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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: 811-02565
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ING VP Money Market Portfolio
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(Exact name of registrant as specified in charter)
7337 E. Doubletree Ranch Rd., Scottsdale, AZ 85258
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(Address of principal executive offices) (Zip code)
CT Corporation System, 101 Federal Street, Boston, MA 02110
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(Name and address of agent for service)
Registrant's telephone number, including area code: 1-800-992-0180
Date of fiscal year end: December 31
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Date of reporting period: January 1, 2003 to June 30, 2003
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ITEM 1. REPORTS TO STOCKHOLDERS.
The following is a copy of the report transmitted to stockholders pursuant to
Rule 30e-1 under the Act (17 CFR 270.30e-1):
SEMI-ANNUAL REPORT
(PHOTO OF COMPASS)
June 30, 2003
Classes R and S
ING VARIABLE PRODUCT PORTFOLIOS
INTERNATIONAL EQUITY PORTFOLIO
ING VP International Equity Portfolio
DOMESTIC EQUITY GROWTH PORTFOLIOS
ING VP Growth Portfolio
ING VP Small Company Portfolio
ING VP Technology Portfolio
DOMESTIC EQUITY VALUE PORTFOLIO
ING VP Value Opportunity Portfolio
DOMESTIC EQUITY AND INCOME PORTFOLIOS
ING VP Balanced Portfolio
ING VP Growth and Income Portfolio
FIXED INCOME PORTFOLIOS
ING VP Bond Portfolio
ING VP Money Market Portfolio
(ING FUNDS LOGO)
TABLE OF CONTENTS
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<Table>
President's Letter...................................... 1
Portfolio Managers' Reports:
International Equity Portfolio........................ 2
Domestic Equity Growth Portfolios..................... 4
Domestic Equity Value Portfolio....................... 10
Domestic Equity and Income Portfolios................. 12
Fixed Income Portfolios............................... 16
Index Descriptions...................................... 19
Statements of Assets and Liabilities.................... 20
Statements of Operations................................ 22
Statements of Changes in Net Assets..................... 24
Financial Highlights.................................... 29
Notes to Financial Statements........................... 38
Portfolios of Investments............................... 47
Director and Officer Information........................ 83
</Table>
(THIS PAGE INTENTIONALLY LEFT BLANK)
PRESIDENT'S LETTER
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[PHOTO]
JAMES M. HENNESSY
Dear Shareholder,
It would be an understatement to refer to this past year as a challenging one
for investors. In the past twelve months, there have been a number of events on
the geopolitical front and numerous economic setbacks that have tested investor
resilience.
We are now in the third year of one of the longest economic downturns in U.S.
history. And although few of us will take much comfort in the fact that we have
coped through a particularly challenging time, perhaps we should.
We at ING Funds remain optimistic about the future. We acknowledge the recent
difficulties, but we also prefer to look at the positives that have emerged in
the wake of those difficulties. For instance, the quick actions on the part of
the financial industry and government regulators following a string of recent
corporate scandals may have helped regain investor trust as well as introduce
new accounting standards that may bring permanent improvements to our industry.
Although I do not wish to overstate my enthusiasm, I do believe that the gradual
market upturn of recent months supports our long-held philosophy that it is
important for investors to remain focused on their long-term goals and maintain
reasonable expectations.
We remain committed to providing quality service and innovative products to help
meet the needs of our investors,and we are excited and optimistic about the
future.
On behalf of ING Funds, I thank you for your continued support and confidence
and look forward to serving you in the future.
Sincerely,
/s/ James M. Hennessy
James M. Hennessy
President
ING Funds
August 15, 2003
1
ING VP INTERNATIONAL EQUITY PORTFOLIO PORTFOLIO MANAGERS' REPORT
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PORTFOLIO MANAGEMENT TEAM: A team of the Sub-Adviser's equity investment
specialists, ING Aeltus Investment Management, Inc., -- the Sub-Adviser.
GOAL: ING VP International Equity Portfolio (the "Portfolio") seeks long-term
capital growth primarily through investment in a diversified portfolio of common
stocks principally traded in countries outside of the United States.
MARKET OVERVIEW: A hesitant international economy and the looming hostilities in
Iraq exerted strong downward pressure on international equity markets through
mid-March. In Asia, the already problematic outlook was compounded by the
outbreak of the Severe Acute Respiratory Syndrome (SARS) virus. In tandem with
Wall Street, international markets began a remarkable recovery once the U.S.
invaded Iraq. The notable exception was Japan, where initially forced selling of
blue-chip shares by domestic institutions restricted gains. In May and June,
however, this pressure had abated and the Japanese market was the best
performing region. For the period as a whole, the Developed Asia/Australia
region (+16.0%) showed the highest return, followed by Pan-Europe (+11.2%) and
Japan (+3.1%). The depreciation of the U.S. dollar during the period, especially
against the euro, bolstered the dollar-based return significantly.
PERFORMANCE: For the six months ended June 30, 2003, the Portfolio's Class R
shares, excluding any charges, returned 6.92% compared to MSCI EAFE Index, which
returned 9.85% for the same period.
PORTFOLIO SPECIFICS: The Portfolio performance was characterized by a sharp
reversal of fortune of the cyclically sensitive and the weakly capitalized
stocks within the benchmark. The Portfolio, with its relative emphasis on
well-financed companies with strong and sustainable growth prospects,
consequently underperformed vis-a-vis the benchmark. This trend was especially
acute from mid-March through May. In Japan this trend was compounded by the
forced liquidation of relatively liquid and higher quality stocks. At the
regional level, the performance shortfall arose almost entirely from adverse
stock selection in Japan. European stock selection contributed marginally to the
Portfolio's underperformance, while in Developed Asia/Australia a small negative
contribution was recorded. Across the Portfolio, sector allocation added no
value. The positive impacts of underweights in consumer staples and materials
and the overweight of telecom were effectively neutralized by the Portfolio's
overweight positions in energy and utilities and the underweight exposure to
industrials.
Adverse stock selection in the industrials, consumer staples, consumer
discretionary, and financials sectors held back performance, while stocks within
information technology added value. The largest individual negative was our lack
of any holdings in the strongly recovering Barclays PLC (a British bank). Two
other poor performers were Numico NV, a Dutch food producer with operational
problems at its U.S. subsidiary, and Japanese grocer Ito-Yokado, which incurred
unexpectedly high restructuring costs. Hong Kong trading and property
conglomerate Li & Fung contributed the most positively after management had
upgraded its earnings target. Telecom Italia was also a noteworthy contributor
after the merger with part of the Olivetti group.
MARKET OUTLOOK: Investors are hoping for a recovery in corporate spending in the
U.S., as the European economies remain mired in a broad based slowdown.
Globally, the balance sheet and earnings deterioration appear to be stabilizing.
European companies should be able to achieve some earnings growth through cost-
cutting. Fears of a credit crunch have eased in Europe due to lower interest
rates and improving balance sheets. Deferred capital spending is also leading to
increased obsolescence, especially in technology, suggesting that this category
should start slowly improving later this year. On balance, the economic slowdown
seems to have run its course and is allowing markets to project resumed earnings
growth within the next year. The latest rally seems to be more sustainable than
the many false starts we have had in the bear market. Under anything but a
Japanese style deflation scenario, to which we attach only a small probability,
the mid-March lows represent a major cyclical bottom. We have adopted a slight
pro-cyclical stance in Europe and are becoming less defensive in Japan. In the
short run, some consolidation is possible ahead of more concrete signs of an
economic recovery. As the second half of the year progresses, increasing
economic and earnings estimates allow for further modest upside from current
levels.
2
PORTFOLIO MANAGERS' REPORT ING VP INTERNATIONAL EQUITY PORTFOLIO
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<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED JUNE 30, 2003
----------------------------------------------------------------------------------------------------
SINCE INCEPTION SINCE INCEPTION
OF CLASS R OF CLASS S
1 YEAR 5 YEAR 12/22/97 11/01/01
------ ------ -------- --------
Class R -12.03% -6.84% -2.31% --
Class S -12.23% -- -- -10.74%
MSCI EAFE Index -6.06% -3.68% -0.70%(1) -2.03%
</Table>
Based upon a $10,000 initial investment, the table above illustrates the total
return of ING VP International Equity Portfolio against the MSCI EAFE Index. The
Index has no cash in its portfolio, imposes no sales charges and incurs no
operating expenses. An investor cannot invest directly in an index. The
Portfolio's performance is shown without the imposition of any expenses or
charges which are, or may be, imposed under your annuity contract or life
insurance policy. Total returns would have been lower if such expenses or
charges were included.
Performance table does not reflect the deduction of taxes that a shareholder
will pay on Portfolio distributions or the redemption of portfolio shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and operating expenses otherwise payable by the Portfolio, subject to
possible later reimbursement during a three-year period. Total returns would
have been lower had there been no waiver to the Portfolio.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO
WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
This report contains statements that may be "forward-looking" statements. Actual
results may differ materially from those projected in the "forward-looking"
statements.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
Portfolio holdings are subject to change daily.
(1) Since inception performance for the index is shown from 01/01/98.
PRINCIPAL RISK FACTOR(S): Those generally attributable to stock investing. These
risks include sudden and unpredictable drops in the value of the market as a
whole and periods of lackluster or negative performance. International investing
does pose special risks including currency fluctuations, economic and political
risks not found in investments that are solely domestic. Risks of foreign
investing are generally intensified for investments in emerging markets.
See accompanying index descriptions on page 19.
3
ING VP GROWTH PORTFOLIO PORTFOLIO MANAGERS' REPORT
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PORTFOLIO MANAGEMENT TEAM: A team of the Sub-Adviser's equity investment
specialists led by Kenneth Bragdon, CFA, ING Aeltus Investment Management,
Inc., -- the Sub-Adviser.
GOAL: ING VP Growth Portfolio (the "Portfolio") seeks growth of capital through
investment in a diversified portfolio consisting primarily of common stocks and
securities convertible into common stocks believed to offer growth potential.
MARKET OVERVIEW: After beginning the year with a 9% decline, the market began to
rally in mid-March and rose nearly 21% from it's lows through the end of June.
The rally reflected the easing of geopolitical tensions, as the war in Iraq was
relatively short, and optimism that the passage of a new economic stimulus
package would have a positive impact on U.S. economic growth. Economically
sensitive sectors, such as technology and consumer discretionary stocks,
outperformed during the first half. Sectors that benefited most from the cut in
the dividend tax rate, such as utilities, also performed well during the period.
PERFORMANCE: For the six months ended June 30, 2003, the Portfolio's Class R
shares, excluding any charges, provided a total return of 14.01% compared to the
Russell 1000 Growth Index, which returned 13.09% for the same period.
PORTFOLIO SPECIFICS: Strong stock selection in the health care and consumer
discretionary sectors were the biggest contributors to relative performance. In
the health care sector, our holdings in Aetna, Inc. rose sharply during the
first half. Aetna's first-quarter earnings beat consensus by 56%, and
forward-earnings estimates were raised significantly. Aetna has made significant
progress narrowing the profitability gap between them and their managed care
peers. In the information technology sector, our holdings in internet commerce
stocks such as Yahoo! Inc. and Expedia significantly outperformed, reflecting
strong secular growth trends and unexpected positive earnings.
Our performance was hurt by poor stock selection in the technology and producer
durables sectors. In the technology sector, a still challenging economy combined
with ongoing pressure on technology budgets led to disappointing sales from
Intuit and Hewlett-Packard in the first quarter. Other names, including
Microchip and Texas Instruments, had to reduce their earnings outlook due, in
part, to the impact of the Severe Acute Respiratory Syndrome (SARS) outbreak in
Asia. During the recent rally we were hurt by being overweight more reliable,
but slower growth names such as anti-virus maker Symantec, and underweight more
volatile, but potentially faster growing names such as semiconductor maker
Intel. In the producer durables sector, our investment in Parker Hannifin, a
supplier of industrial parts, declined due to softer than expected results from
its fluid control and aerospace businesses. These soft trends caused the company
to lower earnings guidance for the year.
MARKET OUTLOOK: With the military action in Iraq now largely behind us,
investors' attention has turned toward the prospects for economic growth in the
U.S. In this regard, we remain optimistic that the combination of stimulative
tax policy, accommodative monetary policy, low interest rates and a weaker
dollar will combine to drive relatively strong economic growth in the months
ahead. Despite the recent rally, equity valuations remain attractive relative to
other asset classes, in our view. We continue to believe that these factors
create a positive backdrop for the equity markets overall, and for growth stocks
in particular. As always, we continue to invest in companies displaying positive
business momentum and attractive valuation.
4
PORTFOLIO MANAGERS' REPORT ING VP GROWTH PORTFOLIO
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<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED JUNE 30, 2003
---------------------------------------------------------------------------------------------------
SINCE INCEPTION SINCE INCEPTION
OF CLASS R OF CLASS S
1 YEAR 5 YEAR 12/13/96 11/01/01
------ ------ -------- --------
Class R -2.38% -4.71% 4.16% --
Class S -2.63% -- -- -9.50%
Russell 1000 Growth Index 2.94% -5.03% 2.67%(1) -6.62%
</Table>
Based upon a $10,000 initial investment, the table above illustrates the total
return of ING VP Growth Portfolio against the Russell 1000 Growth Index. The
Index has no cash in its portfolio, imposes no sales charges and incurs no
operating expenses. An investor cannot invest directly in an index. The
Portfolio's performance is shown without the imposition of any expenses or
charges which are, or may be, imposed under your annuity contract or life
insurance policy. Total returns would have been lower if such expenses or
charges were included.
Performance table does not reflect the deduction of taxes that a shareholder
will pay on Portfolio distributions or the redemption of portfolio shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and operating expenses otherwise payable by the Portfolio, subject to
possible later reimbursement during a three-year period. Total returns would
have been lower had there been no waiver to the Portfolio.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO
WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
This report contains statements that may be "forward-looking" statements. Actual
results may differ materially from those projected in the "forward-looking"
statements.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
Portfolio holdings are subject to change daily.
(1) Since inception performance for the index is shown from 12/01/96.
PRINCIPAL RISK FACTOR(S): Those generally attributable to stock investing. They
include sudden and unpredictable drops in the value of the market as a whole and
periods of lackluster or negative performance. Growth-oriented stocks typically
sell at relatively high valuations as compared to other types of stocks.
Historically, growth-oriented stocks have been more volatile than value-oriented
stocks. The value of convertible securities may fall when interest rates rise.
See accompanying index descriptions on page 19.
5
ING VP SMALL COMPANY PORTFOLIO PORTFOLIO MANAGERS' REPORT
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PORTFOLIO MANAGEMENT TEAM: A team of the Sub-Adviser's equity investment
specialists led by Carolie Burroughs, CFA, ING Aeltus Investment Management,
Inc. -- the Sub-Adviser.
INVESTMENT OBJECTIVE: ING VP Small Company Portfolio (the "Portfolio") seeks
growth of capital primarily through investment in a diversified portfolio of
common stocks and securities convertible into common stocks of companies with
smaller market capitalizations.
MARKET OVERVIEW: Funds flowed out of the U.S. equities market during the first
half of the six-month period ended June 30, 2003, as the threat of war with Iraq
rattled investors' nerves. The uncertainty surrounding the multitude of possible
outcomes of a confrontation with Iraq consumed Americans. This distraction
stifled consumer spending and paralyzed corporate decision making, essentially
slowing down an already anemic economic recovery. By March, it was almost
certain that there would be a U.S.-led invasion of Iraq. The market began to
rally in anticipation of a successful outcome.
The market rallied for the remainder of the period as the news flow turned
positive. Hussein's regime crumbled. First quarter earnings were better than
expected for U.S. companies. Consumer confidence increased. Finally, President
Bush's second tax cut package was approved, which sent a strong signal to the
market that this administration was committed to supporting the U.S. economy in
its recovery. For the six months ended June 30, 2003, the S&P 500 Index was up
11.77%, the Russell 1000 Index was up 12.34%, the Nasdaq Composite Index was up
21.82%, and the S&P 600 Index was up 12.94%.
Speculation in the market has continued since the fourth quarter 2002. This is
evidenced by the Russell 2000 Index's ongoing outperformance over the S&P Small
Cap 600 Index. For the six months ended June 30, 2003, the Russell 2000 Index
returned 17.88%. Technology, biotechnology, and telecommunications were some of
the big winners, regardless of whether fundamentals supported the stock prices.
During the period, the best performing sectors in the Index were technology and
healthcare. Consumer staples and autos and transportation were the worst
performing sectors. The Russell 2000 Growth Index beat the Russell 2000 Value
Index by almost 275 bps.
PERFORMANCE: For the six months ended June 30, 2003, the Portfolio's Class R
shares, excluding any charges, returned 13.88%, underperforming the benchmark,
the Russell 2000 Index, which returned 17.88% over the same period.
PORTFOLIO SPECIFICS: Stock selection in the technology and producer durables
sectors contributed positively to the Portfolio's performance. Stock selection
in the consumer discretionary and materials and processing sectors contributed
negatively to the Portfolio's performance. Our underweight position in the
materials and processing sector helped performance, while our slight underweight
position in healthcare hurt performance.
The largest individual positive contributors to performance during the period
were SanDisk, InterDigital Communications, and Flagstar Bancorp. The largest
negative contributors were NPS Pharmaceuticals, Sierra Pacific Resources, and
Palm.
During the period we shifted to a slight underweight position in the financial
services sector. In preparation for the Russell rebalance (effective June 30),
we increased our weight in the consumer discretionary sector and slightly
increased our weight in the technology sector. We raised about 5% in cash by
selling some of the larger stocks in the Portfolio that were migrating to the
Russell 1000 Index. We will hold futures while we finish investing this money in
smaller, less liquid stocks. Following the rebalance, our weight in technology
is higher than our target weight due to the timing of the sale of two large
positions in stocks that moved to the Russell 1000 Index. We will finalize the
changes to the Portfolio pertaining to the Russell rebalance by mid-July. These
include achieving our target weight in the technology sector, lowering the
number of holdings to 115-120, and completely eliminating the futures position.
We maintain the +/-5% collar for all of our sector active weights and a style
neutral position to avoid being harmed by market reversals. On average, our cash
position has been 2-4%.
MARKET OUTLOOK: We expect the market rally to pause going into the second
quarter earnings season as stock fundamentals catch up with stock prices, or
visa-versa. Although volatility declined by almost 50% during the period, we
expect it to move between the highs and the lows achieved during the last six
months. With volatility at these levels, we expect speculative investors to
remain in the small cap space, perpetuating a market that may not consistently
reward stocks with good fundamentals. Despite the current environment, we expect
smaller capitalization stocks to outperform for the remainder of 2003. First,
small cap stocks have historically outperformed during post-recession recovery
periods. The U.S. economic recovery is slowly building momentum, as evidenced by
the monthly economic data. The Federal Reserve Board implemented its thirteenth
rate cut this quarter, indicating that it will do what is necessary to keep the
economic recovery on track. Second, small cap companies have reported better
earnings and revenues, year-to-date, and announced better business guidance
going forward for 2003. Finally, active large cap managers are looking for
opportunities further down the asset class spectrum, and both private equity
investors and public companies have money to invest.
6
PORTFOLIO MANAGERS' REPORT ING VP SMALL COMPANY PORTFOLIO
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<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED JUNE 30, 2003
------------------------------------------------------------------------------------------------
SINCE INCEPTION SINCE INCEPTION
OF CLASS R OF CLASS S
1 YEAR 5 YEAR 12/27/96 11/01/01
------ ------ -------- --------
Class R -6.04% 3.68% 8.87% --
Class S -5.83% -- -- -1.87%
Russell 2000 Index -1.64% 0.97% 4.69%(1) 4.27%
</Table>
Based upon a $10,000 initial investment, the table above illustrates the total
return of ING VP Small Company Portfolio against the Russell 2000 Index. The
Index has no cash in its portfolio, imposes no sales charges and incurs no
operating expenses. An investor cannot invest directly in an index. The
Portfolio's performance is shown without the imposition of any expenses or
charges which are, or may be, imposed under your annuity contract or life
insurance policy. Total returns would have been lower if such expenses or
charges were included.
Performance table does not reflect the deduction of taxes that a shareholder
will pay on Portfolio distributions or the redemption of portfolio shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and operating expenses otherwise payable by the Portfolio, subject to
possible later reimbursement during a three-year period. Total returns would
have been lower had there been no waiver to the Portfolio.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO
WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
This report contains statements that may be "forward-looking" statements. Actual
results may differ materially from those projected in the "forward-looking"
statements.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
Portfolio holdings are subject to change daily.
(1) Since inception performance for the index is shown from 01/01/97.
PRINCIPAL RISK FACTOR(S): Exposure to financial and market risks that accompany
investments in equities. In exchange for higher growth potential, investing in
stocks of smaller companies may entail greater price volatility and less
liquidity than investing in stocks of larger companies. The Portfolio may invest
in foreign securities. International investing does pose special risks including
currency fluctuations, economical and political risks not found in domestic
investments. Risks of foreign investing are generally intensified in emerging
markets. The value of convertible securities may fall when interest rates rise.
See accompanying index descriptions on page 19.
7
ING VP TECHNOLOGY PORTFOLIO PORTFOLIO MANAGERS' REPORT
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PORTFOLIO MANAGEMENT TEAM: Ronald E. Elijah and Roderick R. Berry, AIC Asset
Management, LLC -- the Sub-Adviser.
GOAL: ING VP Technology Portfolio (the "Portfolio") seeks long-term capital
appreciation.
MARKET OVERVIEW: During the first half of 2003, the market continued to move off
the bottom established in early October 2002. However, this recovery has not
been without volatility. Uncertainty brought about by the conflict in the
Mid-East, saber rattling in North Korea, the Severe Acute Respiratory Syndrome
(SARS) epidemic in Asia, as well as growing concerns of deflation all
contributed to the violent market swings that investors had to endure. Despite
the uncertainties, the market has continued to "climb the wall of worry", as the
NASDAQ Composite rewarded investors with a 21.8% return in the first half of the
year.
Since our year-end 2002 commentary we have seen the major economic indicators
continue to show gradual improvement. In most areas this improvement continued
in the second quarter. As we monitor the economy's progress, we generally track
data in four key areas, the health of the consumer, capital expenditure levels,
inflation/deflation, and economic stimulus trends. In our view, consumer
confidence has continued to be a key component in the economic recovery. That
confidence may be affected by recent unemployment news, with weekly jobless
claims remaining over the critical 400,000 level for the entire second quarter,
and the unemployment rate spiking to 6.4% in June. However, we remind investors
that employment tends to be a lagging indicator in a recovery, and in our
experience unemployment levels tend to peak nearly a year after the equity
markets have begun their recovery. Despite rising unemployment, consumer
confidence improved markedly in the second quarter over the first quarter. We
have also seen continued strength in the housing market with May housing starts
up 12.5%. In retail sales, spending on electronics and appliances rose 2.9% in
May, the biggest increase in 18 months.
Of course much of the resilience of the consumer can be attributed to the
aggressive monetary and fiscal stimulus efforts that have taken place. In June,
the Federal Open Market Committee (FOMC) elected to drop short-term rates
another 25 basis points -- the 13th rate cut since easing began. The impact of
these rate cuts has perhaps aided the consumer the most in the form of mortgage
re-financings. In addition, the President recently signed a new tax relief
program, which will start benefiting consumers in the second half of the year.
The Federal Reserve Board ("Fed") would not be able to maintain the easing
campaign if there was any threat of inflation. Indeed, the greater fear now is
that Japanese style deflation may strangle the economy. Fed Chairman Alan
Greenspan has made it clear that he will not stop short of printing currency to
prevent such deflation. His actions appear to be working as the long-end of the
yield curve is beginning to rise and the recently released PPI number for June
showed a 0.5% increase.
Finally, the biggest drag on the economy continues to be the absence of any
rebound in capital expenditures. After indicating expansion in the first
quarter, the ISM manufacturing index once again dipped below 50 in the second
quarter, signifying a further contraction of the manufacturing sector.
Unfortunately, over-capacity remains throughout much of the economy and will
take some time to be absorbed. On a positive note, capacity utilization in the
semiconductor industry has improved significantly and the resulting pricing
power that is now evident will be a positive for our semiconductor and
semiconductor equipment investments in the second half of the year.
PERFORMANCE: For the six months ended June 30, 2003, the Portfolio's Class R
shares, excluding any charges, returned 16.16% compared to the Goldman Sachs
Technology Industry Composite Index, which returned 21.83% for the same period.
PORTFOLIO SPECIFICS: Primarily due to its large capitalization focus, the
Portfolio under-performed its peer group in the first quarter, as smaller
capitalization stocks led the early gains from the market bottom in October of
2002. However, as the rally broadened during the second quarter to include the
large capitalization industry leaders, the Portfolio performed more in line with
its peer group and the NASDAQ Composite index.
Leading the way for performance during the first half of the year was the
Portfolio's holdings in the semiconductor and semiconductor capital equipment
segments. Of the Portfolio's top-10 performing holdings during the first half of
the year, seven were in these two categories. The most disappointing investment
segment during the first half of the year was software, which significantly
under-performed the market. Fortunately, this segment only made up 14% of the
Portfolio exiting the first half of 2003. During the first half, our investment
in BMC Software was down 5%, our investment in Intuit was down 5% and our
investment in Oracle was up 11%. Our largest portfolio investment, Microsoft was
down 1%.
For the first half of the year, the best performing individual investments in
the Portfolio were, Best Buy (+82%), Lam Research (+69%), Ebay (+53%), Analog
Devices (+46%) and Taiwan Semiconductor (+43%).
During the first half of the year we have made some small changes to the sector
weightings of the Portfolio. Most notable is the reduction in the Portfolio's
software exposure. Since the beginning of the year, the software exposure has
been trimmed from 21% to 14%. With the proceeds from these sales, we have
increased our exposure to semiconductor equipment companies from 14% to 19%.
With capital expenditure levels continuing to be weak, we wanted to reduce the
Fund's exposure to companies that depend on long-lead time, multi-million dollar
software implementation programs. With capacity tightening in the semiconductor
industry, we also felt it was a good time to increase the Portfolio's exposure
in semiconductor equipment companies. Due to improving fundamentals, we also
increased the semiconductor mix slightly.
MARKET OUTLOOK: With the commencement of an economic recovery last fall, our
strategy for the Portfolio has been to maintain an over-weight position in the
most cyclical sub-sector of the highly cyclical information technology sector,
semiconductors. As has been proven in countless economic cycles before, we
continue to believe that the semiconductor sub-sector will outperform as the
economic recovery proceeds. To date, the sub-sector has indeed outperformed the
market
8
PORTFOLIO MANAGERS' REPORT ING VP TECHNOLOGY PORTFOLIO
- --------------------------------------------------------------------------------
during the recovery, but the Portfolio's performance has been somewhat muted
versus our peer group due to the large capitalization focus of the Portfolio.
Similar to past economic recoveries, small capitalization technology stocks have
outperformed during the early months. In fact, many highly speculative small
capitalization companies with no earnings have seen their stock prices more than
double year-to-date. We will continue to focus the Portfolio on investments in
information technology industry leaders with growing market share and healthy
cash flows and believe investors may be rewarded with market and peer group
out-performance as the recovery progresses.
From an economic standpoint, the recovery continues to gradually muddle its way
through. Despite headline unemployment numbers that show little progress, we
continue to see evidence of a sustainable recovery. The end of the Iraq conflict
coupled with an extremely low rate environment has boosted consumer confidence
well ahead of what we saw in the first quarter. This has resulted in modest
gains in consumer spending. This rise in consumer spending also comes at a time
when inventory levels remain at historic lows. This has resulted in price
stability and, in some cases, an increase in pricing power, across many of the
sub-sectors we invest in. In fact, memory semiconductor pricing has been
steadily rising recently both in the spot market and in new contracts.
We are starting to see early signs of increased capital spending on technology
products. For instance, during the second quarter, PC unit growth reached 10%.
This is where one would logically expect to see capital spending improve
initially, as the life expectancy of technology tends to be much shorter than
other areas of capital expenditure. In addition, technology helps improve worker
productivity -- an important feature when one considers the downsizing that many
companies have recently endured.
With continued strong fiscal and monetary stimulus, low inventory levels,
improving consumer confidence and an aging installed base of technology
products, we anticipate a continuation of the recovery in the information
technology sector.
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED JUNE 30, 2003
------------------------------------------------------------------------
SINCE INCEPTION SINCE INCEPTION
OF CLASS R OF CLASS S
1 YEAR 05/01/00 11/01/01
------ -------- --------
Class R -5.79% -31.04% --
Class S -6.10% -- -15.46%
Goldman Sachs Technology Industry Composite Index 8.57% -31.17% -10.16%
</Table>
Based upon a $10,000 initial investment, the table above illustrates the total
return of ING VP Technology Portfolio against the Goldman Sachs Technology
Industry Composite Index. The Index has no cash in its portfolio, imposes no
sales charges and incurs no operating expenses. An investor cannot invest
directly in an index. The Portfolio's performance is shown without the
imposition of any expenses or charges which are, or may be, imposed under your
annuity contract or life insurance policy. Total returns would have been lower
if such expenses or charges were included.
Performance table does not reflect the deduction of taxes that a shareholder
will pay on Portfolio distributions or the redemption of portfolio shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and operating expenses otherwise payable by the Portfolio, subject to
possible later reimbursement during a three-year period. Total returns would
have been lower had there been no waiver to the Portfolio.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO
WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
This report contains statements that may be "forward-looking" statements. Actual
results may differ materially from those projected in the "forward-looking"
statements.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
Portfolio holdings are subject to change daily.
PRINCIPAL RISK FACTOR(S): Those generally attributable to stock investing. The
Portfolio concentrates its investments in information technology industries and
will tend to experience more volatility than funds not concentrated in one
industry. Stocks of smaller companies tend to be less liquid and more volatile
than stocks of larger companies. Further, stocks of smaller companies also can
be particularly sensitive to expected changes in interest rates, borrowing costs
and earnings. The value of convertible securities may fall when interest rates
rise.
See accompanying index descriptions on page 19.
9
ING VP VALUE OPPORTUNITY PORTFOLIO PORTFOLIO MANAGERS' REPORT
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT TEAM: A team of the Sub-Adviser's equity investment
specialists led by Donald Townswick, CFA, ING Aeltus Investment Management,
Inc., -- the Sub-Adviser.
GOAL: ING VP Value Opportunity Portfolio (the "Portfolio") seeks growth of
capital primarily through investment in a diversified portfolio of common stocks
and securities convertible into common stock.
MARKET OVERVIEW: The first half of 2003 marked a return to positive territory
for the S&P 500 Index, with the Index increasing 11.77% for the six months ended
June 30, 2003. The positive first half performance was led by a blistering
15.37% increase in the second quarter. Investors showed their fondness for
equities once again, as the Iraqi War came to an end. Resolution of this
conflict allowed investors to refocus on the markets, and less on the uncertain
geo-political events abroad. The Federal Reserve Board and Washington both did
their parts to create a favorable environment for equities compared to fixed
income through a low interest rate environment and a tax rate reduction on
dividends.
PERFORMANCE: For the six months ended June 30, 2003, the Portfolio's Class R
shares, excluding any charges, returned 9.72%, compared to the S&P 500 Index
which returned 11.77% for the same period.
PORTFOLIO SPECIFICS: The Portfolio experienced strong performance in the finance
sector due to its positions in Bear Stearns and Countrywide Financial Corp. Bear
Stearns posted its fifth consecutive earnings increase during the first quarter
as record low interest rates boosted its mortgage-securities business. Strong
refinancing volumes helped Countrywide Financial Corp to post record numbers.
Unfortunately, the strong performance in the finance sector was offset by poor
performance in the utilities sector. Slow customer growth caused
telecommunication stocks to underperform the market for the quarter. The
Portfolio was hurt by holdings in AT&T and SBC Communications. Jones Apparel was
another stock that had a negative impact on performance during the period as a
licensing dispute with Polo Ralph Lauren Corp. caused the stock to drop for the
quarter.
For the second half of the reporting period, the market's performance was
dominated by high beta stocks. In turn, we benefited from owning such high beta
stocks as Cisco and JP Morgan. On the other hand, holding low beta stocks, such
as Anheuser Busch and Kellogg, was a drag on performance for the quarter. It is
difficult for a risk-controlled portfolio to outperform in this type of
environment. Individual stocks that hurt performance included Procter & Gamble,
which underperformed after tornado damage forced the temporary closing of its
plant in Tennessee, and weakness in the Asian markets caused Qualcom to
underperform. In addition, not owning Altria Group, formerly known as Philip
Morris, had a negative impact on performance as the stock rose significantly on
a favorable legal ruling. Cendant, American Greetings, and Hewlett Packard are
holdings that had a positive impact on performance. Cendant was up over 44% for
the quarter and American Greetings was up almost 50%. Hewlett Packard's second
quarter sales and profit exceeded analysts' forecasts and the stock was up over
37% for the quarter. Overall, sector selection had a negative impact on
performance. A 13% difference in return between the best performing sector and
the worst performing sector caused small active sector weights to have a larger
impact on performance than if the inter-sector spread was narrower. We benefited
from being overweight technology but were hurt by an underweight position in
utilities, the best performing sector.
MARKET OUTLOOK: We believe that the bear market may be over and expect to see a
shift to a market driven more by fundamentals rather than concerns over war and
anxiety over corporate scandals. The uncertainty over the war with Iraq is
behind us. In addition, positive macro economic conditions such as higher gross
domestic product growth, low inflation, and low interest rates suggest that we
may be in the early stages of a bull market. We believe that our quantitative
stock selection process coupled with our disciplined risk controls on size,
style and beta may help us to perform well in this environment.
10
PORTFOLIO MANAGERS' REPORT ING VP VALUE OPPORTUNITY PORTFOLIO
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED JUNE 30, 2003
------------------------------------------------------------------------------------------------
SINCE INCEPTION SINCE INCEPTION
OF CLASS R OF CLASS S
1 YEAR 5 YEAR 12/13/96 07/16/01
------ ------ -------- --------
Class R -9.40% 1.07% 8.30% --
Class S -9.58% -- -- -14.33%
S&P 500 Index 0.25% -1.61% 5.45%(1) -9.24%(2)
</Table>
Based upon a $10,000 initial investment, the table above illustrates the total
return of ING VP Value Opportunity Portfolio against the S&P 500 Index. The
Index has no cash in its portfolio, imposes no sales charges and incurs no
operating expenses. An investor cannot invest directly in an index. The
Portfolio's performance is shown without the imposition of any expenses or
charges which are, or may be, imposed under your annuity contract or life
insurance policy. Total returns would have been lower if such expenses or
charges were included.
Performance table does not reflect the deduction of taxes that a shareholder
will pay on Portfolio distributions or the redemption of portfolio shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and operating expenses otherwise payable by the Portfolio, subject to
possible later reimbursement during a three-year period. Total returns would
have been lower had there been no waiver to the Portfolio.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO
WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
This report contains statements that may be "forward-looking" statements. Actual
results may differ materially from those projected in the "forward-looking"
statements.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
Portfolio holdings are subject to change daily.
(1) Since inception performance for the index is shown from 12/01/96.
(2) Since inception performance for the index is shown from 08/01/01.
PRINCIPAL RISK FACTOR(S): Those generally attributable to stock investing. They
include sudden and unpredictable drops in the value of the market as a whole and
periods of lackluster or negative performance. Because the prices of
value-oriented stocks tend to correlate more closely with economic cycles than
growth-oriented stocks, they generally are more sensitive to changing economic
conditions, such as changes in interest rates, corporate earnings and industrial
production. The value of convertible securities may fall when interest rates
rise.
See accompanying index descriptions on page 19.
11
ING VP BALANCED PORTFOLIO PORTFOLIO MANAGERS' REPORT
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT TEAM: Neil Kochen, CFA and James B. Kauffman, ING Aeltus
Investment Management, Inc., the Sub-Adviser.
GOAL: ING VP Balanced Portfolio (the "Portfolio") seeks to maximize investment
return consistent with reasonable safety of principal, by investing in a
diversified portfolio of one or more of the following asset classes: stocks,
bonds and cash equivalents, based on the judgement of the Portfolio's
management, of which of those sectors or mix thereof offers the best investment
prospects.
MARKET OVERVIEW: For the period, stocks outperformed bonds and small-caps
outperformed large-caps as the equity markets rallied in the second quarter. The
outperformance of the Portfolio's equity component was driven by the strong
small-cap market, which helped the equity component beat the Standard and Poor's
500 Index ("S&P 500") and by modest outperformance of the fixed income
component, relative to the Lehman Brothers Aggregate Bond Index ("Lehman
Aggregate").
PERFORMANCE: For the six months ended June 30, 2003, the Portfolio's Class R
shares, excluding any charges, returned 9.60% compared to the Composite Index
(60% S&P 500 Index/40% Lehman Brothers Aggregate Bond Index), which returned
8.67% for the same period.
PORTFOLIO SPECIFICS: Sector allocation was strong across all market caps and
sectors, but the Portfolio was particularly aided by overweights in technology
and consumer discretionary and underweights in telecom and consumer staples.
Security selection helped performance in health care and financial names, but
detracted from results in materials and consumer discretionary. Some stocks
adding the most to performance were General Electric, Flagstar Bancorp and
Citigroup, while some names detracting the most from performance were American
International Group, Sprint and Pepsi Bottling Group.
The fixed income component modestly outperformed the Lehman Aggregate Index. The
Portfolio's short duration at the end of the reporting period hurt performance.
Duration measures a portfolio's sensitivity to interest rate changes and is
expressed in years. So by being short duration, our portfolio rose in value by
less than the benchmark as interest rates fell. This drag on performance was
offset by our overweighting in credit sectors, which boosted relative returns as
all credit sectors have posted positive excess returns year-to-date. Credit
sectors are those with higher credit risks than Treasuries. They do well during
periods when investors lower the extra return they demand for the risk involved.
The utilities sector was the biggest winner, with 5.82% of excess returns;
industrials returned 3.73%; and financials were up 3.40%. Commercial mortgages
returned 1.59%, and asset-backed securities, which tend to be shorter in
duration, posted 1.26% of excess returns. Positive contributors to performance
also included an underweight in mortgages, which are facing a perilous
environment: 95% of the outstanding paper is refinance-able. With the average
dollar price over $104, the prospect of receiving a large portion of your
mortgage portfolio back at $100 is not a happy one. The sector produced 0.46% of
excess return. An overall yield advantage to the benchmark contributed
positively to overall results.
MARKET OUTLOOK: Despite all the negative events, which weighed on the economy
and markets for the past 12 months, the market appears to have bottomed in March
2003. There are currently a significant number of market and economic supports
in place that should aid momentum in the market in the future. Interest rates
are at a 40-year low, with the Federal Reserve indicating it has no interest in
raising rates until economic growth is firmly entrenched. Fiscal policy is also
very accommodative, with the recent $350 billion tax cut front-loaded to
stimulate the economy in 2003 and 2004. The dollar, which declined from
multi-year highs, will give U.S. firms pricing advantage in overseas markets and
enhance large cap multinational profitability. Consumer confidence is rising
rapidly after the end of the Iraqi conflict, as it did in 1991. Record mortgage
refinancing and recent tax relief have left the consumer with a great deal of
liquidity, to invest or spend. Funds have recently begun to flow from very low
yielding money market mutual funds back into equities. For the first quarter of
2003, corporate profitability rose above analyst estimates, but due more to
increased efficiency and productivity than from a general rise in demand.
Manufacturing inventories are at record low levels. Any demand created by a very
accommodative monetary and fiscal policy will have to translate into increased
production and employment. Technology capital replacement has already been in
evidence for several quarters, which has in turn helped support the NASDAQ
relative to other indices. We look for the current gradual recovery in the
economy and the markets to continue and build momentum through the third and
fourth quarters of this year.
12
PORTFOLIO MANAGERS' REPORT ING VP BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED JUNE 30, 2003
------------------------------------------------------------------
SINCE INCEPTION
OF CLASS S
1 YEAR 5 YEAR 10 YEAR 05/29/03
------ ------ ------- --------
Class R 3.98% 2.35% 8.95% --
Class S -- -- -- 0.95%
S&P 500 Index 0.25% -1.61% 10.04% 1.28%(1)
Lehman Brothers Aggregate Bond Index 10.40% 7.55% 7.21% -0.20%(1)
Composite Index (60% S&P 500 Index/
40% Lehman Brothers Aggregate Bond
Index) 4.85% 2.46% 9.24% 0.69%(1)
</Table>
Based upon a $10,000 initial investment, the table above illustrates the total
return of ING VP Balanced Portfolio against the S&P 500 Index, Lehman Brothers
Aggregate Bond Index and Composite Index (60% S&P 500 Index, 40% Lehman Brothers
Aggregate Bond Index). The Indices have no cash in their portfolios, impose no
sales charges and incur no operating expenses. An investor cannot invest
directly in an index. The Portfolio's performance is shown without the
imposition of any expenses or charges which are, or may be, imposed under your
annuity contract or life insurance policy. Total returns would have been lower
if such expenses or charges were included.
Performance table does not reflect the deduction of taxes that a shareholder
will pay on Portfolio distributions or the redemption of portfolio shares.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO
WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
This report contains statements that may be "forward-looking" statements. Actual
results may differ materially from those projected in the "forward-looking"
statements.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
Portfolio holdings are subject to change daily.
(1) Since inception performance for the index is shown from 06/01/03.
PRINCIPAL RISK FACTOR(S): Those generally attributable to stock and bond
investing. Because the Portfolio's assets are allocated between equities and
fixed income securities, the Portfolio may underperform stock funds when stocks
are in favor and underperform bond funds when bonds are in favor. Investments in
high yield bonds are high risk investments. Certain high yield/high risk bonds
carry particular market, prepayment and credit risks and may experience greater
volatility in market value than investment grade corporate bonds. International
investing does pose special risks including currency fluctuations, economic and
political risks not found in investments that are solely domestic. Risks of
foreign investing are generally intensified for investments in emerging markets.
Stocks of smaller companies tend to be less liquid and more volatile than stocks
of larger companies. Further, stocks of smaller companies also can be
particularly sensitive to expected changes in interest rates, borrowing costs
and earnings.
See accompanying index descriptions on page 19.
13
ING VP GROWTH AND INCOME PORTFOLIO PORTFOLIO MANAGERS' REPORT
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT TEAM: A team of investment professionals, each of whom
specializes in a particular asset class, led by Donald Townswick, CFA, ING
Aeltus Investment Management, Inc., -- the Sub-Adviser.
GOAL: ING VP Growth and Income Portfolio (the "Portfolio") seeks to maximize
total return through investments in a diversified portfolio of common stocks and
securities convertible into common stock. It is anticipated that capital
appreciation and investment income will both be major factors in achieving total
return.
MARKET OVERVIEW: The first half of 2003 marked a return to positive territory
for the S&P 500 Index, with the Index increasing 11.77% for the six months ended
June 30, 2003. The positive first half performance was led by a blistering
15.37% increase in the second quarter. Investors showed their fondness for
equities once again, as the Iraqi War came to an end. Resolution of this
conflict allowed investors to refocus on the markets, and less on the uncertain
geo-political events abroad. The Federal Reserve Board and Washington both did
their parts to create a favorable environment for equities compared to fixed
income through a low interest rate environment and a tax rate reduction on
dividends.
PERFORMANCE: For the six months ended June 30, 2003, the Portfolio's Class R
shares, excluding any charges, returned 10.14%, compared to the S&P 500 Index,
which returned 11.77% for the same period.
PORTFOLIO SPECIFICS: Strong performance at the beginning of the reporting period
in the finance sector due to positions in Bear Stearns and Countrywide Financial
Corp. was offset by poor performance in the utilities and consumer discretionary
sectors. Slow customer growth caused telecommunication stocks to underperform
the market in the first quarter. The Portfolio was hurt by holdings in AT&T and
SBC Communications. Jones Apparel was a consumer stock that had a negative
impact on performance during the period as licensing dispute with Polo Ralph
Lauren Corp. caused the stock to drop. Sector selection had a slightly positive
impact on performance as we benefited from being overweight health care, the
best performing sector, and from not owning any stocks in the commercial
services sector. In contrast, being overweight consumer staples was a drag on
performance.
During the second quarter, the high beta stocks within the S&P 500 Index
significantly outperformed low beta stocks. Because our risk controls prevent us
from owning a portfolio of all high beta stocks, this was a drag on performance.
In addition, Procter & Gamble underperformed significantly after tornado damage
forced the temporary closing of its snack plant in Tennessee, and weakness in
the Asian markets caused Qualcom to underperform. Not owning Altria Group,
formerly known as Philip Morris, had a negative impact on performance as the
stock was up significantly. Cendant, Hewlett Packard, and Merrill Lynch had a
positive impact on performance as all posted robust gains. Overall, sector
selection had a negative impact on performance. A large inter-sector spread
caused small active sector weights to have a notable impact on performance. The
Portfolio benefited from being overweight technology but was hurt by its
underweight position in utilities, the best performing sector.
MARKET OUTLOOK: We believe that the bear market may be over and expect to see a
shift to a market driven more by fundamentals rather than concerns over war and
anxiety over corporate scandals. The uncertainty over the war with Iraq is
behind us. In addition, positive macro economic conditions such as higher gross
domestic product growth, low inflation, and low interest rates suggest that we
may be in the early stages of a bull market. We believe that our quantitative
stock selection process coupled with our disciplined risk controls on size,
style and beta may help us to perform well in this environment.
14
PORTFOLIO MANAGERS' REPORT ING VP GROWTH AND INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED JUNE 30, 2003
----------------------------------------------------------------------------
SINCE INCEPTION
OF CLASS S
1 YEAR 5 YEAR 10 YEAR 06/11/03
------ ------ ------- --------
Class R -5.93% -6.47% 6.03% --
Class S -- -- -- -2.26%
S&P 500 Index 0.25% -1.61% 10.04% 1.28%(1)
</Table>
Based upon a $10,000 initial investment, the table above illustrates the total
return of ING VP Growth and Income Portfolio against the S&P 500 Index. The
Index has no cash in its portfolio, imposes no sales charges and incurs no
operating expenses. An investor cannot invest directly in an index. The
Portfolio's performance is shown without the imposition of any expenses or
charges which are, or may be, imposed under your annuity contract or life
insurance policy. Total returns would have been lower if such expenses or
charges were included.
Performance table does not reflect the deduction of taxes that a shareholder
will pay on portfolio distributions or the redemption of Portfolio shares.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO
WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
This report contains statements that may be "forward-looking" statements. Actual
results may differ materially from those projected in the "forward-looking"
statements.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
Portfolio holdings are subject to change daily.
(1) Since inception performance for the index is shown from 06/01/03.
PRINCIPAL RISK FACTOR(S): Those generally attributable to stock investing. They
include sudden and unpredictable drops in the value of the market as a whole and
periods of lackluster or negative performance. International investing involves
special risks including currency fluctuations, lower liquidity, political and
economic uncertainties, and differences in accounting standards. Risks of
foreign investing are generally intensified for investment in emerging markets.
In exchange for higher growth potential, investing in stocks of mid-sized and
smaller companies may entail greater price volatility and less liquidity than
investing in stocks of larger companies. The value of convertible securities may
fall when interest rates rise.
See accompanying index descriptions on page 19.
15
ING VP BOND PORTFOLIO PORTFOLIO MANAGER'S REPORT
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT: James B. Kauffman, ING Aeltus Investment Management, Inc.,
the Sub-Adviser.
GOAL: ING VP Bond Portfolio (the "Portfolio") seeks to maximize total return
consistent with reasonable risk, through investments in a diversified portfolio
consisting of debt securities. It is anticipated that capital appreciation and
investment income will both be major factors in achieving total return.
MARKET OVERVIEW: Despite the uncertainties surrounding the war in Iraq, all
credit sensitive sectors rallied significantly in the first half of 2003; yields
on the Treasury curve dropped as well. By the second quarter, strong buying from
Asian central banks and mortgage hedgers propelled the 10-year Treasury from
3.80% to a low 3.10% only to see it retreat to 3.45% by quarter-end. China was
reported to have been buying up to $600 million a day of short U. S. government
paper, and their foreign reserves ballooned to $340 billion. As summer
approached incipient signs of domestic economic stability, improving financial
conditions, a firmer dollar, and positive equity markets resulted in rising
rates for investment grade bonds. Nevertheless, the Lehman Brothers Aggregate
Bond Index is up year-to-date by 3.93%.
The Federal Reserve Board ("Fed") sent an unequivocal message to the markets
with the release of its May policy statement: "The probability of an unwelcome
substantial fall in inflation, though minor, exceeds that of a pickup in
inflation from its already low level." Subsequent comments from Fed officials
reiterated their concern about the tepid recovery and "corrosive deflation." The
Fed concerns coupled with mediocre economic numbers and no signs of core
inflation fueled a strong rally in bonds in May. However, the governors
presented a more sanguine economic outlook by the June Federal Open Markets
Committee meeting. While the Fed did drop overnight rates to 1.00%, the bond
market backed off as many participants had hoped for a larger ease of 50 basis
points.
PERFORMANCE: For the six months ended June 30, 2003, the Portfolio's Class R
shares, excluding any charges, returned 5.25% compared to the Lehman Brothers
Aggregate Bond Index, which returned 3.93% for the same period.
PORTFOLIO SPECIFICS: The Portfolio's short duration at the end of the reporting
period hurt performance. Duration measures a portfolio's sensitivity to interest
rate changes and is expressed in years. So by being short duration, our
portfolio rose in value by less than the benchmark as interest rates fell. This
drag on performance was offset by our overweighting in credit sectors, which
boosted relative returns as all credit sectors have posted positive excess
returns year-to-date. Credit sectors are those with higher credit risks than
Treasuries. They do well during periods when investors lower the extra return
they demand for the risk involved. The utilities sector was the biggest winner,
with 5.82% of excess returns; industrials returned 3.73%; and financials were up
3.40%. Commercial mortgages returned 1.59%, and asset-backed securities, which
tend to be shorter in duration, posted 1.26% of excess returns. Positive
contributors to performance also included an underweight in mortgages, which are
facing a perilous environment: 95% of the outstanding paper is refinance-able.
With the average dollar price over $104, the prospect of receiving a large
portion of your mortgage portfolio back at $100 is not a happy one. The sector
produced 0.46% of excess return. An overall yield advantage to the benchmark
contributed positively to overall results.
At present we have a significant exposure to two non-index sectors: high yield
and emerging market debt. Both commitments enhanced our performance versus the
index as the emerging market sector produced 8.41% of excess return and the high
yield sector, 7.73% excess return.
MARKET OUTLOOK: Weak aggregate demand has followed the capital expenditure binge
years of the late 1990s, and this phenomenon is global in nature. Many
economists contend that gross domestic product must come in above 3.5% for an
extended period in order for deflationary concerns to abate. We believe that the
stimulative effects of negative real rates, a weaker dollar, and tax cuts will
eventually boost the domestic economy out of its lethargy. The Fed is intent on
fomenting the "animal spirits" of capital markets, and the American homeowner is
once again reaping the rewards of cheap mortgage rates some of which may find
its way into consumer spending.
The big questions for bond investors are how long rates will stay relatively low
and when and how fast the economy will gain traction. A yield of 3.45% on the
10-year Treasury looks very low when compared to the interest rates witnessed in
the 1980s and 1990s, but so-called low yields are not unusual in the context of
rates from the end of WW II until the oil embargoes of the 1970s. Clearly, the
late June retreat in bond prices was the result of unsustainable, near-term
supply and demand technicals, and now market pundits will be looking for data
confirming their forward-looking, bullish economic outlook.
In response to these historically low interest rates, we are slightly short in
duration, and we continue our underweight in mortgages.
16
PORTFOLIO MANAGER'S REPORT ING VP BOND PORTFOLIO
- --------------------------------------------------------------------------------
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED JUNE 30, 2003
----------------------------------------------------------------------------------------
SINCE INCEPTION
OF CLASS S
1 YEAR 5 YEAR 10 YEAR 5/3/02
------ ------ ------- ------
Class R 11.02% 7.03% 6.78% --
Class S 10.80% -- -- 11.05%
Lehman Brothers Aggregate Bond Index 10.40% 7.55% 7.21% 10.46%(1)
</Table>
Based upon a $10,000 initial investment, the table above illustrates the total
return of ING VP Bond Portfolio against the Lehman Brothers Aggregate Bond
Index. The Index has no cash in its portfolio, imposes no sales charges and
incurs no operating expenses. An investor cannot invest directly in an index.
The Portfolio's performance is shown without the imposition of any expenses or
charges which are, or may be, imposed under your annuity contract or life
insurance policy. Total returns would have been lower if such expenses or
charges were included.
Performance table does not reflect the deduction of taxes that a shareholder
will pay on Portfolio distributions or the redemption of portfolio shares.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO
WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
This report contains statements that may be "forward-looking" statements. Actual
results may differ materially from those projected in the "forward-looking"
statements.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER, ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGER'S
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
Portfolio holdings are subject to change daily.
(1) Since inception performance for the index is shown from 05/01/02.
PRINCIPAL RISK FACTOR(S): Those generally attributable to debt investing,
including increases in interest rates and loss of principal. Generally, when
interest rates rise, bond prices fall. Bonds with longer maturities tend to be
more sensitive to changes in interest rates. For all bonds there is a risk that
the issuer will default. High-yield bonds generally are more susceptible to the
risk of default than higher rated bonds. International investing does pose
special risks including currency fluctuation, economic and political risks not
found in investments that are solely domestic. Risks of foreign investing are
generally intensified for investments in emerging markets.
See accompanying index descriptions on page 19.
17
ING VP MONEY MARKET PORTFOLIO PORTFOLIO MANAGERS' REPORT
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT TEAM: A team of the Sub-Adviser's fixed-income specialists
led by Jennifer J. Thompson, CFA, ING Aeltus Investment Management, Inc. -- the
Sub-Adviser.
GOAL: ING VP Money Market Portfolio (the "Portfolio") seeks to provide high
current return, consistent with preservation of capital and liquidity, through
investment in high-quality money market instruments.
MARKET OVERVIEW: The first half of 2003 was eventful and volatile. During the
first quarter, the markets and the world watched as United Nations weapons
inspectors combed Iraq for weapons of mass destruction. President Bush set forth
Iraq's continued violations of U.N. resolutions and prepared America and the
world for war with or without U.N. Security Council support. Ultimately, in
March, a U.S./U.K.-led coalition declared war on Iraq and, in April, the
coalition was successful in ousting Saddam Hussein and liberating Iraqi citizens
from the brutal dictator. In early May, President Bush declared an end to major
combat in Iraq.
The war and the build up to war virtually paralyzed the economy in the first
quarter. The "political uncertainty" manifested itself in declining employment
and low consumer confidence and spending, reduced business spending, higher
energy prices and related stresses on the airline and transportation industries.
Even the Federal Reserve Board's ("Fed") Federal Open Market Committee ("FOMC")
admitted its inability to characterize the risks to the economy at its March
18th FOMC meeting.
The second-quarter war-related euphoria, however, was short-lived on Wall Street
as market participants quickly changed their focus to the U.S. economy. During
the quarter, Fed Chairman Greenspan and other Fed officials began discussing the
low level of price inflation in the U.S. Fed officials emphasized that a
substantial fall in inflation would be an unwelcome development. Chairman
Greenspan stated in testimony to Congress in May that though the risks of
deflation are minor, the consequences are severe enough to merit consideration
of possible measures to address it.
In total, the market first interpreted these comments to mean that the Fed Funds
target rate of 1.25% would be kept low for an extended period of time. However,
as the quarter progressed and the risks of deflation became the focus, market
participants began pricing in a Fed ease of 25 basis points and, at times, a
strong probability of a 50 basis point ease. Ultimately, the Fed lowered rates
by 25 basis points at its June 25th FOMC meeting, leaving the Fed Funds target
at 1.00% -- the lowest level since 1958.
The LIBOR curve was flat and, at times, inverted throughout the first half.
One-month LIBOR began the period at 1.38% and ended it at 1.12%. Twelve-month
LIBOR went from approximately 1.45% to 1.19% by the period end. The steepness of
the curve remained the same at 7 bps with some significant volatility during the
period associated with the underpinnings of war, a lackluster economy and
discussions of declining price inflation by Fed officials.
PORTFOLIO SPECIFICS: In the generally flat interest rate environment, strategies
used to add higher yielding securities to the Portfolio included increasing
purchases of floating rate notes (which reset at higher yields than commercial
paper, certificates of deposit and bank notes), and purchasing callable paper.
We attempted to take advantage of the volatility in 12-month LIBOR and purchased
long paper whenever rates backed up. In addition to adding yield, this was also
used as a hedge to a decline in the Fed Funds target rate. Using such
strategies, the average maturity of the portfolio remained longer than
competitors throughout the period and was 67 days at the end of June versus 57
days for the benchmark.
MARKET OUTLOOK: In early July, market participants are beginning to wonder
whether the economic paralysis in the first half of the year was really
war-related. Some economic indicators, at times, seem to signal recovery.
However, employment levels remain subdued and business excess capacity remains
high. For now, the LIBOR yield curve remains very flat and market participants
have no conviction about the direction of interest rates going forward.
With this backdrop, we will keep most purchases very short -- in the one-month
to three-month area -- until the direction of the economy becomes detectable.
PRINCIPAL RISK FACTOR(S): Investments in the Portfolio are not bank deposits and
are not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. Unlike many money market funds, the Portfolio is
not managed to maintain a constant net asset value. Instead, the net asset value
will change with the value of the investments in the Portfolio.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
Portfolio holdings are subject to change daily.
This report contains statements that may be "forward-looking" statements. Actual
results may differ materially from those projected in the "forward-looking"
statements.
18
INDEX DESCRIPTIONS
- --------------------------------------------------------------------------------
The GOLDMAN SACHS TECHNOLOGY INDUSTRY COMPOSITE INDEX is a widely recognized,
unmanaged index of technology stocks.
The INSTITUTE FOR SUPPLY MANAGEMENT INDEX is a composite index based on the
seasonally adjusted diffusion indices for five indicators with varying weights:
New Orders -- 30%; Production -- 25%; Employment -- 20%; Supplier Deliveries --
15%; and Inventories -- 10%, based on data compiled from monthly replies to
questions asked of purchasing and supply executives in over 400 industrial
companies.
The LEHMAN BROTHERS AGGREGATE BOND INDEX is an unmanaged index and is composed
of securities from Lehman Brothers Government/Corporate Bond Index,
Mortgage-Backed Securities Index and the Asset-Backed Securities Index.
The LONDON INTERBANK OFFERING RATE (LIBOR) yield is the interest rate at which
banks offer to lend money to one another in the wholesale money markets in
London.
The MSCI EAFE INDEX is an unmanaged index that measures the performance of
securities listed on exchanges in markets in Europe, Australia and the Far East.
The NASDAQ COMPOSITE INDEX is a broad-based capitalization-weighted index of all
Nasdaq National Market and SmallCap stocks.
The RUSSELL 1000 GROWTH INDEX measures the performance of the 1,000 largest
companies in the Russell 3000 Index with higher price-to-book ratios and higher
forecasted growth.
The RUSSELL 2000 INDEX is an unmanaged index that measures the performance of
securities of small companies.
The STANDARD & POOR'S 500 INDEX is an unmanaged index that measures the
performance of securities of approximately 500 large-capitalization companies
whose securities are traded on major U.S. stock markets.
The STANDARD & POOR'S SMALLCAP 600 INDEX is an unmanaged index used to measure
stock market performance composed of companies with a weighted average market
value of approximately $820 million.
All indices are unmanaged.
An investor cannot invest directly in an index.
19
STATEMENTS OF ASSETS AND LIABILITIES as of June 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
ING VP ING VP ING VP ING VP ING VP
INTERNATIONAL GROWTH SMALL COMPANY TECHNOLOGY VALUE OPPORTUNITY
EQUITY PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------- --------- --------- --------- ---------
ASSETS:
Investments in securities at
value* $ 31,697,560 $ 198,364,340 $316,523,422 $ 54,994,903 $226,715,780
Short-term investments at
amortized cost 401,000 6,688,000 11,510,000 3,716,000 4,787,000
Cash 1,812 1,042 -- 955 560
Cash collateral for futures -- 270,750 792,000 -- --
Foreign currencies at value** 689,695 -- -- -- --
Receivables:
Investment securities sold 146,925 2,464,183 24,507,616 -- 2,127,607
Portfolio shares sold 63,698 -- -- -- --
Dividends and interest 131,177 84,744 217,860 7,354 173,000
Futures variation margin -- -- 54,450 -- --
Other 4,556 14 -- 7,033 --
Prepaid expenses 396 2,092 5,630 1,356 5,901
Reimbursement due from manager 5,128 -- -- -- --
------------ ------------- ------------ ------------ ------------
Total assets 33,141,947 207,875,165 353,610,978 58,727,601 233,809,848
------------ ------------- ------------ ------------ ------------
LIABILITIES:
Payable for investment
securities purchased 18,721 1,364,029 11,593,471 -- 1,456,589
Payable for futures variation
margin 23,710 -- -- -- --
Payable for portfolio shares
redeemed 3 -- -- -- --
Payable to affiliates 25,297 108,745 217,521 47,308 122,348
Payable to custodian -- -- 134,761 -- --
Payable for director fees 452 5,717 5,702 1,237 2,046
Other accrued expenses and
liabilities 89,011 60,420 70,327 34,591 59,178
------------ ------------- ------------ ------------ ------------
Total liabilities 157,194 1,538,911 12,021,782 83,136 1,640,161
------------ ------------- ------------ ------------ ------------
NET ASSETS $ 32,984,753 $ 206,336,254 $341,589,196 $ 58,644,465 $232,169,687
============ ============= ============ ============ ============
NET ASSETS WERE COMPRISED OF:
Paid-in capital $ 64,923,617 $ 425,488,770 $377,831,946 $120,721,210 $295,061,662
Undistributed net investment
income (accumulated net
investment loss) 685,924 109,871 1,246,327 (226,450) 2,783,016
Accumulated net realized loss on
investments, futures and
foreign currencies (33,025,958) (233,683,763) (73,958,076) (61,256,983) (85,700,548)
Net unrealized appreciation
(depreciation) on investments,
futures and foreign currencies 401,170 14,421,376 36,468,999 (593,312) 20,025,557
------------ ------------- ------------ ------------ ------------
NET ASSETS $ 32,984,753 $ 206,336,254 $341,589,196 $ 58,644,465 $232,169,687
============ ============= ============ ============ ============
- ------------------
* Cost of investments in
securities $ 31,267,389 $ 183,770,141 $279,972,903 $ 55,588,215 $206,690,223
** Cost of foreign currencies $ 696,660 $ -- $ -- $ -- $ --
CLASS R
Net assets $ 32,936,401 $ 206,223,066 $341,244,504 $ 58,636,604 $230,728,075
Shares authorized 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000
Par value $ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001
Shares outstanding 5,326,717 26,416,788 23,500,367 18,956,616 21,528,143
Net asset value and redemption
price per share $ 6.18 $ 7.81 $ 14.52 $ 3.09 $ 10.72
CLASS S
Net assets $ 48,352 $ 113,188 $ 344,692 $ 7,861 $ 1,441,612
Shares authorized 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000
Par value $ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001
Shares outstanding 7,835 14,560 23,713 2,551 135,002
Net asset value and redemption
price per share $ 6.17 $ 7.77 $ 14.54 $ 3.08 $ 10.68
</Table>
See Accompanying Notes to Financial Statements
20
STATEMENTS OF ASSETS AND LIABILITIES as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
ING VP ING VP ING VP ING VP
BALANCED GROWTH AND INCOME BOND MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
ASSETS:
Investments in securities at value* $1,270,419,915 $ 3,479,190,278 $1,335,646,053 $1,457,931,484
Short-term investments at amortized cost 53,030,368 42,305,000 163,156,595 --
Cash -- 4,237 23,905 --
Foreign currencies at value** 69 14,647 169 --
Swap contracts at value 194,138 -- 591,101 --
Receivables:
Investment securities sold 118,993,509 38,980,828 227,126,829 --
Dividends and interest 5,231,141 2,833,688 11,620,558 4,201,030
Other 146 947 62 1,660
Prepaid expenses 12,935 40,781 24,193 19,696
-------------- --------------- -------------- --------------
Total assets 1,447,882,221 3,563,370,406 1,738,189,465 1,462,153,870
-------------- --------------- -------------- --------------
LIABILITIES:
Payable for investment securities purchased 160,624,291 27,785,537 368,029,445 13,987,517
Payable to affiliates 573,925 1,586,411 519,013 350,582
Payable to custodian 12,067 -- -- 16,625
Payable for director fees 25,393 78,346 22,994 26,517
Other accrued expenses and liabilities 221,863 562,133 180,619 183,166
-------------- --------------- -------------- --------------
Total liabilities 161,457,539 30,012,427 368,752,071 14,564,407
-------------- --------------- -------------- --------------
NET ASSETS $1,286,424,682 $ 3,533,357,979 $1,369,437,394 $1,447,589,463
============== =============== ============== ==============
NET ASSETS WERE COMPRISED OF:
Paid-in capital $1,431,831,070 $ 6,506,416,509 $1,250,986,632 $1,444,031,955
Undistributed net investment income 36,279,840 17,550,895 20,634,162 7,475,340
Accumulated net realized gain (loss) on
investments, futures, foreign currencies and
swaps (249,429,862) (3,403,276,506) 64,353,391 (4,506,979)
Net unrealized appreciation on investments,
futures, foreign currencies and swaps 67,743,634 412,667,081 33,463,209 589,147
-------------- --------------- -------------- --------------
NET ASSETS $1,286,424,682 $ 3,533,357,979 $1,369,437,394 $1,447,589,463
============== =============== ============== ==============
- ------------------
* Cost of investments in securities $1,202,870,419 $ 3,066,568,037 $1,302,773,953 $1,457,342,337
** Cost of foreign currencies $ 70 $ 14,743 $ 161 $ --
CLASS R
Net assets $1,286,410,185 $ 3,533,239,102 $1,281,099,833 $1,447,589,463
Shares authorized 2,000,000,000 unlimited unlimited unlimited
Par value $ 0.001 $ 1.000 $ 1.000 $ 1.000
Shares outstanding 109,434,874 221,278,398 89,956,322 112,324,849
Net asset value and redemption price per share $ 11.76 $ 15.97 $ 14.24 $ 12.89
CLASS S
Net assets $ 14,497 $ 118,877 $ 88,337,561 n/a
Shares authorized 2,000,000,000 unlimited unlimited n/a
Par value $ 0.001 $ 1.000 $ 1.000 n/a
Shares outstanding 1,233 7,445 6,212,140 n/a
Net asset value and redemption price per share $ 11.75 $ 15.97 $ 14.22 n/a
</Table>
See Accompanying Notes to Financial Statements
21
STATEMENTS OF OPERATIONS for the six months ended June 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
ING VP ING VP ING VP ING VP ING VP
INTERNATIONAL GROWTH SMALL COMPANY TECHNOLOGY VALUE OPPORTUNITY
EQUITY PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------- --------- --------- --------- ---------
INVESTMENT INCOME:
Dividends (net of foreign
taxes)* $ 497,024 $ 738,580 $ 1,526,432 $ 38,680 $ 1,761,036
Interest 4,702 46,271 78,740 18,819 20,526
------------ ------------ ------------ ------------ ------------
Total investment income 501,726 784,851 1,605,172 57,499 1,781,562
------------ ------------ ------------ ------------ ------------
EXPENSES:
Investment management fees 127,417 562,620 1,093,022 236,813 635,084
Distribution and service
fees:
Class S 32 92 278 9 1,491
Transfer agent fees 5,611 5,072 5,400 4,860 5,400
Administrative service fees 8,244 51,573 80,155 13,710 58,216
Shareholder reporting expense 5,249 8,514 14,202 5,637 10,093
Registration fees 2,949 -- 754 262 1,137
Professional fees 14,257 16,097 18,364 12,958 16,282
Custody and accounting
expense 58,950 18,970 45,895 2,076 30,600
Directors' fees 773 5,595 9,968 803 3,254
Miscellaneous expense 2,978 6,447 9,971 2,071 7,309
------------ ------------ ------------ ------------ ------------
Total expenses 226,460 674,980 1,278,009 279,199 768,866
------------ ------------ ------------ ------------ ------------
Less:
Net waived and reimbursed
(recouped) fees 53,526 -- -- (4,750) --
------------ ------------ ------------ ------------ ------------
Net expenses 172,934 674,980 1,278,009 283,949 768,866
------------ ------------ ------------ ------------ ------------
Net investment income (loss) 328,792 109,871 327,163 (226,450) 1,012,696
------------ ------------ ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS,
FUTURES AND FOREIGN
CURRENCIES:
Net realized gain (loss) on:
Investments (891,374) (1,783,787) (376,153) (3,446,014) (7,171,975)
Futures and forward foreign
currency exchange
contracts (25,287) 570,800 -- -- --
Foreign currency related
transactions 25,523 -- -- -- --
------------ ------------ ------------ ------------ ------------
Net realized loss (891,138) (1,212,987) (376,153) (3,446,014) (7,171,975)
------------ ------------ ------------ ------------ ------------
Net change in unrealized
appreciation (depreciation)
on:
Investments 2,888,192 26,416,408 40,944,314 11,214,767 26,517,076
Futures and forward foreign
currency exchange
contracts (23,677) (172,823) (81,520) -- --
Foreign currency related
transactions (15,574) -- -- -- --
------------ ------------ ------------ ------------ ------------
Net change in unrealized
appreciation 2,848,941 26,243,585 40,862,794 11,214,767 26,517,076
------------ ------------ ------------ ------------ ------------
Net realized and unrealized
gain on investments,
futures and foreign
currencies 1,957,803 25,030,598 40,486,641 7,768,753 19,345,101
------------ ------------ ------------ ------------ ------------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 2,286,595 $ 25,140,469 $ 40,813,804 $ 7,542,303 $ 20,357,797
============ ============ ============ ============ ============
- ------------------
* Foreign Taxes $ 69,393 $ -- $ 1,431 $ 900 $ --
</Table>
See Accompanying Notes to Financial Statements
22
STATEMENTS OF OPERATIONS for the six months ended June 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
ING VP ING VP ING VP ING VP
BALANCED GROWTH AND INCOME BOND MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
INVESTMENT INCOME:
Dividends $ 5,505,948 $ 27,327,278 $ 7,648 $ --
Interest 9,857,171 285,900 26,473,986 10,154,896
------------ ------------- ------------ ------------
Total investment income 15,363,119 27,613,178 26,481,634 10,154,896
------------ ------------- ------------ ------------
EXPENSES:
Investment management fees 3,024,390 8,380,658 2,613,422 1,887,007
Distribution and service fees:
Class S 3 8 89,311 --
Transfer agent fees 1,980 9,540 10,299 1,980
Administrative service fees 332,683 921,872 359,346 415,141
Shareholder reporting expense 44,883 140,400 30,675 42,860
Registration fees -- 9 3,847 6,188
Professional fees 37,467 61,217 41,764 33,847
Custody and accounting expense 158,201 361,104 150,794 212,224
Directors' fees 33,874 75,075 47,029 34,301
Miscellaneous expense 39,504 112,400 39,597 41,028
------------ ------------- ------------ ------------
Total expenses 3,672,985 10,062,283 3,386,084 2,674,576
------------ ------------- ------------ ------------
Net investment income 11,690,134 17,550,895 23,095,550 7,480,320
------------ ------------- ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES, FOREIGN CURRENCIES AND SWAPS:
Net realized gain (loss) on:
Investments (1,627,914) (153,712,360) 40,735,688 --
Futures, forward foreign currency exchange
contracts and swaps 71,980 -- (929,380) --
Foreign currency related transactions 1,080,168 4,225 2,655,093 --
------------ ------------- ------------ ------------
Net realized gain (loss) (475,766) (153,708,135) 42,461,401 --
------------ ------------- ------------ ------------
Net change in unrealized appreciation (depreciation)
on:
Investments 101,072,846 460,959,273 2,216,918 291,362
Futures, forward foreign currency exchange
contracts and swaps 279,589 -- 9,803 --
Foreign currency related transactions 111,829 10,600 66,566 --
------------ ------------- ------------ ------------
Net change in unrealized appreciation 101,464,264 460,969,873 2,293,287 291,362
------------ ------------- ------------ ------------
Net realized and unrealized gain on investments,
futures, foreign currencies and swaps 100,988,498 307,261,738 44,754,688 291,362
------------ ------------- ------------ ------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $112,678,632 $ 324,812,633 $ 67,850,238 $ 7,771,682
============ ============= ============ ============
</Table>
See Accompanying Notes to Financial Statements
23
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
ING VP INTERNATIONAL
EQUITY PORTFOLIO ING VP GROWTH PORTFOLIO
--------------------------- ----------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
2003 2002 2003 2002
---- ---- ---- ----
FROM OPERATIONS:
Net investment income (loss) $ 328,792 $ 162,363 $ 109,871 $ (151,362)
Net realized loss on investments, futures and foreign
currencies swaps (891,138) (8,255,262) (1,212,987) (70,073,222)
Net change in unrealized appreciation (depreciation) on
investments, futures and foreign currencies swaps 2,848,941 (4,414,002) 26,243,585 (15,240,955)
------------ ------------ ------------ -------------
Net increase (decrease) in net assets resulting from
operations 2,286,595 (12,506,901) 25,140,469 (85,465,539)
------------ ------------ ------------ -------------
FROM DIVIDENDS TO SHAREHOLDERS:
Net investment income:
Class R -- (93,596) -- --
------------ ------------ ------------ -------------
Total distributions -- (93,596) -- --
------------ ------------ ------------ -------------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 38,211,149 80,512,745 11,055,365 35,492,407
Dividends reinvested -- 93,596 -- --
------------ ------------ ------------ -------------
38,211,149 80,606,341 11,055,365 35,492,407
Cost of shares redeemed (36,437,977) (87,743,989) (10,941,678) (74,579,328)
------------ ------------ ------------ -------------
Net increase (decrease) in net asset resulting from capital
share transactions 1,773,172 (7,137,648) 113,687 (39,086,921)
------------ ------------ ------------ -------------
Net increase (decrease) in net assets 4,059,767 (19,738,145) 25,254,156 (124,552,460)
NET ASSETS:
Beginning of period 28,924,986 48,663,131 181,082,098 305,634,558
------------ ------------ ------------ -------------
End of period $ 32,984,753 $ 28,924,986 $206,336,254 $ 181,082,098
============ ============ ============ =============
Undistributed net investment income at end of period $ 685,924 $ 357,132 $ 109,871 $ --
============ ============ ============ =============
</Table>
See Accompanying Notes to Financial Statements
24
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
ING VP SMALL COMPANY PORTFOLIO ING VP TECHNOLOGY PORTFOLIO
------------------------------ ---------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
2003 2002 2003 2002
---- ---- ---- ----
FROM OPERATIONS:
Net investment income (loss) $ 327,163 $ 1,305,149 $ (226,450) $ (498,251)
Net realized loss on investments, futures and foreign
currencies (376,153) (66,845,231) (3,446,014) (15,534,432)
Net change in unrealized appreciation (depreciation) on
investments, futures and foreign currencies 40,862,794 (26,970,408) 11,214,767 (15,966,037)
------------ ------------- ------------ ------------
Net increase (decrease) in net assets resulting from
operations 40,813,804 (92,510,490) 7,542,303 (31,998,720)
------------ ------------- ------------ ------------
FROM DIVIDENDS TO SHAREHOLDERS:
Net investment income:
Class R -- (1,576,315) -- --
Class S -- (603) -- --
------------ ------------- ------------ ------------
Total distributions -- (1,576,918) -- --
------------ ------------- ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 55,833,836 175,762,621 27,849,016 66,979,389
Dividends reinvested -- 1,576,918 -- --
------------ ------------- ------------ ------------
55,833,836 177,339,539 27,849,016 66,979,389
Cost of shares redeemed (44,131,915) (135,522,236) (22,312,347) (52,304,809)
------------ ------------- ------------ ------------
Net increase in net asset resulting from capital share
transactions 11,701,921 41,817,303 5,536,669 14,674,580
------------ ------------- ------------ ------------
Net increase (decrease) in net assets 52,515,725 (52,270,105) 13,078,972 (17,324,140)
NET ASSETS:
Beginning of period 289,073,471 341,343,576 45,565,493 62,889,633
------------ ------------- ------------ ------------
End of period $341,589,196 $ 289,073,471 $ 58,644,465 $ 45,565,493
============ ============= ============ ============
Undistributed net investment income (accumulated net
investment loss) at end of period $ 1,246,327 $ 919,164 $ (226,450) $ --
============ ============= ============ ============
</Table>
See Accompanying Notes to Financial Statements
25
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
ING VP VALUE OPPORTUNITY PORTFOLIO ING VP BALANCED PORTFOLIO
---------------------------------- ----------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
2003 2002 2003 2002
---- ---- ---- ----
FROM OPERATIONS:
Net investment income $ 1,012,696 $ 1,144,646 $ 11,690,134 $ 28,271,047
Net realized loss on investments, futures, foreign
currencies and swaps (7,171,975) (61,487,644) (475,766) (154,844,006)
Net change in unrealized appreciation (depreciation) on
investments, futures, foreign currencies and swaps 26,517,076 (8,717,153) 101,464,264 (34,537,848)
------------ ------------ -------------- --------------
Net increase (decrease) in net assets resulting from
operations 20,357,797 (69,060,151) 112,678,632 (161,110,807)
------------ ------------ -------------- --------------
FROM DIVIDENDS TO SHAREHOLDERS:
Net investment income:
Class R -- (951,142) -- (14,989,364)
Class S -- (3,459) -- --
------------ ------------ -------------- --------------
Total distributions -- (954,601) -- (14,989,364)
------------ ------------ -------------- --------------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 9,196,383 86,392,780 8,861,214 23,017,801
Dividends reinvested -- 954,601 -- 14,989,364
------------ ------------ -------------- --------------
9,196,383 87,347,381 8,861,214 38,007,165
Cost of shares redeemed (9,946,170) (24,364,504) (57,888,973) (230,189,224)
------------ ------------ -------------- --------------
Net increase (decrease) in net assets resulting from
capital share transactions (749,787) 62,982,877 (49,027,759) (192,182,059)
------------ ------------ -------------- --------------
Net increase (decrease) in net assets 19,608,010 (7,031,875) 63,650,873 (368,282,230)
------------ ------------ -------------- --------------
NET ASSETS:
Beginning of period 212,561,677 219,593,552 1,222,773,809 1,591,056,039
------------ ------------ -------------- --------------
End of period $232,169,687 $212,561,677 $1,286,424,682 $1,222,773,809
============ ============ ============== ==============
Undistributed net investment income at end of period $ 2,783,016 $ 1,770,320 $ 36,279,840 $ 24,589,706
============ ============ ============== ==============
</Table>
See Accompanying Notes to Financial Statements
26
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
ING VP GROWTH AND INCOME PORTFOLIO ING VP BOND PORTFOLIO
---------------------------------- -------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
2003 2002 2003 2002
---- ---- ---- ----
FROM OPERATIONS:
Net investment income $ 17,550,895 $ 37,957,496 $ 23,095,550 $ 39,840,504
Net realized gain (loss) on investments, futures, foreign
currencies and swaps (153,708,135) (891,690,878) 42,461,401 17,457,903
Net change in unrealized appreciation (depreciation) on
investments, futures, foreign currencies and swaps 460,969,873 (459,505,600) 2,293,287 31,731,171
-------------- --------------- -------------- --------------
Net increase (decrease) in net assets resulting from
operations 324,812,633 (1,313,238,982) 67,850,238 89,029,578
-------------- --------------- -------------- --------------
FROM DIVIDENDS TO SHAREHOLDERS:
Net investment income
Class R -- (38,495,841) -- (36,706,026)
Class S -- -- -- (1,364,988)
Net realized gain from investments
Class R -- -- -- (5,077,726)
Class S -- -- -- (25,540)
-------------- --------------- -------------- --------------
Total distributions -- (38,495,841) -- (43,174,280)
-------------- --------------- -------------- --------------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 7,542,835 27,763,650 142,823,268 265,499,333
Dividends reinvested -- 38,475,273 -- 43,149,619
-------------- --------------- -------------- --------------
7,542,835 66,238,923 142,823,268 308,648,952
Cost of shares redeemed (324,246,068) (828,611,395) (96,794,217) (122,508,850)
-------------- --------------- -------------- --------------
Net increase (decrease) in net assets resulting from
capital share transactions (316,703,233) (762,372,472) 46,029,051 186,140,102
-------------- --------------- -------------- --------------
Net increase (decrease) in net assets 8,109,400 (2,114,107,295) 113,879,289 231,995,400
NET ASSETS:
Beginning of period 3,525,248,579 5,639,355,874 1,255,558,105 1,023,562,705
-------------- --------------- -------------- --------------
End of period $3,533,357,979 $ 3,525,248,579 $1,369,437,394 $1,255,558,105
============== =============== ============== ==============
Undistributed net investment income (accumulated net
investment loss) at end of period $ 17,550,895 $ -- $ 20,634,162 $ (2,461,388)
============== =============== ============== ==============
</Table>
See Accompanying Notes to Financial Statements
27
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
ING VP MONEY MARKET PORTFOLIO
---------------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
2003 2002
---- ----
FROM OPERATIONS:
Net investment income $ 7,480,320 $ 24,749,106
Net realized gain on investments -- 23,728
Net change in unrealized appreciation (depreciation) on
investments 291,362 (340,945)
--------------- ---------------
Net increase in net assets resulting from operations 7,771,682 24,431,889
--------------- ---------------
FROM DIVIDENDS TO SHAREHOLDERS:
Net investment income (24,741,578) (57,317,722)
--------------- ---------------
Total distributions (24,741,578) (57,317,722)
--------------- ---------------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 1,452,310,168 2,748,252,013
Dividends reinvested 24,741,578 57,317,722
--------------- ---------------
1,477,051,746 2,805,569,735
Cost of shares redeemed (1,564,158,836) (2,739,754,578)
--------------- ---------------
Net increase (decrease) in net assets resulting from capital
share transactions (87,107,090) 65,815,157
--------------- ---------------
Net increase (decrease) in net assets (104,076,986) 32,929,324
NET ASSETS:
Beginning of period 1,551,666,449 1,518,737,125
--------------- ---------------
End of period $ 1,447,589,463 $ 1,551,666,449
=============== ===============
Undistributed net investment income at end of period $ 7,475,340 $ 24,736,598
=============== ===============
</Table>
See Accompanying Notes to Financial Statements
28
FINANCIAL HIGHLIGHTS ING VP INTERNATIONAL EQUITY PORTFOLIO (UNAUDITED)
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS R
-----------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 5.78 7.90 10.40 15.92 11.59 10.27
Income from investment operations:
Net investment income (loss) $ 0.02 0.03 0.02 (0.02) (0.01) 0.07
Net realized and unrealized gain (loss) on
investments $ 0.38 (2.13) (2.51) (3.17) 5.78 1.87
Total from investment operations $ 0.40 (2.10) (2.49) (3.19) 5.77 1.94
Less distributions from:
Net investment income $ -- 0.02 0.01 0.01 0.15 0.01
Net realized gains on investments $ -- -- -- 2.32 1.29 0.61
Total distributions $ -- 0.02 0.01 2.33 1.44 0.62
Net asset value, end of period $ 6.18 5.78 7.90 10.40 15.92 11.59
TOTAL RETURN(1): % 6.92 (26.68) (23.88) (20.33) 51.33 18.92
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 32,936 28,917 48,652 52,210 43,548 16,242
Ratios to average net assets:
Net expenses after expense reimbursement(2)(3) % 1.15 1.15 1.15 1.15 1.15 1.15
Gross expenses prior to expense reimbursement(2) % 1.51 1.46 1.26 1.34 1.62 1.77
Net investment income (loss) after expense
reimbursement(2)(3) % 2.19 0.40 0.23 (0.18) 0.13 0.55
Portfolio turnover rate % 33 266 229 212 169 158
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
CLASS S
-------------------------------------------------
SIX MONTHS YEAR NOVEMBER 1,
ENDED ENDED 2001(4) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 5.78 7.90 7.38
Income from investment operations:
Net investment income $ (0.02) 0.01 --
Net realized and unrealized gain (loss) on investments $ 0.41 (2.13) 0.52
Total from investment operations $ 0.39 (2.12) 0.52
Net asset value, end of period $ 6.17 5.78 7.90
TOTAL RETURN(1): % 6.75 (26.84) 7.05
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 48 8 11
Ratios to average net assets:
Net expenses after expense reimbursement(2)(3) % 1.37 1.40 1.39
Gross expenses prior to expense reimbursement(2) % 1.73 1.71 1.49
Net investment income after expense reimbursement(2)(3) % 1.97 0.15 0.01
Portfolio turnover rate % 33 266 229
- ----------------------------------------------------------------------------------------------------------------------
</Table>
(1) Assumes dividends have been reinvested and does not reflect the effect of
contract insurance charges. Total return for periods less than one year are
not annualized.
(2) Annualized for periods less than one year.
(3) The Investment Manager has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
(4) Commencement of operations of class.
See Accompanying Notes to Financial Statements
29
ING VP GROWTH PORTFOLIO (UNAUDITED) FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS R
----------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, -----------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 6.85 9.64 14.99 17.32 13.53 9.85
Income from investment operations:
Net investment income (loss) $ 0.00* (0.01) (0.01) 0.01 0.03 0.03
Net realized and unrealized gain (loss) on
investments $ 0.96 (2.78) (3.87) (2.02) 4.62 3.68
Total from investment operations $ 0.96 (2.79) (3.88) (2.01) 4.65 3.71
Less distributions from:
Net investment income $ -- -- 0.01 0.01 0.02 0.03
Net realized gains on investments $ -- 1.46 0.31 0.84 --
Total distributions $ -- -- 1.47 0.32 0.86 0.03
Net asset value, end of period $ 7.81 6.85 9.64 14.99 17.32 13.53
TOTAL RETURN(2): % 14.01 (28.94) (27.06) (11.95) 34.97 37.68
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 206,223 181,029 305,624 460,578 369,845 142,363
Ratios to average net assets:
Expenses(3) % 0.72 0.72 0.70 0.70 0.71 0.75
Net investment income (loss)(3) % 0.11 (0.06) (0.08) 0.06 0.20 0.40
Portfolio turnover rate % 83 241 216 179 138 153
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
CLASS S
-------------------------------------------------
SIX MONTHS YEAR NOVEMBER 1,
ENDED ENDED 2001(1) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2003 2002 2001
- --------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 6.83 9.63 8.96
Income from investment operations:
Net investment loss $ (0.01) (0.01) --
Net realized and unrealized gain (loss) on investments $ 0.95 (2.79) 0.67
Total from investment operations $ 0.94 (2.80) 0.67
Net asset value, end of period $ 7.77 6.83 9.63
TOTAL RETURN(2): % 13.76 (29.08) 7.48
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 113 53 11
Ratios to average net assets:
Expenses(3) % 0.97 0.97 0.94
Net investment loss(3) % (0.14) (0.31) (0.32)
Portfolio turnover rate % 83 241 216
- --------------------------------------------------------------------------------------------------------------------
</Table>
(1) Commencement of operations of class.
(2) Assumes dividends have been reinvested and does not reflect the effect of
contract insurance charges. Total return for periods less than one year are
not annualized.
(3) Annualized for periods less than one year.
* Amount is less than $0.01 per share.
See Accompanying Notes to Financial Statements
30
FINANCIAL HIGHLIGHTS ING VP SMALL COMPANY PORTFOLIO (UNAUDITED)
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS R
--------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, --------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 12.75 16.68 16.65 16.52 12.79 12.77
Income from investment operations:
Net investment income $ 0.01 0.05 0.06 0.11 0.08 0.07
Net realized and unrealized gain (loss)
on investments $ 1.76 (3.91) 0.58 1.09 3.84 0.07
Total from investment operations $ 1.77 (3.86) 0.64 1.20 3.92 0.14
Less distributions from:
Net investment income $ -- 0.07 0.10 0.02 0.06 0.08
Net realized gains on investments $ -- -- 0.51 1.05 0.13 0.04
Total distributions $ -- 0.07 0.61 1.07 0.19 0.12
Net asset value, end of period $ 14.52 12.75 16.68 16.65 16.52 12.79
TOTAL RETURN:(2) % 13.88 (23.23) 4.00 6.72 30.85 1.10
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 341,245 288,890 341,332 273,617 149,416 99,823
Ratios to average net assets:
Expenses(3) % 0.88 0.87 0.86 0.87 0.88 0.89
Net investment income(3) % 0.22 0.39 0.50 0.80 0.64 0.93
Portfolio turnover rate % 144 371 240 330 256 185
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
CLASS S
------------------------------------------------
SIX MONTHS YEAR NOVEMBER 1,
ENDED ENDED 2001(1) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2003 2002 2001
- -------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 12.72 16.68 14.90
Income from investment operations:
Net investment loss $ (0.01) (0.04) --
Net realized and unrealized gain (loss) on investments $ 1.83 (3.86) 1.78
Total from investment operations $ 1.82 (3.90) 1.78
Less distribution from:
Net investment income $ -- 0.06 --
Total distribution $ -- 0.06 --
Net asset value, end of period $ 14.54 12.72 16.68
TOTAL RETURN(2): % 14.31 (23.45) 11.95
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 345 184 11
Ratios to average net assets:
Expenses(3) % 1.13 1.12 1.10
Net investment income(3) % 0.00* 0.14 0.29
Portfolio turnover rate % 144 371 240
- -------------------------------------------------------------------------------------------------------------------
</Table>
(1) Commencement of operations of class.
(2) Assumes dividends have been reinvested and does not reflect the effect of
contract insurance charges. Total return for periods less than one year are
not annualized.
(3) Annualized for periods less than one year.
* Amount is less than $0.01 per share.
See Accompanying Notes to Financial Statements
31
ING VP TECHNOLOGY PORTFOLIO (UNAUDITED) FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS R
-----------------------------------------------------------------------
SIX MONTHS YEAR MAY 1,
ENDED ENDED YEAR ENDED 2000(1) TO
JUNE 30, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 2.66 4.53 5.88 10.00
Income from investment operations:
Net investment loss $ (0.01) (0.03) (0.02) (0.02)
Net realized and unrealized loss on investments $ 0.44 (1.84) (1.33) (4.10)
Total from investment operations $ 0.43 (1.87) (1.35) (4.12)
Net asset value, end of period $ 3.09 2.66 4.53 5.88
TOTAL RETURN(2): % 16.16 (41.28) (22.96) (41.20)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 58,637 45,559 62,878 44,621
Ratios to average net assets:
Net expenses after expense
reimbursement/recoupment(3)(4) % 1.14 1.11 1.11 1.15
Gross expenses prior to expense
reimbursement/recoupment(3) % 1.12 1.12 1.11 1.20
Net investment loss after expense
reimbursement/recoupment(3)(4) % (0.91) (0.89) (0.49) (0.61)
Portfolio turnover rate % 15 61 129 150
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
CLASS S
-------------------------------------------------
SIX MONTHS YEAR NOVEMBER 1,
ENDED ENDED 2001(5) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2003 2002 2001
- --------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 2.65 4.53 3.92
Income from investment operations:
Net investment loss $ (0.02) (0.04) --
Net realized and unrealized gain (loss) on investments $ 0.45 (1.84) 0.61
Total from investment operations $ 0.43 (1.88) 0.61
Net asset value, end of period $ 3.08 2.65 4.53
TOTAL RETURN(2): % 16.23 (41.50) 15.56
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 8 7 12
Ratios to average net assets:
Net expenses after expense reimbursement/recoupment(3)(4) % 1.36 1.36 1.36
Gross expenses prior to expense reimbursement/recoupment(3) % 1.34 1.37 1.36
Net investment loss after expense
reimbursement/recoupment(3)(4) % (1.14) (1.14) (0.74)
Portfolio turnover rate % 15 61 129
- --------------------------------------------------------------------------------------------------------------------
</Table>
(1) Commencement of operations.
(2) Assumes dividends have been reinvested and does not reflect the effect of
contract insurance charges. Total return for periods less than one year are
not annualized.
(3) Annualized for periods less than one year.
(4) The Investment Manager has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
(5) Commencement of operations of class.
See Accompanying Notes to Financial Statements
32
FINANCIAL HIGHLIGHTS ING VP VALUE OPPORTUNITY PORTFOLIO (UNAUDITED)
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS R
-------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ---------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 9.77 13.25 15.34 16.42 14.41 11.92
Income from investment operations:
Net investment income $ 0.05 0.04 0.03 0.07 0.10 0.09
Net realized and unrealized gain (loss) on
investments $ 0.90 (3.47) (1.43) 1.49 2.71 2.56
Total from investment operations $ 0.95 (3.43) (1.40) 1.56 2.81 2.65
Less distributions from:
Net investment income $ -- 0.05 0.05 0.03 0.08 0.08
Net realized gains on investments $ -- 0.64 2.61 0.72 0.08
Total distributions $ -- 0.05 0.69 2.64 0.80 0.16
Net asset value, end of period $ 10.72 9.77 13.25 15.34 16.42 14.41
TOTAL RETURN(2): % 9.72 (25.96) (9.62) 10.19 19.58 22.39
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 230,728 211,470 219,287 116,029 85,030 76,109
Ratios to average net assets:
Expenses(3) % 0.72 0.72 0.71 0.75 0.73 0.74
Net investment income(3) % 0.95 0.51 0.54 0.58 0.69 0.93
Portfolio turnover rate % 67 304 185 171 125 126
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
CLASS S
----------------------------------------------
SIX MONTHS YEAR NOVEMBER 1,
ENDED ENDED 2001(1) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2003 2002 2001
- ---------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 9.75 13.24 14.58
Income from investment operations:
Net investment income $ 0.02 0.01 --
Net realized and unrealized gain (loss) on investments $ 0.91 (3.46) (1.34)
Total from investment operations $ 0.93 (3.45) (1.34)
Less distributions from:
Net investment income $ -- 0.04 --
Total distributions $ -- 0.04 --
Net asset value, end of period $ 10.68 9.75 13.24
TOTAL RETURN(2): % 9.54 (26.12) (9.19)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 1,442 1,092 307
Ratios to average net assets:
Expenses(3) % 0.97 0.97 0.96
Net investment income(3) % 0.70 0.26 0.29
Portfolio turnover rate % 67 304 185
- ---------------------------------------------------------------------------------------------------------------------
</Table>
(1) Commencement of operations of class.
(2) Assumes dividends have been reinvested and does not reflect the effect of
contract insurance charges. Total return for periods less than one year are
not annualized.
(3) Annualized for periods less than one year.
See Accompanying Notes to Financial Statements
33
ING VP BALANCED PORTFOLIO (UNAUDITED) FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS R
-------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, --------------------------------------------------
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 10.73 12.09 13.40 15.57 15.73 16.03
Income from investment operations:
Net investment income $ 0.12 0.25 0.31 0.43 0.44 0.46
Net realized and unrealized gain (loss) on
investments $ 0.91 (1.49) (0.87) (0.49) 1.56 2.11
Total from investment operations $ 1.03 (1.24) (0.56) (0.06) 2.00 2.57
Less distributions from:
Net investment income $ -- 0.12 0.28 0.46 0.40 0.39
Net realized gains on investments $ -- -- 0.47 1.65 1.76 2.48
Total distributions $ -- 0.12 0.75 2.11 2.16 2.87
Net asset value, end of period $ 11.76 10.73 12.09 13.40 15.57 15.73
TOTAL RETURN(1): % 9.60 (10.31) (4.21) (0.56) 13.60 16.93
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (millions) $ 1,286 1,223 1,591 1,777 1,988 1,852
Ratios to average net assets:
Expenses(3) % 0.61 0.60 0.59 0.59 0.59 0.59
Net investment income(3) % 1.93 2.00 2.46 2.72 2.81 3.01
Portfolio turnover rate % 180 345 167 182 136 86
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
CLASS S
----------
MAY 29,
2003(2) TO
JUNE 30,
2003
- -----------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 11.53
Income from investment operations:
Net investment income $ 0.02
Net realized and unrealized gain on investments $ 0.20
Total from investment operations $ 0.22
Net asset value, end of period $ 11.75
TOTAL RETURN(1): % 1.91
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (millions) $ --*
Ratios to average net assets:
Expenses(3) % 0.81
Net investment income(3) % 1.61
Portfolio turnover rate % 180
- -----------------------------------------------------------------------------------
</Table>
(1) Assumes dividends have been reinvested and does not reflect the effect of
contract insurance charges. Total return for periods less than one year are
not annualized.
(2) Commencement of operations of class.
(3) Annualized for periods less than one year.
* Amount is less than $1,000,000.
See Accompanying Notes to Financial Statements
34
FINANCIAL HIGHLIGHTS ING VP GROWTH AND INCOME PORTFOLIO (UNAUDITED)
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS R
---------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, -----------------------------------------------------
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 14.50 19.54 24.12 30.69 31.87 33.63
Income from investment operations:
Net investment income $ 0.08 0.16 0.14 0.17 0.31 0.38
Net realized and unrealized gain (loss) on
investments $ 1.39 (5.04) (4.58) (3.46) 4.86 4.47
Total from investment operations $ 1.47 (4.88) (4.44) (3.29) 5.17 4.85
Less distributions from:
Net investment income $ -- 0.16 0.14 0.16 0.34 0.40
Net realized gains on investments $ -- -- -- 3.12 6.01 6.21
Total distributions $ -- 0.16 0.14 3.28 6.35 6.61
Net asset value, end of period $ 15.97 14.50 19.54 24.12 30.69 31.87
TOTAL RETURN(1): % 10.14 (24.99) (18.40) (10.97) 17.42 14.49
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (millions) $ 3,533 3,525 5,639 7,797 10,029 9,801
Ratios to average net assets:
Expenses(3) % 0.60 0.59 0.59 0.58 0.58 0.57
Net investment income(3) % 1.05 0.83 0.62 0.55 0.89 1.03
Portfolio turnover rate % 73 246 185 149 133 146
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
CLASS S
----------
JUNE 11,
2003(2) TO
JUNE 30,
2003
- ---------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 16.32
Income from investment operations:
Net investment income $ 0.00*
Net realized and unrealized loss on investments $ (0.35)
Total from investment operations $ (0.35)
Net asset value, end of period $ 15.97
TOTAL RETURN(1): % (2.14)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (millions) $ --+
Ratios to average net assets:
Expenses(3) % 0.85
Net investment income(3) % 0.18
Portfolio turnover rate % 73
- ---------------------------------------------------------------------------------
</Table>
(1) Assumes dividends have been reinvested and does not reflect the effect of
contract insurance charges. Total return for periods less than one year are
not annualized.
(2) Commencement of operations of class.
(3) Annualized for periods less than one year.
* Amount is less than $0.01 per share.
+ Amount is less than $1,000,000.
See Accompanying Notes to Financial Statements
35
ING VP BOND PORTFOLIO (UNAUDITED) FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS R
-------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ---------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 13.53 12.95 12.61 12.17 13.06 12.85
Income from investment operations:
Net investment income $ 0.24 0.45 0.59 0.79 0.76 0.75
Net realized and unrealized gain (loss) on
investments $ 0.47 0.63 0.51 0.37 (0.86) 0.28
Total from investment operations $ 0.71 1.08 1.10 1.16 (0.10) 1.03
Less distributions from:
Net investment income $ -- 0.43 0.65 0.72 0.75 0.76
Net realized gains on investments $ -- 0.07 0.11 -- 0.04 0.06
Total distributions $ -- 0.50 0.76 0.72 0.79 0.82
Net asset value, end of period $ 14.24 13.53 12.95 12.61 12.17 13.06
TOTAL RETURN(1): % 5.25 8.33 8.75 9.64 (0.74) 8.14
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 1,281,100 1,205,968 1,023,563 711,211 717,472 794,560
Ratios to average net assets:
Expenses(2) % 0.50 0.49 0.50 0.50 0.49 0.49
Net investment income(2) % 3.55 3.50 5.06 6.29 5.77 5.82
Portfolio turnover rate % 285 565 219 334 201 89
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
CLASS S
----------------------------
SIX MONTHS MAY 3,
ENDED 2002(3) TO
JUNE 30, DECEMBER 31,
2003 2002
- -----------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 13.53 13.05
Income from investment operations:
Net investment income $ 0.20 0.16
Net realized and unrealized gain on investments $ 0.49 0.81
Total from investment operations $ 0.69 0.97
Less distributions from:
Net investment income $ -- 0.42
Net realized gains on investments $ -- 0.07
Total distributions $ -- 0.49
Net asset value, end of period $ 14.22 13.53
TOTAL RETURN(1): % 5.10 7.45
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 88,338 49,590
Ratios to average net assets:
Expenses(2) % 0.75 0.74
Net investment income(2) % 3.22 3.25
Portfolio turnover rate % 285 565
- -----------------------------------------------------------------------------------------------
</Table>
(1) Assumes dividends have been reinvested and does not reflect the effect of
contract insurance charges. Total return for periods less than one year are
not annualized.
(2) Annualized for periods less than one year.
(3) Commencement of operations of class.
See Accompanying Notes to Financial Statements
36
FINANCIAL HIGHLIGHTS ING VP MONEY MARKET PORTFOLIO (UNAUDITED)
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS R
-----------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, -------------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 13.03 13.33 13.61 13.42 13.39 13.36
Income from investment operations:
Net investment income $ 0.05 0.21 0.50 0.83 0.59 0.63
Net realized and unrealized gain
(loss) on investments $ 0.01 -- 0.01 (0.02) 0.06 0.07
Total from investment operations $ 0.06 0.21 0.51 0.81 0.65 0.70
Less distributions from:
Net investment income $ 0.20 0.51 0.79 0.62 0.62 0.67
Total distributions $ 0.20 0.51 0.79 0.62 0.62 0.67
Net asset value, end of period $ 12.89 13.03 13.33 13.61 13.42 13.39
TOTAL RETURN(1): % 0.51 1.66 3.94 6.38 5.08 5.46
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 1,447,589 1,551,666 1,518,737 1,195,930 1,157,818 875,169
Ratios to average net assets:
Expenses(2) % 0.35 0.34 0.34 0.34 0.34 0.34
Net investment income(2) % 0.99 1.63 4.07 6.20 5.04 5.28
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Assumes dividends have been reinvested and does not reflect the effect of
contract insurance charges. Total return for periods less than one year are
not annualized.
(2) Annualized for periods less than one year.
See Accompanying Notes to Financial Statements
37
NOTES TO FINANCIAL STATEMENTS as of June 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1 -- ORGANIZATION
Organization. The ING Variable Product Portfolios are comprised of ING Variable
Portfolios, Inc., ING VP Balanced Portfolio, Inc., ING Variable Funds, ING
Income Shares and ING VP Money Market Fund, all of which are open-end investment
management companies registered under the Investment Company Act of 1940, as
amended.
The ING Variable Portfolios, Inc. is a company incorporated under the laws of
Maryland on June 4, 1996 and has eight separate portfolios. The five portfolios
that are in this report are: ING VP International Equity Portfolio
("International"), ING VP Growth Portfolio ("Growth"), ING VP Small Company
Portfolio ("Small Company"), ING VP Technology Portfolio ("Technology"), and ING
VP Value Opportunity Portfolio ("Value Opportunity"). ING VP Balanced Portfolio,
Inc. ("Balanced") is a company incorporated under the laws of Maryland on
December 14, 1988. ING Variable Funds is a company incorporated under the laws
of Massachusetts on January 25, 1984 with one portfolio, ING VP Growth and
Income Portfolio ("Growth and Income"). ING Income Shares is a company
incorporated under the laws of Massachusetts on January 25, 1984 with one
portfolio, ING VP Bond Portfolio ("Bond"). ING VP Money Market Fund is a company
incorporated under the laws of Massachusetts on January 25, 1984 with one
portfolio, ING VP Money Market Portfolio ("Money Market").
Each Portfolio offers class R shares. International, Growth, Small Company,
Technology, Value Opportunity, Balanced, Growth and Income and Bond also offer
class S shares. The two classes differ principally in applicable shareholder
service fees. Shareholders of each class also bear certain expenses that pertain
to that particular class. All shareholders bear the common expenses of the
Portfolios and earn income from the portfolio pro rata based on the average
daily net assets of each class, without discrimination between share classes.
Dividends are determined separately for each class based on income and expenses
allocable to each class. Realized gains are allocated to each class pro rata
based on the net assets of each class on the date of distribution. No class has
preferential dividend rights. Differences in per share dividend rates generally
result from the relative weighting of pro rata income and realized gain
allocations and from differences in separate class expenses, including
distribution, and shareholder servicing fees.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies are consistently followed by the
Portfolios in the preparation of their financial statements, and such policies
are in conformity with accounting principles generally accepted in the United
States of America for investment companies.
A. Security Valuation. Investments in equity securities
traded on a national securities exchange are valued at the last reported
sale price. Portfolio securities reported by NASDAQ will be valued at
NASDAQ official closing price. Portfolio securities traded on an exchange
or NASDAQ for which there has been no sale and securities traded in the
over-the-counter-market are valued at the mean between the last reported
bid and ask prices. All investments quoted in foreign currencies will be
valued daily in U.S. dollars on the basis of the foreign currency exchange
rates prevailing at that time. Debt securities are valued at bid prices
obtained from independent services or from one or more dealers making
markets in the securities. U.S. Government obligations are valued by using
market quotations or independent pricing services which use prices
provided by market-makers or estimates of market values obtained from
yield data relating to instruments or securities with similar
characteristics.
Securities and assets for which market quotations are not readily
available (which may include certain restricted securities which are
subject to limitations as to their sale) are valued at their fair values
as determined in good faith by or under the supervision of the Portfolios'
Board of Directors ("Board"), in accordance with methods that are
specifically authorized by the Board. Securities traded on exchanges,
including foreign exchanges, which close earlier than the time that a
Portfolio calculates its net asset value may also be valued at their fair
values as determined in good faith by or under the supervision of a
Portfolio's Board, in accordance with methods that are specifically
authorized by the Board. If a significant event which is likely to impact
the value of one or more foreign securities held by a Portfolio occurs
after the time at which the foreign market for such security (ies) closes
but before the time that the Portfolio's net asset value is calculated on
any business day, such event may be taken into account in determining the
fair value of such security (ies) at the time the Portfolio calculates its
net asset value. For these purposes, significant events after the close of
trading on a foreign market may include, among others, securities trading
in the U.S. and other markets, corporate announcements, natural and other
disasters, and political and other events. Among other elements of
analysis, the Board has authorized the use of one or more research
services to assist with the determination of the fair value of foreign
securities in light of significant events. Research services use
statistical analyses and
38
NOTES TO FINANCIAL STATEMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
quantitative models to help determine fair value as of the time a
Portfolio calculates its net asset value. Unlike the closing price of a
security on an exchange, fair value determinations employ elements of
judgment, and the fair value assigned to a security may not represent the
actual value that a Portfolio could obtain if it were to sell the security
at the time of the close of the NYSE.
Investments in securities maturing in less than 60 days from the date of
acquisition are valued at amortized cost, which, when combined with
accrued interest, approximates market value.
B. Security Transactions and Revenue
Recognition. Securities transactions are accounted for on the trade date.
Realized gains and losses are reported on the basis of identified cost of
securities delivered. Interest income is recorded on an accrual basis
except when collection is not expected. Dividend income is recorded on the
ex-dividend date, or for certain foreign securities, when the information
becomes available to the portfolios. Premium amortization and discount
accretion are determined by the effective yield method.
C. Foreign Currency Translation. The books and records
of the portfolios are maintained in U.S. dollars. Any foreign currency
amounts are translated into U.S. dollars on the following basis:
(1) Market value of investment securities, other
assets and liabilities -- at the exchange rates prevailing at the end
of the day.
(2) Purchases and sales of investment securities,
income and expenses -- at the rates of exchange prevailing on the
respective dates of such transactions.
Although the net assets and the market values are presented at the foreign
exchange rates at the end of the day, the Portfolios do not isolate the
portion of the results of operations resulting from changes in foreign
exchange rates on investments from the fluctuations arising from changes
in market prices of securities held. Such fluctuations are included with
the net realized and unrealized gains or losses from investments. For
securities, which are subject to foreign withholding tax upon disposition,
liabilities are recorded on the statement of assets and liabilities for
the estimated tax withholding based on the securities current market
value. Upon disposition, realized gains or losses on such securities are
recorded net of foreign withholding tax. Reported net realized foreign
exchange gains or losses arise from sales and maturities of short-term
securities, sales of foreign currencies, currency gains or losses realized
between the trade and settlement dates on securities transactions, the
difference between the amounts of dividends, interest, and foreign
withholding taxes recorded on the Portfolio's books, and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of
assets and liabilities other than investments in securities at fiscal year
end, resulting from changes in the exchange rate. Foreign security and
currency transactions may involve certain considerations and risks not
typically associated with investing in U.S. companies and U.S. Government
securities. These risks include but are not limited to re-evaluation of
currencies and future adverse political and economic developments which
could cause securities and their markets to be less liquid and prices more
volatile than those of comparable U.S. companies and U.S. Government
Securities.
D. Foreign Currency Transactions and Futures
Contracts. Certain portfolios may enter into foreign currency exchange
transactions to convert to and from different foreign currencies and to
and from the U.S. dollar in connection with the planned purchases or sales
of securities. The Portfolios either enter into these transactions on a
spot basis at the spot rate prevailing in the foreign currency exchange
market or use forward foreign currency contracts to purchase or sell
foreign currencies. When the contract is fulfilled or closed, gains or
losses are realized. Until then, the gain or loss is included in
unrealized appreciation or depreciation. Risks may arise upon entering
into forward contracts from the potential inability of counterparties to
meet the terms of their forward contracts and from the potential inability
of counterparties to meet the terms of their forward contracts and from
unanticipated movements in the value of foreign currencies relative to the
U.S. dollar.
Each Portfolio may enter into futures contracts involving foreign
currency, interest rates, securities and securities indices, for hedging
purposes only. A futures contract obligates the seller of the contract to
deliver and the purchaser of the contract to take delivery of the type of
foreign currency, financial instrument or security called for in the
contract at a specified future time for a specified price. Upon entering
into such a contract, a Portfolio is required to deposit and maintain as
collateral such initial margin as required by the exchange on which the
contract is traded. Pursuant to the contract, a Portfolio agrees to
receive from or pay to the broker an amount equal to the daily
fluctuations in the value of the contract. Such receipts or payments are
known as variation margins and are recorded as unrealized gains or losses
by the Portfolio. When
39
NOTES TO FINANCIAL STATEMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
the contract is closed, the Portfolio records a realized gain or loss
equal to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.
E. Distributions to Shareholders. Dividends from net
investment income and capital gains, if any, are declared and paid
annually by the International, Growth, Small Company, Technology, Value
Opportunity, Balanced and Money Market Portfolios; and declared and paid
semi-annually by Bond and Growth and Income Portfolios.
F. Federal Income Taxes. It is the policy of the
Portfolios, to comply with the requirements of the Internal Revenue Code
that are applicable to regulated investment companies and to distribute
substantially all of their net investment income and any net realized
capital gains to their shareholders. Therefore, a federal income tax or
excise tax provision is not required. The Board of Directors intends to
offset any net capital gains with any available capital loss carryforward
until each carryforward has been fully utilized or expires.
G. Use of Estimates. Management of the Portfolios has
made certain estimates and assumptions relating to the reporting of
assets, liabilities, income, and expenses to prepare these financial
statements in conformity with accounting principles generally accepted in
the United States of America. Actual results could differ from these
estimates.
H. Repurchase Agreements. Each Portfolio may invest
in repurchase agreements only with government securities dealers
recognized by the Board of Governors of the Federal Reserve System or with
member banks of the Federal Reserve System. Under such agreements, the
seller of the security agrees to repurchase it at a mutually agreed upon
time and price. The resale price is in excess of the purchase price and
reflects an agreed upon interest rate for the period of time the agreement
is outstanding. The period of the repurchase agreements is usually short,
from overnight to one week, while the underlying securities generally have
longer maturities. Each Portfolio will always receive as collateral
securities acceptable to it whose market value is equal to at least 100%
of the carrying amount of the repurchase agreements, plus accrued
interest, being invested by the Portfolio. The underlying collateral is
valued daily on a mark-to-market basis to assure that the value, including
accrued interest is at least equal to the repurchase price. If the seller
defaults, a Portfolio might incur a loss or delay in the realization of
proceeds if the value of the collateral securing the repurchase agreement
declines, and it might incur disposition costs in liquidating the
collateral.
I. Securities Lending. Each Portfolio has the option to
temporarily loan up to 30% of its total assets to brokers, dealers or
other financial institutions in exchange for a negotiated lender's fee.
The borrower is required to fully collateralize the loans with cash or
U.S. Government Securities. Generally, in the event of counterparty
default, the Portfolios have the right to use collateral to offset losses
incurred. There would be potential loss to the Portfolios in the event the
Portfolios are delayed or prevented from exercising their right to dispose
of the collateral. The Portfolios bear the risk of loss with respect to
the investment of collateral. Engaging in securities lending could have a
leveraging effect, which may intensify the credit, market and other risks
associated with investing in a Fund. No securities were on loan at June
30, 2003.
J. Illiquid and Restricted Securities. Illiquid securities
are not readily marketable. Disposing of illiquid investments may involve
time-consuming negotiation and legal expenses, and it may be difficult or
impossible for the Portfolios to sell them promptly at an acceptable
price. Restricted securities are those sold under Rule 144A of the
Securities Act of 1933 (1933 Act) or are securities offered pursuant to
Section 4(2) of the 1933 Act, and are subject to legal or contractual
restrictions on resale and may not be publicly sold without registration
under the 1933 Act. Restricted securities may be considered liquid
pursuant to procedures adopted by the Board or may be deemed to be
illiquid because they may not be readily marketable. Each Portfolio,
except for Money Market, may invest up to 15% of its net assets in
illiquid securities. Restricted securities are valued using market
quotations when readily available. In the absence of market quotations,
the illiquid and restricted securities are valued based upon their fair
value determined under procedures approved by the Board. The Portfolios
will not pay the costs of disposition of restricted securities other than
ordinary brokerage fees, if any.
K. Delayed Delivery Transactions. Balanced, Growth
and Income, and Bond Portfolios may purchase or sell securities on a
when-issued or forward commitment basis. The price of the underlying
securities and date when the securities will be delivered and paid for are
fixed at the time the transaction is negotiated. The market value of such
is identified in the Portfolios' Portfolio of Investments. Losses may
arise due to changes in the market value of the securities or from the
inability of counterparties to meet the terms of the contract. In
connection with such purchases, the Portfolios are required to hold liquid
assets as collateral with the Portfolios' custodian sufficient to cover
the purchase price.
40
NOTES TO FINANCIAL STATEMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
L. Mortgage Dollar Roll Transactions. In connection with a portfolio's
ability to purchase or sell securities on a when-issued basis, Balanced,
Growth and Income, and Bond Portfolios may engage in dollar roll
transactions with respect to mortgage-backed securities issued by
Government National Mortgage Association, Federal National Mortgage
Association and Federal Home Loan Mortgage Corp. In a dollar roll
transaction, a Portfolio sells a mortgage-backed security to a financial
institution, such as a bank or broker/dealer, and simultaneously agrees to
repurchase a substantially similar (i.e., same type, coupon, and maturity)
security from the institution on a delayed delivery basis at an agreed
upon price. The mortgage-backed securities that are repurchased will bear
the same interest rate as those sold, but generally will be collateralized
by different pools of mortgages with different prepayment histories. The
Portfolios account for dollar roll transactions as purchases and sales.
M. Options Contracts. Balanced, Growth and Income, and Bond may purchase put
and call options and may write (sell) put options and covered call
options. The Portfolios may engage in option transactions as a hedge
against adverse movements in the value of portfolio holdings or to
increase market exposure. Option contracts are valued daily and unrealized
gains or losses are recorded based upon the last sales price on the
principal exchange on which the options are traded. The Portfolios will
realize a gain or loss upon the expiration or closing of the option
contract. When an option is exercised, the proceeds on sales of the
underlying security for a written call option, the purchase cost of the
security for a written put option, or the cost of the security for a
purchased put or call option is adjusted by the amount of premium received
or paid. Realized and unrealized gains or losses on option contracts are
reflected in the accompanying financial statements. The risk in writing a
call option is that the Portfolios give up the opportunity for profit if
the market price of the security increases and the option is exercised.
The risk in writing a put option is that the Portfolios may incur a loss
if the market price of the security decreases and the option is exercised.
The risk in buying an option is that the Portfolios pay a premium whether
or not the option is exercised. Risks may also arise from an illiquid
secondary market or from the inability of counterparties to meet the terms
of the contract.
N. Swap Contracts. The Balanced and Bond Portfolios may enter into interest
rate swaps, currency swaps and other types of swap agreements, including
swaps on securities and indices. A swap is an agreement between two
parties pursuant to which each party agrees to make one or more payments
to the other on regularly scheduled dates over a stated term, based on
different interest rates, currency exchange rates, security prices, the
prices or rates of other types of financial instruments or assets or the
levels of specified indices. During the term of the swap, changes in the
value of the swap are recognized by marking-to-market the value of the
swap. For each swap contract, a capital gain or loss is recognized on each
contract's respective payment date.
NOTE 3 -- INVESTMENT TRANSACTIONS
For the six months ended June 30, 2003, the cost of purchases and proceeds from
the sales of securities, excluding U.S. Government and short-term securities,
were as follows:
<Table>
<Caption>
PURCHASES SALES
--------- -----
International $ 10,330,600 $ 9,644,209
Growth 150,969,727 156,098,358
Small Company 404,643,988 403,392,836
Technology 10,108,111 7,139,334
Value Opportunity 143,364,890 140,714,718
Balanced 1,046,786,670 1,159,241,673
Growth and Income 2,457,567,103 2,758,397,654
Bond 777,746,564 950,750,050
</Table>
U.S. Government Securities not included above were as follows:
<Table>
<Caption>
PURCHASES SALES
--------- -----
Balanced $1,144,297,205 $1,037,147,730
Bond 2,977,041,134 2,631,961,344
</Table>
NOTE 4 -- INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES
Each of the Portfolios has entered into an Investment Management Agreement with
ING Investments, LLC (the "Manager"), a wholly-owned subsidiary of ING Groep
N.V. The investment management agreements compensate the Manager with a fee,
computed daily and payable monthly, based on the average daily net assets of
each Portfolio, at the following annual rates:
<Table>
<Caption>
AS A PERCENTAGE
OF AVERAGE NET ASSETS
-----------------------------
International 0.85%
Growth 0.60%
Small Company 0.75%
Technology 0.95%
Value Opportunity 0.60%
Balanced 0.50%
Growth and Income 0.50% on first $10 billion;
0.45% on next $5 billion; and
0.425% over $15 billion
Bond 0.40%
Money Market 0.25%
</Table>
41
NOTES TO FINANCIAL STATEMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
The Manager entered into a subadvisory agreement with Aeltus Investment
Management, Inc. (ING Aeltus), a wholly owned subsidiary of ING Groep N.V.
effective March 1, 2002. ING Aeltus acts as subadvisor to all Portfolios except
the Technology Portfolio. Subject to such policies as the Board or the Manager
may determine, ING Aeltus manages the Portfolios' assets in accordance with the
Portfolios' investment objectives, policies, and limitations.
Pursuant to a subadvisory agreement between the Manager and AIC Asset
Management, LLC ("AIC"), AIC serves as subadviser to the Technology Portfolio.
Pursuant to an Administrative Services Agreement, ING Funds Services, LLC
("IFS") acts as administrator and provides certain administrative and
shareholder services necessary for Portfolio operations and is responsible for
the supervision of other service providers.
IFS is entitled to receive from each Portfolio a fee at an annual rate of 5.5
basis points on the first $5 billion of daily net assets and 3.0 basis points
thereafter.
NOTE 5 -- DISTRIBUTION AND SERVICE FEES
Class S shares of the Portfolios have adopted a Plan pursuant to Rule 12b-1
under the 1940 Act (the "12b-1 Plans"), whereby ING Funds Distributor, LLC (the
"Distributor") is reimbursed or compensated by the Portfolios for expenses
incurred in the distribution of each Portfolio's shares ("Distribution Fees").
Pursuant to the 12b-1 Plans, the Distributor is entitled to a payment each month
to reimburse or compensate expenses incurred in the distribution and promotion
of each Portfolio's shares, including expenses incurred in printing prospectuses
and reports used for sales purposes, expenses incurred in preparing and printing
sales literature and other such distribution related expenses, including any
distribution or shareholder servicing fees ("Service Fees") paid to securities
dealers who have executed a distribution agreement with the Distributor. Under
the 12b-1 Plans, Class S shares of the Portfolios pay the Distributor a fee
calculated at an annual rate of 0.25% of average daily net assets.
NOTE 6 -- OTHER TRANSACTIONS WITH AFFILIATED AND RELATED PARTIES
At June 30, 2003 the Portfolios had the following amounts recorded in payable to
affiliates on the accompanying Statements of Assets and Liabilities (see Notes 4
and 5):
<Table>
<Caption>
ACCRUED
ACCRUED SHAREHOLDER
INVESTMENT ACCRUED SERVICES AND
MANAGEMENT ADMINISTRATIVE DISTRIBUTION
FEES FEES FEES TOTAL
---- ---- ---- -----
International $ 23,750 $ 1,537 $ 10 $ 25,297
Growth 99,595 9,129 21 108,745
Small Company 202,599 14,857 65 217,521
Technology 44,717 2,589 2 47,308
Value Opportunity 111,812 10,250 286 122,348
Balanced 517,047 56,875 3 573,925
Growth and Income 1,429,191 157,211 9 1,586,411
Bond 440,385 60,553 18,075 519,013
Money Market 287,362 63,220 -- 350,582
</Table>
Each Portfolio has adopted a Deferred Compensation Plan (the "Plan"), which
allows eligible non-affiliated directors as described in the Plan to defer the
receipt of all or a portion of the directors' fees payable. The deferred fees
are invested in various funds advised by ING Investments, LLC until distribution
in accordance with the Plan.
NOTE 7 -- EXPENSE LIMITATIONS
For the following Portfolios, the Investment Manager has voluntarily agreed to
limit expenses, excluding interest, taxes, brokerage and extraordinary expenses
to the levels listed below:
<Table>
<Caption>
CLASS R CLASS S
------- -------
International 1.15% 1.40%
Growth 0.80% 1.05%
Small Company 0.95% 1.20%
Technology 1.15% 1.40%
Value Opportunity 0.80% 1.05%
</Table>
Each Portfolio will at a later date reimburse the Investment Manager for
expenses waived during the previous 36 months, but only if, after such
reimbursement, the Portfolio's expense ratio does not exceed the percentage
described above. Waived and reimbursed fees and any recoupment by the Investment
Manager of such waived and reimbursed fees are reflected on the accompanying
Statements of Operations for each Portfolio.
As of June 30, 2003, the cumulative amount of reimbursed fees that are subject
to possible recoupment by the Manager are as follows:
<Table>
International $135,287
</Table>
42
NOTES TO FINANCIAL STATEMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
NOTE 8 -- LINE OF CREDIT
All of the Portfolios included in this report, in addition to certain other
funds managed by the Adviser, have entered into an unsecured committed revolving
line of credit agreement (the "Credit Agreement ") with a syndicate of banks led
by Citibank, N.A. for an aggregate amount of $200,000,000. The proceeds may be
used only to: (1) temporarily finance the purchase and sale of securities; (2)
finance the redemption of shares of an investor in the Portfolios; and (3)
enable the Portfolios to meet other emergency expenses as defined in the Credit
Agreement. The Portfolios to which the line of credit is available pay a
commitment fee equal to 0.09% per annum on the daily unused portion of the
committed line amount. Each of the Portfolios will pay its pro rata share of
both the agent and commitment fee. Generally, borrowings under the Credit
Agreement accrue interest at the Federal Funds Rate plus a specified margin.
Repayments generally must be made within 30 days after the date of a revolving
credit advance. At June 30, 2003, the Portfolios did not have any loans
outstanding under the line of credit.
NOTE 9 -- CAPITAL SHARES TRANSACTIONS
Transaction in capital shares and dollars were as follows:
<Table>
<Caption>
CLASS R SHARES CLASS S SHARES
--------------------------------- ---------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
2003 2002 2003 2002
---- ---- ---- ----
INTERNATIONAL (NUMBER OF SHARES)
Shares sold 6,641,609 12,211,157 7,622 --
Shares issued as reinvestment of dividends -- 13,352 -- --
Shares redeemed (6,321,285) (13,375,503) (1,142) --
--------------- --------------- ------------ ------------
Net increase (decrease) in shares outstanding 320,324 (1,150,994) 6,480 --
=============== =============== ============ ============
INTERNATIONAL ($)
Shares sold $ 38,169,585 $ 80,512,745 $ 41,564 $ --
Shares issued as reinvestment of dividends -- 93,596 -- --
Shares redeemed (36,431,704) (87,743,989) (6,273) --
--------------- --------------- ------------ ------------
Net increase (decrease) $ 1,737,881 $ (7,137,648) $ 35,291 $ --
=============== =============== ============ ============
</Table>
<Table>
<Caption>
CLASS R SHARES CLASS S SHARES
--------------------------------- ---------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
2003 2002 2003 2002
---- ---- ---- ----
GROWTH (NUMBER OF SHARES)
Shares sold 1,486,974 4,049,562 6,797 6,802
Shares redeemed (1,513,604) (9,317,320) (33) (122)
--------------- --------------- ------------ ------------
Net increase (decrease) in shares outstanding (26,630) (5,267,758) 6,764 6,680
=============== =============== ============ ============
GROWTH ($)
Shares sold $ 11,005,349 $ 35,440,835 $ 50,016 $ 51,572
Shares redeemed (10,941,434) (74,578,416) (244) (912)
--------------- --------------- ------------ ------------
Net increase (decrease) $ 63,915 $ (39,137,581) $ 49,772 $ 50,660
=============== =============== ============ ============
</Table>
43
NOTES TO FINANCIAL STATEMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
NOTE 9 -- CAPITAL SHARES TRANSACTIONS (CONTINUED)
<Table>
<Caption>
CLASS R SHARES CLASS S SHARES
--------------------------------- ---------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
2003 2002 2003 2002
---- ---- ---- ----
SMALL COMPANY (NUMBER OF SHARES)
Shares sold 4,265,341 11,534,225 10,700 16,344
Shares issued as reinvestment of dividends -- 105,298 -- 40
Shares redeemed (3,426,512) (9,435,640) (1,417) (2,625)
--------------- --------------- ------------ ------------
Net increase in shares outstanding 838,829 2,203,883 9,283 13,759
=============== =============== ============ ============
SMALL COMPANY ($)
Shares sold $ 55,691,493 $ 175,512,145 $ 142,343 $ 250,476
Shares issued as reinvestment of dividends -- 1,576,315 -- 603
Shares redeemed (44,114,125) (135,484,865) (17,790) (37,371)
--------------- --------------- ------------ ------------
Net increase $ 11,577,368 $ 41,603,595 $ 124,553 $ 213,708
=============== =============== ============ ============
</Table>
<Table>
<Caption>
CLASS R SHARES CLASS S SHARES
--------------------------------- ---------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
2003 2001 2003 2002
---- ---- ---- ----
TECHNOLOGY (NUMBER OF SHARES)
Shares sold 9,757,580 18,405,609 -- --
Shares redeemed (7,934,881) (15,147,805) -- --
--------------- --------------- ------------ ------------
Net increase in shares outstanding 1,822,699 3,257,804 -- --
=============== =============== ============ ============
TECHNOLOGY ($)
Shares sold $ 27,849,016 $ 66,979,389 $ -- $ --
Shares redeemed (22,312,347) (52,304,809) -- --
--------------- --------------- ------------ ------------
Net increase $ 5,536,669 $ 14,674,580 $ -- $ --
=============== =============== ============ ============
</Table>
<Table>
<Caption>
CLASS R SHARES CLASS S SHARES
--------------------------------- ---------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
2003 2002 2003 2002
---- ---- ---- ----
VALUE OPPORTUNITY (NUMBER OF SHARES)
Shares sold 897,761 7,209,302 28,901 104,635
Shares issued as reinvestment of dividends -- 82,208 -- 300
Shares redeemed (1,012,173) (2,198,402) (5,933) (16,084)
--------------- --------------- ------------ ------------
Net increase (decrease) in shares outstanding (114,412) 5,093,108 22,968 88,851
=============== =============== ============ ============
VALUE OPPORTUNITY ($)
Shares sold $ 8,907,353 $ 85,145,155 $ 289,030 $ 1,247,625
Shares issued as reinvestment of dividends -- 951,142 -- 3,459
Shares redeemed (9,889,802) (24,195,900) (56,368) (168,604)
--------------- --------------- ------------ ------------
Net increase (decrease) $ (982,449) $ 61,900,397 $ 232,662 $ 1,082,480
=============== =============== ============ ============
</Table>
44
NOTES TO FINANCIAL STATEMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
NOTE 9 -- CAPITAL SHARES TRANSACTIONS (CONTINUED)
<Table>
<Caption>
CLASS R SHARES CLASS S SHARES
--------------------------------- --------------
SIX MONTHS YEAR PERIOD
ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30,
2003 2002 2003(1)
---- ---- -------
BALANCED (NUMBER OF SHARES)
Shares sold 795,496 1,996,574 1,234
Shares issued as reinvestment of dividends -- 1,341,931 --
Shares redeemed (5,305,083) (20,950,203) (1)
--------------- --------------- ------------
Net increase (decrease) in shares outstanding (4,509,587) (17,611,698) 1,233
=============== =============== ============
BALANCED ($)
Shares sold $ 8,846,984 $ 23,017,801 $ 14,230
Shares issued as reinvestment of dividends -- 14,989,364 --
Shares redeemed (57,888,965) (230,189,224) (8)
--------------- --------------- ------------
Net increase (decrease) $ (49,041,981) $ (192,182,059) $ 14,222
=============== =============== ============
</Table>
<Table>
<Caption>
CLASS R SHARES CLASS S SHARES
--------------------------------- --------------
SIX MONTHS YEAR PERIOD
ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30,
2003 2002 2003(2)
---- ---- -------
GROWTH AND INCOME (NUMBER OF SHARES)
Shares sold 491,003 1,580,665 7,446
Shares issued as reinvestment of dividends -- 2,604,961 --
Shares redeemed (22,297,417) (49,721,251) (1)
--------------- --------------- ------------
Net increase (decrease) in shares outstanding (21,806,414) (45,535,625) 7,445
=============== =============== ============
GROWTH AND INCOME ($)
Shares sold $ 7,421,530 $ 27,763,650 $ 121,305
Shares issued as reinvestment of dividends -- 38,475,273 --
Shares redeemed (324,246,056) (828,611,395) (12)
--------------- --------------- ------------
Net increase (decrease) $ (316,824,526) $ (762,372,472) $ 121,293
=============== =============== ============
</Table>
<Table>
<Caption>
CLASS R SHARES CLASS S SHARES
--------------------------------- ---------------------------
SIX MONTHS YEAR SIX MONTHS PERIOD
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
2003 2002 2003 2002(3)
---- ---- ---- -------
BOND (NUMBER OF SHARES)
Shares sold 6,021,478 15,194,847 4,312,320 4,594,043
Shares issued as reinvestment of dividends -- 3,110,914 -- 103,425
Shares redeemed (5,186,812) (8,233,251) (1,765,875) (1,031,773)
--------------- --------------- ------------ ------------
Net increase in shares outstanding 834,666 10,072,510 2,546,445 3,665,695
=============== =============== ============ ============
BOND ($)
Shares sold $ 83,028,663 $ 203,392,793 $ 59,794,605 $ 62,106,540
Shares issued as reinvestment of dividends -- 41,759,091 -- 1,390,528
Shares redeemed (72,161,444) (108,669,400) (24,632,773) (13,839,450)
--------------- --------------- ------------ ------------
Net increase $ 10,867,219 $ 136,482,484 $ 35,161,832 $ 49,657,618
=============== =============== ============ ============
</Table>
- ------------------
(1) Class S commenced operations on May 29, 2003.
(2) Class S commenced operations on June 11, 2003.
(3) Class S commenced offering of shares on May 3, 2002.
45
NOTES TO FINANCIAL STATEMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
NOTE 9 -- CAPITAL SHARES TRANSACTIONS (CONTINUED)
<Table>
<Caption>
CLASS R SHARES
---------------------------------
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, DECEMBER 31,
2003 2002
---- ----
MONEY MARKET (NUMBER OF SHARES)
Shares sold 112,697,924 212,328,316
Shares issued as reinvestment of dividends 1,928,116 4,467,825
Shares redeemed (121,427,592) (211,631,167)
--------------- ---------------
Net increase (decrease) in shares outstanding (6,801,552) 5,164,974
=============== ===============
MONEY MARKET ($)
Shares sold $ 1,452,310,168 $ 2,748,252,013
Shares issued as reinvestment of dividends 24,741,578 57,317,722
Shares redeemed (1,564,158,836) (2,739,754,578)
--------------- ---------------
Net increase (decrease) $ (87,107,090) $ 65,815,157
=============== ===============
</Table>
NOTE 10 -- FEDERAL INCOME TAXES
Dividends paid by the Funds from net investment income and distributions of net
realized short-term capital gains are, for federal income tax purposes, taxable
as ordinary income to shareholders. The tax composition of dividends and
distributions to shareholders for six months ended June 30, 2003 were as follow:
<Table>
<Caption>
ORDINARY
INCOME
------
Money Market $24,741,578
</Table>
The amount of distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations, which
may differ from generally accepted accounting principles. These book/tax
differences are either considered temporary or permanent in nature. Key
differences are the treatment of short-term capital gains, foreign currency
transactions, organization costs and other temporary differences. To the extent
that these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassifications. To the extent
distributions exceed net investment income and/or net realized capital gains for
tax purposes, they are reported as distributions of paid-in capital.
Capital loss carryforwards, which may be used to offset future realized capital
gains for federal income tax purposes were as follows at December 31, 2002:
<Table>
<Caption>
AMOUNT EXPIRATION DATES
------ ----------------
International $ 31,531,309 2009-2010
Growth 217,997,040 2009-2010
Small Company 70,984,645 2009-2010
Technology 57,131,367 2008-2010
Value Opportunity 70,506,602 2009-2010
Balanced 205,059,932 2009-2010
Growth and Income 3,023,558,930 2009-2011
Bond 571,253 2011
Money Market 4,506,979 2003-2010
</Table>
NOTE 11 -- SUBSEQUENT EVENTS
Dividends. Subsequent to June 30, 2003, the following Portfolios declared
dividends of:
<Table>
<Caption>
PER SHARE
TYPE AMOUNT PAYABLE DATE RECORD DATE
---- --------- ------------- -------------
INTERNATIONAL
Class R NII $0.0674 July 3, 2003 June 30, 2003
Class S NII $0.0633 July 3, 2003 June 30, 2003
SMALL COMPANY
Class R NII $0.0394 July 3, 2003 June 30, 2003
Class S NII $0.0281 July 3, 2003 June 30, 2003
VALUE OPPORTUNITY
Class R NII $0.0826 July 3, 2003 June 30, 2003
Class S NII $0.0714 July 3, 2003 June 30, 2003
BALANCED
Class R NII $0.2357 July 3, 2003 June 30, 2003
Class S NII $0.2334 July 3, 2003 June 30, 2003
BOND
Class R NII $0.2300 July 3, 2003 June 30, 2003
Class S NII $0.2151 July 3, 2003 June 30, 2003
</Table>
- ------------------
NII Net Investment Income
46
ING
VP
INTERNATIONAL
EQUITY
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Shares Value
- ---------------------------------------------------------------------------
COMMON STOCK: 96.1%
AUSTRALIA: 5.2%
26,900 Amcor Ltd. $ 146,489
41,400 AMP Ltd. 137,992
16,700 Australia & New Zealand Banking Group Ltd. 208,429
37,300 BHP Billiton Ltd. 216,132
9,700 Foodland Associated Ltd. 128,155
77,100 Macquarie Infrastructure Group 185,629
52,400 Mayne Group Ltd. 96,289
14,700 National Australia Bank Ltd. 330,262
9,200 St. George Bank Ltd. 133,271
19,700 TABCORP Holdings Ltd. 142,291
-----------
TOTAL AUSTRALIA 1,724,939
-----------
BELGIUM: 1.9%
13,000 Dexia 164,363
21,000 Fortis 364,624
4,200 Interbrew 93,326
-----------
TOTAL BELGIUM 622,313
-----------
FINLAND: 2.1%
32,100 Nokia OYJ ADR 527,403
16,100 Stora Enso OYJ 179,892
-----------
TOTAL FINLAND 707,295
-----------
FRANCE: 11.1%
900 Air Liquide 133,427
12,300 Alcatel SA 110,879
6,100 Aventis SA 335,606
8,300 BNP Paribas 421,760
3,100 Cap Gemini SA 110,072
5,900 Carrefour SA 289,168
8,300 France Telecom 203,589
1,500 Groupe Danone 207,564
2,100 Lafarge SA 122,988
2,400 Peugeot SA 116,580
1,400 Pinault-Printemps-Redoute 105,464
3,300 Schneider Electric SA 155,144
2,400 Societe Generale 152,133
12,100 Suez SA 192,585
4,848 Total SA 732,644
5,400 Veolia Environnement 111,000
8,500 Vivendi Universal SA 154,711
-----------
TOTAL FRANCE 3,655,314
-----------
GERMANY: 8.1%
3,300 BASF AG 140,971
11,800 Bayer AG 273,450
7,400 DaimlerChrysler AG 258,333
4,800 Deutsche Bank AG 311,322
15,700 Deutsche Telekom AG 239,607
7,900 E.ON AG 406,152
12,300 Infineon Technologies AG 118,930
2,000 Muenchener Rueckversicherungs AG 203,901
1,800 SAP AG 212,284
6,700 Siemens AG 328,685
3,900 Volkswagen AG 164,856
-----------
TOTAL GERMANY 2,658,491
-----------
HONG KONG: 2.3%
35,000 Cheung Kong Holdings Ltd. 210,050
38,000 Hutchison Whampoa Ltd. 231,465
248,000 Li & Fung Ltd. 319,614
-----------
TOTAL HONG KONG 761,129
-----------
IRELAND: 0.5%
14,000 Bank of Ireland 169,611
-----------
TOTAL IRELAND 169,611
-----------
</Table>
<Table>
<Caption>
Shares Value
- ---------------------------------------------------------------------------
ITALY: 3.6%
10,900 Assicurazioni Generali S.p.A. $ 252,593
17,300 ENI-Ente Nazionale Idrocarburi S.p.A. 261,641
48,600 Telecom Italia S.p.A. 439,781
49,500 UniCredito Italiano S.p.A. 235,900
-----------
TOTAL ITALY 1,189,915
-----------
JAPAN: 19.0%
2,000 Bandai Co. Ltd. 76,286
7,000 Canon, Inc. 321,216
12,300 Chubu Electric Power Co., Inc. 224,335
13,000 Dai Nippon Printing Co. Ltd. 137,497
40 East Japan Railway Co. 177,889
9,800 Eisai Co. Ltd. 201,591
2,200 Fanuc Ltd. 109,015
5,000 Fuji Photo Film Co. Ltd. 144,493
400 Funai Electric Co. Ltd. 44,639
35,000 Hitachi Ltd. 148,366
5,100 Honda Motor Co. Ltd. 193,254
8,000 Ito-Yokado Co. Ltd. 191,547
44,000 Kajima Corp. 104,435
7,000 Kao Corp. 130,294
700 Keyence Corp. 128,253
19,000 Kikkoman Corp. 125,480
11,000 Matsushita Electric Industrial Co. Ltd. 108,924
26 Millea Holdings, Inc. 198,776
69 Mitsubishi Tokyo Financial Group, Inc. 312,030
33,000 Mitsui & Co. Ltd. 165,447
1,900 Nidec Corp. 124,531
118,000 Nippon Steel Corp. 162,149
30,000 Nippon Yusen Kabushiki Kaisha 116,927
23,800 Nissan Motor Co. Ltd. 227,544
3,500 Nitto Denko Corp. 114,553
24,000 Nomura Holdings, Inc. 304,610
150 NTT DoCoMo, Inc. 324,797
600 Obic Co. Ltd. 107,233
59,000 Osaka Gas Co. Ltd. 145,934
1,300 Rohm Co. Ltd. 141,720
10,000 Sharp Corp. 128,336
6,800 Shin-Etsu Chemical Co. Ltd. 232,188
1,200 SMC Corp. 101,037
3,600 Sony Corp. 101,337
18,200 Toyota Motor Corp. 471,389
8,300 Yamanouchi Pharmaceutical Co. Ltd. 216,356
-----------
TOTAL JAPAN 6,264,408
-----------
LUXEMBOURG: 0.5%
15,400 Arcelor 179,322
-----------
TOTAL LUXEMBOURG 179,322
-----------
NETHERLANDS: 6.5%
15,500 Aegon NV 155,211
13,300 @ ASML Holding NV 126,308
11,900 Koninklijke Ahold NV 98,801
8,800 Koninklijke Philips Electronics NV 167,347
24,800 S Royal Dutch Petroleum Co. 1,151,124
8,300 Unilever NV ADR 445,303
-----------
TOTAL NETHERLANDS 2,144,094
-----------
SINGAPORE: 0.3%
19,000 DBS Group Holdings Ltd. 111,130
-----------
TOTAL SINGAPORE 111,130
-----------
SPAIN: 4.8%
5,000 Banco Popular Espanol 252,637
45,600 Banco Santander Central Hispano SA 399,543
15,400 Endesa SA 257,841
12,500 Iberdrola SA 216,464
</Table>
See Accompanying Notes to Financial Statements
47
ING
VP
INTERNATIONAL
EQUITY
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Shares Value
- ---------------------------------------------------------------------------
SPAIN (CONTINUED)
5,300 Inditex SA $ 133,289
26,216 Telefonica SA 304,363
-----------
TOTAL SPAIN 1,564,137
-----------
SWEDEN: 0.5%
141,300 Telefonaktiebolaget LM Ericsson 151,804
-----------
TOTAL SWEDEN 151,804
-----------
SWITZERLAND: 8.9%
2,450 Adecco SA 100,927
11,150 Credit Suisse Group 293,453
2,360 Nestle SA 486,966
17,300 Novartis AG 684,567
5,450 Roche Holding AG 427,494
3,650 Swiss Reinsurance 202,231
7,050 UBS AG 392,173
2,832 Zurich Financial Services AG 337,653
-----------
TOTAL SWITZERLAND 2,925,464
-----------
UNITED KINGDOM: 20.8%
19,500 Anglo American PLC 297,646
9,900 AstraZeneca PLC 396,977
31,100 Aviva PLC 215,927
139,233 BP PLC 965,547
26,800 Compass Group PLC 144,502
26,600 Diageo PLC 283,994
21,500 GlaxoSmithKline PLC ADR 871,610
23,600 HBOS PLC 305,512
39,800 HSBC Holdings PLC 470,240
39,959 Lloyds TSB Group PLC 283,700
20,100 Marks & Spencer Group PLC 104,728
41,962 National Grid Transco PLC 284,591
24,300 Pearson PLC 226,958
28,800 Reed Elsevier PLC 239,641
21,503 Royal Bank of Scotland Group PLC 603,214
50,500 Tesco PLC 182,707
506,641 Vodafone Group PLC 990,700
-----------
TOTAL UNITED KINGDOM 6,868,194
-----------
Total Common Stocks
(Cost $31,267,389) 31,697,560
-----------
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
SHORT-TERM INVESTMENT: 1.2%
$401,000 S UBS Finance, Inc., 0.000%, due 07/01/03 401,000
-----------
Total Short-Term Investment
(Cost $401,000) 401,000
-----------
</Table>
<Table>
TOTAL INVESTMENTS IN SECURITIES
(COST $31,668,389)* 97.3% $32,098,560
OTHER ASSETS AND LIABILITIES-NET 2.7 886,193
------ -----------
NET ASSETS 100.0% $32,984,753
====== ===========
</Table>
<Table>
@ Non-income producing security
ADR American Depositary Receipt
S Segregated securities for futures contracts held at June 30,
2003.
* Cost for federal income tax purposes is the same as for
financial statement purposes. Net unrealized appreciation
consists of:
</Table>
<Table>
Gross Unrealized Appreciation
$ 2,208,565
Gross Unrealized Depreciation
(1,778,394)
-----------
Net Unrealized Appreciation
$ 430,171
===========
</Table>
<Table>
<Caption>
Percentage of
Industry Group Net Assets
- --------------------------------------------------------------------------
Auto Manufacturers 4.3%
Banks 17.9%
Beverages 1.1%
Building Materials 0.4%
Chemicals 2.7%
Commercial Paper 1.2%
Commercial Services 1.6%
Computers 0.7%
Cosmetics/Personal Care 0.4%
Distribution/Wholesale 1.5%
Diversified Financial Services 0.9%
Electric 4.2%
</Table>
<Table>
- --------------------------------------------------------------------------
<Caption>
Percentage of
Industry Group Net Assets
Electrical Components & Equipment 1.0%
Electronics 1.2%
Engineering & Construction 0.3%
Entertainment 0.4%
Food 6.0%
Food Service 0.4%
Forest Products & Paper 0.6%
Gas 0.4%
Hand/Machine Tools 1.2%
Holding Companies-Diversified 0.7%
Home Furnishings 0.6%
Insurance 5.2%
Iron/Steel 1.1%
Media 1.9%
Mining 1.6%
Miscellaneous Manufacturing 1.4%
Office/Business Equipment 1.0%
Oil & Gas 9.4%
Packaging & Containers 0.5%
Pharmaceuticals 9.5%
Real Estate 0.6%
Retail 1.6%
Semiconductors 1.2%
Software 0.6%
Telecommunications 10.0%
Toys/Games/Hobbies 0.2%
Transportation 0.9%
Water 0.9%
Other Assets and Liabilities, Net 2.7%
-----
NET ASSETS 100.0%
=====
</Table>
See Accompanying Notes to Financial Statements
48
ING
VP
INTERNATIONAL
EQUITY
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Information concerning open futures contracts at June 30, 2003 is shown below:
<Table>
<Caption>
NO. OF NOTIONAL EXPIRATION UNREALIZED
CONTRACTS MARKET VALUE DATE LOSS
--------- ------------ ---- ----
LONG CONTRACTS
- --------------
Dow Jones Euro-Stoxx 44 $1,226,300 Sep-03 $(16,697)
FTSE 100 Index 10 662,370 Sep-03 (7,013)
---------- --------
$1,888,670 $(23,710)
========== ========
</Table>
See Accompanying Notes to Financial Statements
49
ING
VP
GROWTH
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Shares Value
- ----------------------------------------------------------------------------
COMMON STOCK: 96.1%
AEROSPACE/DEFENSE: 1.3%
57,800 Lockheed Martin Corp. $ 2,749,546
------------
2,749,546
------------
BEVERAGES: 2.1%
94,700 Coca-Cola Co. 4,395,027
------------
4,395,027
------------
BIOTECHNOLOGY: 2.9%
49,572 @ Amgen, Inc. 3,293,564
38,200 @ Genentech, Inc. 2,754,984
------------
6,048,548
------------
COMMERCIAL SERVICES: 2.0%
67,300 @ Apollo Group, Inc. 4,156,448
------------
4,156,448
------------
COMPUTERS: 2.6%
166,200 @ Dell Computer Corp. 5,311,752
------------
5,311,752
------------
COSMETICS/PERSONAL CARE: 4.4%
45,700 Estee Lauder Cos., Inc. 1,532,321
116,300 Gillette Co. 3,705,318
43,200 Procter & Gamble Co. 3,852,576
------------
9,090,215
------------
DIVERSIFIED FINANCIAL SERVICES: 8.5%
36,100 American Express Co. 1,509,341
36,000 Bear Stearns Cos., Inc. 2,607,120
32,300 Capital One Financial Corp. 1,588,514
46,700 Citigroup, Inc. 1,998,760
19,900 Countrywide Financial Corp. 1,384,443
45,800 Fannie Mae 3,088,752
19,500 Goldman Sachs Group, Inc. 1,633,125
46,300 Merrill Lynch & Co., Inc. 2,161,284
34,100 Morgan Stanley 1,457,775
------------
17,429,114
------------
ENTERTAINMENT: 0.1%
7,500 GTECH Holdings Corp. 282,375
------------
282,375
------------
HAND/MACHINE TOOLS: 1.0%
46,200 Black & Decker Corp. 2,007,390
------------
2,007,390
------------
HEALTHCARE -- PRODUCTS: 4.4%
71,600 Johnson & Johnson 3,701,720
26,400 @ St. Jude Medical, Inc. 1,518,000
66,000 @ Varian Medical Systems, Inc. 3,799,620
------------
9,019,340
------------
HEALTHCARE -- SERVICES: 4.3%
34,100 A Aetna, Inc. 2,052,820
39,300 @ Anthem, Inc. 3,031,995
48,800 @ Coventry Health Care, Inc. 2,252,608
31,400 UnitedHealth Group, Inc. 1,577,850
------------
8,915,273
------------
HOME BUILDERS: 0.7%
18,900 Centex Corp. 1,470,231
------------
1,470,231
------------
INSURANCE: 0.9%
61,200 @@ Willis Group Holdings Ltd. 1,881,900
------------
1,881,900
------------
</Table>
<Table>
<Caption>
Shares Value
- ----------------------------------------------------------------------------
INTERNET: 5.7%
31,000 @ eBay, Inc. $ 3,229,580
86,200 @ Symantec Corp. 3,780,732
142,800 @ Yahoo!, Inc. 4,678,128
------------
11,688,440
------------
LODGING: 0.8%
38,500 @ Harrah's Entertainment, Inc. 1,549,240
------------
1,549,240
------------
MEDIA: 1.9%
138,700 @ Fox Entertainment Group, Inc. 3,991,786
------------
3,991,786
------------
MISCELLANEOUS MANUFACTURING: 5.7%
41,597 Danaher Corp. 2,830,675
23,100 Eaton Corp. 1,815,891
247,100 General Electric Co. 7,086,828
------------
11,733,394
------------
OIL & GAS: 0.9%
46,900 @,@@ Nabors Industries Ltd. 1,854,895
------------
1,854,895
------------
OIL & GAS SERVICES: 4.3%
49,400 @ BJ Services Co. 1,845,584
229,500 Halliburton Co. 5,278,500
49,700 @ Smith Intl., Inc. 1,825,978
------------
8,950,062
------------
PHARMACEUTICALS: 14.6%
45,700 @ Barr Laboratories, Inc. 2,993,350
70,100 @ Forest Laboratories, Inc. 3,837,975
75,500 @ Gilead Sciences, Inc. 4,196,290
396,980 S Pfizer, Inc. 13,556,867
59,300 @@ Teva Pharmaceutical Industries ADR 3,375,949
53,300 @ Watson Pharmaceuticals, Inc. 2,151,721
------------
30,112,152
------------
RETAIL: 5.7%
52,700 @ Bed Bath & Beyond, Inc. 2,045,287
101,500 Home Depot, Inc. 3,361,680
117,800 Wal-Mart Stores, Inc. 6,322,326
------------
11,729,293
------------
SEMICONDUCTORS: 5.9%
276,700 Intel Corp. 5,750,933
97,300 Linear Technology Corp. 3,134,033
80,500 @ Nvidia Corp. 1,852,305
28,600 @ QLogic Corp. 1,382,238
------------
12,119,509
------------
SOFTWARE: 11.7%
47,000 @ Electronic Arts, Inc. 3,477,530
79,900 First Data Corp. 3,311,056
63,900 @ Mercury Interactive Corp. 2,467,179
412,400 Microsoft Corp. 10,561,564
366,100 @ Oracle Corp. 4,400,522
------------
24,217,851
------------
TELECOMMUNICATIONS: 3.7%
109,800 @,@@ Amdocs Ltd. 2,635,200
301,100 @ Cisco Systems, Inc. 5,025,359
------------
7,660,559
------------
Total Common Stock
(Cost $183,770,141) 198,364,340
------------
</Table>
See Accompanying Notes to Financial Statements
50
ING
VP
GROWTH
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
SHORT-TERM INVESTMENT: 3.3%
$6,688,000 State Street Repurchase Agreement dated
06/30/03, 1.100%, due 07/01/03,
$6,688,204 to be received upon repurchase
(Collateralized by
$6,820,000 Federal Home Loan Bank,
1.300%, Market Value $6,826,397,
due 06/28/04) $ 6,688,000
------------
Total Short-Term Investment
(Cost $6,688,000) 6,688,000
------------
</Table>
<Table>
TOTAL INVESTMENTS IN SECURITIES
(COST $190,458,141)* 99.4% $205,052,340
OTHER ASSETS AND LIABILITIES-NET 0.6 1,283,914
------ ------------
NET ASSETS 100.0% $206,336,254
====== ============
</Table>
<Table>
@ Non-income producing security
@@ Foreign Issuer
A Related Party
ADR American Depositary Receipt
S Segregated securities for futures contracts held at June 30,
2003.
* Cost for federal income tax purposes is the same as for
financial statement purposes. Net unrealized appreciation
consists of:
</Table>
<Table>
Gross Unrealized Appreciation
$18,560,679
Gross Unrealized Depreciation
(3,966,480)
-----------
Net Unrealized Appreciation
$14,594,199
===========
</Table>
Information concerning open futures contracts at June 30, 2003 is shown below:
<Table>
<Caption>
NO. OF NOTIONAL EXPIRATION UNREALIZED
CONTRACTS MARKET VALUE DATE LOSS
--------- ------------ ---- ----
LONG CONTRACTS
- --------------
S&P 500 Index 19 $4,623,175 Sep-03 $(172,823)
---------- ---------
$4,623,175 $(172,823)
========== =========
</Table>
See Accompanying Notes to Financial Statements
51
ING
VP
SMALL
COMPANY
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Shares Value
- ---------------------------------------------------------------------------
COMMON STOCK: 92.6%
AEROSPACE/DEFENSE: 0.2%
17,375 @ Moog, Inc. $ 603,781
------------
603,781
------------
AGRICULTURE: 0.6%
85,800 Delta & Pine Land Co. 1,885,884
------------
1,885,884
------------
AIRLINES: 0.1%
32,000 @ Continental Airlines, Inc. 479,040
------------
479,040
------------
APPAREL: 1.2%
54,600 @ Nautica Enterprises, Inc. 700,518
200,000 @ Quiksilver, Inc. 3,298,000
------------
3,998,518
------------
BANKS: 3.5%
60,000 Chittenden Corp. 1,641,000
50,000 Community First Bankshares, Inc. 1,365,000
43,900 Cullen/Frost Bankers, Inc. 1,409,190
73,800 @ First Republic Bank 1,963,080
50,000 Greater Bay BanCorp. 1,021,000
93,000 @ Local Financial Corp. 1,342,920
46,000 Provident Bankshares Corp. 1,168,860
73,650 @@ R&G Financial Corp. 2,187,405
------------
12,098,455
------------
BIOTECHNOLOGY: 0.8%
105,600 @ Integra LifeSciences Holdings Corp. 2,785,728
------------
2,785,728
------------
BUILDING MATERIALS: 0.7%
57,650 @ Trex Co., Inc. 2,262,763
------------
2,262,763
------------
COMMERCIAL SERVICES: 4.5%
60,000 @ Advisory Board Co. 2,415,600
90,600 Banta Corp. 2,932,722
80,000 @ Corinthian Colleges, Inc. 3,885,600
195,000 @ FTI Consulting, Inc. 4,869,150
76,100 Rollins, Inc. 1,434,485
------------
15,537,557
------------
COMPUTERS: 6.3%
123,900 @ CACI Intl., Inc. 4,249,770
100,550 @ Hutchinson Technology, Inc. 3,307,089
100,500 @ Intergraph Corp. 2,160,750
226,150 @ Iomega Corp. 2,397,190
191,500 @ Lexar Media, Inc. 1,811,590
125,000 @ Sandisk Corp. 5,043,750
250,000 @ Western Digital Corp. 2,575,000
------------
21,545,139
------------
COSMETICS/PERSONAL CARE: 0.4%
67,075 @ Chattem, Inc. 1,261,010
------------
1,261,010
------------
DISTRIBUTION/WHOLESALE: 0.8%
139,300 @ Handleman Co. 2,228,800
10,700 Hughes Supply, Inc. 371,290
------------
2,600,090
------------
DIVERSIFIED FINANCIAL SERVICES: 1.9%
21,000 @ Affiliated Managers Group 1,279,950
160,000 Friedman Billings Ramsey Group, Inc. 2,144,000
250,200 @ Knight Trading Group, Inc. 1,556,244
279,100 Metris Cos., Inc. 1,549,005
------------
6,529,199
------------
</Table>
<Table>
<Caption>
Shares Value
- ---------------------------------------------------------------------------
ELECTRIC: 0.7%
88,400 PNM Resources, Inc. $ 2,364,700
------------
2,364,700
------------
ELECTRICAL COMPONENTS & EQUIPMENT: 2.0%
100,000 Ametek, Inc. 3,665,000
115,600 @ Rayovac Corp. 1,497,020
45,600 @ Wilson Greatbatch Technologies, Inc. 1,646,160
------------
6,808,180
------------
ELECTRONICS: 4.7%
43,550 Analogic Corp. 2,123,498
154,000 @ Benchmark Electronics, Inc. 4,737,040
85,450 @ Itron, Inc. 1,842,302
70,100 @ Paxar Corp. 771,100
69,000 @ Planar Systems, Inc. 1,349,640
62,100 @ Trimble Navigation Ltd. 1,423,953
110,600 @ Varian, Inc. 3,834,502
------------
16,082,035
------------
ENGINEERING & CONSTRUCTION: 0.8%
105,400 @@ Chicago Bridge & Iron Co. NV ADR 2,390,472
9,500 @ Washington Group Intl., Inc. 208,050
------------
2,598,522
------------
ENTERTAINMENT: 1.6%
294,300 @,S Alliance Gaming Corp. 5,565,213
------------
5,565,213
------------
FOOD: 2.5%
140,000 @ Hain Celestial Group, Inc. 2,238,600
81,650 @ RalCorp. Holdings, Inc. 2,037,984
131,350 Sensient Technologies Corp. 2,996,094
100,500 @ Wild Oats Markets, Inc. 1,105,500
------------
8,378,178
------------
GAS: 0.6%
99,400 Oneok, Inc. 1,951,222
------------
1,951,222
------------
HEALTHCARE -- PRODUCTS: 2.6%
170,200 Cooper Cos., Inc. 5,917,854
149,100 @ Wright Medical Group, Inc. 2,832,900
------------
8,750,754
------------
HEALTHCARE -- SERVICES: 1.0%
36,700 @ Option Care, Inc. 423,151
125,650 @ Select Medical Corp. 3,119,890
------------
3,543,041
------------
HOME BUILDERS: 1.5%
157,800 Standard-Pacific Corp. 5,232,648
------------
5,232,648
------------
HOUSEHOLD PRODUCTS/WARES: 2.6%
202,600 @ American Greetings 3,979,064
71,500 @ Central Garden and Pet Co. 1,705,275
118,150 Harland John H. Co. 3,090,804
------------
8,775,143
------------
INSURANCE: 3.9%
185,000 AmerUs Group Co. 5,215,150
45,000 Delphi Financial Group 2,106,000
82,600 Landamerica Financial Group, Inc. 3,923,500
75,000 @ Stewart Information Services Corp. 2,088,750
------------
13,333,400
------------
INTERNET: 3.0%
100,517 @ Mindspeed Technologies, Inc. 271,395
201,050 Netbank, Inc. 2,645,818
</Table>
See Accompanying Notes to Financial Statements
52
ING
VP
SMALL
COMPANY
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Shares Value
- ---------------------------------------------------------------------------
INTERNET (CONTINUED)
93,800 @ United Online, Inc. $ 2,376,892
351,850 @ WebEx Communications, Inc. 4,883,678
------------
10,177,783
------------
INVESTMENT COMPANIES: 0.7%
99,200 American Capital Strategies Ltd. 2,474,048
------------
2,474,048
------------
LEISURE TIME: 0.5%
143,850 @ K2, Inc. 1,762,162
------------
1,762,162
------------
MACHINERY -- CONSTRUCTION & MINING: 0.6%
101,500 @ Terex Corp. 1,981,280
------------
1,981,280
------------
MACHINERY -- DIVERSIFIED: 0.6%
43,800 Briggs & Stratton 2,211,900
------------
2,211,900
------------
MEDIA: 1.7%
150,000 @ Cumulus Media, Inc. 2,839,500
41,550 Liberty Corp. 1,765,875
101,300 @ XM Satellite Radio Holdings, Inc. 1,113,287
------------
5,718,662
------------
MISCELLANEOUS MANUFACTURING: 0.9%
72,450 AO Smith Corp. 2,039,468
110,000 @ EnPro Industries, Inc. 1,175,900
------------
3,215,368
------------
OIL & GAS: 2.6%
147,300 @ Denbury Resources, Inc. 1,978,239
125,000 Patina Oil & Gas Corp. 4,018,750
187,600 @ Southwestern Energy Co. 2,815,876
------------
8,812,865
------------
OIL & GAS SERVICES: 1.3%
62,550 @ Lone Star Technologies 1,324,809
126,250 @ Oceaneering Intl., Inc. 3,225,688
------------
4,550,497
------------
</Table>
<Table>
<Caption>
Shares Value
- ---------------------------------------------------------------------------
PACKAGING & CONTAINERS: 0.6%
302,800 @ Crown Holdings, Inc. $ 2,161,992
------------
2,161,992
------------
PHARMACEUTICALS: 5.8%
206,600 @ Alkermes, Inc. 2,220,950
61,000 @,@@ Angiotech Pharmaceuticals, Inc. 2,485,140
187,650 @ Atherogenics, Inc. 2,801,614
75,000 @ Atrix Labs, Inc. 1,649,250
112,600 @ Ilex Oncology, Inc. 2,185,566
36,400 @ Inspire Pharmaceuticals, Inc. 393,120
85,000 @ MGI Pharma, Inc. 2,178,550
75,000 @ Neurocrine Biosciences, Inc. 3,745,500
50,000 @ Trimeris, Inc. 2,284,000
------------
19,943,690
------------
REITS: 7.6%
108,000 Alexandria Real Estate Equities, Inc. 4,860,000
32,500 CBL & Associates Properties, Inc. 1,397,500
37,000 Centerpoint Properties Trust 2,266,250
65,000 Corp.orate Office Properties Trust SBI MD 1,100,450
133,075 Equity One, Inc. 2,182,430
100,000 Newcastle Investment Corp. 1,958,000
42,100 Ramco-Gershenson Properties 980,930
188,000 Reckson Associates Realty Corp. 3,921,680
39,800 Regency Centers Corp. 1,392,204
80,000 SL Green Realty Corp. 2,791,200
68,100 Taubman Centers, Inc. 1,304,796
70,000 Washington Real Estate Investment Trust 1,904,000
------------
26,059,440
------------
RETAIL: 2.2%
40,000 Claire's Stores, Inc. 1,014,400
85,200 @ Hollywood Entertainment Corp. 1,465,440
155,850 @ Movie Gallery, Inc. 2,875,433
168,600 @ ShopKo Stores, Inc. 2,191,800
------------
7,547,073
------------
SAVINGS & LOANS: 3.2%
145,000 Commercial Federal Corp. 3,074,000
31,300 Connecticut Bancshares, Inc. 1,228,525
60,000 @ FirstFed Financial Corp. 2,117,400
70,000 Waypoint Financial Corp. 1,262,800
84,200 WSFS Financial Corp. 3,233,280
------------
10,916,005
------------
SEMICONDUCTORS: 3.3%
160,850 @ Artisan Components, Inc. 3,636,818
301,550 @ Conexant Systems, Inc. 1,236,355
251,300 @ GlobespanVirata, Inc. 2,100,868
173,900 @ Power Integrations, Inc. 4,229,248
------------
11,203,289
------------
SOFTWARE: 8.2%
301,150 @ Activision, Inc. 3,890,858
104,550 @ Avid Technology, Inc. 3,666,568
50,500 @ Hyperion Solutions Corp. 1,704,880
100,300 @ Mantech Intl. Corp. 1,924,757
176,000 @ Micromuse, Inc. 1,406,240
187,600 @ NETIQ Corp. 2,900,296
150,800 @ Serena Software, Inc. 3,148,704
202,600 @,S Take-Two Interactive Software, Inc. 5,741,684
201,050 @ THQ, Inc. 3,618,900
------------
28,002,887
------------
TELECOMMUNICATIONS: 4.3%
121,100 @ Boston Communications Group 2,074,443
476,300 @ Cincinnati Bell, Inc. 3,191,210
35,000 @ Commonwealth Telephone Enterprises, Inc. 1,538,950
239,250 @ Crown Castle Intl. Corp. 1,858,972
650,000 @ Enterasys Networks, Inc. 1,969,500
186,350 @ Metro One Telecommunications 961,566
363,000 @ Sonus Networks, Inc. 1,825,890
125,000 @ Talk America Holdings, Inc. 1,393,750
------------
14,814,281
------------
Total Common Stock
(Cost $279,972,903) 316,523,422
------------
</Table>
See Accompanying Notes to Financial Statements
53
ING
VP
SMALL
COMPANY
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- ---------------------------------------------------------------------------
SHORT-TERM INVESTMENT: 3.4%
$11,510,000 S State Street Repurchase Agreement dated
06/30/03, 1.100%, due 07/01/03,
$11,510,352 to be received upon
repurchase (Collateralized by $11,730,000
Federal Home Loan Bank,
1.300%, Market Value $11,741,003, due
06/28/04) $ 11,510,000
------------
Total Short-Term Investment
(Cost $11,510,000) 11,510,000
------------
</Table>
<Table>
TOTAL INVESTMENTS IN SECURITIES
(COST $291,482,903)* 96.0% $328,033,422
OTHER ASSETS AND LIABILITIES-NET 4.0 13,555,774
------ ------------
NET ASSETS 100.0% $341,589,196
====== ============
</Table>
<Table>
@ Non-income producing security
@@ Foreign Issuer
ADR American Depositary Receipt
S Segregated securities for futures contracts held at June 30,
2003
* Cost for federal income tax purposes is the same as for
financial statement purposes. Net unrealized appreciation
consists of:
</Table>
<Table>
Gross Unrealized Appreciation $40,770,634
Gross Unrealized Depreciation (4,220,115)
-----------
Net Unrealized Appreciation $36,550,519
===========
</Table>
Information concerning open futures contracts at June 30, 2003 is shown below:
<Table>
<Caption>
NO. OF NOTIONAL EXPIRATION UNREALIZED
CONTRACTS MARKET VALUE DATE LOSS
--------- ------------ ---- ----
LONG CONTRACTS
- --------------
Russell 2000 Index 66 $14,797,200 Sep-03 $(81,520)
----------- --------
$14,797,200 $(81,520)
=========== ========
</Table>
See Accompanying Notes to Financial Statements
54
ING
VP
TECHNOLOGY
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Shares Value
- ---------------------------------------------------------------------------
COMMON STOCK: 93.8%
COMPUTERS: 15.5%
35,650 @ Affiliated Computer Services, Inc. $ 1,630,275
700 @ Anteon Intl. Corp. 19,537
45,200 @ Computer Sciences Corp. 1,723,024
99,750 @ Dell Computer Corp. 3,188,010
118,100 Hewlett-Packard Co. 2,515,530
-----------
9,076,376
-----------
DISTRIBUTION/WHOLESALE: 4.1%
52,200 @ CDW Corp. 2,390,760
-----------
2,390,760
-----------
ELECTRONICS: 4.4%
247,500 @,@@ Flextronics Intl. Ltd. 2,571,525
-----------
2,571,525
-----------
INTERNET: 3.8%
21,400 @ eBay, Inc. 2,229,452
-----------
2,229,452
-----------
RETAIL: 4.4%
58,775 @ Best Buy Co., Inc. 2,581,398
-----------
2,581,398
-----------
SEMICONDUCTORS: 43.4%
99,000 @ Altera Corp. 1,623,600
49,650 @ Analog Devices, Inc. 1,728,813
170,900 @ Applied Materials, Inc. 2,710,474
113,650 Intel Corp. 2,362,102
50,900 @ Kla-Tencor Corp. 2,366,341
154,250 @ Lam Research Corp. 2,808,892
158,100 @ Micron Technology, Inc. 1,838,703
88,000 @ Novellus Systems, Inc. 3,222,648
45,000 @@ STMicroelectronics NV 935,550
217,415 @,@@ Taiwan Semiconductor Manufacturing Co.
Ltd. ADR 2,191,543
96,250 Texas Instruments, Inc. 1,694,000
78,700 @ Xilinx, Inc. 1,991,897
-----------
25,474,563
-----------
SOFTWARE: 13.8%
71,850 @ BMC Software, Inc. 1,173,311
51,550 @ Intuit, Inc. 2,295,521
132,000 Microsoft Corp. 3,380,520
104,650 @ Oracle Corp. 1,257,893
-----------
8,107,245
-----------
TELECOMMUNICATIONS: 4.4%
153,600 @ Cisco Systems, Inc. 2,563,584
-----------
2,563,584
-----------
Total Common Stock
(Cost $55,588,215) 54,994,903
-----------
SHORT-TERM INVESTMENT: 6.3%
$ 3,716,000 State Street Repurchase Agreement dated
06/30/03, 0.950%, due 07/01/03,
$3,716,098 to be received upon
repurchase (Collateralized by
$3,705,000 U.S. Treasury Note, 3.000%,
Market Value $3,792,994,
due 02/29/04) 3,716,000
-----------
Total Short-Term Investment
(Cost $3,716,000) 3,716,000
-----------
</Table>
<Table>
TOTAL INVESTMENTS IN SECURITIES
(COST $59,304,215)* 100.1% $ 58,710,903
OTHER ASSETS AND LIABILITIES-NET (0.1) (66,438)
------ ------------
NET ASSETS 100.0% $ 58,644,465
====== ============
</Table>
<Table>
@ Non-income producing security
@@ Foreign Issuer
ADR American Depositary Receipt
* Cost for federal income tax purposes is the same as for
financial statement purposes. Net unrealized depreciation
consists of:
</Table>
<Table>
Gross Unrealized Appreciation $ 5,505,391
Gross Unrealized Depreciation (6,098,703)
-----------
Net Unrealized Depreciation $ (593,312)
===========
</Table>
See Accompanying Notes to Financial Statements
55
ING
VALUE
OPPORTUNITY
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Shares Value
- ---------------------------------------------------------------------------
COMMON STOCK: 97.6%
AEROSPACE/DEFENSE: 0.4%
28,800 Boeing Co. $ 988,416
------------
988,416
------------
APPAREL: 2.7%
118,900 @ Jones Apparel Group, Inc. 3,479,014
79,300 @ Reebok Intl. Ltd. 2,666,859
------------
6,145,873
------------
BANKS: 7.1%
83,300 Bank of America Corp. 6,583,199
126,000 National City Corp. 4,121,460
77,500 Wachovia Corp. 3,096,900
51,200 Wells Fargo & Co. 2,580,480
------------
16,382,039
------------
BEVERAGES: 3.0%
113,500 Anheuser-Busch Cos., Inc. 5,794,175
26,000 PepsiCo, Inc. 1,157,000
------------
6,951,175
------------
BIOTECHNOLOGY: 2.0%
69,200 @ Amgen, Inc. 4,597,648
------------
4,597,648
------------
CHEMICALS: 0.8%
66,100 Sherwin-Williams Co. 1,776,768
------------
1,776,768
------------
COMMERCIAL SERVICES: 3.0%
268,900 @ Cendant Corp. 4,926,248
75,200 Equifax, Inc. 1,955,200
------------
6,881,448
------------
COMPUTERS: 5.1%
94,100 @ Dell Computer Corp. 3,007,436
241,000 Hewlett-Packard Co. 5,133,300
44,700 International Business Machines Corp. 3,687,750
------------
11,828,486
------------
COSMETICS/PERSONAL CARE: 3.3%
84,500 Procter & Gamble Co. 7,535,710
------------
7,535,710
------------
DIVERSIFIED FINANCIAL SERVICES: 11.9%
80,000 Bear Stearns Cos., Inc. 5,793,600
160,200 Citigroup, Inc. 6,856,560
56,700 Countrywide Financial Corp. 3,944,619
25,500 Fannie Mae 1,719,720
40,100 Goldman Sachs Group, Inc. 3,358,375
133,200 JP Morgan Chase & Co. 4,552,776
34,100 Morgan Stanley 1,457,775
------------
27,683,425
------------
ELECTRIC: 1.4%
35,100 Dominion Resources, Inc. 2,255,877
18,100 Exelon Corp. 1,082,561
------------
3,338,438
------------
ELECTRONICS: 0.2%
31,100 @ Thomas & Betts Corp. 449,395
------------
449,395
------------
HEALTHCARE -- PRODUCTS: 5.3%
98,300 Bausch & Lomb, Inc. 3,686,250
36,900 CR Bard, Inc. 2,631,339
117,600 Johnson & Johnson 6,079,920
------------
12,397,509
------------
HEALTHCARE -- SERVICES: 0.5%
14,000 @ WellPoint Health Networks 1,180,200
------------
1,180,200
------------
</Table>
<Table>
<Caption>
Shares Value
- ---------------------------------------------------------------------------
HOUSEHOLD PRODUCTS/WARES: 2.1%
249,000 @ American Greetings $ 4,890,360
------------
4,890,360
------------
INSURANCE: 2.6%
14,000 Aflac, Inc. 430,500
19,100 American Intl. Group 1,053,938
25,900 Progressive Corp. 1,893,290
37,100 Safeco Corp. 1,308,888
34,600 Torchmark Corp. 1,288,850
------------
5,975,466
------------
MEDIA: 1.0%
31,700 @ AOL Time Warner, Inc. 510,053
44,100 @ Clear Channel Communications, Inc. 1,869,399
------------
2,379,452
------------
MISCELLANEOUS MANUFACTURING: 4.0%
72,300 Cooper Industries Ltd. 2,985,990
143,200 General Electric Co. 4,106,976
82,300 Honeywell Intl., Inc. 2,209,755
------------
9,302,721
------------
OFFICE/BUSINESS EQUIPMENT: 0.6%
142,500 @ Xerox Corp. 1,509,075
------------
1,509,075
------------
OIL & GAS: 5.9%
76,500 Anadarko Petroleum Corp. 3,401,955
19,100 ConocoPhillips 1,046,680
160,900 Exxon Mobil Corp. 5,777,919
101,000 Occidental Petroleum Corp. 3,388,550
------------
13,615,104
------------
PACKAGING & CONTAINERS: 1.0%
121,300 @ Pactiv Corp. 2,390,823
------------
2,390,823
------------
PHARMACEUTICALS: 5.8%
72,900 Abbott Laboratories 3,190,104
72,700 Bristol-Myers Squibb Co. 1,973,805
58,000 Merck & Co., Inc. 3,511,900
140,100 Pfizer, Inc. 4,784,415
------------
13,460,224
------------
RETAIL: 3.9%
92,900 Federated Department Stores 3,423,365
41,900 Home Depot, Inc. 1,387,728
80,300 Wal-Mart Stores, Inc. 4,309,701
------------
9,120,794
------------
SAVINGS & LOANS: 2.0%
111,900 Washington Mutual, Inc. 4,621,470
------------
4,621,470
------------
SEMICONDUCTORS: 2.7%
190,400 Intel Corp. 3,957,274
21,100 Maxim Integrated Products 721,409
85,300 Texas Instruments, Inc. 1,501,280
------------
6,179,963
------------
SOFTWARE: 7.8%
29,800 @ Electronic Arts, Inc. 2,204,902
91,000 First Data Corp. 3,771,040
335,700 Microsoft Corp. 8,597,277
350,100 @ Novell, Inc. 1,078,308
213,100 @ Oracle Corp. 2,561,462
------------
18,212,989
------------
TELECOMMUNICATIONS: 11.2%
102,700 AT&T Corp. 1,976,975
560,800 @ AT&T Wireless Services, Inc. 4,604,168
64,200 BellSouth Corp. 1,709,646
379,200 @ Cisco Systems, Inc. 6,328,848
</Table>
See Accompanying Notes to Financial Statements
56
ING
VALUE
OPPORTUNITY
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Shares Value
- ---------------------------------------------------------------------------
TELECOMMUNICATIONS (CONTINUED)
88,300 @ Citizens Communications Co. $ 1,138,187
148,800 Motorola, Inc. 1,403,184
94,700 @ Nextel Communications, Inc. 1,712,176
116,700 Qualcomm, Inc. 4,172,025
77,800 Verizon Communications, Inc. 3,069,210
------------
26,114,419
------------
TRANSPORTATION: 0.3%
13,000 FedEx Corp. 806,390
------------
806,390
------------
Total Common Stock
(Cost $206,690,223) 226,715,780
------------
<Caption>
Principal
Amount Value
- ---------------------------------------------------------------------------
SHORT-TERM INVESTMENT: 2.1%
$ 4,787,000 State Street Repurchase Agreement dated
06/30/03, 1.100%, due 07/01/03,
$4,787,146 to be received upon
repurchase (Collateralized by
$4,880,000 Federal Home Loan Bank,
1.350%, Market Value $4,886,246, due
06/02/04) 4,787,000
------------
Total Short-Term Investment
(Cost $4,787,000) 4,787,000
------------
</Table>
<Table>
TOTAL INVESTMENTS IN SECURITIES
(COST $211,477,223)* 99.7% $231,502,780
OTHER ASSETS AND LIABILITIES-NET 0.3 666,907
------ ------------
NET ASSETS 100.0% $232,169,687
====== ============
</Table>
<Table>
@ Non-income producing security
@@ Foreign Issuer
* Cost for federal income tax purposes is the same as for
financial statement purposes. Net unrealized appreciation
consists of:
</Table>
<Table>
Gross Unrealized Appreciation $ 22,125,783
Gross Unrealized Depreciation (2,100,226)
------------
Net Unrealized Appreciation $ 20,025,557
============
</Table>
See Accompanying Notes to Financial Statements
57
ING
VP
BALANCED
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Shares Value
- ----------------------------------------------------------------------------
COMMON STOCK: 59.2%
AEROSPACE/DEFENSE: 1.0%
53,450 Boeing Co. $ 1,834,404
96,125 Goodrich Corp. 2,018,625
89,500 Lockheed Martin Corp. 4,257,515
94,300 Rockwell Collins, Inc. 2,322,609
29,000 United Technologies Corp. 2,054,070
--------------
12,487,223
--------------
AGRICULTURE: 0.5%
128,550 Altria Group, Inc. 5,841,312
--------------
5,841,312
--------------
APPAREL: 1.0%
137,775 Liz Claiborne, Inc. 4,856,569
64,000 Nike, Inc. 3,423,360
52,075 @ Quiksilver, Inc. 858,717
81,275 @ Reebok Intl. Ltd. 2,733,278
104,075 @ Skechers U.S.A., Inc. 770,155
--------------
12,642,079
--------------
AUTO MANUFACTURERS: 0.5%
390,300 Ford Motor Co. 4,289,397
40,100 Paccar, Inc. 2,709,156
--------------
6,998,553
--------------
AUTO PARTS & EQUIPMENT: 0.1%
102,150 @ Dura Automotive Systems, Inc. 1,002,092
--------------
1,002,092
--------------
BANKS: 2.9%
161,900 Bank of America Corp. 12,794,957
71,950 Bank One Corp. 2,675,101
130,275 Hibernia Corp. 2,365,794
129,050 National City Corp. 4,221,226
116,600 US BanCorp. 2,856,700
187,100 Wachovia Corp. 7,476,516
105,300 Wells Fargo & Co. 5,307,120
--------------
37,697,414
--------------
BEVERAGES: 1.0%
155,100 Coca-Cola Co. 7,198,191
38,850 @ Constellation Brands, Inc. 1,219,890
108,150 PepsiCo, Inc. 4,812,675
--------------
13,230,756
--------------
BIOTECHNOLOGY: 0.7%
80,800 @ Amgen, Inc. 5,368,352
59,700 @ Chiron Corp. 2,610,084
41,650 @ Invitrogen Corp. 1,598,111
--------------
9,576,547
--------------
CHEMICALS: 0.5%
68,950 Dow Chemical Co. 2,134,692
76,100 Du Pont EI de Nemours & Co. 3,168,804
51,700 HB Fuller Co. 1,138,434
--------------
6,441,930
--------------
COMMERCIAL SERVICES: 0.8%
58,850 @ Corp.orate Executive Board Co. 2,385,191
42,900 Equifax, Inc. 1,115,400
64,500 H&R Block, Inc. 2,789,625
76,500 @ Quintiles Transnational Corp. 1,085,535
39,650 @ Rent-A-Center, Inc. 3,005,867
--------------
10,381,618
--------------
COMPUTERS: 2.5%
305,900 @ Dell Computer Corp. 9,776,564
131,450 @ EMC Corp.-Mass 1,376,282
57,850 @ Fidelity National Information
Solutions, Inc. 1,508,728
188,750 Hewlett-Packard Co. 4,020,375
102,300 International Business Machines Corp. 8,439,750
</Table>
<Table>
<Caption>
Shares Value
- ----------------------------------------------------------------------------
39,200 @ Lexmark Intl., Inc. $ 2,774,184
107,600 @ Perot Systems Corp. 1,222,336
15,300 @ Synopsys, Inc. 946,305
207,500 @ Western Digital Corp. 2,137,250
--------------
32,201,774
--------------
COSMETICS/PERSONAL CARE: 1.8%
91,200 Colgate-Palmolive Co. 5,285,040
173,500 Gillette Co. 5,527,710
137,300 Procter & Gamble Co. 12,244,414
--------------
23,057,164
--------------
DISTRIBUTION/WHOLESALE: 0.2%
22,300 @ Handleman Co. 356,800
30,400 @ Scansource, Inc. 813,200
42,650 @ Tech Data Corp. 1,139,182
932 @ Timco Aviation Services 354
--------------
2,309,536
--------------
DIVERSIFIED FINANCIAL SERVICES: 5.5%
55,500 @ Affiliated Managers Group 3,382,725
82,550 American Express Co. 3,451,416
35,900 Bear Stearns Cos., Inc. 2,599,878
65,950 Capital One Financial Corp. 3,243,421
310,300 Citigroup, Inc. 13,280,840
40,300 Countrywide Financial Corp. 2,803,671
124,050 Fannie Mae 8,365,932
106,950 Freddie Mac 5,429,852
253,000 JP Morgan Chase & Co. 8,647,540
57,400 Lehman Brothers Holdings, Inc. 3,815,952
246,250 MBNA Corp. 5,131,850
140,600 Merrill Lynch & Co., Inc. 6,563,208
67,750 Morgan Stanley 2,896,313
39,775 New Century Financial Corp. 1,736,179
--------------
71,348,777
--------------
ELECTRIC: 1.6%
287,000 @ AES Corp. 1,822,450
62,250 Cinergy Corp. 2,290,178
71,000 CMS Energy Corp. 575,100
20,450 Dominion Resources, Inc. 1,314,322
43,950 Duke Energy Corp. 876,803
71,050 Exelon Corp. 4,249,501
11,300 FPL Group, Inc. 755,405
147,300 @ PG&E Corp. 3,115,395
35,500 PNM Resources, Inc. 949,625
62,850 PPL Corp. 2,702,550
47,300 Southern Co. 1,473,868
--------------
20,125,197
--------------
ELECTRICAL COMPONENTS & EQUIPMENT: 0.2%
118,450 American Power Conversion 1,846,636
26,200 Emerson Electric Co. 1,338,820
--------------
3,185,456
--------------
ELECTRONICS: 0.5%
32,500 @ Benchmark Electronics, Inc. 999,700
77,450 @ Itron, Inc. 1,669,822
57,400 @,@@ Mettler Toledo Intl., Inc. 2,103,710
70,550 @ Waters Corp. 2,055,122
--------------
6,828,354
--------------
ENTERTAINMENT: 0.4%
127,375 @ Alliance Gaming Corp. 2,408,661
56,400 GTECH Holdings Corp. 2,123,460
--------------
4,532,121
--------------
ENVIRONMENTAL CONTROL: 0.1%
120,850 @ Allied Waste Industries, Inc. 1,214,543
--------------
1,214,543
--------------
</Table>
See Accompanying Notes to Financial Statements
58
ING
VP
BALANCED
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Shares Value
- ----------------------------------------------------------------------------
FOOD: 0.3%
98,950 HJ Heinz Co. $ 3,263,371
29,300 Sensient Technologies Corp. 668,333
--------------
3,931,704
--------------
FOREST PRODUCTS & PAPER: 0.1%
37,700 International Paper Co. 1,347,021
--------------
1,347,021
--------------
GAS: 0.3%
123,750 Oneok, Inc. 2,429,213
24,650 Peoples Energy Corp. 1,057,239
--------------
3,486,452
--------------
HAND/MACHINE TOOLS: 0.1%
35,500 Snap-On, Inc. 1,030,565
--------------
1,030,565
--------------
HEALTHCARE -- PRODUCTS: 2.1%
68,475 CR Bard, Inc. 4,882,952
63,575 @ Edwards Lifesciences Corp. 2,043,301
78,700 Guidant Corp. 3,493,493
43,775 Invacare Corp. 1,444,575
182,050 Johnson & Johnson 9,411,985
77,775 @ Respironics, Inc. 2,918,118
37,900 @ Varian Medical Systems, Inc. 2,181,903
--------------
26,376,327
--------------
HEALTHCARE -- SERVICES: 1.6%
48,900 A Aetna, Inc. 2,943,780
43,000 @ Anthem, Inc. 3,317,450
83,500 @ Humana, Inc. 1,260,850
67,450 @ Pacificare Health Systems 3,327,309
67,150 @ Sierra Health Services 1,343,000
107,800 UnitedHealth Group, Inc. 5,416,950
40,050 @ WellPoint Health Networks 3,376,215
--------------
20,985,554
--------------
HOUSEHOLD PRODUCTS/WARES: 0.4%
210,075 @ American Greetings 4,125,873
35,350 Tupperware Corp. 507,626
--------------
4,633,499
--------------
INSURANCE: 2.9%
81,500 @@ ACE Ltd. 2,794,635
117,050 Aflac, Inc. 3,599,288
129,700 Allstate Corp. 4,623,805
159,700 American Intl. Group 8,812,246
66,543 Fidelity National Financial, Inc. 2,046,863
70,800 First American Corp. 1,865,580
30,600 Landamerica Financial Group, Inc. 1,453,500
97,350 Principal Financial Group 3,139,538
53,100 Progressive Corp. 3,881,610
57,050 Safeco Corp. 2,012,724
37,200 @@ XL Capital Ltd. 3,087,600
--------------
37,317,389
--------------
INTERNET: 0.8%
53,450 @ eBay, Inc. 5,568,421
58,150 @ eSpeed, Inc. 1,149,044
136,500 @ RSA Security, Inc. 1,467,375
54,150 @ Symantec Corp. 2,375,019
--------------
10,559,859
--------------
MACHINERY -- DIVERSIFIED: 0.5%
22,725 @ AGCO Corp. 388,143
68,150 Deere & Co. 3,114,455
42,475 @ Flowserve Corp. 835,483
89,100 Rockwell Automation, Inc. 2,124,144
--------------
6,462,225
--------------
MEDIA: 2.0%
277,850 @ AOL Time Warner, Inc. 4,470,607
37,050 @ Clear Channel Communications, Inc. 1,570,550
</Table>
<Table>
<Caption>
Shares Value
- ----------------------------------------------------------------------------
144,100 @ Comcast Corp. $ 4,348,938
58,850 @ Entercom Communications Corp. 2,884,239
16,600 Gannett Co., Inc. 1,275,046
23,100 Media General, Inc. 1,321,320
24,900 Meredith Corp. 1,095,600
28,525 @ Scholastic Corp. 849,475
109,700 @ Viacom, Inc. 4,789,502
126,900 Walt Disney Co. 2,506,275
--------------
25,111,552
--------------
METAL FABRICATE/HARDWARE: 0.2%
70,325 Quanex Corp. 2,090,059
--------------
2,090,059
--------------
MINING: 0.1%
29,900 Newmont Mining Corp. 970,554
--------------
970,554
--------------
MISCELLANEOUS MANUFACTURING: 2.6%
24,100 3M Co. 3,108,418
90,350 Eastman Kodak Co. 2,471,073
844,750 General Electric Co. 24,227,430
53,050 Honeywell Intl., Inc. 1,424,393
120,950 @@ Tyco Intl. Ltd. 2,295,631
--------------
33,526,945
--------------
OFFICE/BUSINESS EQUIPMENT: 0.2%
260,050 IKON Office Solutions, Inc. 2,314,445
--------------
2,314,445
--------------
OIL & GAS: 3.1%
68,900 Anadarko Petroleum Corp. 3,063,983
66,800 ChevronTexaco Corp. 4,822,960
42,200 ConocoPhillips 2,312,560
407,200 Exxon Mobil Corp. 14,622,552
68,600 @ Houston Exploration Co. 2,380,420
107,650 Marathon Oil Corp. 2,836,578
103,300 Occidental Petroleum Corp. 3,465,715
44,400 Sunoco, Inc. 1,675,656
150,450 @ Tesoro Petroleum Corp. 1,035,096
90,550 Unocal Corp. 2,597,880
63,875 Vintage Petroleum, Inc. 720,510
--------------
39,533,910
--------------
OIL & GAS SERVICES: 0.2%
243,450 @ Veritas DGC, Inc. 2,799,675
--------------
2,799,675
--------------
PACKAGING & CONTAINERS: 0.3%
36,950 Ball Corp. 1,681,595
53,000 @ Sealed Air Corp. 2,525,980
--------------
4,207,575
--------------
PHARMACEUTICALS: 3.0%
98,600 Abbott Laboratories 4,314,736
69,100 Eli Lilly & Co. 4,765,827
128,775 ICN Pharmaceuticals, Inc. 2,158,269
144,600 @ King Pharmaceuticals, Inc. 2,134,296
20,625 Medicis Pharmaceutical 1,169,438
135,500 Merck & Co., Inc. 8,204,525
481,200 Pfizer, Inc. 16,432,980
--------------
39,180,071
--------------
PIPELINES: 0.1%
19,900 Williams Energy Partners LP 942,464
--------------
942,464
--------------
REAL ESTATE: 0.2%
70,625 LNR Property Corp. 2,641,375
--------------
2,641,375
--------------
</Table>
See Accompanying Notes to Financial Statements
59
ING
VP
BALANCED
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Shares Value
- ----------------------------------------------------------------------------
REITS: 0.2%
46,350 Chelsea Property Group, Inc. $ 1,868,369
26,975 Kimco Realty Corp. 1,022,353
--------------
2,890,722
--------------
RETAIL: 3.3%
71,725 Claire's Stores, Inc. 1,818,946
73,750 Federated Department Stores 2,717,688
146,050 Home Depot, Inc. 4,837,176
42,175 @ Jack in the Box, Inc. 940,503
48,400 Lowe's Cos., Inc. 2,078,780
79,350 McDonald's Corp. 1,750,461
125,800 @ Movie Gallery, Inc. 2,321,010
94,950 @ ShopKo Stores, Inc. 1,234,350
113,525 @ Sports Authority, Inc. 1,214,718
148,950 @ Staples, Inc. 2,733,233
50,425 @ United Auto Group, Inc. 1,098,257
170,850 Walgreen Co. 5,142,585
266,350 Wal-Mart Stores, Inc. 14,295,005
--------------
42,182,712
--------------
SAVINGS & LOANS: 1.6%
127,100 BankAtlantic BanCorp., Inc. 1,511,219
26,975 Downey Financial Corp. 1,114,068
76,700 @ FirstFed Financial Corp. 2,706,743
200,675 Flagstar BanCorp., Inc. 4,906,504
99,866 New York Community BanCorp., Inc. 2,905,102
151,400 Washington Mutual, Inc. 6,252,820
33,050 Webster Financial Corp. 1,249,290
--------------
20,645,746
--------------
SEMICONDUCTORS: 0.9%
191,100 @ Applied Micro Circuits Corp. 1,156,155
101,050 @ Cirrus Logic, Inc. 406,221
401,200 Intel Corp. 8,338,541
248,250 @ Silicon Image, Inc. 1,385,235
--------------
11,286,152
--------------
SOFTWARE: 4.7%
75,900 Adobe Systems, Inc. 2,434,113
93,300 @ Citrix Systems, Inc. 1,899,588
152,900 Computer Associates Intl., Inc. 3,406,612
210,080 @ Compuware Corp. 1,212,162
45,250 First Data Corp. 1,875,160
72,225 Inter-Tel, Inc. 1,532,615
64,300 @ Intuit, Inc. 2,863,279
51,700 @ Mercury Interactive Corp. 1,996,137
938,250 Microsoft Corp. 24,028,583
139,750 @ NETIQ Corp. 2,160,535
540,450 @ Novell, Inc. 1,664,586
664,100 @ Oracle Corp. 7,982,482
105,575 @ Pinnacle Systems, Inc. 1,129,653
270,750 @ ScanSoft, Inc. 1,470,173
217,300 @ Siebel Systems, Inc. 2,073,042
117,650 @ Veritas Software Corp. 3,373,026
--------------
61,101,746
--------------
TELECOMMUNICATIONS: 4.3%
233,550 @ Arris Group, Inc. 1,158,408
248,150 @ Avaya, Inc. 1,603,049
51,050 Black Box Corp. 1,848,010
745,200 @ Cisco Systems, Inc. 12,437,388
59,850 @ Commonwealth Telephone Enterprises,
Inc. 2,631,605
105,100 @ Comverse Technology, Inc. 1,579,653
39,850 Harris Corp. 1,197,493
238,800 @ Nextel Communications, Inc. 4,317,504
47,750 Qualcomm, Inc. 1,707,063
36,050 @ SafeNet, Inc. 1,008,679
373,600 SBC Communications, Inc. 9,545,480
84,350 Scientific-Atlanta, Inc. 2,010,904
</Table>
<Table>
<Caption>
Shares Value
- ----------------------------------------------------------------------------
226,350 Sprint Corp.-FON Group $ 3,259,440
287,600 Verizon Communications, Inc. 11,345,820
--------------
55,650,496
--------------
TOYS/GAMES/HOBBIES: 0.3%
101,500 Hasbro, Inc. 1,775,235
127,450 Mattel, Inc. 2,411,354
--------------
4,186,589
--------------
TRANSPORTATION: 1.0%
64,600 FedEx Corp. 4,007,138
141,300 United Parcel Service, Inc. 9,000,810
--------------
13,007,948
--------------
Total Common Stock
(Cost $706,317,706) 761,503,777
--------------
PREFERRED STOCK: 0.2%
AUTO MANUFACTURERS 0.2%
62,560 General Motors Corp. 1,557,744
--------------
1,557,744
--------------
MEDIA: 0.0%
1,000 Cablevision Systems Corp. 102,750
9 @ Paxson Communications Corp. 88,875
850 Primedia, Inc. 81,813
--------------
273,438
--------------
TELECOMMUNICATIONS: 0.0%
45 @ Crown Castle Intl. Corp. 49,388
--------------
49,388
--------------
Total Preferred Stock
(Cost $1,881,175) 1,880,570
--------------
<Caption>
Number of
Warrants Value
- ----------------------------------------------------------------------------
WARRANTS: 0.0%
DISTRIBUTION/WHOLESALE: 0.0%
2,978 XX Timco Aviation Services --
--------------
Total Warrants (Cost $0) --
--------------
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
CORPORATE BONDS: 14.6%
ADVERTISING: 0.0%
$ 60,000 # RH Donnelley Finance Corp. I,
10.875%, due 12/15/12 70,200
90,000 # Vertis, Inc., 9.750%, due 04/01/09 94,050
--------------
164,250
--------------
AEROSPACE/DEFENSE: 0.2%
410,000 Boeing Co., 6.125%, due 02/15/33 429,612
45,000 L-3 Communications Corp.,
7.625%, due 06/15/12 49,725
1,321,000 Raytheon Co., 6.150%, due 11/01/08 1,495,408
60,000 Sequa Corp., 9.000%, due 08/01/09 63,900
70,000 # Titan Corp., 8.000%, due 05/15/11 74,550
65,000 # Vought Aircraft Industries, Inc.,
8.000%, due 07/15/11 65,650
--------------
2,178,845
--------------
AGRICULTURE: 0.2%
770,000 # Bunge Ltd. Finance Corp.,
5.875%, due 05/15/13 795,858
55,000 # DIMON, Inc., 7.750%, due 06/01/13 56,787
680,000 RJ Reynolds Tobacco Holdings, Inc.,
6.500%, due 06/01/07 681,774
505,000 RJ Reynolds Tobacco Holdings, Inc.,
7.750%, due 05/15/06 519,849
--------------
2,054,268
--------------
</Table>
See Accompanying Notes to Financial Statements
60
ING
VP
BALANCED
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
AIRLINES: 0.1%
$ 1,650,000 American Airlines, Inc.,
7.024%, due 10/15/09 $ 1,576,190
--------------
1,576,190
--------------
APPAREL: 0.0%
65,000 Levi Strauss & Co.,
11.625%, due 01/15/08 56,062
90,000 # Phillips-Van Heusen,
8.125%, due 05/01/13 92,812
--------------
148,874
--------------
AUTO MANUFACTURERS: 0.5%
2,435,000 Ford Motor Co.,
6.375%, due 02/01/29 1,974,310
1,350,000 Ford Motor Co.,
6.625%, due 10/01/28 1,126,435
135,000 Ford Motor Co.,
7.250%, due 10/01/08 141,342
1,863,000 General Motors Corp.,
6.750%, due 05/01/28 1,578,941
1,485,000 General Motors Corp.,
8.375%, due 07/15/33 1,461,700
--------------
6,282,728
--------------
AUTO PARTS & EQUIPMENT: 0.0%
40,000 # Advanced Accessory Systems LLC,
10.750%, due 06/15/11 42,600
45,000 Dana Corp.,
10.125%, due 03/15/10 49,837
60,000 Dura Operating Corp.,
8.625%, due 04/15/12 61,800
100,000 Lear Corp.,
8.110%, due 05/15/09 115,000
75,000 # TRW Automotive, Inc.,
11.000%, due 02/15/13 82,125
45,000 # UIS, Inc., 9.375%, due 06/15/13 46,912
--------------
398,274
--------------
BANKS: 1.0%
1,115,000 Bank One Corp.,
4.900%, due 04/30/15 1,153,382
310,000 BNY Capital I,
7.970%, due 12/31/26 360,884
2,520,000 @@,# Credit Suisse First Boston,
7.900%, due 05/01/07 2,865,885
335,000 Fleet Capital Trust II,
7.920%, due 12/11/26 381,354
40,000 FleetBoston Financial Corp.,
6.875%, due 01/15/28 46,399
840,000 M&T Bank Corp.,
3.850%, due 04/01/13 858,064
1,770,000 Mellon Capital I,
7.720%, due 12/01/26 2,090,779
925,000 NB Capital Trust IV,
8.250%, due 04/15/27 1,127,643
940,000 Sovereign Bank,
5.125%, due 03/15/13 972,991
880,000 US Bank National Association,
4.800%, due 04/15/15 909,637
1,030,000 US Bank National Association,
6.300%, due 07/15/08 1,190,534
180,000 # Wells Fargo Capital A,
7.730%, due 12/01/26 209,147
--------------
12,166,699
--------------
BUILDING MATERIALS: 0.0%
50,000 Nortek Holdings, Inc.,
9.875%, due 06/15/11 52,875
--------------
52,875
--------------
</Table>
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
CHEMICALS: 0.1%
$ 770,000 Dow Chemical Co.,
5.750%, due 11/15/09 $ 843,235
45,000 Equistar Chemicals LP/Equistar Funding
Corp.,
10.125%, due 09/01/08 46,575
30,000 # Equistar Chemicals LP/Equistar Funding
Corp.,
10.625%, due 05/01/11 30,900
290,000 IMC Global, Inc.,
10.875%, due 06/01/08 303,050
260,000 Lyondell Chemical Co.,
9.625%, due 05/01/07 256,100
--------------
1,479,860
--------------
COMMERCIAL SERVICES: 0.0%
70,000 Corrections Corp. of America,
7.500%, due 05/01/11 73,500
175,000 @@ Quebecor Media, Inc.,
11.125%, due 07/15/11 201,250
220,000 # United Rentals North America, Inc.,
10.750%, due 04/15/08 241,450
5,000 United Rentals North America, Inc.,
10.750%, due 04/15/08 5,487
--------------
521,687
--------------
COMPUTERS: 0.0%
50,000 @@ Seagate Technology Holdings,
8.000%, due 05/15/09 54,375
50,000 Unisys Corp., 8.125%, due 06/01/06 53,750
--------------
108,125
--------------
COSMETICS/PERSONAL CARE: 0.0%
130,000 Chattem, Inc.,
8.875%, due 04/01/08 134,875
--------------
134,875
--------------
DISTRIBUTION/WHOLESALE: 0.0%
120,000 # Aviall, Inc., 7.625%, due 07/01/11 122,250
2,871 Timco Aviation Services,
8.000%, due 01/02/07 16
--------------
122,266
--------------
DIVERSIFIED FINANCIAL SERVICES: 1.2%
1,285,000 Boeing Capital Corp.,
7.375%, due 09/27/10 1,524,845
930,000 CitiCorp. Capital I,
7.933%, due 02/15/27 1,092,558
195,000 # Corestates Capital Trust I,
8.000%, due 12/15/26 232,424
1,423,000 Countrywide Home Loans, Inc.,
4.250%, due 12/19/07 1,496,287
440,000 # Erac USA Finance Co.,
8.000%, due 01/15/11 524,981
1,095,000 # Farmers Exchange Capital,
7.200%, due 07/15/48 905,457
600,000 Ford Motor Credit Co.,
7.375%, due 10/28/09 629,939
805,000 General Electric Capital Corp.,
5.000%, due 06/15/07 877,302
2,245,000 General Electric Capital Corp.,
6.000%, due 06/15/12 2,538,545
55,000 # HLI Operating Co., Inc.,
10.500%, due 06/15/10 58,025
700,000 International Lease Finance Corp.,
5.875%, due 05/01/13 755,024
1,190,000 Lehman Brothers Holdings, Inc.,
4.000%, due 01/22/08 1,241,510
310,000 Morgan Stanley,
6.750%, due 04/15/11 363,163
</Table>
See Accompanying Notes to Financial Statements
61
ING
VP
BALANCED
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (CONTINUED)
$ 155,000 Nexstar Finance LLC,
12.000%, due 04/01/08 $ 173,600
2,070,000 @@,#,XX PF Export Receivables Master Trust,
3.748%, due 06/01/13 2,089,023
1,070,000 @@,#,XX PF Export Receivables Master Trust,
6.436%, due 06/01/15 1,075,350
30,000 Technical Olympic USA, Inc.,
10.375%, due 07/01/12 32,100
90,000 Technical Olympic USA, Inc.,
9.000%, due 07/01/10 97,650
15,000 # Universal City Development Partners,
11.750%, due 04/01/10 16,537
--------------
15,724,320
--------------
ELECTRIC: 1.1%
115,000 # AES Corp.,
8.750%, due 05/15/13 120,175
1,470,000 Arizona Public Service,
4.650%, due 05/15/15 1,465,103
600,000 # Consumers Energy Co.,
4.250%, due 04/15/08 621,117
1,235,000 Duke Capital Corp.,
6.250%, due 02/15/13 1,315,235
75,000 Homer City Funding LLC,
8.734%, due 10/01/26 82,312
730,000 Nisource Finance Corp.,
6.150%, due 03/01/13 785,029
1,005,000 Nisource Finance Corp.,
7.625%, due 11/15/05 1,099,416
1,320,000 # Ohio Edison Co.,
4.000%, due 05/01/08 1,355,427
1,150,000 # Ohio Power Co.,
6.600%, due 02/15/33 1,287,949
870,000 # Oncor Electric Delivery Co.,
7.250%, due 01/15/33 1,029,835
1,120,000 # PG&E Corp.,
6.875%, due 07/15/08 1,167,600
780,000 # PSEG Energy Holdings, Inc.,
7.750%, due 04/16/07 825,661
725,000 # Reliant Resources, Inc.,
9.250%, due 07/15/10 732,250
1,122,000 # TXU Energy Co.,
6.125%, due 03/15/08 1,204,514
710,000 # TXU Energy Co.,
7.000%, due 03/15/13 787,466
--------------
13,879,089
--------------
ELECTRICAL COMPONENTS & EQUIPMENT: 0.0%
50,000 @@,# FIMEP SA,
10.500%, due 02/15/13 56,000
55,000 @@ Legrand,
8.500%, due 02/15/25 56,925
--------------
112,925
--------------
ELECTRONICS: 0.0%
55,000 @@,# Flextronics Intl. Ltd.,
6.500%, due 05/15/13 53,212
55,000 Stoneridge, Inc.,
11.500%, due 05/01/12 61,875
--------------
115,087
--------------
</Table>
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
ENTERTAINMENT: 0.0%
$ 70,000 Carmike Cinemas, Inc.,
10.375%, due 02/01/09 $ 73,850
65,000 # Cinemark USA, Inc.,
9.000%, due 02/01/13 70,850
10,000 # Cinemark USA, Inc.,
9.000%, due 02/01/13 10,900
75,000 Regal Cinemas, Inc.,
9.375%, due 02/01/12 83,062
50,000 Six Flags, Inc.,
9.750%, due 06/15/07 49,750
40,000 # Speedway Motorsports, Inc.,
6.750%, due 06/01/13 41,600
--------------
330,012
--------------
ENVIRONMENTAL CONTROL: 0.0%
130,000 Allied Waste North America,
10.000%, due 08/01/09 138,775
225,000 Allied Waste North America,
7.875%, due 04/15/13 236,531
115,000 Allied Waste North America,
8.500%, due 12/01/08 124,200
--------------
499,506
--------------
FOOD: 0.8%
190,000 Ahold Finance USA, Inc.,
8.250%, due 07/15/10 195,700
580,000 ConAgra Foods, Inc.,
7.500%, due 09/15/05 647,117
135,000 # Del Monte Corp.,
8.625%, due 12/15/12 143,775
90,000 # Domino's, Inc.,
8.250%, due 07/01/11 93,375
110,000 Great Atlantic & Pacific Tea Co.,
9.125%, due 12/15/11 103,400
105,000 Ingles Markets, Inc.,
8.875%, due 12/01/11 106,181
480,000 Kroger Co.,
5.500%, due 02/01/13 507,614
701,000 Kroger Co.,
7.250%, due 06/01/09 819,688
705,000 Kroger Co.,
7.500%, due 04/01/31 838,840
125,000 Michael Foods, Inc.,
11.750%, due 04/01/11 144,375
140,000 Pilgrims Pride Corp.,
9.625%, due 09/15/11 150,150
70,000 Roundy's, Inc.,
8.875%, due 06/15/12 73,500
1,140,000 Safeway, Inc.,
4.800%, due 07/16/07 1,193,291
610,000 Safeway, Inc.,
5.800%, due 08/15/12 655,276
50,000 # Smithfield Foods, Inc.,
7.750%, due 05/15/13 53,875
1,940,000 Supervalu, Inc.,
7.875%, due 08/01/09 2,264,626
1,955,000 Tyson Foods, Inc.,
6.625%, due 10/01/04 2,027,051
85,000 Winn-Dixie Stores, Inc.,
8.875%, due 04/01/08 90,525
--------------
10,108,359
--------------
FOREST PRODUCTS & PAPER: 0.4%
370,000 @@ Abitibi-Consolidated, Inc.,
6.950%, due 04/01/08 389,809
1,340,000 @@ Abitibi-Consolidated, Inc.,
6.950%, due 12/15/06 1,417,992
200,000 Appleton Papers, Inc.,
12.500%, due 12/15/08 225,000
810,000 Fort James Corp.,
6.625%, due 09/15/04 828,225
150,000 Georgia-Pacific Corp.,
8.125%, due 05/15/11 154,875
175,000 # Georgia-Pacific Corp.,
8.875%, due 02/01/10 190,750
225,000 @@ Tembec Industries, Inc.,
7.750%, due 03/15/12 219,375
</Table>
See Accompanying Notes to Financial Statements
62
ING
VP
BALANCED
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
FOREST PRODUCTS & PAPER (CONTINUED)
$ 50,000 @@ Tembec Industries, Inc.,
8.500%, due 02/01/11 $ 49,750
1,121,000 Weyerhaeuser Co.,
6.875%, due 12/15/33 1,228,080
--------------
4,703,856
--------------
HEALTHCARE -- PRODUCTS: 0.0%
80,000 # Medex, Inc.,
8.875%, due 05/15/13 83,400
--------------
83,400
--------------
HEALTHCARE -- SERVICES: 0.0%
70,000 Alliance Imaging, Inc.,
10.375%, due 04/15/11 73,500
100,000 Triad Hospitals, Inc.,
8.750%, due 05/01/09 106,875
--------------
180,375
--------------
HOME BUILDERS: 0.0%
65,000 # K Hovnanian Enterprises, Inc.,
7.750%, due 05/15/13 68,412
55,000 KB Home,
7.750%, due 02/01/10 59,744
25,000 Meritage Corp.,
9.750%, due 06/01/11 27,750
30,000 # Meritage Corp.,
9.750%, due 06/01/11 33,300
55,000 Standard-Pacific Corp.,
7.750%, due 03/15/13 58,437
55,000 Toll Corp.,
8.250%, due 02/01/11 61,600
80,000 WCI Communities, Inc.,
10.625%, due 02/15/11 88,800
--------------
398,043
--------------
INSURANCE: 0.9%
1,695,000 # AIG SunAmerica Global Financing VII,
5.850%, due 08/01/08 1,913,272
2,420,000 CNA Financial Corp.,
6.250%, due 11/15/03 2,454,296
855,000 # John Hancock Global Funding II,
5.250%, due 02/25/15 901,373
960,000 # Monumental Global Funding II,
3.850%, due 03/03/08 993,316
550,000 # New York Life Insurance Co.,
5.875%, due 05/15/33 579,295
940,000 Travelers Property Casualty Corp.,
6.375%, due 03/15/33 1,030,954
3,342,000 # Zurich Capital Trust I,
8.376%, due 06/01/37 3,683,379
--------------
11,555,885
--------------
</Table>
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
IRON/STEEL: 0.0%
$ 280,000 AK Steel Corp.,
7.875%, due 02/15/09 $ 239,400
55,000 United States Steel Corp.,
9.750%, due 05/15/10 56,100
--------------
295,500
--------------
LEISURE TIME: 0.0%
75,000 @@ Royal Caribbean Cruises Ltd.,
8.000%, due 05/15/10 78,375
40,000 # Worldspan LP/WS Financing Corp.,
9.625%, due 06/15/11 41,400
--------------
119,775
--------------
LODGING: 0.2%
215,000 Ameristar Casinos, Inc.,
10.750%, due 02/15/09 244,831
105,000 Aztar Corp.,
9.000%, due 08/15/11 114,187
80,000 Extended Stay America, Inc.,
9.875%, due 06/15/11 86,400
45,000 Host Marriott Corp.,
7.875%, due 08/01/05 46,012
30,000 Host Marriott Corp.,
7.875%, due 08/01/08 30,600
215,000 Mandalay Resort Group,
9.500%, due 08/01/08 247,250
300,000 MGM Mirage,
8.375%, due 02/01/11 342,750
50,000 MGM Mirage,
8.500%, due 09/15/10 59,000
115,000 # Park Place Entertainment Corp.,
7.000%, due 04/15/13 123,625
270,000 Park Place Entertainment Corp.,
7.875%, due 03/15/10 291,600
200,000 Starwood Hotels & Resorts Worldwide,
Inc.,
7.875%, due 05/01/12 220,000
70,000 Venetian Casino Resort LLC,
11.000%, due 06/15/10 79,275
--------------
1,885,530
--------------
MACHINERY -- DIVERSIFIED: 0.0%
25,000 # Cummins, Inc.,
9.500%, due 12/01/10 28,500
--------------
28,500
--------------
MEDIA: 0.8%
790,000 AMFM, Inc.,
8.000%, due 11/01/08 922,325
1,315,000 AOL Time Warner, Inc.,
6.875%, due 05/01/12 1,504,269
95,000 @@ CanWest Media, Inc.,
10.625%, due 05/15/11 108,775
185,000 @@,# CanWest Media, Inc.,
7.625%, due 04/15/13 197,487
75,000 Charter Communications Holdings LLC,
0.000%, due 05/15/11 38,250
295,000 Charter Communications Holdings LLC,
9.625%, due 11/15/09 216,825
1,350,000 # COX Enterprises, Inc.,
4.375%, due 05/01/08 1,405,320
110,000 CSC Holdings, Inc.,
10.500%, due 05/15/16 120,450
50,000 CSC Holdings, Inc.,
7.625%, due 04/01/11 50,750
55,000 CSC Holdings, Inc.,
7.625%, due 07/15/18 55,137
155,000 Dex Media East Finance Co.,
12.125%, due 11/15/12 184,062
55,000 Dex Media East Finance Co.,
9.875%, due 11/15/09 61,600
150,000 # DirecTV Holdings LLC,
8.375%, due 03/15/13 168,000
175,000 Granite Broadcasting Corp.,
8.875%, due 05/15/08 171,937
105,000 Hollinger Intl. Publishing,
9.000%, due 12/15/10 112,875
50,000 @@,# Hollinger, Inc.,
11.875%, due 03/01/11 55,750
125,000 Insight Communications,
0.000%, due 02/15/11 104,375
770,000 InterActiveCorp.,
7.000%, due 01/15/13 888,471
230,000 Mediacom Broadband LLC,
11.000%, due 07/15/13 257,025
630,000 News America Holdings,
7.600%, due 10/11/15 763,964
80,000 # Nexstar Finance Holdings LLC, Inc.,
0.000%, due 04/01/13 53,700
</Table>
See Accompanying Notes to Financial Statements
63
ING
VP
BALANCED
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
MEDIA (CONTINUED)
$ 75,000 Paxson Communications Corp.,
10.750%, due 07/15/08 $ 81,000
70,000 # Primedia, Inc.,
8.000%, due 05/15/13 72,100
95,000 Primedia, Inc.,
8.875%, due 05/15/11 100,462
65,000 Radio One, Inc.,
8.875%, due 07/01/11 71,825
30,000 @@,# Rogers Cable, Inc.,
6.250%, due 06/15/13 30,075
20,000 Salem Communications Holding Corp.,
9.000%, due 07/01/11 21,625
60,000 # Sinclair Broadcast Group, Inc.,
8.000%, due 03/15/12 64,350
35,000 Susquehanna Media Co.,
8.500%, due 05/15/09 37,100
1,350,000 Time Warner, Inc.,
6.950%, due 01/15/28 1,450,521
165,000 @@,# Vivendi Universal SA,
9.250%, due 04/15/10 188,512
180,000 Young Broadcasting, Inc.,
10.000%, due 03/01/11 195,750
--------------
9,754,667
--------------
MINING: 0.1%
135,000 Compass Minerals Group, Inc.,
10.000%, due 08/15/11 151,875
540,000 @@,# WMC Finance USA,
5.125%, due 05/15/13 558,786
--------------
710,661
--------------
MISCELLANEOUS MANUFACTURING: 0.1%
75,000 SPX Corp.,
7.500%, due 01/01/13 81,562
55,000 # Tenneco Automotive, Inc.,
10.250%, due 07/15/13 55,962
775,000 @@ Tyco Intl. Group SA,
6.125%, due 01/15/09 809,875
430,000 @@ Tyco Intl. Group SA,
6.125%, due 11/01/08 451,500
205,000 @@ Tyco Intl. Group SA,
6.750%, due 02/15/11 218,325
--------------
1,617,224
--------------
MULTI-NATIONAL: 0.1%
1,480,000 @@ Corp. Andina de Fomento CAF,
5.200%, due 05/21/13 1,502,779
280,000 @@ Corp. Andina de Fomento CAF,
6.875%, due 03/15/12 319,402
--------------
1,822,181
--------------
OFFICE/BUSINESS EQUIPMENT: 0.0%
115,000 Xerox Corp.,
7.625%, due 06/15/13 115,719
--------------
115,719
--------------
</Table>
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
OIL & GAS: 1.1%
$ 1,115,000 Amerada Hess Corp.,
5.900%, due 08/15/06 $ 1,227,379
870,000 Amerada Hess Corp.,
7.125%, due 03/15/33 993,514
565,000 @@ Anderson Exploration Ltd.,
6.750%, due 03/15/11 655,191
165,000 # Chesapeake Energy Corp.,
7.500%, due 09/15/13 176,137
1,410,000 # Enterprise Products Partners LP,
6.875%, due 03/01/33 1,602,368
60,000 Forest Oil Corp.,
8.000%, due 06/15/08 64,500
3,799,000 @@ Husky Oil Co.,
8.900%, due 08/15/28 4,406,840
50,000 Nuevo Energy Co.,
9.500%, due 06/01/08 52,687
800,000 Ocean Energy, Inc.,
4.375%, due 10/01/07 842,032
1,732,000 Pemex Project Funding Master Trust,
7.375%, due 12/15/14 1,900,870
165,000 Swift Energy Co.,
9.375%, due 05/01/12 180,262
690,000 Valero Energy Corp.,
8.750%, due 06/15/30 886,731
310,000 @@ Western Oil Sands, Inc.,
8.375%, due 05/01/12 347,200
175,000 Westport Resources Corp.,
8.250%, due 11/01/11 192,500
--------------
13,528,211
--------------
OIL & GAS SERVICES: 0.0%
195,000 Hanover Equipment Trust,
8.500%, due 09/01/08 205,725
80,000 Hanover Equipment Trust,
8.750%, due 09/01/11 84,400
--------------
290,125
--------------
OTHER ABS: 0.5%
5,290,000 PP&L Transition Bond Co LLC,
7.050%, due 06/25/09 6,114,208
--------------
6,114,208
--------------
PACKAGING & CONTAINERS: 0.3%
105,000 Ball Corp.,
6.875%, due 12/15/12 111,825
140,000 # BWAY Finance Corp.,
10.000%, due 10/15/10 142,800
170,000 @@,# Crown European Holdings SA,
10.875%, due 03/01/13 186,150
50,000 @@,# Norampac, Inc.,
6.750%, due 06/01/13 52,750
110,000 # Owens-Brockway,
8.250%, due 05/15/13 115,500
240,000 Owens-Brockway,
8.875%, due 02/15/09 261,600
465,000 # Sealed Air Corp.,
5.375%, due 04/15/08 488,526
860,000 # Sealed Air Corp.,
5.625%, due 07/15/13 869,168
1,560,000 # Sealed Air Corp.,
6.950%, due 05/15/09 1,725,299
195,000 Smurfit-Stone Container Corp.,
8.250%, due 10/01/12 210,112
--------------
4,163,730
--------------
PHARMACEUTICALS: 0.0%
170,000 AmerisourceBergen Corp.,
7.250%, due 11/15/12 185,300
--------------
185,300
--------------
PIPELINES: 0.4%
90,000 # ANR Pipeline Co.,
8.875%, due 03/15/10 98,775
1,975,000 CenterPoint Energy Resources Corp.,
8.125%, due 07/15/05 2,140,276
1,035,000 Duke Energy Field Services LLC,
7.500%, due 08/16/05 1,132,449
115,000 # El Paso Production Holding Co.,
7.750%, due 06/01/13 115,287
90,000 # GulfTerra Energy Partners LP,
8.500%, due 06/01/10 96,750
985,000 Kinder Morgan Energy Partners LP,
7.300%, due 08/15/33 1,186,853
</Table>
See Accompanying Notes to Financial Statements
64
ING
VP
BALANCED
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
PIPELINES (CONTINUED)
$ 70,000 Southern Natural Gas Co.,
7.350%, due 02/15/31 $ 71,575
60,000 Southern Natural Gas Co.,
8.000%, due 03/01/32 65,175
70,000 Tennessee Gas Pipeline Co.,
8.375%, due 06/15/32 76,475
135,000 Transcontinental Gas Pipe LN,
8.875%, due 07/15/12 153,225
115,000 Williams Cos., Inc.,
8.625%, due 06/01/10 120,750
--------------
5,257,590
--------------
REAL ESTATE: 0.3%
350,000 EOP Operating LP,
7.250%, due 02/15/18 413,643
1,430,000 EOP Operating LP,
7.750%, due 11/15/07 1,676,458
510,000 Liberty Property-LP,
7.250%, due 03/15/11 602,879
1,007,000 Liberty Property-LP,
7.750%, due 04/15/09 1,217,011
--------------
3,909,991
--------------
REITS: 0.3%
90,000 Felcor Lodging LP,
8.500%, due 06/01/11 91,125
20,000 Host Marriott LP,
9.500%, due 01/15/07 21,600
65,000 # La Quinta Properties, Inc.,
8.875%, due 03/15/11 69,550
935,000 Liberty Property Trust,
6.375%, due 08/15/12 1,046,205
730,000 # Simon Property Group LP,
4.875%, due 03/18/10 760,245
1,075,000 Simon Property Group LP,
6.375%, due 11/15/07 1,200,509
615,000 Simon Property Group LP,
7.375%, due 06/15/18 736,784
--------------
3,926,018
--------------
</Table>
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
RETAIL: 0.1%
$ 40,000 Dollar General Corp.,
8.625%, due 06/15/10 $ 44,450
195,000 JC Penney Co., Inc.,
7.600%, due 04/01/07 205,725
55,000 # Rent-A-Center, Inc.,
7.500%, due 05/01/10 58,025
150,000 Rite Aid Corp.,
7.625%, due 04/15/05 149,625
65,000 # Rite Aid Corp.,
9.250%, due 06/01/13 64,675
130,000 # Star Gas Partners LP,
10.250%, due 02/15/13 135,850
105,000 Yum! Brands, Inc.,
8.875%, due 04/15/11 124,950
--------------
783,300
--------------
SEMICONDUCTORS: 0.0%
25,000 # AMI Semiconductor, Inc.,
10.750%, due 02/01/13 28,375
20,000 # Amkor Technology, Inc.,
7.750%, due 05/15/13 19,100
--------------
47,475
--------------
SOVEREIGN: 2.4%
1,285,000 @@ Argentina Bonos,
0.000%, due 08/03/12 770,101
2,214,000 @@ Brazilian Government Intl. Bond,
0.000%, due 04/15/12 1,676,662
184,000 @@ Brazilian Government Intl. Bond,
10.000%, due 01/16/07 189,520
424,000 @@ Brazilian Government Intl. Bond,
10.250%, due 06/17/13 405,980
1,517,000 @@ Brazilian Government Intl. Bond,
11.000%, due 08/17/40 1,388,055
717,000 @@ Bulgaria Government Intl. Bond,
0.000%, due 01/15/15 849,143
250 @@ Central Bank of Nigeria,
0.000%, due 11/15/20 0
500,000 @@ Central Bank of Nigeria,
0.000%, due 11/15/20 430,000
485,000 @@ Chile Government Intl. Bond,
5.500%, due 01/15/13 514,342
507,000 @@ Colombia Government Intl. Bond,
0.000%, due 02/25/20 632,483
1,307,000 @@ Colombia Government Intl. Bond,
10.000%, due 01/23/12 1,467,107
726,000 @@ Dominican Republic Intl. Bond,
0.000%, due 01/23/13 677,576
713,000 @@ Ecuador Government Intl. Bond,
0.000%, due 08/15/30 456,320
516,000 @@ El Salvador Government Intl. Bond,
0.000%, due 01/24/23 544,380
4,725,000 Fannie Mae,
2.375%, due 04/13/06 4,772,236
720,000 @@ Mexico Government Intl. Bond,
4.625%, due 10/08/08 736,920
1,135,000 @@ Mexico Government Intl. Bond,
6.625%, due 03/03/15 1,208,775
1,950,667 @@ Panama Government Intl. Bond,
0.000%, due 07/17/16 1,577,602
306,000 @@ Peru Government Intl. Bond,
0.000%, due 03/07/17 239,063
675,000 @@ Peru Government Intl. Bond,
9.125%, due 02/21/12 721,237
1,613,000 @@ Philippine Government Intl. Bond,
9.875%, due 01/15/19 1,784,381
3,800,000 @@ Russia Government Intl. Bond,
0.000%, due 03/31/30 3,727,990
2,021,000 @@ Turkey Government Intl. Bond,
12.375%, due 06/15/09 2,182,680
301,655 @@ Ukraine Government Intl. Bond,
0.000%, due 03/15/07 332,574
350,000 @@,# Ukraine Government Intl. Bond,
7.650%, due 06/11/13 348,908
430,000 @@ Uruguay Government Intl. Bond,
7.500%, due 03/15/15 336,475
964,286 @@ Venezuela Government Intl. Bond,
0.000%, due 12/18/07 767,523
2,124,000 @@ Venezuela Government Intl. Bond,
9.250%, due 09/15/27 1,577,070
--------------
30,315,103
--------------
TELECOMMUNICATIONS: 1.4%
75,000 American Tower Corp.,
9.375%, due 02/01/09 75,750
90,000 American Tower Escrow Corp.,
0.000%, due 08/01/08 58,500
801,000 AT&T Corp.,
6.000%, due 03/15/09 858,344
2,070,000 AT&T Corp.,
7.800%, due 11/15/11 2,370,701
515,000 AT&T Corp.,
8.500%, due 11/15/31 585,984
420,000 AT&T Wireless Services, Inc.,
8.125%, due 05/01/12 507,032
115,000 Block Communications, Inc.,
9.250%, due 04/15/09 125,925
85,000 # Centennial Cellular Operating Co.,
10.125%, due 06/15/13 84,575
110,000 Crown Castle Intl. Corp.,
9.375%, due 08/01/11 114,950
</Table>
See Accompanying Notes to Financial Statements
65
ING
VP
BALANCED
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
TELECOMMUNICATIONS (CONTINUED)
$ 750,000 @@ Deutsche Telekom Intl. Finance BV,
8.250%, due 06/15/05 $ 836,805
45,000 Dobson Communications Corp.,
10.875%, due 07/01/10 48,825
40,000 Dobson/Sygnet Communications Co.,
12.250%, due 12/15/08 43,000
160,000 Insight Capital, Inc.,
10.500%, due 11/01/10 176,400
420,000 Nextel Communications, Inc.,
9.375%, due 11/15/09 453,075
30,000 Nextel Partners, Inc.,
12.500%, due 11/15/09 33,900
50,000 # Nextel Partners, Inc.,
8.125%, due 07/01/11 50,125
205,000 PanAmSat Corp.,
8.500%, due 02/01/12 222,937
180,000 Qwest Communications Intl.,
7.500%, due 11/01/08 167,400
100,000 # Qwest Corp.,
8.875%, due 03/15/12 112,250
150,000 # Qwest Services Corp.,
14.000%, due 12/15/14 174,750
115,000 @@ Rogers Wireless Communications, Inc.,
9.625%, due 05/01/11 132,825
70,000 # Spectrasite, Inc.,
8.250%, due 05/15/10 73,150
970,000 Sprint Capital Corp.,
6.000%, due 01/15/07 1,043,410
2,130,000 Sprint Capital Corp.,
6.875%, due 11/15/28 2,144,573
705,000 Sprint Capital Corp.,
6.900%, due 05/01/19 740,606
3,095,000 TCI Communications Finance,
9.650%, due 03/31/27 3,698,525
145,000 @@ TELUS Corp.,
8.000%, due 06/01/11 168,200
145,000 # Triton PCS, Inc.,
8.500%, due 06/01/13 156,600
40,000 Triton PCS, Inc.,
9.375%, due 02/01/11 41,100
1,566,000 Verizon Global Funding Corp.,
7.375%, due 09/01/12 1,914,028
930,000 Verizon Wireless Capital LLC,
5.375%, due 12/15/06 1,022,433
--------------
18,236,678
--------------
TRANSPORTATION: 0.0%
1,756 Chicago & Northwest Co.,
6.250%, due 07/30/12 1,925
--------------
1,925
--------------
Total Corporate Bonds
(Cost $178,975,684) 188,190,084
--------------
COLLATERALIZED MORTGAGE OBLIGATIONS AND ASSET BACKED SECURITIES: 4.2%
AUTOMOBILE: 0.1%
300,000 Capital Auto Receivables Asset Trust,
2.750%, due 04/16/07 307,053
1,590,000 Nissan Auto Receivables Owner Trust,
2.610%, due 07/15/08 1,615,589
--------------
1,922,642
--------------
COMMERCIAL: 2.4%
2,060,000 Chase Manhattan Bank-First Union
National Bank,
7.439%, due 08/15/31 2,485,030
1,500,000 XX CS First Boston Mortgage Securities
Corp., 3.562%, due 05/15/38 1,479,204
1,363,207 CS First Boston Mortgage Securities
Corp., 3.727%, due 03/15/35 1,394,235
3,600,000 First Union National Bank,
6.136%, due 12/15/10 4,131,037
500,000 Ge Capital Commercial Mortgage Corp.,
6.531%, due 05/15/33 586,691
200,000 JP Morgan Chase Commercial Mortgage
Securities Corp.,
6.162%, due 05/12/34 229,653
3,120,000 JP Morgan Chase Commercial Mortgage
Securities Corp.,
6.244%, due 04/15/35 3,547,935
2,340,000 LB-UBS Commercial Mortgage Trust,
4.659%, due 12/15/26 2,474,447
3,800,000 LB-UBS Commercial Mortgage Trust,
6.133%, due 12/15/30 4,360,089
1,850,000 LB-UBS Commercial Mortgage Trust,
6.226%, due 03/15/26 2,117,333
3,000,000 LB-UBS Commercial Mortgage Trust,
7.370%, due 08/15/26 3,646,564
</Table>
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
$ 3,120,000 Mortgage Capital Funding, Inc.,
6.663%, due 03/18/30 $ 3,586,496
207,892 Prudential Commercial Mortgage Trust,
3.669%, due 02/11/36 212,180
--------------
30,250,894
--------------
CREDIT CARD: 0.2%
775,000 Citibank Credit Card Issuance Trust,
5.650%, due 06/16/08 852,055
1,270,000 Fleet Credit Card Master Trust II,
2.400%, due 07/15/08 1,288,137
--------------
2,140,192
--------------
HOME EQUITY: 0.1%
240,000 Equity One, Inc.,
2.976%, due 09/25/33 243,782
940,000 Residential Funding Mortgage
Securities II,
3.450%, due 01/25/16 963,229
--------------
1,207,011
--------------
OTHER: 0.1%
1,190,000 XX Residential Asset Mortgage Products,
Inc.,
2.140%, due 06/25/33 1,182,191
--------------
1,182,191
--------------
WHOLE LOAN COLLATERAL: 1.3%
4,377,724 Bank of America Mortgage Securities,
4.413%, due 03/25/33 4,453,259
807,211 XX Bear Stearns Adjustable Rate Mortgage
Trust,
6.020%, due 01/25/32 818,562
5,695,635 MASTR Alternative Loans Trust,
6.500%, due 05/25/33 5,884,303
5,420,000 XX Washington Mutual,
5.000%, due 06/25/18 5,541,950
--------------
16,698,074
--------------
Total Collateralized Mortgage
Obligations and Asset Backed
Securities
(Cost $51,174,696) 53,401,004
--------------
U.S. GOVERNMENT AGENCY OBLIGATIONS: 11.4%
FEDERAL HOME LOAN MORTGAGE CORPORATION: 3.1%
2,625,000 3.960%, due 06/25/33 2,678,883
993,000 4.000%, due 04/15/21 1,008,458
4,725,000 4.250%, due 06/15/05 4,985,437
9,420,441 5.500%, due 05/01/23 9,758,907
</Table>
See Accompanying Notes to Financial Statements
66
ING
VP
BALANCED
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (CONTINUED)
$ 7,137,690 5.500%, due 05/15/31 $ 7,308,797
2,510,000 5.875%, due 03/21/11 2,827,864
10,850,000 6.000%, due 09/15/31 11,246,698
--------------
39,815,044
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION: 6.0%
240,000 2.859%, due 12/26/29 243,201
4,710,000 2.875%, due 05/19/08 4,730,771
7,331,000 4.000%, due 06/25/16 7,427,084
8,940,000 4.600%, due 06/05/18 8,933,134
11,700,000 5.000%, due 08/25/18 12,061,975
1,800,000 5.000%, due 10/25/33 TBA 1,814,625
8,380,000 5.500%, due 10/15/33 TBA 8,610,450
1,600,000 6.000%, due 07/01/16 1,670,499
10,870,000 6.000%, due 10/15/32 TBA 11,284,419
2,244,670 6.500%, due 11/01/28 2,339,632
2,894,600 7.000%, due 06/01/31 3,054,238
1,110,976 7.000%, due 11/01/29 1,170,880
1,631,215 7.500%, due 01/25/48 1,821,354
1,297,976 7.500%, due 06/25/32 1,449,273
483,114 7.500%, due 10/01/30 513,444
525,706 7.500%, due 10/01/30 558,709
509,425 7.500%, due 11/01/30 541,407
495,015 7.500%, due 11/01/30 526,092
3,722,789 8.500%, due 01/01/25 4,056,376
1,359,214 8.500%, due 11/01/23 1,482,526
2,432,335 9.500%, due 10/01/16 2,706,952
--------------
76,997,041
--------------
GOVERNMENT NATIONAL MORTGAGE: 2.3%
149,162 5.000%, due 12/20/29 155,007
578,678 5.375%, due 04/20/28 600,074
5,320,999 6.500%, due 05/15/32 TBA 5,588,709
1,053,584 6.500%, due 10/15/31 1,106,592
1,088,283 7.000%, due 04/15/32 1,149,839
1,308,356 7.000%, due 05/15/31 1,382,359
1,183,778 7.000%, due 05/15/32 TBA 1,250,735
2,139,519 7.000%, due 09/15/24 2,276,253
934,305 7.000%, due 10/15/24 993,916
2,227,173 7.000%, due 10/15/24 2,369,274
571,597 7.000%, due 11/15/24 608,158
1,241,633 7.500%, due 11/20/30 1,312,318
6,031,634 7.500%, due 12/15/23 6,463,256
306,382 8.000%, due 07/15/24 332,834
4,104,466 8.000%, due 12/15/17 4,488,565
--------------
30,077,889
--------------
Total U.S. Government Agency
Obligations
(Cost $145,347,957) 146,889,974
--------------
U.S. TREASURY OBLIGATIONS: 9.2%
U.S. TREASURY BONDS: 1.9%
7,945,000 5.375%, due 02/15/31 8,948,994
12,980,000 6.250%, due 08/15/23 15,903,550
--------------
24,852,544
--------------
U.S. TREASURY NOTES: 7.3%
62,006,000 S 1.250%, due 05/31/05 61,989,072
650,000 2.000%, due 05/15/06 657,110
1,932,000 2.625%, due 05/15/08 1,950,265
5,300,000 3.000%, due 01/31/04 5,363,563
5,000,000 3.000%, due 11/30/03 5,043,755
6,518,000 3.625%, due 05/15/13 6,570,965
11,480,000 3.625%, due 08/31/03 11,534,266
557,000 5.875%, due 11/15/04 592,966
--------------
93,701,962
--------------
Total U.S. Treasury Obligations
(Cost $119,173,201) 118,554,506
--------------
Total Long-Term Investments
(Cost $1,202,870,419) 1,270,419,915
--------------
SHORT-TERM INVESTMENTS: 4.1%
COMMERCIAL PAPER: 4.1%
12,000,000 S Credit Suisse First Boston,
1.250%, due 07/21/03 11,991,667
13,000,000 S Diamlerchrysler,
1.390%, due 07/21/03 12,989,961
8,000,000 S Ford Motor Credit Corp.,
1.220%, due 07/28/03 7,992,680
8,000,000 S General Motors Accept.,
1.230%, due 08/07/03 7,989,887
6,000,000 Kraft Foods, Inc.,
1.360%, due 08/01/03 5,992,973
6,000,000 S Kraft Foods, Inc.,
1.450%, due 07/25/03 5,994,200
--------------
52,951,368
--------------
Total Commercial Paper
(Cost $52,951,368) 52,951,368
--------------
REPURCHASE AGREEMENT: 0.0%
79,000 State Street Repurchase Agreement
dated 06/30/03, 1.100%, due 07/01/03,
$79,002 to be received upon
repurchase (Collateralized by $85,000
Federal Home Loan Bank, 1.690%,
Market Value $82,861 due 12/29/03) 79,000
--------------
Total Repurchase Agreement
(Cost $79,000) 79,000
--------------
Total Short-Term Investments
(Cost $53,030,368) 53,030,368
--------------
</Table>
<Table>
TOTAL INVESTMENTS IN SECURITIES
(COST $1,255,900,787)* 102.9% $1,323,450,283
OTHER ASSETS AND LIABILITIES-NET (2.9) (37,025,601)
------ --------------
NET ASSETS 100.0% $1,286,424,682
====== ==============
</Table>
<Table>
@ Non-income producing security
@@ Foreign Issuer
A Related Party
# Securities purchased pursuant to Rule 144A, under the
Securities Act of 1933 and may not be resold subject to that
rule except to qualified institutional buyers
XX Value of securities obtained from one or more dealers making
markets in the securities which have been adjusted based on
the Portfolio's valuation procedures
TBA To be announced
S Segregated securities for swaps and when-issued or delayed
delivery securities held at June 30, 2003
REITs Real Estate Investment Trusts
* Cost for federal income tax purposes is the same as for
financial statement purposes. Net unrealized appreciation
consists of:
</Table>
<Table>
Gross Unrealized Appreciation $ 86,577,135
Gross Unrealized Depreciation (19,027,639)
------------
Net Unrealized Appreciation $ 67,549,496
============
</Table>
See Accompanying Notes to Financial Statements
67
ING
VP
BALANCED
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Information concerning open swap contract at June 30, 2003 is shown below:
<Table>
SWAP COUNTER PARTY MERRILL LYNCH
Notional Principal $2,235,000
Fund will Pay: Notional amount times (libor rate + 0.90%) times actual days
divided by 360
Effective LIBOR rate: 1.2788%
Fund will receive: Notional amount times Index Return [1]. Positive amounts are
paid to the Fund. The absolute value of negative amounts are
paid to Merrill Lynch Capital Services.
Index: U.S. High Yield Cash Pay Index
Payment Date: Quarterly on the 2nd
Net unrealized gain: $194,138
Termination date: July 2, 2003
</Table>
<Table>
[1] Index return calculation: (Ending Index Level -- Starting
Index Level) / Starting Index Level.
</Table>
See Accompanying Notes to Financial Statements
68
ING
VP
GROWTH &
INCOME PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Shares Value
- ----------------------------------------------------------------------------
COMMON STOCK: 98.5%
AEROSPACE/DEFENSE: 1.3%
1,018,200 Boeing Co. $ 34,944,624
257,000 @ L-3 Communications Holdings, Inc. 11,176,930
--------------
46,121,554
--------------
APPAREL: 1.0%
1,232,100 @ Jones Apparel Group, Inc. 36,051,246
--------------
36,051,246
--------------
BANKS: 6.2%
1,303,000 Bank of America Corp. 102,976,090
232,200 Charter One Financial, Inc. 7,239,996
1,478,800 National City Corp. 48,371,548
1,505,500 Wachovia Corp. 60,159,780
--------------
218,747,414
--------------
BEVERAGES: 2.1%
1,074,000 Anheuser-Busch Cos., Inc. 54,827,700
221,800 Coca-Cola Co. 10,293,738
224,300 PepsiCo, Inc. 9,981,350
--------------
75,102,788
--------------
BIOTECHNOLOGY: 2.0%
1,065,100 @ Amgen, Inc. 70,765,244
--------------
70,765,244
--------------
BUILDING MATERIALS: 1.3%
634,600 @ American Standard Cos., Inc. 46,915,978
--------------
46,915,978
--------------
COMMERCIAL SERVICES: 2.4%
2,332,400 @ Cendant Corp. 42,729,568
818,700 Equifax, Inc. 21,286,200
465,000 H&R Block, Inc. 20,111,250
--------------
84,127,018
--------------
COMPUTERS: 5.6%
565,800 @ Affiliated Computer Services, Inc. 25,874,034
592,400 @ Computer Sciences Corp. 22,582,288
640,700 @ Dell Computer Corp. 20,476,772
3,204,300 Hewlett-Packard Co. 68,251,590
680,600 International Business Machines Corp. 56,149,500
389,100 @ Unisys Corp. 4,778,148
--------------
198,112,332
--------------
COSMETICS/PERSONAL CARE: 3.3%
1,287,000 Procter & Gamble Co. 114,774,660
--------------
114,774,660
--------------
DIVERSIFIED FINANCIAL SERVICES: 12.2%
985,000 Bear Stearns Cos., Inc. 71,333,700
2,705,600 Citigroup, Inc. 115,799,680
667,300 Countrywide Financial Corp. 46,424,061
391,300 Fannie Mae 26,389,272
622,900 Goldman Sachs Group, Inc. 52,167,875
1,889,200 JP Morgan Chase & Co. 64,572,856
1,170,600 Merrill Lynch & Co., Inc. 54,643,608
--------------
431,331,052
--------------
ELECTRIC: 1.6%
506,800 Dominion Resources, Inc. 32,572,036
358,800 FPL Group, Inc. 23,985,780
--------------
56,557,816
--------------
FOOD: 2.0%
2,043,300 Kellogg Co. 70,228,221
--------------
70,228,221
--------------
</Table>
<Table>
<Caption>
Shares Value
- ----------------------------------------------------------------------------
HEALTHCARE -- PRODUCTS: 5.6%
1,020,300 Bausch & Lomb, Inc. $ 38,261,250
754,100 Becton Dickinson & Co. 29,296,785
522,900 CR Bard, Inc. 37,287,999
1,790,000 Johnson & Johnson 92,543,000
--------------
197,389,034
--------------
HOUSEHOLD PRODUCTS/WARES: 0.6%
381,100 Fortune Brands, Inc. 19,893,420
--------------
19,893,420
--------------
INSURANCE: 2.5%
563,800 Aflac, Inc. 17,336,850
257,800 AMBAC Financial Group, Inc. 17,079,250
426,700 American Intl. Group 23,545,306
222,700 MGIC Investment Corp. 10,386,728
259,000 Progressive Corp. 18,932,900
--------------
87,281,034
--------------
INTERNET: 0.6%
118,400 @ eBay, Inc. 12,334,912
217,300 @ InterActiveCorp 8,598,561
--------------
20,933,473
--------------
MEDIA: 1.8%
451,300 @ Clear Channel Communications, Inc. 19,130,607
565,800 @ Fox Entertainment Group, Inc. 16,283,724
271,800 McGraw-Hill Cos., Inc. 16,851,600
263,800 Tribune Co. 12,741,540
--------------
65,007,471
--------------
MINING: 0.2%
344,500 Freeport-McMoRan Copper & Gold, Inc. 8,440,250
--------------
8,440,250
--------------
MISCELLANEOUS MANUFACTURING: 3.1%
2,720,000 General Electric Co. 78,009,600
1,175,900 Honeywell Intl., Inc. 31,572,915
--------------
109,582,515
--------------
OFFICE/BUSINESS EQUIPMENT: 0.9%
217,000 Pitney Bowes, Inc. 8,334,970
2,152,900 @ Xerox Corp. 22,799,211
--------------
31,134,181
--------------
OIL & GAS: 6.2%
456,800 Amerada Hess Corp. 22,465,424
821,100 Anadarko Petroleum Corp. 36,514,317
394,300 ConocoPhillips 21,607,640
28,100 Devon Energy Corp. 1,500,540
2,365,500 Exxon Mobil Corp. 84,945,105
915,500 Occidental Petroleum Corp. 30,715,025
532,200 Valero Energy Corp. 19,334,826
--------------
217,082,877
--------------
PACKAGING & CONTAINERS: 0.6%
1,103,900 @ Pactiv Corp. 21,757,869
--------------
21,757,869
--------------
PHARMACEUTICALS: 6.0%
1,102,300 Abbott Laboratories 48,236,648
275,200 Bristol-Myers Squibb Co. 7,471,680
937,400 Merck & Co., Inc. 56,759,570
277,000 Mylan Laboratories 9,631,290
2,091,700 Pfizer, Inc. 71,431,555
443,100 @ Watson Pharmaceuticals, Inc. 17,887,947
--------------
211,418,690
--------------
RETAIL: 5.2%
135,000 @ Advance Auto Parts 8,221,500
492,400 Dillard's, Inc. 6,632,628
924,900 Federated Department Stores 34,082,565
508,800 Lowe's Cos., Inc. 21,852,960
295,700 Sears Roebuck and Co. 9,947,348
727,800 @ Starbucks Corp. 17,845,656
</Table>
See Accompanying Notes to Financial Statements
69
ING
VP
GROWTH &
INCOME PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Shares Value
- ----------------------------------------------------------------------------
RETAIL (CONTINUED)
1,152,900 Wal-Mart Stores, Inc. $ 61,876,143
833,800 @ Williams-Sonoma, Inc. 24,346,960
--------------
184,805,760
--------------
SAVINGS & LOANS 2.4%
2,040,000 Washington Mutual, Inc. 84,252,000
--------------
84,252,000
--------------
SEMICONDUCTORS: 3.2%
3,559,800 Intel Corp. 73,986,883
236,000 Maxim Integrated Products 8,068,840
1,833,800 Texas Instruments, Inc. 32,274,880
--------------
114,330,603
--------------
SOFTWARE: 7.2%
1,260,400 First Data Corp. 52,230,976
688,000 @ Intuit, Inc. 30,636,640
5,582,600 Microsoft Corp. 142,970,386
2,231,500 @ Oracle Corp. 26,822,630
--------------
252,660,632
--------------
TELECOMMUNICATIONS: 10.2%
2,021,900 AT&T Corp. 38,921,575
3,080,400 @ AT&T Wireless Services, Inc. 25,290,084
1,227,700 BellSouth Corp. 32,693,651
5,311,000 @ Cisco Systems, Inc. 88,640,590
2,631,800 Motorola, Inc. 24,817,874
2,125,100 @ Nextel Communications, Inc. 38,421,808
1,296,200 Qualcomm, Inc. 46,339,150
910,300 Sprint Corp.-FON Group 13,108,320
1,353,900 Verizon Communications, Inc. 53,411,355
--------------
361,644,407
--------------
TRANSPORTATION: 1.2%
668,200 FedEx Corp. 41,448,446
--------------
41,448,446
--------------
Total Common Stock
(Cost $3,065,663,322) 3,477,897,985
--------------
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
CORPORATE BONDS: 0.0%
OIL & GAS: 0.0%
$ 532,000 Devon Energy Corp.,
4.900%, due 08/15/08 545,300
727,000 Devon Energy Corp.,
4.950%, due 08/15/08 746,993
--------------
1,292,293
--------------
Total Corporate Bonds
(Cost $904,715) 1,292,293
--------------
Total Long-Term Investments
(Cost $3,066,568,037) 3,479,190,278
--------------
SHORT-TERM INVESTMENT: 1.2%
$42,305,000 Morgan Stanley Repurchase Agreement
dated 06/30/03, 1.100%, due 07/01/03,
$42,306,293 to be received upon
repurchase (Collateralized by
$3,735,000 Federal National Mortgage
Association, 3.000%, Market Value
$3,806,200, due 06/15/04; $7,330,000
FNMA, 5.250%, Market Value $8,209,604,
due 04/15/07; $14,770,000 FNMA,
2.650%, Market Value $14,885,354, due
02/13/06 and $14,650,000 FNMA, 5.250%,
Market Value $16,105,851, due
06/15/06) $ 42,305,000
--------------
Total Short-Term Investment
(Cost $42,305,000) 42,305,000
--------------
</Table>
<Table>
TOTAL INVESTMENTS IN SECURITIES
(COST $3,108,873,037)* 99.7% $3,521,495,278
OTHER ASSETS AND LIABILITIES-NET 0.3 11,862,701
------ --------------
NET ASSETS 100.0% $3,533,357,979
====== ==============
</Table>
<Table>
@ Non-income producing security
@@ Foreign Issuer
ADR American Depositary Receipt
* Cost for federal income tax purposes is the same as for
financial statement purposes. Net unrealized appreciation
consists of:
</Table>
<Table>
Gross Unrealized Appreciation $431,723,625
Gross Unrealized Depreciation (19,101,384)
------------
Net Unrealized Appreciation $412,622,241
============
</Table>
See Accompanying Notes to Financial Statements
70
ING
VP
BOND
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
CORPORATE BONDS: 37.3%
ADVERTISING: 0.0%
$ 165,000 # RH Donnelley Finance Corp. I,
10.875%, due 12/15/12 $ 193,050
240,000 # Vertis, Inc.,
9.750%, due 04/01/09 250,800
--------------
443,850
--------------
AEROSPACE/DEFENSE: 0.5%
1,300,000 Boeing Co.,
6.125%, due 02/15/33 1,362,184
130,000 L-3 Communications Corp.,
7.625%, due 06/15/12 143,650
3,688,000 Raytheon Co.,
6.150%, due 11/01/08 4,174,916
165,000 Sequa Corp.,
9.000%, due 08/01/09 175,725
190,000 # Titan Corp.,
8.000%, due 05/15/11 202,350
165,000 # Vought Aircraft Industries, Inc.,
8.000%, due 07/15/11 166,650
--------------
6,225,475
--------------
AGRICULTURE: 0.4%
2,040,000 # Bunge Ltd. Finance Corp.,
5.875%, due 05/15/13 2,108,507
145,000 # DIMON, Inc.,
7.750%, due 06/01/13 149,712
2,250,000 RJ Reynolds Tobacco Holdings, Inc.,
6.500%, due 06/01/07 2,255,870
1,340,000 RJ Reynolds Tobacco Holdings, Inc.,
7.750%, due 05/15/06 1,379,403
--------------
5,893,492
--------------
AIRLINES: 0.3%
4,520,000 American Airlines, Inc.,
7.024%, due 10/15/09 4,317,806
--------------
4,317,806
--------------
APPAREL: 0.0%
160,000 Levi Strauss & Co.,
11.625%, due 01/15/08 138,000
230,000 # Phillips-Van Heusen,
8.125%, due 05/01/13 237,188
--------------
375,188
--------------
AUTO MANUFACTURERS: 1.2%
6,525,000 Ford Motor Co.,
6.375%, due 02/01/29 5,290,503
3,605,000 Ford Motor Co.,
6.625%, due 10/01/28 3,007,997
385,000 Ford Motor Co.,
7.250%, due 10/01/08 403,087
4,870,000 General Motors Corp.,
6.750%, due 05/01/28 4,127,452
3,985,000 General Motors Corp.,
8.375%, due 07/15/33 3,922,475
--------------
16,751,514
--------------
AUTO PARTS & EQUIPMENT: 0.1%
105,000 # Advanced Accessory Systems LLC,
10.750%, due 06/15/11 111,825
120,000 Dana Corp.,
10.125%, due 03/15/10 132,900
155,000 Dura Operating Corp.,
8.625%, due 04/15/12 159,650
270,000 Lear Corp., 8.110%, due 05/15/09 310,500
</Table>
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
$ 220,000 # TRW Automotive, Inc.,
11.000%, due 02/15/13 $ 240,900
120,000 # UIS, Inc., 9.375%, due 06/15/13 125,100
--------------
1,080,875
--------------
BANKS: 2.3%
3,240,000 Bank One Corp.,
4.900%, due 04/30/15 3,351,530
810,000 BNY Capital I,
7.970%, due 12/31/26 942,954
4,840,000 @@,# Credit Suisse First Boston,
7.900%, due 05/01/07 5,504,319
885,000 Fleet Capital Trust II,
7.920%, due 12/11/26 1,007,458
450,000 FleetBoston Financial Corp.,
6.875%, due 01/15/28 521,992
2,550,000 M&T Bank Corp.,
3.850%, due 04/01/13 2,604,838
4,770,000 Mellon Capital I,
7.720%, due 12/01/26 5,634,472
2,415,000 NB Capital Trust IV,
8.250%, due 04/15/27 2,944,064
2,640,000 Sovereign Bank,
5.125%, due 03/15/13 2,732,656
2,660,000 US Bank National Association,
4.800%, due 04/15/15 2,749,586
2,922,000 US Bank National Association,
6.300%, due 07/15/08 3,377,417
470,000 # Wells Fargo Capital A,
7.730%, due 12/01/26 546,106
--------------
31,917,392
--------------
BUILDING MATERIALS: 0.0%
135,000 Nortek Holdings, Inc.,
9.875%, due 06/15/11 142,762
--------------
142,762
--------------
CHEMICALS: 0.3%
2,555,000 Dow Chemical Co.,
5.750%, due 11/15/09 2,798,009
115,000 Equistar Chemicals LP,
10.125%, due 09/01/08 119,025
90,000 # Equistar Chemicals LP,
10.625%, due 05/01/11 92,700
845,000 IMC Global, Inc.,
10.875%, due 06/01/08 883,025
690,000 Lyondell Chemical Co.,
9.625%, due 05/01/07 679,650
--------------
4,572,409
--------------
COMMERCIAL SERVICES: 0.1%
185,000 Corrections Corp. of America,
7.500%, due 05/01/11 194,250
525,000 @@ Quebecor Media, Inc.,
11.125%, due 07/15/11 603,750
635,000 # United Rentals North America, Inc.,
10.750%, due 04/15/08 696,913
--------------
1,494,913
--------------
COMPUTERS: 0.0%
140,000 @@ Seagate Technology Holdings, 8.000%,
due 05/15/09 152,250
130,000 Unisys Corp.,
8.125%, due 06/01/06 139,750
--------------
292,000
--------------
</Table>
See Accompanying Notes to Financial Statements
71
ING
VP
BOND
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
COSMETICS/PERSONAL CARE: 0.0%
$ 340,000 Chattem, Inc.,
8.875%, due 04/01/08 $ 352,750
--------------
352,750
--------------
DISTRIBUTION/WHOLESALE: 0.0%
315,000 # Aviall, Inc.,
7.625%, due 07/01/11 320,906
--------------
320,906
--------------
DIVERSIFIED FINANCIAL SERVICES: 3.2%
3,365,000 Boeing Capital Corp.,
7.375%, due 09/27/10 3,993,077
2,425,000 CitiCorp. Capital I,
7.933%, due 02/15/27 2,848,875
565,000 # Corestates Capital Trust I,
8.000%, due 12/15/26 673,432
4,040,000 Countrywide Home Loans, Inc.,
4.250%, due 12/19/07 4,248,068
1,160,000 # Erac USA Finance Co.,
8.000%, due 01/15/11 1,384,040
2,935,000 # Farmers Exchange Capital,
7.200%, due 07/15/48 2,426,954
1,705,000 Ford Motor Credit Co.,
7.375%, due 10/28/09 1,790,076
2,445,000 General Electric Capital Corp.,
5.000%, due 06/15/07 2,664,600
6,740,000 General Electric Capital Corp.,
6.000%, due 06/15/12 7,621,289
145,000 # HLI Operating Co., Inc.,
10.500%, due 06/15/10 152,975
1,990,000 International Lease Finance Corp.,
5.875%, due 05/01/13 2,146,426
3,120,000 Lehman Brothers Holdings, Inc.,
4.000%, due 01/22/08 3,255,052
1,200,000 Morgan Stanley,
6.750%, due 04/15/11 1,405,792
410,000 Nexstar Finance LLC,
12.000%, due 04/01/08 459,200
5,480,000 @@,XX PF Export Receivables Master Trust,
3.748%, due 06/01/13 5,530,361
2,840,000 @@,XX PF Export Receivables Master Trust,
6.436%, due 06/01/15 2,854,200
80,000 Technical Olympic USA, Inc.,
10.375%, due 07/01/12 85,600
240,000 Technical Olympic USA, Inc.,
9.000%, due 07/01/10 260,400
50,000 # Universal City Development Partners,
11.750%, due 04/01/10 55,125
--------------
43,855,542
--------------
ELECTRIC: 2.9%
310,000 # AES Corp.,
8.750%, due 05/15/13 323,950
4,260,000 Arizona Public Service,
4.650%, due 05/15/15 4,245,810
1,700,000 # Consumers Energy Co.,
4.250%, due 04/15/08 1,759,831
3,185,000 Duke Capital Corp.,
6.250%, due 02/15/13 3,391,923
200,000 Homer City Funding LLC,
8.734%, due 10/01/26 219,500
2,425,000 Nisource Finance Corp.,
6.150%, due 03/01/13 2,607,801
1,975,000 Nisource Finance Corp.,
7.625%, due 11/15/05 2,160,543
3,780,000 # Ohio Edison Co.,
4.000%, due 05/01/08 3,881,451
3,810,000 # Ohio Power Co.,
6.600%, due 02/15/33 4,267,032
2,295,000 # Oncor Electric Delivery Co.,
7.250%, due 01/15/33 2,716,635
2,987,000 # PG&E Corp.,
6.875%, due 07/15/08 3,113,948
2,680,000 # PSEG Energy Holdings, Inc.,
7.750%, due 04/16/07 2,836,887
1,950,000 # Reliant Resources, Inc.,
9.250%, due 07/15/10 1,969,500
3,207,000 # TXU Energy Co.,
6.125%, due 03/15/08 3,442,849
1,985,000 # TXU Energy Co.,
7.000%, due 03/15/13 2,201,577
--------------
39,139,237
--------------
</Table>
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
ELECTRICAL COMPONENTS & EQUIPMENT: 0.0%
$ 135,000 @@,# FIMEP SA, 10.500%, due 02/15/13 $ 151,200
145,000 @@ Legrand, 8.500%, due 02/15/25 150,075
--------------
301,275
--------------
ELECTRONICS: 0.0%
150,000 @@,# Flextronics Intl. Ltd.,
6.500%, due 05/15/13 145,125
155,000 Stoneridge, Inc.,
11.500%, due 05/01/12 174,375
--------------
319,500
--------------
ENTERTAINMENT: 0.1%
180,000 Carmike Cinemas, Inc.,
10.375%, due 02/01/09 189,900
25,000 # Cinemark USA, Inc.,
9.000%, due 02/01/13 27,250
170,000 # Cinemark USA, Inc.,
9.000%, due 02/01/13 185,300
195,000 Regal Cinemas, Inc.,
9.375%, due 02/01/12 215,963
125,000 # Six Flags, Inc.,
9.750%, due 06/15/07 124,375
105,000 Speedway Motorsports, Inc.,
6.750%, due 06/01/13 109,200
--------------
851,988
--------------
ENVIRONMENTAL CONTROL: 0.1%
345,000 Allied Waste North America,
10.000%, due 08/01/09 368,287
680,000 Allied Waste North America,
7.875%, due 04/15/13 714,850
165,000 Allied Waste North America,
8.500%, due 12/01/08 178,200
--------------
1,261,337
--------------
FOOD: 2.1%
505,000 Ahold Finance USA, Inc.,
8.250%, due 07/15/10 520,150
1,920,000 ConAgra Foods, Inc.,
7.500%, due 09/15/05 2,142,180
350,000 # Del Monte Corp.,
8.625%, due 12/15/12 372,750
230,000 # Domino's, Inc.,
8.250%, due 07/01/11 238,625
290,000 Great Atlantic & Pacific Tea Co.,
9.125%, due 12/15/11 272,600
280,000 Ingles Markets, Inc.,
8.875%, due 12/01/11 283,150
1,300,000 Kroger Co.,
5.500%, due 02/01/13 1,374,788
1,829,000 Kroger Co.,
7.250%, due 06/01/09 2,138,672
</Table>
See Accompanying Notes to Financial Statements
72
ING
VP
BOND
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
FOOD (CONTINUED)
$ 1,975,000 Kroger Co.,
7.500%, due 04/01/31 $ 2,349,942
330,000 Michael Foods, Inc.,
11.750%, due 04/01/11 381,150
410,000 Pilgrims Pride Corp.,
9.625%, due 09/15/11 439,725
190,000 Roundy's, Inc.,
8.875%, due 06/15/12 199,500
2,775,000 Safeway, Inc.,
4.800%, due 07/16/07 2,904,723
2,380,000 Safeway, Inc.,
5.800%, due 08/15/12 2,556,651
140,000 # Smithfield Foods, Inc.,
7.750%, due 05/15/13 150,850
5,530,000 Supervalu, Inc.,
7.875%, due 08/01/09 6,455,351
5,855,000 Tyson Foods, Inc.,
6.625%, due 10/01/04 6,070,786
230,000 Winn-Dixie Stores, Inc.,
8.875%, due 04/01/08 244,950
--------------
29,096,543
--------------
FOREST PRODUCTS & PAPER: 1.0%
1,718,000 @@ Abitibi-Consolidated, Inc.,
6.950%, due 04/01/08 1,809,980
3,200,000 @@ Abitibi-Consolidated, Inc.,
6.950%, due 12/15/06 3,386,250
525,000 Appleton Papers, Inc.,
12.500%, due 12/15/08 590,625
2,360,000 Fort James Corp.,
6.625%, due 09/15/04 2,413,100
400,000 Georgia-Pacific Corp.,
8.125%, due 05/15/11 413,000
500,000 # Georgia-Pacific Corp.,
8.875%, due 02/01/10 545,000
675,000 @@ Tembec Industries, Inc.,
7.750%, due 03/15/12 658,125
100,000 @@ Tembec Industries, Inc.,
8.500%, due 02/01/11 99,500
3,175,000 Weyerhaeuser Co.,
6.875%, due 12/15/33 3,478,282
--------------
13,393,862
--------------
HEALTHCARE -- PRODUCTS: 0.0%
205,000 # Medex, Inc.,
8.875%, due 05/15/13 213,712
--------------
213,712
--------------
HEALTHCARE -- SERVICES: 0.0%
175,000 Alliance Imaging, Inc.,
10.375%, due 04/15/11 183,750
275,000 Triad Hospitals, Inc.,
8.750%, due 05/01/09 293,906
--------------
477,656
--------------
HOME BUILDERS: 0.1%
175,000 # K Hovnanian Enterprises, Inc.,
7.750%, due 05/15/13 184,187
150,000 KB Home, 7.750%, due 02/01/10 162,937
80,000 # Meritage Corp.,
9.750%, due 06/01/11 88,800
60,000 Meritage Corp.,
9.750%, due 06/01/11 66,600
145,000 Standard-Pacific Corp.,
7.750%, due 03/15/13 154,063
135,000 Toll Corp., 8.250%, due 02/01/11 151,200
215,000 WCI Communities, Inc.,
10.625%, due 02/15/11 238,650
--------------
1,046,437
--------------
</Table>
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
INSURANCE: 2.5%
$ 4,838,000 # AIG SunAmerica Global Financing VII,
5.850%, due 08/01/08 $ 5,461,009
6,900,000 CNA Financial Corp.,
6.250%, due 11/15/03 6,997,787
2,940,000 # John Hancock Global Funding II,
5.250%, due 02/25/15 3,099,460
2,735,000 # Monumental Global Funding II,
3.850%, due 03/03/08 2,829,915
1,590,000 # New York Life Insurance Co.,
5.875%, due 05/15/33 1,674,690
3,325,000 Travelers Property Casualty Corp.,
6.375%, due 03/15/33 3,646,727
9,135,000 # Zurich Capital Trust I,
8.376%, due 06/01/37 10,068,122
--------------
33,777,710
--------------
IRON/STEEL: 0.1%
745,000 AK Steel Corp.,
7.875%, due 02/15/09 636,975
145,000 United States Steel Corp.,
9.750%, due 05/15/10 147,900
--------------
784,875
--------------
LEISURE TIME: 0.0%
190,000 @@ Royal Caribbean Cruises Ltd.,
8.000%, due 05/15/10 198,550
100,000 # Worldspan LP/WS Financing Corp.,
9.625%, due 06/15/11 103,500
--------------
302,050
--------------
LODGING: 0.4%
560,000 Ameristar Casinos, Inc.,
10.750%, due 02/15/09 637,700
270,000 Aztar Corp.,
9.000%, due 08/15/11 293,625
215,000 Extended Stay America, Inc.,
9.875%, due 06/15/11 232,200
125,000 Host Marriott Corp.,
7.875%, due 08/01/05 127,812
85,000 Host Marriott Corp.,
7.875%, due 08/01/08 86,700
570,000 Mandalay Resort Group,
9.500%, due 08/01/08 655,500
900,000 MGM Mirage,
8.375%, due 02/01/11 1,028,250
140,000 MGM Mirage,
8.500%, due 09/15/10 165,200
300,000 # Park Place Entertainment Corp.,
7.000%, due 04/15/13 322,500
720,000 Park Place Entertainment Corp.,
7.875%, due 03/15/10 777,600
535,000 Starwood Hotels & Resorts Worldwide,
Inc., 7.875%, due 05/01/12 588,500
185,000 Venetian Casino Resort LLC,
11.000%, due 06/15/10 209,513
--------------
5,125,100
--------------
MACHINERY -- DIVERSIFIED: 0.0%
65,000 # Cummins, Inc.,
9.500%, due 12/01/10 74,100
--------------
74,100
--------------
</Table>
See Accompanying Notes to Financial Statements
73
ING
VP
BOND
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
MEDIA: 1.9%
$ 2,130,000 AMFM, Inc.,
8.000%, due 11/01/08 $ 2,486,775
3,335,000 AOL Time Warner, Inc.,
6.875%, due 05/01/12 3,815,010
280,000 @@ CanWest Media, Inc.,
10.625%, due 05/15/11 320,600
500,000 @@,# CanWest Media, Inc.,
7.625%, due 04/15/13 533,750
220,000 Charter Communications Holdings, LLC,
0.000%, due 05/15/11 112,200
770,000 Charter Communications Holdings, LLC,
9.625%, due 11/15/09 565,950
3,890,000 # COX Enterprises, Inc.,
4.375%, due 05/01/08 4,049,404
340,000 CSC Holdings, Inc.,
10.500%, due 05/15/16 372,300
145,000 CSC Holdings, Inc.,
7.625%, due 04/01/11 147,175
140,000 CSC Holdings, Inc.,
7.625%, due 07/15/18 140,350
415,000 Dex Media East LLC,
12.125%, due 11/15/12 492,812
165,000 Dex Media East LLC,
9.875%, due 11/15/09 184,800
395,000 # DirecTV Holdings LLC,
8.375%, due 03/15/13 442,400
465,000 Granite Broadcasting Corp.,
8.875%, due 05/15/08 456,862
280,000 Hollinger Intl. Publishing,
9.000%, due 12/15/10 301,000
125,000 @@,# Hollinger, Inc.,
11.875%, due 03/01/11 139,375
320,000 Insight Communications,
0.000%, due 02/15/11 267,200
2,015,000 InterActiveCorp.,
7.000%, due 01/15/13 2,325,024
605,000 Mediacom Broadband LLC,
11.000%, due 07/15/13 676,087
1,800,000 News America Holdings,
7.600%, due 10/11/15 2,182,756
215,000 # Nexstar Finance Holdings LLC, Inc.,
0.000%, due 04/01/13 144,319
200,000 Paxson Communications Corp.,
10.750%, due 07/15/08 216,000
180,000 # Primedia, Inc.,
8.000%, due 05/15/13 185,400
270,000 Primedia, Inc.,
8.875%, due 05/15/11 285,525
190,000 Radio One, Inc.,
8.875%, due 07/01/11 209,950
75,000 @@,# Rogers Cable, Inc.,
6.250%, due 06/15/13 75,188
60,000 Salem Communications Holding Corp.,
9.000%, due 07/01/11 64,875
165,000 # Sinclair Broadcast Group, Inc.,
8.000%, due 03/15/12 176,963
100,000 Susquehanna Media Co.,
8.500%, due 05/15/09 106,000
3,630,000 Time Warner, Inc.,
6.950%, due 01/15/28 3,900,290
480,000 @@,# Vivendi Universal SA,
9.250%, due 04/15/10 548,400
475,000 Young Broadcasting, Inc.,
10.000%, due 03/01/11 516,563
--------------
26,441,303
--------------
MINING: 0.2%
390,000 Compass Minerals Group, Inc.,
10.000%, due 08/15/11 438,750
1,570,000 @@,# WMC Finance USA,
5.125%, due 05/15/13 1,624,617
--------------
2,063,367
--------------
MISCELLANEOUS MANUFACTURING: 0.3%
190,000 SPX Corp.,
7.500%, due 01/01/13 206,625
155,000 # Tenneco Automotive, Inc.,
10.250%, due 07/15/13 157,713
2,270,000 @@ Tyco Intl. Group SA,
6.125%, due 01/15/09 2,372,150
1,280,000 @@ Tyco Intl. Group SA,
6.125%, due 11/01/08 1,344,000
540,000 @@ Tyco Intl. Group SA,
6.750%, due 02/15/11 575,100
--------------
4,655,588
--------------
</Table>
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
MULTI-NATIONAL: 0.4%
$ 3,860,000 @@ Corp. Andina de Fomento CAF,
5.200%, due 05/21/13 $ 3,919,409
820,000 @@ Corp. Andina de Fomento CAF,
6.875%, due 03/15/12 935,391
--------------
4,854,800
--------------
OFFICE/BUSINESS EQUIPMENT: 0.0%
310,000 Xerox Corp.,
7.625%, due 06/15/13 311,938
--------------
311,938
--------------
OIL & GAS: 2.8%
2,930,000 Amerada Hess Corp.,
5.900%, due 08/15/06 3,225,309
2,565,000 Amerada Hess Corp.,
7.125%, due 03/15/33 2,929,153
1,625,000 @@ Anderson Exploration Ltd.,
6.750%, due 03/15/11 1,884,400
435,000 # Chesapeake Energy Corp.,
7.500%, due 09/15/13 464,362
3,765,000 # Enterprise Products Partners LP,
6.875%, due 03/01/33 4,278,663
150,000 Forest Oil Corp.,
8.000%, due 06/15/08 161,250
11,145,000 @@ Husky Oil Co.,
8.900%, due 08/15/28 12,928,200
155,000 Nuevo Energy Co.,
9.500%, due 06/01/08 163,331
2,330,000 Ocean Energy, Inc.,
4.375%, due 10/01/07 2,452,418
4,945,000 Pemex Project Funding Master Trust,
7.375%, due 12/15/14 5,427,138
425,000 Swift Energy Co.,
9.375%, due 05/01/12 464,313
2,000,000 Valero Energy Corp.,
8.750%, due 06/15/30 2,570,236
845,000 @@ Western Oil Sands, Inc.,
8.375%, due 05/01/12 946,400
505,000 Westport Resources Corp.,
8.250%, due 11/01/11 555,500
--------------
38,450,673
--------------
</Table>
See Accompanying Notes to Financial Statements
74
ING
VP
BOND
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
OIL & GAS SERVICES: 0.1%
$ 560,000 Hanover Equipment Trust,
8.500%, due 09/01/08 $ 590,800
200,000 Hanover Equipment Trust,
8.750%, due 09/01/11 211,000
--------------
801,800
--------------
PACKAGING & CONTAINERS: 0.8%
275,000 Ball Corp.,
6.875%, due 12/15/12 292,875
370,000 # BWAY Finance Corp.,
10.000%, due 10/15/10 377,400
480,000 @@,# Crown European Holdings SA,
10.875%, due 03/01/13 525,600
130,000 @@,# Norampac, Inc.,
6.750%, due 06/01/13 137,150
315,000 # Owens-Brockway,
8.250%, due 05/15/13 330,750
725,000 Owens-Brockway,
8.875%, due 02/15/09 790,250
1,220,000 # Sealed Air Corp.,
5.375%, due 04/15/08 1,281,723
2,305,000 # Sealed Air Corp.,
5.625%, due 07/15/13 2,329,571
4,445,000 # Sealed Air Corp.,
6.950%, due 05/15/09 4,915,997
500,000 Smurfit-Stone Container Corp.,
8.250%, due 10/01/12 538,750
--------------
11,520,066
--------------
PHARMACEUTICALS: 0.0%
460,000 AmerisourceBergen Corp.,
7.250%, due 11/15/12 501,400
--------------
501,400
--------------
PIPELINES: 1.2%
235,000 # ANR Pipeline Co.,
8.875%, due 03/15/10 257,912
5,320,000 CenterPoint Energy Resources Corp.,
8.125%, due 07/15/05 5,765,199
2,965,000 Duke Energy Field Services LLC,
7.500%, due 08/16/05 3,244,167
300,000 # El Paso Production Holding Co.,
7.750%, due 06/01/13 300,750
265,000 # GulfTerra Energy Partners LP,
8.500%, due 06/01/10 284,875
3,415,000 Kinder Morgan Energy Partners LP,
7.300%, due 08/15/33 4,114,826
500,000 Northern Border Pipeline Co.,
6.250%, due 05/01/07 547,636
180,000 Southern Natural Gas Co.,
7.350%, due 02/15/31 184,050
175,000 Southern Natural Gas Co.,
8.000%, due 03/01/32 190,094
175,000 Tennessee Gas Pipeline Co.,
8.375%, due 06/15/32 191,188
345,000 Transcontinental Gas Pipe LN,
8.875%, due 07/15/12 391,575
300,000 Williams Cos., Inc.,
8.625%, due 06/01/10 315,000
--------------
15,787,272
--------------
REAL ESTATE: 0.8%
2,240,000 EOP Operating LP,
7.250%, due 02/15/18 2,647,313
2,945,000 EOP Operating LP,
7.750%, due 11/15/07 3,452,565
</Table>
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
$ 1,383,000 Liberty Property-LP,
7.250%, due 03/15/11 $ 1,634,865
2,910,000 Liberty Property-LP,
7.750%, due 04/15/09 3,516,883
--------------
11,251,626
--------------
REITS: 0.8%
225,000 Felcor Lodging LP,
8.500%, due 06/01/11 227,812
60,000 Host Marriott LP,
9.500%, due 01/15/07 64,800
160,000 # La Quinta Properties, Inc.,
8.875%, due 03/15/11 171,200
1,935,000 Liberty Property Trust,
6.375%, due 08/15/12 2,165,141
2,150,000 # Simon Property Group LP,
4.875%, due 03/18/10 2,239,079
3,068,000 Simon Property Group LP,
6.375%, due 11/15/07 3,426,198
1,893,000 Simon Property Group LP,
7.375%, due 06/15/18 2,267,858
--------------
10,562,088
--------------
RETAIL: 0.2%
115,000 Dollar General Corp.,
8.625%, due 06/15/10 127,794
520,000 JC Penney Co., Inc.,
7.600%, due 04/01/07 548,600
150,000 # Rent-A-Center, Inc.,
7.500%, due 05/01/10 158,250
400,000 Rite Aid Corp., 7.625%, due 04/15/05 399,000
165,000 # Rite Aid Corp., 9.250%, due 06/01/13 164,175
370,000 # Star Gas Partners LP/Star Gas Finance
Co., 10.250%, due 02/15/13 386,650
275,000 Yum! Brands, Inc.,
8.875%, due 04/15/11 327,250
--------------
2,111,719
--------------
SEMICONDUCTORS: 0.0%
65,000 # AMI Semiconductor, Inc.,
10.750%, due 02/01/13 73,775
65,000 # Amkor Technology, Inc.,
7.750%, due 05/15/13 62,075
--------------
135,850
--------------
SOVEREIGN: 6.4%
6,626,000 @@ Brazil Dcb L,
0.000%, due 04/15/12 5,017,870
617,000 @@ Brazilian Government Intl. Bond,
10.000%, due 01/16/07 635,510
1,148,000 @@ Brazilian Government Intl. Bond,
10.250%, due 06/17/13 1,099,210
4,470,000 @@ Brazilian Government Intl. Bond,
11.000%, due 08/17/40 4,090,050
750 @@ Central Bank Of Nigeria,
0.000%, due 11/15/20 --
1,500,000 @@ Central Bank Of Nigeria,
0.000%, due 11/15/20 1,290,000
1,955,000 @@ Chile Government Intl. Bond,
5.500%, due 01/15/13 2,073,277
1,467,000 @@ Colombia Government Intl. Bond,
0.000%, due 02/25/20 1,830,082
3,915,000 @@ Colombia Government Intl. Bond,
10.000%, due 01/23/12 4,394,587
2,068,000 @@ Dominican Republic,
0.000%, due 01/23/13 1,930,064
</Table>
See Accompanying Notes to Financial Statements
75
ING
VP
BOND
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
SOVEREIGN (CONTINUED)
$ 13,335,000 Fannie Mae,
2.375%, due 04/13/06 $ 13,468,310
2,150,000 @@ Mexico Government Intl. Bond,
4.625%, due 10/08/08 2,200,525
3,265,000 @@ Mexico Government Intl. Bond,
6.625%, due 03/03/15 3,477,225
2,020,000 @@ Peru Government Intl. Bond,
9.125%, due 02/21/12 2,158,370
4,787,000 @@ Philippine Government Intl. Bond,
9.875%, due 01/15/19 5,295,619
3,466,000 @@ Republic Of Argentina,
0.000%, due 08/03/12 2,077,174
2,084,000 @@ Republic Of Bulgaria,
0.000%, due 01/15/15 2,468,081
2,099,000 @@ Republic Of Ecuador,
0.000%, due 08/15/30 1,343,360
1,477,000 @@ Republic Of El Salvador,
0.000%, due 01/24/23 1,558,235
1,725,018 @@ Republic Of Panama,
0.000%, due 07/17/16 1,395,108
879,000 @@ Republic Of Peru,
0.000%, due 03/07/17 686,719
1,821,429 @@ Republic Of Venezuela,
0.000%, due 12/18/07 1,449,766
11,121,000 @@ Russian Federation,
0.000%, due 03/31/30 10,910,257
3,911,699 Small Business Administration,
7.550%, due 11/01/12 4,283,080
5,979,000 @@ Turkey Government Intl. Bond,
12.375%, due 06/15/09 6,457,320
500,000 @@,# Ukraine Government Intl. Bond,
7.650%, due 06/11/13 498,440
909,444 @@ Ukraine Government,
0.000%, due 03/15/07 1,002,662
1,152,000 @@ Uruguay Government Intl. Bond, 7.500%,
due 03/15/15 901,440
4,500,000 @@ Venezuela Government Intl. Bond,
9.250%, due 09/15/27 3,341,250
--------------
87,333,591
--------------
TELECOMMUNICATIONS: 3.7%
190,000 American Tower Corp.,
9.375%, due 02/01/09 191,900
230,000 American Tower Escrow Corp.,
0.000%, due 08/01/08 149,500
2,292,000 AT&T Corp.,
6.000%, due 03/15/09 2,456,086
6,175,000 AT&T Corp.,
7.800%, due 11/15/11 7,072,017
1,520,000 AT&T Corp.,
8.500%, due 11/15/31 1,729,506
1,045,000 AT&T Wireless Services, Inc.,
8.125%, due 05/01/12 1,261,545
335,000 Block Communications, Inc.,
9.250%, due 04/15/09 366,825
230,000 # Centennial Cellular Operating Co.,
10.125%, due 06/15/13 228,850
295,000 Crown Castle Intl. Corp.,
9.375%, due 08/01/11 308,275
2,309,000 @@ Deutsche Telekom Intl. Finance BV,
8.250%, due 06/15/05 2,576,244
130,000 Dobson Communications Corp., 10.875%,
due 07/01/10 141,050
110,000 Dobson/Sygnet Communications Co.,
12.250%, due 12/15/08 118,250
420,000 Insight Midwest LP/Insight Capital,
Inc.,
10.500%, due 11/01/10 463,050
1,115,000 Nextel Communications, Inc.,
9.375%, due 11/15/09 1,202,806
90,000 Nextel Partners, Inc.,
12.500%, due 11/15/09 101,700
120,000 # Nextel Partners, Inc.,
8.125%, due 07/01/11 120,300
550,000 PanAmSat Corp.,
8.500%, due 02/01/12 598,125
480,000 Qwest Communications Intl.,
7.500%, due 11/01/08 446,400
265,000 # Qwest Corp.,
8.875%, due 03/15/12 297,463
375,000 # Qwest Services Corp.,
14.000%, due 12/15/14 436,875
310,000 @@ Rogers Wireless Communications, Inc.,
9.625%, due 05/01/11 358,050
185,000 # Spectrasite, Inc.,
8.250%, due 05/15/10 193,325
2,030,000 Sprint Capital Corp.,
6.000%, due 01/15/07 2,183,632
6,285,000 Sprint Capital Corp.,
6.875%, due 11/15/28 6,328,002
1,850,000 Sprint Capital Corp.,
6.900%, due 05/01/19 1,943,434
8,355,000 TCI Communications Finance,
9.650%, due 03/31/27 9,984,225
415,000 @@ TELUS Corp.,
8.000%, due 06/01/11 481,400
380,000 # Triton PCS, Inc.,
8.500%, due 06/01/13 410,400
105,000 Triton PCS, Inc.,
9.375%, due 02/01/11 107,888
</Table>
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
$ 4,575,000 Verizon Global Funding Corp.,
7.375%, due 09/01/12 $ 5,591,748
2,425,000 Verizon Wireless Capital LLC,
5.375%, due 12/15/06 2,666,021
--------------
50,514,892
--------------
TRANSPORTATION: 0.0%
4,627 Chicago & Northwest Co.,
6.250%, due 07/30/12 5,073
--------------
5,073
--------------
Total Corporate Bonds
(Cost $487,442,438) 511,505,302
--------------
COLLATERALIZED MORTGAGE OBLIGATIONS AND ASSET BACKED SECURITIES: 12.1%
AUTOMOBILE: 1.0%
9,200,000 Capital Auto Receivables Asset Trust,
2.750%, due 04/16/07 9,416,305
4,320,000 Nissan Auto Receivables Owner Trust,
2.610%, due 07/15/08 4,389,526
--------------
13,805,831
--------------
COMMERCIAL: 6.4%
6,167,579 Chase Manhattan Bank-First Union
National Bank,
7.439%,due 08/15/31 7,440,105
1,750,000 XX CS First Boston Mortgage Securities
Corp.,
3.562%, due 05/15/38 1,725,738
3,782,279 CS First Boston Mortgage Securities
Corp.,
3.727%, due 03/15/35 3,868,368
</Table>
See Accompanying Notes to Financial Statements
76
ING
VP
BOND
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
COMMERCIAL (CONTINUED)
$ 5,200,000 First Union National Bank-Bank of
America Commercial Mortgage Trust,
6.136%, due 12/15/10 $ 5,967,054
7,300,000 GE Capital Commercial Mortgage Corp.,
6.531%, due 05/15/33 8,565,686
6,350,000 JP Morgan Chase Commercial Mortgage
Securities Corp.,
6.162%, due 05/12/34 7,291,475
9,380,000 JP Morgan Chase Commercial Mortgage
Securities Corp.,
6.244%, due 04/15/35 10,666,550
7,030,000 LB-UBS Commercial Mortgage Trust,
4.659%, due 12/15/26 7,433,915
2,000,000 LB-UBS Commercial Mortgage Trust,
6.133%, due 12/15/30 2,294,784
5,220,000 LB-UBS Commercial Mortgage Trust,
6.226%, due 03/15/26 5,974,313
4,500,000 LB-UBS Commercial Mortgage Trust,
7.370%, due 08/15/26 5,469,845
9,380,000 Mortgage Capital Funding, Inc.,
6.663%, due 03/18/30 10,782,478
4,534,017 Prudential Commercial Mortgage Trust,
3.669%, due 02/11/36 4,627,554
5,281,576 Vendee Mortgage Trust,
5.849%, due 09/15/23 5,468,848
--------------
87,576,713
--------------
CREDIT CARD: 1.0%
8,800,000 Citibank Credit Card Issuance Trust,
5.650%, due 06/16/08 9,674,947
3,460,000 Fleet Credit Card Master Trust II,
2.400%, due 07/15/08 3,509,411
--------------
13,184,358
--------------
HOME EQUITY: 0.8%
695,000 Equity One, Inc.,
2.976%, due 09/25/33 705,952
2,602,000 Residential Funding Mortgage
Securities II, 3.450%, due 01/25/16 2,666,301
7,465,000 Saxon Asset Securities Trust,
3.960%, due 06/25/33 7,618,233
--------------
10,990,486
--------------
OTHER: 0.2%
3,256,000 XX Residential Asset Mortgage Products,
Inc., 2.140%, due 06/25/33 3,234,634
--------------
3,234,634
--------------
</Table>
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
WHOLE LOAN: 2.7%
$ 1,868,821 Bank of America Alternative Loan
Trust, 5.500%, due 02/25/33 $ 1,923,581
5,340,823 Bank of America Mortgage Securities,
4.413%, due 03/25/33 5,432,976
1,526,362 XX Bear Stearns Adjustable Rate Mortgage
Trust,
6.020%, due 01/25/32 1,547,827
5,150,036 Bear Stearns Asset Backed Securities,
Inc., 5.625%, due 11/25/32 5,359,483
16,778,141 MASTR Alternative Loans Trust,
6.500%, due 05/25/33 17,333,917
4,835,000 XX Washington Mutual,
5.000%, due 06/25/18 4,943,788
--------------
36,541,572
--------------
Total Collateralized Mortgage
Obligations and Asset Backed
Securities
(Cost $159,623,065) 165,333,594
--------------
U.S. GOVERNMENT AGENCY OBLIGATIONS: 27.6%
FEDERAL HOME LOAN MORTGAGE CORPORATION: 8.7%
1,477,000 4.000%, due 04/15/21 1,499,992
13,350,000 4.250%, due 06/15/05 14,085,839
24,964,116 5.500%, due 05/01/23 25,861,050
19,033,841 5.500%, due 05/15/31 19,490,124
6,840,000 5.875%, due 03/21/11 7,706,211
44,630,000 6.000%, due 09/15/31 46,261,762
3,092,677 7.500%, due 11/01/28 3,295,755
747,788 7.500%, due 12/01/11 798,180
--------------
118,998,913
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION: 14.0%
929,032 10.000%, due 02/25/19 1,051,307
695,000 2.859%, due 12/26/29 704,270
12,880,000 2.875%, due 05/19/08 12,936,801
10,904,000 4.000%, due 06/25/16 11,046,913
19,860,000 4.600%, due 06/05/18 19,844,748
28,500,000 5.000%, due 08/25/18 29,381,733
8,500,000 5.000%, due 10/25/33 TBA 8,569,063
7,800,000 5.500%, due 10/15/33 TBA 8,014,500
6,467,498 6.000%, due 03/01/17 6,752,469
411,626 6.000%, due 03/01/17 429,764
8,476,702 6.000%, due 04/01/17 8,850,227
3,016,429 6.000%, due 07/01/29 3,141,313
491,368 6.000%, due 08/01/17 513,020
9,730,000 6.000%, due 10/15/32 TBA 10,100,956
12,300,000 6.500%, due 07/15/33 TBA 12,830,438
13,878,276 6.500%, due 08/01/29 14,492,240
8,000,000 6.500%, due 09/25/23 8,451,832
1,926,744 6.500%, due 11/01/13 2,034,822
956,510 7.000%, due 01/01/30 1,008,086
117,750 7.000%, due 02/01/26 124,441
224,406 7.000%, due 02/01/26 237,156
117,209 7.000%, due 03/01/26 123,819
203,849 7.000%, due 03/01/26 215,346
153,018 7.000%, due 03/01/26 161,648
186,148 7.000%, due 03/01/26 196,725
202,348 7.000%, due 03/01/26 213,845
6,403,621 7.000%, due 06/01/31 6,756,782
110,960 7.000%, due 08/01/25 117,265
118,023 7.000%, due 10/01/25 124,729
44,601 7.000%, due 11/01/25 47,135
126,379 7.000%, due 12/01/25 133,560
183,233 7.000%, due 12/01/25 193,645
157,294 7.000%, due 12/01/25 166,231
8,048,859 7.500%, due 01/25/48 8,987,058
6,401,748 7.500%, due 06/25/32 7,147,955
467,105 7.500%, due 07/01/11 500,248
654,247 7.500%, due 10/01/30 695,321
490,942 7.500%, due 11/01/30 521,763
898,100 7.500%, due 11/01/30 954,482
2,412,057 8.500%, due 01/01/25 2,628,194
1,474,566 8.500%, due 11/01/23 1,608,343
--------------
192,010,193
--------------
</Table>
See Accompanying Notes to Financial Statements
77
ING
VP
BOND
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION: 4.9%
$ 419,193 5.000%, due 12/20/29 $ 435,618
617,492 5.375%, due 04/20/28 640,323
5,000,000 6.000%, due 10/15/31 TBA 5,223,440
22,965,904 6.500%, due 10/15/31 24,121,365
413,416 7.000%, due 04/15/26 438,117
652,911 7.000%, due 04/15/26 691,921
402,894 7.000%, due 04/15/26 426,966
558,102 7.000%, due 04/15/26 591,447
1,648,455 7.000%, due 04/15/32 1,741,695
2,792,854 7.000%, due 05/15/31 2,950,823
1,793,105 7.000%, due 05/15/32 TBA 1,894,526
1,926,554 7.000%, due 06/15/31 2,036,147
95,908 7.500%, due 01/15/26 101,932
244,432 7.500%, due 01/15/30 259,875
5,805 7.500%, due 01/15/31 6,170
6,663 7.500%, due 01/15/31 7,081
5,614 7.500%, due 01/15/31 5,966
578,033 7.500%, due 01/15/32 614,571
658,877 7.500%, due 02/15/30 700,263
6,276 7.500%, due 02/15/30 6,673
181,540 7.500%, due 02/15/31 192,940
3,318 7.500%, due 02/15/31 3,526
6,444 7.500%, due 02/15/31 6,849
7,147 7.500%, due 02/15/31 7,595
6,158 7.500%, due 02/15/31 6,548
4,062 7.500%, due 02/15/31 4,317
763,879 7.500%, due 02/15/32 811,857
131,132 7.500%, due 03/15/29 139,368
81,052 7.500%, due 03/15/31 86,142
18,656 7.500%, due 03/15/31 19,828
96,138 7.500%, due 03/15/32 102,177
503,581 7.500%, due 03/15/32 535,212
162,127 7.500%, due 04/15/22 173,718
293,474 7.500%, due 04/15/29 311,907
182,391 7.500%, due 04/15/31 193,845
28,960 7.500%, due 04/15/32 30,779
15,242 7.500%, due 05/15/22 16,199
271,040 7.500%, due 05/15/30 288,164
430,506 7.500%, due 05/15/32 457,546
12,849 7.500%, due 06/15/22 13,656
7,019 7.500%, due 06/15/22 7,460
13,619 7.500%, due 06/15/24 14,475
13,972 7.500%, due 06/15/24 14,849
101,863 7.500%, due 06/15/30 108,261
64,990 7.500%, due 06/15/30 69,072
171,263 7.500%, due 06/15/32 182,020
561,683 7.500%, due 06/15/32 596,962
9,559 7.500%, due 07/15/26 10,159
6,752 7.500%, due 07/15/30 7,179
229,326 7.500%, due 07/15/30 243,814
5,886 7.500%, due 07/15/30 6,258
507,435 7.500%, due 07/15/32 539,308
20,576 7.500%, due 08/15/22 21,868
6,470 7.500%, due 08/15/29 6,877
663,793 7.500%, due 08/15/29 705,487
5,951 7.500%, due 08/15/30 6,327
6,998 7.500%, due 08/15/30 7,440
62,794 7.500%, due 08/15/30 66,738
679,444 7.500%, due 08/15/32 722,119
250,844 7.500%, due 09/15/29 266,600
47,968 7.500%, due 09/15/31 50,981
2,628,981 7.500%, due 09/15/32 2,794,113
183,115 7.500%, due 10/15/29 194,617
251,287 7.500%, due 10/15/30 267,163
5,799 7.500%, due 11/15/30 6,166
6,664 7.500%, due 11/15/30 7,085
7,222 7.500%, due 11/15/30 7,678
6,424 7.500%, due 11/15/30 6,830
1,540,822 7.500%, due 11/20/30 1,628,539
282,873 7.500%, due 12/15/29 300,641
274,216 7.500%, due 12/15/30 291,440
4,609 7.500%, due 12/15/30 4,900
4,321,087 7.500%, due 12/15/31 4,594,144
6,906,872 8.000%, due 12/15/17 7,553,222
--------------
67,607,884
--------------
Total U.S. Government Agency
Obligations
(Cost $374,337,571) 378,616,990
--------------
U.S. TREASURY OBLIGATIONS: 20.1%
U.S. TREASURY BONDS: 4.4%
13,073,000 5.375%, due 02/15/31 14,725,009
36,553,000 6.250%, due 08/15/23 44,786,015
--------------
59,511,024
--------------
U.S. TREASURY NOTES: 15.7%
183,306,000 S 1.250%, due 05/31/05 183,255,957
1,825,000 2.000%, due 05/15/06 1,844,962
8,190,000 2.625%, due 05/15/08 8,267,428
13,000,000 3.000%, due 01/31/04 13,155,909
9,014,000 3.625%, due 05/15/13 9,087,248
--------------
215,611,504
--------------
Total U.S. Treasury Obligations
(Cost $276,302,135) 275,122,528
--------------
<Caption>
Shares Value
- ----------------------------------------------------------------------------
PREFERRED STOCKS: 0.4%
AUTO MANUFACTURERS: 0.3%
167,874 General Motors 4,180,063
--------------
4,180,063
--------------
</Table>
<Table>
<Caption>
Shares Value
- ----------------------------------------------------------------------------
MEDIA: 0.1%
$ 2,750 CSC Holdings, Inc. $ 282,563
26 @ Paxson 256,750
2,250 Primedia, Inc. 216,563
--------------
755,876
--------------
TELECOMMUNICATIONS: 0.0%
120 @ Crown Castle, Inc. 131,700
--------------
131,700
--------------
Total Preferred Stocks
(Cost $5,068,744) 5,067,639
--------------
Total Long-Term Investments
(Cost $1,302,773,953) 1,335,646,053
--------------
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 11.9%
COMMERCIAL PAPER: 10.5%
$ 12,000,000 S AOL TIME WARNER, Inc.,
1.340%, due 07/15/03 11,993,747
12,000,000 Blue Ridge Asset Funding,
1.070%, due 07/31/03 11,989,300
13,000,000 S Credit Suisse First Boston,
1.250%, due 07/21/03 12,990,972
13,000,000 S Crown Point Capital,
1.040%, due 07/18/03 12,993,616
14,000,000 S Deere & Company,
1.330%, due 07/25/03 13,987,587
14,000,000 S Diamlerchrysler,
1.260%, due 08/04/03 13,983,340
</Table>
See Accompanying Notes to Financial Statements
78
ING
VP
BOND
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
COMMERCIAL PAPER (CONTINUED)
$ 12,000,000 S Edison Asset Security LLC,
1.230%, due 07/28/03 $ 11,988,930
14,000,000 S Ford Motor Credit Corp.,
1.400%, due 07/28/03 13,985,300
13,500,000 S General Motors Accept.,
1.420%, due 07/24/03 13,487,753
12,000,000 S Household Finance Corp.,
1.250%, due 07/02/03 11,999,583
14,000,000 S Kraft Foods, Inc.,
1.450%, due 07/25/03 13,986,467
--------------
143,386,595
--------------
REPURCHASE AGREEMENT: 1.4%
19,770,000 S State Street Repurchase Agreement
dated 06/30/03, 1.100%, due 07/01/03,
$6,688,204 to be received upon
repurchase (Collateralized by
$6,820,000 Federal Home Loan Bank,
1.300%, Market Value $6,826,397, due
06/28/04) 19,770,000
--------------
Total Short-Term Investments
(Cost $163,156,595) 163,156,595
--------------
</Table>
<Table>
TOTAL INVESTMENTS IN SECURITIES
(COST $1,465,930,548)* 109.4% $1,498,802,648
OTHER ASSETS AND LIABILITIES-NET (9.4) (129,365,254)
------ --------------
NET ASSETS 100.0% $1,369,437,394
====== ==============
</Table>
<Table>
@ Non-income producing security
@@ Foreign Issuer
# Securities purchased pursuant to Rule 144A, under the
Securities Act of 1933 and may not be resold subject to that
rule except to qualified institutional buyers.
XX Value of securities obtained from one or more dealers making
markets in the securities which have been adjusted based on
the Portfolio's valuation procedures.
TBA To be announced
S Segregated securities for swaps and when-issued or delayed
delivery securities held at June 30, 2003.
REITs Real Estate Investment Trusts
* Cost for federal income tax purposes is the same as for
financial statement purposes. Net unrealized appreciation
consists of:
</Table>
<Table>
Gross Unrealized Appreciation $36,178,756
Gross Unrealized Depreciation (3,306,656)
-----------
Net Unrealized Appreciation $32,872,100
===========
</Table>
Information concerning open swap contract at June 30, 2003 is shown below:
<Table>
SWAP COUNTER PARTY MERRILL LYNCH
Notional Principal $6,805,000
Fund will Pay: Notional amount times (libor rate +0.90%) times actual days
divided by 360
Effective LIBOR rate: 1.2788%
Fund will receive: Notional amount times Index Return [1]. Positive amounts are
paid to the Fund. The absolute value of negative amounts are
paid to Merrill Lynch Capital Services.
Index: U.S. High Yield Cash Pay Index
Payment Date: Quarterly on the 2nd
Net unrealized gain: $591,101
Termination date: July 2, 2003
</Table>
<Table>
[1] Index return calculation: (Ending Index Level -- Starting
Index Level) / Starting Index Level.
</Table>
See Accompanying Notes to Financial Statements
79
ING
VP
MONEY
MARKET
PORTFOLIO(1) PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
ASSET-BACKED COMMERCIAL PAPER: 17.3%
$ 14,500,000 Blue Ridge Asset Funding,
1.050%, due 07/14/03 $ 14,494,502
14,000,000 Blue Ridge Asset Funding,
1.070%, due 07/31/03 13,987,517
14,800,000 Crown Point Capital,
0.950%, due 10/09/03 14,752,936
14,500,000 Crown Point Capital,
1.010%, due 09/19/03 14,462,590
26,400,000 Crown Point Capital,
1.160%, due 09/10/03 26,342,712
15,000,000 Crown Point Capital,
1.230%, due 08/05/03 14,982,062
14,500,000 Edison Asset Securitization LLC,
1.140%, due 11/17/03 14,442,290
15,000,000 Edison Asset Securitization LLC,
1.250%, due 07/16/03 14,992,188
14,400,000 Galaxy Funding, Inc.,
1.170%, due 08/27/03 14,375,952
9,300,000 Galaxy Funding, Inc.,
1.250%, due 07/28/03 9,291,281
14,500,000 Jupiter Securitization Corp.,
0.990%, due 07/23/03 14,491,228
14,500,000 Jupiter Securitization Corp.,
1.050%, due 07/15/03 14,494,079
14,500,000 Old Line Funding Corp.,
1.230%, due 07/09/03 14,496,037
14,100,000 Old Line Funding Corp.,
1.375%, due 07/24/03 14,089,415
16,000,000 Preferred Receivable Funding Corp.,
1.200%, due 07/02/03 15,999,467
14,500,000 Thunder Bay Funding, Inc.,
1.160%, due 07/28/03 14,487,385
10,900,000 Thunder Bay Funding, Inc.,
1.190%, due 07/18/03 10,893,875
--------------
Total Asset-Backed Commercial Paper
(Cost $251,073,877) 251,075,516
--------------
CERTIFICATES OF DEPOSIT: 8.1%
16,000,000.. @@ Barclays Bank PLC,
1.260%, due 09/03/03 16,005,760
17,500,000.. @@ Barclays Bank PLC,
1.620%, due 12/09/03 17,543,750
15,450,000.. @@ Canadian Imperial Bank,
1.290%, due 08/11/03 15,477,931
19,000,000 HBOS Treasury Services,
1.250%, due 07/29/03 18,999,832
17,900,000 State Street Bank & Trust,
1.220%, due 07/06/04 17,916,110
14,000,000 Washington Mutual Bank,
1.220%, due 11/25/03 14,009,520
17,100,000 Washington Mutual Bank,
1.290%, due 10/17/03 17,112,483
--------------
Total Certificates of Deposit
(Cost $116,963,494) 117,065,386
--------------
</Table>
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
COMMERCIAL PAPER: 3.8%
16,000,000 Credit Suisse First Boston,
1.250%, due 07/21/03 $ 15,988,889
9,250,000 Household Finance Corp.,
0.980%, due 09/03/03 9,231,038
$ 15,000,000 Household Finance Corp.,
1.240%, due 07/03/03 14,998,967
14,000,000 UBS Finance, Inc.,
1.030%, due 07/11/03 13,995,994
--------------
Total Commercial Paper
(Cost $54,217,734) 54,214,888
--------------
CORPORATE NOTES: 55.9%
24,100,000 American Honda Finance,
1.320%, due 08/04/03 24,100,294
18,000,000 American Honda Finance,
1.400%, due 09/16/03 18,006,660
14,817,000 Associates Corp.,
5.750%, due 11/01/03 15,041,181
18,700,000 Bank Of America Corp.,
1.354%, due 07/07/03 18,700,348
25,500,000 Bank Of America Corp.,
6.820%, due 08/18/03 25,503,060
9,500,000 Bank Of New York,
1.310%, due 06/25/04 9,501,045
5,800,000... @@ Bank Of Scotland Treasury Services,
1.770%, due 01/22/04 5,823,316
16,000,000 Bank One,
1.290%, due 02/24/04 16,001,280
16,000,000 Bank One,
1.290%, due 03/04/04 16,001,280
14,000,000 Bank One,
1.933%, due 02/23/04 14,011,900
9,760,000 Bankamerica Corp.,
5.750%, due 03/01/04 10,055,533
17,900,000.. @@ Barclays Bank PLC,
1.280%, due 03/08/04 17,925,955
3,920,000 Bell Atlantic,
5.875%, due 02/01/04 4,021,058
17,000,000 Bellsouth Corp.,
4.160%, due 04/26/04 17,405,790
16,000,000 BP Capital,
1.295%, due 03/08/04 16,001,760
15,000,000 @@ Canadian Imperial Bank,
1.295%, due 12/15/03 15,000,352
11,300,000 Chase Manhattan Bank,
1.074%, due 06/30/04 11,294,689
24,000,000 Citigroup, Inc.,
3.848%, due 07/17/03 24,001,255
5,600,000 First Union National Bank,
1.660%, due 02/20/04 5,613,832
8,000,000 First Union National Bank,
5.268%, due 06/08/04 8,010,720
13,000,000 Fleet Boston Corp.,
6.913%, due 07/31/03 13,002,365
16,000,000 General Electric Capital,
1.340%, due 07/09/04 16,013,120
18,850,000 General Electric Capital,
1.770%, due 01/28/04 18,856,032
25,500,000 General Electric Capital,
2.019%, due 10/22/03 25,516,065
15,000,000 Goldman Sachs,
1.400%, due 10/27/03 15,013,500
16,000,000 Goldman Sachs,
1.350%, due 09/26/03 16,011,200
32,000,000 Goldman Sachs,
1.604%, due 08/01/03 32,000,000
5,150,000 GTE North,
6.000%, due 01/15/04 5,280,964
19,500,000 HBOS Treasury Services PLC,
1.270%, due 06/24/04 19,509,360
6,100,000 Heller Financial, Inc.,
6.000%, due 03/19/04 6,306,790
</Table>
See Accompanying Notes to Financial Statements
80
ING
VP
MONEY
MARKET
PORTFOLIO(1)PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------------------
$ 12,800,000 Household Finance Corp.,
4.520%, due 09/15/03 $ 12,879,872
5,400,000 Household Finance Corp.,
6.930%, due 09/26/03 5,402,430
9,200,000 Merrill Lynch & Co., Inc.,
1.321%, due 11/19/03 9,200,000
23,950,000 Merrill Lynch & Co., Inc.,
1.590%, due 03/08/04 24,005,324
12,800,000 Merrill Lynch & Co., Inc.,
1.987%, due 08/01/03 12,803,642
13,500,000 Money Market Trust LLY,
1.370%, due 06/03/04 13,504,576
18,300,000 Money Market Trust Series 2003-A,
1.439%, due 02/19/04 18,303,843
31,400,000 Money Market Trust Series A-1,
1.460%, due 07/09/04 31,404,082
18,000,000 @@ Rabobank Nederland,
1.293%, due 01/22/04 18,024,120
18,000,000 @@ Rabobank Nederland,
1.295%, due 01/23/04 18,024,840
11,000,000 Salomon Smith Barney,
1.480%, due 11/13/03 11,009,900
19,000,000 Salomon Smith Barney,
1.970%, due 02/20/04 19,021,280
30,000,000 SBC Communications, Inc.,
4.180%, due 06/05/04 30,964,500
31,000,000 Toyota Motor Credit Corp.,
1.370%, due 01/16/04 31,004,650
15,000,000 US Bancorp,
1.569%, due 09/15/03 15,004,950
8,000,000 US Bank,
1.390%, due 11/14/03 8,001,920
15,500,000 Washington Mutual Bank,
1.260%, due 11/13/03 15,513,020
9,000,000 Wells Fargo Bank,
1.280%, due 02/06/04 9,001,350
18,000,000 Wells Fargo Bank,
1.300%, due 01/26/04 18,001,440
18,900,000 Wells Fargo Bank,
1.321%, due 11/24/03 18,900,756
10,000,000 Wells Fargo Bank,
1.338%, due 07/02/04 10,003,400
--------------
Total Corporate Notes
(Cost $809,132,802) 809,510,599
--------------
U.S. GOVERNMENT AGENCY OBLIGATIONS: 8.7%
16,000,000 Federal Home Loan Bank,
1.410%, due 03/05/04 16,006,560
16,000,000 Federal Home Loan Bank,
1.410%, due 03/08/04 16,006,720
20,200,000 Federal Home Loan Bank,
5.375%, due 01/05/04 20,645,612
8,900,000 Federal Home Loan Bank,
5.500%, due 02/25/04 9,156,053
28,000,000 Federal Home Loan Mortgage
Corporation,
3.250%, due 01/15/04 28,332,360
3,900,000 Federal Home Loan Mortgage
Corporation,
3.400%, due 02/20/04 3,958,110
$ 15,000,000 Federal National Mortgage Association,
1.250%, due 07/07/04 15,004,200
16,000,000 Federal National Mortgage Association,
5.125%, due 02/13/04 16,400,480
--------------
Total U.S. Government Agency
Obligations
(Cost $125,399,430) 125,510,095
--------------
REPURCHASE AGREEMENT: 6.9%
100,555,000 Morgan Stanley Repurchase Agreement
dated 06/30/03, 1.100%, due 07/01/03,
$100,558,073 to be received upon
repurchase (Collateralized by total
$98,735,000 Federal National Mortgage
Association, Market Value
$102,570,931)(2) 100,555,000
--------------
Total Repurchase Agreement
(Cost $100,555,000) 100,555,000
--------------
</Table>
<Table>
TOTAL INVESTMENTS IN SECURITIES
(COST $1,457,342,337)* 100.7% $1,457,931,484
OTHER ASSETS AND LIABILITIES-NET (0.7) (10,342,021)
------ --------------
NET ASSETS 100.0% $1,447,589,463
====== ==============
</Table>
<Table>
@@ Foreign Issuer
PLC Public Limited Company
(1) All securities with a maturity date greater than one year
have a variable rate, a demand feature, are prerefunded,
have optional or mandatory put resulting in an effective
maturity of one year or less. Rate shown reflects current
rate.
(2) Collateral information for the repurchase agreement is as
follows:
</Table>
<Table>
<Caption>
PAR MARKET MATURITY
VALUE RATE VALUE DATE
----- ---- ------ --------
$11,000,000 4.375% $ 11,925,260 10/15/06
10,000,000 5.250% 10,248,333 08/14/06
10,265,000 3.000% 10,410,181 07/29/04
10,000,000 5.625% 10,464,062 05/14/04
10,000,000 4.400% 10,180,378 05/07/05
5,180,000 5.250% 5,801,603 04/15/07
8,470,000 3.625% 8,700,724 04/15/04
3,580,000 2.375% 3,632,775 04/13/06
10,100,000 4.750% 10,501,921 03/15/04
11,120,000 5.125% 11,611,713 02/13/04
9,020,000 2.750% 9,093,981 11/14/05
----------- ------------
98,735,000 102,570,931
----------- ------------
</Table>
<Table>
* Cost for federal income tax purposes is the same as for
financial statement purposes. Net unrealized appreciation
consists of:
</Table>
<Table>
Gross Unrealized Appreciation $649,262
Gross Unrealized Depreciation (60,115)
--------
Net Unrealized Appreciation $589,147
========
</Table>
See Accompanying Notes to Financial Statements
81
ING
VP
MONEY
MARKET
PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Percentage of
Industry Net Assets
- --------------------------------------------------------------------------
Asset-Backed Commercial Paper 17.3%
Bank holding companies 3.8%
Commercial Banks, NEC 1.7%
Federal & Federally-Sponsored Credit Agencies 8.7%
Foreign bank, branches and agencies 13.3%
Miscellaneous Business Credit Institution 1.3%
National Commercial Banks 16.4%
Personal Credit Institutions 16.4%
Pharmaceutical Preparations 0.9%
Security Brokers, Dealers & Flotation Companies 9.6%
Short-Term Business Credit Institutions 0.4%
Telephone Communications 4.0%
Repurchase Agreement 6.9%
Other Assets and Liabilities, Net -0.7%
-----
NET ASSETS 100.0%
=====
</Table>
See Accompanying Notes to Financial Statements
82
DIRECTOR AND OFFICER INFORMATION (Unaudited)
- --------------------------------------------------------------------------------
The business and affairs of the Portfolios are managed under the direction of
the Portfolios' Board of Directors. Information pertaining to the Director and
Officers of the Portfolios is set forth below. The Statement of Additional
Information includes additional information about directors of the Registrant
and is available, without charge, upon request at 1-800-992-0180.
<Table>
<Caption>
TERM OF OFFICE
POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH COMPANY TIME SERVED(1) DURING THE PAST FIVE YEARS
- --------------------- ---------------- -------------- --------------------------
INDEPENDENT DIRECTORS
Albert E. DePrince, Jr. Director June, 1998 Director, Business and Economic Research
7337 E. Doubletree Ranch Road to present Center (1999 to present) and Professor
Scottsdale, AZ 85258 of Economics and Finance, Middle
Born: 1941 Tennessee State University (1991 to
present).
Maria T. Fighetti Director April, 1994 Associate Commissioner, Contract
7337 E. Doubletree Ranch Road to present Management -- Health Services for New
Scottsdale, AZ 85258 York City Department of Mental Health,
Born: 1943 Mental Retardation and Alcohol Services
(1973 to 2002).
Sidney Koch Director April, 1994 Financial Adviser and Self-Employed
7337 E. Doubletree Ranch Road to present (January 1993 to present).
Scottsdale, AZ 85258
Born: 1935
Corine T. Norgaard Director June, 1991 Dean, Barney School of Business,
7337 E. Doubletree Ranch Road to present University of Hartford (August 1996 to
Scottsdale, AZ 85258 present).
Born: 1937
Edward T. O'Dell Director June, 2002 Formerly, Partner/Chairman of Financial
7337 E. Doubletree Ranch Road to present Service Group, Goodwin Proctor LLP (June
Scottsdale, AZ 85258 1966 to September 2000); Chairman,
Born: 1935 Committee I -- International Bar
Association (1995 to 1999).
Joseph E. Obermeyer(2) Director January, 2003 President, Obermeyer & Associates, Inc.
7337 E. Doubletree Ranch Road to present (November 1999 to present) and Senior
Scottsdale, AZ 85258 Manager, Arthur Anderson LLP (1995 to
Born: 1957 October 1999).
DIRECTORS WHO ARE "INTERESTED
PERSONS"
J. Scott Fox(3) Director December, 1997 President and Chief Executive Officer
Aeltus Investment Management, to present (April 2001 to present), Managing
Inc. Director and Chief Operating Officer
10 State House Square (April 1994 to April 2001), Chief
Hartford, CT Financial Officer (April 1994 to July
Born: 1955 2001), Aeltus Investment Management,
Inc.; Executive Vice President (April
2001 to present), Director, Chief
Operating Officer (February 1995 to
present), Chief Financial Officer,
Managing Director (February 1995 to
April 2001), Aeltus Capital, Inc; Senior
Vice President -- Operations, Aetna Life
Insurance and Annuity Company, March
1997 to December 1997.
<Caption>
NUMBER OF
PORTFOLIOS
IN FUND
COMPLEX
OVERSEEN BY OTHER DIRECTORSHIPS
NAME, ADDRESS AND AGE DIRECTOR HELD BY DIRECTOR
- --------------------- ----------- -------------------
INDEPENDENT DIRECTORS
Albert E. DePrince, Jr. 54 --
7337 E. Doubletree Ranch Road
Scottsdale, AZ 85258
Born: 1941
Maria T. Fighetti 54 --
7337 E. Doubletree Ranch Road
Scottsdale, AZ 85258
Born: 1943
Sidney Koch 54 --
7337 E. Doubletree Ranch Road
Scottsdale, AZ 85258
Born: 1935
Corine T. Norgaard 54 Director/Trustee, Mass Mutual
7337 E. Doubletree Ranch Road Corporate Investors
Scottsdale, AZ 85258
Born: 1937
Edward T. O'Dell 54 --
7337 E. Doubletree Ranch Road
Scottsdale, AZ 85258
Born: 1935
Joseph E. Obermeyer(2) 54 --
7337 E. Doubletree Ranch Road
Scottsdale, AZ 85258
Born: 1957
DIRECTORS WHO ARE "INTERESTED
PERSONS"
J. Scott Fox(3) 54 Mr. Fox is a Director of IPC
Aeltus Investment Management, Financial Network, Inc.
Inc.
10 State House Square
Hartford, CT
Born: 1955
</Table>
83
DIRECTOR AND OFFICER INFORMATION (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
TERM OF OFFICE
POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH COMPANY TIME SERVED(1) DURING THE PAST FIVE YEARS
- --------------------- ---------------- -------------- --------------------------
DIRECTORS WHO ARE "INTERESTED
PERSONS"
Thomas J. McInerney(4) Director April, 2002 Chief Executive Officer, ING U.S.
7337 E. Doubletree Ranch Rd. to present Financial Services (September 2001 to
Scottsdale, AZ 85258 present); General Manager and Chief
Born: 1956 Executive Officer, ING U.S. Worksite
Financial Services (December 2000 to
present); Member, ING Americas Executive
Committee (2001 to present); President,
Chief Executive Officer and Director of
Northern Life Insurance Company (2001 to
present), ING Aeltus Holding Company,
Inc. (2000 to present), ING Retail
Holding Company (1998 to present).
Formerly, ING Life Insurance and Annuity
Company (1997 to November 2002); ING
Retirement Holdings, Inc. (1997 to March
2003); General Manager and Chief
Executive Officer, ING Worksite Division
(December 2000 to October 2001),
President, ING-SCI, Inc. (August 1997 to
December 2000); President, Aetna
Financial Services (August 1997 to
December 2000); Head of National
Accounts, Core Sales and Marketing,
Aetna U.S. Healthcare (April 1996 to
March 1997);
<Caption>
NUMBER OF
PORTFOLIOS
IN FUND
COMPLEX
OVERSEEN BY OTHER DIRECTORSHIPS
NAME, ADDRESS AND AGE DIRECTOR HELD BY DIRECTOR
- --------------------- ----------- -------------------
DIRECTORS WHO ARE "INTERESTED
PERSONS"
Thomas J. McInerney(4) 165 Director, Hemisphere, Inc.
7337 E. Doubletree Ranch Rd. (May 2003 -- Present).
Scottsdale, AZ 85258 Trustee, ING Investors Trust
Born: 1956 (February 2002 -- Present);
Director, Equitable Life
Insurance Co., Golden American
Life Insurance Co., Life
Insurance Company of Georgia,
Midwestern United Life
Insurance Co., ReliaStar Life
Insurance Co., Security Life
of Denver, Security
Connecticut Life Insurance
Co., Southland Life Insurance
Co., USG Annuity and Life
Company, and United Life and
Annuity Insurance Co. Inc
(March 2001 -- Present);
Trustee, Ameribest Life
Insurance Co., (2001-2003);
Trustee, First Columbine Life
Insurance Co., (2001-2002);
Member of the Board, National
Commission on Retirement
Policy, Governor's Council on
Economic Competitiveness and
Technology of Connecticut,
Connecticut Business and
Industry Association,
Bushnell; Connecticut Forum;
Metro Hartford Chamber of
Commerce; and is Chairman,
Concerned Citizens for
Effective Government.
</Table>
- ---------------
(1) Directors serve until their successors are duly elected and qualified,
subject to the Board's retirement policy.
(2) Mr. Obermeyer was elected to the Board on January 1, 2003.
(3) Mr. Fox is an "interested person", as defined by the Investment Company Act
of 1940 Act, as amended ("1940 Act"), because of his relationship with
Aeltus Investment Management, Inc, an affiliate of ING Investments, LLC.
(4) Mr. McInerney is an "interested person", as defined by the Investment
Company Act of 1940 Act, as amended ("1940 Act") because of his relationship
with ING U.S. Worksite Financial Services, an affiliate of ING Investments,
LLC.
84
DIRECTOR AND OFFICER INFORMATION (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
TERM OF OFFICE
POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH COMPANY SERVICE(1) DURING THE LAST FIVE YEARS
- --------------------- ---------------- -------------- --------------------------
OFFICERS:
James M. Hennessy President, Chief February 2002 President and Chief Executive Officer,
7337 E. Doubletree Ranch Rd. Executive Officer, to present ING Capital Corporation, LLC, ING Funds
Scottsdale, AZ 85258 and Chief Services, LLC, ING Advisors, Inc., ING
Born: 1949 Operating Officer Investments, LLC, Lexington Funds
Distributor, Inc., Express America T.C.,
Inc. and EAMC Liquidation Corp.
(December 2001 -- Present); Executive
Vice President and Chief Operating
Officer and ING Funds Distributor, LLC
(June 2000 -- Present). Formerly,
Executive Vice President and Chief
Operating Officer, ING Quantitative
Management, Inc. (October
2001 -- September 2002), Senior
Executive Vice President (June
2000 -- December 2000) and Secretary
(April 1995 -- December 2000), ING
Capital Corporation, LLC, ING Funds
Services, LLC, ING Investments, LLC, ING
Advisors, Inc., Express America T.C.,
Inc. and EAMC Liquidation Corp.;
Executive Vice President, ING Capital
Corporation, LLC and its affiliates (May
1998 -- June 2000); and Senior Vice
President, ING Capital Corporation, LLC
and its affiliates (April 1995 -- April
1998).
Stanley D. Vyner Executive Vice February 2002 Executive Vice President of ING
7337 E. Doubletree Ranch Rd. President to present Advisors, Inc. and ING Investments, LLC
Scottsdale, AZ 85258 (July 2000 to present) and Chief
Born: 1950 Investment Officer of the International
Portfolios, ING Investments, LLC (July
1996 to present). Formerly, President
and Chief Executive Officer of ING
Investments, LLC (August 1996 to August
2000).
Michael J. Roland Executive Vice April 2002 Executive Vice President, Chief
7337 E. Doubletree Ranch Rd. President and to present Financial Officer and Treasurer of ING
Scottsdale, AZ 85258 Assistant Funds Services, LLC, ING Funds
Born: 1958 Secretary Distributor, LLC, ING Advisors, Inc.,
Principal February, 2002 ING Investments, LLC, Lexington Funds
Financial Officer to present Distributor, Inc., Express America T.C.
Inc. and EAMC Liquidation Corp.
(December 2001 to present). Formerly,
Executive Vice President, Chief
Financial Officer and Treasurer ING
Quantitative Management (December
2001 -- September 2002), formerly,
Senior Vice President, ING Funds
Services, LLC, ING Investments, LLC, and
ING Funds Distributor, LLC (June 1998 to
December 2001) and Chief Financial
Officer of Endeavor Group (April 1997 to
June 1998).
Robert S. Naka Senior Vice February 2002 Senior Vice President and Assistant
7337 E. Doubletree Ranch Rd. President and to present Secretary of ING Funds Services, LLC,
Scottsdale, AZ 85258 Assistant ING Funds Distributor, LLC, ING
Born: 1963 Secretary Advisors, Inc., ING Capital Corporation,
LLC ING Investments, LLC, (October 2001
to present) and Lexington Funds
Distributor, Inc. (December 2001 to
present). Formerly, Senior Vice
President and Assistant Secretary, ING
Quantitative Management, Inc. (October
2001 -- September 2002). Formerly, Vice
President, ING Investments, LLC (April
1997 to October 1999), ING Funds
Services, LLC (February 1997 to August
1999) and Assistant Vice President, ING
Funds Services, LLC (August 1995 to
February 1997).
Robyn L. Ichilov Vice President and February 2002 Vice President of ING Funds Services,
7337 E. Doubletree Ranch Rd. Treasurer to present LLC (October 2001 to present) and ING
Scottsdale, AZ 85258 Investments, LLC (August 1997 to
Born: 1967 present); Accounting Manager, ING
Investments, LLC (November 1995 to
present).
Kimberly A. Anderson Vice President and February 2002 Vice President and Secretary of ING
7337 E. Doubletree Ranch Rd. Secretary to present Funds Services, LLC, ING Funds
Scottsdale, AZ 85258 Distributor, LLC, ING Advisors, Inc.,
Born: 1964 ING Investments, LLC (October 2001 to
present) and Lexington Funds
Distributor, Inc. (December 2001 to
present). Formerly, Vice President, ING
Quantitative Management, Inc. (October
2001 -- September 2002). Formerly,
Assistant Vice President of ING Funds
Services, LLC (November 1999 to January
2001) and has held various other
positions with ING Funds Services, LLC
for more than the last five years.
Lauren D. Bensinger Vice President March 2003 Vice President and Chief Compliance
7337 E. Doubletree Ranch Rd. to present Officer, ING Funds Distributor, LLC.
Scottsdale, AZ 85258 (July 1995 -- Present); Vice President
Born: 1954 (February 1996 -- Present) and Chief
Compliance Officer (October
2001 -- Present) ING Investments, LLC;
Vice President and Chief Compliance
Officer, ING Advisors, Inc. (July
2000 -- Present), Vice President and
Chief Compliance Officer, ING
Quantitative Management, Inc. (July
2000 -- September 2002), and Vice
President, ING Fund Services, LLC (July
1995 -- Present).
</Table>
85
DIRECTOR AND OFFICER INFORMATION (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
TERM OF OFFICE
POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH COMPANY SERVICE(1) DURING THE LAST FIVE YEARS
- --------------------- ---------------- -------------- --------------------------
OFFICERS:
Maria M. Anderson Assistant Vice April 2002 Assistant Vice President of ING Funds
7337 E. Doubletree Ranch Rd. President to present Services, LLC (October 2001 to present).
Scottsdale, AZ 85258 Formerly, Manager of Fund Accounting and
Born: 1958 Fund Compliance, ING Investments, LLC
(September 1999 to November 2001);
Section Manager of Fund Accounting,
Stein Roe Mutual Funds (July 1998 to
August 1999); and Financial Reporting
Analyst, Stein Roe Mutual Funds (August
1997 to July 1998).
Todd Modic Assistant Vice April 2002 Vice President of Financial
7337 E. Doubletree Ranch Rd. President to present Reporting -- Fund Accounting of ING
Scottsdale, AZ 85258 Funds Services, LLC (September 2002 to
Born: 1967 present). Director of Financial
Reporting of ING Funds Services, LLC
(March 2001 to September 2002).
Formerly, Director of Financial
Reporting, Axient Communications, Inc.
(May 2000 to January 2001) and Director
of Finance, Rural/Metro Corporation
(March 1995 to May 2000).
Susan P. Kinens Assistant Vice March 2003 Assistant Vice President and Assistant
7337 E. Doubletree Ranch Rd. President and to present Secretary, ING Funds Services, LLC
Scottsdale, AZ 85258 Assistant (December 2002 -- Present); and has held
Born: 1976 Secretary various other positions with ING Funds
Services, LLC for the last five years.
</Table>
- ---------------
(1) The officers hold office until the next annual meeting of the Directors and
until their successors are duly elected and qualified.
86
INVESTMENT MANAGER
ING Investments, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258
ADMINISTRATOR
ING Funds Services, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258
DISTRIBUTOR
ING Funds Distributor, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258
1-800-992-0180
TRANSFER AGENT
DST Systems, Inc.
P.O. Box 419368
Kansas City, Missouri 64141-6368
CUSTODIAN
Bank of New York
100 Colonial Center Parkway, Suite 300
Lake Mary, FL 32746
LEGAL COUNSEL
Dechert
1775 Eye Street, N.W.
Washington, D.C. 20006
INDEPENDENT AUDITORS
KPMG LLP
99 High Street
Boston, MA 02110-2371
Contact your investment professional, or call (800) 992-0180 for
a current ING Funds prospectus. The prospectuses contain more
complete information on all charges, fees, risks and expenses.
Please read the prospectus carefully before investing or sending
money.
[ING LOGO]
AVPSAR0603 -- 081803
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEMS 4-8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Based on our evaluation conducted within 90 days of the filing date, hereof,
the design and operation of the registrant's disclosure controls and procedures
are effective to ensure that material information relating to the registrant is
made known to the certifying officers by others within the appropriate entities,
particularly during the period in which Forms N-CSR are being prepared, and the
registrant's disclosure controls and procedures allow timely preparation and
review of the information for the registrant's Form N-CSR and the officer
certifications of such Form N-CSR.
(b) There were no significant changes in the registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
ITEM 10. EXHIBITS.
(a) Not applicable.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act (17
CFR 270.30a-2) is attached hereto as EX-99.CERT. The officer certifications
required by Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto as
EX-99.906CERT
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): ING VP Money Market Portfolio
By /s/ James M. Hennessy
--------------------------
James M. Hennessy
President and Chief Executive Officer
Date: August 28, 2003
-------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ James M. Hennessy
--------------------------
James M. Hennessy
President and Chief Executive Officer
Date: August 28, 2003
-------------------------------------
By /s/ Michael J. Roland
--------------------------
Michael J. Roland
Executive Vice President and Chief Financial Officer
Date: August 28, 2003
-------------------------------------