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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: April 30, 2003
ITEM 1. REPORTS TO STOCKHOLDERS.
The following is a copy of the report transmitted to stockholders pursuant to
Rule 30e-1 under the Act (17 CFR 270.30e-1):
SEMI-ANNUAL REPORT
INTERNATIONAL EQUITY FUNDS
April 30, 2003 ING Emerging Countries Fund
ING International Fund
CLASSES A, B, C, AND M ING International SmallCap Growth Fund
ING International Value Fund
ING Precious Metals Fund
ING Russia Fund
GLOBAL EQUITY FUNDS
ING Global Real Estate Fund
ING Worldwide Growth Fund
[PHOTO]
[LION LOGO]
ING FUNDS
TABLE OF CONTENTS
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President's Letter ........................... 1
Portfolio Managers' Reports:
International Equity Funds ................. 2
Global Equity Funds ........................ 14
Index Descriptions ........................... 18
Statements of Assets and Liabilities ......... 19
Statements of Operations ..................... 23
Statements of Changes in Net Assets .......... 25
Financial Highlights ......................... 29
Notes to Financial Statements ................ 42
Portfolios of Investments .................... 57
Shareholder Meeting Information .............. 74
Trustee and Officer Information .............. 75
PRESIDENT'S LETTER
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[PHOTO OF JAMES M. HENNESSY]
Dear Shareholder,
It would be an understatement to refer to this past year as a challenging one
for investors. There have been many events on the geopolitical front and
numerous economic challenges that have tested investor resilience.
We are now in a period of one of the longest economic downturns in U.S. history.
Although few of us will take much comfort in the fact that we have coped with a
particularly challenging time, perhaps we should.
We at ING Funds remain optimistic about the future, preferring to see the
positives that have emerged in the wake of recent difficulties. For instance,
the quick actions on the part of the financial industry and government
regulators that followed a string of recent corporate scandals may have helped
regain investor trust and the tough new accounting standards now in place should
help permanently improve our industry.
Although I do not wish to be premature in my enthusiasm, I do believe that the
gradual market upturn of recent months supports ING Funds' long-held philosophy
that it is important to remain focused on long-term investment goals and
maintain reasonable expectations.
In recent months, we at ING Funds have made some changes to some of our fund
management teams. We have also entered into new relationships with respected
sub-advisers and are launching several new mutual funds. We have implemented
improvements to our website that make it more accessible to investors and
financial advisors alike.
We remain committed to providing quality service and innovative products to help
meet the needs of our investors, and we are excited and optimistic about the
future.
On behalf of ING Funds, I thank you for your continued support and confidence
and look forward to serving you in the future.
Sincerely,
/s/ James M. Hennessy
James M. Hennessy
President
ING Funds
June 15, 2003
1
ING EMERGING COUNTRIES FUND Portfolio Managers' Report
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PORTFOLIO MANAGEMENT TEAM: Jan Wim Derks, Eric Anderson, Bratin Sanyal, Fritz
Moolhuizen and Michiel Bootsma, 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. The Fund invests at least 80% of its assets in securities
of issuers located in at least three countries with emerging securities markets.
MARKET OVERVIEW: Emerging market equities gained 5.9% over the six-month period
ending April 30, 2003, slightly ahead of the S&P 500 which rose 4.5% but lagged
the NASDAQ which rose 10.4%. Emerging markets were also ahead of Europe (up 4%)
and Japan (down 6.3%). Emerging markets have now outperformed developed markets
over the last three years by more than 5%.
The period saw record inflows into emerging market fixed income assets pursuing
higher yields as the macroeconomic picture continued to improve in the high
yielding economies of Latin America. The ensuing liquidity in the fixed income
markets led to sizeable contraction in debt spreads, which in turn drove equity
performance not only in Latin America but also in other high yield markets like
South Africa, Indonesia and lately the Philippines.
Latin America was the best performing region within emerging markets gaining 26%
driven by a spectacular performance from Brazil, up 42%. Having moved sideways
for the first few months of the reporting period it 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 8% but gains were limited by concerns regarding the economic
health of its largest trading partner, the United States. Argentina rebounded
off a low base (up 79%) driven mostly by currency gains and Peru gained 37% on
account of rising copper prices, its largest commodity export item.
The EMEA (Europe, Middle East and Africa) region performed quite strongly as
well, gaining 16%. The Czech Republic and Hungary continued their winning streak
rising 29% and 23%, respectively, following the convergence theme (with the
European Union). Russia put on 16.4% as it benefited from high oil prices and
improvements in corporate governance. An additional impetus for the market was
the announcement of BP entering into a joint venture with a Russian oil company.
Soon after, Yukos and Sibneft announced their merger plans thereby creating a
formidable force in the global oil and gas sector (roughly the size of Total
Fina Elf). South Africa gained 13.8%, which was due to a 40% gain in the South
African Rand while the market actually declined 25% in Rand terms.
Full of promise, early on, the laggard region was Asia, losing 4.6%. The prime
factors contributing to this poor performance were rising geopolitical tension
vis-a-vis North Korea and the outbreak of atypical pneumonia (also known as
SARS) in China, which then quickly spread to several other countries in the
region. South Korea slid 6.6% as North Korea first withdrew from its armistice
pact with South Korea and then threatened to re-start its nuclear weapons
program only to follow up with the admission of actually possessing nuclear
weapons. Asia also suffered from weakening global growth expectations as it
remains an economy highly geared to external demand for its IT and industrial
sectors. Just as the region was coming to grips with its new geopolitical
situation, SARS was detected in Hong Kong, which was then traced back to China.
However, this virulent disease quickly spread around the region creating panic,
dealing a severe blow to consumer confidence, domestic demand and the
leisure/tourism sector, which is an important foreign currency earner.
Subsequently, markets danced to the ebbs and flows of SARS related news items
while ignoring economic data, which have remained surprisingly good. The only
markets to record positive gains were Indonesia (up 39.8%) and Thailand (up
12.7%) but their relatively small size failed to pull up the region.
PERFORMANCE: For the six-months ended April 30, 2003 the Fund's Class A shares,
excluding sales charges, provided a total return of 2.01% compared to the MSCI
EMF Index, which returned 5.93%.
PORTFOLIO SPECIFICS: We began the period with an overweight in Asia which we
started trimming as South Korea began getting impacted by news flow from North
Korea. We were also fairly quick in reducing China as SARS was reported there.
More recently we have added to our positions in South Korea as we believe much
of the negative news has been priced in and introduced some defensive names in
China. Elsewhere in the region we maintained our overweights in India, Indonesia
and Thailand. We have maintained our overweight in Latin America primarily via
Brazil and Mexico both of which have benefited the Fund. Recently, we have
top-sliced our positions in Brazil while maintaining our overweight stance. In
the EMEA region we are overweight Eastern Europe and Russia while maintaining
South Africa as an underweight. We have increased our weighting in Poland early
this year to profit from the convergence theme as it
2
Portfolio Managers' Report ING EMERGING COUNTRIES FUND
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remains to be well played out in the equity markets there. Some notable
outperformers in our portfolio have been America Moviles (+36%), Astra
International (+133%), Banco Itau (+69%), Evergreen Marine (+67%) and Samsung
Heavy (+58%), whereas some of the underachievers have been Infosys (-32%),
Kookmin Bank (-25%), Synnex (-19%), Hon Hai (-14%) and Samsung Electronics
(-11%).
MARKET OUTLOOK: In spite of all the uncertainties related to the outcome of the
war in Iraq and its implications for the global economy, we remain constructive
on the emerging markets asset class. We believe emerging markets may deliver
another year of earnings growth given our assumption of a gradual recovery in
global economic growth. As global risk aversion declines, 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 2003, average P/E's
are at around 10 times earnings. Furthermore, emerging economies are expected to
grow by 3.7% on average in 2003 versus 1.7% in developed markets. In addition,
with the current dividend yield of approximately 2.5% we also see yield support.
Our strategy is to focus on countries where economic growth appears to be
rebounding and on companies with improving cash flows, solid balance sheets and
attractive valuations. We are currently finding the best opportunities in
Brazil, Mexico, Thailand, India and Eastern Europe.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED APRIL 30, 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) -23.55% -7.67% 0.63% -- --
Class B (2) -23.11% -7.35% -- 0.90% --
Class C (3) -20.81% -7.21% 0.44% -- --
Class M (4) -- -- -- -- -2.10%
Excluding Sales Charge:
Class A -18.91% -6.57% 1.34% -- --
Class B -19.06% -6.97% -- 0.90% --
Class C 20.01% -7.21% 0.44% -- --
Class M -- -- -- -- 1.45%
MSCI EMF Index -14.06% -5.04% -4.77%(5) -3.61%(6) 2.18%(7)
Based on a $10,000 initial investment, the table above illustrates the total
return of ING Emerging Countries Fund against the MSCI EMF Index. The Index has
no cash in its portfolio, imposes no sales charges and incurs no operating
expenses. An investor cannot invest directly in an index. The Fund's performance
is shown both with and without the imposition of sales charges.
Performance table does not reflect the deduction of taxes that a shareholder
will pay on Fund distributions or the redemption of Fund shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Fund. Total returns would have been
lower had there been no waiver to the Fund.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING"
STATEMENTS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY.
(1) Reflects deduction of the maximum Class A sales charge of 5.75%.
(2) Reflects deduction of the Class B deferred sales charge of 5% and 2%,
respectively, for the 1 year and 5 year returns.
(3) Reflects deduction of the Class C deferred sales charge of 1% for the 1
year return.
(4) Reflects deduction of the maximum Class M sales charge of 3.50%.
(5) Since inception performance for the index is shown from 12/01/94.
(6) Since inception performance for the index is shown from 06/01/95.
(7) Since inception performance for the 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. Risks of foreign investing are generally intensified for investments
in emerging markets.
See accompanying index descriptions on page 18.
3
ING INTERNATIONAL FUND Portfolio Managers' Report
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PORTFOLIO MANAGEMENT TEAM: Managed by Philip Schwartz and Richard Saler, Senior
Vice Presidents, ING Investments, LLC.
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. Under normal conditions the Fund invests at least 65%
of its net assets in equity securities of issuers located in countries outside
of the U.S. The Fund may hold up to 35% of its assets in securities of U.S.
issuers, including investment-grade debt securities.
MARKET OVERVIEW: The six-month period ended April 30, 2003 showed relatively
little change for the major markets, compared to the volatility of the last
three years. In dollar terms, the MSCI EAFE Index rose 0.6%, and Europe gained
2.7%, while Japan declined by 7.8%. As the larger foreign markets struggled,
better performance was found in Asia ex-Japan, emerging markets and the U.S.,
which rose by 3.8%, 4.2%, and 3.7%, respectively. In October of last year, a
rally materialized, which faded quickly into January. Markets shifted from a
focus on economic recovery to potential repercussions of war in Iraq, and gave
back all the gains. World market declines in March were particularly acute, as
war and deflation fears together raised questions of systemic risk. Within days
of the onset of war, markets then staged a sharp reversal from oversold lows,
which continued through April.
There were good reasons for the relatively weak showing of developed foreign
markets. In the eurozone, gross domestic product ("GDP") growth stalled after an
anemic bounce back to 1.2% during 2002. Economic pressure created by a lack of
major reform became more evident, especially in a weak environment. Adding
pressure to Europe's competitiveness was the 20% fall in the dollar versus the
euro. Germany, in particular, looks close to deflationary conditions, but is
absent a credible recovery strategy. The threat of a capital shortage among
European insurance companies was also worrisome during this period. These
worries led to sharp declines in many financial stocks, bringing market indexes
down with them.
Japan emerged from recession, at least temporarily, showing GDP growth of 2.7%
in the first quarter of 2003. Japanese markets continued their long slide as no
real progress was made towards structural reform. Hopes for continuing the
export-led recovery faded in the first quarter. China and pockets of emerging
markets did show some strength, but even there, forecasts were reduced due to
the Severe Acute Respiratory Syndrome (SARS) outbreak.
At the end of April, markets worldwide were anticipating economic recovery,
while recent numbers indicated weakness. The markets seemed to expect signs of
growth fairly soon.
PERFORMANCE: For the six-month period ended April 30, 2003, the Fund's Class A
shares, excluding sales charges, provided a total return of -0.49%, compared to
the MSCI EAFE Index, which returned 2.04% for the same period.
PORTFOLIO SPECIFICS: The portfolio remained well diversified. Despite a cloudy
outlook, steep multiyear declines meant equity prices were becoming more
attractive. Stock selection focused on financially strong companies that we
believe could weather difficult times. The Fund was underweight financials and
utilities by 4.8% each. We were concerned about deterioration in bank loan
books, which led to our underweighting banks. Utilities did not offer good value
since they had enjoyed two years of relative outperformance. The Fund was about
2% overweight in energy, where oil stocks offered attractive dividend yields and
had ignored the sharp rise in oil prices.
The Fund benefited from strong gains in Credit Lyonnais, which advanced
considerably on a takeover offer. Also helping returns was Teva Pharmaceutical,
up significantly on strong drug sales and Food and Drug Administration (FDA)
approvals. Among disappointing stocks were Sony, down substantially, on weak
consumer electronics sales, and Aegon, down significantly in tandem with many
European insurance stocks.
MARKET OUTLOOK: The outlook for international equities has improved over the
past month. Although the geopolitical environment is far from stable, the end of
the Iraq war eliminates a major risk. Falling bond yields, especially in the
high yield sector, are providing a major stimulus to business. The weakness of
the dollar is also becoming an important issue. A weak dollar is a stimulant to
the U.S. economy; however, this may put additional pressure on European and
Japanese economies. It is highly likely the European Central Bank will move to
cut interest rates aggressively. Unfortunately for Japan, rate cuts are no
longer an option as they are already near 0%. Despite the recent rise in equity
prices, valuation remains reasonably attractive overseas. Our opinion is more
favorable toward stocks. Fixed income alternatives look expensive, and corporate
earnings look set to improve in the second half of 2003 and into next year.
In light of a more positive outlook, we have continued to reduce weightings in
consumer staples and pharmaceuticals. We have also added to sectors that are
more geared to economic growth, such as industrials and capital goods.
4
Portfolio Managers' Report ING INTERNATIONAL FUND
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AVERAGE ANNUAL TOTAL RETURNS FOR
THE PERIODS ENDED APRIL 30, 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) -23.33% -2.99% 2.96% -- --
Class B (2) -23.66% -- -- -17.82% --
Class C (3) -20.44% -- -- -- -15.75%
Excluding Sales Charge:
Class A -18.61% -1.83% 3.61% -- --
Class B -19.65% -- -- -16.96% --
Class C -19.64% -- -- -- -15.75%
MSCI EAFE Index -15.92% -5.23% 1.58%(4) -16.32%(5) -16.32%(5)
Based on a $10,000 initial investment, the table above illustrates the total
return of ING International Fund against the MSCI EAFE Index. The Index has no
cash in its portfolio, imposes no sales charges and incurs no operating
expenses. An investor cannot invest directly in an index. The Fund's performance
is shown both with and without the imposition of sales charges.
Performance table does not reflect the deduction of taxes that a shareholder
will pay on Fund distributions or the redemption of Fund shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Fund. Total returns would have been
lower had there been no waiver to the Fund.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
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 foreign equities. Currency exchange rates, international,
political and economic conditions and other risks affect foreign securities. The
risks of foreign investing are generally intensified for investing in emerging
markets.
See accompanying index descriptions on page 18.
5
ING INTERNATIONAL
SMALLCAP GROWTH FUND Portfolio Manager's Report
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PORTFOLIO MANAGEMENT TEAM: Loretta J. Morris, Portfolio Manager, Horacio A.
Valeiras, CFA, Chief Investment Officer, with Nicholas-Applegate Capital
Management, the Sub-Adviser.
GOAL: The International SmallCap Growth Fund (the "Fund") seeks maximum
long-term capital appreciation.
MARKET OVERVIEW: The international stock markets endured yet another challenging
period during the six months ended April 30, 2003. Sluggish economic growth
worldwide, the spectre of war in Iraq and deteriorating conditions in the German
and Japanese financial systems dampened investor sentiment. Despite these
overhangs, international equities held up remarkably well.
The international equity market became sharply oversold in the third quarter and
into the fourth quarter, with investor sentiment dampened by anemic growth
rates, pessimism over financial services companies (particularly in Germany),
the overhang of the Iraq situation and terrorism, and debt downgrades from
credit rating agencies. Then, in early October, international equities rallied
sharply as many beaten-down stocks rallied as much as 160%, while
higher-quality, better-performing companies averaged an appreciation rate of
16%. In December, international stocks retreated somewhat as concerns arose that
per-share earnings estimates remained high. The market began to exhibit greater
rationality based on signs of stability in the fundamental data.
2003 opened with a steady drumbeat of news surrounding the prospect of US-led
military action in Iraq. The international stock markets came under pressure in
the first quarter of the year as a combination of war worries and weak economic
data spurred a sell-off in equities. "War trades" also heightened volatility as
investors moved quickly into -- and then back out of -- gold, oil and U.S.
Treasury securities.
A snap-back in late March erased almost all of January and February's losses,
even though the MSCI EAFE (Morgan Stanley Capital International Europe,
Australasia, and the Far East) Index finished the quarter down 8.8%, with much
of the decline due to regained strength in the dollar. Large insurance companies
were especially hard hit as falling equity prices triggered the need to issue
rights and sell futures to maintain hedged positions, thereby diluting shares
and driving them down even further. Meanwhile, pension deficits negatively
affected company valuations. In April, the international stock markets staged a
strong rally as the situation in Iraq appeared to be nearing resolution, energy
prices moderated, and earnings -- although still weak -- came in slightly better
than anticipated.
PERFORMANCE: For the six-month period ended April 30, 2003, the Fund's Class A
Shares, excluding sales charges, provided a total return of 2.23% compared to
the Salomon EPAC EM Index (Europe, Pacific Australasia Composite Extended Market
Index), which advanced 6.77% during the same period.
PORTFOLIO SPECIFICS: The Fund's relative under-performance was caused primarily
by disappointing stock selection and overweight holdings in technology
companies, particularly software developers. Stock selection in the
producers/manufacturers and transportation groups also proved negative.
On the positive side, the Fund's absolute advance was driven by gains in its
utilities, energy and insurance services holdings. Overweight positions in
energy and healthcare stocks also supported relative returns. The oil price
shock stemming from the build-up to, then commencement of, war in Iraq drove gas
and oil-related shares higher. Oil refining/machinery companies in the portfolio
gained more than 60% during the period, while gas utilities and oil/gas
producers rose 51.9% and 23.8%, respectively.
By country, relative performance was helped by stock selection and an
underweight in Japan. German stocks in the portfolio also registered strong
gains, rising more than 30% compared to 10.6% for the benchmark, but an
underweight position diminished the benefit to relative performance. However,
stock selection in France, South Korea and China detracted from both absolute
and relative performance.
Top-performing stocks for the reporting period included Frontline Ltd.,
(transportation, 0.7% of net assets) a Bermuda-based tanker company, and Schwarz
Pharma, (Pharmaceuticals, 0.8% of net assets) a German specialty pharmaceutical
firm.
MARKET OUTLOOK: Overall, our outlook has become more positive. First-quarter
corporate earnings were better than expected, but against lowered expectations;
the overhang of Iraq has been removed; and developed economies appear to be
strengthening somewhat. We believe that, absent an extraordinary event, we are
in a bottoming process. In Asia, we continue to monitor the SARS outbreak
closely, but believe aggressive action by health ministers and the World Health
Organization seem to be impeding its spread.
6
ING INTERNATIONAL
Portfolio Manager's Report SMALLCAP GROWTH FUND
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A more selective environment focusing on fundamental strength bodes well for our
style, which is predicated on identifying companies benefiting from positive,
sustainable change and investing in them just as the market is recognizing
strength. Currently, we are looking closely for stocks that may benefit over the
intermediate term and continue to strengthen when higher-growth stocks come back
into favor.
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED APRIL 30, 2003
-------------------------------------------------------------
SINCE INCEPTION SINCE INCEPTION
OF CLASS B OF CLASS A & C
1 YEAR 5 YEAR 5/31/95 08/31/94
------ ------ ------- --------
Including Sales Charge:
Class A (1) -24.17% 1.55% -- 7.63%
Class B (2) -24.05% 1.80% 9.29% --
Class C (3) -20.84% 2.13% -- 7.62%
Excluding Sales Charge:
Class A -19.55% 2.76% -- 8.36%
Class B -20.05% 2.14% 9.29% --
Class C -20.84% 2.13% -- 7.62%
Salomon EPAC EM Index -10.60% -3.22% -0.80%(4) -0.61%(5)
Based on a $10,000 initial investment, the table above illustrates the total
return of ING International SmallCap Growth Fund against the Salomon EPAC EM
Index. The Index has no cash in its portfolio, imposes no sales charges and
incurs no operating expenses. An investor cannot invest directly in an index.
The Fund's performance is shown both with and without the imposition of sales
charges.
Performance table does not reflect the deduction of taxes that a shareholder
will pay on Fund distributions or the redemption of Fund shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Fund. Total returns would have been
lower had there been no waiver to the Fund.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
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 the index is shown from 06/01/95.
(5) Since inception performance for the index is shown from 09/01/94.
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 18.
7
ING INTERNATIONAL VALUE FUND Portfolio Managers' Report
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PORTFOLIO MANAGEMENT TEAM: Brandes' LargeCap Investment Committee, Brandes
Investment Partners, LLC, the Sub-Adviser.
GOAL: The ING International Value Fund (the "Fund") seeks long-term capital
appreciation. The Fund invests 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.
MARKET OVERVIEW: After posting declines in December 2002 and through the first
three months of 2003, stocks in non-U.S. markets surged in April. Overall,
across the six-month period ended April 30, 2003, the MSCI EAFE Index gained
2.04%.
Share prices around the globe seemed to react favorably to the end of major
conflict in Iraq in late March. After losing ground in the first quarter, most
country indexes registered substantial gains in April and the MSCI EAFE Index
advanced 9.9%.
In Asia, concerns related to the outbreak of severe acute respiratory syndrome
(SARS) impacted stock returns. The MSCI Singapore Index, for example, declined
12.9% during the six months ended April 30, 2003. Over the same period, the MSCI
Japan Index declined 7.2%.
In Europe, stocks generally advanced, with the MSCI Europe Index gaining 4.4%.
Economic reports, however, remained mixed and the European Central Bank left
interest rates unchanged in April, waiting to see what effect the conflict in
Iraq would have on Europe's sluggish economy.
Stocks in Brazil posted sharp gains during the period as investors showed
increasing confidence in the administration of President Luiz Inacio Lula da
Silva. The International Monetary Fund praised the nation's progress, saying the
agency's $31 billion aid package to Brazil is among its most successful deals
ever.
PERFORMANCE: For the six months ended April 30, 2003, the Fund's Class A shares,
excluding sales charges, provided a total return of 1.11% compared to the MSCI
EAFE Index, which returned 2.04%.
PORTFOLIO SPECIFICS: Substantial advances for positions in Brazil helped drive
performance during the six months ended April 30, 2003. Brazil-based stocks
registering gains included Eletrobras (electric utilities, 1.5% of net assets),
and Telenorte Leste (diversified telecom services, 1.1% of net assets).
Strong returns for positions in select European nations also contributed to
results. Holdings in Spain, including Repsol YPF (oil & gas, 3.1%) and
Telefonica (diversified telecom services, 3.8%), advanced during the period.
Positions in countries such as France and Germany also registered gains. In
contrast, holdings in the United Kingdom, the Netherlands and Asia tended to
decline.
>From an industry perspective, holdings in the oil + gas and communications
equipment industries were among the Fund's top performers. Positions such as
Petro Brasileiro and Nortel Networks (Canada, communications equipment, 1.9%)
advanced sharply during the period.
During the six-month period, we pared back on select holdings -- including
Nortel Networks, Alcatel (France, communications equipment, 2.7%), and Tyco
International (Bermuda, industrial conglomerates, 2.2%) -- as price appreciation
lifted their portfolio weights toward our limits for individual securities. In
other cases, such as Repsol YPF and Telefonos de Mexico (Mexico, diversified
telecom services, 1.8%), we sold portions of our holdings to pursue other
investment opportunities. We believe all of these pared back positions continue
to offer potential for long-term price appreciation.
Over the period, we took advantage of recent price declines and purchased
additional shares of select existing holdings at attractive prices. Positions we
added to during the period included Hitachi (Japan, electronic equipment &
instruments, 1.2%) and BAE Systems (United Kingdom, aerospace & defense, 1.8%).
We sold PetroChina (China, oil & gas) to pursue other investment opportunities.
As of April 30, 2003 the Fund's most substantial country weightings remain in
Japan and the United Kingdom. On an industry basis, the Fund's largest exposure
lies in diversified telecom services.
MARKET OUTLOOK: While we monitor short-term events in international equity
markets, our investment philosophy focuses on company-by-company analysis with a
long-term perspective.
In all market environments, we search for and hold what we believe to be
fundamentally sound companies trading at discounts to our estimates of their
fair values. We believe this strategy will provide patient investors with
favorable results.
8
Portfolio Managers' Report ING INTERNATIONAL VALUE FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED APRIL 30, 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) -25.64% 0.15% 7.35% --
Class B (2) -25.48% 0.34% -- 4.85%
Class C (3) -22.46% 0.63% 7.40% --
Excluding Sales Charge:
Class A -21.12% 1.35% 8.13% --
Class B -21.64% 0.65% -- 4.85%
Class C -21.69% 0.63% 7.40% --
MSCI EAFE Index -15.92% -5.23% 1.36%(4) -1.54%(5)
Based on a $10,000 initial investment, the table above illustrates the total
return of ING International Value Fund against the MSCI EAFE Index. The Index
has no cash in its portfolio, imposes no sales charges and incurs no operating
expenses. An investor cannot invest directly in an index. The Fund's performance
is shown both with and without the imposition of sales charges.
Performance does not reflect the deduction of taxes that a shareholder will pay
on Fund distributions or the redemption of Fund shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Fund. Total returns would have been
lower had there been no waiver to the Fund.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
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 the index is shown from 03/01/95.
(5) Since inception performance for the 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 including
currency fluctuation, economic and political risks not found in investments that
are solely domestic. The risks of foreign investing are generally intensified
for investing in emerging markets. Investing in funds that are concentrated in a
smaller number of holdings poses greater risk than those funds with a larger
number of holdings because each investment has a greater effect on the Fund's
performance.
See accompanying index descriptions on page 18.
9
ING PRECIOUS METALS FUND Portfolio Manager's Report
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER: James A. Vail, C.F.A., Portfolio Manager, ING Investments,
LLC.
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 the securities of companies
engaged in the mining or processing of gold throughout the world.
MARKET OVERVIEW: The fundamentals for the gold sector remain positive, fostered
by heightened international tensions, U.S. Dollar weakness, lower interest rates
globally, and reduced producer hedging. Additionally, the sector continues to
consolidate bringing greater discipline to the production equation. Finally,
gold as an investment, rather than solely a jewelry item is continuing to emerge
as an alternative to financial assets.
PERFORMANCE: For the six months ended April 30, 2003, the Fund's Class A shares,
excluding sales charges, returned 7.27% compared to the S&P 500 Index, Gold
Bullion and FT Gold Mines Index which returned 4.47%, 6.26% and 3.22%,
respectively, for the same period. The Fund's out performance reflects its
holdings in intermediate producers where performance outpaced the larger names.
PORTFOLIO SPECIFICS: During the last six months the Fund reduced its holdings in
the South African miners as the Rand soared, increasing the cost to the miners
in local currencies and reducing the anticipated future earnings prospects for
the sector. The Fund benefited specifically from its holdings in intermediate
producers on a global scale led by Randgold Resources up 79% in the period
followed by IAMGOLD up 48% and Glamis Gold up 34%. Toward the end of the period
the Fund increased its position in Barrick Gold, traditionally shunned for its
hedging position, however with new management, that policy is changing.
Additionally, Barrick's production profile is among the most exciting in the
industry.
MARKET OUTLOOK: Industry fundamentals continue strong and gold prices are
consolidating at levels not seen in two years. The key going forward should be
continued U.S. dollar weakness and fears of deflationary pressures.
Additionally, the World Gold Council is proposing a gold based equity traded
fund which would allow individuals to purchase an instrument directly redeemable
into gold, adding incremental demand for gold itself. We continue to believe the
outlook for the Fund is positive.
10
Portfolio Manager's Report ING PRECIOUS METALS FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR THE
PERIODS ENDED APRIL 30, 2003
---------------------------------
1 YEAR 5 YEAR 10 YEAR
------ ------ -------
Including Sales Charge:
Class A (1) -3.08% 3.02% 0.45%
Excluding Sales Charge:
Class A 2.83% 4.27% 1.05%
S&P 500 Index -13.31% -2.43% 9.66%
Gold Bullion 9.26% 1.62% -0.51%
FT Gold Mines Index -10.78% -2.98% -3.17%
Based on a $10,000 initial investment, the table above illustrates the total
return of ING Precious Metals Fund against the S&P 500 Index, Gold Bullion and
FT Gold Mines Index. The Indices have no cash in their portfolio, 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.
Performance table does not reflect the deduction of taxes that a shareholder
will pay on Fund distributions or the redemption of Fund shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Fund. Total returns would have been
lower had there been no waiver to the Fund.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING"
STATEMENTS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER, ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGER'S
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
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 risks not found in investments that are
solely domestic. Risks of foreign investing are generally intensified for
investments in emerging markets.
See accompanying index descriptions on page 18.
11
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, Head of Equity Investments, 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 or Russian companies.
MARKET OVERVIEW: The period from the end of 2002 and the first part of 2003 saw
a number of landmark developments in the history of the Russian equity market.
Given the background of a stubbornly high oil price through most of the first
quarter, it should not come as a surprise that most of these events took place
in the Oil & Gas sector. Nevertheless, while certain oil stocks did perform
well, larger gains were seen in a couple of the other prominent sectors.
Overall, the Russian market rose almost 18.0% in the six-month period.
The first of these highly significant developments, and arguably the most
important, was the announcement that BP PLC (BP) was entering into a 50/50 joint
venture with one of Russia's largest oil companies, OAO Tyumen Oil Co. (TNK).
The transaction, which will see BP pay U.S. $6.75 billion in cash and securities
over a period of three years, marks the largest foreign direct investment in
Russia. The move was somewhat of a trigger for the Russian market as several
analysts anticipated that the deal would be a catalyst for similar moves by the
other international oil majors.
Sure enough, the end of the period saw the announcement of the largest merger in
Russian history. Although this was also a merger between two oil companies, the
tie-up was a purely domestic one between Yukos and Sibneft. While the deal is
not expected to close until the end of 2003, the new entity should be, in terms
of valuation, by far the largest in the Russian market with a market
capitalization of about U.S. $35.0 billion (based on current prices.) According
to one analyst, the new entity will be a formidable force in the global oil &
gas sector. It will be the world's sixth largest producer of oil and gas, and
fourth largest in terms of reserves.
Finally, the consolidation of the fixed-line telecom sector was completed early
in 2003. This consolidation began in 2002 and saw dozens of smaller, local
companies, transformed into seven larger, regional telecom operators. Each of
these has its own individual share listing. As the regional operators now
represent larger companies (in terms of both revenue and number of subscribers)
they are also, potentially, much more attractive investments.
PERFORMANCE: For the six months ended April 30, 2003, the Fund's Class A shares,
excluding sales charges, provided a total return of 25.2%. In the same period
the Moscow Times Index and Russian Trading System Index (RTS) returned 18.0% and
19.9%, respectively. The Fund's outperformance can be attributed to its large
position in the telecom sector over the period under review. This includes the
mobile operators and the fixed-line regional operators. The Fund also had
positions in a number of the regional electricity producers, which performed
very well.
PORTFOLIO SPECIFICS: As mentioned, Russia's mobile operators performed very well
in the period under review. The Fund benefited from this performance as it had
substantial positions in both of Russia's listed mobile companies. MTS, the
country's largest mobile operator in terms of overall subscribers gained over
46.0%. Its largest competitor, Vimpelcom saw a similar rise of 41.0%. At the end
of April, the total number of mobile subscribers in Russia had reached 22.2
million people, or a penetration rate of 15.0%. From the period of March 2002,
until March 2003, the number of mobile subscribers in Russia more than doubled.
On the back of the consolidation mentioned earlier, the gains were just as
impressive in the fixed-line sector. The shares of Uralsvyazinform rose 32.0%,
and those of Volgatelecom soared almost 65.0%. The Fund held positions in both
stocks. Some of the other regional operators saw more modest gains that were in
line with the performance of the overall market.
In the spite of the remarkable performance of the telecom sector, the market's
star performer over the period was the regional electricity producer, Mosenergo.
The company generates and distributes electricity for the city of Moscow. The
company's share price rocketed 118.0% over the period. However, this spectacular
performance was likely less tied to fundamentals, as much as it was driven by
one investor's attempt to accumulate a large enough stake in the company ahead
of the eventual
12
Portfolio Managers' Report ING RUSSIA FUND
- --------------------------------------------------------------------------------
restructuring of the electricity sector. The Fund gradually reduced its position
in Mosenergo throughout the period.
MARKET OUTLOOK: As it has been for some time, the macroeconomic outlook for
Russia remains rather favorable. This is highlighted by forecasts for 2003 of
real gross domestic product growth of 5-6%, a current account surplus of 2-3%,
and a balanced federal budget. Inflation, while still in double-digits, has
fallen steadily. These forecasts are underpinned by an average oil price
estimate of $24.00-$25.00 per barrel. In other words, we are likely to see the
oil price decline to levels closer to $20.00 per barrel by the end of 2003. As
always, the possibility of a sharper fall is a risk, and would put the outlook
for a balanced budget in doubt.
Aside from the positive macroeconomic outlook, the market has also been
supported by the abundance of domestic liquidity. This liquidity stems from a
reduction in `capital flight', and has been the main driver of the strong rally
in the fixed income market. (Russian government bonds trade at only a 150-200
basis point spread over U.S. treasury bonds.) To a certain extent, this excess
liquidity has already spilled over into the Russian equity market. However,
given the rapid growth in central bank reserves, the level of domestic liquidity
is likely to increase. This could lead to further strong gains in the equity
market.
AVERAGE ANNUAL TOTAL RETURNS FOR THE
PERIODS ENDED APRIL 30, 2003
----------------------------------------
SINCE INCEPTION
1 YEAR 5 YEAR 07/03/96
------ ------ --------
Including Sales Charge:
Class A (1) 6.93% 2.29% 6.14%
Excluding Sales Charge:
Class A 13.47% 3.51% 7.06%
Moscow Times Index 6.36% 9.56% 15.47%(2)
Russian Trading System Index 11.35% 7.84% 11.22%(2)
Based on a $10,000 initial investment, the table above illustrates the total
return of ING Russia Fund against the Moscow Times Index and Russian Trading
System Index. The indices have no cash in their portfolio, impose no sales
charge and incur no operating expenses. An investor cannot invest directly in an
index. The Fund's performance is shown both with and without the imposition of
sales charges.
Performance table does not reflect the deduction of taxes that a shareholder
will pay on Fund distributions or the redemption of Fund shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Fund. Total returns would have been
lower had there been no waiver to the Fund.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FOWARD-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 the 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.
Currency exchange rates, international, political and economic conditions and
other risks affect foreign securities.
See accompanying index descriptions on page 18.
13
ING GLOBAL REAL ESTATE FUND Portfolio Managers' Report
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT TEAM: Steven D. Burton, Kenneth D. Campbell and T. Ritson
Ferguson, with Clarion CRA Securities, the Sub-Adviser.
GOAL: The ING Global Real Estate Fund (the "Fund") seeks to achieve high total
return. The Fund invests at least 80% of its assets in a portfolio of equity
securities of companies that are principally engaged in the real estate
industry.
MARKET OVERVIEW: Property stocks around the world have benefited from strong
performance relative to other equities as a result of the defensive nature of
real estate. Defensive attributes include high free cash flow from long lease
terms, healthy dividend yields, stable earnings growth, attractive valuations
and low correlation to broad equities.
PERFORMANCE: For the six months ended April 30, 2003, the Fund's Class A shares,
excluding sales charges, provided a total return of 7.68% compared to the
Citigroup World Property Index which returned 5.85%.
PORTFOLIO SPECIFICS: The Fund continues to be overweighted in the defensive
property types of grocery-anchored shopping centers, regional malls and
warehouse industrial properties but is beginning to shift into sectors that we
believe may respond better to an eventual economic recovery (such as apartments
and the beaten down office sector). The Fund continues to be market weighted to
overweighted in the more defensive European, U.S. and Australian markets.
Outperformance of +183 bps relative to the benchmark was 40% the result of
strong country selection and 60% the result of strong stock selection.
Overweights in the Netherlands, France and Spain combined with a sharp
underweight in the underperforming Hong Kong market to contribute to relative
outperformance. The Netherlands recorded +20.9% total return during this time
period, France +18.3% and Spain +26%. The underweighted Hong Kong market,
conversely, was -14.8% for the six months ended April 30th as deflationary woes
continued to cause a lack of pricing power among property owners. Strong stock
selection included concentrations in the outperforming mall and shopping center
property types as well as companies leveraged to economies with above trand
growth prospects, such as Urbis, a Spanish homebuilder.
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 5% dividend yield plus 1-3% prospective annual earnings
growth, global property stocks continue to be well positioned to conservatively
deliver total returns in the high single digit range per annum, and possibly the
low double digit range, over the next several years. Valuations remain
attractive as real estate stocks trade at 20% discounts to estimated private
market valuations and dividend yields average in the 5 to 6% range.
Additionally, the low correlation with broad equities continues to provide
diversification benefits in a volatile equities environment.
14
Portfolio Managers' Report ING GLOBAL REAL ESTATE FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED APRIL 30, 2003
--------------------------------------------------------------------
SINCE INCEPTION SINCE INCEPTION SINCE INCEPTION
OF CLASS A OF CLASS B OF CLASS C
1 YEAR 11/05/01 3/15/02 1/8/02
------ -------- ------- ------
Including Sales Charge:
Class A (1) -5.48% 6.05% -- --
Class B (2) -5.02% -- -0.99% --
Class C (3) -1.29% -- -- 4.50%
Excluding Sales Charge:
Class A 0.26% 2.42% -- --
Class B 0.34% -- 2.42% --
Class C -0.35% -- -- 4.50%
Citigroup World Property Index -3.28% 7.14%(4) 4.14%(5) 3.68%(6)
Based upon a $10,000 initial investment, the table above illustrates the total
return of ING Global Real Estate Fund against the Citigroup World Property
Index. The Index has no cash in its portfolio, imposes no sales charges and
incurs no operating expenses. An investor cannot invest directly in an index.
The Fund's performance is shown both with and without the imposition of sales
charges.
Performance table does not reflect the deduction of taxes that a shareholder
will pay on Fund distributions or the redemption of Fund shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Fund. Total returns would have been
lower had there been no waiver to the Fund.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING"
STATEMENTS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY.
(1) Reflects deduction of the maximum Class A sales charge of 5.75%.
(2) Reflects deduction of the Class B deferred sales charge of 5% for the since
inception return.
(3) Reflects deduction of the Class C deferred sales charge of 1% for the since
inception return.
(4) Since inception performance for the index is shown from 11/01/01.
(5) Since inception performance for the index is shown from 3/1/02.
(6) Since inception performance for the index is shown from 1/1/02.
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 risks). 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.
See accompanying index descriptions on page 18.
15
ING WORLDWIDE GROWTH FUND Portfolio Manager's Report
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT TEAM: Domestic Equity Component: Managed by a team of
investment professionals lead by James Vail, ING Investments, LLC. International
Component: Managed by a team of investment professionals lead by Philip Schwartz
and Richard Saler, Senior Vice Presidents, ING Investments, LLC.
GOAL: The ING Worldwide Growth Fund (the "Fund") seeks maximum long-term capital
appreciation.
MARKET OVERVIEW:
DOMESTIC: The overall domestic equity market was little changed for the
six-month period ended April 30, 2003 notwithstanding severe gyrations within
the period primarily due to fears surrounding the buildup to Operation Enduring
Freedom, and the subsequent rally in equities as the Iraqi campaign was far more
successful than many expected.
During the period the Federal Reserve left overnight lending rates unchanged at
1.25% after a sustained period of easing while 10-year government bonds declined
20 basis points to 3.85% as the bond market continued to predict sustained low
inflation. The U.S. dollar declined 12% against the Euro and 3% against the Yen
during the period as U.S. rates stayed low and overseas investors withdrew to
stronger currencies amid nagging U.S. economic uncertainties.
Within the market, the best performing sectors of the Russell 1000 Growth Index
were Utilities, Materials and Industrials while the worst performers were
Consumer Staples and Financials. The largest components of the Index, Health
Care and Information Technology were slightly positive for the period. In
general, many of the companies that had been under severe price pressure
reported strong performances as the market became more comfortable with future
prospects. Indeed, with record low interest rates, corporate earnings showing
recovery and equity friendly tax and dividend policies in place, we believe the
prospects for continued improving performance in the U.S. Equity markets remain
solid.
INTERNATIONAL: The six-month period ended April 30, 2003 showed relatively
little change for the major markets, compared to the volatility of the last
three years. In dollar terms, the MSCI EAFE Index rose 0.6%, and Europe gained
2.7%, while Japan declined by 7.8%. As the larger foreign markets struggled,
better performance was found in Asia ex-Japan, emerging markets and the U.S.,
which rose by 3.8%, 4.2%, and 3.7%, respectively. In October of last year, a
rally materialized, which faded quickly into January. Markets shifted from a
focus on economic recovery to potential repercussions of war in Iraq, and gave
back all the gains. World market declines in March were particularly acute, as
war and deflation fears together raised questions of systemic risk. Within days
of the onset of war, markets then staged a sharp reversal from oversold lows,
which continued through April.
There were good reasons for the relatively weak showing of developed foreign
markets. In the eurozone, gross domestic product ("GDP") growth stalled after an
anemic bounce back to 1.2% during 2002. Economic pressure created by a lack of
major reform became more evident, especially in a weak environment. Adding
pressure to Europe's competitiveness was the 20% fall in the dollar versus the
euro. Germany, in particular, looks close to deflationary conditions, but is
lacking a credible recovery strategy. The threat of a capital shortage among
European insurance companies was also worrisome during this period. These
worries led to sharp declines in many financial stocks, bringing market indexes
down with them.
Japan emerged from recession, at least temporarily, showing GDP growth of 2.7%
in the first quarter of 2003. Japanese markets continued their long slide as no
real progress was made towards structural reform. Hopes for continuing the
export-led recovery faded in the first quarter. China and pockets of emerging
markets did show some strength, but even there, forecasts were reduced due to
the Severe Acute Respiratory Syndrome (SARS) outbreak.
At the end of April, markets worldwide were anticipating economic recovery,
while recent numbers indicated weakness. The markets were expecting signs of
growth fairly soon.
PERFORMANCE: For the six-month period ended April 30, 2003, the Fund's Class A
shares, excluding sales charges, provided a total return of 0.16%, compared to
the MSCI World Index, which returned 3.88% for the same period.
PORTFOLIO SPECIFICS:
DOMESTIC: The Fund remained well diversified with the largest sectors being
Information Technology and Health Care. The Fund was not exposed to the Food
Beverage & Tobacco sector, which saw many stocks decline. Disappointing
performance was seen in the Information Technology sector where despite being
overweight the Index, the Fund suffered from individual stock selection.
INTERNATIONAL: The Fund remained well diversified. Despite a cloudy outlook,
steep multiyear declines meant equity prices were becoming more attractive.
Stock selection focused on financially strong companies that could weather
difficult times. The Fund was underweight financials 1.5%. We were concerned
about deterioration in bank loan books, which led to our underweighting banks.
Utilities did not offer good value since they had enjoyed two years of relative
outperformance. The Fund was about 2% overweight in energy, where oil stocks
offered attractive dividend yields and had ignored the sharp rise in oil prices.
The Fund benefited from strong gains in Credit Lyonnais, which advanced 55% on a
takeover offer. Also helping returns was Teva Pharmaceutical, up 21% on strong
drug sales and Food and Drug Administration (FDA) approvals. Disappointing
stocks were Sony, down 43% on weak consumer electronics sales, and Aegon, down
22% in tandem with many European insurance stocks.
16
Portfolio Manager's Report ING WORLDWIDE GROWTH FUND
- --------------------------------------------------------------------------------
MARKET OUTLOOK:
DOMESTIC: The overall outlook remains quite positive for U.S. Equities.
Continued low interest rates, recovering corporate earnings resulting from cost
cutting during bad times and positive fiscal stimulus all bode well for the
market. The Fund continues to be positioned to take advantage of a recovering
economy and eventual increases in corporate spending by focusing on the
Information Technology and select Consumer Discretionary companies.
INTERNATIONAL: The outlook for international equities has improved over the past
month, in our opinion. Although the geopolitical environment is far from stable,
the end of the Iraq war eliminates a major risk. Falling bond yields, especially
in the high yield sector, are providing a major stimulus to business. The
weakness of the dollar is also becoming an important issue. A weak dollar is a
stimulant to the U.S. economy; however, this may put additional pressure on
European and Japanese economies. It is highly likely the European Central Bank
will move to cut interest rates aggressively. Unfortunately for Japan, rate cuts
are no longer an option as they are already near 0%. Despite the recent rise in
equity prices, valuation remains reasonably attractive overseas. Our opinion is
more favorable toward stocks. Fixed income alternatives look expensive and
corporate earnings look set to improve in the second half of 2003 and into next
year.
In light of a more positive outlook, we have continued to reduce weightings in
consumer staples and pharmaceuticals. We have also added to sectors that are
more geared to economic growth, such as industrials and capital goods.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED APRIL 30, 2003
-----------------------------------------------------------------
SINCE INCEPTION
OF CLASS B
1 YEAR 5 YEAR 10 YEAR 5/31/95
------ ------ ------- -------
Including Sales Charge:
Class A (1) -24.98% -3.83% 6.10% --
Class B (2) -24.85% -3.62% -- 5.27%
Class C (3) -21.66% -3.29% 6.06% --
Excluding Sales Charge:
Class A -20.40% -2.68% 6.73% --
Class B -20.89% -3.32% -- 5.27%
Class C -20.87% -3.29% 6.06% --
MSCI World Index -14.16% -3.91% 5.69% 4.24%(4)
Based on a $10,000 initial investment, the table above illustrates the total
return of ING Worldwide Growth Fund against the MSCI World Index. The Index has
no cash in its portfolio, imposes no sales charges and incurs no operating
expenses. An investor cannot invest directly in an index. The Fund's performance
is shown both with and without the imposition of sales charges.
Performance table does not reflect the deduction of taxes that a shareholder
will pay on Fund distributions or the redemption of Fund shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Fund. Total returns would have been
lower had there been no waiver to the Fund.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
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 the 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 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 18.
17
INDEX DESCRIPTIONS
- --------------------------------------------------------------------------------
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 NASDAQ COMPOSITE INDEX is a broad-based capitalization-weighted index of all
NASDAQ National Market & SmallCap stocks.
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 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 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 FAR EAST FREE EX-JAPAN INDEX measures performance of securities listed
on exchanges in the Far East markets excluding Japan.
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 GOLD BULLION is a commodity traded on the New York Mercantile Exchange.
The MSCI JAPAN INDEX is a capitalization weighted index that monitors the
performance of stocks from the country of Japan.
The MSCI EUROPE INDEX is a capitalization weighted index that monitors the
performance of stocks from all the countries that make up the continent of
Europe.
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 MSCI SINGAPORE INDEX is an unmanaged index that measures the performance of
the Singapore stock market.
The RUSSELL 1000 GROWTH INDEX is an index that measures the performance of those
Russell 1000 Index companies with higher price-to-book ratios and higher
forecasted growth values.
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.
All indices are unmanaged.
An investor cannot invest directly in an index.
18
STATEMENTS OF ASSETS AND LIABILITIES as of April 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
ING
ING INTERNATIONAL ING
EMERGING ING SMALLCAP INTERNATIONAL
COUNTRIES INTERNATIONAL GROWTH VALUE
FUND FUND FUND FUND
--------------- --------------- --------------- ---------------
ASSETS:
Investments in securities, at value* $ 95,575,608 $ 68,561,204 $ 268,308,477 $ 2,451,924,363
Cash 6,274,067 9,583,542 21,736,562 20,368,050
Foreign currencies at value** 1,905,272 399,087 311,564 --
Receivables:
Investment securities sold 768,009 360,880 361,786 29,689,150
Fund shares sold 5,065,087 716,261 9,096,532 1,026,751
Dividends and interest 561,091 405,397 1,422,609 17,354,659
Other -- 14,860 -- --
Other investments 10,203,838 5,781,960 36,062,980 503,374,914
Prepaid expenses 37,929 31,675 42,519 142,562
Reimbursement due from manager 12,763 3,863 -- --
--------------- --------------- --------------- ---------------
Total assets 120,403,664 85,858,729 337,343,029 3,023,880,449
--------------- --------------- --------------- ---------------
LIABILITIES:
Payable for investment securities purchased -- 2,502,216 4,474,669 --
Payable for fund shares redeemed 971,788 1,193,572 6,287,950 4,339,119
Payable for securities loaned 10,203,838 5,781,960 36,062,980 503,374,914
Payable to affiliates 148,142 90,886 365,971 3,653,598
Payable for trustee fees 125,720 82,713 5,942 31,150
Other accrued expenses and liabilities 313,602 149,735 466,404 2,092,198
--------------- --------------- --------------- ---------------
Total liabilities 11,763,090 9,801,082 47,663,916 513,490,979
--------------- --------------- --------------- ---------------
NET ASSETS $ 108,640,574 $ 76,057,647 $ 289,679,113 $ 2,510,389,470
=============== =============== =============== ===============
NET ASSETS WERE COMPRISED OF:
Paid-in capital $ 280,772,575 $ 119,609,239 $ 541,343,602 $ 3,503,055,413
Undistributed net investment income (accumulated net
investment loss) 204,204 (55,453) (658,797) 6,012,233
Accumulated net realized loss on investments and foreign
currencies (net of foreign tax on the sale of Indian
investments of $2,200, $0, $0 and $0, respectively -- see
Note 2) (183,437,432) (40,250,115) (270,513,550) (127,614,187)
Net unrealized appreciation (depreciation) of investments
and foreign currencies 11,101,227 (3,246,024) 19,507,858 (871,063,989)
--------------- --------------- --------------- ---------------
NET ASSETS $ 108,640,574 $ 76,057,647 $ 289,679,113 $ 2,510,389,470
=============== =============== =============== ===============
* Cost of securities $ 84,504,194 $ 71,828,629 $ 248,851,098 $ 3,323,915,951
** Cost of foreign currencies $ 1,873,068 $ 399,087 $ 312,730 $ --
See Accompanying Notes to Financial Statements
19
STATEMENTS OF ASSETS AND LIABILITIES as of April 30, 2003 (Unaudited)
(Continued)
- --------------------------------------------------------------------------------
ING
ING INTERNATIONAL ING
EMERGING ING SMALLCAP INTERNATIONAL
COUNTRIES INTERNATIONAL GROWTH VALUE
FUND FUND FUND FUND
------------- ------------- -------------- ----------------
CLASS A:
Net assets $ 62,407,962 $ 35,868,055 $ 126,780,868 $ 1,259,957,616
Shares authorized unlimited unlimited unlimited unlimited
Par value $ 0.00 $ 0.00 $ 0.00 $ 0.01
Shares outstanding 4,916,851 5,126,485 6,757,650 122,777,088
Net asset value and redemption price per share $ 12.69 $ 7.00 $ 18.76 $ 10.26
Maximum offering price per share (5.75%)(1) $ 13.46 $ 7.43 $ 19.90 $ 10.89
CLASS B:
Net assets $ 13,574,616 $ 10,257,951 $ 48,600,567 $ 340,061,027
Shares authorized unlimited unlimited unlimited unlimited
Par value $ 0.00 $ 0.00 $ 0.00 $ 0.01
Shares outstanding 1,076,882 1,502,174 2,477,373 33,648,128
Net asset value and redemption price per share(2) $ 12.61 $ 6.83 $ 19.62 $ 10.11
Maximum offering price per share $ 12.61 $ 6.83 $ 19.62 $ 10.11
CLASS C:
Net assets $ 8,914,639 $ 12,271,213 $ 41,734,293 $ 514,362,194
Shares authorized unlimited unlimited unlimited unlimited
Par value $ 0.00 $ 0.00 $ 0.00 $ 0.01
Shares outstanding 743,198 1,796,508 2,320,373 51,009,083
Net asset value and redemption price per share(2) $ 11.99 $ 6.83 $ 17.99 $ 10.08
Maximum offering price per share $ 11.99 $ 6.83 $ 17.99 $ 10.08
CLASS I:
Net assets n/a $ 9,090,876 n/a $ 370,828,123
Shares authorized n/a unlimited n/a unlimited
Par value n/a $ 0.00 n/a $ 0.01
Shares outstanding n/a 1,303,502 n/a 36,113,525
Net asset value and redemption price per share n/a $ 6.97 n/a $ 10.27
Maximum offering price per share n/a $ 6.97 n/a $ 10.27
CLASS M:
Net assets $ 979,892 n/a n/a n/a
Shares authorized unlimited n/a n/a n/a
Par value $ 0.00 n/a n/a n/a
Shares outstanding 77,940 n/a n/a n/a
Net asset value and redemption price per share $ 12.57 n/a n/a n/a
Maximum offering price per share (3.50%)(3) $ 13.03 n/a n/a n/a
CLASS Q:
Net assets $ 22,763,465 $ 8,569,552 $ 72,563,385 $ 25,180,510
Shares authorized unlimited unlimited unlimited unlimited
Par value $ 0.00 $ 0.00 $ 0.00 $ 0.01
Shares outstanding 1,740,125 1,232,429 3,625,005 2,453,204
Net asset value and redemption price per share $ 13.08 $ 6.95 $ 20.02 $ 10.26
Maximum offering price per share $ 13.08 $ 6.95 $ 20.02 $ 10.26
- ----------
(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
20
STATEMENTS OF ASSETS AND LIABILITIES as of April 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
ING ING ING
PRECIOUS ING GLOBAL WORLDWIDE
METALS RUSSIA REAL ESTATE GROWTH
FUND FUND FUND FUND
------------- ------------- ------------ --------------
ASSETS:
Investments in securities, at value* $ 59,973,242 $ 99,142,119 $ 28,073,668 $ 144,818,937
Cash 12,169,482 14,055,965 1,950,829 7,996,466
Foreign currencies at value** -- -- -- 402,385
Receivables:
Investment securities sold 901,049 847,312 125,048 373,044
Fund shares sold 267,526 839,428 454,085 2,442,345
Dividends and interest 41,898 275,731 184,830 669,846
Other investments 4,181,950 8,795,850 90,000 7,090,464
Prepaid expenses 12,647 10,596 25,660 35,312
Reimbursement due from manager -- -- 16,793 12,970
------------- ------------- ------------ --------------
Total assets 77,547,794 123,967,001 30,920,913 163,841,769
------------- ------------- ------------ --------------
LIABILITIES:
Payable for investment securities purchased -- 480,000 513,000 2,496,517
Payable for fund shares redeemed 765,676 192,745 -- 1,719,553
Payable for securities loaned 4,181,950 8,795,850 90,000 7,090,464
Payable to affiliates 80,140 129,937 33,289 213,311
Payable for trustee fees 130,382 61,445 872 63,090
Other accrued expenses and liabilities 124,735 186,489 152,031 374,573
------------- ------------- ------------ --------------
Total liabilities 5,282,883 9,846,466 789,192 11,957,508
------------- ------------- ------------ --------------
NET ASSETS $ 72,264,911 $ 114,120,535 $ 30,131,721 $ 151,884,261
============= ============= ============ ==============
NET ASSETS WERE COMPRISED OF:
Paid-in capital $ 130,412,283 $ 148,673,481 $ 28,619,714 $ 390,671,652
Undistributed net investment income (accumulated net
investment loss) (190,232) (542,834) 334,156 (599,382)
Accumulated net realized loss on investments and foreign
currencies (66,513,091) (61,049,430) (603,859) (245,228,918)
Net unrealized appreciation of investments and foreign
currencies 8,555,951 27,039,318 1,781,710 7,040,909
------------- ------------- ------------ --------------
NET ASSETS $ 72,264,911 $ 114,120,535 $ 30,131,721 $ 151,884,261
============= ============= ============ ==============
* Cost of securities $ 51,419,253 $ 72,102,801 $ 26,294,575 $ 137,828,704
** Cost of foreign currencies $ -- $ -- $ -- $ 402,335
See Accompanying Notes to Financial Statements
21
STATEMENTS OF ASSETS AND LIABILITIES as of April 30, 2003 (Unaudited)
(Continued)
- --------------------------------------------------------------------------------
ING ING ING
PRECIOUS ING GLOBAL WORLDWIDE
METALS RUSSIA REAL ESTATE GROWTH
FUND FUND FUND FUND
------------- -------------- ------------ -------------
CLASS A:
Net assets $ 72,264,911 $ 114,120,535 $ 27,611,198 $ 65,569,613
Shares authorized unlimited unlimited unlimited unlimited
Par value $ 0.00 $ 0.00 $ 0.00 $ 0.00
Shares outstanding 15,300,694 7,571,761 2,571,411 5,298,562
Net asset value and redemption price per share $ 4.72 $ 15.07 $ 10.74 $ 12.37
Maximum offering price per share (5.75%)(1) $ 5.01 $ 15.99 $ 11.40 $ 13.12
CLASS B:
Net assets n/a n/a $ 757,390 $ 33,701,081
Shares authorized n/a n/a unlimited unlimited
Par value n/a n/a $ 0.00 $ 0.00
Shares outstanding n/a n/a 78,244 2,473,128
Net asset value and redemption price per share(2) n/a n/a $ 9.68 $ 13.63
Maximum offering price per share n/a n/a $ 9.68 $ 13.63
CLASS C:
Net assets n/a n/a $ 1,763,133 $ 43,446,681
Shares authorized n/a n/a unlimited unlimited
Par value n/a n/a $ 0.00 $ 0.00
Shares outstanding n/a n/a 176,566 3,583,072
Net asset value and redemption price per share(2) n/a n/a $ 9.99 $ 12.13
Maximum offering price per share n/a n/a $ 9.99 $ 12.13
CLASS Q:
Net assets n/a n/a n/a $ 9,166,886
Shares authorized n/a n/a n/a unlimited
Par value n/a n/a n/a $ 0.00
Shares outstanding n/a n/a n/a 637,100
Net asset value and redemption price per share n/a n/a n/a $ 14.39
Maximum offering price per share n/a n/a n/a $ 14.39
- ----------
(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
22
STATEMENTS OF OPERATIONS for six months ended April 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
ING
ING INTERNATIONAL ING
EMERGING ING SMALLCAP INTERNATIONAL
COUNTRIES INTERNATIONAL GROWTH VALUE
FUND FUND FUND FUND
------------ ------------ ----------- ------------
INVESTMENT INCOME:
Dividends (net of foreign taxes)* $ 1,405,446 $ 892,946 $ 2,348,533 $ 30,341,069
Interest 10,125 27,715 54,851 72,565
Other 1,429 881 10 4,243
Securities loaned income 6,878 7,144 90,607 252,464
----------- ------------ ----------- ------------
Total investment income 1,423,878 928,686 2,494,001 30,670,341
----------- ------------ ----------- ------------
EXPENSES:
Investment advisory and management fees 646,101 367,148 1,402,710 12,765,885
Distribution and service fees:
Class A 103,013 44,819 208,784 1,915,947
Class B 70,824 50,365 247,675 1,763,850
Class C 43,813 61,761 215,373 2,662,929
Class M 3,960 -- -- --
Class Q 25,660 9,247 85,784 33,031
Transfer agent fees:
Class A 76,818 51,273 164,838 1,014,104
Class B 18,485 14,406 68,408 284,234
Class C 11,436 17,663 59,447 429,114
Class I -- 271 -- 5,286
Class M 1,378 -- -- --
Class Q 3,490 259 8,234 561
Administrative service fees 51,688 36,715 140,271 2,076,609
Custody and accounting expense 85,160 23,515 133,584 546,639
Shareholder reporting expense 36,087 14,165 74,009 701,608
Registration fees 47,466 33,012 43,133 87,171
Professional fees 16,230 5,148 27,287 242,381
Trustee fees 2,148 1,039 9,041 61,902
Miscellaneous expense 20,224 3,259 10,387 65,646
----------- ------------ ----------- ------------
1,263,981 734,065 2,898,965 24,656,897
Less:
Net waived and reimbursed fees 44,307 15,106 -- --
----------- ------------ ----------- ------------
Total expenses 1,219,674 718,959 2,898,965 24,656,897
----------- ------------ ----------- ------------
Net investment income (loss) 204,204 209,727 (404,964) 6,013,444
----------- ------------ ----------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCIES:
Net realized loss on investments
(net of foreign tax on sale of Indian
investments of $2,200, $0, $0, and $0,
respectively -- Note 2) (3,079,378) (4,386,774) (42,266,358) (127,531,190)
Net realized gain (loss) on foreign currencies (71,799) (3,791) 11,380,711 (89,159)
Net change in unrealized appreciation (depreciation) of
investments and foreign currencies 5,675,488 3,267,014 38,114,066 143,916,858
----------- ------------ ----------- ------------
Net realized and unrealized gain (loss) on investments
and foreign currencies 2,524,311 (1,123,551) 7,228,419 16,296,509
----------- ------------ ----------- ------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 2,728,515 $ (913,824) $ 6,823,455 $ 22,309,953
=========== ============ =========== ============
* Foreign taxes $ 193,457 $ 103,760 $ 309,723 $ 4,967,798
See Accompanying Notes to Financial Statements
23
STATEMENTS OF OPERATIONS for six months ended April 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
ING ING ING
PRECIOUS ING GLOBAL WORLDWIDE
METALS RUSSIA REAL ESTATE GROWTH
FUND FUND FUND FUND
------------- ------------ ----------- ------------
INVESTMENT INCOME:
Dividends (net of foreign taxes)* $ 353,046 $ 402,734 $ 1,152,530 $ 1,064,207
Interest 38,907 15,493 2,879 24,159
Other 30,533 -- -- --
Securities loaned income 22,137 5,963 8,513 7,147
------------- ------------ ----------- ------------
Total investment income 444,623 424,190 1,163,922 1,095,513
------------- ------------ ----------- ------------
EXPENSES:
Investment advisory and management fees 357,978 565,932 141,005 778,225
Distribution and service fees:
Class A 98,664 113,186 32,511 113,390
Class B -- -- 3,737 177,695
Class C -- -- 7,223 231,861
Class Q -- -- -- 11,175
Transfer agent fees:
Class A 63,379 45,875 21,067 91,036
Class B -- -- 605 49,932
Class C -- -- 1,170 65,153
Class Q -- -- -- 4,202
Administrative service fees 39,466 45,275 14,100 77,823
Custody and accounting expense 28,061 128,991 22,689 49,298
Shareholder reporting expense 24,254 18,100 10,344 41,213
Registration fees 11,314 16,859 24,627 32,765
Professional fees 7,769 15,140 3,939 17,670
Trustee fees 1,287 3,913 767 3,043
Offering expense -- -- 68,185 --
Miscellaneous expense 2,683 8,554 2,130 6,893
------------- ------------ ----------- ------------
634,855 961,825 354,099 1,751,374
Less:
Net waived and reimbursed fees -- -- 98,460 56,479
------------- ------------ ----------- ------------
Total expenses 634,855 961,825 255,639 1,694,895
------------- ------------ ----------- ------------
Net investment income (loss) (190,232) (537,635) 908,283 (599,382)
------------- ------------ ----------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments 16,284,152 1,648,194 (602,112) (9,687,905)
Net realized gain (loss) on foreign currencies (130,089) -- 1,063 (21,825)
Net change in unrealized appreciation (depreciation) of
investments and foreign currencies (10,162,320) 20,372,664 1,825,958 9,846,350
------------- ------------ ----------- ------------
Net realized and unrealized gain (loss) on investments
and foreign currencies 5,991,743 22,020,858 1,224,909 136,620
------------- ------------ ----------- ------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 5,801,511 $ 21,483,223 $ 2,133,192 $ (462,762)
============= ============ =========== ============
* Foreign taxes $ 23,778 $ 74,885 $ 69,736 $ 116,035
See Accompanying Notes to Financial Statements
24
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
- --------------------------------------------------------------------------------
ING ING
EMERGING COUNTRIES INTERNATIONAL
FUND FUND
----------------------------- -----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------- ------------- ------------- -------------
FROM OPERATIONS:
Net investment income (loss) $ 204,204 $ (834,118) $ 209,727 $ (217,920)
Net realized loss on investments and foreign currencies (3,151,177) (21,740,055) (4,390,565) (10,118,464)
Net change in unrealized appreciation (depreciation) of
investments and foreign currencies 5,675,488 32,027,083 3,267,014 (2,700,015)
------------- ------------- ------------- -------------
Increase (decrease) in net assets resulting from operations 2,728,515 9,452,910 (913,824) (13,036,399)
------------- ------------- ------------- -------------
FROM DIVIDENDS TO SHAREHOLDERS:
Net investment income:
Class A -- (1,786) (168,248) --
Class C -- -- (1,612) --
Class I -- -- (50,182) --
Class M -- -- (45,138) --
Class Q -- (1,105) -- --
------------- ------------- ------------- -------------
Total distributions -- (2,891) (265,180) --
------------- ------------- ------------- -------------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 152,759,856 216,145,026 80,387,455 102,371,057
Dividends reinvested -- 2,537 238,238 --
Redemption fee proceeds -- -- 173,797 132,507
Net assets received in connection with
reorganization (Note 13) -- 10,040,276 -- 37,276,905
------------- ------------- ------------- -------------
152,759,856 226,187,839 80,799,490 139,780,469
Cost of shares redeemed (155,835,956) (248,063,246) (82,839,974) (88,437,578)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets resulting from
capital share transactions (3,076,100) (21,875,407) (2,040,484) 51,342,891
------------- ------------- ------------- -------------
Net increase (decrease) in net assets (347,585) (12,425,388) (3,219,488) 38,306,492
Net assets, beginning of period 108,988,159 121,413,547 79,277,135 40,970,643
------------- ------------- ------------- -------------
Net assets, end of period $ 108,640,574 $ 108,988,159 $ 76,057,647 $ 79,277,135
============= ============= ============= =============
Undistributed net investment income (accumulated
net investment loss) $ 204,204 $ -- $ (55,453) $ --
============= ============= ============= =============
See Accompanying Notes to Financial Statements
25
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
- --------------------------------------------------------------------------------
ING
INTERNATIONAL ING
SMALLCAP GROWTH INTERNATIONAL
GROWTH FUND VALUE FUND
--------------------------------- ---------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
--------------- --------------- --------------- ---------------
FROM OPERATIONS:
Net investment income (loss) $ (404,964) $ (1,729,234) $ 6,013,444 $ 11,052,808
Net realized gain (loss) on investments and foreign
currencies (30,885,647) (53,391,247) (127,620,349) 52,071,566
Net change in unrealized appreciation (depreciation) of
investments and foreign currencies 38,114,066 1,153,419 143,916,858 (564,489,564)
--------------- --------------- --------------- ---------------
Increase (decrease) in net assets resulting from
operations 6,823,455 (53,967,062) 22,309,953 (501,365,190)
--------------- --------------- --------------- ---------------
FROM DIVIDENDS 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 from 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 392,413,421 814,783,487 174,747,454 2,229,434,327
Dividends reinvested -- -- 47,901,712 48,205,060
--------------- --------------- --------------- ---------------
392,413,421 814,783,487 222,649,166 2,277,639,387
Cost of shares redeemed (402,530,373) (856,597,344) (379,719,750) (1,485,994,863)
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets resulting from
capital share transactions (10,116,952) (41,813,857) (157,070,584) 791,644,524
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets (3,293,497) (95,780,919) (197,811,259) 225,459,156
Net assets, beginning of period 292,972,610 388,753,529 2,708,200,729 2,482,741,573
--------------- --------------- --------------- ---------------
Net assets, end of period $ 289,679,113 $ 292,972,610 $ 2,510,389,470 $ 2,708,200,729
=============== =============== =============== ===============
Undistributed net investment income (accumulated
net investment loss) $ (658,797) $ (253,833) $ 6,012,233 $ 10,440,192
=============== =============== =============== ===============
See Accompanying Notes to Financial Statements
26
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
- --------------------------------------------------------------------------------
ING ING
PRECIOUS METALS RUSSIA
FUND FUND
------------------------------ ------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------- ------------- ------------- -------------
FROM OPERATIONS:
Net investment income (loss) $ (190,232) $ (246,612) $ (537,635) $ 1,221,694
Net realized gain on investments and foreign currencies 16,154,063 13,345,790 1,648,194 10,582,073
Net change in unrealized appreciation (depreciation) of
investments and foreign currencies (10,162,320) 12,849,763 20,372,664 13,682,689
------------- ------------- ------------- -------------
Increase in net assets resulting from operations 5,801,511 25,948,941 21,483,223 25,486,456
------------- ------------- ------------- -------------
FROM DIVIDENDS 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 13,172,544 23,370,196 21,816,074 74,776,336
Dividends reinvested -- 276,307 760,437 --
Redemption fee proceeds -- -- 64,904 156,582
------------- ------------- ------------- -------------
13,172,544 23,646,503 22,641,415 74,932,918
Cost of shares redeemed (19,054,856) (37,510,436) (14,831,386) (63,780,444)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets resulting from
capital share transactions (5,882,312) (13,863,933) 7,810,029 11,152,474
------------- ------------- ------------- -------------
Net increase (decrease) in net assets (80,801) 11,782,390 28,462,809 36,638,930
Net assets, beginning of period 72,345,712 60,563,322 85,657,726 49,018,796
------------- ------------- ------------- -------------
Net assets, end of period $ 72,264,911 $ 72,345,712 $ 114,120,535 $ 85,657,726
============= ============= ============= =============
Undistributed net investment income (accumulated
net investment loss) $ (190,232) $ -- $ (542,834) $ 825,244
============= ============= ============= =============
See Accompanying Notes to Financial Statements
27
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
- --------------------------------------------------------------------------------
ING ING
GLOBAL REAL WORLDWIDE
ESTATE FUND GROWTH FUND
-------------------------------- -----------------------------
SIX MONTHS PERIOD SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002(1) 2003 2002
------------- ------------- ------------- -------------
FROM OPERATIONS:
Net investment income (loss) $ 908,283 $ 1,133,098 $ (599,382) $ (3,001,356)
Net realized gain (loss) on investments and foreign
currencies (601,049) 404,577 (9,709,730) (74,277,585)
Net change in unrealized appreciation (depreciation) of
investments and foreign currencies 1,825,958 (44,248) 9,846,350 31,285,489
------------- ------------- ------------- -------------
Increase (decrease) in net assets resulting from operations 2,133,192 1,493,427 (462,762) (45,993,452)
------------- ------------- ------------- -------------
FROM DIVIDENDS TO SHAREHOLDERS:
Net investment income:
Class A (704,055) (909,962) -- --
Class B (19,651) (9,777) -- --
Class C (45,793) (22,090) -- --
Net realized gain from investments:
Class A (382,139) -- -- --
Class B (11,315) -- -- --
Class C (30,471) -- -- --
------------- ------------- ------------- -------------
Total distributions (1,193,424) (941,829) -- --
------------- ------------- ------------- -------------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 1,390,205 29,722,567 163,398,894 188,403,422
Dividends reinvested 922,201 532,375 -- --
------------- ------------- ------------- -------------
2,312,406 30,254,942 163,398,894 188,403,422
Cost of shares redeemed (1,556,878) (2,370,115) (179,194,219) (300,460,131)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets resulting from capital
share transactions 755,528 27,884,827 (15,795,325) (112,056,709)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets 1,695,296 28,436,425 (16,258,087) (158,050,161)
Net assets, beginning of period 28,436,425 -- 168,142,348 326,192,509
------------- ------------- ------------- -------------
Net assets, end of period $ 30,131,721 $ 28,436,425 $ 151,884,261 $ 168,142,348
============= ============= ============= =============
Undistributed net investment income (accumulated net
investment loss) $ 334,156 $ 195,372 $ (599,382) $ --
============= ============= ============= =============
- ----------
(1) Commenced operations on November 5, 2001
See Accompanying Notes to Financial Statements
28
ING EMERGING COUNTRIES FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
CLASS A
-------------------------------------------------------------------------------
SIX FOUR THREE
MONTHS MONTHS YEAR MONTHS YEAR
ENDED YEAR ENDED OCTOBER 31, ENDED ENDED ENDED ENDED
APRIL 30, ---------------------- OCTOBER 31, JUNE 30, JUNE 30, MARCH 31,
2003 2002 2001 2000(5)(6) 2000 1999(1) 1999
------ ------ ------ ---------- ------ ------- ------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 12.44 11.87 16.33 20.17 16.74 13.43 17.39
Income from investment operations:
Net investment income (loss) $ 0.03 (0.10) (0.02) (0.24) (0.20) (0.05) (0.06)
Net realized and unrealized gain
(loss) on investments (net of Indian tax) $ 0.22 0.67 (4.44) (3.60) 3.63 3.36 (3.81)
Total from investment operations $ 0.25 0.57 (4.46) (3.84) 3.43 3.31 (3.87)
Less distributions from:
Net investment income $ -- 0.00* -- -- -- -- 0.02
Net realized gain on investments $ -- -- -- -- -- -- 0.07
Total distributions $ -- -- -- -- -- -- 0.09
Net asset value, end of period $ 12.69 12.44 11.87 16.33 20.17 16.74 13.43
TOTAL RETURN(2): % 2.01 4.80 (27.31) (19.04) 20.49 24.65 (22.23)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 62,408 62,063 67,247 59,541 75,311 53,483 47,180
Ratios to average net assets:
Net expenses after expense
reimbursement/recoupment(3)(4) % 2.28 2.32 2.32 2.23 2.19 2.13 2.27
Gross expenses prior to expense
reimbursement/recoupment(3) % 2.36 2.26 2.33 2.38 2.34 2.66 2.56
Net investment income (loss) after
expense reimbursement/recoupment(3)(4) % 0.48 (0.56) (0.16) (1.31) (1.15) (1.30) (0.25)
Portfolio turnover rate % 54 124 74 94 211 67 213
CLASS B
-------------------------------------------------------------------------------
SIX FOUR THREE
MONTHS MONTHS YEAR MONTHS YEAR
ENDED YEAR ENDED OCTOBER 31, ENDED ENDED ENDED ENDED
APRIL 30, ---------------------- OCTOBER 31, JUNE 30, JUNE 30, MARCH 31,
2003 2002 2001 2000(5)(6) 2000 1999(1) 1999
------ ------ ------ ---------- ------ ------- ------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 12.39 11.85 16.41 20.30 16.98 13.64 17.64
Income from investment operations:
Net investment loss $ (0.01) (0.16) (0.11) (0.23) (0.35) (0.07) (0.22)
Net realized and unrealized gain
(loss) on investments (net of Indian tax) $ 0.23 0.70 (4.45) (3.66) 3.67 3.41 (3.70)
Total from investment operations $ 0.22 0.54 (4.56) (3.89) 3.32 3.34 (3.92)
Less distributions from:
Net realized gain on investments $ -- -- -- -- -- -- 0.08
Total distributions $ -- -- -- -- -- -- 0.08
Net asset value, end of period $ 12.61 12.39 11.85 16.41 20.30 16.98 13.64
TOTAL RETURN(2): % 1.78 4.56 (27.79) (19.16) 19.55 24.49 (22.23)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 13,575 15,150 14,637 22,707 30,322 26,342 22,338
Ratios to average net assets:
Net expenses after expense
reimbursement/recoupment(3)(4) % 2.93 2.97 2.99 2.98 2.84 2.75 2.91
Gross expenses prior to expense
reimbursement/recoupment(3) % 3.01 2.91 3.00 3.12 2.99 3.28 3.20
Net investment loss after
expense reimbursement/recoupment(3)(4) % (0.18) (1.23) (0.72) (1.01) (1.80) (1.92) (0.80)
Portfolio turnover rate % 54 124 74 94 211 67 213
- ----------
(1) 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.
(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 Manager has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
(5) Effective October 1, 2000, ING Investments, LLC became the Investment
Manager of the Fund, replacing Nicholas-Applegate Capital Management.
(6) The Fund changed its fiscal year-end from June 30 to October 31.
* Amount represents less than $0.01 per share.
See Accompanying Notes to Financial Statements
29
ING EMERGING COUNTRIES FUND (UNAUDITED) (CONTINUED) FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
CLASS C CLASS M
----------------------------------------------------------------------- ------------------
SIX FOUR THREE SIX
MONTHS MONTHS YEAR MONTHS YEAR MONTHS PERIOD
ENDED YEAR ENDED OCT. 31, ENDED ENDED ENDED ENDED ENDED ENDED
APRIL 30, ------------------- OCT. 31, JUNE 30, JUNE 30, MARCH 31, APRIL 30, OCT. 31,
2003 2002 2001 2000(5)(6) 2000 1999(1) 1999 2003 2002(7)
------ ------ ------ ---------- ------ ------- ------ ------ -------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning
of period $ 11.79 11.41 15.81 19.56 16.35 13.14 16.98 12.35 12.39
Income from investment
operations:
Net investment loss $ (0.01) (0.25) (0.12) (0.22) (0.32) (0.07) (0.27) 0.01 (0.03)
Net realized and unrealized
gain (loss)
on investments (net of Indian tax) $ 0.21 0.63 (4.28) (3.53) 3.53 3.28 (3.49) 0.21 (0.01)
Total from investment operations $ 0.20 0.38 (4.40) (3.75) 3.21 3.21 (3.76) 0.22 (0.04)
Less distributions from:
Net realized gain on investments $ -- -- -- -- -- -- 0.08 -- --
Total distributions $ -- -- -- -- -- -- 0.08 -- --
Net asset value, end of period $ 11.99 11.79 11.41 15.81 19.56 16.35 13.14 12.57 12.35
Total Return(2): % 1.70 3.33 (27.83) (19.17) 19.63 24.43 (22.21) 1.78 (0.32)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 8,915 9,519 12,746 22,456 29,610 24,230 19,246 980 1,125
Ratios to average net assets:
Net expenses after expense
reimbursement/recoupment(3)(4) % 2.93 2.97 2.99 2.98 2.84 2.75 2.90 2.68 2.73
Gross expenses prior to expense
reimbursement/recoupment(3) % 3.02 2.91 3.00 3.09 2.99 3.28 3.19 2.76 2.73
Net investment loss after expense
reimbursement/recoupment(3)(4) % (0.18) (1.20) (0.73) (0.95) (1.80) (1.92) (0.77) 0.09 (1.32)
Portfolio turnover rate % 54 124 74 94 211 67 213 54 124
- ----------
(1) 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.
(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 Manager has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
(5) Effective October 1, 2000, ING Investments, LLC became the Investment
Manager of the Fund, replacing Nicholas-Applegate Capital Management.
(6) The Fund changed its fiscal year-end from June 30 to October 31.
(7) Class M commenced offering of shares on August 5, 2002.
See Accompanying Notes to Financial Statements
30
ING INTERNATIONAL FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
CLASS A
-------------------------------------------------------------------------
SIX MONTHS TEN MONTHS
ENDED YEAR ENDED OCTOBER 31, ENDED YEAR ENDED DECEMBER 31,
APRIL 30, ---------------------- OCTOBER 31, -----------------------
2003 2002 2001 2000(4)(6) 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 from investment operations:
Net investment income (loss) $ 0.02 (0.02) (0.05) 0.19 (0.01) 0.17
Net realized and unrealized gain (loss) on
investments $ (0.07) (1.04) (2.14) (1.48) 5.46 1.74
Total from investment operations $ (0.05) (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 $ 0.03 0.02(7) -- -- -- --
Net asset value, end of period $ 7.00 7.05 8.09 11.22 13.45 11.61
TOTAL RETURN(2): % (0.49) (12.86) (21.38) (10.22) 47.85 19.02
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 35,868 43,314 37,489 30,653 25,304 24,000
Ratios to average net assets:
Net expenses after expense reimbursement(3)(5) % 1.81 2.14 2.51 2.23 1.98 1.75
Gross expenses prior to expense reimbursement(3) % 1.85 2.18 2.51 2.23 1.98 2.25
Net investment income (loss) after expense
reimbursement(3)(5) % 0.62 (0.32) (0.74) (0.23) (0.21) 0.35
Portfolio turnover rate % 45 126 169 113 144 144
CLASS B
-----------------------------------------------
SIX MONTHS AUGUST 22,
ENDED YEAR ENDED OCTOBER 31, 2000(1) TO
APRIL 30, ---------------------- OCTOBER 31,
2003 2002 2001 2000(4)
------ ------ ------ -------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 6.91 8.03 11.19 12.28
Income from investment operations:
Net investment income (loss) $ 0.00* (0.02) (0.62) (0.05)
Net realized and unrealized loss on investments $ (0.08) (1.10) (1.60) (1.04)
Total from investment operations $ (0.08) (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 $ 6.83 6.91 8.03 11.19
TOTAL RETURN(2): % (1.16) (13.95) (21.74) (8.88)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 10,258 10,246 1,961 80
Ratios to average net assets:
Net expenses after expense reimbursement(3)(5) % 2.56 2.76 3.32 2.76
Gross expenses prior to expense reimbursement(3) % 2.60 2.83 3.32 2.76
Net investment income (loss) after expense
reimbursement(3)(5) % 0.01 (1.10) (1.40) (7.02)
Portfolio turnover rate % 45 126 169 113
- ----------
(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 Fund changed its fiscal year-end from December 31 to October 31.
(5) The Investment Manager has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
(6) Effective July 26, 2000 ING Investments, LLC became the Investment Manager
of the Fund.
(7) Change to financial statement presentation made to reflect the adoption of
the AICPA Audit and Accounting Guide, Audits of Investment Companies.
* Amount is less than $0.01 per share.
See Accompanying Notes to Financial Statements
31
ING INTERNATIONAL FUND (UNAUDITED) (CONTINUED) FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
CLASS C
-------------------------------------------------
SIX MONTHS SEPTEMBER 15,
ENDED YEAR ENDED OCTOBER 31, 2000(1) TO
APRIL 30, ---------------------- OCTOBER 31,
2003 2002 2001 2000(4)
------ ------ ------ -------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 6.91 8.02 11.21 11.67
Income from investment operations:
Net investment income (loss) $ 0.00* (0.02) (0.62) (0.04)
Net realized and unrealized loss on investments $ (0.08) (1.09) (1.63) (0.42)
Total from investment operations $ (0.08) (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 $ 6.83 6.91 8.02 11.21
TOTAL RETURN(2): % (1.14) (13.84) (21.98) (3.94)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 12,271 12,384 1,514 85
Ratios to average net assets:
Net expenses after expense reimbursement(3)(5) % 2.56 2.76 3.31 2.96
Gross expenses prior to expense reimbursement(3) % 2.60 2.84 3.31 2.96
Net investment income (loss) after expense
reimbursement(3)(5) % 0.01 (1.18) (1.46) (3.97)
Portfolio turnover rate % 45 126 169 113
- ----------
(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 Fund changed its fiscal year-end from December 31 to October 31.
(5) The Investment Manager has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
(6) Effective July 26, 2000 ING Investments, LLC became the Investment Manager
of the Fund.
* Amount is less than $0.01 per share.
See Accompanying Notes to Financial Statements
32
ING INTERNATIONAL SMALLCAP GROWTH FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
CLASS A
-----------------------------------------------------------------------------
SIX FOUR THREE
MONTHS MONTHS YEAR MONTHS YEAR
ENDED YEAR ENDED OCTOBER 31, ENDED ENDED ENDED ENDED
APRIL 30, ---------------------- 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 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 $ 0.42 (3.43) (11.39) (4.76) 19.38 2.80 3.21
Total from investment operations $ 0.41 (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 $ 18.76 18.35 21.85 36.08 40.94 23.80 21.03
TOTAL RETURN(3): % 2.23 (16.02) (34.30) (11.90) 82.89 13.17 17.26
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 126,781 123,206 153,804 273,393 278,480 37,490 25,336
Ratios to average net assets:
Net expenses after expense
reimbursement (recoupment)(4)(5) % 1.94 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 loss after expense
reimbursement (recoupment)(4)(5) % (0.15) (0.32) (0.33) (0.80) (0.76) (0.69) (0.82)
Portfolio turnover rate % 55 149 143 56 164 44 146
CLASS B
-----------------------------------------------------------------------------
SIX FOUR THREE
MONTHS MONTHS YEAR MONTHS YEAR
ENDED YEAR ENDED OCTOBER 31, ENDED ENDED ENDED ENDED
APRIL 30, ---------------------- 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 from investment operations:
Net investment loss $ (0.14) (0.32) (0.32) (0.20) (0.37) (0.07) (0.20)
Net realized and unrealized gain (loss)
on investments $ 0.51 (3.49) (11.98) (5.02) 20.50 2.97 3.46
Total from investment operations $ 0.37 (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 $ 19.62 19.25 23.06 38.05 43.27 25.33 22.43
TOTAL RETURN(3): % 1.92 (16.52) (34.59) (12.05) 81.63 12.93 16.55
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 48,601 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) % 2.59 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) % (0.82) (0.98) (0.98) (1.46) (1.41) (1.34) (1.45)
Portfolio turnover rate % 55 149 143 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 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.
(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 Manager 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
33
ING INTERNATIONAL SMALLCAP GROWTH FUND (UNAUDITED) (CONTINUED) FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
CLASS C
-------------------------------------------------------------------------------
SIX FOUR THREE
MONTHS MONTHS YEAR MONTHS YEAR
ENDED YEAR ENDED OCTOBER 31, ENDED ENDED ENDED ENDED
APRIL 30, ---------------------- 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 from investment operations:
Net investment loss $ (0.15) (0.32) (0.38) (0.18) (0.31) (0.06) (0.10)
Net realized and unrealized gain (loss)
on investments $ 0.49 (3.17) (10.91) (4.60) 18.69 2.80 3.09
Total from investment operations $ 0.34 (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 $ 17.99 17.65 21.14 34.93 39.71 23.34 20.60
TOTAL RETURN(3): % 1.93 (16.51) (34.62) (12.04) 80.89 13.31 16.55
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 41,734 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) % 2.59 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) % (0.83) (0.99) (0.98) (1.46) (1.41) (1.34) (1.45)
Portfolio turnover rate % 55 149 143 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 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.
(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 Manager 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
34
ING INTERNATIONAL VALUE FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
CLASS A
---------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ---------------------------------------------------------
2003 2002 2001 2000 1999 1998
--------- --------- --------- --------- --------- ---------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 10.40 12.33 16.68 14.75 11.88 10.90
Income from investment operations:
Net investment income $ 0.03 0.06 0.11 0.15 0.08 0.11
Net realized and unrealized gain (loss) on
investments $ 0.08 (1.64) (2.44) 2.58 3.58 0.96
Total from investment operations $ 0.11 (1.58) (2.33) 2.73 3.66 1.07
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 0.09
Total distributions $ 0.25 0.35 2.02 0.80 0.79 0.09
Net asset value, end of period $ 10.26 10.40 12.33 16.68 14.75 11.88
TOTAL RETURN(1): % 1.11 (13.31) (15.89) 18.56 32.55 9.86
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 1,259,958 1,356,334 1,195,760 920,591 451,815 211,018
Ratios to average net assets:
Expenses(2) % 1.76 1.76 1.67 1.64 1.68 1.74
Net investment income(2) % 0.64 0.58 0.88 1.14 0.92 1.62
Portfolio turnover rate % 3 20 15 34 29 32
CLASS B
---------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ---------------------------------------------------------
2003 2002 2001 2000 1999 1998
--------- --------- --------- --------- --------- ---------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 10.23 12.13 16.43 14.57 11.76 10.87
Income from investment operations:
Net investment income (loss) $ 0.00* (0.02) 0.02 0.07 0.01 0.07
Net realized and unrealized gain (loss) on
investments $ 0.08 (1.62) (2.41) 2.51 3.51 0.91
Total from investment operations $ 0.08 (1.64) (2.39) 2.58 3.52 0.98
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 0.09
Total distributions $ 0.20 0.26 1.91 0.72 0.71 0.09
Net asset value, end of period $ 10.11 10.23 12.13 16.43 14.57 11.76
TOTAL RETURN(1): % 0.81 (13.90) (16.48) 17.69 31.55 9.16
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 340,061 375,967 421,884 437,765 278,871 145,976
Ratios to average net assets:
Expenses(2) % 2.46 2.45 2.37 2.34 2.41 2.47
Net investment income (loss)(2) % (0.07) (0.13) 0.16 0.45 0.18 0.69
Portfolio turnover rate % 3 20 15 34 29 32
- ----------
(1) Total return is calculated assuming reinvestment of all dividends and
capital gains distributions at net asset value and excluding the deduction
of sales charges. Total return for less than one year is not annualized.
(2) Annualized for periods less than one year.
* Amount represents less than $0.01 per share.
See Accompanying Notes to Financial Statements
35
ING INTERNATIONAL VALUE FUND (UNAUDITED) (CONTINUED) FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
CLASS C
---------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, -------------------------------------------------------
2003 2002 2001 2000 1999 1998
------- ------- ------- ------- ------- -------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 10.21 12.10 16.41 14.55 11.75 10.86
Income from investment operations:
Net investment income (loss) $ 0.00* (0.02) 0.02 0.07 -- 0.06
Net realized and unrealized gain (loss) on
investments $ 0.07 (1.61) (2.41) 2.52 3.51 0.92
Total from investment operations $ 0.07 (1.63) (2.39) 2.59 3.51 0.98
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 0.09
Total distributions $ 0.20 0.26 1.92 0.73 0.71 0.09
Net asset value, end of period $ 10.08 10.21 12.10 16.41 14.55 11.75
TOTAL RETURN(1): % 0.71 (13.85) (16.52) 17.76 31.50 9.07
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 514,362 573,712 603,229 605,678 310,227 137,651
Ratios to average net assets:
Expenses(2) % 2.46 2.46 2.37 2.34 2.41 2.47
Net investment income (loss)(2) % (0.07) (0.13) 0.16 0.46 0.19 0.68
Portfolio turnover rate % 3 20 15 34 29 32
- ----------
(1) Total return is calculated assuming reinvestment of all dividends and
capital gains distributions at net asset value and excluding the deduction
of sales charges. Total return for less than one year is not annualized.
(2) Annualized for periods less than one year.
* Amount represents less than $0.01 per share.
See Accompanying Notes to Financial Statements
36
ING PRECIOUS METALS FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
CLASS A
-----------------------------------------------------------------------
SIX TEN
MONTHS MONTHS
ENDED YEAR ENDED OCTOBER 31, ENDED YEAR ENDED DECEMBER 31,
APRIL 30, ---------------------- OCTOBER 31, -----------------------
2003 2002 2001 2000(3)(4) 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 from investment operations:
Net investment income (loss) $ (0.01) (0.01) 0.02 0.01 (0.01) --
Net realized and unrealized gain (loss)
on investments $ 0.33 1.38 0.76 (1.03) 0.27 (0.21)
Total from investment operations $ 0.32 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 $ 4.72 4.40 3.05 2.27 3.29 3.03
TOTAL RETURN(1): % 7.27 45.01 34.56 (30.98) 8.58 (6.39)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 72,265 72,346 60,563 40,130 72,516 50,841
Ratios to average net assets:
Expenses(2) % 1.61 1.73 1.96 2.18 1.94 1.74
Net investment income (loss)(2) % (0.48) (0.33) 0.67 0.28 (0.02) 0.08
Portfolio turnover rate % 41 54 83 27 79 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. Total return for less than one year is not annualized.
(2) Annualized for periods less than one year.
(3) The Fund changed its fiscal year-end from December 31 to October 31.
(4) Effective July 26, 2000, ING Investments, LLC became the Investment Manager
of the Fund.
* Amount represents less than $0.01 per share.
See Accompanying Notes to Financial Statements
37
ING RUSSIA FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
CLASS A
-----------------------------------------------------------------------
SIX TEN
MONTHS MONTHS
ENDED YEAR ENDED OCTOBER 31, ENDED YEAR ENDED DECEMBER 31,
APRIL 30, ---------------------- OCTOBER 31, -----------------------
2003 2002 2001 2000(3)(5) 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 from investment operations:
Net investment income (loss) $ (0.07) 0.17 (0.04) (0.07) 0.18 0.15
Net realized and unrealized gain (loss)
on investments $ 3.10 3.92 0.93 0.48 3.99 (14.70)
Total from investment operations $ 3.03 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 $ 0.01 0.02(6) -- -- -- --
Net asset value, end of period $ 15.07 12.15 8.04 7.15 6.74 2.64
TOTAL RETURN(1): % 25.24 51.12 12.45 6.08 159.76 (82.99)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 114,121 85,658 49,019 53,637 59,011 19,147
Ratios to average net assets:
Net expenses after redemption fee proceeds and
expense reimbursement(2)(4) % 1.67 1.77 2.23 1.40 2.23 1.84
Gross expenses prior to redemption fee proceeds
and expense reimbursement(2) % 1.67 2.20 2.77 2.85 3.32 2.64
Net investment income (loss) after redemption fee
proceeds and expense reimbursement(2)(4) % (0.93) 1.33 (0.56) (0.90) 4.39 1.36
Portfolio turnover rate % 3 32 28 52 91 66
- ----------
(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. Total return for less than one year is not annualized.
(2) Annualized for periods less than one year.
(3) The Fund changed its fiscal year-end from December 31 to October 31.
(4) The Investment Manager has agreed to limit expenses, (excluding, interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years. Redemption fee proceeds are
offset against custody and redemption services.
(5) Effective July 26, 2000 ING Investments, LLC became the Investment Manager
of the Fund.
(6) Change to financial statement presentation made to reflect the adoption of
the AICPA Audit and Accounting Guide, Audits of Investment Companies.
See Accompanying Notes to Financial Statements
38
ING GLOBAL REAL ESTATE FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
--------------------- --------------------- ---------------------
SIX MONTHS PERIOD SIX MONTHS PERIOD SIX MONTHS PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
APRIL 30, OCT. 31, APRIL 30, OCT. 31, APRIL 30, OCT. 31,
2003 2002(1) 2003 2002(2) 2003 2002(3)
------- ------- ------- ------- ------- -------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 10.40 10.01 9.43 10.03 9.70 9.99
Income from investment operations:
Net investment income $ 0.34 0.45 0.28 0.16 0.25 0.19
Net realized and unrealized gain (loss) on investments $ 0.45 0.31 0.39 (0.58) 0.44 (0.31)
Total from investment operations $ 0.79 0.76 0.67 (0.42) 0.69 (0.12)
Less distributions from:
Net investment income $ 0.29 0.37 0.26 0.18 0.24 0.17
Net realized gain on investments 0.16 -- 0.16 -- 0.16 --
Total distributions $ 0.45 0.37 0.42 0.18 0.40 0.17
Net asset value, end of period $ 10.74 10.40 9.68 9.43 9.99 9.70
TOTAL RETURN(4): % 7.68 7.47 7.35 (4.29) 7.26 (1.24)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 27,611 25,440 757 677 1,763 2,320
Ratios to average net assets:
Net expenses after expense reimbursement(5)(6) % 1.75 1.76 2.50 2.52 2.50 2.52
Gross expenses prior to expense reimbursement(5) % 2.45 2.46 3.21 3.19 3.20 3.19
Net investment income after expense reimbursement(5)(6) % 6.48 4.12 5.61 3.74 6.24 3.51
Portfolio turnover rate % 55 141 55 141 55 141
- ----------
(1) The Fund commenced operations on November 5, 2001.
(2) Class B commenced offering of shares on March 15, 2002.
(3) Class C commenced offering of shares on January 8, 2002.
(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 than one year.
(6) The Investment Manager has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
See Accompanying Notes to Financial Statements
39
ING WORLDWIDE GROWTH FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
CLASS A
---------------------------------------------------------------------------------
SIX FOUR THREE
MONTHS MONTHS YEAR MONTHS YEAR
ENDED YEAR ENDED OCTOBER 31, ENDED ENDED ENDED ENDED
APRIL 30, ---------------------- OCTOBER 31, JUNE 30, JUNE 30, MARCH 31
2003 2002 2001 2000(5)(6) 2000 1999(1) 1999
------- ------- ------- ---------- ------- ------- -------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 12.36 15.45 26.36 29.98 23.58 21.39 19.33
Income from investment operations:
Net investment income (loss) $ 0.00*,** (0.12)* (0.11) (0.07) (0.15) -- (0.02)
Net realized and unrealized gain
(loss) on investments $ 0.01* (2.97)* (9.73) (3.55) 9.62 2.19 5.78
Total from investment operations $ (3.09) (9.84) (3.62) 9.47 2.19 5.76
Less distributions from:
Net investment income $ -- -- -- -- -- -- 0.06
Net realized gain on investments $ -- -- 0.77 -- 3.07 -- 3.64
Tax return of capital $ -- -- 0.30 -- -- -- --
Total distributions $ -- -- 1.07 -- 3.07 -- 3.70
Net asset value, end of period $ 12.37 12.36 15.45 26.36 29.98 23.58 21.39
TOTAL RETURN(2): % 0.16 (20.00) (38.80) (12.07) 42.43 10.24 33.56
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 65,570 69,478 134,152 246,590 235,341 66,245 49,134
Ratios to average net assets:
Net expenses after expense
reimbursement(recoupment)(3)(4) % 1.85 1.86 1.85 1.61 1.67 1.75 1.86
Gross expenses prior to expense
reimbursement(recoupment)(3) % 1.93 1.96 1.95 1.61 1.67 1.75 2.02
Net investment loss after expense
reimbursement(recoupment)(3)(4) % (0.44) (0.83) (0.65) (0.71) (0.79) (0.03) (0.62)
Portfolio turnover rate % 82 281 302 71 169 57 247
CLASS B
---------------------------------------------------------------------------------
SIX FOUR THREE
MONTHS MONTHS YEAR MONTHS YEAR
ENDED YEAR ENDED OCTOBER 31, ENDED ENDED ENDED ENDED
APRIL 30, ---------------------- OCTOBER 31, JUNE 30, JUNE 30, MARCH 31,
2003 2002 2001 2000(5)(6) 2000 1999(1) 1999
------- ------- ------- ---------- ------- ------- -------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 13.65 17.19 29.52 33.66 26.64 24.21 20.10
Income from investment operations:
Net investment loss $ (0.13) (0.25)* (0.31) (0.15) (0.28) (0.03) (0.08)
Net realized and unrealized gain
(loss) on investments $ 0.11 (3.29)* (10.82) (3.99) 10.76 2.46 6.25
Total from investment operations $ (0.02) (3.54) (11.13) (4.14) 10.48 2.43 6.17
Less distributions from:
Net investment income $ -- -- -- -- -- -- 0.01
Net realized gain on investments $ -- -- 0.86 -- 3.46 -- 2.05
Tax return of capital $ -- -- 0.34 -- -- -- --
Total distributions $ -- -- 1.20 -- 3.46 -- 2.06
Net asset value, end of period $ 13.63 13.65 17.19 29.52 33.66 26.64 24.21
TOTAL RETURN(2): % (0.29) (20.59) (39.19) (12.27) 41.54 10.04 32.74
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 33,701 38,603 71,943 126,756 130,988 27,938 18,556
Ratios to average net assets:
Net expenses after expense
reimbursement(recoupment)(3)(4) % 2.50 2.51 2.51 2.26 2.32 2.40 2.51
Gross expenses prior to expense
reimbursement(recoupment)(3) % 2.57 2.61 2.61 2.26 2.32 2.40 2.67
Net investment loss after expense
reimbursement(recoupment)(3)(4) % (1.09) (1.46) (1.31) (1.37) (1.44) (0.68) (1.31)
Portfolio turnover rate % 82 281 302 71 169 57 247
- ----------
(1) 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.
(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 Manager has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
(5) Effective October 1, 2000, ING Investments, LLC became the Investment
Manager of the Fund, replacing Nicholas-Applegate Capital Management.
(6) The Fund changed its fiscal year-end from June 30 to October 31.
* Per share data calculated using average number of shares outstanding
throughout the period.
** Amount represents less than $0.01 per share.
See Accompanying Notes to Financial Statements
40
ING WORLDWIDE GROWTH FUND (UNAUDITED) (CONTINUED) FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
CLASS C
--------------------------------------------------------------------------------
SIX FOUR THREE
MONTHS MONTHS YEAR MONTHS YEAR
ENDED YEAR ENDED OCTOBER 31, ENDED ENDED ENDED ENDED
APRIL 30, ---------------------- OCTOBER 31, JUNE 30, JUNE 30, MARCH 31,
2003 2002 2001 2000(5)(6) 2000 1999(1) 1999
------- ------- ------- ---------- ------- ------- -------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 12.14 15.29 26.26 29.92 23.69 21.52 19.05
Income from investment operations:
Net investment loss $ (0.28)* (0.22)* (0.40) (0.13) (0.33) (0.04) (0.20)
Net realized and unrealized gain (loss)
on investments $ 0.27* (2.93)* (9.50) (3.53) 9.65 2.21 5.83
Total from investment operations $ (0.01) (3.15) (9.90) (3.66) 9.32 2.17 5.63
Less distributions from:
Net investment income $ -- -- -- -- -- -- 0.01
Net realized gain on investments $ -- -- 0.77 -- 3.09 -- 3.15
Tax return of capital $ -- -- 0.30 -- -- -- --
Total distributions $ -- -- 1.07 -- 3.09 -- 3.16
Net asset value, end of period $ 12.13 12.14 15.29 26.26 29.92 23.69 21.52
TOTAL RETURN(2): % (0.17) (20.60) (39.20) (12.23) 41.48 10.08 32.73
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 43,447 51,868 102,919 213,843 239,432 111,250 98,470
Ratios to average net assets:
Net expenses after expense
reimbursement(recoupment)(3)(4) % 2.50 2.51 2.51 2.26 2.32 2.40 2.51
Gross expenses prior to expense
reimbursement(recoupment)(3) % 2.57 2.61 2.60 2.26 2.32 2.40 2.67
Net investment loss after
expense reimbursement
(recoupment)(3)(4) % (1.10) (1.46) (1.30) (1.37) (1.44) (0.68) (1.28)
Portfolio turnover rate % 82 281 302 71 169 57 247
- ----------
(1) 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.
(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 Manager has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
(5) Effective October 1, 2000, ING Investments, LLC became the Investment
Manager of the Fund, replacing Nicholas-Applegate Capital Management.
(6) The Fund changed its fiscal year-end from June 30 to October 31.
* Per share data calculated using average number of shares outstanding
throughout the period.
See Accompanying Notes to Financial Statements
41
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
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 seven separate series
("Portfolios"): ING Emerging Countries Fund ("Emerging Countries"), ING
International Fund ("International"), ING International SmallCap Growth Fund
("International SmallCap Growth"), ING Precious Metals Fund ("Precious Metals"),
ING Russia Fund ("Russia"), 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 ("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 semi-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-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.
On September 1, 2000, ING Groep N.V. (NYSE: ING) acquired ReliaStar, the
indirect parent company of Pilgrim Investments, Inc., Adviser to the Funds,
Pilgrim Securities, Inc., Distributor to the Funds and Pilgrim Group, Inc.,
Administrator to the Funds. In conjunction with the acquisition the Adviser,
Distributor and Administrator changed their names to ING Pilgrim Investments,
Inc., ING Pilgrim Securities, Inc., and ING Pilgrim Group, Inc., respectively,
effective September 8, 2000. Effective February 26, 2001, ING Pilgrim
Investments, Inc. was merged into the newly formed ING Pilgrim Investments, LLC.
Effective February 27, 2001, ING Pilgrim Group, Inc. was merged into the newly
formed ING Pilgrim Group, LLC. Effective March 1, 2002, the Adviser, Distributor
and Administrator changed their names to ING Investments, LLC, ING Funds
Distributor, Inc. and ING Funds Services, LLC, respectively. Effective October
1, 2002, the Distributor changed its name to ING Distributor, LLC.
REORGANIZATION. On December 17, 2001, the Boards of Trustees of each of the
various ING Funds approved plans of reorganization which were intended to
decrease the number of corporate entities under which the ING Funds are
organized (the "Reorganization") and to align the open-end funds with similar
open-end funds that share the same prospectus. The Reorganization only resulted
in a change in corporate form of some of the ING Funds, with no change in the
ING Funds. The Reorganization was consummated to align the ING Funds' corporate
structures and expedite the Funds' required filings with the SEC. Shareholders
of International Value did not approve the Reorganization; therefore the Fund
will remain part of ING Mayflower Trust.
As a result of the Reorganization, the following ING Funds Reorganized into
series of IMF: Global Real Estate Fund; International; Precious Metals and
Russia (collectively, the "Reorganizing Funds"). In this regard, the Board
approved the creation of new series of ING Mutual Funds to serve as "shells"
(the "Shell Funds") into which Reorganized Funds were reorganized. The plans of
the reorganization provided for, among other things, the transfer for assets and
liabilities ofthe Reorganizing Funds to the Shell Funds. Prior to September 21,
2002, the effective date of the Reorganization, the Shell Funds had only nominal
assets. For accounting purposes, each Reorganizing Fund is considered the
surviving
42
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
entity, and the financial highlights shown for periods prior to September 21,
2002 are the financial highlights of the Reorganizing Fund.
Prior to the Reorganization, Global Real Estate was organized as series of ING
Funds Trust, a Delaware business trust registered as an open-end, management
investment company. ING Funds Trust was organized on July 30, 1998.
Prior to the Reorganization, International Fund was the sole series of ING
International Fund, Inc. ING International Fund, Inc. was a corporation
organized under the laws of the State of Maryland on November 23, 1993.
Prior to the Reorganization, Precious Metals Fund was the sole series of ING
Precious Metals Fund, Inc. ING Precious Metals Fund, Inc. was a corporation
formed under the laws of the State of Maryland on May 11, 1988.
Prior to the Reorganization, Russia Fund was the sole series of ING Russia Fund,
Inc. ING Russia Fund, Inc. was a corporation organized under the laws of the
State of Maryland on November 20, 1995.
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 generally accepted accounting principles 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. Portfolio 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. Securities for which market quotations
are not readily available are valued at their respective fair values as
determined in good faith and in accordance with policies set by the Board
of Directors/Trustees ("Board"). Among 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 Portfolio
calculates its net asset value.
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.
B. SECURITY TRANSACTIONS AND REVENUE RECOGNITION. Securities transactions are
accounted for on the trade date. Realized gains and losses are reported on
the basis of identified cost of securities delivered. Interest income is
recorded on an accrual basis. 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
43
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gains or losses from investments. For securities which are
subject to foreign withholding tax upon disposition, liabilities are
recorded on the statement of assets and liabilities for the estimated tax
withholding based on the securities current market value. Upon disposition,
realized gains or losses on such securities are recorded net of foreign
withholding tax.
Reported net realized foreign exchange gains or losses arise from sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise
from changes in the value of assets and liabilities other than investments
in securities at fiscal year end, resulting from changes in the exchange
rate. Foreign security and currency transactions may involve certain
considerations and risks not typically associated with investing in U.S.
companies and the U.S. Government. 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
the U.S. Government.
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. 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
44
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
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.
F. DISTRIBUTIONS TO SHAREHOLDERS. The Funds record distributions to their
shareholders on ex-date. Each Fund pays dividends and capital gains, if any
annually.
G. FEDERAL INCOME TAXES. It is the policy of the Funds, to comply with the
requirements of the Internal Revenue Code that are applicable to regulated
investment companies and to distribute substantially all of their net
investment income and any net realized capital gains to their shareholders.
Therefore, a federal income tax provision is not required. Certain Funds
may utilize earnings and profits on redemption of shares as part of the
dividends paid deduction. 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 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. During
the year ended October 31, 2002, Emerging Countries Fund paid $110,768 of
taxes on gains on sales of Indian investments.
H. USE OF ESTIMATES. Management of the Funds has made certain estimates and
assumptions relating to the reporting of assets, liabilities, income, and
expenses to prepare these financial statements in conformity with generally
accepted accounting principles. Actual results could differ from these
estimates.
I. REPURCHASE AGREEMENTS. Each Fund may invest in repurchase agreements only
with government securities dealers recognized by the Board of Governors of
the Federal Reserve System 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 amount being invested by the Fund. 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.
J. SECURITIES LENDING. Each Fund has the option to temporarily loan 33 1/3%
(except Emerging Countries, International SmallCap Growth and Worldwide
Growth Funds which may only lend 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.
45
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
NOTE 3 -- INVESTMENT TRANSACTIONS
For the six months ended April 30, 2003, the cost of purchases and proceeds from
the sales of securities, excluding short-term securities, were as follows:
PURCHASES SALES
------------ ------------
Emerging Countries $ 52,819,476 $ 64,127,315
International 31,006,086 30,348,859
International SmallCap Growth 144,649,045 157,374,640
International Value 63,790,758 299,971,363
Precious Metals 27,922,089 43,149,784
Russia 2,479,280 7,802,261
Global Real Estate 15,083,685 16,151,535
Worldwide Growth 122,333,707 142,479,219
NOTE 4 -- REDEMPTION FEE INCOME
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 accounted for as an addition to paid-in capital. Total
redemption fee proceeds for the six months ended April 30, 2003 were $64,904 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.
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 accounted for as
an addition to paid-in capital. Total redemption fee proceeds for the six months
ended April 30, 2003 were $173,797 and are set forth in the statements 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 "Manager", the "Investment Manager", or the "Adviser"), a
wholly-owned subsidiary of ING Groep N.V. The investment management agreements
compensate the Manager with a fee, computed daily and payable monthly, based on
the average daily net assets of each Fund, at the following annual rates:
AS A PERCENT OF AVERAGE NET ASSETS
----------------------------------
Emerging Countries 1.25%
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 Real Estate 1.00%
Worldwide Growth 1.00% on first $500 million; 0.90% on next
$500 million; and 0.85% in excess of $1
billion
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.
Effective December 5, 2002, ING Investment Management Advisors B.V. (IIMA), a
registered investment advisor, serves as Sub-Adviser to the Russia Fund and 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. 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 semi-annually, 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") 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
46
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
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 O
------- ------- ------- ------- ------- -------
Emerging Countries 0.35% 1.00% 1.00% N/A 0.75% 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 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 six months ended April 30, 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 six months ended April 30, 2003, the Distributor
earned the following amounts in sales charges:
CLASS A CLASS B CLASS C CLASS M
SHARES SHARES SHARES SHARES
-------- -------- -------- --------
Initial Sales Charges $ 54,689 n/a n/a $ 134
Contingent deferred sales charges $151,929 $ 0 $ 82,384 n/a
NOTE 7 -- OTHER TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
At April 30, 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 SHAREHOLDER
INVESTMENT ACCRUED SERVICES &
MANAGEMENT ADMINISTRATIVE DISTRIBUTION
FEES FEES FEES TOTAL
---------- ---------- ---------- ----------
Emerging Countries $ 101,494 $ 8,120 $ 38,528 $ 148,142
International 58,596 5,859 26,431 90,886
International SmallCap Growth 223,876 22,388 119,707 365,971
International Value 1,972,035 197,203 1,484,360 3,653,598
Precious Metals 59,043 6,028 15,069 80,140
Russia 101,513 8,121 20,303 129,937
Global Real Estate 23,739 2,374 7,176 33,289
Worldwide Growth 119,682 11,968 81,661 213,311
At April 30, 2003, ING Life Insurance and Annuity Company, a wholly-owned
indirect subsidiary of ING Groep N.V., held 13.10% of the shares outstanding of
the ING International Fund. At April 30, 2003, one shareholder held 9.51% of the
shares outstanding of ING Russia fund. 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.
47
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
NOTE 8 -- EXPENSE LIMITATIONS
For the following Funds, the Investment Manager has voluntarily 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
------- ------- ------- ------- ------- -------
Emerging Countries(1) 2.25% 2.90% 2.90% N/A 2.65% 2.15%
International(2) 1.80 2.55 2.55 1.45 N/A 1.70
International SmallCap Growth(3) 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 Real Estate 1.75 2.50 2.50 N/A N/A 1.75
Worldwide Growth(4) 1.85 2.50 2.50 N/A N/A 1.75
- ----------
(1) Prior to November 1, 2001, the expense limitation rate for Class Q was
1.90%.
(2) Prior to June 7, 2002, the expense limitation rates for Class A, Class B,
Class C, Class I and Class Q were 2.75%, 3.50%, 3.50%, 2.50%, and 2.75%
respectively.
(3) Prior to November 1, 2001, the expense limitation rate for Class Q was
1.65%.
(4) Prior to November 1, 2001, the expense limitation rate for Class Q was
1.60%.
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 April 30, 2003, the cumulative amounts of reimbursed fees that are subject
to possible recoupment by the Manager are as follows:
Emerging Countries $127,232
International 46,055
International SmallCap Growth 120,895
Global Real Estate 294,004
Worldwide Growth 721,317
NOTE 9 -- 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 State Street Bank and Trust
Company for an aggregate amount of $125,000,000. The proceeds may be used only
to: (1) temporarily finance the purchase and sale of securities; (2) finance the
redemption of shares of an investor in the Funds; and (3) enable the Funds to
meet other emergency expenses as defined in the Credit Agreement. The Funds to
which the line of credit is available pay a commitment fee equal to 0.10% per
annum on the daily unused portion of the committed line amount payable quarterly
in arrears. At April 30, 2003 the Funds did not have any loans outstanding.
48
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
NOTE 10 -- CAPITAL SHARES
Transaction in capital shares and dollars were as follows:
CLASS A SHARES CLASS B SHARES
------------------------------ ------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------- ------------- ------------- -------------
ING EMERGING COUNTRIES FUND
(NUMBER OF SHARES)
Shares sold 5,973,420 11,599,557 23,084 171,877
Shares issued in merger -- 407,103 -- 276,180
Shares issued as reinvestment of dividends -- 121 -- --
Shares redeemed (6,045,318) (12,682,825) (168,672) (461,156)
------------- ------------- ------------- -------------
Net decrease in shares outstanding (71,898) (676,044) (145,588) (13,099)
============= ============= ============= =============
ING EMERGING COUNTRIES FUND ($)
Shares sold $ 73,995,893 $ 161,276,949 $ 289,347 $ 2,478,236
Shares issued in merger -- 5,280,325 -- 3,558,403
Shares issued as reinvestment of dividends -- 1,567 -- --
Shares redeemed (75,254,848) (177,404,620) (2,091,807) (6,402,316)
------------- ------------- ------------- -------------
Net decrease $ (1,258,955) $ (10,845,779) $ (1,802,460) $ (365,677)
============= ============= ============= =============
CLASS C SHARES CLASS Q SHARES
------------------------------ ------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------- ------------- ------------- -------------
ING EMERGING COUNTRIES FUND
(NUMBER OF SHARES)
Shares sold 223,725 361,853 5,976,664 3,391,625
Shares issued as reinvestment of dividends -- -- -- 72
Shares redeemed (287,779) (671,785) (5,887,742) (3,924,951)
------------- ------------- ------------- -------------
Net increase (decrease) in shares
outstanding (64,054) (309,932) 88,922 (533,254)
============= ============= ============= =============
ING EMERGING COUNTRIES FUND ($)
Shares sold $ 2,604,737 $ 5,122,486 $ 75,842,251 $ 47,255,785
Shares issued as reinvestment of dividends -- -- -- 970
Shares redeemed (3,374,931) (9,265,932) (74,922,359) (54,959,947)
------------- ------------- ------------- -------------
Net increase (decrease) $ (770,194) $ (4,143,446) $ 919,892 $ (7,703,192)
============= ============= ============= =============
49
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
NOTE 10 -- CAPITAL SHARES (CONTINUED)
CLASS M SHARES
----------------------------
SIX MONTHS PERIOD
ENDED ENDED
APRIL 30, OCTOBER 31,
2003 2002(1)
------------ ------------
ING EMERGING COUNTRIES FUND
(NUMBER OF SHARES)
Shares sold 2,226 921
Shares issued in merger -- 92,645
Shares redeemed (15,416) (2,436)
------------ ------------
Net increase (decrease) in shares
outstanding (13,190) 91,130
============ ============
ING EMERGING COUNTRIES FUND ($)
Shares sold $ 27,628 $ 11,570
Shares issued in merger -- 1,201,548
Shares redeemed (192,011) (30,431)
------------ ------------
Net increase (decrease) $ (164,383) $ 1,182,687
============ ============
- ----------
(1) Commenced operations on August 5, 2002
CLASS A SHARES CLASS B SHARES CLASS C SHARES
---------------------------- ---------------------------- ----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002 2003 2002
------------ ------------ ------------ ------------ ------------ ------------
ING INTERNATIONAL FUND
(NUMBER OF SHARES)
Shares sold 6,015,208 8,189,311 233,125 455,458 383,326 974,161
Shares issued in merger -- 818,729 -- 1,223,633 -- 1,243,707
Shares issued as reinvestment
of dividends 22,180 -- -- -- 219 --
Shares redeemed (7,055,309) (7,499,690) (214,036) (440,191) (379,097) (614,252)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in
shares outstanding (1,017,921) 1,508,350 19,089 1,238,900 4,448 1,603,616
============ ============ ============ ============ ============ ============
ING INTERNATIONAL FUND ($)
Shares sold $ 42,222,617 $ 62,922,949 $ 1,594,415 $ 3,482,361 $ 2,628,186 $ 7,381,467
Shares issued in merger -- 7,189,923 -- 10,596,499 -- 10,762,961
Shares issued as reinvestment
of dividends 159,031 -- -- -- 1,542 --
Redemption fee proceeds 173,797 132,507 -- -- -- --
Shares redeemed (49,487,046) (59,009,071) (1,450,522) (3,410,635) (2,547,952) (4,729,016)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) $ (6,931,601) $ 11,236,308 $ 143,893 $ 10,668,225 $ 81,776 $ 13,415,412
============ ============ ============ ============ ============ ============
CLASS I SHARES CLASS Q SHARES
---------------------------- ----------------------------
SIX MONTHS PERIOD SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002(1) 2003 2002
------------ ------------ ------------ ------------
ING INTERNATIONAL FUND
(NUMBER OF SHARES)
Shares sold 2,129,257 3,152,664 2,834,543 471,191
Shares issued in merger -- -- -- 993,513
Shares issued as reinvestment of dividends 5,615 -- 5,262
Shares redeemed (1,730,389) (2,248,030) (2,588,996) (478,675)
------------ ------------ ------------ ------------
Net increase in shares outstanding 404,483 904,634 250,809 986,029
============ ============ ============ ============
ING INTERNATIONAL FUND ($)
Shares sold $ 14,734,444 $ 25,021,083 $ 19,207,793 $ 3,563,197
Shares issued in merger -- -- -- 8,727,522
Shares issued as reinvestment of dividends 40,147 -- 37,518
Shares redeemed (11,925,180) (17,592,690) (17,429,274) (3,696,166)
------------ ------------ ------------ ------------
Net increase $ 2,849,411 $ 7,428,393 $ 1,816,037 $ 8,594,553
============ ============ ============ ============
- ----------
(1) Commenced operations on January 15, 2002.
50
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
NOTE 10 -- CAPITAL SHARES (CONTINUED)
CLASS A SHARES CLASS B SHARES
------------------------------ ------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------- ------------- ------------- -------------
ING INTERNATIONAL SMALLCAP GROWTH FUND
(NUMBER OF SHARES)
Shares sold 10,727,135 29,014,063 114,609 599,756
Shares redeemed (10,684,231) (29,337,016) (373,397) (1,096,685)
------------- ------------- ------------- -------------
Net increase (decrease) in shares
outstanding 42,904 (322,953) (258,788) (496,929)
============= ============= ============= =============
ING INTERNATIONAL SMALLCAP GROWTH FUND ($)
Shares sold $ 194,377,945 $ 632,348,151 $ 2,182,045 $ 13,965,766
Shares redeemed (194,155,155) (642,058,647) (7,093,833) (25,182,365)
------------- ------------- ------------- -------------
Net increase (decrease) $ 222,790 $ (9,710,496) $ (4,911,788) $ (11,216,599)
============= ============= ============= =============
CLASS C SHARES CLASS Q SHARES
------------------------------ ------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------- ------------- ------------- -------------
ING INTERNATIONAL SMALLCAP GROWTH FUND
(NUMBER OF SHARES)
Shares sold 604,567 1,192,193 9,613,286 6,300,682
Shares redeemed (930,881) (1,824,566) (9,590,544) (6,626,006)
------------- ------------- ------------- -------------
Net increase (decrease) in shares
outstanding (326,314) (632,373) 22,742 (325,324)
============= ============= ============= =============
ING INTERNATIONAL SMALLCAP GROWTH FUND ($)
Shares sold $ 10,546,476 $ 25,346,123 $ 185,306,955 $ 143,123,447
Shares redeemed (16,240,401) (38,544,051) (185,040,984) (150,812,281)
------------- ------------- ------------- -------------
Net increase (decrease) $ (5,693,925) $ (13,197,928) $ 265,971 $ (7,688,834)
============= ============= ============= =============
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-------------------------------- ----------------------------- -----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002 2003 2002
------------- --------------- ------------ ------------- ------------ -------------
ING INTERNATIONAL VALUE FUND
(NUMBER OF SHARES)
Shares sold 12,899,319 119,238,378 429,574 9,034,613 316,548 18,810,213
Shares issued as reinvestment
of dividends 2,380,188 2,046,200 522,401 542,229 793,701 774,598
Shares redeemed (22,863,508) (87,913,712) (4,043,891) (7,613,839) (6,288,886) (13,237,481)
------------- --------------- ------------ ------------- ------------ -------------
Net increase (decrease) in
shares outstanding (7,584,001) 33,370,866 (3,091,916) 1,963,003 (5,178,637) 6,347,330
============= =============== ============ ============= ============ =============
ING INTERNATIONAL VALUE
FUND ($)
Shares sold $ 130,036,247 $ 1,522,323,967 $ 4,303,155 $ 114,916,200 $ 3,180,103 $ 239,956,133
Shares issued as reinvestment
of dividends 24,301,715 25,679,811 5,265,802 6,739,902 7,984,632 9,605,012
Shares redeemed (230,725,375) (1,107,047,090) (39,953,132) (89,774,421) (62,218,526) (159,086,448)
------------- --------------- ------------ ------------- ------------ -------------
Net increase (decrease) $ (76,387,413) $ 440,956,688 $(30,384,175) $ 31,881,681 $(51,053,791) $ 90,474,697
============= =============== ============ ============= ============ =============
51
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
NOTE 10 -- CAPITAL SHARES (CONTINUED)
CLASS I SHARES CLASS Q SHARES
------------------------------ ------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------- ------------- ------------- -------------
ING INTERNATIONAL VALUE FUND
(NUMBER OF SHARES)
Shares sold 3,323,928 24,400,308 326,331 3,129,171
Shares issued as reinvestment
of dividends 960,472 431,858 55,079 61,189
Shares redeemed (3,862,015) (7,442,390) (785,899) (3,233,666)
------------- ------------- ------------- -------------
Net increase (decrease) in
shares outstanding 422,385 17,389,776 (404,489) (43,306)
============= ============= ============= =============
ING INTERNATIONAL VALUE FUND ($)
Shares sold $ 33,997,801 $ 311,346,171 $ 3,230,148 $ 40,891,856
Shares issued as reinvestment
of dividends 9,787,206 5,411,186 562,357 769,149
Shares redeemed (38,872,674) (88,175,138) (7,950,043) (41,911,766)
------------- ------------- ------------- -------------
Net increase (decrease) $ 4,912,333 $ 228,582,219 $ (4,157,538) $ (250,761)
============= ============= ============= =============
CLASS A SHARES
-----------------------------
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
2003 2002
------------ ------------
ING PRECIOUS METALS FUND
(NUMBER OF SHARES)
Shares sold 2,683,326 5,093,937
Shares issued as reinvestment of dividends -- 93,347
Shares redeemed (3,835,537) (8,565,463)
------------ ------------
Net decrease in shares outstanding (1,152,211) (3,378,179)
============ ============
ING PRECIOUS METALS FUND ($)
Shares sold $ 13,172,544 $ 23,370,196
Shares issued as reinvestment of dividends -- 276,307
Shares redeemed (19,054,856) (37,510,436)
------------ ------------
Net decrease $ (5,882,312) $(13,863,933)
============ ============
CLASS A SHARES
-----------------------------
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
2003 2002
------------ ------------
ING RUSSIA FUND
(NUMBER OF SHARES)
Shares sold 1,605,744 6,263,777
Shares issued as reinvestment of dividends 63,107 --
Shares redeemed (1,148,593) (5,312,399)
------------ ------------
Net increase in shares outstanding 520,258 951,378
============ ============
ING RUSSIA FUND ($)
Shares sold 21,816,074 $ 74,776,336
Shares issued as reinvestment of dividends 760,437 --
Redemption fee proceeds 64,904 156,582
Shares redeemed (14,831,386) (63,780,444)
------------ ------------
Net increase $ 7,810,029 $ 11,152,474
============ ============
52
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
NOTE 10 -- CAPITAL SHARES (CONTINUED)
CLASS A SHARES CLASS B SHARES CLASS C SHARES
--------------------------- ---------------------- --------------------------
SIX MONTHS PERIOD SIX MONTHS PERIOD SIX MONTHS PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002(1) 2003 2002(2) 2003 2002(3)
----------- ------------ --------- --------- ----------- -----------
ING GLOBAL REAL ESTATE FUND
(NUMBER OF SHARES)
Shares sold 58,307 2,620,377 32,351 72,797 48,971 237,200
Shares issued as reinvestment of dividends 81,549 46,906 3,023 670 7,355 2,126
Shares redeemed (13,592) (222,136) (28,904) (1,693) (118,889) (197)
----------- ------------ --------- --------- ----------- -----------
Net increase (decrease) in shares
outstanding 126,264 2,445,147 6,470 71,774 (62,563) 239,129
=========== ============ ========= ========= =========== ===========
ING GLOBAL REAL ESTATE FUND ($)
Shares sold 604,570 $ 26,466,690 301,591 $ 738,634 484,044 $ 2,517,243
Shares issued as reinvestment of dividends 825,280 505,181 27,633 6,378 69,288 20,816
Shares redeemed (146,320) (2,351,639) (267,778) (16,456) (1,142,780) (2,020)
----------- ------------ --------- --------- ----------- -----------
Net increase (decrease) $ 1,283,530 $ 24,620,232 $ 61,446 $ 728,556 $ (589,448) $ 2,536,039
=========== ============ ========= ========= =========== ===========
- ----------
(1) Commenced operations on November 5, 2001.
(2) Commenced operations on March 15, 2002.
(3) Commenced operations on January 8, 2002.
CLASS A SHARES CLASS B SHARES
------------------------------ ------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------- ------------- ------------- -------------
ING WORLDWIDE GROWTH FUND
(NUMBER OF SHARES)
Shares sold 7,565,006 10,042,589 39,988 130,581
Shares redeemed (7,889,449) (13,104,424) (395,349) (1,486,694)
------------- ------------- ------------- -------------
Net decrease in shares
outstanding (324,443) (3,061,835) (355,361) (1,356,113)
============= ============= ============= =============
ING WORLDWIDE GROWTH FUND ($)
Shares sold $ 91,414,080 $ 145,141,054 $ 541,720 $ 2,247,925
Shares redeemed (95,537,187) (192,304,536) (5,270,967) (24,337,790)
------------- ------------- ------------- -------------
Net decrease $ (4,123,107) $ (47,163,482) $ (4,729,247) $ (22,089,865)
============= ============= ============= =============
CLASS C SHARES CLASS Q SHARES
------------------------------ ------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------- ------------- ------------- -------------
ING WORLDWIDE GROWTH FUND
(NUMBER OF SHARES)
Shares sold 385,249 372,981 4,728,203 2,165,766
Shares redeemed (1,073,359) (2,833,697) (4,662,605) (2,555,640)
------------- ------------- ------------- -------------
Net decrease in shares
outstanding (688,110) (2,460,716) 65,598 (389,874)
============= ============= ============= =============
ING WORLDWIDE GROWTH FUND ($)
Shares sold $ 4,557,779 $ 5,747,691 $ 66,885,315 $ 35,266,752
Shares redeemed (12,761,123) (41,522,976) (65,624,942) (42,294,829)
------------- ------------- ------------- -------------
Net decrease $ (8,203,344) $ (35,775,285) $ 1,260,373 $ (7,028,077)
============= ============= ============= =============
53
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
NOTE 11 -- SECURITIES LENDING
Under an agreement with Brown Brothers Harriman ("BBH"), the Funds can lend
their securities to approved brokers, dealers and other financial institutions.
Loans are collateralized by cash, U.S. Government securities. The collateral
must be in an amount equal to at least 105% of the market value of non-U.S.
securities loaned and 102% of the market value of U.S. securities loaned. The
cash collateral received is invested in Brown Brothers Investment Trust
("BBIT"). The BBIT is a Delaware business trust whose units are not offered for
sale to the public, and whose purchasers are qualified purchasers such as
registered investment companies ("RICs") in accordance with the provisions of
Section 3(C) of the Investment Company Act of 1940. The standard investment
guidelines are modeled after SEC Rule 2a-7. A portion of the income generated by
the investment of the collateral, net of any rebates paid by BBH to borrowers,
is remitted to BBH as lending agent, and the remainder is paid to the Funds.
Generally, in the event of counterparty default, the Funds have the right to use
the collateral to offset losses incurred. There would be a potential loss to the
Funds in the event the Funds are delayed or prevented from exercising their
right to dispose of the collateral. The Funds bear the risk of loss with respect
to the investment of collateral.
At April 30, 2003, the Funds had securities on loan with the following market
values:
FUND VALUE
- ---- ------------
Emerging Countries $ 9,736,676
International 5,543,048
International SmallCap Growth 34,188,460
International Value 476,151,512
Precious Metals 3,934,991
Russia 8,501,325
Global Real Estate 80,100
Worldwide Growth 6,768,620
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 Synnex Technology Intl. Corp. GDR 49,379 12/15/99 $ 321,700 $ 234,550 0.2%
=========== =========== ====
Russia Aeroflot 2,446,350 08/15/97 950,126 801,180 0.7%
Moscow City Telephone Pfd 189,500 08/19/96 1,409,620 767,475 0.7%
Severstal-Avto 36,550 05/07/02 -- -- 0.0%
Volga Telecom 1,500,000 08/01/96 4,270,859 2,407,500 2.1%
Volga Telecom Pfd 658,030 11/20/96 1,291,600 684,351 0.6%
Yuzhnaya Telecommunication Co. 15,409,869 05/27/99 1,459,778 1,232,790 1.1%
----------- ----------- ----
$ 9,381,983 $ 5,893,296 5.2%
=========== =========== ====
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 10 -- 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
TOTAL NET TOTAL NET UNREALIZED
ASSETS OF ASSETS OF APPRECIATION/
ACQUIRING ACQUIRED ACQUIRED FUND ACQUIRING FUND (DEPRECIATION)
FUND FUND (000'S) (000'S) (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.
54
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
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 govenments 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
Dividends paid by the Funds from net investment income and distributions of net
realized short-term capital gains are, for federal income tax purposes, taxable
as ordinary income to shareholders. The tax composition of dividends and
distributions for the six months ended April 30, 2003 to shareholders were as
follow:
ORDINARY LONG-TERM
INCOME CAPITAL GAINS
----------- -------------
International $ 265,180 $ --
International Value 25,971,308 37,079,320
Russia 830,443 --
Global Real Estate 1,193,424 --
The amount of distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations, which
may differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. Key
differences are the treatment of short-term capital gains, foreign currency
transactions, organization costs and other temporary differences. To the extent
that these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassifications. To the extent
distributions exceed net investment income and/or net realized capital gains for
tax purposes, they are reported as distributions of paid-in capital.
Capital loss carryforwards, which may be used to offset future realized capital
gains for federal income tax purposes were as follows at October 31, 2002:
AMOUNT EXPIRATION DATES
------------ ----------------
Emerging Countries $175,770,769 2005 - 2010
International 35,616,204 2007 - 2010
International SmallCap Growth 238,103,455 2008 - 2010
Precious Metals 81,505,807 2003 - 2009
Russia 61,666,792 2006 - 2009
Worldwide Growth 229,162,719 2008 - 2010
55
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
NOTE 16 -- SUBSEQUENT EVENT
CHANGE IN FUNDS' AUDITORS 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 ending 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.
56
ING
Emerging
Countries
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK: 85.7%
BRAZIL: 10.6%
35,900 A Banco Itau Holding Financeira SA ADR $ 1,195,470
21,800 A Brasil Telecom Participacoes SA ADR 771,720
47,075 Cia de Bebidas das Americas ADR 936,322
100,400 Cia Energetica de Minas Gerais ADR 1,064,240
4,200 A Cia Siderurgica Nacional SA ADR 96,642
53,795 Cia Vale do Rio Doce ADR 1,504,108
68,783 A Gerdau SA ADR 836,401
169,395 Petroleo Brasileiro SA - Petrobras ADR 2,898,348
76,459 A Tele Norte Leste Participacoes SA ADR 829,580
358,900 @,A Telesp Celular Participacoes SA ADR 1,381,765
--------------
TOTAL BRAZIL 11,514,596
--------------
CHILE: 0.6%
53,100 Cia de Telecomunicaciones de Chile SA ADR 609,057
--------------
TOTAL CHILE 609,057
--------------
CHINA: 2.7%
390,500 Byd Co. Ltd. 773,585
5,156,000 China Petroleum & Chemical Corp. 1,018,103
2,916,000 China Telecom Corp. Ltd. 560,838
653,000 Huaneng Power Intl., Inc. 619,588
--------------
TOTAL CHINA 2,972,114
--------------
CZECH: 0.7%
34,800 Komercni Banka AS GDR 793,440
--------------
TOTAL CZECH 793,440
--------------
HONG KONG: 2.4%
537,500 China Mobile Ltd. 1,078,577
879,000 CNOOC Ltd. 1,155,237
1,066,000 Denway Motors Ltd. 355,377
--------------
TOTAL HONG KONG 2,589,191
--------------
HUNGARY: 1.6%
82,400 OTP Bank Rt GDR 1,778,192
--------------
TOTAL HUNGARY 1,778,192
--------------
INDIA: 4.6%
6,100 @,#,X ABN Amro Bank NV 359,551
240,000 Larsen & Toubro Ltd. 1,016,876
92,600 Ranbaxy Laboratories Ltd. GDR 1,447,338
91,800 # Reliance Industries Ltd. GDR 1,045,602
355,500 @ Tata Engineering & Locomotive GDR 1,148,265
--------------
TOTAL INDIA 5,017,632
--------------
INDONESIA: 1.2%
1,770,346 @ Astra Intl. Tbk PT 617,432
1,380,000 Telekomunikasi Indonesia Tbk PT 652,332
--------------
TOTAL INDONESIA 1,269,764
--------------
ISRAEL: 2.9%
34,000 @ Check Point Software Technologies 534,820
55,600 A Teva Pharmaceutical Industries ADR 2,596,520
--------------
TOTAL ISRAEL 3,131,340
--------------
LUXEMBOURG: 0.7%
33,400 @ Tenaris SA ADR 784,900
--------------
TOTAL LUXEMBOURG 784,900
--------------
MALAYSIA: 2.4%
606,000 Gamuda BHD 829,263
118,800 Genting BHD 375,158
317,800 Malayan Banking BHD 660,689
1,215,500 Public Bank BHD 767,684
--------------
TOTAL MALAYSIA 2,632,794
--------------
MEXICO: 8.6%
90,015 America Movil SA de CV ADR 1,509,552
26,350 Cemex SA de CV ADR 602,097
19,430 Fomento Economico Mexicano SA de CV ADR 737,563
31,050 Grupo Aeroportuario del Sureste SA de CV ADR 397,750
169,600 Grupo Financiero Banorte SA de CV 471,789
914,400 @ Grupo Financiero BBVA Bancomer 795,169
31,450 @ Grupo Televisa SA ADR 954,193
72,880 Telefonos de Mexico SA de CV ADR 2,201,705
15,910 TV Azteca SA de CV ADR 92,278
575,800 Wal-Mart de Mexico SA de CV 1,594,471
--------------
TOTAL MEXICO 9,356,567
--------------
POLAND: 1.7%
42,100 Bank Pekao SA GDR 921,148
285,700 @ Telekomunikacja Polska SA GDR 954,238
--------------
TOTAL POLAND 1,875,386
--------------
RUSSIA: 5.0%
22,000 A LUKOIL ADR 1,532,520
18,400 MMC Norilsk Nickel ADR 440,312
25,600 Sibneft ADR 596,736
50,800 Surgutneftegaz ADR 1,176,550
9,500 A YUKOS ADR 1,662,500
--------------
TOTAL RUSSIA 5,408,618
--------------
SOUTH AFRICA: 6.5%
247,000 ABSA Group Ltd. 1,082,872
1,000,000 FirstRand Ltd. 975,771
39,600 Gold Fields Ltd. ADR 401,940
35,000 Harmony Gold Mining Co. Ltd. ADR 367,500
19,000 Impala Platinum Holdings Ltd. 940,038
67,000 Sappi Ltd. 827,797
103,500 Sasol Ltd. 1,122,152
338,900 Standard Bank Group Ltd. 1,360,015
--------------
TOTAL SOUTH AFRICA 7,078,085
--------------
See Accompanying Notes to Financial Statements
57
ING
Emerging
Countries
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
SOUTH KOREA: 16.9%
48,800 Daishin Securities Co. Ltd. $ 654,683
22,580 Hanssem Co. Ltd. 220,225
21,080 Honam Petrochemical Corp. 530,036
23,600 Hyundai Motor Co. 557,465
42,871 Kookmin Bank 1,203,211
105,500 Korea Electric Power Corp. 1,775,700
14,430 A KT Corp. ADR 292,063
13,700 KT Corp. 562,658
94,800 # KT&G Corp. GDR 715,740
31,890 LG Chem Ltd. 1,057,751
18,670 LG Electronics, Inc. 643,846
15,040 POSCO 1,268,807
16,810 Samsung Electronics Co. Ltd. 4,219,794
19,600 Samsung Fire & Marine Insurance Co. Ltd. 967,901
236,100 Samsung Heavy Industries Co. Ltd. 1,045,447
2,950 Shinsegae Co. Ltd. 352,058
10,000 Sindo Ricoh Co. Ltd. 557,202
12,190 SK Telecom Co. Ltd. 1,695,564
--------------
TOTAL SOUTH KOREA 18,320,151
--------------
TAIWAN: 10.2%
209,323 Asustek Computer, Inc. GDR 416,553
25,300 Asustek Computer, Inc. 49,352
1,230,000 @ Chinatrust Financial Holding Co. 959,725
1,231,200 Compal Electronics, Inc. 1,327,972
2,454,000 @ Eva Airways Corp. 753,236
1,598,000 Fubon Financial Holding Co. Ltd. 1,091,004
70,050 HON HAI Precision Industry 219,032
167,807 # HON HAI Precision Industry GDR 1,082,355
1,278,000 Nan Ya Plastic Corp. 1,107,160
669,600 Synnex Technology Intl. Corp. 787,539
49,379 I Synnex Technology Intl. Corp. GDR 234,550
33,731 @ Taiwan Semiconductor Manufacturing Co.
Ltd. ADR 282,328
2,000,456 @ Taiwan Semiconductor Manufacturing Co. Ltd. 2,743,023
--------------
TOTAL TAIWAN 11,053,829
--------------
THAILAND: 2.7%
1,850,000 X Bangkok Expressway PCL 642,990
167,500 X BEC World PLC 804,875
457,500 @ Kasikornbank PCL 386,853
3,925,100 Land & House Pub Co. Ltd. 704,998
1,302,000 @ National Finance PCL 376,599
--------------
TOTAL THAILAND 2,916,315
--------------
TURKEY: 1.0%
190,000,000 Akbank TAS 673,372
72,000,000 Turkcell Iletisim Hizmet AS 432,184
--------------
TOTAL TURKEY 1,105,556
--------------
UNITED KINGDOM: 2.6%
197,000 Anglo American PLC 2,821,103
--------------
TOTAL UNITED KINGDOM 2,821,103
--------------
Total Common Stock (Cost $81,704,681) 93,028,630
--------------
PREFERRED STOCK: 2.0%
SOUTH KOREA: 0.3%
17,990 Samsung Electronics Co. Ltd. 2,206,181
--------------
TOTAL SOUTH KOREA 2,206,181
--------------
Total Preferred Stock (Cost $2,474,936) 2,206,181
--------------
WARRANTS: 0.3%
SOUTH KOREA: 0.3%
8,300 @,X Merrill Lynch Intl. Exp. 08/26/05 340,797
--------------
TOTAL SOUTH KOREA 340,797
--------------
Total Warrants (Cost $324,577) 340,797
--------------
TOTAL INVESTMENTS IN SECURITIES
(COST $84,504,194)* 88.0% $ 95,575,608
OTHER ASSETS AND LIABILITIES-NET 12.0 13,064,966
----- --------------
NET ASSETS 100.0% $ 108,640,574
===== ==============
@ Non-income producing security
ADR American Depository Receipt
GDR Global Depository 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 Fund's Board of Directors.
X Fair Value as determined by ING Valuation Committee appointed by the Fund's
Board of Directors.
A Loaned security, a portion or all of the security is on loan at April 30,
2003.
I Illiquid Security
* Cost for federal income tax purposes is the same as for financial statement
purposes. Net unrealized appreciation consists of:
Gross Unrealized Appreciation $ 16,994,330
Gross Unrealized Depreciation (5,922,917)
--------------
Net Unrealized Appreciation $ 11,071,414
==============
See Accompanying Notes to Financial Statements
58
ING
Emerging
Countries
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Percentage of
Industry Net Assets
- --------------------------------------------------------------------------------
Agriculture 0.7%
Airlines 0.7%
Auto Manufacturers 1.9%
Banks 11.7%
Beverages 1.5%
Building Materials 0.6%
Chemicals 3.4%
Commercial Services 0.7%
Computers 3.4%
Diversified Financial Services 3.1%
Electric 3.2%
Electrical Components & Equipment 7.2%
Electronics 0.4%
Engineering & Construction 1.1%
Forest Products & Paper 0.8%
Holding Companies-Diversified 0.9%
Home Builders 0.6%
Home Furnishings 0.2%
Insurance 0.9%
Internet 0.5%
Iron/Steel 2.0%
Lodging 0.3%
Media 1.7%
Mining 6.0%
Office/Business Equipment 0.5%
Oil & Gas 10.3%
Oil & Gas Services 0.7%
Pharmaceuticals 3.7%
Retail 2.4%
Semiconductors 2.8%
Shipbuilding 1.0%
Software 0.3%
Telecommunications 12.8%
Other Assets and Liabilities, Net 12.0%
-----
NET ASSETS 100.0%
=====
See Accompanying Notes to Financial Statements
59
ING
International
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK: 82.9%
AUSTRALIA: 1.4%
206,000 QBE Insurance Group Ltd. $ 1,100,493
--------------
TOTAL AUSTRALIA 1,100,493
--------------
CANADA: 2.8%
39,703 EnCana Corp. 1,302,350
128,000 @ Kinross Gold Corp. 789,628
--------------
TOTAL CANADA 2,091,978
--------------
DENMARK: 2.5%
39,000 Danske Bank A/S 750,378
7,800 Novo-Nordisk A/S ADR 283,140
8,100 Novo-Nordisk A/S 293,432
22,100 TDC A/S 549,788
--------------
TOTAL DENMARK 1,876,738
--------------
FINLAND: 2.7%
18,000 Nokia OYJ ADR 298,260
55,200 Nokia OYJ 933,905
54,200 UPM-Kymmene OYJ 792,382
--------------
TOTAL FINLAND 2,024,547
--------------
FRANCE: 8.5%
10,850 Aventis SA 551,062
56,000 AXA 850,571
18,950 A Carrefour SA 824,145
13,100 Pechiney SA 377,917
23,700 A Schneider Electric SA 1,121,975
14,000 Societe Generale 856,195
2,539 Total SA 332,939
17,700 Total SA ADR 1,162,890
14,400 Valeo SA 412,527
--------------
TOTAL FRANCE 6,490,221
--------------
GERMANY: 4.0%
29,939 Deutsche Bank AG 1,548,309
20,200 Deutsche Boerse AG 946,814
77,000 @ Infineon Technologies AG 571,448
--------------
TOTAL GERMANY 3,066,571
--------------
GREECE: 0.6%
51,500 Greek Organization of Football
Prognostics SA 470,137
--------------
TOTAL GREECE 470,137
--------------
IRELAND: 2.3%
91,800 Irish Life & Permanent PLC 1,046,002
108,210 @ Ryanair Holdings PLC 740,170
--------------
TOTAL IRELAND 1,786,172
--------------
ISRAEL: 1.6%
26,800 Teva Pharmaceutical Industries ADR 1,251,560
--------------
TOTAL ISRAEL 1,251,560
--------------
ITALY: 2.0%
295,200 A Banca Fideuram S.p.A. 1,558,266
--------------
TOTAL ITALY 1,558,266
--------------
JAPAN: 13.1%
30,800 FamilyMart Co. Ltd. 587,540
34,800 Fanuc Ltd. 1,423,981
60,000 JGC Corp. 422,606
51,000 Kao Corp. 930,111
3,500 Mabuchi Motor Co. Ltd. 261,488
57,600 Marui Co. Ltd. 479,598
119,000 Nikko Cordial Corp. 319,302
95,000 Nomura Holdings, Inc. 940,760
540 NTT DoCoMo, Inc. 1,113,869
14,400 A Otsuka Kagu Ltd. 319,973
51,000 Sekisui House Ltd. 374,610
47,500 Shimano, Inc. 753,962
31,100 Sony Corp. 756,247
8,500 Tokyo Electron Ltd. 318,590
44,000 Toyota Motor Corp. 996,143
--------------
TOTAL JAPAN 9,998,780
--------------
MEXICO: 2.4%
183,900 Cemex SA de CV 833,554
33,300 Telefonos de Mexico SA de CV ADR 1,005,993
--------------
TOTAL MEXICO 1,839,547
--------------
NETHERLANDS: 4.7%
107,432 Aegon NV 1,092,235
21,300 Koninklijke Philips Electronics NV ADR 397,884
34,876 Koninklijke Philips Electronics NV 648,823
35,990 Royal Dutch Petroleum Co. 1,471,372
--------------
TOTAL NETHERLANDS 3,610,314
--------------
NEW ZEALAND: 1.4%
405,900 Telecom Corp. of New Zealand Ltd. 1,087,522
--------------
TOTAL NEW ZEALAND 1,087,522
--------------
NORWAY: 0.5%
73,700 Tomra Systems ASA 348,605
--------------
TOTAL NORWAY 348,605
--------------
RUSSIA: 1.3%
5,600 A YUKOS ADR 980,000
--------------
TOTAL RUSSIA 980,000
--------------
SINGAPORE: 0.9%
116,000 United Overseas Bank Ltd. 679,432
--------------
TOTAL SINGAPORE 679,432
--------------
SOUTH AFRICA: 0.9%
65,600 Gold Fields Ltd. ADR 665,840
--------------
TOTAL SOUTH AFRICA 665,840
--------------
SPAIN: 1.5%
100,300 Telefonica SA 1,109,274
--------------
TOTAL SPAIN 1,109,274
--------------
SWEDEN: 2.4%
32,700 Atlas Copco AB 739,575
55,180 A ForeningsSparbanken AB 748,803
40,800 A Swedish Match AB 301,771
--------------
TOTAL SWEDEN 1,790,149
--------------
See Accompanying Notes to Financial Statements
60
ING
International
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
SWITZERLAND: 7.7%
1,510 Julius Baer Holding AG $ 317,297
8,165 Nestle SA 1,664,545
24,680 Novartis AG ADR 974,366
16,900 Novartis AG 666,630
23,450 Roche Holding AG 1,492,100
15,100 UBS AG 716,423
--------------
TOTAL SWITZERLAND 5,831,361
--------------
TAIWAN: 0.7%
58,300 @ Taiwan Semiconductor Manufacturing Co.
Ltd. ADR 487,971
--------------
TOTAL TAIWAN 487,971
--------------
UNITED KINGDOM: 16.1%
2,700 Amvescap PLC ADR 29,997
222,200 Amvescap PLC 1,207,446
239,600 BP PLC 1,518,360
153,400 @ British Sky Broadcasting PLC 1,589,938
33,700 Diageo PLC 373,796
8,100 GlaxoSmithKline PLC ADR 328,212
68,225 GlaxoSmithKline PLC 1,367,369
10,000 HSBC Holdings PLC ADR 546,900
46,500 Imperial Tobacco Group PLC 778,116
581,500 Legal & General Group PLC 720,271
60,800 Pearson PLC 506,760
59,600 Provident Financial PLC 546,768
36,300 Rio Tinto PLC 693,877
7,400 Rio Tinto PLC ADR 567,580
745,373 Vodafone Group PLC 1,471,246
--------------
TOTAL UNITED KINGDOM 12,246,636
--------------
UNITED STATES: 0.9%
16,000 Schlumberger Ltd. 670,880
--------------
TOTAL UNITED STATES 670,880
--------------
Total Common Stock (Cost $66,676,206) 63,062,994
--------------
MUTUAL FUND: 7.2%
UNITED STATES: 7.2%
7,100 iShares MSCI EAFE Index Fund 708,651
129,100 iShares MSCI United Kingdom Index Fund 1,590,512
65,300 A iShares S&P Europe 350 Index Fund 3,199,047
--------------
TOTAL UNITED STATES 5,498,210
--------------
Total Mutual Fund (Cost $5,152,423) 5,498,210
--------------
TOTAL INVESTMENTS IN SECURITIES
(COST $71,828,629)* 90.1% $ 68,561,204
OTHER ASSETS AND LIABILITIES-NET 9.9 7,496,443
----- --------------
NET ASSETS 100.0% $ 76,057,647
===== ==============
@ Non-income producing security
ADR American Depository Receipt
GDR Global Depository Receipt
PLC Public Limited Company
A Loaned security, a portion or all of the security is on loan at April 30,
2003.
* Cost for federal income tax purposes is the same as for financial statement
purposes. Net unrealized depreciation consists of:
Gross Unrealized Appreciation $ 4,096,805
Gross Unrealized Depreciation (7,364,230)
--------------
Net Unrealized Depreciation $ (3,267,425)
==============
Percentage of
Industry Net Assets
- --------------------------------------------------------------------------------
Agriculture 1.4%
Airlines 1.0%
Auto Manufacturers 1.3%
Auto Parts & Equipment 0.5%
Banks 8.1%
Beverages 0.5%
Building Materials 1.1%
Cosmetics/Personal Care 1.2%
Diversified Financial Services 8.7%
Electronics 3.6%
Engineering & Construction 0.5%
Entertainment 0.6%
Environmental Control 0.5%
Equity Fund 7.2%
Food 3.3%
Forest Products & Paper 1.0%
Hand/Machine Tools 1.5%
Home Builders 0.5%
Home Furnishings 1.0%
Insurance 4.9%
Leisure Time 1.0%
Machinery-Construction & Mining 1.0%
Media 2.8%
Mining 4.1%
Oil & Gas 8.9%
Oil & Gas Services 0.9%
Pharmaceuticals 9.5%
Retail 1.8%
Semiconductors 1.8%
Telecommunications 9.9%
Other Assets and Liabilities, Net 9.9%
-----
NET ASSETS 100.0%
=====
See Accompanying Notes to Financial Statements
61
ING
International
SmallCap Growth
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK: 90.6%
AUSTRIA: 1.3%
31,000 Erste Bank der Oesterreichischen
Sparkassen AG $ 2,452,856
10,000 OMV AG 1,200,816
--------------
TOTAL AUSTRIA 3,653,672
--------------
BELGIUM: 0.9%
22,400 Colruyt SA 1,463,656
37,300 @ Mobistar SA 1,215,503
--------------
TOTAL BELGIUM 2,679,159
--------------
BERMUDA: 0.6%
179,000 Frontline Ltd. 1,892,881
--------------
TOTAL BERMUDA 1,892,881
--------------
BRAZIL: 0.7%
221,500,000 Cia Paranaense de Energia 525,151
131,300 Cia Paranaense de Energia ADR 425,412
98,000 Empresa Brasileira de Aeronautica SA ADR 1,359,260
--------------
TOTAL BRAZIL 2,309,823
--------------
CANADA: 11.7%
178,100 Abitibi-Consolidated, Inc. 1,247,668
91,000 @,A Ballard Power Systems, Inc. 931,931
26,400 @ Bonavista Petroleum Ltd. 618,319
350,300 @ Canadian 88 Energy Corp. 529,870
181,200 @ Cequel Energy, Inc. 795,734
176,500 @ Compton Petroleum Corp. 658,215
103,800 @,A Cott Corp. 1,904,730
101,400 Dofasco, Inc. 1,939,506
111,400 Finning Intl., Inc. 2,189,795
88,500 @ Industrial-Alliance Life Insurance Co. 2,304,109
158,400 IPSCO, Inc. 1,324,969
128,300 @ Ketch Resources Ltd. 532,124
201,600 @ Kingsway Financial Services, Inc. 2,318,695
74,700 @ Masonite Intl. Corp. 1,273,118
110,600 Molson, Inc. 2,544,124
133,700 @ Olympia Energy, Inc. 343,896
85,500 @ Precision Drilling Corp. 2,939,490
120,100 @ Progress Energy Ltd. 728,335
215,300 @ RONA, Inc. 2,366,709
94,100 Saputo, Inc. 1,656,228
235,800 Teck Cominco Ltd. 1,686,399
133,600 @ Tesco Corp. 1,415,530
127,200 @ Thunder Energy, Inc. 558,595
99,400 @ Westjet Airlines Ltd. 1,143,246
--------------
TOTAL CANADA 33,951,335
--------------
CHINA: 0.6%
821,000 Byd Co. Ltd. 1,626,410
--------------
TOTAL CHINA 1,626,410
--------------
DENMARK: 1.9%
19,700 A Coloplast A/S 1,456,923
66,200 Danisco A/S 2,418,074
50,000 @ Jyske Bank 1,630,929
--------------
TOTAL DENMARK 5,505,926
--------------
FINLAND: 0.8%
335,200 Sampo OYJ 2,431,541
--------------
TOTAL FINLAND 2,431,541
--------------
FRANCE: 6.0%
39,600 @ Business Objects SA ADR 860,508
43,000 @,A Cap Gemini SA 1,337,905
60,300 Cie Generale D'Optique Essilor
International SA 2,469,046
40,200 CNP Assurances 1,615,972
56,000 A Dassault Systemes SA 1,618,021
235,500 @ JC Decaux SA 2,273,376
47,400 A Pechiney SA 1,367,424
51,500 Thales SA 1,377,652
31,200 Unibail 2,087,411
38,600 Vinci SA 2,513,578
--------------
TOTAL FRANCE 17,520,893
--------------
GERMANY: 3.9%
80,000 Continental AG 1,431,158
56,000 Deutsche Boerse AG 2,624,832
50,000 A Medion AG 1,868,742
54,900 A Schwarz Pharma AG 2,389,468
80,000 @ SGL Carbon AG 1,192,781
35,000 Stada Arzneimittel AG 1,831,914
--------------
TOTAL GERMANY 11,338,895
--------------
GREECE: 0.4%
78,600 Coca Cola Hellenic Bottling Co. SA 1,149,101
--------------
TOTAL GREECE 1,149,101
--------------
HONG KONG: 0.5%
1,134,000 Cathay Pacific Airways Ltd. 1,366,782
--------------
TOTAL HONG KONG 1,366,782
--------------
INDIA: 1.1%
75,900 Comfort Intech Ltd. 1,082,110
58,260 Ranbaxy Laboratories Ltd. GDR 910,604
159,400 A Satyam Computer Services Ltd. ADR 1,227,380
--------------
TOTAL INDIA 3,220,094
--------------
IRELAND: 2.4%
586,000 Anglo Irish Bank Corp. PLC 4,407,798
200,000 Greencore Group PLC 613,800
165,100 Irish Life & Permanent PLC 1,893,275
--------------
TOTAL IRELAND 6,914,873
--------------
ISRAEL: 0.8%
50,000 @ Taro Pharmaceuticals Industries 2,288,000
--------------
TOTAL ISRAEL 2,288,000
--------------
ITALY: 2.6%
254,200 A Banco Popolare di Verona e Novara Scrl 3,452,473
184,800 A Italcementi S.p.A. 1,930,376
289,100 A Saipem S.p.A. 2,016,473
--------------
TOTAL ITALY 7,399,322
--------------
See Accompanying Notes to Financial Statements
62
ING
International
SmallCap Growth
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
JAPAN: 13.6%
548,000 A Bank of Yokohama Ltd. $ 1,934,496
94,000 A Capcom Co. Ltd. 750,361
25,000 Eneserve Corp. 876,237
8,700 Funai Electric Co. Ltd. 875,398
23,000 Hogy Medical Co. Ltd. 973,923
190,000 A JSR Corp. 1,981,888
300,000 A Keihin Electric Express Railway Co. Ltd. 1,436,358
828,000 Komatsu Ltd. 3,158,980
181,000 A Konica Corp. 1,655,802
57,700 Kose Corp. 1,828,828
900,000 Mitsui Mining & Smelting Co. Ltd. 2,362,066
46,300 Nichii Gakkan Co. 2,360,423
40,500 A Nidec Corp. 2,139,443
221,000 Nippon Electric Glass Co. Ltd. 2,420,141
77,400 Nitto Denko Corp. 2,226,077
770,000 NSK Ltd. 2,053,161
57,600 Pioneer Corp. 1,154,318
344,000 A Shizuoka Bank Ltd. 2,272,950
129,000 A THK Co. Ltd. 1,189,837
522,000 Toho Gas Co. Ltd. 1,448,784
300,000 TonenGeneral Sekiyu KK 1,906,758
1,106 @ UMC Japan 871,742
38,500 Uni-Charm Corp. 1,533,414
--------------
TOTAL JAPAN 39,411,385
--------------
LUXEMBOURG: 0.4%
48,349 @ Tenaris SA ADR 1,136,202
35,125 @ Tenaris SA 82,267
--------------
TOTAL LUXEMBOURG 1,218,469
--------------
NETHERLANDS: 1.9%
90,900 Euronext NV 2,008,599
35,000 Fugro NV 1,419,831
32,200 A IHC Caland NV 1,662,003
10,981 Rodamco Europe NV 533,696
--------------
TOTAL NETHERLANDS 5,624,129
--------------
NORWAY: 1.0%
57,300 A Gjensidige NOR ASA 1,985,660
47,800 ProSafe ASA 806,025
--------------
TOTAL NORWAY 2,791,685
--------------
PORTUGAL: 0.9%
475,200 Brisa-Auto Estradas de Portugal SA 2,561,461
--------------
TOTAL PORTUGAL 2,561,461
--------------
RUSSIA: 0.4%
26,000 @,A Vimpel-Communications ADR 1,036,360
--------------
TOTAL RUSSIA 1,036,360
--------------
SINGAPORE: 0.5%
2,000,000 Singapore Exchange Ltd. 1,374,183
--------------
TOTAL SINGAPORE 1,374,183
--------------
SOUTH AFRICA: 0.5%
365,000 @ Telkom SA Ltd. 1,579,628
--------------
TOTAL SOUTH AFRICA 1,579,628
--------------
SOUTH KOREA: 2.9%
23,170 Kumgang Korea Chemical Co. Ltd. 1,973,741
15,600 LG Home Shopping, Inc. 887,210
45,680 Samsung Electro-Mechanics Co. Ltd. 1,347,842
18,600 Samsung SDI Co. Ltd. 1,163,457
9,000 Shinsegae Co. Ltd. 1,074,074
108,520 SK Corp. 893,169
55,000 You Eal Electronics Co. Ltd. 1,050,206
--------------
TOTAL SOUTH KOREA 8,389,699
--------------
SPAIN: 6.8%
49,300 Acciona SA 2,365,808
200,000 A ACESA Infraestructuras SA 2,600,280
89,600 A ACS Actividades Cons y Serv 3,374,785
71,600 Altadis SA 1,845,819
65,500 A Bankinter SA 2,000,692
372,300 Corp. Mapfre SA 3,490,089
205,300 Ebro Puleva SA 1,789,387
200,100 Red Electrica de Espana 2,378,268
--------------
TOTAL SPAIN 19,845,128
--------------
SWEDEN: 3.2%
73,000 Autoliv, Inc. 1,784,907
50,000 Billerud AB 663,227
229,600 @ Elekta AB 2,498,185
88,000 Gambro AB 497,035
53,300 A SKF AB 1,544,323
309,200 A Swedish Match AB 2,286,954
--------------
TOTAL SWEDEN 9,274,631
--------------
SWITZERLAND: 4.0%
42,800 @ Actelion Ltd. 2,740,677
48,500 Converium Holding AG 2,190,242
39,800 @ Logitech International SA 1,467,227
45,430 @ Saurer AG 1,187,417
6,800 SGS Societe Generale Surveillance
Holdings SA 2,378,972
25,000 @ Swiss Life Holding 1,563,076
--------------
TOTAL SWITZERLAND 11,527,611
--------------
TAIWAN: 0.7%
923,000 Benq Corp. 937,298
2,143,000 @ Siliconware Precision Industries Co. 1,014,329
--------------
TOTAL TAIWAN 1,951,627
--------------
UNITED KINGDOM: 16.5%
300,000 @ Acambis PLC 1,359,312
281,156 Amvescap PLC 1,527,816
300,000 Arriva PLC 1,536,717
392,100 Cattles PLC 1,983,423
208,300 Close Brothers Group PLC 1,756,129
51,700 Cobham PLC 946,108
100,000 CP Ships Ltd. 1,460,337
498,900 @ easyJet PLC 1,507,023
194,500 Exel PLC 1,865,158
1,654,800 Friends Provident PLC 2,598,500
587,500 GKN PLC 1,934,282
612,951 John Wood Group PLC 1,525,803
410,200 Kelda Group PLC 2,697,803
501,000 Kidde PLC 576,521
215,800 Man Group PLC 3,638,720
256,200 Northern Rock PLC 2,929,770
See Accompanying Notes to Financial Statements
63
ING
International
SmallCap Growth
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
UNITED KINGDOM (CONTINUED)
728,200 Peninsular and Oriental Steam
Navigation Co. $ 2,246,222
233,800 Schroders PLC 2,270,985
253,952 Severn Trent PLC 2,902,033
300,000 SIG PLC 1,112,382
1,149,600 Signet Group PLC 1,543,372
2,463,800 @ Skyepharma PLC 1,949,195
303,500 Smith & Nephew PLC 2,023,950
195,900 Smiths Group PLC 2,094,620
510,100 Taylor Woodrow PLC 1,597,924
83,980 @ Tullow Oil PLC 93,284
--------------
TOTAL UNITED KINGDOM 47,677,389
--------------
UNITED STATES: 1.1%
311,300 @ Ultra Petroleum Corp. 3,113,000
--------------
TOTAL UNITED STATES 3,113,000
--------------
Total Common Stock (Cost $244,068,534) 262,625,092
--------------
PREFERRED STOCK: 2.0%
BRAZIL: 0.4%
317,300,000 Cia Paranaense de Energia 1,050,335
--------------
TOTAL BRAZIL 1,050,335
--------------
GERMANY: 1.6%
27,500 A Henkel KGaA 1,785,544
38,000 Wella AG 2,841,336
--------------
TOTAL GERMANY 4,626,880
--------------
Total Preferred Stock (Cost $4,757,883) 5,677,215
--------------
Contracts Value
- --------------------------------------------------------------------------------
OPTIONS: 0.0%
HONG KONG: 0.0%
4,330 X USD Call/HKD Put, 7.820 Strike,
expires 10/07/03 6,170
--------------
TOTAL HONG KONG 6,170
--------------
Total Options (Cost $24,681) 6,170
--------------
TOTAL INVESTMENTS IN SECURITIES
(COST $248,851,098)* 92.6% $ 268,308,477
OTHER ASSETS AND LIABILITIES-NET 7.4 21,370,636
----- --------------
NET ASSETS 100.0% $ 289,679,113
===== ==============
@ Non-income producing security
ADR American Depository Receipt
GDR Global Depository Receipt
PLC Public Limited Company
X Fair Value as determined by ING Valuation Committee as appointed by the
Fund's Board of Directors.
A Loaned security, a portion or all of the security is on loan at April 30,
2003.
* Cost for federal income tax purposes is the same as for financial statement
purposes. Net unrealized appreciation consists of:
Gross Unrealized Appreciation $ 30,258,642
Gross Unrealized Depreciation (10,801,263)
--------------
Net Unrealized Appreciation $ 19,457,379
==============
Percentage of
Industry Net Assets
- --------------------------------------------------------------------------------
Advertising 0.8%
Aerospace/Defense 1.3%
Agriculture 1.4%
Airlines 1.4%
Auto Parts & Equipment 1.8%
Banks 7.3%
Beverages 1.9%
Building Materials 1.5%
Chemicals 2.5%
Closed-end Funds 0.2%
Commercial 4.2%
Services Computers 1.3%
Cosmetics/Personal Care 2.1%
Distribution/Wholesale 0.7%
Diversified Financial Services 8.5%
Electric 1.5%
Electrical Components & Equipment 1.2%
Electronics 1.7%
Energy-Alternate Sources 0.3%
Engineering & Construction 2.9%
Food 2.7%
Forest Products & Paper 0.7%
Gas 0.5%
Hand/Machine Tools 1.9%
Healthcare-Product 3.4%
Home Builders 0.6%
Home Furnishings 0.4%
Household Products/Wares 0.6%
Insurance 5.6%
Iron/Steel 1.1%
Machinery-Construction & Mining 1.1%
Machinery-Diversified 0.4%
Metal Fabricate/Hardware 1.2%
Mining 1.9%
Miscellaneous Manufacturing 1.3%
Oil & Gas 5.1%
Oil & Gas Services 2.9%
Pharmaceuticals 4.6%
Real Estate 0.7%
Retail 2.0%
Semiconductors 0.7%
Software 1.5%
Telecommunications 1.7%
Transportation 3.6%
Water 1.9%
Other Assets and Liabilities, Net 7.4%
-----
NET ASSETS 100.0%
=====
See Accompanying Notes to Financial Statements
64
ING
International
Value
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK: 97.7%
BERMUDA: 2.1%
3,465,070 Tyco Intl. Ltd. $ 54,055,092
--------------
TOTAL BERMUDA 54,055,092
--------------
BRAZIL: 6.8%
960,480 A Banco Bradesco SA/Brazil ADR 19,785,888
10,027,700 Centrais Eletricas Brasileiras SA ADR 38,408,097
3,094,300 Petroleo Brasileiro SA -- Petrobras ADR 52,943,473
2,532,786 A Tele Norte Leste Participacoes SA ADR 27,480,728
1,208,600 Telecomunicacoes Brasileiras SA ADR 31,399,428
--------------
TOTAL BRAZIL 170,017,614
--------------
CANADA: 1.9%
18,105,392 @,A Nortel Networks Corp. 46,711,911
--------------
TOTAL CANADA 46,711,911
--------------
FRANCE: 5.0%
8,288,100 A Alcatel SA 67,891,474
1,485,000 A Alstom 3,016,213
1,463,100 A Michelin (C.G.D.E.) 54,127,970
--------------
TOTAL FRANCE 125,035,657
--------------
GERMANY: 7.3%
805,500 A BASF AG 35,930,552
1,644,800 A Bayerische Hypo-und Vereinsbank AG 21,898,670
5,377,300 A Deutsche Telekom AG 71,892,780
1,124,988 A E.ON AG 53,847,821
--------------
TOTAL GERMANY 183,569,823
--------------
HONG KONG: 1.7%
3,160,236 Jardine Matheson Holdings Ltd. 17,855,333
6,146,000 Swire Pacific Ltd. 24,271,777
--------------
TOTAL HONG KONG 42,127,110
--------------
ITALY: 3.0%
19,093,700 A Banca Intesa S.p.A. 49,435,881
3,129,200 A Telecom Italia S.p.A. 25,562,810
--------------
TOTAL ITALY 74,998,691
--------------
JAPAN: 20.5%
654,000 Daiichi Pharmaceutical Co. Ltd. 8,280,563
5,540,000 Daiwa House Industry Co. Ltd. 33,446,252
9,186,700 Hitachi Ltd. 30,658,281
6,438 Japan Tobacco, Inc. 37,518,112
9,584,000 Komatsu Ltd. 36,564,816
6,456,000 Matsushita Electric Industrial Co. Ltd. 51,427,134
1,762 Millea Holdings, Inc. 11,435,418
10,636,000 Mitsubishi Heavy Industries Ltd. 23,633,574
10,207 Mitsubishi Tokyo Financial Group, Inc. 34,576,790
12,161,000 A Nippon Oil Corp. 48,435,980
13,125 Nippon Telegraph & Telephone Corp. 46,002,432
1,049,000 Ono Pharmaceutical Co. Ltd. 31,313,433
3,822,000 Sankyo Co. Ltd. 55,378,300
11,494 A Sumitomo Mitsui Financial Group, Inc. 18,022,623
1,362,000 TDK Corp. 47,280,563
--------------
TOTAL JAPAN 513,974,271
--------------
MEXICO: 2.6%
1,275,060 America Movil SA de CV ADR 21,382,756
1,471,160 Telefonos de Mexico SA de CV ADR 44,443,744
--------------
TOTAL MEXICO 65,826,500
--------------
NETHERLANDS: 1.4%
945,000 Akzo Nobel NV 21,008,030
350,000 A European Aeronautic Defense and Space Co. 3,253,698
2,287,000 Koninklijke Ahold NV 10,464,397
--------------
TOTAL NETHERLANDS 34,726,125
--------------
NEW ZEALAND: 2.0%
19,086,427 A Telecom Corp. of New Zealand Ltd. 51,138,006
--------------
TOTAL NEW ZEALAND 51,138,006
--------------
PORTUGAL: 1.9%
6,709,676 Portugal Telecom SGPS SA 47,998,070
--------------
TOTAL PORTUGAL 47,998,070
--------------
RUSSIA: 1.3%
477,800 LUKOIL ADR 33,283,548
--------------
TOTAL RUSSIA 33,283,548
--------------
SINGAPORE: 3.2%
3,652,191 DBS Group Holdings Ltd. 17,894,831
6,060,800 @,X DBS Group Holdings Ltd. ADR 29,696,418
6,239,000 Oversea-Chinese Banking Corp. 33,204,860
--------------
TOTAL SINGAPORE 80,796,109
--------------
SOUTH KOREA: 4.8%
4,337,800 A Korea Electric Power Corp. ADR 40,862,076
2,180,500 KT Corp. ADR 44,133,320
1,709,000 POSCO ADR 35,119,950
--------------
TOTAL SOUTH KOREA 120,115,346
--------------
SPAIN: 9.5%
6,566,533 Banco Bilbao Vizcaya
Argentaria SA 66,100,823
5,374,170 Repsol YPF SA 78,268,337
8,538,260 Telefonica SA 94,429,399
--------------
TOTAL SPAIN 238,798,559
--------------
SWITZERLAND: 4.1%
91,700 A Swisscom AG 28,362,567
697,374 Zurich Financial Services AG 73,526,861
--------------
TOTAL SWITZERLAND 101,889,428
--------------
UNITED KINGDOM: 18.1%
22,621,100 BAE Systems PLC 45,915,800
4,901,200 British American Tobacco PLC 47,000,057
6,983,730 BT Group PLC 20,007,431
43,633,700 @ Corus Group PLC 9,658,652
15,012,600 Friends Provident PLC 23,573,995
2,945,600 HSBC Holdings PLC 32,197,819
18,801,490 Imperial Chemical Industries PLC 38,989,202
30,391,298 Invensys PLC 7,164,502
11,088,607 Marks & Spencer Group PLC 51,660,697
15,343,000 Reuters Group PLC 33,104,632
17,674,000 Royal & Sun Alliance Insurance Group 30,860,362
8,735,650 SABMiller PLC 60,175,154
12,395,700 Safeway PLC 53,887,083
--------------
TOTAL UNITED KINGDOM 454,195,386
--------------
See Accompanying Notes to Financial Statements
65
ING
International
Value
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
VENEZUELA: 0.5%
1,216,822 Cia Anonima Nacional Telefonos de
Venezuela -- CANTV ADR $ 12,667,117
--------------
TOTAL VENEZUELA 12,667,117
--------------
Total Common Stock (Cost $3,323,915,951) 2,451,924,363
--------------
TOTAL INVESTMENTS IN SECURITIES
(COST $3,323,915,951)* 97.7% $2,451,924,363
OTHER ASSETS AND LIABILITIES-NET 2.3 58,465,107
----- --------------
NET ASSETS 100.0% $2,510,389,470
===== ==============
@ Non-income producing security
ADR American Depository Receipt
PLC Public Limited Company
X Fair Value as determined by ING Valuation Committee appointed by the Fund's
Board of Directors.
A Loaned security, a portion or all of the security is on loan at April 30,
2003.
* Cost for federal income tax purposes is the same as for financial statement
purposes. Net unrealized depreciation consists of:
Gross Unrealized Appreciation $ 123,453,495
Gross Unrealized Depreciation (995,445,083)
--------------
Net Unrealized Depreciation $ (871,991,588)
==============
Percentage of
Industry Net Assets
- --------------------------------------------------------------------------------
Aerospace/Defense 2.0%
Agriculture 3.4%
Auto Parts & Equipment 2.2%
Banks 12.9%
Beverages 2.4%
Chemicals 3.7%
Computers 1.9%
Electric 5.3%
Electrical Components & Equipment 1.2%
Food 2.6%
Holding Companies-Diversified 1.7%
Home Builders 1.3%
Home Furnishings 2.0%
Insurance 5.5%
Iron/Steel 1.8%
Machinery-Construction & Mining 1.5%
Machinery-Diversified 0.1%
Media 1.3%
Miscellaneous Manufacturing 3.4%
Oil & Gas 8.5%
Pharmaceuticals 3.8%
Retail 2.1%
Telecommunication Services 2.2%
Telecommunication Equipment 4.7%
Telephone-Integrated 20.2%
Other Assets and Liabilities, Net 2.3%
-----
NET ASSETS 100.0%
=====
See Accompanying Notes to Financial Statements
66
ING
Precious
Metals
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK: 82.7%
CANADA: 37.7%
303,500 A Agnico-Eagle Mines Ltd. $ 3,041,070
200,000 Barrick Gold Corp. 2,990,000
264,400 @ Glamis Gold Ltd. 2,932,554
177,800 Goldcorp, Inc. 1,854,097
913,600 Iamgold Corp. 4,457,828
459,998 @ Kinross Gold Corp. 2,818,126
345,180 @ Meridian Gold, Inc. 3,504,665
200,000 A,@ PAN American Silver Corp. 1,256,000
413,500 A Placer Dome, Inc. 4,089,515
325,000 @ Wheaton River Minerals Ltd. 283,180
--------------
TOTAL CANADA 27,227,035
--------------
GHANA: 4.4%
600,000 @ Ashanti Goldfields Co. Ltd. GDR 3,174,000
--------------
TOTAL GHANA 3,174,000
--------------
PAPUA NEW GUINEA: 3.4%
3,000,000 Lihir Gold Ltd. 2,458,411
--------------
TOTAL PAPUA NEW GUINEA 2,458,411
--------------
PERU: 5.5%
150,000 Cia de Minas Buenaventura SA ADR 3,990,000
--------------
TOTAL PERU 3,990,000
--------------
SOUTH AFRICA: 11.2%
105,000 @ African Rainbow Minerals Gold Ltd. 809,546
95,000 A Anglogold Ltd. ADR 2,680,900
200,000 @ Durban Roodepoort Deep Ltd. 453,802
200,000 Gold Fields Ltd. ADR 2,030,000
200,000 Harmony Gold Mining Co. Ltd. ADR 2,100,000
--------------
TOTAL SOUTH AFRICA 8,074,248
--------------
UNITED KINGDOM: 9.0%
315,000 Lonmin Public Ltd. Co. 3,498,969
200,000 A,@ Randgold Resources Ltd. ADR 3,002,000
--------------
TOTAL UNITED KINGDOM 6,500,969
--------------
UNITED STATES: 11.5%
200,000 Freeport-McMoRan Copper & Gold, Inc. 3,462,000
225,000 @ Hecla Mining Co. 841,500
150,000 Newmont Mining Corp. 4,053,000
--------------
TOTAL UNITED STATES 8,356,500
--------------
Total Common Stock (Cost $51,302,887) 59,781,163
--------------
WARRANTS: 0.3%
CANADA: 0.3%
17,500 Agnico-Eagle Mines Ltd. 50,750
90,000 Kinross Gold Corp. 84,693
162,500 Wheaton River Minerals Ltd. 56,636
--------------
TOTAL CANADA 192,079
--------------
Total Warrants (Cost $116,366) 192,079
--------------
TOTAL INVESTMENTS IN SECURITIES
(COST $51,419,253)* 83.0% $ 59,973,242
OTHER ASSETS AND LIABILITIES-NET 17.0 12,291,669
----- --------------
NET ASSETS 100.0% $ 72,264,911
===== ==============
@ Non-income producing security
ADR American Depository Receipt
GDR Global Depository Receipt
A Loaned security, a portion or all of the security is on loan at April 30,
2003.
* Cost for federal income tax purposes is the same as for financial statement
purposes. Net unrealized appreciation consists of:
Gross Unrealized Appreciation $ 12,298,248
Gross Unrealized Depreciation (3,744,259)
--------------
Net Unrealized Appreciation $ 8,553,989
==============
Percentage of
Industry Net Assets
- --------------------------------------------------------------------------------
Gold Mining 64.9%
Metal-Diversified 6.0%
Platinum 4.8%
Silver Mining 7.3%
Other Assets and Liabilities, Net 17.0%
-----
NET ASSETS 100.0%
=====
See Accompanying Notes to Financial Statements
67
ING
Russia
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK: 79.7%
AIRLINES: 0.7%
2,446,350 I Aeroflot $ 801,180
--------------
801,180
--------------
AUTO: 0.00%
36,550 @,X,I Severstal-Avto --
--------------
--
--------------
BANKS: 3.6%
18,000 Sberbank RF 4,098,600
--------------
4,098,600
--------------
BEVERAGES: 1.6%
500,000 Sun Interbrew Ltd. GDR 1,830,000
--------------
1,830,000
--------------
ELECTRIC: 6.5%
2,115,000 Lenenergo 704,295
40,000,000 A Mosenergo 2,748,000
26,000,000 Unified Energy System 3,913,000
--------------
7,365,295
--------------
FOOD: 1.4%
90,000 A Wimm-Bill-Dann Foods OJSC ADR 1,651,500
--------------
1,651,500
--------------
GAS: 2.9%
210,000 A OAO Gazprom ADR 3,307,500
--------------
3,307,500
--------------
IRON/STEEL: 2.2%
43,000 Cherepovets MK Severstal 2,506,900
--------------
2,506,900
--------------
MINING: 4.2%
200,000 MMC Norilsk Nickel ADR 4,786,000
--------------
4,786,000
--------------
OIL & GAS: 40.2%
135,000 LUKOIL ADR 9,404,100
2,000,000 Sibneft 4,680,000
420,000 A Surgutneftegaz ADR 9,030,000
188,000 A Tatneft ADR 3,293,760
1,675,000 YUKOS 19,430,000
--------------
45,837,860
--------------
TELECOMMUNICATIONS: 16.4%
4,864,502 Central Telecommunications Co. 1,289,093
100,000 Golden Telecom, Inc. 1,690,000
70,000 A Mobile Telesystems ADR 3,360,000
200,000 Moscow City Telephone 1,370,000
1,098,882 Rostelecom 1,538,435
33,510,200 Sibirtelecom 891,371
104,962,293 Uralsvyazinform 1,805,351
77,000 A Vimpel-Communications ADR 3,069,220
1,500,000 I VolgaTelecom 2,407,500
15,409,869 I Yuzhnaya Telecommunication Co. 1,232,790
--------------
18,653,760
--------------
Total Common Stock (Cost $65,741,653) 90,838,595
--------------
PREFERRED STOCK: 7.2%
ELECTRIC: 1.3%
12,000,000 Unified Energy System 1,500,000
--------------
1,500,000
--------------
OIL & GAS: 3.0%
15,000,000 Surgutneftegaz 3,450,000
--------------
3,450,000
--------------
PIPELINES: 0.9%
2,800 Transneft 1,041,600
--------------
1,041,600
--------------
TELECOMMUNICATIONS: 2.0%
189,500 I Moscow City Telephone 767,475
71,082,514 Uralsvyazinform 860,098
658,030 I VolgaTelecom 684,351
--------------
2,311,924
--------------
Total Preferred Stock (Cost $6,361,148) 8,303,524
--------------
TOTAL INVESTMENTS IN SECURITIES
(COST $72,102,801)* 86.9% $ 99,142,119
OTHER ASSETS AND LIABILITIES-NET 13.1 14,978,416
----- --------------
NET ASSETS 100.0% $ 114,120,535
===== ==============
@ Non-income producing security
ADR American Depository Receipt
GDR Global Depository Receipt
X Fair Value as determined by ING Valuation Committee appointed by the Fund's
Board of Directors.
A Loaned security, a portion or all of the security is on loan at April 30,
2003.
I Illiquid security
* Cost for federal income tax purposes is the same as for financial statement
purposes. Net unrealized appreciation consists of:
Gross Unrealized Appreciation $ 33,795,514
Gross Unrealized Depreciation (6,756,196)
--------------
Net Unrealized Appreciation $ 27,039,318
==============
See Accompanying Notes to Financial Statements
68
ING
Global
Real Estate
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK: 90.4%
AUSTRALIA: 10.9%
271,000 Centro Properties Group $ 649,277
439,000 General Property Trust 823,849
625,000 Macquarie Goodman Industrial Trust 602,092
99,700 Stockland 311,837
422,600 Westfield Trust 906,746
--------------
TOTAL AUSTRALIA 3,293,801
--------------
CANADA: 2.5%
80,100 RioCan Real Estate Investment Trust 739,805
--------------
TOTAL CANADA 739,805
--------------
FRANCE: 3.9%
6,814 Gecina SA 767,286
6,200 Unibail 414,806
--------------
TOTAL FRANCE 1,182,092
--------------
HONG KONG: 2.2%
121,000 Cheung Kong Holdings Ltd. 668,684
--------------
TOTAL HONG KONG 668,684
--------------
JAPAN: 5.1%
50 Japan Real Estate Investment Corp. 268,321
100 Japan Retail Fund Investment Corp. 485,494
79,000 Mitsubishi Estate Co. Ltd. 462,368
34,000 Mitsui Fudosan Co. Ltd. 183,029
40,000 Sumitomo Realty & Development Co. Ltd. 130,807
--------------
TOTAL JAPAN 1,530,019
--------------
NETHERLANDS: 9.7%
20,000 Corio NV 596,167
29,000 Eurocommercial Properties NV 655,371
18,600 Rodamco Europe NV 903,993
8,100 Vastned Offices/Industrial 170,306
10,300 Wereldhave NV 593,132
--------------
TOTAL NETHERLANDS 2,918,969
--------------
SPAIN: 2.9%
119,634 Inmobiliaria Urbis SA 861,149
--------------
TOTAL SPAIN 861,149
--------------
UNITED KINGDOM: 10.4%
64,000 British Land Co. PLC 417,335
100,000 Canary Wharf Group PLC 260,515
137,500 Capital & Regional PLC 551,596
38,000 Hammerson PLC 276,337
55,650 Land Securities Group PLC 673,296
32,800 Liberty Intl. PLC 304,051
36,556 Pillar Property PLC 199,816
91,000 Slough Estates PLC 460,684
--------------
TOTAL UNITED KINGDOM 3,143,630
--------------
UNITED STATES: 42.8%
15,500 Apartment Investment & Management Co. 585,280
12,500 Arden Realty, Inc. 297,875
19,500 Boston Properties, Inc. 764,400
3,800 Crown American Realty Trust 38,836
44,000 Equity Office Properties Trust 1,142,680
10,000 First Industrial Realty Trust, Inc. 279,600
22,500 Gables Residential Trust 638,550
32,300 Glimcher Realty Trust 667,318
10,825 Health Care REIT, Inc. 308,188
23,400 Heritage Property Investment Trust 594,360
24,000 Hospitality Properties Trust 691,440
75,000 A Host Marriott Corp. 579,000
101,000 @ HRPT Properties Trust 912,030
30,000 iStar Financial, Inc. 897,900
18,000 Keystone Property Trust 309,600
30,000 Lexington Corporate Properties Trust 517,200
14,000 Liberty Property Trust 438,060
76,100 Meristar Hospitality Corp. 316,576
13,500 Mills Corp. 431,460
11,300 Prologis 290,862
18,300 Regency Centers Corp. 603,900
15,000 Simon Property Group, Inc. 550,800
45,800 Urstadt Biddle Properties, Inc. 558,760
38,000 Ventas, Inc. 494,000
--------------
TOTAL UNITED STATES 12,908,675
--------------
Total Common Stock (Cost $25,498,582) 27,246,824
--------------
PREFERRED STOCK: 2.7%
UNITED STATES: 2.7%
20,600 Keystone Property Trust 550,844
12,000 La Quinta Corp. 276,000
--------------
TOTAL UNITED STATES 826,844
--------------
Total Preferred Stock (Cost $795,993) 826,844
--------------
TOTAL INVESTMENTS IN SECURITIES
(COST $26,294,575)* 93.2% $ 28,073,668
OTHER ASSETS AND LIABILITIES-NET 6.8 2,058,053
----- --------------
NET ASSETS 100.0% $ 30,131,721
===== ==============
@ Non-income producing security
PLC Public Limited Company
A Loaned security, a portion or all of the security is on loan at April 30,
2003.
* Cost for federal income tax purposes is the same as for financial statement
purposes. Net unrealized appreciation consists of:
Gross Unrealized Appreciation $ 2,688,031
Gross Unrealized Depreciation (908,938)
--------------
Net Unrealized Appreciation $ 1,779,093
==============
See Accompanying Notes to Financial Statements
69
ING
Global
Real Estate
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Percentage of
Industry Net Assets
- --------------------------------------------------------------------------------
Closed-end Funds 3.0%
Property Trust 10.9%
Real Estate Management/Service 13.0%
Real Estate Operation/Development 15.7%
REITS-Apartments 4.1%
REITS-Diversified 9.0%
REITS-Health Care 3.6%
REITS-Hotels 5.3%
REITS-Office Property 11.2%
REITS-Regional Malls 3.4%
REITS-Shopping Centers 12.1%
REITS-Warehouse/Industry 1.9%
Other Assets and Liabilities, Net 6.8%
-----
NET ASSETS 100.0%
=====
See Accompanying Notes to Financial Statements
70
ING
Worldwide
Growth
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK: 93.7%
AUSTRALIA: 1.1%
308,700 A QBE Insurance Group Ltd. $ 1,649,136
--------------
TOTAL AUSTRALIA 1,649,136
--------------
BERMUDA: 1.5%
146,000 Tyco Intl. Ltd. 2,277,600
--------------
TOTAL BERMUDA 2,277,600
--------------
CANADA: 1.7%
52,432 EnCana Corp. 1,718,129
128,000 @ Kinross Gold Corp. 789,628
--------------
TOTAL CANADA 2,507,757
--------------
DENMARK: 1.8%
42,200 Danske Bank A/S 811,947
32,800 Novo-Nordisk A/S 1,188,218
28,100 TDC A/S 699,052
--------------
TOTAL DENMARK 2,699,217
--------------
FINLAND: 1.3%
12,800 Nokia OYJ ADR 212,096
63,200 Nokia OYJ 1,069,253
51,200 UPM-Kymmene OYJ 748,524
--------------
TOTAL FINLAND 2,029,873
--------------
FRANCE: 4.9%
14,200 Aventis SA 721,206
59,400 AXA 902,212
24,200 A Carrefour SA 1,052,471
13,800 A Pechiney SA 398,111
22,900 A Schneider Electric SA 1,084,102
18,700 A Societe Generale 1,143,632
11,620 Total Fina Elf SA 1,523,731
19,000 Valeo SA 544,307
--------------
TOTAL FRANCE 7,369,772
--------------
GERMANY: 2.2%
30,454 Deutsche Bank AG 1,574,942
25,150 Deutsche Boerse AG 1,178,831
76,500 Infineon Technologies AG 567,737
--------------
TOTAL GERMANY 3,321,510
--------------
GREECE: 0.2%
38,000 Greek Organization of Football
Prognostics SA 346,897
--------------
TOTAL GREECE 346,897
--------------
IRELAND: 1.2%
95,300 Irish Life & Permanent PLC 1,085,882
112,490 @ Ryanair Holdings PLC 769,553
--------------
TOTAL IRELAND 1,855,435
--------------
ISRAEL: 0.7%
23,000 Teva Pharmaceutical Industries
ADR 1,074,100
--------------
TOTAL ISRAEL 1,074,100
--------------
ITALY: 1.0%
298,000 A Banca Fideuram S.p.A. 1,573,047
--------------
TOTAL ITALY 1,573,047
--------------
JAPAN: 8.0%
29,500 FamilyMart Co Ltd. 562,741
31,000 Fanuc Ltd. 1,268,489
59,000 JGC Corp. 415,563
50,000 Kao Corp. 911,873
9,400 Mabuchi Motor Co. Ltd. 702,281
58,500 Marui Co. Ltd. 487,091
125,000 Nikko Cordial Corp. 335,402
101,000 Nomura Holdings, Inc. 1,000,176
820 NTT DoCoMo, Inc. 1,691,430
41,000 A Otsuka Kagu Ltd. 911,035
64,000 Sekisui House Ltd. 470,099
39,400 Shimano, Inc. 625,392
31,800 Sony Corp. 773,268
12,900 Tokyo Electron Ltd. 483,507
70,100 Toyota Motor Corp. 1,587,037
--------------
TOTAL JAPAN 12,225,384
--------------
MEXICO: 1.2%
186,500 Cemex SA de CV 845,339
33,900 Telefonos de Mexico SA de CV ADR 1,024,119
--------------
TOTAL MEXICO 1,869,458
--------------
NETHERLANDS: 2.4%
135,408 Aegon NV 1,376,661
43,723 Koninklijke Philips Electronics NV 813,410
24,800 Royal Dutch Petroleum Co. 1,014,355
12,100 Royal Dutch Petroleum Co. ADR 494,648
--------------
TOTAL NETHERLANDS 3,699,074
--------------
NEW ZEALAND: 0.7%
404,500 Telecom Corp. of New Zealand Ltd. 1,083,771
--------------
TOTAL NEW ZEALAND 1,083,771
--------------
NORWAY: 0.2%
77,500 Tomra Systems ASA 366,579
--------------
TOTAL NORWAY 366,579
--------------
RUSSIA: 0.7%
6,200 A YUKOS ADR 1,085,000
--------------
TOTAL RUSSIA 1,085,000
--------------
SINGAPORE: 0.5%
117,000 United Overseas Bank Ltd. 685,289
--------------
TOTAL SINGAPORE 685,289
--------------
SOUTH AFRICA: 0.4%
60,500 Gold Fields Ltd. ADR 614,075
--------------
TOTAL SOUTH AFRICA 614,075
--------------
SPAIN: 0.7%
99,700 Telefonica SA 1,102,638
--------------
TOTAL SPAIN 1,102,638
--------------
SWEDEN: 1.3%
33,300 Atlas Copco AB 753,145
59,000 ForeningsSparbanken AB 800,641
53,000 A Swedish Match AB 392,007
--------------
TOTAL SWEDEN 1,945,793
--------------
See Accompanying Notes to Financial Statements
71
ING
Worldwide
Growth
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
SWITZERLAND: 4.4%
8,500 Alcon, Inc. $ 374,425
1,940 Julius Baer Holding AG 407,653
8,120 Nestle SA 1,655,371
42,480 Novartis AG 1,675,647
27,150 Roche Holding AG 1,727,527
16,500 UBS AG 782,847
--------------
TOTAL SWITZERLAND 6,623,470
--------------
TAIWAN: 0.4%
63,100 @ Taiwan Semiconductor Manufacturing Co.
Ltd. ADR 528,147
--------------
TOTAL TAIWAN 528,147
--------------
UNITED KINGDOM: 8.7%
4,200 Amvescap PLC ADR 46,662
289,300 Amvescap PLC 1,572,071
178,000 BP PLC 1,127,997
196,900 @ British Sky Broadcasting PLC 2,040,800
34,700 Diageo PLC 384,887
83,200 GlaxoSmithKline PLC 1,667,499
50,800 HSBC Holdings PLC 555,285
59,800 Imperial Tobacco Group PLC 1,000,674
585,000 Legal & General Group PLC 724,607
63,000 Pearson PLC 525,097
74,800 Provident Financial PLC 686,212
66,450 Rio Tinto PLC 1,270,196
789,122 Vodafone Group PLC 1,557,600
--------------
TOTAL UNITED KINGDOM 13,159,587
--------------
UNITED STATES: 46.5%
5,800 Allergan, Inc. 407,450
52,400 @ Amazon.Com, Inc. 1,502,308
29,200 American Intl. Group 1,692,140
43,000 @ Amgen, Inc. 2,636,330
37,000 @ Analog Devices, Inc. 1,225,440
30,760 Apache Corp. 1,761,010
26,000 Avon Products, Inc. 1,512,420
32,900 @ Boston Scientific Corp. 1,416,345
130,300 @ Cisco Systems, Inc. 1,959,712
31,913 @ Comcast Corp. Class A 1,018,344
70,000 @ Comcast Corp. Class A+ 2,104,200
45,300 @ COX Communications, Inc. 1,499,430
29,200 @ eBay, Inc. 2,708,884
212,800 @ EMC Corp.-Mass. 1,934,352
15,000 @ Forest Laboratories, Inc. 775,800
141,500 Gap, Inc. 2,353,145
31,700 General Electric Co. 933,565
8,900 @ Gilead Sciences, Inc. 410,646
20,600 Goldman Sachs Group, Inc. 1,563,540
42,900 Guidant Corp. 1,672,671
91,600 Halliburton Co. 1,961,156
8,500 Harley-Davidson, Inc. 377,740
122,100 Hewlett-Packard Co. 1,990,230
44,700 International Business Machines Corp. 3,795,030
56,100 JP Morgan Chase & Co. 1,646,535
16,100 @ Kohl's Corp. 914,480
45,700 Linear Technology Corp. 1,575,279
28,700 Maxim Integrated Products 1,127,623
42,900 @ Medimmune, Inc. 1,513,083
27,000 Merck & Co., Inc. 1,570,860
74,600 Microsoft Corp. 1,907,522
58,700 @ Nextel Communications, Inc. 868,173
14,800 Nike, Inc. 792,244
65,200 @ Novellus Systems, Inc. 1,828,208
158,100 @ Oracle Corp. 1,878,228
49,500 Pfizer, Inc. 1,522,125
11,000 Schlumberger Ltd. 461,230
18,100 SLM Corp. 2,027,200
22,100 @ St. Jude Medical, Inc. 1,159,366
46,600 @ Staples, Inc. 887,264
40,900 Texas Instruments, Inc. 756,241
16,200 UnitedHealth Group, Inc. 1,492,506
47,100 @ Veritas Software Corp. 1,036,671
21,800 Wal-Mart Stores, Inc. 1,227,776
68,300 @ Xilinx, Inc. 1,848,881
106,200 @ Yahoo!, Inc. 2,631,636
15,800 @ Zimmer Holdings, Inc. 741,020
--------------
TOTAL UNITED STATES 70,626,039
--------------
Total Common Stock (Cost $135,471,367) 142,318,648
--------------
MUTUAL FUND: 1.6%
UNITED STATES: 1.6%
20,100 Internet HOLDRs Trust 643,401
43,900 @ Nasdaq-100 Index Tracking Stock 1,205,055
24,700 Semiconductor HOLDRs Trust 651,833
--------------
TOTAL UNITED STATES 2,500,289
--------------
Total Mutual Fund (Cost $2,357,337) 2,500,289
--------------
TOTAL INVESTMENTS IN SECURITIES
(COST $137,828,704)* 95.3% $ 144,818,937
OTHER ASSETS AND LIABILITIES-NET 4.7 7,065,324
----- --------------
NET ASSETS 100.0% $ 151,884,261
===== ==============
@ Non-income producing security
ADR AmericanDepository Receipt
PLC Public Limited Company
A Loaned security, a portion or all of the security is on loan at April 30,
2003.
* Cost for federal income tax purposes is the same as for financial statement
purposes. Net unrealized appreciation consists of:
Gross Unrealized Appreciation $ 15,054,372
Gross Unrealized Depreciation (8,064,139)
--------------
Net Unrealized Appreciation $ 6,990,233
==============
See Accompanying Notes to Financial Statements
72
ING
Worldwide
Growth
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Percentage of
Industry Net Assets
- --------------------------------------------------------------------------------
Agriculture 0.9%
Airlines 0.5%
Apparel 0.5%
Auto Manufacturers 1.0%
Auto Parts & Equipment 0.4%
Banks 4.5%
Beverages 0.3%
Biotechnology 1.7%
Building Materials 0.6%
Computers 5.8%
Cosmetics/Personal Care 1.6%
Diversified Financial Services 8.4%
Electronics 1.8%
Engineering & Construction 0.3%
Entertainment 0.2%
Environmental Control 0.2%
Equity Fund 1.7%
Food 1.8%
Forest Products & Paper 0.5%
Hand/Machine Tools 0.7%
Healthcare-Product 3.5%
Healthcare-Service 1.0%
Home Builders 0.3%
Home Furnishings 0.5%
Insurance 4.1%
Internet 4.5%
Leisure Time 0.7%
Machinery-Construction & Mining 0.5%
Media 4.7%
Mining 2.0%
Miscellaneous Manufacturing 2.1%
Oil & Gas 5.7%
Oil & Gas Services 1.6%
Pharmaceuticals 9.4%
Retail 4.8%
Semiconductors 6.6%
Software 2.5%
Telecommunications 7.4%
Other Assets and Liabilities, Net 4.7%
-----
NET ASSETS 100.0%
=====
See Accompanying Notes to Financial Statements
73
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:
SHARES VOTED
SHARES VOTED AGAINST OR SHARES BROKER TOTAL
FOR WITHHELD ABSTAINED NON-VOTE SHARES VOTED
--- -------- --------- -------- ------------
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.
ING Russia Fund 6,315,267 175,813 49,981 -- 6,541,062
ING Emerging Countries Fund 6,649,778 95,502 93,806 -- 6,839,086
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.
ING Russia Fund 6,131,930 247,492 161,640 -- 6,541,062
ING Emerging Countries Fund 6,435,163 270,754 133,170 -- 6,839,086
See Accompanying Notes to Financial Statements
74
TRUSTEE AND OFFICER INFORMATION (Unaudited)
- --------------------------------------------------------------------------------
The business and affairs of the Trusts are managed under the direction of the
Trusts' Board of Trustees. A Trustee who is not an interested person of the
Trusts, as defined in the 1940 Act, is an independent trustee ("Independent
Trustee"). The Trustees and Officers of the Trust are listed below. The
Statement of Additional Information includes additional information about
trustees of the Registrant and is available, without charge, upon request at
1-800-992-0180.
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH TIME DURING THE OVERSEEN HELD BY
AND AGE FUND SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE
------- ---- --------- --------------- ---------- -------
INDEPENDENT TRUSTEES
Paul S. Doherty(2) Trustee October Mr. Doherty is 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 1999 - President and Partner, (February 2002 -
Scottsdale, Arizona 85258 Present Doherty, Wallace, Present).
Born: 1934 Pillsbury and Murphy,
P.C., Attorneys (1996 -
Present); Director,
Tambrands, Inc. (1993 -
1998); and Trustee of
each of the funds
managed by Northstar
Investment
Management
Corporation (1993 -
1999).
J. Michael Earley(3) Trustee February President and Chief 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 2002 - Executive Officer, (1997 - Present).
Scottsdale, Arizona 85258 Present Bankers Trust Company,
Born: 1945 N.A. (1992 - Present).
R. Barbara Gitenstein(2) Trustee February President, College of 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 2002 - New Jersey (1999 - (1997 - Present).
Scottsdale, Arizona 85258 Present Present). Formerly,
Born: 1948 Executive Vice
President and Provost,
Drake University (1992
- 1998).
Walter H. May(2) Trustee October Retired. Formerly, 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 1999 - Managing Director and (February 2002 -
Scottsdale, Arizona 85258 Present Director of Marketing, Present) and Best Prep
Born: 1936 Piper Jaffray, Inc.; Charity (1991 -
Trustee of each of the Present).
funds managed by
Northstar Investment
Management
Corporation (1996 -
1999).
Jock Patton(2) Trustee August Private Investor (June 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 1995 - 1997 - Present). (February 2002 -
Scottsdale, Arizona 85258 Present Formerly, Director and Present); Director,
Born: 1945 Chief Executive Officer, Hypercom, Inc. (January
Rainbow Multimedia 1999 - Present); JDA
Group, Inc. (January Software Group, Inc.
1999 - December 2001); (January 1999 -
Director of Stuart Present); Buick of
Entertainment, Inc.; Scottsdale, Inc.;
Director of Artisoft, Inc. National Airlines, Inc.;
(1994 - 1998). BG Associates, Inc.; BK
Entertainment, Inc.;
and Arizona Rotorcraft,
Inc.
75
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
- --------------------------------------------------------------------------------
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH TIME DURING THE OVERSEEN HELD BY
AND AGE FUND SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE
------- ---- --------- --------------- ---------- -------
David W.C. Putnam(3) Trustee October President and Director, 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 1999 - F.L. Putnam Securities (February 2002 -
Scottsdale, Arizona 85258 Present Company, Inc. and its Present), Anchor
Born: 1939 affiliates; President, International Bond
Secretary and Trustee, (December 2000 -
The Principled Equity Present); Progressive
Marke Fund. Formerly, Capital Accumulation
Trustee, Trust Realty Trust (August 1998 -
Trust (December Corp.; Present); Principled
Anchor Investment Equity Market Fund
Trust; Bow 2000 - (November 1996 -
Present); Ridge Mining Present), Mercy
Company and each of Endowment
the F.L. Putnam funds Foundation (1995 -
managed by Northstar Present); Director, F.L.
Investment Foundation Putnam Investment
Management Management Company
Corporation (1994 - (December 2001 -
1999). Present); Asian
American Bank and
Trust Company (June
1992 - Present); and
Notre Dame Health
Care Center (1991 -
Present) F.L. Putnam
Securities Company,
Inc. (June 1978 -
Present); and an
Honorary Trustee,
Mercy Hospital (1973 -
Present).
Blaine E. Rieke(3) Trustee February General Partner, 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 2001 - Huntington Partners (February 2002 -
Scottsdale, Arizona 85258 Present (January 1997 - Present) and Morgan
Born: 1933 Present). Chairman of Chase Trust Co.
the Board and Trustee (January 1998 -
of each of the funds Present).
managed by ING
Investment
Management Co. LLC
(November 1998 -
February 2001).
Roger B. Vincent(3) Trustee February President, Springwell 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 2002 - Corporation (1989 - (1994 - Present); and
Scottsdale, Arizona 85258 Present Present). Formerly, Director, AmeriGas
Born: 1945 Director, Tatham Propane, Inc. (1998 -
Offshore, Inc. (1996 - Present).
2000).
Richard A. Wedemeyer(2) Trustee February Retired. Mr. 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 2001 - Wedemeyer was (February 2002 -
Scottsdale, Arizona 85258 Present formerly Vice President Present) and
Born: 1936 - Finance and Touchstone Consulting
Administration, Group (1997 - Present).
Channel Corporation
(June 1996 - April
2002). Formerly, Vice
President, Operations
and Administration,
Jim Henson
Productions. (1979 -
1997); Trustee, First
Choice Funds (1997 -
2001); and of each of
the funds managed by
ING Investment
Management Co. LLC
(1998 - 2001).
76
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
- --------------------------------------------------------------------------------
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH TIME DURING THE OVERSEEN HELD BY
AND AGE FUND SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE
------- ---- --------- --------------- ---------- -------
TRUSTEES WHO ARE "INTERESTED PERSONS"
Thomas J. McInerney(5) Trustee February Chief Executive Officer, 160 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 2001 - ING U.S. Financial (February 2002 -
Scottsdale, Arizona 85258 Present Services (September Present); Equitable Life
Born: 1956 2001 - Present); Insurance Co., Golden
General Manager and American Life
Chief Executive Officer, Insurance Co., Life
ING U.S. Worksite Insurance Company of
Financial Services Georgia, Midwestern
(December 2000 - United Life Insurance
Present); Member, ING Co., ReliaStar Life
Americas Executive Insurance Co., Security
Committee (2001 - Life of Denver, Security
Present); President, Connecticut Life
Chief Executive Officer Insurance Co.,
and Director of Southland Life
Northern Life Insurance Insurance Co., USG
Company (March 2001 - Annuity and Life
October 2002), ING Company, and United
Aeltus Holding Life and Annuity
Company, Inc. (2000 - Insurance Co. Inc
Present), ING Retail (March 2001 - Present);
Holding Company Director, Ameribest Life
(1998 - Present), ING Insurance Co., (March
Life Insurance and 2001 to January 2003);
Annuity Company Director, First
(September 1997 - Columbine Life
November 2002) and Insurance Co. (March
ING Retirement 2001 to December
Holdings, Inc. (1997 - 2002); Member of the
Present). Formerly, Board, National
General Manager and Commission on
Chief Executive Officer, Retirement Policy,
ING Worksite Division Governor's Council on
(December 2000 - Economic
October 2001), Competitiveness and
President, ING-SCI, Inc. Technology of
(August 1997 - Connecticut,
December 2000); Connecticut Business
President, Aetna and Industry
Financial Services Association, Bushnell;
(August 1997 - Connecticut Forum;
December 2000). Metro Hartford
Chamber of Commerce;
and is Chairman,
Concerned Citizens for
Effective Government.
77
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
- --------------------------------------------------------------------------------
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH TIME DURING THE OVERSEEN HELD BY
AND AGE FUND SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE
------- ---- --------- --------------- ---------- -------
John G. Turner(6) Trustee October Chairman, Hillcrest 106 Trustee, GCG; Director,
7337 E. Doubletree Ranch Rd. 1999 - Capital Partners (May Hormel Foods
Scottsdale, Arizona 85258 Present 2002-Present); Corporation (March
Born: 1939 President, Turner 2000 - Present); Shopko
Investment Company Stores, Inc. (August
(January 2002 - 1999 - Present); and
Present). Mr. Turner M.A. Mortenson
was formerly Vice Company (March 2002 -
Chairman of ING Present).
Americas (2000 - 2002);
Chairman and Chief
Executive Officer of
ReliaStar Financial
Corp. and ReliaStar Life
Insurance Company
(1993 - 2000); Chairman
of ReliaStar United
Services Life Insurance
Company (1995 - 1998);
Chairman of ReliaStar
Life Insurance Company
of New York (1995 -
2001); Chairman of
Northern Life Insurance
Company (1992 - 2001);
Chairman and Trustee
of the Northstar
affiliated investment
companies (1993 -
2001) and Director,
Northstar Investment
Management
Corporation and its
affiliates (1993 - 1999).
- ----------
(1) Trustees serve until their successors are duly elected and qualified.
(2) Valuation Committee member.
(3) Audit Committee member.
(4) Mr. Hilliard is an "interested person," as defined by the Investment
Company Act of 1940, as amended (the "1940 Act"), because of his
relationship with ING Americas, an affiliate of ING Investments, LLC.
(5) Mr. McInerney is an "interested person," as defined by the 1940 Act,
because of his affiliation with ING U.S. Worksite Financial Services, an
affiliate of ING Investments, LLC.
(6) Mr. Turner is an "interested person," as defined by the 1940 Act, because
of his affiliation with ING Americas, an affiliate of ING Investments, LLC.
78
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL
TERM OF OFFICE OCCUPATION(S)
NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE
AND AGE HELD WITH THE TRUST TIME SERVED(1) PAST FIVE YEARS
------- ------------------- -------------- ---------------
OFFICERS:
James M. Hennessy President and Chief February 2001 - President and Chief Executive
7337 E. Doubletree Ranch Rd., Executive Officer Present Officer of ING Capital Corporation,
Scottsdale, Arizona 85258 LLC, ING Funds Services, LLC, ING
Born: 1949 Chief Operating June 2000 - Present Advisors, Inc., ING Investments,
Officer LLC, Lexington Funds Distributor,
Inc., Express America T.C. Inc. and
Senior Executive June 2000 - February EAMC Liquidation Corp. (since
Vice President 2001 December 2001); Executive Vice
President and Chief Operating
Secretary April 1995 - February Officer of ING Funds Distributor,
2001 LLC (since June 2000). Formerly,
Executive Vice President and Chief
Operating Officer of ING
Quantitative Management, Inc.
(October 2001 to September
2002); Senior Executive Vice
President (June 2000 to December
2000) and Secretary (April 1995 to
December 2000) of ING Capital
Corporation, LLC, ING Funds
Services, LLC, ING Investments,
LLC, ING Advisors, Inc., Express
America T.C. Inc., and EAMC
Liquidation Corp.; and Executive
Vice President, ING Capital
Corporation, LLC and its affiliates
(May 1998 to June 2000) and
Senior Vice President, ING Capital
Corporation, LLC and its affiliates
(April 1995 to April 1998).
Michael J. Roland Executive Vice February 2002 - Executive Vice President, Chief
7337 E. Doubletree Ranch Rd., President and Present Financial Officer and Treasurer of
Scottsdale, Arizona 85258 Assistant Secretary ING Funds Services, LLC, ING Funds
Born: 1958 Distributor, LLC, ING Advisors, Inc.,
Chief Financial Officer June 1998 - Present ING Investments, LLC (December
2001 to present), Lexington Funds
Senior Vice President June 1998 - February Distributor, Inc., Express America
2002 T.C. Inc. and EAMC Liquidation
Corp. (since December 2001).
Formerly, Executive Vice President,
Chief Financial Officer and
Treasurer of ING Quantitative
Management, Inc. (December 2001
to October 2002); Senior Vice
President, ING Funds Services, LLC,
ING Investments, LLC, and ING
Funds Distributor, LLC (June 1998
to December 2001) and Chief
Financial Officer of Endeavor
Group (April 1997 to June 1998).
79
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL
TERM OF OFFICE OCCUPATION(S)
NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE
AND AGE HELD WITH THE TRUST TIME SERVED(1) PAST FIVE YEARS
------- ------------------- -------------- ---------------
OFFICERS:
Robert S. Naka Senior Vice President November 1999 - Senior Vice President and Assistant
7337 E. Doubletree Ranch Rd., Present Secretary of ING Funds Services,
Scottsdale, Arizona 85258 LLC, ING Funds Distributor, LLC,
Born: 1963 Assistant Secretary July 1996 - Present ING Advisors, Inc., ING
Investments, LLC (October 2001 to
present) and Lexington Funds
Distributor, Inc. (since December
2001). Formerly, Senior Vice
President and Assistant Secretary
for ING Quantitative
Management, Inc. (October 2001
to October 2002); Vice President,
ING Investments, LLC (April 1997
to October 1999) , ING Funds
Services, LLC (February 1997 to
August 1999) and Assistant Vice
President, ING Funds Services, LLC
(August 1995 to February 1997).
Kimberly A. Anderson Vice President and February 2001 - Vice President and Assistant
7337 E. Doubletree Ranch Rd., Secretary Present Secretary of ING Funds Services,
Scottsdale, Arizona 85258 LLC, ING Funds Distributor, LLC,
Born: 1964 Assistant November 1999 - ING Advisors, Inc., ING
Vice President and February 2001 Investments, LLC (since October
Assistant Secretary 2001) and Lexington Funds
Distributor, Inc. (since December
2001). Formerly, Vice President for
ING Quantitative Management,
Inc. (October 2001 to October
2002); Assistant Vice President of
ING Funds Services, LLC (November
1999 to January 2001) and has
held various other positions with
ING Funds Services, LLC for more
than the last five years
Robyn L. Ichilov Vice President November 1997 - Vice President of ING Funds
7337 E. Doubletree Ranch Rd., Present Services, LLC (since October 2001)
Scottsdale, Arizona 85258 and ING Investments, LLC (since
Born: 1967 August 1997); Accounting
Manager, ING Investments, LLC
(since November 1995).
Maria M. Anderson Assistant August 2001 - Present Assistant Vice President of ING
7337 E. Doubletree Ranch Rd., Vice President Funds Services, LLC (since October
Scottsdale, Arizona 85258 2001). Formerly, Manager of Fund
Born: 1958 Accounting and Fund Compliance,
ING Investments, LLC (September
1999 to November 2001); Section
Manager of Fund Accounting,
Stein Roe Mutual Funds (July 1998
to August 1999); and Financial
Reporting Analyst, Stein Roe
Mutual Funds (August 1997 to July
1998).
Todd Modic Assistant August 2001 - Present Vice-President of Financial
7337 E. Doubletree Ranch Rd., Vice President Reporting-Fund Accounting of ING
Scottsdale, Arizona 85258 Funds Services, LLC (September
Born: 1967 2002 to present). Director of
Financial Reporting of ING
Investments, LLC (since March
2001). 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).
80
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL
TERM OF OFFICE OCCUPATION(S)
NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE
AND AGE HELD WITH THE TRUST TIME SERVED(1) PAST FIVE YEARS
------- ------------------- -------------- ---------------
OFFICERS:
Susan P. Kinens Assistant February 2003 - Assistant Vice President and
7337 E. Doubletree Ranch Rd. Vice President and Present (For the ING Assistant Secretary, ING Funds
Scottsdale, Arizona 85258 Assistant Secretary Funds) Services, LLC (December 2002 -
Born: 1976 Present); and has held various
other positions with ING Funds
Services, LLC for the last five years.
- ----------
(1) The officers hold office until the next meeting of the Trustees and until
their successors shall have been elected and qualified.
81
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 DOMESTIC EQUITY VALUE FUNDS
ING Emerging Countries Fund ING Financial Services Fund
ING International Fund ING Large Company Value Fund
ING International Growth Fund ING MagnaCap Fund
ING International SmallCap Growth Fund ING Tax Efficient Equity Fund
ING International Value Fund ING Value Opportunity Fund
ING Precious Metals Fund ING SmallCap Value Fund
ING Russia Fund ING MidCap Value Fund
INTERNATIONAL GLOBAL EQUITY DOMESTIC EQUITY AND INCOME FUNDS
ING Global Real Estate Fund ING Equity and Bond Fund
ING Worldwide Growth Fund ING Convertible Fund
ING Balanced Fund
DOMESTIC EQUITY FUNDS ING Growth and Income Fund
ING Growth Fund
ING Growth + Value Fund FIXED INCOME FUNDS
ING Growth Opportunities Fund ING Bond Fund
ING LargeCap Growth Fund ING Classic Money Market Fund*
ING MidCap Opportunities Fund ING Government Fund
ING Small Company Fund ING GNMA Income Fund
ING SmallCap Opportunities Fund ING High Yield Opportunity Fund
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is possible to lose money by investing in the Fund.
INVESTMENT MANAGER
ING Investments, LLC
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Dechert
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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.
[LION LOGO]
ING FUNDS
INTLABCSAR0403-062503
SEMI-ANNUAL REPORT
INTERNATIONAL EQUITY FUNDS
April 30, 2003 ING Emerging Countries Fund
ING International Fund
CLASSES I AND Q ING International SmallCap Growth Fund
ING International Value Fund
GLOBAL EQUITY FUNDS
ING Worldwide Growth Fund
[PHOTO]
[LION LOGO]
ING FUNDS
TABLE OF CONTENTS
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President's Letter ........................... 1
Portfolio Managers' Reports:
International Equity Funds ................. 2
Global Equity Funds ........................ 10
Index Descriptions ........................... 12
Statements of Assets and Liabilities ......... 13
Statements of Operations ..................... 15
Statements of Changes in Net Assets .......... 16
Financial Highlights ......................... 19
Notes to Financial Statements ................ 24
Portfolios of Investments .................... 36
Shareholder Meeting Information .............. 49
Trustee and Officer Information .............. 50
PRESIDENT'S LETTER
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[PHOTO OF JAMES M. HENNESSY]
Dear Shareholder,
It would be an understatement to refer to this past year as a challenging one
for investors. There have been many events on the geopolitical front and
numerous economic challenges that have tested investor resilience.
We are now in a period of one of the longest economic downturns in U.S. history.
Although few of us will take much comfort in the fact that we have coped with a
particularly challenging time, perhaps we should.
We at ING Funds remain optimistic about the future, preferring to see the
positives that have emerged in the wake of recent difficulties. For instance,
the quick actions on the part of the financial industry and government
regulators that followed a string of recent corporate scandals may have helped
regain investor trust and the tough new accounting standards now in place should
help permanently improve our industry.
Although I do not wish to be premature in my enthusiasm, I do believe that the
gradual market upturn of recent months supports ING Funds' long-held philosophy
that it is important to remain focused on long-term investment goals and
maintain reasonable expectations.
In recent months, we at ING Funds have made some changes to some of our fund
management teams. We have also entered into new relationships with respected
sub-advisers and are launching several new mutual funds. We have implemented
improvements to our website that make it more accessible to investors and
financial advisors alike.
We remain committed to providing quality service and innovative products to help
meet the needs of our investors, and we are excited and optimistic about the
future.
On behalf of ING Funds, I thank you for your continued support and confidence
and look forward to serving you in the future.
Sincerely,
/s/ James M. Hennessy
James M. Hennessy
President
ING Funds
June 15, 2003
1
ING EMERGING COUNTRIES FUND Portfolio Managers' Report
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT TEAM: Jan Wim Derks, Eric Anderson, Bratin Sanyal, Fritz
Moolhuizen and Michiel Bootsma, 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. The Fund invests at least 80% of its assets in securities
of issuers located in at least three countries with emerging securities markets.
MARKET OVERVIEW: Emerging market equities gained 5.9% over the six-month period
ending April 30, 2003, slightly ahead of the S&P 500 which rose 4.5% but lagged
the NASDAQ which rose 10.4%. Emerging markets were also ahead of Europe (up 4%)
and Japan (down 6.3%). Emerging markets have now outperformed developed markets
over the last three years by more than 5%.
The period saw record inflows into emerging market fixed income assets pursuing
higher yields as the macroeconomic picture continued to improve in the high
yielding economies of Latin America. The ensuing liquidity in the fixed income
markets led to sizeable contraction in debt spreads, which in turn drove equity
performance not only in Latin America but also in other high yield markets like
South Africa, Indonesia and lately the Philippines.
Latin America was the best performing region within emerging markets gaining 26%
driven by a spectacular performance from Brazil, up 42%. Having moved sideways
for the first few months of the reporting period it 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 8% but gains were limited by concerns regarding the economic
health of its largest trading partner, the United States. Argentina rebounded
off a low base (up 79%) driven mostly by currency gains and Peru gained 37% on
account of rising copper prices, its largest commodity export item.
The EMEA (Europe, Middle East and Africa) region performed quite strongly as
well, gaining 16%. The Czech Republic and Hungary continued their winning streak
rising 29% and 23%, respectively, following the convergence theme (with the
European Union). Russia put on 16.4% as it benefited from high oil prices and
improvements in corporate governance. An additional impetus for the market was
the announcement of BP entering into a joint venture with a Russian oil company.
Soon after, Yukos and Sibneft announced their merger plans thereby creating a
formidable force in the global oil and gas sector (roughly the size of Total
Fina Elf). South Africa gained 13.8%, which was due to a 40% gain in the South
African Rand while the market actually declined 25% in Rand terms.
Full of promise, early on, the laggard region was Asia, losing 4.6%. The prime
factors contributing to this poor performance were rising geopolitical tension
vis---vis North Korea and the outbreak of atypical pneumonia (also known as
SARS) in China, which then quickly spread to several other countries in the
region. South Korea slid 6.6% as North Korea first withdrew from its armistice
pact with South Korea and then threatened to re-start its nuclear weapons
program only to follow up with the admission of actually possessing nuclear
weapons. Asia also suffered from weakening global growth expectations as it
remains an economy highly geared to external demand for its IT and industrial
sectors. Just as the region was coming to grips with its new geopolitical
situation, SARS was detected in Hong Kong, which was then traced back to China.
However, this virulent disease quickly spread around the region creating panic,
dealing a severe blow to consumer confidence, domestic demand and the
leisure/tourism sector, which is an important foreign currency earner.
Subsequently, markets danced to the ebbs and flows of SARS related news items
while ignoring economic data, which have remained surprisingly good. The only
markets to record positive gains were Indonesia (up 39.8%) and Thailand (up
12.7%) but their relatively small size failed to pull up the region.
PERFORMANCE: For the six-months ended April 30, 2003 the Fund's Class Q shares
provided a total return of 2.19% compared to the MSCI EMF Index, which returned
5.93%.
PORTFOLIO SPECIFICS: We began the period with an overweight in Asia which we
started trimming as South Korea began getting impacted by news flow from North
Korea. We were also fairly quick in reducing China as SARS was reported there.
More recently we have added to our positions in South Korea we believe much of
the negative news has been priced in and introduced some defensive names in
China. Elsewhere in the region we maintained our overweights in India, Indonesia
and Thailand. We have maintained our overweight in Latin America primarily via
Brazil and Mexico both of which have benefited the Fund. Recently, we have
top-sliced our positions in Brazil while maintaining our overweight stance. In
the EMEA region we are overweight Eastern Europe and Russia while maintaining
South Africa as an underweight. We have increased our weighting in Poland early
this year to profit from the convergence theme as it remains to be well
2
Portfolio Managers' Report ING EMERGING COUNTRIES FUND
- --------------------------------------------------------------------------------
played out in the equity markets there. Some notable outperformers in our
portfolio have been America Moviles (+36%), Astra International (+133%), Banco
Itau (+69%), Evergreen Marine (+67%) and Samsung Heavy (+58%), whereas some of
the underachievers have been Infosys (-32%), Kookmin Bank (-25%), Synnex (-19%),
Hon Hai (-14%) and Samsung Electronics (-11%).
MARKET OUTLOOK: In spite of all the uncertainties related to the outcome of the
war in Iraq and its implications for the global economy, we remain constructive
on the emerging markets asset class. We believe emerging markets may deliver
another year of earnings growth given our assumption of a gradual recovery in
global economic growth. As global risk aversion declines, 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 2003, average P/E's
are at around 10 times earnings. Furthermore, emerging economies are expected to
grow by 3.7% on average in 2003 versus 1.7% in developed markets. In addition,
with the current dividend yield of approximately 2.5% we also see yield support.
Our strategy appears to be to focus on countries where economic growth is
rebounding and on companies with improving cash flows, solid balance sheets and
attractive valuations. We are currently finding the best opportunities in
Brazil, Mexico, Thailand, India and Eastern Europe.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED APRIL 30, 2003
------------------------------------------
SINCE INCEPTION
OF CLASS Q
1 YEAR 5 YEAR 08/31/95
------ ------ --------
Class Q -19.31% -6.32% 0.87%
MSCI EMF Index -14.06% -5.04% -3.74%(1)
Based on a $10,000 initial investment, the table above illustrates the total
return of ING Emerging Countries Fund against the MSCI EMF Index. The Index has
no cash in its portfolio, imposes no sales charges and incurs no operating
expenses. An investor cannot invest directly in an index.
Performance table does not reflect the deduction of taxes that a shareholder
will pay on Fund distributions or the redemption of Fund shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Fund. Total returns would have been
lower had there been no waiver to the Fund.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
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 9/1/95.
PRINCIPAL RISK FACTOR(S): Sensitivity to currency exchange 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 12.
3
ING INTERNATIONAL FUND Portfolio Managers' Report
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT TEAM: Managed by Philip Schwartz and Richard Saler, Senior
Vice Presidents, ING Investments, LLC.
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. Under normal conditions the Fund invests at least 65%
of its net assets in equity securities of issuers located in countries outside
of the U.S. The Fund may hold up to 35% of its assets in securities of U.S.
issuers, including investment-grade debt securities.
MARKET OVERVIEW: The six-month period ended
April 30, 2003 showed relatively little change for the major markets, compared
to the volatility of the last three years. In dollar terms, the MSCI EAFE Index
rose 0.6%, and Europe gained 2.7%, while Japan declined by 7.8%. As the larger
foreign markets struggled, better performance was found in Asia ex-Japan,
emerging markets and the U.S., which rose by 3.8%, 4.2%, and 3.7%, respectively.
In October of last year, a rally materialized, which faded quickly into January.
Markets shifted from a focus on economic recovery to potential repercussions of
war in Iraq, and gave back all the gains. World market declines in March were
particularly acute, as war and deflation fears together raised questions of
systemic risk. Within days of the onset of war, markets then staged a sharp
reversal from oversold lows, which continued through April.
There were good reasons for the relatively weak showing of developed foreign
markets. In the eurozone, gross domestic product ("GDP") growth stalled after an
anemic bounce back to 1.2% during 2002. Economic pressure created by a lack of
major reform became more evident, especially in a weak environment. Adding
pressure to Europe's competitiveness was the 20% fall in the dollar versus the
euro. Germany, in particular, looks close to deflationary conditions, but is
absent a credible recovery strategy. The threat of a capital shortage among
European insurance companies was also worrisome during this period. These
worries led to sharp declines in many financial stocks, bringing market indexes
down with them.
Japan emerged from recession, at least temporarily, showing GDP growth of 2.7%
in the first quarter of 2003. Japanese markets continued their long slide as no
real progress was made towards structural reform. Hopes for continuing the
export-led recovery faded in the first quarter. China and pockets of emerging
markets did show some strength, but even there, forecasts were reduced due to
the Severe Acute Respiratory Syndrome (SARS) outbreak.
At the end of April, markets worldwide were anticipating economic recovery,
while recent numbers indicated weakness. The markets seemed to expect signs of
growth fairly soon.
PERFORMANCE: For the six-month period ended April 30, 2003, the Fund's Class Q
shares provided a total return of -0.65%, compared to the MSCI EAFE Index, which
returned 2.04% for the same period.
PORTFOLIO SPECIFICS: The portfolio remained well diversified. Despite a cloudy
outlook, steep multiyear declines meant equity prices were becoming more
attractive. Stock selection focused on financially strong companies that we
believe could weather difficult times. The Fund was underweight financials and
utilities by 4.8% each. We were concerned about deterioration in bank loan
books, which led to our underweighting banks. Utilities did not offer good value
since they had enjoyed two years of relative outperformance. The Fund was about
2% overweight in energy, where oil stocks offered attractive dividend yields and
had ignored the sharp rise in oil prices.
The Fund benefited from strong gains in Credit Lyonnais, which advanced
considerably on a takeover offer. Also helping returns was Teva Pharmaceutical,
up significantly on strong drug sales and Food and Drug Administration (FDA)
approvals. Among disappointing stocks were Sony, down substantially, on weak
consumer electronics sales, and Aegon, down significantly in tandem with many
European insurance stocks.
MARKET OUTLOOK: The outlook for international equities has improved over the
past month. Although the geopolitical environment is far from stable, the end of
the Iraq war eliminates a major risk. Falling bond yields, especially in the
high yield sector, are providing a major stimulus to business. The weakness of
the dollar is also becoming an important issue. A weak dollar is a stimulant to
the U.S. economy; however, this may put additional pressure on European and
Japanese economies. It is highly likely the European Central Bank will move to
cut interest rates aggressively. Unfortunately for Japan, rate cuts are no
longer an option as they are already near 0%. Despite the recent rise in equity
prices, valuation remains reasonably attractive overseas. Our opinion is more
favorable toward stocks. Fixed income alternatives look expensive, and corporate
earnings look set to improve in the second half of 2003 and into next year.
In light of a more positive outlook, we have continued to reduce weightings in
consumer staples and pharmaceuticals. We have also added to sectors that are
more geared to economic growth, such as industrials and capital goods.
4
Portfolio Managers' Report ING INTERNATIONAL FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR
THE PERIODS ENDED APRIL 30, 2003
------------------------------------------------
SINCE INCEPTION SINCE INCEPTION
OF CLASS I OF CLASS Q
1 YEAR 01/15/02 02/26/01
------ -------- --------
Class I -18.76% -11.77% --
Class Q -18.86% -- -14.76%
MSCI EAFE Index -15.92% -11.34%(1) -13.75%(2)
Based on a $10,000 initial investment, the table above illustrates the total
return of ING International Fund against the MSCI EAFE Index. The Index has no
cash in its portfolio, imposes no sales charges and incurs no operating
expenses. An investor cannot invest directly in an index.
Performance table does not reflect the deduction of taxes that a shareholder
will pay on Fund distributions or the redemption of Fund shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Fund. Total returns would have been
lower had there been no waiver to the Fund.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
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 01/01/02.
(2) Since inception performance for the 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 foreign equities. Currency exchange rates, international,
political and economic conditions and other risks affect foreign securities. The
risks of foreign investing are generally intensified for investing in emerging
markets.
See accompanying index descriptions on page 12.
5
ING INTERNATIONAL
SMALLCAP GROWTH FUND Portfolio Manager's Report
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT TEAM: Loretta J. Morris, Portfolio Manager, Horacio A.
Valeiras, CFA, Chief Investment Officer, with Nicholas-Applegate Capital
Management, the Sub-Adviser.
GOAL: The International SmallCap Growth Fund (the "Fund") seeks maximum
long-term capital appreciation.
MARKET OVERVIEW: The international stock markets endured yet another challenging
period during the six months ended April 30, 2003. Sluggish economic growth
worldwide, the spectre of war in Iraq and deteriorating conditions in the German
and Japanese financial systems dampened investor sentiment. Despite these
overhangs, international equities held up remarkably well.
The international equity market became sharply oversold in the third quarter and
into the fourth quarter, with investor sentiment dampened by anemic growth
rates, pessimism over financial services companies (particularly in Germany),
the overhang of the Iraq situation and terrorism, and debt downgrades from
credit rating agencies. Then, in early October, international equities rallied
sharply as many beaten-down stocks rallied as much as 160%, while
higher-quality, better-performing companies averaged an appreciation rate of
16%. In December, international stocks retreated somewhat as concerns arose that
per-share earnings estimates remained high. The market began to exhibit greater
rationality based on signs of stability in the fundamental data.
2003 opened with a steady drumbeat of news surrounding the prospect of US-led
military action in Iraq. The international stock markets came under pressure in
the first quarter of the year as a combination of war worries and weak economic
data spurred a sell-off in equities. "War trades" also heightened volatility as
investors moved quickly into -- and then back out of -- gold, oil and U.S.
Treasury securities.
A snap-back in late March erased almost all of January and February's losses,
even though the MSCI EAFE (Morgan Stanley Capital International Europe,
Australasia, and the Far East) Index finished the quarter down 8.8%, with much
of the decline due to regained strength in the dollar. Large insurance companies
were especially hard hit as falling equity prices triggered the need to issue
rights and sell futures to maintain hedged positions, thereby diluting shares
and driving them down even further. Meanwhile, pension deficits negatively
affected company valuations. In April, the international stock markets staged a
strong rally as the situation in Iraq appeared to be nearing resolution, energy
prices moderated, and earnings -- although still weak -- came in slightly better
than anticipated.
PERFORMANCE: For the six-month period ended April 30, 2003, the Fund's Class Q
shares provided a total return of 2.46% compared to the Salomon EPAC EM Index
(Europe, Pacific Australasia Composite Extended Market Index), which advanced
6.77% during the same period.
PORTFOLIO SPECIFICS: The Fund's relative under-performance was caused primarily
by disappointing stock selection and overweight holdings in technology
companies, particularly software developers. Stock selection in the
producers/manufacturers and transportation groups also proved negative.
On the positive side, the Fund's absolute advance was driven by gains in its
utilities, energy and insurance services holdings. Overweight positions in
energy and healthcare stocks also supported relative returns. The oil price
shock stemming from the build-up to, then commencement of, war in Iraq drove gas
and oil-related shares higher. Oil refining/machinery companies in the portfolio
gained more than 60% during the period, while gas utilities and oil/gas
producers rose 51.9% and 23.8%, respectively.
By country, relative performance was helped by stock selection and an
underweight in Japan. German stocks in the portfolio also registered strong
gains, rising more than 30% compared to 10.6% for the benchmark, but an
underweight position diminished the benefit to relative performance. However,
stock selection in France, South Korea and China detracted from both absolute
and relative performance.
Top-performing stocks for the reporting period included Frontline Ltd.,
(transportation, 0.7% of net assets) a Bermuda-based tanker company, and Schwarz
Pharma, (Pharmaceuticals, 0.8% of net assets) a German specialty pharmaceutical
firm.
MARKET OUTLOOK: Overall, our outlook has become more positive. First-quarter
corporate earnings were better than expected, but against lowered expectations;
the overhang of Iraq has been removed; and developed economies appear to be
strengthening somewhat. We believe that, absent an extraordinary event, we are
in a bottoming process. In Asia, we continue to monitor the SARS outbreak
closely, but believe aggressive action by health ministers and the World Health
Organization seem to be impeding its spread.
6
ING INTERNATIONAL
Portfolio Manager's Report SMALLCAP GROWTH FUND
- --------------------------------------------------------------------------------
A more selective environment focusing on fundamental strength bodes well for our
style, which is predicated on identifying companies benefiting from positive,
sustainable change and investing in them just as the market is recognizing
strength. Currently, we are looking closely for stocks that may benefit over the
intermediate term and continue to strengthen when higher-growth stocks come back
into favor.
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED APRIL 30, 2003
--------------------------------------------
SINCE INCEPTION
OF CLASS Q
1 YEAR 5 YEAR 8/31/95
------ ------ -------
Class Q -19.24% 3.00% 10.03%
Salomon EPAC EM Index -10.60% -3.22% -0.16%(1)
Based on a $10,000 initial investment, the table above illustrates the total
return of ING International SmallCap Growth Fund against the Salomon EPAC EM
Index. The Index has no cash in its portfolio, imposes no sales charges and
incurs no operating expenses. An investor cannot invest directly in an index.
Performance table does not reflect the deduction of taxes that a shareholder
will pay on Fund distributions or the redemption of Fund shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Fund. Total returns would have been
lower had there been no waiver to the Fund.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
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 09/01/95.
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 12.
7
ING INTERNATIONAL VALUE FUND Portfolio Managers' Report
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT TEAM: Brandes' LargeCap Investment Committee, Brandes
Investment Partners, LLC, the Sub-Adviser.
GOAL: The ING International Value Fund (the "Fund") seeks long-term capital
appreciation. The Fund invests 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.
MARKET OVERVIEW: After posting declines in December 2002 and through the first
three months of 2003, stocks in non-U.S. markets surged in April. Overall,
across the six-month period ended April 30, 2003, the MSCI EAFE Index gained
2.04%.
Share prices around the globe seemed to react favorably to the end of major
conflict in Iraq in late March. After losing ground in the first quarter, most
country indexes registered substantial gains in April and the MSCI EAFE Index
advanced 9.9%.
In Asia, concerns related to the outbreak of severe acute respiratory syndrome
(SARS) impacted stock returns. The MSCI Singapore Index, for example, declined
12.9% during the six months ended April 30, 2003. Over the same period, the MSCI
Japan Index declined 7.2%.
In Europe, stocks generally advanced, with the MSCI Europe Index gaining 4.4%.
Economic reports, however, remained mixed and the European Central Bank left
interest rates unchanged in April, waiting to see what effect the conflict in
Iraq would have on Europe's sluggish economy.
Stocks in Brazil posted sharp gains during the period as investors showed
increasing confidence in the administration of President Luiz Inacio Lula da
Silva. The International Monetary Fund praised the nation's progress, saying the
agency's $31 billion aid package to Brazil is among its most successful deals
ever.
PERFORMANCE: For the six months ended April 30, 2003, the Fund's Class Q shares
provided a total return of 1.26% compared to the MSCI EAFE Index, which returned
2.04%.
PORTFOLIO SPECIFICS: Substantial advances for positions in Brazil helped drive
performance during the six months ended April 30, 2003. Brazil-based stocks
registering gains included Eletrobras (electric utilities, 1.5% of net assets),
and Telenorte Leste (diversified telecom services, 1.1% of net assets).
Strong returns for positions in select European nations also contributed to
results. Holdings in Spain, including Repsol YPF (oil & gas, 3.1%) and
Telefonica (diversified telecom services, 3.8%), advanced during the period.
Positions in countries such as France and Germany also registered gains. In
contrast, holdings in the United Kingdom, the Netherlands and Asia tended to
decline.
From an industry perspective, holdings in the oil + gas and communications
equipment industries were among the Fund's top performers. Positions such as
Petro Brasileiro and Nortel Networks (Canada, communications equipment, 1.9%)
advanced sharply during the period.
During the six-month period, we pared back on select holdings -- including
Nortel Networks, Alcatel (France, communications equipment, 2.7%), and Tyco
International (Bermuda, industrial conglomerates, 2.2%) -- as price appreciation
lifted their portfolio weights toward our limits for individual securities. In
other cases, such as Repsol YPF and Telefonos de Mexico (Mexico, diversified
telecom services, 1.8%), we sold portions of our holdings to pursue other
investment opportunities. We believe all of these pared back positions continue
to offer potential for long-term price appreciation.
Over the period, we took advantage of recent price declines and purchased
additional shares of select existing holdings at attractive prices. Positions we
added to during the period included Hitachi (Japan, electronic equipment &
instruments, 1.2%) and BAE Systems (United Kingdom, aerospace & defense, 1.8%).
We sold PetroChina (China, oil & gas) to pursue other investment opportunities.
As of April 30, 2003 the Fund's most substantial country weightings remain in
Japan and the United Kingdom. On an industry basis, the Fund's largest exposure
lies in diversified telecom services.
MARKET OUTLOOK: While we monitor short-term events in international equity
markets, our investment philosophy focuses on company-by-company analysis with a
long-term perspective.
In all market environments, we search for and hold what we believe to be
fundamentally sound companies trading at discounts to our estimates of their
fair values. We believe this strategy will provide patient investors with
favorable results.
8
Portfolio Managers' Report ING INTERNATIONAL VALUE FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED APRIL 30, 2003
-----------------------------------------------
SINCE INCEPTION SINCE INCEPTION
OF CLASS I OF CLASS Q
1 YEAR 06/18/01 01/24/00
------ -------- --------
Class I -20.70% -12.15% --
Class Q -20.99% -- -7.42%
MSCI EAFE Index -15.92% 12.43%(1) -13.83%(2)
Based on a $10,000 initial investment, the table above illustrates the total
return of ING International Value Fund against the MSCI EAFE Index. The Index
has no cash in its portfolio, imposes no sales charges and incurs no operating
expenses. An investor cannot invest directly in an index.
Performance does not reflect the deduction of taxes that a shareholder will pay
on Fund distributions or the redemption of Fund shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Fund. Total returns would have been
lower had there been no waiver to the Fund.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
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 07/01/01.
(2) Since inception performance for the 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 including
currency fluctuation, economic and political risks not found in investments that
are solely domestic. The risks of foreign investing are generally intensified
for investing in emerging markets. Investing in funds that are concentrated in a
smaller number of holdings poses greater risk than those funds with a larger
number of holdings because each investment has a greater effect on the Fund's
performance.
See accompanying index descriptions on page 12.
9
ING WORLDWIDE GROWTH FUNDS Portfolio Manager's Report
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT TEAM: Domestic Equity Component: Managed by a team of
investment professionals lead by James Vail, ING Investments, LLC. International
Component: Managed by a team of investment professionals lead by Philip Schwartz
and Richard Saler, Senior Vice Presidents, ING Investments, LLC.
GOAL: The ING Worldwide Growth Fund (the "Fund") seeks maximum long-term capital
appreciation.
MARKET OVERVIEW:
DOMESTIC: The overall domestic equity market was little changed for the
six-month period ended April 30, 2003 notwithstanding severe gyrations within
the period primarily due to fears surrounding the buildup to Operation Enduring
Freedom, and the subsequent rally in equities as the Iraqi campaign was far more
successful than many expected.
During the period the Federal Reserve left overnight lending rates unchanged at
1.25% after a sustained period of easing while 10-year government bonds declined
20 basis points to 3.85% as the bond market continued to predict sustained low
inflation. The U.S. dollar declined 12% against the Euro and 3% against the Yen
during the period as U.S. rates stayed low and overseas investors withdrew to
stronger currencies amid nagging U.S. economic uncertainties.
Within the market, the best performing sectors of the Russell 1000 Growth Index
were Utilities, Materials and Industrials while the worst performers were
Consumer Staples and Financials. The largest components of the Index, Health
Care and Information Technology were slightly positive for the period. In
general, many of the companies that had been under severe price pressure
reported strong performances as the market became more comfortable with future
prospects. Indeed, with record low interest rates, corporate earnings showing
recovery and equity friendly tax and dividend policies in place, we believe the
prospects for continued improving performance in the U.S. Equity markets remain
solid.
INTERNATIONAL: The six-month period ended April 30, 2003 showed relatively
little change for the major markets, compared to the volatility of the last
three years. In dollar terms, the MSCI EAFE Index rose 0.6%, and Europe gained
2.7%, while Japan declined by 7.8%. As the larger foreign markets struggled,
better performance was found in Asia ex-Japan, emerging markets and the U.S.,
which rose by 3.8%, 4.2%, and 3.7%, respectively. In October of last year, a
rally materialized, which faded quickly into January. Markets shifted from a
focus on economic recovery to potential repercussions of war in Iraq, and gave
back all the gains. World market declines in March were particularly acute, as
war and deflation fears together raised questions of systemic risk. Within days
of the onset of war, markets then staged a sharp reversal from oversold lows,
which continued through April.
There were good reasons for the relatively weak showing of developed foreign
markets. In the eurozone, gross domestic product ("GDP") growth stalled after an
anemic bounce back to 1.2% during 2002. Economic pressure created by a lack of
major reform became more evident, especially in a weak environment. Adding
pressure to Europe's competitiveness was the 20% fall in the dollar versus the
euro. Germany, in particular, looks close to deflationary conditions, but is
lacking a credible recovery strategy. The threat of a capital shortage among
European insurance companies was also worrisome during this period. These
worries led to sharp declines in many financial stocks, bringing market indexes
down with them.
Japan emerged from recession, at least temporarily, showing GDP growth of 2.7%
in the first quarter of 2003. Japanese markets continued their long slide as no
real progress was made towards structural reform. Hopes for continuing the
export-led recovery faded in the first quarter. China and pockets of emerging
markets did show some strength, but even there, forecasts were reduced due to
the Severe Acute Respiratory Syndrome (SARS) outbreak.
At the end of April, markets worldwide were anticipating economic recovery,
while recent numbers indicated weakness. The markets were expecting signs of
growth fairly soon.
PERFORMANCE: For the six-month period ended April 30, 2003, the Fund's Class Q
shares provided a total return of 0.35%, compared to the MSCI World Index, which
returned 3.88% for the same period.
PORTFOLIO SPECIFICS:
DOMESTIC: The Fund remained well diversified with the largest sectors being
Information Technology and Health Care. The Fund was not exposed to the Food
Beverage & Tobacco sector, which saw many stocks decline. Disappointing
performance was seen in the Information Technology sector where despite being
overweight the Index, the Fund suffered from individual stock selection.
INTERNATIONAL: The Fund remained well diversified. Despite a cloudy outlook,
steep multiyear declines meant equity prices were becoming more attractive.
Stock selection focused on financially strong companies that could weather
difficult times. The Fund was underweight financials 1.5%. We were concerned
about deterioration in bank loan books, which led to our underweighting banks.
Utilities did not offer good value since they had enjoyed two years of relative
outperformance. The Fund was about 2% overweight in energy, where oil stocks
offered attractive dividend yields and had ignored the sharp rise in oil prices.
The Fund benefited from strong gains in Credit Lyonnais, which advanced 55% on a
takeover offer. Also helping returns was Teva Pharmaceutical, up 21% on strong
drug sales and Food and Drug Administration (FDA) approvals.
10
Portfolio Manager's Report ING WORLDWIDE GROWTH FUND
- --------------------------------------------------------------------------------
Disappointing stocks were Sony, down 43% on weak consumer electronics sales, and
Aegon, down 22% in tandem with many European insurance stocks.
MARKET OUTLOOK:
DOMESTIC: The overall outlook remains quite positive for U.S. Equities.
Continued low interest rates, recovering corporate earnings resulting from cost
cutting during bad times and positive fiscal stimulus all bode well for the
market. The Fund continues to be positioned to take advantage of a recovering
economy and eventual increases in corporate spending by focusing on the
Information Technology and select Consumer Discretionary companies.
INTERNATIONAL: The outlook for international equities has improved over the past
month, in our opinion. Although the geopolitical environment is far from stable,
the end of the Iraq war eliminates a major risk. Falling bond yields, especially
in the high yield sector, are providing a major stimulus to business. The
weakness of the dollar is also becoming an important issue. A weak dollar is a
stimulant to the U.S. economy; however, this may put additional pressure on
European and Japanese economies. It is highly likely the European Central Bank
will move to cut interest rates aggressively. Unfortunately for Japan, rate cuts
are no longer an option as they are already near 0%. Despite the recent rise in
equity prices, valuation remains reasonably attractive overseas. Our opinion is
more favorable toward stocks. Fixed income alternatives look expensive and
corporate earnings look set to improve in the second half of 2003 and into next
year.
In light of a more positive outlook, we have continued to reduce weightings in
consumer staples and pharmaceuticals. We have also added to sectors that are
more geared to economic growth, such as industrials and capital goods.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED APRIL 30, 2003
------------------------------------------
SINCE INCEPTION
OF CLASS Q
1 YEAR 5 YEAR 08/31/95
------ ------ --------
Class Q -20.06% -2.39% 5.31%
MSCI World Index -14.16% -3.91% 4.03%(1)
Based on a $10,000 initial investment, the table above illustrates the total
return of ING Worldwide Growth Fund against the MSCI World Index. The Index has
no cash in its portfolio, imposes no sales charges and incurs no operating
expenses. An investor cannot invest directly in an index.
Performance table does not reflect the deduction of taxes that a shareholder
will pay on Fund distributions or the redemption of Fund shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Fund. Total returns would have been
lower had there been no waiver to the Fund.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
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 09/01/95.
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 12.
11
INDEX DESCRIPTIONS
- --------------------------------------------------------------------------------
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 NASDAQ COMPOSITE INDEX is a broad-based capitalization-weighted index of all
NASDAQ National Market & SmallCap stocks.
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 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 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 FAR EAST FREE EX-JAPAN INDEX measures performance of securities listed
on exchanges in the Far East markets excluding Japan.
The MSCI JAPAN INDEX is a capitalization weighted index that monitors the
performance of stocks from the country of Japan.
The MSCI EUROPE INDEX is a capitalization weighted index that monitors the
performance of stocks from all the countries that make up the continent of
Europe.
The MSCI SINGAPORE INDEX is an unmanaged index that measures the performance of
the Singapore stock market.
The RUSSELL 1000 GROWTH INDEX is an index that measures the performance of those
Russell 1000 Index companies with higher price-to-book ratios and higher
forecasted growth values.
All indices are unmanaged.
An investor cannot invest directly in an index.
12
STATEMENTS OF ASSETS AND LIABILITIES as of April 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
ING
ING INTERNATIONAL ING ING
EMERGING ING SMALLCAP INTERNATIONAL WORLDWIDE
COUNTRIES INTERNATIONAL GROWTH VALUE GROWTH
FUND FUND FUND FUND FUND
------------- ------------- ------------- --------------- -------------
ASSETS:
Investments in securities, at value* $ 95,575,608 $ 68,561,204 $ 268,308,477 $ 2,451,924,363 $ 144,818,937
Cash 6,274,067 9,583,542 21,736,562 20,368,050 7,996,466
Foreign currencies at value** 1,905,272 399,087 311,564 -- 402,385
Receivables:
Investment securities sold 768,009 360,880 361,786 29,689,150 373,044
Fund shares sold 5,065,087 716,261 9,096,532 1,026,751 2,442,345
Dividends and interest 561,091 405,397 1,422,609 17,354,659 669,846
Other -- 14,860 -- -- --
Other investments 10,203,838 5,781,960 36,062,980 503,374,914 7,090,464
Prepaid expenses 37,929 31,675 42,519 142,562 35,312
Reimbursement due from manager 12,763 3,863 -- -- 12,970
------------- ------------- ------------- --------------- -------------
Total assets 120,403,664 85,858,729 337,343,029 3,023,880,449 163,841,769
------------- ------------- ------------- --------------- -------------
LIABILITIES:
Payable for investment securities
purchased -- 2,502,216 4,474,669 -- 2,496,517
Payable for fund shares redeemed 971,788 1,193,572 6,287,950 4,339,119 1,719,553
Payable for securities loaned 10,203,838 5,781,960 36,062,980 503,374,914 7,090,464
Payable to affiliates 148,142 90,886 365,971 3,653,598 213,311
Payable for trustee fees 125,720 82,713 5,942 31,150 63,090
Other accrued expenses and liabilities 313,602 149,735 466,404 2,092,198 374,573
------------- ------------- ------------- --------------- -------------
Total liabilities 11,763,090 9,801,082 47,663,916 513,490,979 11,957,508
------------- ------------- ------------- --------------- -------------
NET ASSETS $ 108,640,574 $ 76,057,647 $ 289,679,113 $ 2,510,389,470 $ 151,884,261
============= ============= ============= =============== =============
NET ASSETS WERE COMPRISED OF:
Paid-in capital $ 280,772,575 $ 119,609,239 $ 541,343,602 $ 3,503,055,413 $ 390,671,652
Undistributed net investment income
(accumulated net investment loss) 204,204 (55,453) (658,797) 6,012,233 (599,382)
Accumulated net realized loss on
investments and foreign currencies (net
of foreign tax on the sale of Indian
investments of $2,200, $0, $0, $0 and
$0, respectively -- see Note 2) (183,437,432) (40,250,115) (270,513,550) (127,614,187) (245,228,918)
Net unrealized appreciation
(depreciation) of investments and
foreign currencies 11,101,227 (3,246,024) 19,507,858 (871,063,989) 7,040,909
------------- ------------- ------------- --------------- -------------
NET ASSETS $ 108,640,574 $ 76,057,647 $ 289,679,113 $ 2,510,389,470 $ 151,884,261
============= ============= ============= =============== =============
* Cost of securities $ 84,504,194 $ 71,828,629 $ 248,851,098 $ 3,323,915,951 $ 137,828,704
** Cost of foreign currencies $ 1,873,068 $ 399,087 $ 312,730 $ -- $ 402,335
See Accompanying Notes to Financial Statements
13
STATEMENTS OF ASSETS AND LIABILITIES as of April 30, 2003 (Unaudited)
(Continued)
- --------------------------------------------------------------------------------
ING
ING INTERNATIONAL ING ING
EMERGING ING SMALLCAP INTERNATIONAL WORLDWIDE
COUNTRIES INTERNATIONAL GROWTH VALUE GROWTH
FUND FUND FUND FUND FUND
------------ ------------ ------------- --------------- ------------
CLASS A:
Net assets $ 62,407,962 $ 35,868,055 $ 126,780,868 $ 1,259,957,616 $ 65,569,613
Shares authorized unlimited unlimited unlimited unlimited unlimited
Par value $ 0.00 $ 0.00 $ 0.00 $ 0.01 $ 0.00
Shares outstanding 4,916,851 5,126,485 6,757,650 122,777,088 5,298,562
Net asset value and redemption price per
share $ 12.69 $ 7.00 $ 18.76 $ 10.26 $ 12.37
Maximum offering price per share (5.75%)(1) $ 13.46 $ 7.43 $ 19.90 $ 10.89 $ 13.12
CLASS B:
Net assets $ 13,574,616 $ 10,257,951 $ 48,600,567 $ 340,061,027 $ 33,701,081
Shares authorized unlimited unlimited unlimited unlimited unlimited
Par value $ 0.00 $ 0.00 $ 0.00 $ 0.01 $ 0.00
Shares outstanding 1,076,882 1,502,174 2,477,373 33,648,128 2,473,128
Net asset value and redemption price per
share(2) $ 12.61 $ 6.83 $ 19.62 $ 10.11 $ 13.63
Maximum offering price per share $ 12.61 $ 6.83 $ 19.62 $ 10.11 $ 13.63
CLASS C:
Net assets $ 8,914,639 $ 12,271,213 $ 41,734,293 $ 514,362,194 $ 43,446,681
Shares authorized unlimited unlimited unlimited unlimited unlimited
Par value $ 0.00 $ 0.00 $ 0.00 $ 0.01 $ 0.00
Shares outstanding 743,198 1,796,508 2,320,373 51,009,083 3,583,072
Net asset value and redemption price per
share(2) $ 11.99 $ 6.83 $ 17.99 $ 10.08 $ 12.13
Maximum offering price per share $ 11.99 $ 6.83 $ 17.99 $ 10.08 $ 12.13
CLASS I:
Net assets n/a $ 9,090,876 n/a $ 370,828,123 n/a
Shares authorized n/a unlimited n/a unlimited n/a
Par value n/a $ 0.00 n/a $ 0.01 n/a
Shares outstanding n/a 1,303,502 n/a 36,113,525 n/a
Net asset value and redemption price per
share n/a $ 6.97 n/a $ 10.27 n/a
Maximum offering price per share n/a $ 6.97 n/a $ 10.27 n/a
CLASS M:
Net assets $ 979,892 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 77,940 n/a n/a n/a n/a
Net asset value and redemption price per
share $ 12.57 n/a n/a n/a n/a
Maximum offering price per share (3.50%)(3) $ 13.03 n/a n/a n/a n/a
CLASS Q:
Net assets $ 22,763,465 $ 8,569,552 $ 72,563,385 $ 25,180,510 $ 9,166,886
Shares authorized unlimited unlimited unlimited unlimited unlimited
Par value $ 0.00 $ 0.00 $ 0.00 $ 0.01 $ 0.00
Shares outstanding 1,740,125 1,232,429 3,625,005 2,453,204 637,100
Net asset value and redemption price per
share $ 13.08 $ 6.95 $ 20.02 $ 10.26 $ 14.39
Maximum offering price per share $ 13.08 $ 6.95 $ 20.02 $ 10.26 $ 14.39
- ----------
(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
14
STATEMENTS OF OPERATIONS for six months ended April 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
ING
ING INTERNATIONAL ING ING
EMERGING ING SMALLCAP INTERNATIONAL WORLDWIDE
COUNTRIES INTERNATIONAL GROWTH VALUE GROWTH
FUND FUND FUND FUND FUND
------------ ------------ ------------ ------------- ------------
INVESTMENT INCOME:
Dividends (net of foreign taxes)* $ 1,405,446 $ 892,946 $ 2,348,533 $ 30,341,069 $ 1,064,207
Interest 10,125 27,715 54,851 72,565 24,159
Other 1,429 881 10 4,243 --
Securities loaned income 6,878 7,144 90,607 252,464 7,147
------------ ------------ ------------ ------------- ------------
Total investment income 1,423,878 928,686 2,494,001 30,670,341 1,095,513
------------ ------------ ------------ ------------- ------------
EXPENSES:
Investment advisory and management fees 646,101 367,148 1,402,710 12,765,885 778,225
Distribution and service fees:
Class A 103,013 44,819 208,784 1,915,947 113,390
Class B 70,824 50,365 247,675 1,763,850 177,695
Class C 43,813 61,761 215,373 2,662,929 231,861
Class M 3,960 -- -- -- --
Class Q 25,660 9,247 85,784 33,031 11,175
Transfer agent fees:
Class A 76,818 51,273 164,838 1,014,104 91,036
Class B 18,485 14,406 68,408 284,234 49,932
Class C 11,436 17,663 59,447 429,114 65,153
Class I -- 271 -- 5,286 --
Class M 1,378 -- -- -- --
Class Q 3,490 259 8,234 561 4,202
Administrative service fees 51,688 36,715 140,271 2,076,609 77,823
Custody and accounting expense 85,160 23,515 133,584 546,639 49,298
Shareholder reporting expense 36,087 14,165 74,009 701,608 41,213
Registration fees 47,466 33,012 43,133 87,171 32,765
Professional fees 16,230 5,148 27,287 242,381 17,670
Trustee fees 2,148 1,039 9,041 61,902 3,043
Miscellaneous expense 20,224 3,259 10,387 65,646 6,893
------------ ------------ ------------ ------------- ------------
1,263,981 734,065 2,898,965 24,656,897 1,751,374
Less:
Net waived and reimbursed fees 44,307 15,106 -- -- 56,479
------------ ------------ ------------ ------------- ------------
Total expenses 1,219,674 718,959 2,898,965 24,656,897 1,694,895
------------ ------------ ------------ ------------- ------------
Net investment income (loss) 204,204 209,727 (404,964) 6,013,444 (599,382)
------------ ------------ ------------ ------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCIES:
Net realized loss on investments (net of
foreign tax on sale of Indian
investments of $2,200, $0, $0, $0,
and $0, respectively -- Note 2) (3,079,378) (4,386,774) (42,266,358) (127,531,190) (9,687,905)
Net realized gain (loss) on foreign currencies (71,799) (3,791) 11,380,711 (89,159) (21,825)
Net change in unrealized appreciation
(depreciation) of investments and foreign
currencies 5,675,488 3,267,014 38,114,066 143,916,858 9,846,350
------------ ------------ ------------ ------------- ------------
Net realized and unrealized gain (loss) on
investments and foreign currencies 2,524,311 (1,123,551) 7,228,419 16,296,509 136,620
------------ ------------ ------------ ------------- ------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $ 2,728,515 $ (913,824) $ 6,823,455 $ 22,309,953 $ (462,762)
============ ============ ============ ============= ============
* Foreign taxes $ 193,457 $ 103,760 $ 309,723 $ 4,967,798 $ 116,035
See Accompanying Notes to Financial Statements
15
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
- --------------------------------------------------------------------------------
ING ING
EMERGING COUNTRIES INTERNATIONAL
FUND FUND
------------------------------ ------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------- ------------- ------------- -------------
FROM OPERATIONS:
Net investment income (loss) $ 204,204 $ (834,118) $ 209,727 $ (217,920)
Net realized loss on investments and foreign currencies (3,151,177) (21,740,055) (4,390,565) (10,118,464)
Net change in unrealized appreciation (depreciation) of
investments and foreign currencies 5,675,488 32,027,083 3,267,014 (2,700,015)
------------- ------------- ------------- -------------
Increase (decrease) in net assets resulting from operations 2,728,515 9,452,910 (913,824) (13,036,399)
------------- ------------- ------------- -------------
FROM DIVIDENDS TO SHAREHOLDERS:
Net investment income:
Class A -- (1,786) (168,248) --
Class C -- -- (1,612) --
Class I -- -- (50,182) --
Class M -- -- (45,138) --
Class Q -- (1,105) -- --
------------- ------------- ------------- -------------
Total distributions -- (2,891) (265,180) --
------------- ------------- ------------- -------------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 152,759,856 216,145,026 80,387,455 102,371,057
Dividends reinvested -- 2,537 238,238 --
Redemption fee proceeds -- -- 173,797 132,507
Net assets received in connection with
reorganization (Note 13) -- 10,040,276 -- 37,276,905
------------- ------------- ------------- -------------
152,759,856 226,187,839 80,799,490 139,780,469
Cost of shares redeemed (155,835,956) (248,063,246) (82,839,974) (88,437,578)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets resulting from
capital share transactions (3,076,100) (21,875,407) (2,040,484) 51,342,891
------------- ------------- ------------- -------------
Net increase (decrease) in net assets (347,585) (12,425,388) (3,219,488) 38,306,492
Net assets, beginning of period 108,988,159 121,413,547 79,277,135 40,970,643
------------- ------------- ------------- -------------
Net assets, end of period $ 108,640,574 $ 108,988,159 $ 76,057,647 $ 79,277,135
============= ============= ============= =============
Undistributed net investment income (accumulated
net investment loss) $ 204,204 $ -- $ (55,453) $ --
============= ============= ============= =============
See Accompanying Notes to Financial Statements
16
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
- --------------------------------------------------------------------------------
ING
INTERNATIONAL ING
SMALLCAP GROWTH INTERNATIONAL
GROWTH FUND VALUE FUND
---------------------------------- ----------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
--------------- --------------- --------------- ---------------
FROM OPERATIONS:
Net investment income (loss) $ (404,964) $ (1,729,234) $ 6,013,444 $ 11,052,808
Net realized gain (loss) on investments and foreign
currencies (30,885,647) (53,391,247) (127,620,349) 52,071,566
Net change in unrealized appreciation (depreciation) of
investments and foreign currencies 38,114,066 1,153,419 143,916,858 (564,489,564)
--------------- --------------- --------------- ---------------
Increase (decrease) in net assets resulting from
operations 6,823,455 (53,967,062) 22,309,953 (501,365,190)
--------------- --------------- --------------- ---------------
FROM DIVIDENDS 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 from 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 392,413,421 814,783,487 174,747,454 2,229,434,327
Dividends reinvested -- -- 47,901,712 48,205,060
--------------- --------------- --------------- ---------------
392,413,421 814,783,487 222,649,166 2,277,639,387
Cost of shares redeemed (402,530,373) (856,597,344) (379,719,750) (1,485,994,863)
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets resulting from
capital share transactions (10,116,952) (41,813,857) (157,070,584) 791,644,524
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets (3,293,497) (95,780,919) (197,811,259) 225,459,156
Net assets, beginning of period 292,972,610 388,753,529 2,708,200,729 2,482,741,573
--------------- --------------- --------------- ---------------
Net assets, end of period $ 289,679,113 $ 292,972,610 $ 2,510,389,470 $ 2,708,200,729
=============== =============== =============== ===============
Undistributed net investment income (accumulated
net investment loss) $ (658,797) $ (253,833) $ 6,012,233 $ 10,440,192
=============== =============== =============== ===============
See Accompanying Notes to Financial Statements
17
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
- --------------------------------------------------------------------------------
ING
WORLDWIDE
GROWTH FUND
------------------------------
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
2003 2002
------------- -------------
FROM OPERATIONS:
Net investment loss $ (599,382) $ (3,001,356)
Net realized loss on investments and foreign currencies (9,709,730) (74,277,585)
Net change in unrealized appreciation of investments and
foreign currencies 9,846,350 31,285,489
------------- -------------
Decrease in net assets resulting from operations (462,762) (45,993,452)
------------- -------------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 163,398,894 188,403,422
Cost of shares redeemed (179,194,219) (300,460,131)
------------- -------------
Net decrease in net assets resulting from capital share
transactions (15,795,325) (112,056,709)
------------- -------------
Net decrease in net assets (16,258,087) (158,050,161)
Net assets, beginning of period 168,142,348 326,192,509
------------- -------------
Net assets, end of period $ 151,884,261 $ 168,142,348
============= =============
Accumulated net investment loss $ (599,382) $ --
============= =============
See Accompanying Notes to Financial Statements
18
ING EMERGING COUNTRIES FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
CLASS Q
-------------------------------------------------------------------------------
SIX FOUR THREE
MONTHS MONTHS YEAR MONTHS YEAR
ENDED YEAR ENDED OCT. 31, ENDED ENDED ENDED ENDED
APRIL 30, ------------------- OCT. 31, JUNE 30, JUNE 30, MARCH 31,
2003 2002 2001 2000(5)(6) 2000 1999(1) 1999
------ ------ ------ ---------- ------- ------ ------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 12.80 12.26 16.81 20.74 17.20 13.79 17.76
Income from investment operations:
Net investment income (loss) $ 0.05 (0.14) 0.09 (0.27) (0.16) (0.04) (0.01)
Net realized and unrealized gain (loss)
on investments (net of Indian tax) $ 0.23 0.68 (4.64) (3.66) 3.70 3.45 (3.78)
Total from investment operations $ 0.28 0.54 (4.55) (3.93) 3.54 3.41 (3.79)
Less distributions from:
Net investment income $ -- 0.00 * -- -- -- -- 0.18
Total distributions $ -- 0.00 * -- -- -- -- 0.18
Net asset value, end of period $ 13.08 12.80 12.26 16.81 20.74 17.20 13.79
TOTAL RETURN(2): % 2.19 4.41 (27.01) (18.95) 20.58 24.73 (21.42)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 22,763 21,132 26,783 88,894 119,251 79,130 53,125
Ratios to average net assets:
Net expenses after expense
reimbursement (recoupment)(3)(4) % 1.95 2.00 1.97 2.13 2.09 1.90 1.94
Gross expenses prior to expense
reimbursement (recoupment)(3) % 2.03 1.94 1.98 2.28 2.24 2.43 2.23
Net investment income (loss) after
expense reimbursement (recoupment)(3)(4) % 0.81 (0.24) 0.42 (1.21) (1.05) (1.07) (0.01)
Portfolio turnover rate % 54 124 74 94 211 67 213
- ----------
(1) 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 year end to June 30.
(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 Manager has agreed to limit expenses, (excluding, interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
(5) Effective October 1, 2000, ING Investments, LLC became the Investment
Manager of the Fund, replacing Nicholas-Applegate Capital Management.
(6) The Fund changed its fiscal year-end from June 30 to October 31.
* Amount represents less than $0.01 per share.
See Accompanying Notes to Financial Statements
19
ING INTERNATIONAL FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
CLASS I CLASS Q
-------------------- --------------------------------
SIX SIX
MONTHS PERIOD MONTHS YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
APRIL 30, OCT. 31, APRIL 30, OCT. 31, OCT. 31,
2003 2002(1) 2003 2002 2001(2)
---- ------- ---- ---- -------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 7.06 8.25 7.04 8.10 9.89
Income from investment operations:
Net investment income (loss) $ 0.03 0.05 0.04 (0.03) (0.02)
Net realized and unrealized loss on investments $ (0.07) (1.24) (0.08) (1.03) (1.77)
Total from investment operations $ (0.04) (1.19) (0.04) (1.06) (1.79)
Less distributions from:
Net invesment income 0.05 -- 0.05 -- --
Total distributions 0.05 -- 0.05 -- --
Net asset value, end of period $ 6.97 7.06 6.95 7.04 8.10
TOTAL RETURN(3) % (0.58) (14.42) (0.65) (13.09) (18.10)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 9,091 6,384 8,570 6,949 7
Ratios to average net assets:
Net expenses after expense reimbursement(4)(5) % 1.29 1.48 1.54 1.61 2.27
Gross expenses prior to expense reimbursement(4) % 1.33 1.53 1.58 1.70 2.27
Net investment income (loss) after expense
reimbursement(4)(5) % 1.50 0.72 1.08 (0.08) (0.24)
Portfolio turnover rate % 45 126 45 126 169
- ----------
(1) Class I commenced operations on January 15, 2002.
(2) Class Q commenced operations on February 26, 2001.
(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 than one year.
(5) The Investment Manager has agreed to limit expenses, (excluding, interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
See Accompanying Notes to Financial Statements
20
ING INTERNATIONAL SMALLCAP GROWTH FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
CLASS Q
--------------------------------------------------------------------------------
SIX FOUR THREE
MONTHS MONTHS YEAR MONTHS YEAR
ENDED YEAR ENDED OCT. 31, ENDED ENDED ENDED ENDED
APRIL 30, ------------------- OCT. 31, JUNE 30, JUNE 30, MARCH 31,
2003 2002 2001 2000(5) 2000 1999(1) 1999
------ ------ ------ ------- ------- ------ ------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 19.54 23.19 38.18 43.30 25.16 22.23 19.18
Income from investment operations:
Net investment income (loss) $ 0.02 0.04 0.00* (0.09) (0.21) (0.03) (0.02)
Net realized and unrealized gain
(loss) on investments $ 0.46 (3.69) (12.12) (5.03) 20.53 2.96 3.36
Total from investment operations $ 0.48 (3.65) (12.12) (5.12) 20.32 2.93 3.34
Less distributions from:
Net investment income $ -- -- 0.24 -- -- -- 0.09
Net realized gain on investments $ -- -- 2.63 -- 2.18 -- 0.20
Total distributions $ -- -- 2.87 -- 2.18 -- 0.29
Net asset value, end of period $ 20.02 19.54 23.19 38.18 43.30 25.16 22.23
TOTAL RETURN(2): % 2.46 (15.74) (34.11) 11.82 82.99 13.18 17.61
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 72,563 70,404 91,089 164,719 163,843 42,881 32,819
Ratios to average net assets:
Net expenses after expense
reimbursement (recoupment)(3)(4) % 1.58 1.55 1.50 1.58 1.57 1.65 1.65
Gross expenses prior to expense
reimbursement (recoupment)(3) % 1.58 1.59 1.50 1.58 1.57 1.67 1.80
Net investment income (loss)
after expense reimbursement
(recoupment)(3)(4) % 0.19 0.07 0.04 (0.71) (0.66) (0.50) (0.50)
Portfolio turnover rate % 55 149 143 56 164 44 146
- ----------
(1) 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 year end to June 30.
(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 Manager has agreed to limit expenses, (excluding, interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
(5) The Fund changed its fiscal year-end from June 30 to October 31.
* Amount represents less than $0.01 per share.
See Accompanying Notes to Financial Statements
21
ING INTERNATIONAL VALUE FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
CLASS I CLASS Q
------------------------------ --------------------------------------------
SIX SIX
MONTHS YEAR PERIOD MONTHS YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
APRIL 30, OCT. 31, OCT. 31, APRIL 30, OCT. 31, OCT. 31, OCT. 31,
2003 2002 2001(1) 2003 2002 2001 2000(2)
---- ---- ------- ---- ---- ---- -------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 10.43 12.35 13.89 10.44 12.34 16.68 15.90
Income from investment operations:
Net investment income $ 0.06 0.16 0.02 0.04 0.07 0.10 0.13
Net realized and unrealized gain (loss)
on investments $ 0.08 (1.68) (1.56) 0.08 (1.63) (2.42) 0.65
Total from investment operations $ 0.14 (1.52) (1.54) 0.12 (1.56) (2.32) 0.78
Less distributions from:
Net investment income $ 0.10 0.14 -- 0.10 0.08 0.14 --
Net realized gain on investments $ 0.20 0.26 -- 0.20 0.26 1.88 --
Total distributions $ 0.30 0.40 -- 0.30 0.34 2.02 --
Net asset value, end of period $ 10.27 10.43 12.35 10.26 10.44 12.34 16.68
TOTAL RETURN(3) % 1.34 (12.89) (11.09) 1.26 (13.11) (15.80) 4.91
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 370,828 372,352 226,067 25,181 29,836 35,802 24,882
Ratios to average net assets:
Expenses(4) % 1.28 1.32 1.24 1.53 1.49 1.59 1.57
Net investment income(4) % 1.15 1.04 0.62 0.86 0.63 0.91 1.35
Portfolio turnover rate % 3 20 15 3 20 15 34
- ----------
(1) Class I commenced operations on June 18, 2001.
(2) Class Q commenced operations on January 24, 2000.
(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 than one year.
See Accompanying Notes to Financial Statements
22
ING WORLDWIDE GROWTH FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
CLASS Q
----------------------------------------------------------------------------
SIX FOUR THREE
MONTHS MONTHS YEAR MONTHS YEAR
ENDED YEAR ENDED OCT. 31, ENDED ENDED ENDED ENDED
APRIL 30, ------------------- OCT. 31, JUNE 30, JUNE 30, MARCH 31,
2003 2002 2001 2000(5)(6) 2000 1999(1) 1999
---- ---- ---- ---------- ---- ------- ----
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 14.34 17.87 30.37 34.53 27.12 24.59 19.63
Income from investment operations:
Net investment income (loss) $ (0.12) (0.08)* (0.07)* (0.07) (0.16) 0.01 0.22
Net realized and unrealized gain
(loss) on investments $ 0.18 (3.45)* (11.19)* (4.09) 11.11 2.52 6.15
Total from investment operations $ 0.05 (3.53) (11.26) (4.16) 10.95 2.53 6.37
Less distributions from:
Net investment income $ -- -- -- -- -- -- 0.15
Net realized gain on investments $ -- -- 0.89 -- 3.54 -- 1.26
Tax return of capital $ -- -- 0.35 -- -- -- --
Total distributions $ -- -- 1.24 -- 3.54 -- 1.41
Net asset value, end of period $ 14.39 14.34 17.87 30.37 34.53 27.12 24.59
TOTAL RETURN(2): % 0.35 (19.75) (38.56) (12.05) 42.63 10.29 33.97
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 9,167 8,194 17,178 44,702 54,418 14,870 7,320
Ratios to average net assets:
Net expenses after expense
reimbursement (recoupment)(3)(4) % 1.55 1.49 1.51 1.52 1.57 1.55 1.59
Gross expenses prior to expense
reimbursement (recoupment)(3) % 1.62 1.59 1.60 1.49 1.57 1.55 1.76
Net investment income (loss) after
expense reimbursement
(recoupment)(3)(4) % (0.17) (0.47) (0.30) (0.62) (0.69) 0.17 0.17
Portfolio turnover rate % 82 281 302 71 169 57 247
- ----------
(1) 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 year end to June 30.
(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 Manager has agreed to limit expenses, (excluding, interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
(5) Effective October 1, 2000, ING Investments, LLC became the Investment
Manager of the Fund, replacing Nicholas-Applegate Capital Management.
(6) The Fund changed its fiscal year-end from June 30 to October 31.
* Per share data calculated using average number of shares outstanding
throughout the period.
See Accompanying Notes to Financial Statements
23
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
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 seven separate series
("Portfolios"): Four in this report are: ING Emerging Countries Fund ("Emerging
Countries"), 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 ("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. 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.
On September 1, 2000, ING Groep N.V. (NYSE: ING) acquired ReliaStar, the
indirect parent company of Pilgrim Investments, Inc., Adviser to the Funds,
Pilgrim Securities, Inc., Distributor to the Funds and Pilgrim Group, Inc.,
Administrator to the Funds. In conjunction with the acquisition the Adviser,
Distributor and Administrator changed their names to ING Pilgrim Investments,
Inc., ING Pilgrim Securities, Inc., and ING Pilgrim Group, Inc., respectively,
effective September 8, 2000. Effective February 26, 2001, ING Pilgrim
Investments, Inc. was merged into the newly formed ING Pilgrim Investments, LLC.
Effective February 27, 2001, ING Pilgrim Group, Inc. was merged into the newly
formed ING Pilgrim Group, LLC. Effective March 1, 2002, the Adviser, Distributor
and Administrator changed their names to ING Investments, LLC, ING Funds
Distributor, Inc. and ING Funds Services, LLC, respectively. Effective October
1, 2002, the Distributor changed its name to ING Distributor, LLC.
REORGANIZATION. On December 17, 2001, the Boards of Trustees of each of the
various ING Funds approved plans of reorganization which were intended to
decrease the number of corporate entities under which the ING Funds are
organized (the "Reorganization") and to align the open-end funds with similar
open-end funds that share the same prospectus. The Reorganization only resulted
in a change in corporate form of some of the ING Funds, with no change in the
ING Funds. The Reorganization was consummated to align the ING Funds' corporate
structures and expedite the Funds' required filings with the SEC. Shareholders
of International Value did not approve the Reorganization; therefore the Fund
will remain part of ING Mayflower Trust.
As a result of the Reorganization, the ING International Fund Reorganized into
series of IMF: ("Reorganizing Fund"). In this regard, the Board approved the
creation of new series of ING Mutual Funds to serve as "shells" (the "Shell
Funds") into which Reorganized Fund was reorganized. The plans of the
reorganization provided for, among other things, the transfer for assets and
liabilities of the Reorganizing Fund to the Shell Fund. Prior to September 21,
2002, the effective date of the Reorganization, the Shell Fund had only nominal
assets. For accounting purposes, the Reorganizing Fund is considered the
surviving entity, and the financial highlights shown for periods prior to
September 21, 2002 are the financial highlights of the Reorganizing Fund.
24
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Prior to the Reorganization, International Fund was the sole series of ING
International Fund, Inc. ING International Fund, Inc. was a corporation
organized under the laws of the State of Maryland on November 23, 1993.
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 generally accepted accounting principles 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. Portfolio 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. Securities for which market quotations
are not readily available are valued at their respective fair values as
determined in good faith and in accordance with policies set by the Board
of Directors/Trustees ("Board"). Among 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 Portfolio
calculates its net asset value.
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 delivered. Interest income is
recorded on an accrual basis. Dividend income is recorded on the
ex-dividend date, or for certain foreign securities, when the information
becomes available to the Funds. Premium amortization and discount accretion
are determined by the effective yield method.
C. FOREIGN CURRENCY TRANSLATION. The books and records of the Funds are
maintained in U.S. dollars. Any foreign currency amounts are translated
into U.S. dollars on the following basis:
(1) Market value of investment securities, other assets and liabilities --
at the exchange rates prevailing at the end of the day.
(2) Purchases and sales of investment securities, income and expenses --
at the rates of exchange prevailing on the respective dates of such
transactions.
Although the net assets and the market values are presented at the foreign
exchange rates at the end of the day, the Funds do not isolate the portion
of the results of operations resulting from changes in foreign exchange
rates on investments from the fluctuations arising from changes in market
prices of securities held. Such fluctuations are included with the net
realized and unrealized gains or losses from investments. For securities
which are subject to foreign withholding tax upon disposition, liabilities
are recorded on the statement of assets and liabilities for the estimated
tax withholding based on the securities current market value. Upon
disposition, realized gains or losses on such securities are recorded net
of foreign withholding tax.
Reported net realized foreign exchange gains or losses arise from sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise
from changes in the value of assets and liabilities other than investments
in securities at fiscal year end, resulting from changes in the exchange
rate. Foreign security and currency transactions may involve certain
considerations and risks not
25
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
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. 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.
F. DISTRIBUTIONS TO SHAREHOLDERS. The Funds record distributions to their
shareholders on ex-dividend date. Each Fund pays dividends and capital
gains, if any annually.
G. FEDERAL INCOME TAXES. It is the policy of the Funds, to comply with the
requirements of the Internal Revenue Code that are applicable to regulated
investment companies and to distribute substantially all of their net
investment income and any net realized capital gains to their shareholders.
Therefore, a federal income tax provision is not required. Certain Funds
may utilize earnings and profits on redemption of shares as part of the
dividends paid deduction. 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.
26
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
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. During
the year ended October 31, 2002, Emerging Countries Fund paid $110,768 of
taxes on gains on sales of Indian investments.
H. USE OF ESTIMATES. Management of the Funds has made certain estimates and
assumptions relating to the reporting of assets, liabilities, income, and
expenses to prepare these financial statements in conformity with generally
accepted accounting principles. Actual results could differ from these
estimates.
I. REPURCHASE AGREEMENTS. Each Fund may invest in repurchase agreements only
with government securities dealers recognized by the Board of Governors of
the Federal Reserve System 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 amount being invested by the Fund. 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.
J. SECURITIES LENDING. Each Fund has the option to temporarily loan 33 1/3%
(except Emerging Countries, International SmallCap Growth and Worldwide
Growth Funds which may only lend 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.
NOTE 3 -- INVESTMENT TRANSACTIONS
For the six months ended April 30, 2003, the cost of purchases and proceeds from
the sales of securities, excluding short-term securities, were as follows:
PURCHASES SALES
--------- -----
Emerging Countries $52,819,476 $64,127,315
International 31,006,086 30,348,859
International SmallCap Growth 144,649,045 157,374,640
International Value 63,790,758 299,971,363
Worldwide Growth 122,333,707 142,479,219
NOTE 4 -- REDEMPTION FEE INCOME
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 accounted for as
an addition to paid-in capital. Total redemption fee proceeds for the six months
ended April 30, 2003 were $173,797 and are set forth in the statements 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 "Manager", the "Investment Manager", or the "Adviser"), a
wholly-owned subsidiary of ING Groep N.V. The investment management agreements
compensate the Manager with a fee, computed daily and payable monthly, based on
the average daily net assets of each Fund, at the following annual rates:
AS A PERCENT OF AVERAGE NET ASSETS
----------------------------------
Emerging Countries 1.25%
International 1.00%
International 1.00% on first $500 million; 0.90% on next
SmallCap Growth $500 million; and 0.85% in excess of $1
billion
International Value 1.00%
Worldwide Growth 1.00% on first $500 million; 0.90% on next
$500 million; and 0.85% in excess of $1
billion
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.
27
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Effective December 5, 2002, 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. 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 semi-annually, 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") 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 O
------- ------- ------- ------- ------- -------
Emerging
Countries 0.35% 1.00% 1.00% N/A 0.75% 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 six months ended April 30, 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 six months ended April 30, 2003, the Distributor
earned the following amounts in sales charges:
CLASS A CLASS B CLASS C CLASS M
SHARES SHARES SHARES SHARES
------ ------ ------ ------
Initial Sales Charges $ 10,504 n/a n/a $134
Contingent deferred
sales charges $127,956 $ 0 $81,273 n/a
NOTE 7 -- OTHER TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
At April 30, 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 SHAREHOLDER
INVESTMENT ACCRUED SERVICES &
MANAGEMENT ADMINISTRATIVE DISTRIBUTION
FEES FEES FEES TOTAL
---- ---- ---- -----
Emerging
Countries $ 101,494 $ 8,120 $ 38,528 $ 148,142
International 58,596 5,859 26,431 90,886
International
SmallCap
Growth 223,876 22,388 119,707 365,971
International
Value 1,972,035 197,203 1,484,360 3,653,598
Worldwide
Growth 119,682 11,968 81,661 213,311
At April 30, 2003, ING Life Insurance and Annuity Company, a wholly-owned
indirect subsidiary of ING Groep N.V., held 13.10% of the shares outstanding of
the ING International Fund. 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.
28
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
NOTE 8 -- EXPENSE LIMITATIONS
For the following Funds, the Investment Manager has voluntarily 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
------- ------- ------- ------- ------- -------
Emerging
Countries(1) 2.25% 2.90% 2.90% N/A 2.65% 2.15%
International(2) 1.80 2.55 2.55 1.45 N/A 1.70
International
SmallCap
Growth(3) 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(4) 1.85 2.50 2.50 N/A N/A 1.75
- ----------
(1) Prior to November 1, 2001, the expense limitation rate for Class Q was
1.90%.
(2) Prior to June 7, 2002, the expense limitation rates for Class A, Class B,
Class C, Class I and Class Q were 2.75%, 3.50%, 3.50%, 2.50%, and 2.75%
respectively.
(3) Prior to November 1, 2001, the expense limitation rate for Class Q was
1.65%.
(4) Prior to November 1, 2001, the expense limitation rate for Class Q was
1.60%.
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 April 30, 2003, the cumulative amounts of reimbursed fees that are subject
to possible recoupment by the Manager are as follows:
Emerging Countries $127,232
International 46,055
International SmallCap Growth 120,895
Worldwide Growth 721,317
NOTE 9 -- 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 State Street Bank and Trust
Company for an aggregate amount of $125,000,000. The proceeds may be used only
to: (1) temporarily finance the purchase and sale of securities; (2) finance the
redemption of shares of an investor in the Funds; and (3) enable the Funds to
meet other emergency expenses as defined in the Credit Agreement. The Funds to
which the line of credit is available pay a commitment fee equal to 0.10% per
annum on the daily unused portion of the committed line amount payable quarterly
in arrears. At April 30, 2003 the Funds did not have any loans outstanding.
NOTE 10 -- CAPITAL SHARES
Transaction in capital shares and dollars were as follows:
CLASS A SHARES CLASS B SHARES
------------------------------ ------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------- ------------- ------------- -------------
ING EMERGING COUNTRIES FUND
(NUMBER OF SHARES)
Shares sold 5,973,420 11,599,557 23,084 171,877
Shares issued in merger -- 407,103 -- 276,180
Shares issued as reinvestment of dividends -- 121 -- --
Shares redeemed (6,045,318) (12,682,825) (168,672) (461,156)
------------- ------------- ------------- -------------
Net decrease in shares outstanding (71,898) (676,044) (145,588) (13,099)
============= ============= ============= =============
ING EMERGING COUNTRIES FUND ($)
Shares sold $ 73,995,893 $ 161,276,949 $ 289,347 $ 2,478,236
Shares issued in merger -- 5,280,325 -- 3,558,403
Shares issued as reinvestment of dividends -- 1,567 -- --
Shares redeemed (75,254,848) (177,404,620) (2,091,807) (6,402,316)
------------- ------------- ------------- -------------
Net decrease $ (1,258,955) $ (10,845,779) $ (1,802,460) $ (365,677)
============= ============= ============= =============
29
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
NOTE 10 -- CAPITAL SHARES (CONTINUED)
CLASS C SHARES CLASS Q SHARES
---------------------------- ----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------ ------------ ------------ ------------
ING EMERGING COUNTRIES FUND
(NUMBER OF SHARES)
Shares sold 223,725 361,853 5,976,664 3,391,625
Shares issued as reinvestment of dividends -- -- -- 72
Shares redeemed (287,779) (671,785) (5,887,742) (3,924,951)
------------ ------------ ------------ ------------
Net increase (decrease) in shares
outstanding (64,054) (309,932) 88,922 (533,254)
============ ============ ============ ============
ING EMERGING COUNTRIES FUND ($)
Shares sold $ 2,604,737 $ 5,122,486 $ 75,842,251 $ 47,255,785
Shares issued as reinvestment of dividends -- -- -- 970
Shares redeemed (3,374,931) (9,265,932) (74,922,359) (54,959,947)
------------ ------------ ------------ ------------
Net increase (decrease) $ (770,194) $ (4,143,446) $ 919,892 $ (7,703,192)
============ ============ ============ ============
CLASS M SHARES
-----------------------------
SIX MONTHS PERIOD
ENDED ENDED
APRIL 30, OCTOBER 31,
2003 2002(1)
----------- -----------
ING EMERGING COUNTRIES FUND
(NUMBER OF SHARES)
Shares sold 2,226 921
Shares issued in merger -- 92,645
Shares redeemed (15,416) (2,436)
----------- -----------
Net increase (decrease) in shares
outstanding (13,190) 91,130
=========== ===========
ING EMERGING COUNTRIES FUND ($)
Shares sold $ 27,628 $ 11,570
Shares issued in merger -- 1,201,548
Shares redeemed (192,011) (30,431)
----------- -----------
Net increase (decrease) $ (164,383) $ 1,182,687
=========== ===========
- ----------
(1) Commenced operations on August 5, 2002
CLASS A SHARES CLASS B SHARES CLASS C SHARES
---------------------------- ---------------------------- ----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002 2003 2002
------------ ------------ ------------ ------------ ------------ ------------
ING INTERNATIONAL FUND
(NUMBER OF SHARES)
Shares sold 6,015,208 8,189,311 233,125 455,458 383,326 974,161
Shares issued in merger -- 818,729 -- 1,223,633 -- 1,243,707
Shares issued as reinvestment
of dividends 22,180 -- -- -- 219 --
Shares redeemed (7,055,309) (7,499,690) (214,036) (440,191) (379,097) (614,252)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in
shares outstanding (1,017,921) 1,508,350 19,089 1,238,900 4,448 1,603,616
============ ============ ============ ============ ============ ============
ING INTERNATIONAL FUND ($)
Shares sold $ 42,222,617 $ 62,922,949 $ 1,594,415 $ 3,482,361 $ 2,628,186 $ 7,381,467
Shares issued in merger -- 7,189,923 -- 10,596,499 -- 10,762,961
Shares issued as reinvestment
of dividends 159,031 -- -- -- 1,542 --
Redemption fee proceeds 173,797 132,507 -- -- -- --
Shares redeemed (49,487,046) (59,009,071) (1,450,522) (3,410,635) (2,547,952) (4,729,016)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) $ (6,931,601) $ 11,236,308 $ 143,893 $ 10,668,225 $ 81,776 $ 13,415,412
============ ============ ============ ============ ============ ============
30
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
NOTE 10 -- CAPITAL SHARES (CONTINUED)
CLASS I SHARES CLASS Q SHARES
---------------------------- ----------------------------
SIX MONTHS PERIOD SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002(1) 2003 2002
------------ ------------ ------------ ------------
ING INTERNATIONAL FUND
(NUMBER OF SHARES)
Shares sold 2,129,257 3,152,664 2,834,543 471,191
Shares issued in merger -- -- -- 993,513
Shares issued as reinvestment of dividends 5,615 -- 5,262
Shares redeemed (1,730,389) (2,248,030) (2,588,996) (478,675)
------------ ------------ ------------ ------------
Net increase in shares outstanding 404,483 904,634 250,809 986,029
============ ============ ============ ============
ING INTERNATIONAL FUND ($)
Shares sold $ 14,734,444 $ 25,021,083 $ 19,207,793 $ 3,563,197
Shares issued in merger -- -- -- 8,727,522
Shares issued as reinvestment of dividends 40,147 -- 37,518
Shares redeemed (11,925,180) (17,592,690) (17,429,274) (3,696,166)
------------ ------------ ------------ ------------
Net increase $ 2,849,411 $ 7,428,393 $ 1,816,037 $ 8,594,553
============ ============ ============ ============
- ----------
(1) Commenced operations on January 15, 2002.
CLASS A SHARES CLASS B SHARES
------------------------------ ------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------- ------------- ------------- -------------
ING INTERNATIONAL SMALLCAP GROWTH FUND
(NUMBER OF SHARES)
Shares sold 10,727,135 29,014,063 114,609 599,756
Shares redeemed (10,684,231) (29,337,016) (373,397) (1,096,685)
------------- ------------- ------------- -------------
Net increase (decrease) in shares
outstanding 42,904 (322,953) (258,788) (496,929)
============= ============= ============= =============
ING INTERNATIONAL SMALLCAP GROWTH FUND ($)
Shares sold $ 194,377,945 $ 632,348,151 $ 2,182,045 $ 13,965,766
Shares redeemed (194,155,155) (642,058,647) (7,093,833) (25,182,365)
------------- ------------- ------------- -------------
Net increase (decrease) $ 222,790 $ (9,710,496) $ (4,911,788) $ (11,216,599)
============= ============= ============= =============
CLASS C SHARES CLASS Q SHARES
------------------------------ ------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------- ------------- ------------- -------------
ING INTERNATIONAL SMALLCAP GROWTH FUND
(NUMBER OF SHARES)
Shares sold 604,567 1,192,193 9,613,286 6,300,682
Shares redeemed (930,881) (1,824,566) (9,590,544) (6,626,006)
------------- ------------- ------------- -------------
Net increase (decrease) in shares
outstanding (326,314) (632,373) 22,742 (325,324)
============= ============= ============= =============
ING INTERNATIONAL SMALLCAP GROWTH FUND ($)
Shares sold $ 10,546,476 $ 25,346,123 $ 185,306,955 $ 143,123,447
Shares redeemed (16,240,401) (38,544,051) (185,040,984) (150,812,281)
------------- ------------- ------------- -------------
Net increase (decrease) $ (5,693,925) $ (13,197,928) $ 265,971 $ (7,688,834)
============= ============= ============= =============
31
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
NOTE 10 -- CAPITAL SHARES (CONTINUED)
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-------------------------------- ----------------------------- -----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002 2003 2002
------------- --------------- ------------ ------------- ------------ -------------
ING INTERNATIONAL VALUE FUND
(NUMBER OF SHARES)
Shares sold 12,899,319 119,238,378 429,574 9,034,613 316,548 18,810,213
Shares issued as reinvestment
of dividends 2,380,188 2,046,200 522,401 542,229 793,701 774,598
Shares redeemed (22,863,508) (87,913,712) (4,043,891) (7,613,839) (6,288,886) (13,237,481)
------------- --------------- ------------ ------------- ------------ -------------
Net increase (decrease) in
shares outstanding (7,584,001) 33,370,866 (3,091,916) 1,963,003 (5,178,637) 6,347,330
============= =============== ============ ============= ============ =============
ING INTERNATIONAL VALUE
FUND ($)
Shares sold $ 130,036,247 $ 1,522,323,967 $ 4,303,155 $ 114,916,200 $ 3,180,103 $ 239,956,133
Shares issued as reinvestment
of dividends 24,301,715 25,679,811 5,265,802 6,739,902 7,984,632 9,605,012
Shares redeemed (230,725,375) (1,107,047,090) (39,953,132) (89,774,421) (62,218,526) (159,086,448)
------------- --------------- ------------ ------------- ------------ -------------
Net increase (decrease) $ (76,387,413) $ 440,956,688 $(30,384,175) $ 31,881,681 $(51,053,791) $ 90,474,697
============= =============== ============ ============= ============ =============
CLASS I SHARES CLASS Q SHARES
----------------------------- ---------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------ ------------- ----------- ------------
ING INTERNATIONAL VALUE FUND
(NUMBER OF SHARES)
Shares sold 3,323,928 24,400,308 326,331 3,129,171
Shares issued as reinvestment
of dividends 960,472 431,858 55,079 61,189
Shares redeemed (3,862,015) (7,442,390) (785,899) (3,233,666)
------------ ------------- ----------- ------------
Net increase (decrease) in
shares outstanding 422,385 17,389,776 (404,489) (43,306)
============ ============= =========== ============
ING INTERNATIONAL VALUE FUND ($)
Shares sold $ 33,997,801 $ 311,346,171 $ 3,230,148 $ 40,891,856
Shares issued as reinvestment
of dividends 9,787,206 5,411,186 562,357 769,149
Shares redeemed (38,872,674) (88,175,138) (7,950,043) (41,911,766)
------------ ------------- ----------- ------------
Net increase (decrease) $ 4,912,333 $ 228,582,219 $(4,157,538) $ (250,761)
============ ============= =========== ============
CLASS A SHARES CLASS B SHARES
----------------------------- ---------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------ ------------- ----------- ------------
ING WORLDWIDE GROWTH FUND
(NUMBER OF SHARES)
Shares sold 7,565,006 10,042,589 39,988 130,581
Shares redeemed (7,889,449) (13,104,424) (395,349) (1,486,694)
------------ ------------- ----------- ------------
Net decrease in shares
outstanding (324,443) (3,061,835) (355,361) (1,356,113)
============ ============= =========== ============
ING WORLDWIDE GROWTH FUND ($)
Shares sold $ 91,414,080 $ 145,141,054 $ 541,720 $ 2,247,925
Shares redeemed (95,537,187) (192,304,536) (5,270,967) (24,337,790)
------------ ------------- ----------- ------------
Net decrease $ (4,123,107) $ (47,163,482) $(4,729,247) $(22,089,865)
============ ============= =========== ============
32
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
NOTE 10 -- CAPITAL SHARES (CONTINUED)
CLASS C SHARES CLASS Q SHARES
---------------------------- ----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
------------ ------------ ------------ ------------
ING WORLDWIDE GROWTH FUND
(NUMBER OF SHARES)
Shares sold 385,249 372,981 4,728,203 2,165,766
Shares redeemed (1,073,359) (2,833,697) (4,662,605) (2,555,640)
------------ ------------ ------------ ------------
Net decrease in shares
outstanding (688,110) (2,460,716) 65,598 (389,874)
============ ============ ============ ============
ING WORLDWIDE GROWTH FUND ($)
Shares sold $ 4,557,779 $ 5,747,691 $ 66,885,315 $ 35,266,752
Shares redeemed (12,761,123) (41,522,976) (65,624,942) (42,294,829)
------------ ------------ ------------ ------------
Net decrease $ (8,203,344) $(35,775,285) $ 1,260,373 $ (7,028,077)
============ ============ ============ ============
NOTE 11 -- SECURITIES LENDING
Under an agreement with Brown Brothers Harriman ("BBH"), the Funds can lend
their securities to approved brokers, dealers and other financial institutions.
Loans are collateralized by cash, U.S. Government securities. The collateral
must be in an amount equal to at least 105% of the market value of non-U.S.
securities loaned and 102% of the market value of U.S. securities loaned. The
cash collateral received is invested in Brown Brothers Investment Trust
("BBIT"). The BBIT is a Delaware business trust whose units are not offered for
sale to the public, and whose purchasers are qualified purchasers such as
registered investment companies ("RICs") in accordance with the provisions of
Section 3(C) of the Investment Company Act of 1940. The standard investment
guidelines are modeled after SEC Rule 2a-7. A portion of the income generated by
the investment of the collateral, net of any rebates paid by BBH to borrowers,
is remitted to BBH as lending agent, and the remainder is paid to the Funds.
Generally, in the event of counterparty default, the Funds have the right to use
the collateral to offset losses incurred. There would be a potential loss to the
Funds in the event the Funds are delayed or prevented from exercising their
right to dispose of the collateral. The Funds bear the risk of loss with respect
to the investment of collateral.
At April 30, 2003, the Funds had securities on loan with the following market
values:
FUND VALUE
---- -----
Emerging Countries $ 9,736,676
International 5,543,048
International SmallCap Growth 34,188,460
International Value 476,151,512
Worldwide Growth 6,768,620
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 Synnex Technology Intl. Corp. GDR 49,379 12/15/99 $ 321,700 $ 234,550 0.2%
========= ========= ===
33
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (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 10 -- 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
TOTAL NET TOTAL NET UNREALIZED
ASSETS OF ASSETS OF APPRECIATION/
ACQUIRING ACQUIRED ACQUIRED FUND ACQUIRING FUND (DEPRECIATION)
FUND FUND (000'S) (000'S) (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 govenments 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
Dividends paid by the Funds from net investment income and distributions of net
realized short-term capital gains are, for federal income tax purposes, taxable
as ordinary income to shareholders. The tax composition of dividends and
distributions for the six months ended April 30, 2003 to shareholders were as
follow:
ORDINARY LONG-TERM
INCOME CAPITAL GAINS
------ -------------
International $ 265,180 $ --
International Value 25,971,308 37,079,320
The amount of distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations, which
may differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. Key
differences are the treatment of short-term capital gains, foreign currency
transactions, organization costs and other temporary differences. To the extent
that these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassifications. To the extent
distributions exceed net investment income and/or net realized capital gains for
tax purposes, they are reported as distributions of paid-in capital.
34
NOTES TO FINANCIAL STATEMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Capital loss carryforwards, which may be used to offset future realized capital
gains for federal income tax purposes were as follows at October 31, 2002:
AMOUNT EXPIRATION DATES
------ ----------------
Emerging Countries $175,770,769 2005 - 2010
International 35,616,204 2007 - 2010
International SmallCap
Growth 238,103,455 2008 - 2010
Worldwide Growth 229,162,719 2008 - 2010
NOTE 16 -- SUBSEQUENT EVENT
CHANGE IN FUNDS' AUDITORS 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 ending 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.
35
ING
Emerging
Countries
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK: 85.7%
BRAZIL: 10.6%
35,900 A Banco Itau Holding Financeira SA ADR $ 1,195,470
21,800 A Brasil Telecom Participacoes SA ADR 771,720
47,075 Cia de Bebidas das Americas ADR 936,322
100,400 Cia Energetica de Minas Gerais ADR 1,064,240
4,200 A Cia Siderurgica Nacional SA ADR 96,642
53,795 Cia Vale do Rio Doce ADR 1,504,108
68,783 A Gerdau SA ADR 836,401
169,395 Petroleo Brasileiro SA - Petrobras ADR 2,898,348
76,459 A Tele Norte Leste Participacoes SA ADR 829,580
358,900 @,A Telesp Celular Participacoes SA ADR 1,381,765
--------------
TOTAL BRAZIL 11,514,596
--------------
CHILE: 0.6%
53,100 Cia de Telecomunicaciones de Chile SA ADR 609,057
--------------
TOTAL CHILE 609,057
--------------
CHINA: 2.7%
390,500 Byd Co. Ltd. 773,585
5,156,000 China Petroleum & Chemical Corp. 1,018,103
2,916,000 China Telecom Corp. Ltd. 560,838
653,000 Huaneng Power Intl., Inc. 619,588
--------------
TOTAL CHINA 2,972,114
--------------
CZECH: 0.7%
34,800 Komercni Banka AS GDR 793,440
--------------
TOTAL CZECH 793,440
--------------
HONG KONG: 2.4%
537,500 China Mobile Ltd. 1,078,577
879,000 CNOOC Ltd. 1,155,237
1,066,000 Denway Motors Ltd. 355,377
--------------
TOTAL HONG KONG 2,589,191
--------------
HUNGARY: 1.6%
82,400 OTP Bank Rt GDR 1,778,192
--------------
TOTAL HUNGARY 1,778,192
--------------
INDIA: 4.6%
6,100 @,#,X ABN Amro Bank NV 359,551
240,000 Larsen & Toubro Ltd. 1,016,876
92,600 Ranbaxy Laboratories Ltd. GDR 1,447,338
91,800 # Reliance Industries Ltd. GDR 1,045,602
355,500 @ Tata Engineering & Locomotive GDR 1,148,265
--------------
TOTAL INDIA 5,017,632
--------------
INDONESIA: 1.2%
1,770,346 @ Astra Intl. Tbk PT 617,432
1,380,000 Telekomunikasi Indonesia Tbk PT 652,332
--------------
TOTAL INDONESIA 1,269,764
--------------
ISRAEL: 2.9%
34,000 @ Check Point Software Technologies 534,820
55,600 A Teva Pharmaceutical Industries ADR 2,596,520
--------------
TOTAL ISRAEL 3,131,340
--------------
LUXEMBOURG: 0.7%
33,400 @ Tenaris SA ADR 784,900
--------------
TOTAL LUXEMBOURG 784,900
--------------
MALAYSIA: 2.4%
606,000 Gamuda BHD 829,263
118,800 Genting BHD 375,158
317,800 Malayan Banking BHD 660,689
1,215,500 Public Bank BHD 767,684
--------------
TOTAL MALAYSIA 2,632,794
--------------
MEXICO: 8.6%
90,015 America Movil SA de CV ADR 1,509,552
26,350 Cemex SA de CV ADR 602,097
19,430 Fomento Economico Mexicano SA de CV ADR 737,563
31,050 Grupo Aeroportuario del Sureste SA de CV ADR 397,750
169,600 Grupo Financiero Banorte SA de CV 471,789
914,400 @ Grupo Financiero BBVA Bancomer 795,169
31,450 @ Grupo Televisa SA ADR 954,193
72,880 Telefonos de Mexico SA de CV ADR 2,201,705
15,910 TV Azteca SA de CV ADR 92,278
575,800 Wal-Mart de Mexico SA de CV 1,594,471
--------------
TOTAL MEXICO 9,356,567
--------------
POLAND: 1.7%
42,100 Bank Pekao SA GDR 921,148
285,700 @ Telekomunikacja Polska SA GDR 954,238
--------------
TOTAL POLAND 1,875,386
--------------
RUSSIA: 5.0%
22,000 A LUKOIL ADR 1,532,520
18,400 MMC Norilsk Nickel ADR 440,312
25,600 Sibneft ADR 596,736
50,800 Surgutneftegaz ADR 1,176,550
9,500 A YUKOS ADR 1,662,500
--------------
TOTAL RUSSIA 5,408,618
--------------
SOUTH AFRICA: 6.5%
247,000 ABSA Group Ltd. 1,082,872
1,000,000 FirstRand Ltd. 975,771
39,600 Gold Fields Ltd. ADR 401,940
35,000 Harmony Gold Mining Co. Ltd. ADR 367,500
19,000 Impala Platinum Holdings Ltd. 940,038
67,000 Sappi Ltd. 827,797
103,500 Sasol Ltd. 1,122,152
338,900 Standard Bank Group Ltd. 1,360,015
--------------
TOTAL SOUTH AFRICA 7,078,085
--------------
See Accompanying Notes to Financial Statements
36
ING
Emerging
Countries
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
SOUTH KOREA: 16.9%
48,800 Daishin Securities Co. Ltd. $ 654,683
22,580 Hanssem Co. Ltd. 220,225
21,080 Honam Petrochemical Corp. 530,036
23,600 Hyundai Motor Co. 557,465
42,871 Kookmin Bank 1,203,211
105,500 Korea Electric Power Corp. 1,775,700
14,430 A KT Corp. ADR 292,063
13,700 KT Corp. 562,658
94,800 # KT&G Corp. GDR 715,740
31,890 LG Chem Ltd. 1,057,751
18,670 LG Electronics, Inc. 643,846
15,040 POSCO 1,268,807
16,810 Samsung Electronics Co. Ltd. 4,219,794
19,600 Samsung Fire & Marine Insurance Co. Ltd. 967,901
236,100 Samsung Heavy Industries Co. Ltd. 1,045,447
2,950 Shinsegae Co. Ltd. 352,058
10,000 Sindo Ricoh Co. Ltd. 557,202
12,190 SK Telecom Co. Ltd. 1,695,564
--------------
TOTAL SOUTH KOREA 18,320,151
--------------
TAIWAN: 10.2%
209,323 Asustek Computer, Inc. GDR 416,553
25,300 Asustek Computer, Inc. 49,352
1,230,000 @ Chinatrust Financial Holding Co. 959,725
1,231,200 Compal Electronics, Inc. 1,327,972
2,454,000 @ Eva Airways Corp. 753,236
1,598,000 Fubon Financial Holding Co. Ltd. 1,091,004
70,050 HON HAI Precision Industry 219,032
167,807 # HON HAI Precision Industry GDR 1,082,355
1,278,000 Nan Ya Plastic Corp. 1,107,160
669,600 Synnex Technology Intl. Corp. 787,539
49,379 I Synnex Technology Intl. Corp. GDR 234,550
33,731 @ Taiwan Semiconductor Manufacturing Co.
Ltd. ADR 282,328
2,000,456 @ Taiwan Semiconductor Manufacturing Co. Ltd. 2,743,023
--------------
TOTAL TAIWAN 11,053,829
--------------
THAILAND: 2.7%
1,850,000 X Bangkok Expressway PCL 642,990
167,500 X BEC World PLC 804,875
457,500 @ Kasikornbank PCL 386,853
3,925,100 Land & House Pub Co. Ltd. 704,998
1,302,000 @ National Finance PCL 376,599
--------------
TOTAL THAILAND 2,916,315
--------------
TURKEY: 1.0%
190,000,000 Akbank TAS 673,372
72,000,000 Turkcell Iletisim Hizmet AS 432,184
--------------
TOTAL TURKEY 1,105,556
--------------
UNITED KINGDOM: 2.6%
197,000 Anglo American PLC 2,821,103
--------------
TOTAL UNITED KINGDOM 2,821,103
--------------
Total Common Stock (Cost $81,704,681) 93,028,630
--------------
PREFERRED STOCK: 2.0%
SOUTH KOREA: 0.3%
17,990 Samsung Electronics Co. Ltd. 2,206,181
--------------
TOTAL SOUTH KOREA 2,206,181
--------------
Total Preferred Stock (Cost $2,474,936) 2,206,181
--------------
WARRANTS: 0.3%
SOUTH KOREA: 0.3%
8,300 @,X Merrill Lynch Intl. Exp. 08/26/05 340,797
--------------
TOTAL SOUTH KOREA 340,797
--------------
Total Warrants (Cost $324,577) 340,797
--------------
TOTAL INVESTMENTS IN SECURITIES
(COST $84,504,194)* 88.0% $ 95,575,608
OTHER ASSETS AND LIABILITIES-NET 12.0 13,064,966
----- --------------
NET ASSETS 100.0% $ 108,640,574
===== ==============
@ Non-income producing security
ADR American Depository Receipt
GDR Global Depository 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 Fund's Board of Directors.
X Fair Value as determined by ING Valuation Committee appointed by the Fund's
Board of Directors.
A Loaned security, a portion or all of the security is on loan at April 30,
2003.
I Illiquid Security
* Cost for federal income tax purposes is the same as for financial statement
purposes. Net unrealized appreciation consists of:
Gross Unrealized Appreciation $ 16,994,330
Gross Unrealized Depreciation (5,922,917)
--------------
Net Unrealized Appreciation $ 11,071,414
==============
See Accompanying Notes to Financial Statements
37
ING
Emerging
Countries
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Percentage of
Industry Net Assets
- --------------------------------------------------------------------------------
Agriculture 0.7%
Airlines 0.7%
Auto Manufacturers 1.9%
Banks 11.7%
Beverages 1.5%
Building Materials 0.6%
Chemicals 3.4%
Commercial Services 0.7%
Computers 3.4%
Diversified Financial Services 3.1%
Electric 3.2%
Electrical Components & Equipment 7.2%
Electronics 0.4%
Engineering & Construction 1.1%
Forest Products & Paper 0.8%
Holding Companies-Diversified 0.9%
Home Builders 0.6%
Home Furnishings 0.2%
Insurance 0.9%
Internet 0.5%
Iron/Steel 2.0%
Lodging 0.3%
Media 1.7%
Mining 6.0%
Office/Business Equipment 0.5%
Oil & Gas 10.3%
Oil & Gas Services 0.7%
Pharmaceuticals 3.7%
Retail 2.4%
Semiconductors 2.8%
Shipbuilding 1.0%
Software 0.3%
Telecommunications 12.8%
Other Assets and Liabilities, Net 12.0%
-----
NET ASSETS 100.0%
=====
See Accompanying Notes to Financial Statements
38
ING
International
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK: 82.9%
AUSTRALIA: 1.4%
206,000 QBE Insurance Group Ltd. $ 1,100,493
--------------
TOTAL AUSTRALIA 1,100,493
--------------
CANADA: 2.8%
39,703 EnCana Corp. 1,302,350
128,000 @ Kinross Gold Corp. 789,628
--------------
TOTAL CANADA 2,091,978
--------------
DENMARK: 2.5%
39,000 Danske Bank A/S 750,378
7,800 Novo-Nordisk A/S ADR 283,140
8,100 Novo-Nordisk A/S 293,432
22,100 TDC A/S 549,788
--------------
TOTAL DENMARK 1,876,738
--------------
FINLAND: 2.7%
18,000 Nokia OYJ ADR 298,260
55,200 Nokia OYJ 933,905
54,200 UPM-Kymmene OYJ 792,382
--------------
TOTAL FINLAND 2,024,547
--------------
FRANCE: 8.5%
10,850 Aventis SA 551,062
56,000 AXA 850,571
18,950 A Carrefour SA 824,145
13,100 Pechiney SA 377,917
23,700 A Schneider Electric SA 1,121,975
14,000 Societe Generale 856,195
2,539 Total SA 332,939
17,700 Total SA ADR 1,162,890
14,400 Valeo SA 412,527
--------------
TOTAL FRANCE 6,490,221
--------------
GERMANY: 4.0%
29,939 Deutsche Bank AG 1,548,309
20,200 Deutsche Boerse AG 946,814
77,000 @ Infineon Technologies AG 571,448
--------------
TOTAL GERMANY 3,066,571
--------------
GREECE: 0.6%
51,500 Greek Organization of Football
Prognostics SA 470,137
--------------
TOTAL GREECE 470,137
--------------
IRELAND: 2.3%
91,800 Irish Life & Permanent PLC 1,046,002
108,210 @ Ryanair Holdings PLC 740,170
--------------
TOTAL IRELAND 1,786,172
--------------
ISRAEL: 1.6%
26,800 Teva Pharmaceutical Industries ADR 1,251,560
--------------
TOTAL ISRAEL 1,251,560
--------------
ITALY: 2.0%
295,200 A Banca Fideuram S.p.A. 1,558,266
--------------
TOTAL ITALY 1,558,266
--------------
JAPAN: 13.1%
30,800 FamilyMart Co. Ltd. 587,540
34,800 Fanuc Ltd. 1,423,981
60,000 JGC Corp. 422,606
51,000 Kao Corp. 930,111
3,500 Mabuchi Motor Co. Ltd. 261,488
57,600 Marui Co. Ltd. 479,598
119,000 Nikko Cordial Corp. 319,302
95,000 Nomura Holdings, Inc. 940,760
540 NTT DoCoMo, Inc. 1,113,869
14,400 A Otsuka Kagu Ltd. 319,973
51,000 Sekisui House Ltd. 374,610
47,500 Shimano, Inc. 753,962
31,100 Sony Corp. 756,247
8,500 Tokyo Electron Ltd. 318,590
44,000 Toyota Motor Corp. 996,143
--------------
TOTAL JAPAN 9,998,780
--------------
MEXICO: 2.4%
183,900 Cemex SA de CV 833,554
33,300 Telefonos de Mexico SA de CV ADR 1,005,993
--------------
TOTAL MEXICO 1,839,547
--------------
NETHERLANDS: 4.7%
107,432 Aegon NV 1,092,235
21,300 Koninklijke Philips Electronics NV ADR 397,884
34,876 Koninklijke Philips Electronics NV 648,823
35,990 Royal Dutch Petroleum Co. 1,471,372
--------------
TOTAL NETHERLANDS 3,610,314
--------------
NEW ZEALAND: 1.4%
405,900 Telecom Corp. of New Zealand Ltd. 1,087,522
--------------
TOTAL NEW ZEALAND 1,087,522
--------------
NORWAY: 0.5%
73,700 Tomra Systems ASA 348,605
--------------
TOTAL NORWAY 348,605
--------------
RUSSIA: 1.3%
5,600 A YUKOS ADR 980,000
--------------
TOTAL RUSSIA 980,000
--------------
SINGAPORE: 0.9%
116,000 United Overseas Bank Ltd. 679,432
--------------
TOTAL SINGAPORE 679,432
--------------
SOUTH AFRICA: 0.9%
65,600 Gold Fields Ltd. ADR 665,840
--------------
TOTAL SOUTH AFRICA 665,840
--------------
SPAIN: 1.5%
100,300 Telefonica SA 1,109,274
--------------
TOTAL SPAIN 1,109,274
--------------
SWEDEN: 2.4%
32,700 Atlas Copco AB 739,575
55,180 A ForeningsSparbanken AB 748,803
40,800 A Swedish Match AB 301,771
--------------
TOTAL SWEDEN 1,790,149
--------------
See Accompanying Notes to Financial Statements
39
ING
International
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
SWITZERLAND: 7.7%
1,510 Julius Baer Holding AG $ 317,297
8,165 Nestle SA 1,664,545
24,680 Novartis AG ADR 974,366
16,900 Novartis AG 666,630
23,450 Roche Holding AG 1,492,100
15,100 UBS AG 716,423
--------------
TOTAL SWITZERLAND 5,831,361
--------------
TAIWAN: 0.7%
58,300 @ Taiwan Semiconductor Manufacturing Co.
Ltd. ADR 487,971
--------------
TOTAL TAIWAN 487,971
--------------
UNITED KINGDOM: 16.1%
2,700 Amvescap PLC ADR 29,997
222,200 Amvescap PLC 1,207,446
239,600 BP PLC 1,518,360
153,400 @ British Sky Broadcasting PLC 1,589,938
33,700 Diageo PLC 373,796
8,100 GlaxoSmithKline PLC ADR 328,212
68,225 GlaxoSmithKline PLC 1,367,369
10,000 HSBC Holdings PLC ADR 546,900
46,500 Imperial Tobacco Group PLC 778,116
581,500 Legal & General Group PLC 720,271
60,800 Pearson PLC 506,760
59,600 Provident Financial PLC 546,768
36,300 Rio Tinto PLC 693,877
7,400 Rio Tinto PLC ADR 567,580
745,373 Vodafone Group PLC 1,471,246
--------------
TOTAL UNITED KINGDOM 12,246,636
--------------
UNITED STATES: 0.9%
16,000 Schlumberger Ltd. 670,880
--------------
TOTAL UNITED STATES 670,880
--------------
Total Common Stock (Cost $66,676,206) 63,062,994
--------------
MUTUAL FUND: 7.2%
UNITED STATES: 7.2%
7,100 iShares MSCI EAFE Index Fund 708,651
129,100 iShares MSCI United Kingdom Index Fund 1,590,512
65,300 A iShares S&P Europe 350 Index Fund 3,199,047
--------------
TOTAL UNITED STATES 5,498,210
--------------
Total Mutual Fund (Cost $5,152,423) 5,498,210
--------------
TOTAL INVESTMENTS IN SECURITIES
(COST $71,828,629)* 90.1% $ 68,561,204
OTHER ASSETS AND LIABILITIES-NET 9.9 7,496,443
----- --------------
NET ASSETS 100.0% $ 76,057,647
===== ==============
@ Non-income producing security
ADR American Depository Receipt
GDR Global Depository Receipt
PLC Public Limited Company
A Loaned security, a portion or all of the security is on loan at April 30,
2003.
* Cost for federal income tax purposes is the same as for financial statement
purposes. Net unrealized depreciation consists of:
Gross Unrealized Appreciation $ 4,096,805
Gross Unrealized Depreciation (7,364,230)
--------------
Net Unrealized Depreciation $ (3,267,425)
==============
Percentage of
Industry Net Assets
- --------------------------------------------------------------------------------
Agriculture 1.4%
Airlines 1.0%
Auto Manufacturers 1.3%
Auto Parts & Equipment 0.5%
Banks 8.1%
Beverages 0.5%
Building Materials 1.1%
Cosmetics/Personal Care 1.2%
Diversified Financial Services 8.7%
Electronics 3.6%
Engineering & Construction 0.5%
Entertainment 0.6%
Environmental Control 0.5%
Equity Fund 7.2%
Food 3.3%
Forest Products & Paper 1.0%
Hand/Machine Tools 1.5%
Home Builders 0.5%
Home Furnishings 1.0%
Insurance 4.9%
Leisure Time 1.0%
Machinery-Construction & Mining 1.0%
Media 2.8%
Mining 4.1%
Oil & Gas 8.9%
Oil & Gas Services 0.9%
Pharmaceuticals 9.5%
Retail 1.8%
Semiconductors 1.8%
Telecommunications 9.9%
Other Assets and Liabilities, Net 9.9%
-----
NET ASSETS 100.0%
=====
See Accompanying Notes to Financial Statements
40
ING
International
SmallCap Growth
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK: 90.6%
AUSTRIA: 1.3%
31,000 Erste Bank der Oesterreichischen
Sparkassen AG $ 2,452,856
10,000 OMV AG 1,200,816
--------------
TOTAL AUSTRIA 3,653,672
--------------
BELGIUM: 0.9%
22,400 Colruyt SA 1,463,656
37,300 @ Mobistar SA 1,215,503
--------------
TOTAL BELGIUM 2,679,159
--------------
BERMUDA: 0.6%
179,000 Frontline Ltd. 1,892,881
--------------
TOTAL BERMUDA 1,892,881
--------------
BRAZIL: 0.7%
221,500,000 Cia Paranaense de Energia 525,151
131,300 Cia Paranaense de Energia ADR 425,412
98,000 Empresa Brasileira de Aeronautica SA ADR 1,359,260
--------------
TOTAL BRAZIL 2,309,823
--------------
CANADA: 11.7%
178,100 Abitibi-Consolidated, Inc. 1,247,668
91,000 @,A Ballard Power Systems, Inc. 931,931
26,400 @ Bonavista Petroleum Ltd. 618,319
350,300 @ Canadian 88 Energy Corp. 529,870
181,200 @ Cequel Energy, Inc. 795,734
176,500 @ Compton Petroleum Corp. 658,215
103,800 @,A Cott Corp. 1,904,730
101,400 Dofasco, Inc. 1,939,506
111,400 Finning Intl., Inc. 2,189,795
88,500 @ Industrial-Alliance Life Insurance Co. 2,304,109
158,400 IPSCO, Inc. 1,324,969
128,300 @ Ketch Resources Ltd. 532,124
201,600 @ Kingsway Financial Services, Inc. 2,318,695
74,700 @ Masonite Intl. Corp. 1,273,118
110,600 Molson, Inc. 2,544,124
133,700 @ Olympia Energy, Inc. 343,896
85,500 @ Precision Drilling Corp. 2,939,490
120,100 @ Progress Energy Ltd. 728,335
215,300 @ RONA, Inc. 2,366,709
94,100 Saputo, Inc. 1,656,228
235,800 Teck Cominco Ltd. 1,686,399
133,600 @ Tesco Corp. 1,415,530
127,200 @ Thunder Energy, Inc. 558,595
99,400 @ Westjet Airlines Ltd. 1,143,246
--------------
TOTAL CANADA 33,951,335
--------------
CHINA: 0.6%
821,000 Byd Co. Ltd. 1,626,410
--------------
TOTAL CHINA 1,626,410
--------------
DENMARK: 1.9%
19,700 A Coloplast A/S 1,456,923
66,200 Danisco A/S 2,418,074
50,000 @ Jyske Bank 1,630,929
--------------
TOTAL DENMARK 5,505,926
--------------
FINLAND: 0.8%
335,200 Sampo OYJ 2,431,541
--------------
TOTAL FINLAND 2,431,541
--------------
FRANCE: 6.0%
39,600 @ Business Objects SA ADR 860,508
43,000 @,A Cap Gemini SA 1,337,905
60,300 Cie Generale D'Optique Essilor
International SA 2,469,046
40,200 CNP Assurances 1,615,972
56,000 A Dassault Systemes SA 1,618,021
235,500 @ JC Decaux SA 2,273,376
47,400 A Pechiney SA 1,367,424
51,500 Thales SA 1,377,652
31,200 Unibail 2,087,411
38,600 Vinci SA 2,513,578
--------------
TOTAL FRANCE 17,520,893
--------------
GERMANY: 3.9%
80,000 Continental AG 1,431,158
56,000 Deutsche Boerse AG 2,624,832
50,000 A Medion AG 1,868,742
54,900 A Schwarz Pharma AG 2,389,468
80,000 @ SGL Carbon AG 1,192,781
35,000 Stada Arzneimittel AG 1,831,914
--------------
TOTAL GERMANY 11,338,895
--------------
GREECE: 0.4%
78,600 Coca Cola Hellenic Bottling Co. SA 1,149,101
--------------
TOTAL GREECE 1,149,101
--------------
HONG KONG: 0.5%
1,134,000 Cathay Pacific Airways Ltd. 1,366,782
--------------
TOTAL HONG KONG 1,366,782
--------------
INDIA: 1.1%
75,900 Comfort Intech Ltd. 1,082,110
58,260 Ranbaxy Laboratories Ltd. GDR 910,604
159,400 A Satyam Computer Services Ltd. ADR 1,227,380
--------------
TOTAL INDIA 3,220,094
--------------
IRELAND: 2.4%
586,000 Anglo Irish Bank Corp. PLC 4,407,798
200,000 Greencore Group PLC 613,800
165,100 Irish Life & Permanent PLC 1,893,275
--------------
TOTAL IRELAND 6,914,873
--------------
ISRAEL: 0.8%
50,000 @ Taro Pharmaceuticals Industries 2,288,000
--------------
TOTAL ISRAEL 2,288,000
--------------
ITALY: 2.6%
254,200 A Banco Popolare di Verona e Novara Scrl 3,452,473
184,800 A Italcementi S.p.A. 1,930,376
289,100 A Saipem S.p.A. 2,016,473
--------------
TOTAL ITALY 7,399,322
--------------
See Accompanying Notes to Financial Statements
41
ING
International
SmallCap Growth
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
JAPAN: 13.6%
548,000 A Bank of Yokohama Ltd. $ 1,934,496
94,000 A Capcom Co. Ltd. 750,361
25,000 Eneserve Corp. 876,237
8,700 Funai Electric Co. Ltd. 875,398
23,000 Hogy Medical Co. Ltd. 973,923
190,000 A JSR Corp. 1,981,888
300,000 A Keihin Electric Express Railway Co. Ltd. 1,436,358
828,000 Komatsu Ltd. 3,158,980
181,000 A Konica Corp. 1,655,802
57,700 Kose Corp. 1,828,828
900,000 Mitsui Mining & Smelting Co. Ltd. 2,362,066
46,300 Nichii Gakkan Co. 2,360,423
40,500 A Nidec Corp. 2,139,443
221,000 Nippon Electric Glass Co. Ltd. 2,420,141
77,400 Nitto Denko Corp. 2,226,077
770,000 NSK Ltd. 2,053,161
57,600 Pioneer Corp. 1,154,318
344,000 A Shizuoka Bank Ltd. 2,272,950
129,000 A THK Co. Ltd. 1,189,837
522,000 Toho Gas Co. Ltd. 1,448,784
300,000 TonenGeneral Sekiyu KK 1,906,758
1,106 @ UMC Japan 871,742
38,500 Uni-Charm Corp. 1,533,414
--------------
TOTAL JAPAN 39,411,385
--------------
LUXEMBOURG: 0.4%
48,349 @ Tenaris SA ADR 1,136,202
35,125 @ Tenaris SA 82,267
--------------
TOTAL LUXEMBOURG 1,218,469
--------------
NETHERLANDS: 1.9%
90,900 Euronext NV 2,008,599
35,000 Fugro NV 1,419,831
32,200 A IHC Caland NV 1,662,003
10,981 Rodamco Europe NV 533,696
--------------
TOTAL NETHERLANDS 5,624,129
--------------
NORWAY: 1.0%
57,300 A Gjensidige NOR ASA 1,985,660
47,800 ProSafe ASA 806,025
--------------
TOTAL NORWAY 2,791,685
--------------
PORTUGAL: 0.9%
475,200 Brisa-Auto Estradas de Portugal SA 2,561,461
--------------
TOTAL PORTUGAL 2,561,461
--------------
RUSSIA: 0.4%
26,000 @,A Vimpel-Communications ADR 1,036,360
--------------
TOTAL RUSSIA 1,036,360
--------------
SINGAPORE: 0.5%
2,000,000 Singapore Exchange Ltd. 1,374,183
--------------
TOTAL SINGAPORE 1,374,183
--------------
SOUTH AFRICA: 0.5%
365,000 @ Telkom SA Ltd. 1,579,628
--------------
TOTAL SOUTH AFRICA 1,579,628
--------------
SOUTH KOREA: 2.9%
23,170 Kumgang Korea Chemical Co. Ltd. 1,973,741
15,600 LG Home Shopping, Inc. 887,210
45,680 Samsung Electro-Mechanics Co. Ltd. 1,347,842
18,600 Samsung SDI Co. Ltd. 1,163,457
9,000 Shinsegae Co. Ltd. 1,074,074
108,520 SK Corp. 893,169
55,000 You Eal Electronics Co. Ltd. 1,050,206
--------------
TOTAL SOUTH KOREA 8,389,699
--------------
SPAIN: 6.8%
49,300 Acciona SA 2,365,808
200,000 A ACESA Infraestructuras SA 2,600,280
89,600 A ACS Actividades Cons y Serv 3,374,785
71,600 Altadis SA 1,845,819
65,500 A Bankinter SA 2,000,692
372,300 Corp. Mapfre SA 3,490,089
205,300 Ebro Puleva SA 1,789,387
200,100 Red Electrica de Espana 2,378,268
--------------
TOTAL SPAIN 19,845,128
--------------
SWEDEN: 3.2%
73,000 Autoliv, Inc. 1,784,907
50,000 Billerud AB 663,227
229,600 @ Elekta AB 2,498,185
88,000 Gambro AB 497,035
53,300 A SKF AB 1,544,323
309,200 A Swedish Match AB 2,286,954
--------------
TOTAL SWEDEN 9,274,631
--------------
SWITZERLAND: 4.0%
42,800 @ Actelion Ltd. 2,740,677
48,500 Converium Holding AG 2,190,242
39,800 @ Logitech International SA 1,467,227
45,430 @ Saurer AG 1,187,417
6,800 SGS Societe Generale Surveillance
Holdings SA 2,378,972
25,000 @ Swiss Life Holding 1,563,076
--------------
TOTAL SWITZERLAND 11,527,611
--------------
TAIWAN: 0.7%
923,000 Benq Corp. 937,298
2,143,000 @ Siliconware Precision Industries Co. 1,014,329
--------------
TOTAL TAIWAN 1,951,627
--------------
UNITED KINGDOM: 16.5%
300,000 @ Acambis PLC 1,359,312
281,156 Amvescap PLC 1,527,816
300,000 Arriva PLC 1,536,717
392,100 Cattles PLC 1,983,423
208,300 Close Brothers Group PLC 1,756,129
51,700 Cobham PLC 946,108
100,000 CP Ships Ltd. 1,460,337
498,900 @ easyJet PLC 1,507,023
194,500 Exel PLC 1,865,158
1,654,800 Friends Provident PLC 2,598,500
587,500 GKN PLC 1,934,282
612,951 John Wood Group PLC 1,525,803
410,200 Kelda Group PLC 2,697,803
501,000 Kidde PLC 576,521
215,800 Man Group PLC 3,638,720
256,200 Northern Rock PLC 2,929,770
See Accompanying Notes to Financial Statements
42
ING
International
SmallCap Growth
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
UNITED KINGDOM (CONTINUED)
728,200 Peninsular and Oriental Steam
Navigation Co. $ 2,246,222
233,800 Schroders PLC 2,270,985
253,952 Severn Trent PLC 2,902,033
300,000 SIG PLC 1,112,382
1,149,600 Signet Group PLC 1,543,372
2,463,800 @ Skyepharma PLC 1,949,195
303,500 Smith & Nephew PLC 2,023,950
195,900 Smiths Group PLC 2,094,620
510,100 Taylor Woodrow PLC 1,597,924
83,980 @ Tullow Oil PLC 93,284
--------------
TOTAL UNITED KINGDOM 47,677,389
--------------
UNITED STATES: 1.1%
311,300 @ Ultra Petroleum Corp. 3,113,000
--------------
TOTAL UNITED STATES 3,113,000
--------------
Total Common Stock (Cost $244,068,534) 262,625,092
--------------
PREFERRED STOCK: 2.0%
BRAZIL: 0.4%
317,300,000 Cia Paranaense de Energia 1,050,335
--------------
TOTAL BRAZIL 1,050,335
--------------
GERMANY: 1.6%
27,500 A Henkel KGaA 1,785,544
38,000 Wella AG 2,841,336
--------------
TOTAL GERMANY 4,626,880
--------------
Total Preferred Stock (Cost $4,757,883) 5,677,215
--------------
Contracts Value
- --------------------------------------------------------------------------------
OPTIONS: 0.0%
HONG KONG: 0.0%
4,330 X USD Call/HKD Put, 7.820 Strike,
expires 10/07/03 6,170
--------------
TOTAL HONG KONG 6,170
--------------
Total Options (Cost $24,681) 6,170
--------------
TOTAL INVESTMENTS IN SECURITIES
(COST $248,851,098)* 92.6% $ 268,308,477
OTHER ASSETS AND LIABILITIES-NET 7.4 21,370,636
----- --------------
NET ASSETS 100.0% $ 289,679,113
===== ==============
@ Non-income producing security
ADR American Depository Receipt
GDR Global Depository Receipt
PLC Public Limited Company
X Fair Value as determined by ING Valuation Committee as appointed by the
Fund's Board of Directors.
A Loaned security, a portion or all of the security is on loan at April 30,
2003.
* Cost for federal income tax purposes is the same as for financial statement
purposes. Net unrealized appreciation consists of:
Gross Unrealized Appreciation $ 30,258,642
Gross Unrealized Depreciation (10,801,263)
--------------
Net Unrealized Appreciation $ 19,457,379
==============
Percentage of
Industry Net Assets
- --------------------------------------------------------------------------------
Advertising 0.8%
Aerospace/Defense 1.3%
Agriculture 1.4%
Airlines 1.4%
Auto Parts & Equipment 1.8%
Banks 7.3%
Beverages 1.9%
Building Materials 1.5%
Chemicals 2.5%
Closed-end Funds 0.2%
Commercial 4.2%
Services Computers 1.3%
Cosmetics/Personal Care 2.1%
Distribution/Wholesale 0.7%
Diversified Financial Services 8.5%
Electric 1.5%
Electrical Components & Equipment 1.2%
Electronics 1.7%
Energy-Alternate Sources 0.3%
Engineering & Construction 2.9%
Food 2.7%
Forest Products & Paper 0.7%
Gas 0.5%
Hand/Machine Tools 1.9%
Healthcare-Product 3.4%
Home Builders 0.6%
Home Furnishings 0.4%
Household Products/Wares 0.6%
Insurance 5.6%
Iron/Steel 1.1%
Machinery-Construction & Mining 1.1%
Machinery-Diversified 0.4%
Metal Fabricate/Hardware 1.2%
Mining 1.9%
Miscellaneous Manufacturing 1.3%
Oil & Gas 5.1%
Oil & Gas Services 2.9%
Pharmaceuticals 4.6%
Real Estate 0.7%
Retail 2.0%
Semiconductors 0.7%
Software 1.5%
Telecommunications 1.7%
Transportation 3.6%
Water 1.9%
Other Assets and Liabilities, Net 7.4%
-----
NET ASSETS 100.0%
=====
See Accompanying Notes to Financial Statements
43
ING
International
Value
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK: 97.7%
BERMUDA: 2.1%
3,465,070 Tyco Intl. Ltd. $ 54,055,092
--------------
TOTAL BERMUDA 54,055,092
--------------
BRAZIL: 6.8%
960,480 A Banco Bradesco SA/Brazil ADR 19,785,888
10,027,700 Centrais Eletricas Brasileiras SA ADR 38,408,097
3,094,300 Petroleo Brasileiro SA -- Petrobras ADR 52,943,473
2,532,786 A Tele Norte Leste Participacoes SA ADR 27,480,728
1,208,600 Telecomunicacoes Brasileiras SA ADR 31,399,428
--------------
TOTAL BRAZIL 170,017,614
--------------
CANADA: 1.9%
18,105,392 @,A Nortel Networks Corp. 46,711,911
--------------
TOTAL CANADA 46,711,911
--------------
FRANCE: 5.0%
8,288,100 A Alcatel SA 67,891,474
1,485,000 A Alstom 3,016,213
1,463,100 A Michelin (C.G.D.E.) 54,127,970
--------------
TOTAL FRANCE 125,035,657
--------------
GERMANY: 7.3%
805,500 A BASF AG 35,930,552
1,644,800 A Bayerische Hypo-und Vereinsbank AG 21,898,670
5,377,300 A Deutsche Telekom AG 71,892,780
1,124,988 A E.ON AG 53,847,821
--------------
TOTAL GERMANY 183,569,823
--------------
HONG KONG: 1.7%
3,160,236 Jardine Matheson Holdings Ltd. 17,855,333
6,146,000 Swire Pacific Ltd. 24,271,777
--------------
TOTAL HONG KONG 42,127,110
--------------
ITALY: 3.0%
19,093,700 A Banca Intesa S.p.A. 49,435,881
3,129,200 A Telecom Italia S.p.A. 25,562,810
--------------
TOTAL ITALY 74,998,691
--------------
JAPAN: 20.5%
654,000 Daiichi Pharmaceutical Co. Ltd. 8,280,563
5,540,000 Daiwa House Industry Co. Ltd. 33,446,252
9,186,700 Hitachi Ltd. 30,658,281
6,438 Japan Tobacco, Inc. 37,518,112
9,584,000 Komatsu Ltd. 36,564,816
6,456,000 Matsushita Electric Industrial Co. Ltd. 51,427,134
1,762 Millea Holdings, Inc. 11,435,418
10,636,000 Mitsubishi Heavy Industries Ltd. 23,633,574
10,207 Mitsubishi Tokyo Financial Group, Inc. 34,576,790
12,161,000 A Nippon Oil Corp. 48,435,980
13,125 Nippon Telegraph & Telephone Corp. 46,002,432
1,049,000 Ono Pharmaceutical Co. Ltd. 31,313,433
3,822,000 Sankyo Co. Ltd. 55,378,300
11,494 A Sumitomo Mitsui Financial Group, Inc. 18,022,623
1,362,000 TDK Corp. 47,280,563
--------------
TOTAL JAPAN 513,974,271
--------------
MEXICO: 2.6%
1,275,060 America Movil SA de CV ADR 21,382,756
1,471,160 Telefonos de Mexico SA de CV ADR 44,443,744
--------------
TOTAL MEXICO 65,826,500
--------------
NETHERLANDS: 1.4%
945,000 Akzo Nobel NV 21,008,030
350,000 A European Aeronautic Defense and Space Co. 3,253,698
2,287,000 Koninklijke Ahold NV 10,464,397
--------------
TOTAL NETHERLANDS 34,726,125
--------------
NEW ZEALAND: 2.0%
19,086,427 A Telecom Corp. of New Zealand Ltd. 51,138,006
--------------
TOTAL NEW ZEALAND 51,138,006
--------------
PORTUGAL: 1.9%
6,709,676 Portugal Telecom SGPS SA 47,998,070
--------------
TOTAL PORTUGAL 47,998,070
--------------
RUSSIA: 1.3%
477,800 LUKOIL ADR 33,283,548
--------------
TOTAL RUSSIA 33,283,548
--------------
SINGAPORE: 3.2%
3,652,191 DBS Group Holdings Ltd. 17,894,831
6,060,800 @,X DBS Group Holdings Ltd. ADR 29,696,418
6,239,000 Oversea-Chinese Banking Corp. 33,204,860
--------------
TOTAL SINGAPORE 80,796,109
--------------
SOUTH KOREA: 4.8%
4,337,800 A Korea Electric Power Corp. ADR 40,862,076
2,180,500 KT Corp. ADR 44,133,320
1,709,000 POSCO ADR 35,119,950
--------------
TOTAL SOUTH KOREA 120,115,346
--------------
SPAIN: 9.5%
6,566,533 Banco Bilbao Vizcaya
Argentaria SA 66,100,823
5,374,170 Repsol YPF SA 78,268,337
8,538,260 Telefonica SA 94,429,399
--------------
TOTAL SPAIN 238,798,559
--------------
SWITZERLAND: 4.1%
91,700 A Swisscom AG 28,362,567
697,374 Zurich Financial Services AG 73,526,861
--------------
TOTAL SWITZERLAND 101,889,428
--------------
UNITED KINGDOM: 18.1%
22,621,100 BAE Systems PLC 45,915,800
4,901,200 British American Tobacco PLC 47,000,057
6,983,730 BT Group PLC 20,007,431
43,633,700 @ Corus Group PLC 9,658,652
15,012,600 Friends Provident PLC 23,573,995
2,945,600 HSBC Holdings PLC 32,197,819
18,801,490 Imperial Chemical Industries PLC 38,989,202
30,391,298 Invensys PLC 7,164,502
11,088,607 Marks & Spencer Group PLC 51,660,697
15,343,000 Reuters Group PLC 33,104,632
17,674,000 Royal & Sun Alliance Insurance Group 30,860,362
8,735,650 SABMiller PLC 60,175,154
12,395,700 Safeway PLC 53,887,083
--------------
TOTAL UNITED KINGDOM 454,195,386
--------------
See Accompanying Notes to Financial Statements
44
ING
International
Value
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
VENEZUELA: 0.5%
1,216,822 Cia Anonima Nacional Telefonos de
Venezuela -- CANTV ADR $ 12,667,117
--------------
TOTAL VENEZUELA 12,667,117
--------------
Total Common Stock (Cost $3,323,915,951) 2,451,924,363
--------------
TOTAL INVESTMENTS IN SECURITIES
(COST $3,323,915,951)* 97.7% $2,451,924,363
OTHER ASSETS AND LIABILITIES-NET 2.3 58,465,107
----- --------------
NET ASSETS 100.0% $2,510,389,470
===== ==============
@ Non-income producing security
ADR American Depository Receipt
PLC Public Limited Company
X Fair Value as determined by ING Valuation Committee appointed by the Fund's
Board of Directors.
A Loaned security, a portion or all of the security is on loan at April 30,
2003.
* Cost for federal income tax purposes is the same as for financial statement
purposes. Net unrealized depreciation consists of:
Gross Unrealized Appreciation $ 123,453,495
Gross Unrealized Depreciation (995,445,083)
--------------
Net Unrealized Depreciation $ (871,991,588)
==============
Percentage of
Industry Net Assets
- --------------------------------------------------------------------------------
Aerospace/Defense 2.0%
Agriculture 3.4%
Auto Parts & Equipment 2.2%
Banks 12.9%
Beverages 2.4%
Chemicals 3.7%
Computers 1.9%
Electric 5.3%
Electrical Components & Equipment 1.2%
Food 2.6%
Holding Companies-Diversified 1.7%
Home Builders 1.3%
Home Furnishings 2.0%
Insurance 5.5%
Iron/Steel 1.8%
Machinery-Construction & Mining 1.5%
Machinery-Diversified 0.1%
Media 1.3%
Miscellaneous Manufacturing 3.4%
Oil & Gas 8.5%
Pharmaceuticals 3.8%
Retail 2.1%
Telecommunication Services 2.2%
Telecommunication Equipment 4.7%
Telephone-Integrated 20.2%
Other Assets and Liabilities, Net 2.3%
-----
NET ASSETS 100.0%
=====
See Accompanying Notes to Financial Statements
45
ING
Worldwide
Growth
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK: 93.7%
AUSTRALIA: 1.1%
308,700 A QBE Insurance Group Ltd. $ 1,649,136
--------------
TOTAL AUSTRALIA 1,649,136
--------------
BERMUDA: 1.5%
146,000 Tyco Intl. Ltd. 2,277,600
--------------
TOTAL BERMUDA 2,277,600
--------------
CANADA: 1.7%
52,432 EnCana Corp. 1,718,129
128,000 @ Kinross Gold Corp. 789,628
--------------
TOTAL CANADA 2,507,757
--------------
DENMARK: 1.8%
42,200 Danske Bank A/S 811,947
32,800 Novo-Nordisk A/S 1,188,218
28,100 TDC A/S 699,052
--------------
TOTAL DENMARK 2,699,217
--------------
FINLAND: 1.3%
12,800 Nokia OYJ ADR 212,096
63,200 Nokia OYJ 1,069,253
51,200 UPM-Kymmene OYJ 748,524
--------------
TOTAL FINLAND 2,029,873
--------------
FRANCE: 4.9%
14,200 Aventis SA 721,206
59,400 AXA 902,212
24,200 A Carrefour SA 1,052,471
13,800 A Pechiney SA 398,111
22,900 A Schneider Electric SA 1,084,102
18,700 A Societe Generale 1,143,632
11,620 Total Fina Elf SA 1,523,731
19,000 Valeo SA 544,307
--------------
TOTAL FRANCE 7,369,772
--------------
GERMANY: 2.2%
30,454 Deutsche Bank AG 1,574,942
25,150 Deutsche Boerse AG 1,178,831
76,500 Infineon Technologies AG 567,737
--------------
TOTAL GERMANY 3,321,510
--------------
GREECE: 0.2%
38,000 Greek Organization of Football
Prognostics SA 346,897
--------------
TOTAL GREECE 346,897
--------------
IRELAND: 1.2%
95,300 Irish Life & Permanent PLC 1,085,882
112,490 @ Ryanair Holdings PLC 769,553
--------------
TOTAL IRELAND 1,855,435
--------------
ISRAEL: 0.7%
23,000 Teva Pharmaceutical Industries ADR 1,074,100
--------------
TOTAL ISRAEL 1,074,100
--------------
ITALY: 1.0%
298,000 A Banca Fideuram S.p.A. 1,573,047
--------------
TOTAL ITALY 1,573,047
--------------
JAPAN: 8.0%
29,500 FamilyMart Co Ltd. 562,741
31,000 Fanuc Ltd. 1,268,489
59,000 JGC Corp. 415,563
50,000 Kao Corp. 911,873
9,400 Mabuchi Motor Co. Ltd. 702,281
58,500 Marui Co. Ltd. 487,091
125,000 Nikko Cordial Corp. 335,402
101,000 Nomura Holdings, Inc. 1,000,176
820 NTT DoCoMo, Inc. 1,691,430
41,000 A Otsuka Kagu Ltd. 911,035
64,000 Sekisui House Ltd. 470,099
39,400 Shimano, Inc. 625,392
31,800 Sony Corp. 773,268
12,900 Tokyo Electron Ltd. 483,507
70,100 Toyota Motor Corp. 1,587,037
--------------
TOTAL JAPAN 12,225,384
--------------
MEXICO: 1.2%
186,500 Cemex SA de CV 845,339
33,900 Telefonos de Mexico SA de CV ADR 1,024,119
--------------
TOTAL MEXICO 1,869,458
--------------
NETHERLANDS: 2.4%
135,408 Aegon NV 1,376,661
43,723 Koninklijke Philips Electronics NV 813,410
24,800 Royal Dutch Petroleum Co. 1,014,355
12,100 Royal Dutch Petroleum Co. ADR 494,648
--------------
TOTAL NETHERLANDS 3,699,074
--------------
NEW ZEALAND: 0.7%
404,500 Telecom Corp. of New Zealand Ltd. 1,083,771
--------------
TOTAL NEW ZEALAND 1,083,771
--------------
NORWAY: 0.2%
77,500 Tomra Systems ASA 366,579
--------------
TOTAL NORWAY 366,579
--------------
RUSSIA: 0.7%
6,200 A YUKOS ADR 1,085,000
--------------
TOTAL RUSSIA 1,085,000
--------------
SINGAPORE: 0.5%
117,000 United Overseas Bank Ltd. 685,289
--------------
TOTAL SINGAPORE 685,289
--------------
SOUTH AFRICA: 0.4%
60,500 Gold Fields Ltd. ADR 614,075
--------------
TOTAL SOUTH AFRICA 614,075
--------------
SPAIN: 0.7%
99,700 Telefonica SA 1,102,638
--------------
TOTAL SPAIN 1,102,638
--------------
SWEDEN: 1.3%
33,300 Atlas Copco AB 753,145
59,000 ForeningsSparbanken AB 800,641
53,000 A Swedish Match AB 392,007
--------------
TOTAL SWEDEN 1,945,793
--------------
See Accompanying Notes to Financial Statements
46
ING
Worldwide
Growth
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
SWITZERLAND: 4.4%
8,500 Alcon, Inc. $ 374,425
1,940 Julius Baer Holding AG 407,653
8,120 Nestle SA 1,655,371
42,480 Novartis AG 1,675,647
27,150 Roche Holding AG 1,727,527
16,500 UBS AG 782,847
--------------
TOTAL SWITZERLAND 6,623,470
--------------
TAIWAN: 0.4%
63,100 @ Taiwan Semiconductor Manufacturing Co.
Ltd. ADR 528,147
--------------
TOTAL TAIWAN 528,147
--------------
UNITED KINGDOM: 8.7%
4,200 Amvescap PLC ADR 46,662
289,300 Amvescap PLC 1,572,071
178,000 BP PLC 1,127,997
196,900 @ British Sky Broadcasting PLC 2,040,800
34,700 Diageo PLC 384,887
83,200 GlaxoSmithKline PLC 1,667,499
50,800 HSBC Holdings PLC 555,285
59,800 Imperial Tobacco Group PLC 1,000,674
585,000 Legal & General Group PLC 724,607
63,000 Pearson PLC 525,097
74,800 Provident Financial PLC 686,212
66,450 Rio Tinto PLC 1,270,196
789,122 Vodafone Group PLC 1,557,600
--------------
TOTAL UNITED KINGDOM 13,159,587
--------------
UNITED STATES: 46.5%
5,800 Allergan, Inc. 407,450
52,400 @ Amazon.Com, Inc. 1,502,308
29,200 American Intl. Group 1,692,140
43,000 @ Amgen, Inc. 2,636,330
37,000 @ Analog Devices, Inc. 1,225,440
30,760 Apache Corp. 1,761,010
26,000 Avon Products, Inc. 1,512,420
32,900 @ Boston Scientific Corp. 1,416,345
130,300 @ Cisco Systems, Inc. 1,959,712
31,913 @ Comcast Corp. Class A 1,018,344
70,000 @ Comcast Corp. Class A+ 2,104,200
45,300 @ COX Communications, Inc. 1,499,430
29,200 @ eBay, Inc. 2,708,884
212,800 @ EMC Corp.-Mass. 1,934,352
15,000 @ Forest Laboratories, Inc. 775,800
141,500 Gap, Inc. 2,353,145
31,700 General Electric Co. 933,565
8,900 @ Gilead Sciences, Inc. 410,646
20,600 Goldman Sachs Group, Inc. 1,563,540
42,900 Guidant Corp. 1,672,671
91,600 Halliburton Co. 1,961,156
8,500 Harley-Davidson, Inc. 377,740
122,100 Hewlett-Packard Co. 1,990,230
44,700 International Business Machines Corp. 3,795,030
56,100 JP Morgan Chase & Co. 1,646,535
16,100 @ Kohl's Corp. 914,480
45,700 Linear Technology Corp. 1,575,279
28,700 Maxim Integrated Products 1,127,623
42,900 @ Medimmune, Inc. 1,513,083
27,000 Merck & Co., Inc. 1,570,860
74,600 Microsoft Corp. 1,907,522
58,700 @ Nextel Communications, Inc. 868,173
14,800 Nike, Inc. 792,244
65,200 @ Novellus Systems, Inc. 1,828,208
158,100 @ Oracle Corp. 1,878,228
49,500 Pfizer, Inc. 1,522,125
11,000 Schlumberger Ltd. 461,230
18,100 SLM Corp. 2,027,200
22,100 @ St. Jude Medical, Inc. 1,159,366
46,600 @ Staples, Inc. 887,264
40,900 Texas Instruments, Inc. 756,241
16,200 UnitedHealth Group, Inc. 1,492,506
47,100 @ Veritas Software Corp. 1,036,671
21,800 Wal-Mart Stores, Inc. 1,227,776
68,300 @ Xilinx, Inc. 1,848,881
106,200 @ Yahoo!, Inc. 2,631,636
15,800 @ Zimmer Holdings, Inc. 741,020
--------------
TOTAL UNITED STATES 70,626,039
--------------
Total Common Stock (Cost $135,471,367) 142,318,648
--------------
MUTUAL FUND: 1.6%
UNITED STATES: 1.6%
20,100 Internet HOLDRs Trust 643,401
43,900 @ Nasdaq-100 Index Tracking Stock 1,205,055
24,700 Semiconductor HOLDRs Trust 651,833
--------------
TOTAL UNITED STATES 2,500,289
--------------
Total Mutual Fund (Cost $2,357,337) 2,500,289
--------------
TOTAL INVESTMENTS IN SECURITIES
(COST $137,828,704)* 95.3% $ 144,818,937
OTHER ASSETS AND LIABILITIES-NET 4.7 7,065,324
----- --------------
NET ASSETS 100.0% $ 151,884,261
===== ==============
@ Non-income producing security
ADR AmericanDepository Receipt
PLC Public Limited Company
A Loaned security, a portion or all of the security is on loan at April 30,
2003.
* Cost for federal income tax purposes is the same as for financial statement
purposes. Net unrealized appreciation consists of:
Gross Unrealized Appreciation $ 15,054,372
Gross Unrealized Depreciation (8,064,139)
--------------
Net Unrealized Appreciation $ 6,990,233
==============
See Accompanying Notes to Financial Statements
47
ING
Worldwide
Growth
Fund
PORTFOLIO OF INVESTMENTS as of April 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Percentage of
Industry Net Assets
- --------------------------------------------------------------------------------
Agriculture 0.9%
Airlines 0.5%
Apparel 0.5%
Auto Manufacturers 1.0%
Auto Parts & Equipment 0.4%
Banks 4.5%
Beverages 0.3%
Biotechnology 1.7%
Building Materials 0.6%
Computers 5.8%
Cosmetics/Personal Care 1.6%
Diversified Financial Services 8.4%
Electronics 1.8%
Engineering & Construction 0.3%
Entertainment 0.2%
Environmental Control 0.2%
Equity Fund 1.7%
Food 1.8%
Forest Products & Paper 0.5%
Hand/Machine Tools 0.7%
Healthcare-Product 3.5%
Healthcare-Service 1.0%
Home Builders 0.3%
Home Furnishings 0.5%
Insurance 4.1%
Internet 4.5%
Leisure Time 0.7%
Machinery-Construction & Mining 0.5%
Media 4.7%
Mining 2.0%
Miscellaneous Manufacturing 2.1%
Oil & Gas 5.7%
Oil & Gas Services 1.6%
Pharmaceuticals 9.4%
Retail 4.8%
Semiconductors 6.6%
Software 2.5%
Telecommunications 7.4%
Other Assets and Liabilities, Net 4.7%
-----
NET ASSETS 100.0%
=====
See Accompanying Notes to Financial Statements
48
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:
SHARES VOTED
SHARES VOTED AGAINST OR SHARES BROKER TOTAL
FOR WITHHELD ABSTAINED NON-VOTE SHARES VOTED
--- -------- --------- -------- ------------
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.
ING Emerging Countries Fund 6,649,778 95,502 93,806 -- 6,839,086
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.
ING Emerging Countries Fund 6,435,163 270,754 133,170 -- 6,839,086
See Accompanying Notes to Financial Statements
49
TRUSTEE AND OFFICER INFORMATION (Unaudited)
- --------------------------------------------------------------------------------
The business and affairs of the Trusts are managed under the direction of the
Trusts' Board of Trustees. A Trustee who is not an interested person of the
Trusts, as defined in the 1940 Act, is an independent trustee ("Independent
Trustee"). The Trustees and Officers of the Trust are listed below. The
Statement of Additional Information includes additional information about
trustees of the Registrant and is available, without charge, upon request at
1-800-992-0180.
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH TIME DURING THE OVERSEEN HELD BY
AND AGE FUND SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE
------- ---- --------- --------------- ---------- -------
INDEPENDENT TRUSTEES
Paul S. Doherty(2) Trustee October Mr. Doherty is 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 1999 - President and Partner, (February 2002 -
Scottsdale, Arizona 85258 Present Doherty, Wallace, Present).
Born: 1934 Pillsbury and Murphy,
P.C., Attorneys (1996 -
Present); Director,
Tambrands, Inc. (1993 -
1998); and Trustee of
each of the funds
managed by Northstar
Investment
Management
Corporation (1993 -
1999).
J. Michael Earley(3) Trustee February President and Chief 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 2002 - Executive Officer, (1997 - Present).
Scottsdale, Arizona 85258 Present Bankers Trust Company,
Born: 1945 N.A. (1992 - Present).
R. Barbara Gitenstein(2) Trustee February President, College of 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 2002 - New Jersey (1999 - (1997 - Present).
Scottsdale, Arizona 85258 Present Present). Formerly,
Born: 1948 Executive Vice
President and Provost,
Drake University (1992
- 1998).
Walter H. May(2) Trustee October Retired. Formerly, 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 1999 - Managing Director and (February 2002 -
Scottsdale, Arizona 85258 Present Director of Marketing, Present) and Best Prep
Born: 1936 Piper Jaffray, Inc.; Charity (1991 -
Trustee of each of the Present).
funds managed by
Northstar Investment
Management
Corporation (1996 -
1999).
Jock Patton(2) Trustee August Private Investor (June 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 1995 - 1997 - Present). (February 2002 -
Scottsdale, Arizona 85258 Present Formerly, Director and Present); Director,
Born: 1945 Chief Executive Officer, Hypercom, Inc. (January
Rainbow Multimedia 1999 - Present); JDA
Group, Inc. (January Software Group, Inc.
1999 - December 2001); (January 1999 -
Director of Stuart Present); Buick of
Entertainment, Inc.; Scottsdale, Inc.;
Director of Artisoft, Inc. National Airlines, Inc.;
(1994 - 1998). BG Associates, Inc.; BK
Entertainment, Inc.;
and Arizona Rotorcraft,
Inc.
50
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
- --------------------------------------------------------------------------------
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH TIME DURING THE OVERSEEN HELD BY
AND AGE FUND SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE
------- ---- --------- --------------- ---------- -------
David W.C. Putnam(3) Trustee October President and Director, 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 1999 - F.L. Putnam Securities (February 2002 -
Scottsdale, Arizona 85258 Present Company, Inc. and its Present), Anchor
Born: 1939 affiliates; President, International Bond
Secretary and Trustee, (December 2000 -
The Principled Equity Present); Progressive
Marke Fund. Formerly, Capital Accumulation
Trustee, Trust Realty Trust (August 1998 -
Trust (December Corp.; Present); Principled
Anchor Investment Equity Market Fund
Trust; Bow 2000 - (November 1996 -
Present); Ridge Mining Present), Mercy
Company and each of Endowment
the F.L. Putnam funds Foundation (1995 -
managed by Northstar Present); Director, F.L.
Investment Foundation Putnam Investment
Management Management Company
Corporation (1994 - (December 2001 -
1999). Present); Asian
American Bank and
Trust Company (June
1992 - Present); and
Notre Dame Health
Care Center (1991 -
Present) F.L. Putnam
Securities Company,
Inc. (June 1978 -
Present); and an
Honorary Trustee,
Mercy Hospital (1973 -
Present).
Blaine E. Rieke(3) Trustee February General Partner, 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 2001 - Huntington Partners (February 2002 -
Scottsdale, Arizona 85258 Present (January 1997 - Present) and Morgan
Born: 1933 Present). Chairman of Chase Trust Co.
the Board and Trustee (January 1998 -
of each of the funds Present).
managed by ING
Investment
Management Co. LLC
(November 1998 -
February 2001).
Roger B. Vincent(3) Trustee February President, Springwell 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 2002 - Corporation (1989 - (1994 - Present); and
Scottsdale, Arizona 85258 Present Present). Formerly, Director, AmeriGas
Born: 1945 Director, Tatham Propane, Inc. (1998 -
Offshore, Inc. (1996 - Present).
2000).
Richard A. Wedemeyer(2) Trustee February Retired. Mr. 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 2001 - Wedemeyer was (February 2002 -
Scottsdale, Arizona 85258 Present formerly Vice President Present) and
Born: 1936 - Finance and Touchstone Consulting
Administration, Group (1997 - Present).
Channel Corporation
(June 1996 - April
2002). Formerly, Vice
President, Operations
and Administration,
Jim Henson
Productions. (1979 -
1997); Trustee, First
Choice Funds (1997 -
2001); and of each of
the funds managed by
ING Investment
Management Co. LLC
(1998 - 2001).
51
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
- --------------------------------------------------------------------------------
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH TIME DURING THE OVERSEEN HELD BY
AND AGE FUND SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE
------- ---- --------- --------------- ---------- -------
TRUSTEES WHO ARE "INTERESTED PERSONS"
Thomas J. McInerney(5) Trustee February Chief Executive Officer, 160 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 2001 - ING U.S. Financial (February 2002 -
Scottsdale, Arizona 85258 Present Services (September Present); Equitable Life
Born: 1956 2001 - Present); Insurance Co., Golden
General Manager and American Life
Chief Executive Officer, Insurance Co., Life
ING U.S. Worksite Insurance Company of
Financial Services Georgia, Midwestern
(December 2000 - United Life Insurance
Present); Member, ING Co., ReliaStar Life
Americas Executive Insurance Co., Security
Committee (2001 - Life of Denver, Security
Present); President, Connecticut Life
Chief Executive Officer Insurance Co.,
and Director of Southland Life
Northern Life Insurance Insurance Co., USG
Company (March 2001 - Annuity and Life
October 2002), ING Company, and United
Aeltus Holding Life and Annuity
Company, Inc. (2000 - Insurance Co. Inc
Present), ING Retail (March 2001 - Present);
Holding Company Director, Ameribest Life
(1998 - Present), ING Insurance Co., (March
Life Insurance and 2001 to January 2003);
Annuity Company Director, First
(September 1997 - Columbine Life
November 2002) and Insurance Co. (March
ING Retirement 2001 to December
Holdings, Inc. (1997 - 2002); Member of the
Present). Formerly, Board, National
General Manager and Commission on
Chief Executive Officer, Retirement Policy,
ING Worksite Division Governor's Council on
(December 2000 - Economic
October 2001), Competitiveness and
President, ING-SCI, Inc. Technology of
(August 1997 - Connecticut,
December 2000); Connecticut Business
President, Aetna and Industry
Financial Services Association, Bushnell;
(August 1997 - Connecticut Forum;
December 2000). Metro Hartford
Chamber of Commerce;
and is Chairman,
Concerned Citizens for
Effective Government.
52
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
- --------------------------------------------------------------------------------
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH TIME DURING THE OVERSEEN HELD BY
AND AGE FUND SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE
------- ---- --------- --------------- ---------- -------
John G. Turner(6) Trustee October Chairman, Hillcrest 106 Trustee, GCG; Director,
7337 E. Doubletree Ranch Rd. 1999 - Capital Partners (May Hormel Foods
Scottsdale, Arizona 85258 Present 2002-Present); Corporation (March
Born: 1939 President, Turner 2000 - Present); Shopko
Investment Company Stores, Inc. (August
(January 2002 - 1999 - Present); and
Present). Mr. Turner M.A. Mortenson
was formerly Vice Company (March 2002 -
Chairman of ING Present).
Americas (2000 - 2002);
Chairman and Chief
Executive Officer of
ReliaStar Financial
Corp. and ReliaStar Life
Insurance Company
(1993 - 2000); Chairman
of ReliaStar United
Services Life Insurance
Company (1995 - 1998);
Chairman of ReliaStar
Life Insurance Company
of New York (1995 -
2001); Chairman of
Northern Life Insurance
Company (1992 - 2001);
Chairman and Trustee
of the Northstar
affiliated investment
companies (1993 -
2001) and Director,
Northstar Investment
Management
Corporation and its
affiliates (1993 - 1999).
- ----------
(1) Trustees serve until their successors are duly elected and qualified.
(2) Valuation Committee member.
(3) Audit Committee member.
(4) Mr. Hilliard is an "interested person," as defined by the Investment
Company Act of 1940, as amended (the "1940 Act"), because of his
relationship with ING Americas, an affiliate of ING Investments, LLC.
(5) Mr. McInerney is an "interested person," as defined by the 1940 Act,
because of his affiliation with ING U.S. Worksite Financial Services, an
affiliate of ING Investments, LLC.
(6) Mr. Turner is an "interested person," as defined by the 1940 Act, because
of his affiliation with ING Americas, an affiliate of ING Investments, LLC.
53
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL
TERM OF OFFICE OCCUPATION(S)
NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE
AND AGE HELD WITH THE TRUST TIME SERVED(1) PAST FIVE YEARS
------- ------------------- -------------- ---------------
OFFICERS:
James M. Hennessy President and Chief February 2001 - President and Chief Executive
7337 E. Doubletree Ranch Rd., Executive Officer Present Officer of ING Capital Corporation,
Scottsdale, Arizona 85258 LLC, ING Funds Services, LLC, ING
Born: 1949 Chief Operating June 2000 - Present Advisors, Inc., ING Investments,
Officer LLC, Lexington Funds Distributor,
Inc., Express America T.C. Inc. and
Senior Executive June 2000 - February EAMC Liquidation Corp. (since
Vice President 2001 December 2001); Executive Vice
President and Chief Operating
Secretary April 1995 - February Officer of ING Funds Distributor,
2001 LLC (since June 2000). Formerly,
Executive Vice President and Chief
Operating Officer of ING
Quantitative Management, Inc.
(October 2001 to September
2002); Senior Executive Vice
President (June 2000 to December
2000) and Secretary (April 1995 to
December 2000) of ING Capital
Corporation, LLC, ING Funds
Services, LLC, ING Investments,
LLC, ING Advisors, Inc., Express
America T.C. Inc., and EAMC
Liquidation Corp.; and Executive
Vice President, ING Capital
Corporation, LLC and its affiliates
(May 1998 to June 2000) and
Senior Vice President, ING Capital
Corporation, LLC and its affiliates
(April 1995 to April 1998).
Michael J. Roland Executive Vice February 2002 - Executive Vice President, Chief
7337 E. Doubletree Ranch Rd., President and Present Financial Officer and Treasurer of
Scottsdale, Arizona 85258 Assistant Secretary ING Funds Services, LLC, ING Funds
Born: 1958 Distributor, LLC, ING Advisors, Inc.,
Chief Financial Officer June 1998 - Present ING Investments, LLC (December
2001 to present), Lexington Funds
Senior Vice President June 1998 - February Distributor, Inc., Express America
2002 T.C. Inc. and EAMC Liquidation
Corp. (since December 2001).
Formerly, Executive Vice President,
Chief Financial Officer and
Treasurer of ING Quantitative
Management, Inc. (December 2001
to October 2002); Senior Vice
President, ING Funds Services, LLC,
ING Investments, LLC, and ING
Funds Distributor, LLC (June 1998
to December 2001) and Chief
Financial Officer of Endeavor
Group (April 1997 to June 1998).
54
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL
TERM OF OFFICE OCCUPATION(S)
NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE
AND AGE HELD WITH THE TRUST TIME SERVED(1) PAST FIVE YEARS
------- ------------------- -------------- ---------------
OFFICERS:
Robert S. Naka Senior Vice President November 1999 - Senior Vice President and Assistant
7337 E. Doubletree Ranch Rd., Present Secretary of ING Funds Services,
Scottsdale, Arizona 85258 LLC, ING Funds Distributor, LLC,
Born: 1963 Assistant Secretary July 1996 - Present ING Advisors, Inc., ING
Investments, LLC (October 2001 to
present) and Lexington Funds
Distributor, Inc. (since December
2001). Formerly, Senior Vice
President and Assistant Secretary
for ING Quantitative
Management, Inc. (October 2001
to October 2002); Vice President,
ING Investments, LLC (April 1997
to October 1999) , ING Funds
Services, LLC (February 1997 to
August 1999) and Assistant Vice
President, ING Funds Services, LLC
(August 1995 to February 1997).
Kimberly A. Anderson Vice President and February 2001 - Vice President and Assistant
7337 E. Doubletree Ranch Rd., Secretary Present Secretary of ING Funds Services,
Scottsdale, Arizona 85258 LLC, ING Funds Distributor, LLC,
Born: 1964 Assistant November 1999 - ING Advisors, Inc., ING
Vice President and February 2001 Investments, LLC (since October
Assistant Secretary 2001) and Lexington Funds
Distributor, Inc. (since December
2001). Formerly, Vice President for
ING Quantitative Management,
Inc. (October 2001 to October
2002); Assistant Vice President of
ING Funds Services, LLC (November
1999 to January 2001) and has
held various other positions with
ING Funds Services, LLC for more
than the last five years
Robyn L. Ichilov Vice President November 1997 - Vice President of ING Funds
7337 E. Doubletree Ranch Rd., Present Services, LLC (since October 2001)
Scottsdale, Arizona 85258 and ING Investments, LLC (since
Born: 1967 August 1997); Accounting
Manager, ING Investments, LLC
(since November 1995).
Maria M. Anderson Assistant August 2001 - Present Assistant Vice President of ING
7337 E. Doubletree Ranch Rd., Vice President Funds Services, LLC (since October
Scottsdale, Arizona 85258 2001). Formerly, Manager of Fund
Born: 1958 Accounting and Fund Compliance,
ING Investments, LLC (September
1999 to November 2001); Section
Manager of Fund Accounting,
Stein Roe Mutual Funds (July 1998
to August 1999); and Financial
Reporting Analyst, Stein Roe
Mutual Funds (August 1997 to July
1998).
Todd Modic Assistant August 2001 - Present Vice-President of Financial
7337 E. Doubletree Ranch Rd., Vice President Reporting-Fund Accounting of ING
Scottsdale, Arizona 85258 Funds Services, LLC (September
Born: 1967 2002 to present). Director of
Financial Reporting of ING
Investments, LLC (since March
2001). 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).
55
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL
TERM OF OFFICE OCCUPATION(S)
NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE
AND AGE HELD WITH THE TRUST TIME SERVED(1) PAST FIVE YEARS
------- ------------------- -------------- ---------------
OFFICERS:
Susan P. Kinens Assistant February 2003 - Assistant Vice President and
7337 E. Doubletree Ranch Rd. Vice President and Present (For the ING Assistant Secretary, ING Funds
Scottsdale, Arizona 85258 Assistant Secretary Funds) Services, LLC (December 2002 -
Born: 1976 Present); and has held various
other positions with ING Funds
Services, LLC for the last five years.
- ----------
(1) The officers hold office until the next meeting of the Trustees and until
their successors shall have been elected and qualified.
56
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 DOMESTIC EQUITY VALUE FUNDS
ING Emerging Countries Fund ING Financial Services Fund
ING International Fund ING Large Company Value Fund
ING International Growth Fund ING MagnaCap Fund
ING International SmallCap Growth Fund ING Tax Efficient Equity Fund
ING International Value Fund ING Value Opportunity Fund
ING Precious Metals Fund ING SmallCap Value Fund
ING Russia Fund ING MidCap Value Fund
INTERNATIONAL GLOBAL EQUITY DOMESTIC EQUITY AND INCOME FUNDS
ING Global Real Estate Fund ING Equity and Bond Fund
ING Worldwide Growth Fund ING Convertible Fund
ING Balanced Fund
DOMESTIC EQUITY FUNDS ING Growth and Income Fund
ING Growth Fund
ING Growth + Value Fund FIXED INCOME FUNDS
ING Growth Opportunities Fund ING Bond Fund
ING LargeCap Growth Fund ING Classic Money Market Fund*
ING MidCap Opportunities Fund ING Government Fund
ING Small Company Fund ING GNMA Income Fund
ING SmallCap Opportunities Fund ING High Yield Opportunity Fund
ING Technology Fund ING High Yield Bond Fund
ING Intermediate Bond Fund
DOMESTIC EQUITY INDEX FUNDS ING Lexington Money Market Trust*
ING Disciplined LargeCap Fund ING National Tax Exempt Bond Fund
ING Index Plus LargeCap Fund ING Money Market Fund*
ING Index Plus MidCap Fund ING Aeltus Money Market Fund*
ING Index Plus SmallCap 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
1-800-992-0180
TRANSFER AGENT
DST Systems, Inc.
P.O. Box 419368
Kansas City, Missouri 64141-6368
CUSTODIAN
Brown Brothers Harriman
40 Water Street
Boston, Massachusetts 02109-3661
LEGAL COUNSEL
Dechert
1775 Eye Street, N.W.
Washington, D.C. 20006
INDEPENDENT ACCOUNTANTS
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.
[LION LOGO]
ING FUNDS
INTLIQSAR0403-062503
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEMS 4-8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Based on our evaluation conducted within 90 days of the filing date, hereof,
the design and operation of the registrant's disclosure controls and procedures
are effective to ensure that material information relating to the registrant is
made known to the certifying officers by others within the appropriate entities,
particularly during the period in which Forms N-CSR are being prepared, and the
registrant's disclosure controls and procedures allow timely preparation and
review of the information for the registrant's Form N-CSR and the officer
certifications of such Form N-CSR.
(b) There were no significant changes in the registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
ITEM 10. EXHIBITS.
(a) Not applicable.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act (17
CFR 270.30a-2) is attached hereto as EX-99.CERT. The officer certifications
required by Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto as
EX-99.906CERT
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): ING Mayflower Trust
By /s/ James M. Hennessy
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James M. Hennessy
President and Chief Executive Officer
Date July 8, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ James M. Hennessy
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James M. Hennessy
President and Chief Executive Officer
Date July 8, 2003
By /s/ Michael J. Roland
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Michael J. Roland
Executive Vice President and Chief Financial Officer
Date July 8, 2003