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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: 811-08895
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ING Funds Trust
---------------
(Exact name of registrant as specified in charter)
7337 E. Doubletree Ranch Rd., Scottsdale, AZ 85258
--------------------------------------------------
(Address of principal executive offices) (Zip code)
The Corporation Trust Company, 1209 Orange Street, Wilmington, DE 19801
-----------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 1-800-992-0180
---------------
Date of fiscal year end: March 31
--------
Date of reporting period: September 30, 2003
------------------
ITEM 1. REPORTS TO STOCKHOLDERS.
The following is a copy of the report transmitted to stockholders pursuant to
Rule 30e-1 under the Act (17 CFR 270.30e-1):
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SEMI-ANNUAL REPORT
SEMI-ANNUAL REPORT
SEPTEMBER 30, 2003
CLASSES A, B, C AND M
FIXED INCOME FUNDS
ING GNMA INCOME FUND
ING HIGH YIELD BOND FUND
ING HIGH YIELD OPPORTUNITY FUND
ING INTERMEDIATE BOND FUND
ING NATIONAL TAX-EXEMPT BOND FUND
ING STRATEGIC BOND FUND
MONEY MARKET FUNDS
ING CLASSIC MONEY MARKET FUND
ING MONEY MARKET FUND
ING LEXINGTON MONEY MARKET TRUST
[GRAPHIC]
[ING FUNDS LOGO]
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TABLE OF CONTENTS
<Table>
President's Letter 1
Market Perspective 3
Portfolio Managers' Reports 4
Index Descriptions 19
Statements of Assets and Liabilities 20
Statements of Operations 24
Statements of Changes in Net Assets 26
Financial Highlights 35
Notes to Financial Statements 52
Portfolios of Investments 68
Shareholder Meeting Information 100
Trustee and Officer Information 101
</Table>
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PRESIDENT'S LETTER
[PHOTO OF JAMES M. HENNESSY]
JAMES M. HENNESSY
Dear Shareholder,
What a difference a half a year can make. When writing my last letter to our
shareholders -- six months ago -- it was hard to escape the sense of anxiety
that many investors everywhere were experiencing. Now, less than a year later, I
believe there may be a renewed sense of optimism among investors -- cautious
optimism, to be sure, but optimism nonetheless.
And I believe there are good, solid reasons for this improved outlook. For one,
many key corporations have been reporting profits in recent months. Granted, the
numbers are modest, but they have been noteworthy, consistent and credible
because many of these same companies are employing stricter accounting standards
following the Enron debacle. Going hand-in-hand with these upbeat figures are
the improving price-to-earning ratios and improving valuations that many
investors are now seeing.
The reasons for renewed confidence continue. A year ago, there was much
uncertainty regarding the prospect of war. Now, much of that uncertainty is
behind us. Although many questions remain about the U.S.'s future role in Iraq,
the speed at which Baghdad fell was unprecedented and it brought a sense of calm
to many investors and triggered a positive impact on equities markets, which
reacted to the news with steady growth during the summer months. And while
mortgage and treasury-related sectors may have suffered in the blossoming equity
market, high-yield, floating-rate loan and convertible markets remain strong
enough to attract investors still squeamish about stocks.
This renewed confidence has been tempered, however, by recent events and news
stories concerning mutual fund trading practices, including after-hours trading
and market timing. I want to clearly state that ING Funds does not condone the
illegal practice of after-hours trading. In addition, it has been our
long-standing policy to discourage inappropriate market timing in our funds.
In fact, over the years, ING Funds has taken a variety of steps to address
inappropriate fund trading activity. We were among the first fund groups to
employ innovative techniques such as making extensive use of fair-value pricing
for foreign securities.
ING Funds believes that mutual funds are an important vehicle for individual
investors, because mutual funds provide the opportunity for investment in
professionally managed and monitored, diversified portfolios. As such, we
consider the fair treatment of committed investors to be of the utmost
importance. We continue to look for effective strategies to address fund trading
issues. We hope that the increased attention this issue is now receiving will
make it easier for the industry to effectively address inappropriate fund
trading in the future.
On behalf of everyone at ING Funds, thank you for your continued support. We
look forward to helping you meet your investment goals in the future.
Sincerely,
/s/ James M. Hennessy
James M. Hennessy
President
ING Funds
November 15, 2003
1
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MARKET PERSPECTIVE: SIX MONTHS ENDED SEPTEMBER 30, 2003
This was a remarkable six months for the world's financial markets. The quick
end to major conflict in Iraq meant that risk premia(1) could and did decline
across all major asset classes. Equities and the riskier sectors of the fixed
income markets soared. The less risky parts of the bond market went on a wild
ride and ended up not very far from where they started.
In the FIXED INCOME MARKETS, post-war relief predictably reduced the risk premia
in high yield bonds. They are, after all, high yield because there is greater
chance that investors won't get some or all of their principal back. A more
stable business environment reduces that risk. The Credit Suisse First Boston
(CSFB) High Yield Bond Index gained 13.1% during the six months ended September
30th. Less risky bonds did not perform as well. The Lehman Brothers U.S. Credit
Index, measuring returns on investment grade bonds, rose by 4.7%, while as a
whole government bonds were hard pressed to return their coupons. The Lehman
Brothers Government Bond Index rose just 1.7%. This, however, conceals the
tumult in high-grade bond markets during the period, when almost stock-like
volatility was seen. Much of this can be attributed to Federal Reserve Board's
Federal Open Market Committee ("FOMC" or the "Fed") Chairman Alan Greenspan. In
May, he moved markets by saying that the risk of deflation was small but that
the Federal Reserve might even buy bonds to forestall it, and that a second half
recovery was expected. This sent Treasury yields to decades-long low levels,
even as stocks continued their advance. The ten-year Treasury yield had started
April at 3.82%. It sank to 3.10% on June 13th. Bond yields had already come off
their low points when the FOMC disappointed markets on June 25th by reducing the
Fed Funds rate by only 1/4%. But, in mid-July, when Greenspan appeared to
downplay the likelihood that the FOMC would buy bonds after all and presented a
sanguine view of the economy, bond yields started to soar. Bond markets
stabilized in August as it became clear that the slump of the previous month had
been overdone. The ten-year Treasury yield peaked at 4.60%. Then in September,
as new doubts emerged about the strength of the U.S. recovery, and supported by
massive Treasury purchases from abroad, bonds recovered most of what they had
lost. By the end of the period, stressed investors in the ten-year Treasury
could reflect that for all that volatility, the yield on September 30th was
3.94%; just 12 basis points above the rate on March 31st. And, if they sought a
quieter life in Treasury Bills, the price of the three-month T-Bill at September
30th was the not-so-princely yield of 0.94% per annum.
World EQUITY MARKETS had their best six months in years. Global equities, as
measured by the Morgan Stanley Capital International (MSCI) World Index, jumped
22.7%. In the U.S., the Standard & Poors (S&P) 500 Index rose 18.5%. In tune
with the theme of shrinking risk premia, small cap stocks did much better than
mid cap stocks which in turn substantially outperformed large cap stocks. To
justify this there were increasingly encouraging signs. Second quarter Gross
Domestic Product (GDP) growth estimates were revised up to 3.3%, within which
corporate profits from current production rose 14.3% from the same quarter in
2002. Spending on equipment and software, a proxy for business investment, rose
by 8.3% (quarter over quarter at an annualized rate). Productivity growth was
estimated at the remarkable rate of 6.8%. And yet where were the jobs? The
September unemployment report showed another 93,000 decline in payrolls. The
nagging concern is that while growth, strong productivity and expanding profit
margins are eminently desirable, without jobs growth the recovery must surely
fade as consumers' incomes cannot rise fast enough to sustain it and those who
have a job feel less secure and confident about spending.
In CURRENCIES, the euro and the yen advanced to levels against the dollar not
seen in years, as the belief took hold that the U.S.'s burgeoning trade and
budget deficits, both approaching 5% of GDP, were unsustainable.
- ----------
(1) Risk premium (plural - "premia") is the expected additional return required
by investors for securities that are perceived to be riskier than safer
investments.
See accompanying index descriptions on page 19.
3
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ING GNMA INCOME FUND Portfolio Managers' Report
PORTFOLIO MANAGEMENT TEAM: Denis P. Jamison, CFA and Roseann G. McCarthy, Aeltus
Investment Management, Inc. -- the Sub-Adviser.
GOAL: The ING GNMA Income Fund (the "Fund") seeks to generate a high level of
current income, consistent with liquidity and safety of principal, through
investment primarily in Government National Mortgage Association ("Ginnie Mae",
"GNMA") mortgage-backed securities (also known as GNMA Certificates) that are
guaranteed as to the timely payment of principal and interest by the U.S.
Government.
PERFORMANCE: For the six months ended September 30, 2003, the Fund's class A
shares, excluding sales charges, provided a total return of 1.42% compared to
1.18% for the Lehman Brothers Mortgage-Backed Securities Index ("Lehman Mortgage
Index").
PORTFOLIO SPECIFICS: The Fund has a large percentage of its assets invested in
call-protected, multi-family mortgages, and active duration management often
gives the Fund exposure to thirty-year U.S. Treasury bonds. Accordingly, the
Fund tends to be more sensitive to interest rate changes than other
GNMA-oriented mutual funds. That was apparent in the results for the six months
ended September 30th. From mid-April to mid-June, ten-year bond yields tumbled
about 4% to 3.1%. This was actually bad news for most mortgage investors because
borrowers increasingly refinanced their loans. These prepayments limited the
appreciation of mortgage securities and reduced investment income. With our
emphasis on securities with reduced call risk, the Fund outperformance
continued. For the three months ended June 30th, the Fund out performed the
Lehman Mortgage Index by forty basis points. The market, however, reversed
quickly late June when it became clear that the Federal Reserve wasn't going to
support the bond market bubble. Yields started to climb and the ten-year U.S.
Treasury bonds reached 4.6% by early September. Unfortunately, we added mortgage
exposure in early July and despite our efforts to reduce interest rate
sensitivity later in the quarter, we couldn't salvage the return. We under
performed our benchmark by about twenty basis points in the three months ended
September 30, 2003, and the losses would have been a lot worse except for a
September bond rally. However, for the six month period as a whole we
outperformed the benchmark, especially due to a September bond market rally.
MARKET OUTLOOK: Bond price volatility increased during the September quarter.
Mortgage investors accounted for some of the increase as they bought and sold
U.S. Treasury securities to offset the swings in portfolio maturity caused by
changes in prepayments. However, investors also were reacting to uncertainties
regarding the pace of economic expansion, the value of the U.S. dollar, and the
massive increase in the Federal budget deficit. These will likely remain
concerns in the coming months. So, we anticipate continued wide price swings for
bonds; this will create both risks and opportunities. The Fund closed the
quarter with 6.5% of its assets in short-term U.S. Treasury securities. If
yields spike higher and investor sentiment for fixed income securities weakens,
we will likely use that liquidity to purchase longer-term bonds and increase the
interest rate sensitivity of the portfolio. And this process will likely be
reversed if the market rallies. We do not anticipate any significant trend
toward either higher or lower yields developing during the next six months.
Caution, flexibility, and liquidity may be the keys to good relative performance
in such a trendless, volatile market, and your Fund appears to be properly
positioned for this environment.
4
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Portfolio Managers' Report ING GNMH INCOME FUND
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED SEPTEMBER 30, 2003
--------------------------------------------------------------------------
SINCE INCEPTION SINCE INCEPTION SINCE INCEPTION
OF CLASS B OF CLASS C OF CLASS M
1 YEAR 5 YEAR 10 YEAR 10/6/00 10/13/00 2/23/01
------ ------ ------- --------------- --------------- ---------------
Including Sales Charge:
Class A(1) -2.07% 5.52% 6.40% -- -- --
Class B(2) -2.94% -- -- 6.42% -- --
Class C(3) 1.08% -- -- -- 7.21% --
Class M(4) -1.07% -- -- -- -- 5.11%
Excluding Sales Charge:
Class A 2.81% 6.55% 6.92% -- -- --
Class B 1.95% -- -- 7.30% -- --
Class C 2.06% -- -- -- 7.21% --
Class M 2.25% -- -- -- -- 6.45%
Lehman Brothers Mortgage-Backed
Securities Index 3.50% 6.52% 6.89% 7.67%(5) 7.67%(5) 6.50%(6)
</Table>
The table above illustrates the total return of ING GNMA Income Fund against the
Lehman Brothers Mortgage-Backed Securities Index. The Index is unmanaged and has
no cash in its portfolio, imposes no sales charges and incurs no operating
expenses. An investor cannot invest directly in an index. The Fund's performance
is shown both with and without the imposition of sales charges.
The performance table does not reflect the deduction of taxes that a shareholder
will pay on Fund distributions or the redemption of Fund shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Fund. Total returns would have been
lower had there been no waiver to the Fund.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING"
STATEMENTS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
(1) Reflects deduction of the maximum Class A sales charge of 4.75%.
(2) Reflects deduction of the Class B deferred sales charge of 5% and 3%,
respectively, for the 1 year and since inception returns.
(3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year
return.
(4) Reflects deduction of the maximum Class M sales charge of 3.25%.
(5) Since inception performance for index is shown from 10/01/00.
(6) Since inception performance for index is shown from 03/01/01.
PRINCIPAL RISK FACTOR(S): The market value of the Fund's portfolio securities
and the Fund's shares are neither insured or guaranteed by the U.S. Government.
GNMA certificates in the Fund's portfolio are subject to early prepayment. Net
Asset Value and Yield fluctuate. The value of the Fund's investment may fall
when interest rates rise. This Fund may be particularly sensitive to interest
rates because it primarily invests in U.S. Government securities. Debt
securities with longer durations tend to be more sensitive to changes in
interest rates, usually making them more voatile then debt securities with
shorter durations. Although FNMA and FHLMC are government sponsored enterprises,
their securities are not backed by the full faith and credit of the U.S.
Government. Consequently, there are somewhat greater credit risks involved with
investing in securities issued by those entities.
See accompanying index descriptions on page 19.
5
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ING HIGH YIELD BOND FUND Portfolio Managers' Report
PORTFOLIO MANAGEMENT TEAM: A team of investment professionals led by Greg
Jacobs, CFA and Kurt Kringelis, CFA, CPA, Aeltus Investment Management, Inc. --
the Sub-Adviser.
GOAL: The ING High Yield Bond Fund (the "Fund") seeks to provide investors with
a high level of current income and total return by investing at least 80% of its
assets in high yield (high risk) bonds, which are commonly referred to as "Junk
Bonds", that are unrated or rated below investment grade.
PERFORMANCE: For the six months ended September 30, 2003, the Fund's class A
shares, excluding sales charges, provided a total return of 7.53% compared to
13.16% for the Lehman Brothers High Yield Bond Index.
PORTFOLIO SPECIFICS: The health of the high yield bond market is often dependent
on factors generally associated with equity investments. Recent economic
releases have demonstrated that consumers are willing to spend their tax relief,
and massive mortgage refinancing continues to have a beneficial impact on
disposable incomes. A number of monthly barometers have exceeded consensus
forecasts recently. Despite decreasing job contraction and the pace of layoffs,
many observers remain disquieted by the slow pace of recovery, the domestic
unemployment picture and poor consumer confidence.
Returns for the Fund lagged the index over the last six months primarily due to
the portfolio's conservative quality and sector positioning. Specifically, the
Fund's underweight in CCC and lower grade securities, as well as its underweight
in volatile sectors such as finance and utilities, contributed significantly to
underperformance.
From a fundamental standpoint, we remain constructive on the high yield market.
Issuers in general have been more focused on balance sheet maintenance than
financing growth plans. Many companies have taken advantage of the strong market
in 2003 to refinance debt and extend scheduled maturities. As a result, we have
seen the annual default rate for the high yield market drop from over 10% a year
to about 5% currently.
MARKET OUTLOOK: Notwithstanding the fundamental improvements and achieved
returns, opportunities abound. We believe that current trends will continue over
the next 6-12 months, causing further spread tightening across the market. The
outlook for a stronger fourth calendar quarter is compelling especially with the
consumer so willing to spend. The twin deficits -- federal and current account
- -- will remain challenges; and we are not optimistic on the dollar. An upward
economic trajectory is becoming more apparent, but the slope and speed of
improvement may be less than past recoveries. As the fundamental environment
improves, we expect that the high yield market will continue to reward risk
takers, and we have added exposure to lower-rated, more volatile credits.
However, we have not and will not deviate from our long-term investment
philosophy of building a portfolio consisting of sound fundamental credits with
solid balance sheets and improving operations. Consistent with our philosophy,
we will continue to be conservatively positioned compared to the benchmark,
though we have taken steps to bridge the risk gap between the Fund and the
benchmark.
6
<Page>
Portfolio Managers' Report ING HIGH YIELD BOND FUND
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS FOR THE
PERIODS ENDED SEPTEMBER 30, 2003
------------------------------------
SINCE INCEPTION
1 YEAR 12/15/98
------ ---------------
Including Sales Charge:
Class A(1) 11.62% 4.26%
Class B(2) 11.32% 4.25%
Class C(3) 15.40% 4.56%
Excluding Sales Charge:
Class A 17.19% 5.32%
Class B 16.32% 4.55%
Class C 16.40% 4.56%
Lehman Brothers High Yield Bond
Securities Index 29.98% 4.19%(4)
</Table>
The table above illustrates the total return of ING High Yield Bond Fund against
the Lehman Brothers High Yield Bond Securities Index. The Index is unmanaged and
has no cash in its portfolio, imposes no sales charges and incurs no operating
expenses. An investor cannot invest directly in an index. The Fund's performance
is shown both with and without the imposition of sales charges.
The performance table does not reflect the deduction of taxes that a shareholder
will pay on Fund distributions or the redemption of Fund shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Fund. Total returns would have been
lower had there been no waiver to the Fund.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING"
STATEMENTS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY.
(1) Reflects deduction of the maximum Class A sales charge of 4.75%.
(2) Reflects deduction of the Class B deferred sales charge of 5% and 2%,
respectively, for the 1 year and since inception returns.
(3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year
return.
(4) Since inception performance for index is shown from 12/01/98.
PRINCIPAL RISK FACTOR(S): 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 fluctuation, economic and political risks not
found in investments that are soley domestic. The value of the Fund's
investments may fall when interest rates rise. The Fund may be sensitive to
changes in interest rates because it may invest in debt securities with
intermediate and long terms to maturity. Debt securities with longer durations
tend to be more sensitive to changes in interest rates, usually making them more
volatile than debt securities with shorter durations. The Fund could lose money
if it cannot sell a security at the time and price that would be most beneficial
to the Fund. Investment in small-capitalization companies involves greater risk
than is customarily associated with larger, more-established companies. The
securities may have limited market stability and may be subject to more erratic
market movements than securities of larger, more established companies or the
market averages in general.
See accompanying index descriptions on page 19.
7
<Page>
ING HIGH YIELD OPPORTUNITY FUND Portfolio Managers' Report
PORTFOLIO MANAGEMENT TEAM: A team of investment professionals led by Greg
Jacobs, CFA and Kurt Kringelis, CFA, CPA, Aeltus Investment Management, Inc. --
the Sub-Adviser.
GOAL: The ING High Yield Opportunity Fund (the "Fund") seeks a high level of
current income and capital growth primarily through investments in high yield
(high risk) debt securities, which are commonly referred to as "Junk Bonds",
including those in the lowest ratings.
PERFORMANCE: For the six months ended September 30, 2003, the Fund's class A
shares, excluding sales charges, provided a total return of 7.85% compared to
13.07% for the Credit Suisse First Boston High Yield Bond Index ("CSFB High
Yield Bond Index").
PORTFOLIO SPECIFICS: The health of the high yield bond market is often dependent
on factors generally associated with equity investments. Recent economic
releases have demonstrated that consumers are willing to spend their tax relief,
and massive mortgage refinancing continues to have a beneficial impact on
disposable incomes. A number of monthly barometers have exceeded consensus
forecasts recently. Despite decreasing job contraction and the pace of layoffs,
many observers remain disquieted by the slow pace of recovery, the domestic
unemployment picture and poor consumer confidence.
Returns for the Fund lagged the index over the last six months primarily due to
the portfolio's conservative quality and sector positioning. Specifically, the
Fund's underweight in CCC and lower grade securities, as well as its underweight
in volatile sectors such as finance and utilities, contributed significantly to
underperformance.
From a fundamental standpoint, we remain constructive on the high yield market.
Issuers in general have been more focused on balance sheet maintenance than
financing growth plans. Many companies have taken advantage of the strong market
in 2003 to refinance debt and extend scheduled maturities. As a result, we have
seen the annual default rate for the high yield market drop from over 10% a year
to about 5% currently.
MARKET OUTLOOK: Notwithstanding the fundamental improvements and achieved
returns, opportunities abound. We believe that current trends will continue over
the next 6-12 months, causing further spread tightening across the market. The
outlook for a stronger fourth calendar quarter is compelling especially with the
consumer so willing to spend. The twin deficits -- federal and current account
- -- will remain challenges; and we are not optimistic on the dollar. An upward
economic trajectory is becoming more apparent, but the slope and speed of
improvement may be less than past recoveries.
As the fundamental environment improves, we expect that the high yield market
will continue to reward risk takers, and we have added exposure to lower-rated,
more volatile credits. However, we have not and will not deviate from our
long-term investment philosophy of building a portfolio consisting of sound
fundamental credits with solid balance sheets and improving operations.
Consistent with our philosophy, we will continue to be conservatively positioned
compared to the benchmark, though we have taken steps to bridge the risk gap
between the Fund and the benchmark.
8
<Page>
Portfolio Managers' Report ING HIGH YIELD OPPORTUNITY FUND
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED SEPTEMBER 30, 2003
-------------------------------------------------------
SINCE INCEPTION SINCE INCEPTION
OF CLASS A, B AND C OF CLASS M
1 YEAR 5 YEAR 3/27/98 5/17/02
------ ------ ------------------- ---------------
Including Sales Charge:
Class A(1) 12.04% 0.04% -0.99% --
Class B(2) 11.95% 0.16% -0.80% --
Class C(3) 15.96% 0.42% -0.69% --
Class M(4) 13.54% -- -- 0.71%
Excluding Sales Charge:
Class A 17.62% 1.02% -0.11% --
Class B 16.95% 0.40% -0.70% --
Class C 16.96% 0.42% -0.69% --
Class M 17.36% -- -- 3.18%
Credit Suisse First Boston
High Yield Bond Index 28.05% 5.81% 4.30%(5) 14.73%(6)
</Table>
The table above illustrates the total return of ING High Yield Opportunity Fund
against the Credit Suisse First Boston High Yield Bond Index. The Index is
unmanaged and has no cash in its portfolio, imposes no sales charges and incurs
no operating expenses. An investor cannot invest directly in an index. The
Fund's performance is shown both with and without the imposition of sales
charges.
The performance table does not reflect the deduction of taxes that a shareholder
will pay on Fund distributions or the redemption of Fund shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Fund. Total returns would have been
lower had there been no waiver to the Fund.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING"
STATEMENTS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY.
(1) Reflects deduction of the maximum Class A sales charge of 4.75%.
(2) Reflects deduction of the Class B deferred sales charge of 5%, 2% and 1%
respectively, for the 1 year, 5 year and since inception returns.
(3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year
return.
(4) Reflects deduction of the maximum Class M sales charge of 3.25%.
(5) Since inception performance for index is shown from 04/01/98.
(6) Since inception performance for index is shown from 06/01/02.
PRINCIPAL RISK FACTOR(S): The Fund may be subject to more credit risk than other
income funds because it invests in high yield (or junk bond) debt securities,
which are considered predominately speculative with respect to the issuer's
continuing ability to meet interest and principal payments. This is especially
true during periods of economic uncertainty or economic downturns. The value of
the Fund's investments may fall when interest rates rise. Debt securities with
longer durations tend to be more sensitive to changes in interest rates, usually
making them more volatile than debt securities with shorter durations. High
yield bonds carry particular market risks and may experience greater volatility
and may be less liquid than higher quality investments. Foreign investing and
emerging markets do 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.
Investment in small-capitalization companies involves greater risk than is
customarily associated with larger, more established companies. The Fund could
lose money if it cannot sell a security at the time and price that would be most
beneficial to the Fund. Investment in small-capitalization companies involves
greater risk than is customarily associated with larger, more-established
companies. The securities may have limited market stability and may be subject
to more erratic market movements than securities of larger, more established
companies or the market averages in general.
See accompanying index descriptions on page 19.
9
<Page>
ING INTERMEDIATE BOND FUND Portfolio Managers' Report
PORTFOLIO MANAGEMENT: A team of investment professionals led by James B.
Kauffmann, Aeltus Investment Management, Inc. -- the Sub-Adviser.
GOAL: The ING Intermediate Bond Fund (the "Fund") seeks to provide investors
with a high level of current income, consistent with the preservation of capital
and liquidity by investing at least 80% of its assets in investment grade debt
securities.
PERFORMANCE: For the six months ended September 30, 2003, the Fund's class A
shares, excluding sales charges, provided a total return of 2.66% compared to
2.35% for the Lehman Brothers Aggregate Bond Index.
PORTFOLIO SPECIFICS: Our investment process seeks to outperform the Lehman
Brothers Aggregate Bond Index by emphasizing bond categories we believe are
attractive in terms of relative value and by selecting specific bonds that we
believe are the best opportunities in each category. Over the six-month period,
we tended to favor bonds issued by corporations, for example industrial,
financial and utility bonds, and also bonds supported by pools of mortgages on
real estate of various kinds.
From March 31, 2003 through September 30, 2003 the bond market produced positive
returns each month except June and July. The Fund generated its best return
compared to the Index in April, primarily because corporate bonds were the best
performing category, the Fund had an above-benchmark allocation to them, and the
bonds we owned produced better returns than the average for the corporate bond
sector.
After reaching forty-five year lows early in June, bond yields abruptly reversed
direction and climbed over 100 basis points (based on the ten-year U.S. Treasury
note), leaving July with the worst monthly decline in bond market values in
several years.
In fact, July witnessed one of the worst bond routs in memory, and it was the
only month in which the Fund did not outperform the Index. Hedging in the
mortgage market, confusing announcements from the Federal Reserve Board, and
positive economic releases together motivated investors to sell bonds and invest
elsewhere. Our process seldom leads us to make major adjustments based on the
outlook for interest rates. Accordingly, the Fund's modest underperformance in
July, when rates climbed sharply, was solely due to the Fund's positioning in
sectors and securities, and not a consequence of any attempt to forecast rates.
In the third calendar quarter overall, lower risk issues lagged behind as buyers
scrambled to add yield and became more comfortable with the macro economic
outlook. The bond groups we follow closely included, Agency bonds, which posted
a -0.35% return relative to similar U.S. Treasuries, following a summer full of
negative headlines, and mortgage-backed securities which sagged as well, -1.19%
during the quarter. On the other hand, credit-sensitive bonds had positive
excess returns, as risk aversion seemed to diminish. Industrials posted 0.89%,
financials posted 0.68%, and, despite a massive power blackout in the northeast
and mid-west, utilities were up 0.38% (all compared to similar U.S. Treasuries).
In general, the Fund benefited from a modest overweight to credit sensitive
bonds -- especially lower rated issues. In particular, our investment in high
yield bonds (issued by corporations judged to have relatively high credit risk)
and emerging market debt (bonds issued in developing market countries) produced
strong returns. Both sectors' returns are well into double digits calendar
year-to-date, and enhanced the Fund's performance over the entire reporting
period. Some deft trading in mortgage-backed securities and Agency bonds also
added value.
MARKET OUTLOOK: We believe that tax cuts, reduced corporate borrowing costs, and
negative real short rates are pushing the economy forward. Most domestic
economic measures are improving with the exception of unemployment, and
near-term prospects for inflationary problems remain muted. In our view, the
outlook going forward is compelling, especially with the consumer so willing to
spend. The twin deficits -- federal and current account -- will remain
challenges; and we are not optimistic on the dollar. Tactically, we are
overweight home and commercial mortgage-backed bonds, asset-backed securities,
and longer-dated corporate bonds, as well as high yield and emerging market
debt.
10
<Page>
Portfolio Managers' Report ING INTERMEDIATE BOND FUND
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED SEPTEMBER 30, 2003
--------------------------------------------
SINCE INCEPTION
1 YEAR 12/15/98
------ ---------------
Including Sales Charge:
Class A(1) 0.94% 7.20%
Class B(2) 0.07% 7.13%
Class C(3) 4.18% 7.49%
Excluding Sales Charge:
Class A 5.97% 8.29%
Class B 5.07% 7.45%
Class C 5.18% 7.49%
Lehman Brothers Aggregate Bond Index 5.41% 6.86%(4)
</Table>
The table above illustrates the total return of ING Intermediate Bond Fund
against the Lehman Brothers Aggregate Bond Index. The Index is unmanaged and has
no cash in its portfolio, imposes no sales charges and incurs no operating
expenses. An investor cannot invest directly in an index. The Fund's performance
is shown both with and without the imposition of sales charges.
The performance table does not reflect the deduction of taxes that a shareholder
will pay on Fund distributions or the redemption of Fund shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Fund. Total returns would have been
lower had there been no waiver to the Fund.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING"
STATEMENTS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY.
(1) Reflects deduction of the maximum Class A sales charge of 4.75%.
(2) Reflects deduction of the Class B defferred sales charge of 5% and 3%,
respectively, for the 1 year and since inception returns.
(3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year
return.
(4) Since inception performance for index is shown from 12/01/98.
PRINCIPAL RISK FACTOR(S): Exposure to financial, market, prepayment and interst
rate risks. The value of an investment in the Fund is not guaranteed and will
fluctuate. Higher yeilding bonds are subject to greater volatility and credit
risks. The Fund invests in securities guaranteed by the U.S. Government as to
timely payment of interest and principal if held to maturity, but Fund shares
are not insured or guaranteed. Bonds have fixed principal and return if held to
maturity, but may fluctuate in the interim. The principal risks of investing in
the Fund are those generally attributable to bond investing, including increases
in interest rates. Generally, when interest rates rise, bond prices fall. Bonds
with longer maturities tend to be more sensitive to changes in interest rates.
International investing involves special risks including currency fluctuations,
lower liquidity, political and economic uncertainties and differences in
accounting standards. The Fund could lose money if it cannot sell a security at
the time and price that would be most beneficial to the Fund. Derivatives are
subject to the risk of loss due to changes in interest rates. The use of certain
derivatives may also have a leveraging effect, which may increase the volatility
of the Fund.
See accompanying index descriptions on page 19.
11
<Page>
ING NATIONAL TAX-EXEMPT BOND FUND Portfolio Managers' Report
PORTFOLIO MANAGEMENT TEAM: Robert Schonbrunn and Karen Cronk, Aeltus Investment
Management, Inc. -- the Sub-Adviser.
GOAL: The ING National-Tax Exempt Bond Fund, (the "Fund") seeks to provide
investors with a high level of current income that is exempt from federal income
taxes, and consistent with preservation of capital.
PERFORMANCE: For the six months ended September 30, 2003, the Fund's class A
shares, excluding sales charges, returned 2.17% compared to a return of 2.66%
for the Lehman Brothers Municipal Bond Index and 2.35% for the Lehman Brothers
Aggregate Bond Index.
PORTFOLIO SPECIFICS The economic outlook was weak and uncertain at the beginning
of the second calendar quarter, but gained strength through the spring and
summer. The consumer, supported by tax cuts and attractive financing terms,
continued to spend, particularly on autos and housing. Capital spending remained
in a slow mode, and weak employment and subdued industrial activity were
particular concerns. As for interest rate changes over the past six months,
tax-exempt bonds were subject to the same influences as other bond categories.
Interest rates declined dramatically and then rose dramatically, but ended the
period very close to the levels achieved in March. Ten year AAA General
Obligation bonds went from yielding 3.75% in March to 3.67% in September.
However, these same bonds hit a low yield of near 3.0% in mid June and then rose
above the 4.0% level in August.
In addition to interest rate volatility the municipal bond market had a number
of specific issues to deal with. The general economic weakness has negatively
affected tax revenue flow to the states and cities. Although all were affected,
California had one of the most negative situations. The state bonds were
downgraded to BBB and lost value relative to the national scale. Airport and
tobacco bonds improved in price from the lows established in the first calendar
quarter of the year, but remained volatile.
Performance for the period was enhanced by over weighting the intermediate
maturities in the middle of the yield curve. This sector of the yield curve
weathered the volatility in rates better than the long end of the curve. Our
heavy weighting in New York issues also helped as these bonds outperformed
relative to the national scale. Our portfolio duration (sensitivity to interest
rate movement) was lower than the index throughout the period, but had minimal
impact because the net change in interest rates was so small. Low quality bonds
rebounded from low levels in the first calendar quarter and performed relatively
well in the current reporting period. Our emphasis on quality and under exposure
to the lower quality issues was a negative factor. The Fund's performance also
was penalized by exposure to California issues during their period of under
performance following the quality rating downgrade.
MARKET OUTLOOK: Looking ahead, we believe economic activity may strengthen which
will put upward pressure on interest rates. The outlook for corporate earnings
is stronger and the worst of the unemployment news should be behind us. However,
because the Federal Reserve is committed to holding short-term rates down,
inflation is low and the economy is still struggling. Rates are unlikely to rise
substantially in the next six months.
The Fund expects to maintain its defensive posture in anticipation of a stronger
economy and higher interest rates. Duration will remain relatively low as a
defensive measure. Although overall credit quality will continue at a high
level, we will be investing in some higher yielding issues in the lower quality
range. An improving economy enhances expectations for revenues by tax-exempt
issuers judged to be of lower quality, and the stronger economic footing
increases our comfort level. As interest rates rise and the yield curve
flattens, we would expect to take a more defensive position and shift from an
over weight in the middle of the yield curve to heavy exposure at both the short
and long ends of the curve.
12
<Page>
Portfolio Managers' Report ING NATIONAL TAX-EXEMPT BOND FUND
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED SEPTEMBER 30, 2003
--------------------------------------------
SINCE INCEPTION
1 YEAR 11/8/99
------ ---------------
Including Sales Charge:
Class A(1) -0.88% 5.53%
Class B(2) -1.67% 5.38%
Class C(3) 2.33% 6.06%
Excluding Sales Charge:
Class A 4.06% 6.85%
Class B 3.31% 6.04%
Class C 3.33% 6.06%
Lehman Brothers Municipal Bond Index 3.89% 7.78%(4)
Lehman Brothers Aggregate Bond Index 5.41% 8.54%(4)
</Table>
The table above illustrates the total return of ING National Tax-Exempt Bond
Fund against the Lehman Brothers Municipal Bond Index, Lehman Brothers Aggregate
Bond Index. The Indices are unmanaged and have no cash in their portfolios,
impose no sales charges and incur no operating expenses. An investor cannot
invest directly in an index. The Fund's performance is shown both with and
without the imposition of sales charges.
The performance table does not reflect the deduction of taxes that a shareholder
will pay (if any) on Fund distributions or the redemption of Fund shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Fund. Total returns would have been
lower had there been no waiver to the Fund.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING"
STATEMENTS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY.
(1) Reflects deduction of the maximum Class A sales charge of 4.75%.
(2) Reflects deduction of the Class B defferred sales charge of 5% and 3%,
respectively, for the 1 year and since inception returns.
(3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year
return.
(4) Since inception performance for index is shown from 11/01/99.
PRINCIPAL RISK FACTOR(S): Exposure to credit, market and interest rate risk.
Fluctuations in the value of the Fund's shares can be expected in response to
changes in interest rates. The Fund's investments in mortgage-related securities
may entail prepayment risk. Investments in municipal obligations pose special
risks. To the extent that the Fund's assets are invested in municipal
obligations payable from revenue or similar projects, the Fund will be subject
to the peculiar risks presented by such projects. Income recieved from the Fund
may be subject to state and local taxes, as well as the federal alternative
minimum tax. Derivatives are subject to the risk of changes in the market and
the risk of loss due to changes in interest rates. The use of certain
derivatives may also have a leveraging effect, which may increase the volatility
of the Fund.
See accompanying index descriptions on page 19.
13
<Page>
ING STRATEGIC BOND FUND Portfolio Managers' Report
PORTFOLIO MANAGEMENT: A team of the Sub-Adviser's investment professionals led
by James B. Kaufmann, Aeltus Investment Management, Inc. -- the Sub-Adviser.
GOAL: The ING Strategic Bond Fund (the "Fund") seeks maximum total return by
investing primarily in debt securities issued by U. S. and foreign entities, as
well as U. S. and foreign governments and their agencies and instrumentalities,
that are rated investment grade by a nationally recognized statistical rating
agency, or of comparable quality if unrated.
PERFORMANCE: For the six months ended September 30, 2003, the Fund's class A
shares, excluding sales charges, provided a total return of 2.34% compared to
the Lehman Brothers Aggregate Bond Index, which returned 2.35% for the same
period.
PORTFOLIO SPECIFICS: Our investment process seeks to outperform the Lehman
Brothers Aggregate Bond Index by emphasizing bond categories we believe are
attractive in terms of relative value and by selecting specific bonds that we
believe are the best opportunities in each category. Over the six-month period,
we tended to favor bonds issued by corporations, for example industrial,
financial and utility bonds, and also bonds supported by pools of mortgages on
real estate of various kinds.
From March 31, 2003 through September 30, 2003 the bond market produced positive
returns each month except June and July. The Fund generated its best return
compared to the Index in April, primarily because corporate bonds were the best
performing category, the Fund had an above-benchmark allocation to them, and the
bonds we owned produced better returns than the average for the corporate bond
sector.
After reaching forty-five year lows early in June, bond yields abruptly reversed
direction and climbed over 100 basis points (based on the ten-year U.S. Treasury
note), leaving July with the worst monthly decline in bond market values in
several years.
In fact, July witnessed one of the worst bond routs in memory, and it was the
only month in which the Fund did not outperform the Index. Hedging in the
mortgage market, confusing announcements from the Federal Reserve Board, and
positive economic releases together motivated investors to sell bonds and invest
elsewhere. Our process seldom leads us to make major adjustments based on the
outlook for interest rates. Accordingly, the Fund's modest underperformance in
July, when rates climbed sharply, was solely due to the Fund's positioning in
sectors and securities, and not a consequence of any attempt to forecast rates.
In the third calendar quarter overall, lower-risk issues lagged behind as buyers
scrambled to add yield and became more comfortable with the macro economic
outlook. The bond groups we follow closely, Agency bonds, posted a -0.35% return
relative to similar U.S. Treasuries, which following a summer full of negative
headlines, and mortgage-backed securities which sagged as well, -1.19% during
the quarter. On the other hand, credit-sensitive bonds had positive excess
returns, as risk aversion seemed to diminish. Industrials posted 0.89%,
financials posted 0.68%, and despite a massive power blackout in the northeast
and mid-west, utilities were up 0.38% (all compared to similar U.S. Treasuries).
In general, the Fund benefited from a modest overweight to credit sensitive
bonds -- especially lower rated issues. In particular, our investment in high
yield bonds (issued by corporations judged to have relatively high credit risk)
and emerging market debt (bonds issued in developing market countries) produced
strong returns. Both sectors' returns are well into double digits calendar
year-to-date, and enhanced the portfolio's performance over the entire reporting
period. Some deft trading in mortgage-backed securities and Agency bonds also
added value.
MARKET OUTLOOK: We believe that tax cuts, reduced corporate borrowing costs, and
negative real short rates are pushing the economy forward. Most domestic
economic measures are improving with the exception of unemployment, and
near-term prospects for inflationary problems remain muted. In our view, the
outlook going forward is compelling, especially with the consumer so willing to
spend. The twin deficits -- federal and current account -- will remain
challenges; and we are not optimistic on the dollar. Tactically, we are
overweight home and commercial mortgage-backed bonds, asset-backed securities,
and longer-dated corporate bonds, as well as high yield and emerging market
debt.
14
<Page>
Portfolio Managers' Report ING STRATEGIC BOND FUND
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS FOR THE
PERIODS ENDED SEPTEMBER 30, 2003
------------------------------------
SINCE INCEPTION
1 YEAR 5 YEAR 7/27/98
------ ------ ---------------
Including Sales Charge:
Class A(1) 2.74% 2.60% 2.97%
Class B(2) 2.53% 2.95% 3.45%
Class C(3) 6.47% 3.25% 3.59%
Excluding Sales Charge:
Class A 7.86% 3.60% 3.95%
Class B 7.53% 3.25% 3.59%
Class C 7.47% 3.25% 3.59%
Lehman Brothers Aggregate Bond Index 5.41% 6.63% 7.22%(4)
</Table>
The table above illustrates the total return of ING Strategic Bond Fund against
the Lehman Brothers Aggregate Bond Index. The Index is unmanaged and has no cash
in its portfolio, imposes no sales charges and incurs no operating expenses. An
investor cannot invest directly in an index. The Fund's performance is shown
both with and without the imposition of sales charges.
The performance table does not reflect the deduction of taxes that a shareholder
will pay on Fund distributions or the redemption of Fund shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Fund. Total returns would have been
lower had there been no waiver to the Fund.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING"
STATEMENTS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY.
(1) Reflects deduction of the maximum Class A sales charge of 4.75%.
(2) Reflects deduction of the Class B defferred sales charge of 5% and 2%,
respectively, for the 1 year and since inception returns.
(3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year
return.
(4) Since inception performance for index is shown from 08/01/98.
PRINCIPAL RISK FACTOR(S): High yield bonds have exposure to financial, market
and interest rate risks. High yields reflect the higher credit risks associated
with certain lower rated securities in the Fund's portfolio, and in some cases,
the lower market prices for those instruments. The Fund's investments in
mortgage-related securities may entail prepayment risk. The Fund may invest up
to 30% of its total assets in securities payable in foriegn currencies.
International investing does pose special risks, including currency fluctuation
and political risks not found in domestic investments. High yield securities may
be less liquid than higher quality investments. The Fund could lose money if it
cannot sell a secruity at the time and price that would be most beneficial to
the Fund. Derivatives are subject to the risk of changes in the market and the
risk of loss due to changes in interest rates. The use of certain derivatives
may also have a leveraging effect, which may increase the volatility of the
Fund.
See accompanying index descriptions on page 19.
15
<Page>
ING CLASSIC MONEY MARKET FUND Portfolio Managers' Report
PORTFOLIO MANAGEMENT: A team of investment professionals led by Jennifer J.
Thompson, CFA, Aeltus Investment Management, Inc. -- the Sub-Adviser.
GOAL: The ING Classic Money Market Fund (the "Fund") seeks to provide investors
with a high level of current income, consistent with the preservation of capital
and liquidity and the maintenance of a stable $1.00 net asset value per share.
PORTFOLIO SPECIFICS: The period covered by this report was volatile for the
fixed income markets. After the end of major fighting in Iraq, market
participants began focusing on the economy. Concerns about a weakened economy,
falling inflation and the potential consequences of deflation caused a
significant rally in U.S. Treasury bonds. The Federal Reserve Board's Federal
Open Market Committee (the "Fed") provided stimulus by lowering its Federal
Funds ("Fed Funds") target rate to 1.0% from 1.25% in June. Stable economic
fundamentals and technical factors in the marketplace caused a subsequent and
significant sell-off in the Treasury market. By the end of the period, concerns
about the lack of follow-through and ongoing weakness in the labor markets
prevailed causing Treasury bonds to rally back to where they began the
semi-annual period.
In the short-end of the market (securities maturing in 13 months or less), the
London-Inter-Bank Offered Rate ("LIBOR") yield curve from one-month to
twelve-months was flat or inverted until the Fed lowered rates in June. It then
began to steepen in conjunction with the Treasury market sell-off as investors
became more optimistic about the economy's outlook. Finally, as the labor
markets remained subdued, the yield curve flattened leaving the spread between
one-month LIBOR and 12-month LIBOR at 18 basis points, down from an August high
of 38 basis points.
With this market backdrop, during most of the period the fund utilized a barbell
strategy, whereby maturities of the securities in the portfolio were
concentrated at the two extremes of the suitable maturity range. When the yield
curve was flat or inverted, purchases were kept short in the one-month to
three-month area. In addition, the Fund increased its purchase of floating rate
notes. However, prior to the Fed ease in June and as the yield curve steepened
when 12-month rates increased in July and August, the fund purchased long paper
to take advantage of the higher rates. At the semi-annual period end, the Fund's
weighted average maturity was generally longer than competitors.
MARKET OUTLOOK: Going forward, we expect the Fed to leave its Fed Funds target
rate unchanged until the labor markets show clear and continued signs of
improvement. Additionally, we believe that LIBOR rates will fluctuate within a
very narrow range until market participants can better ascertain the point at
which the Fed will raise rates.
The Fund will continue to use a barbell strategy and attempt to buy long paper
when LIBOR rates are at the top-end of their trading range. Otherwise, purchases
will be limited primarily to floating rate notes or securities maturing in the
one-month to three-month time frame. The average maturity is expected to remain
longer than competitors but may fluctuate based upon the level of interest
rates.
PRINCIPAL RISK FACTOR(S): An investment in the Fund is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency.
Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
Fund holdings are subject to change daily.
This report contains statements that may be "forward-looking" statements. Actual
results may differ materially from those projected in the "forward-looking"
statements.
See accompanying index descriptions on page 19.
16
<Page>
Portfolio Managers' Report ING MONEY MARKET FUND
PORTFOLIO MANAGEMENT: A team of investment professionals led by Jennifer J.
Thompson, CFA, Aeltus Investment Management, Inc. -- the Sub-Adviser.
GOAL: The ING Money Market Fund (the "Fund") seeks to provide a high level of
current income while preserving capital and liquidity. The Fund may achieve this
objective by investing in a portfolio of high quality U.S. denominated
short-term debt obligations.
PORTFOLIO SPECIFICS: The period covered by this report was volatile for the
fixed income markets. After the end of major fighting in Iraq, market
participants began focusing on the economy. Concerns about a weakened economy,
falling inflation and the potential consequences of deflation caused a
significant rally in U.S. Treasury bonds. The Federal Reserve Board's Federal
Open Market Committee (the "Fed") provided stimulus by lowering its Federal
Funds ("Fed Funds") target rate to 1.0% from 1.25% in June. Stable economic
fundamentals and technical factors in the marketplace caused a subsequent and
significant sell-off in the Treasury market. By the end of the period, concerns
about the lack of follow-through and ongoing weakness in the labor markets
prevailed causing Treasury bonds to rally back to where they began the
semi-annual period.
In the short-end of the market (securities maturing in 13 months or less), the
London-Inter-Bank-Offered Rate ("LIBOR") yield curve from one-month to
twelve-months was flat or inverted until the Fed lowered rates in June. It then
began to steepen in conjunction with the Treasury market sell-off as investors
became more optimistic about the economy's outlook. Finally, as the labor
markets remained subdued, the yield curve flattened leaving the spread between
one-month LIBOR and 12-month LIBOR at 18 basis points, down from an August high
of 38 basis points.
With this market backdrop, the Fund utilized a barbell strategy, whereby
maturities of the securities in the portfolio were concentrated at the two
extremes of the suitable maturity range. When the yield curve was flat or
inverted, purchases were kept short in the one-month to three-month area. In
addition, the Fund increased its purchase of floating rate notes. However, prior
to the Fed ease in June and as the yield curve steepened when 12-month rates
increased in July and August, the Fund purchased long paper to take advantage of
the higher rates. At the semi-annual period end, the Fund's weighted average
maturity was generally longer than competitors.
MARKET OUTLOOK: Going forward, we expect the Fed to leave its Fed Funds target
rate unchanged until the labor markets show clear and continued signs of
improvement. Additionally, we believe that LIBOR rates will fluctuate within a
very narrow range until market participants can better ascertain the point at
which the Fed will raise rates.
The Fund will continue to use a barbell strategy and attempt to buy long paper
when LIBOR rates are at the top-end of their trading range. Otherwise, purchases
will be limited primarily to floating rate notes or securities maturing in the
one-month to three-month time frame. The average maturity is expected to remain
longer than competitors but may fluctuate based upon the level of interest
rates.
PRINCIPAL RISK FACTOR(S): An investment in the Fund is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency.
Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
Fund holdings are subject to change daily.
This report contains statements that may be "forward-looking" statements. Actual
results may differ materially from those projected in the "forward-looking"
statements.
See accompanying index descriptions on page 19.
17
<Page>
ING LEXINGTON MONEY MARKET TRUST Portfolio Managers' Report
PORTFOLIO MANAGEMENT: A team of investment professionals led by Jennifer J.
Thompson, CFA, Aeltus Investment Management, Inc. -- the Sub-Adviser.
GOAL: The ING Lexington Money Market Trust (the "Trust") seeks to provide high
current income while preserving capital and liquidity. This objective is
achieved by investing in a portfolio of high quality U.S. denominated short-term
debt obligations.
PORTFOLIO SPECIFICS: The period covered by this report was volatile for the
fixed income markets. After the end of major fighting in Iraq, market
participants began focusing on the economy. Concerns about a weakened economy,
falling inflation and the potential consequences of deflation caused a
significant rally in U.S. Treasury bonds. The Federal Reserve Board's Federal
Open Market Committee (the "Fed") provided stimulus by lowering its Federal
Funds ("Fed Funds") target rate to 1.0% from 1.25% in June. Stable economic
fundamentals and technical factors in the marketplace caused a subsequent and
significant sell-off in the Treasury market. By the end of the period, concerns
about the lack of follow-through and ongoing weakness in the labor markets
prevailed causing Treasury bonds to rally back to where they began the
semi-annual period.
In the short-end of the market (securities maturing in 13 months or less), the
London-Inter-Bank Offered Rate ("LIBOR") yield curve from one-month to
twelve-months was flat or inverted until the Fed lowered rates in June. It then
began to steepen in conjunction with the Treasury market sell-off as investors
became more optimistic about the economy's outlook. Finally, as the labor
markets remained subdued, the yield curve flattened leaving the spread between
one-month LIBOR and 12-month LIBOR at 18 basis points, down from an August high
of 38 basis points.
With this market backdrop, the Trust utilized a barbell strategy, whereby
maturities of the securities in the portfolio were concentrated at the two
extremes of the suitable maturity range. When the yield curve was flat or
inverted, purchases were kept short in the one-month to three-month area. In
addition, the Trust increased its purchase of floating rate notes. However,
prior to the Fed ease in June and as the yield curve steepened when 12-month
rates increased in July and August, the Trust purchased long paper to take
advantage of the higher rates. At the semi-annual period end, the Fund's
weighted average maturity was generally longer than competitors.
MARKET OUTLOOK: Going forward, we expect the Fed to leave its Fed Funds target
rate unchanged until the labor markets show clear and continued signs of
improvement. Additionally, we believe that LIBOR rates will fluctuate within a
very narrow range until market participants can better ascertain the point at
which the Fed will raise rates.
The Trust will continue to use a barbell strategy and attempt to buy long paper
when LIBOR rates are at the top-end of their trading range. Otherwise, purchases
will be limited primarily to floating rate notes or securities maturing in the
one-month to three-month time frame. The average maturity is expected to remain
longer than competitors but may fluctuate based upon the level of interest
rates.
PRINCIPAL RISK FACTOR(S): An investment in the Trust is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Trust seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Trust.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
Trust holdings are subject to change daily.
This report contains statements that may be "forward-looking" statements. Actual
results may differ materially from those projected in the "forward-looking"
statements.
See accompanying index descriptions on page 19.
18
<Page>
INDEX DESCRIPTIONS
THE CREDIT SUISSE FIRST BOSTON HIGH YIELD BOND INDEX serves as a benchmark to
evaluate the performance of low quality bonds. Low quality is defined as those
bonds in the range from BBB to CCC and defaults.
THE LEHMAN BROTHERS AGGREGATE BOND INDEX is a widely recognized, unmanaged index
of publicly issued investment grade U.S. Government, mortgage-backed,
asset-backed and corporate debt securities.
THE LEHMAN BROTHERS GOVERNMENT BOND INDEX is an index made up of the Treasury
Bond Index and the Agency Bond Index as well as the 1-3 Year Government Index
and the 20+ Year Treasury Index.
THE LEHMAN BROTHERS HIGH YIELD BOND INDEX is an unmanaged index that includes
all fixed income securities having a maximum quality rating of Ba1, a minimum
amount outstanding of $100m, and at least 1 year to maturity. Investors cannot
invest directly in an index.
THE LEHMAN BROTHERS MORTGAGE-BACKED SECURITIES INDEX is an unmanaged index
composed of fixed income security mortgage pools sponsored by GNMA, FNMA and
FHLMC, including GNMA Graduated Payment Mortgages.
THE LEHMAN BROTHERS MUNICIPAL BOND INDEX is an unmanaged index of approximately
1,100 investment grade tax-exempt bonds classified into four sectors: general
obligation, revenue, insured and pre-refunded.
THE LEHMAN BROTHERS U.S. CREDIT INDEX includes investment grade bonds issued by
corporations and non-corporate entities.
THE MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDEX is an unmanaged index that
measures the performance of over 1,400 securities listed on exchanges in the
U.S., Europe, Canada, Australia, New Zealand and the Far East.
THE STANDARD & POORS 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.
All indices are unmanaged.
An investor cannot invest directly in an index.
19
<Page>
STATEMENTS OF ASSETS AND LIABILITIES as of September 30, 2003 (Unaudited)
<Table>
<Caption>
ING ING ING
ING HIGH YIELD HIGH YIELD INTERMEDIATE
GNMA INCOME BOND OPPORTUNITY BOND
FUND FUND FUND FUND
------------- ------------- ------------- -------------
ASSETS:
Investments in securities at value* $ 843,124,561 $ 64,022,017 $ 299,092,061 $ 373,571,405
Short-term investments at amortized cost -- 2,507,000 7,261,000 12,634,000
Cash 404,959 169,375 778,977 --
Receivables:
Investment securities sold -- 21,350 640,575 43,744,094
Fund shares sold 517,672 27,392 212,115 1,071,712
Dividends and interest 3,915,629 1,472,682 7,498,567 2,364,897
Other -- 6,769 -- --
Other investments -- 16,602,023 82,978,167 71,635,383
Prepaid expenses 69,256 20,971 69,998 32,882
Reimbursement due from manager -- -- -- 2,005
------------- ------------- ------------- -------------
Total assets 848,032,077 84,849,579 398,531,460 505,056,378
------------- ------------- ------------- -------------
LIABILITIES:
Payable for investment securities purchased 1,040,827 306,188 1,406,650 101,369,045
Payable for fund shares redeemed 413,821 48,669 1,173,772 358,494
Income distribution payable -- 361,678 1,421,474 786,367
Payable upon return of securities loaned -- 16,602,023 82,978,167 71,635,383
Payable to affiliates 715,354 75,941 409,318 303,946
Payable to custodian -- -- -- 155,520
Payable for trustee fees 47,233 179 12,838 1,013
Other accrued expenses and liabilities 539,660 87,320 363,632 136,126
------------- ------------- ------------- -------------
Total liabilities 2,756,895 17,481,998 87,765,851 174,745,894
------------- ------------- ------------- -------------
NET ASSETS $ 845,275,182 $ 67,367,581 $ 310,765,609 $ 330,310,484
============= ============= ============= =============
NET ASSETS WERE COMPRISED OF:
Paid-in Capital $ 822,679,957 $ 72,530,095 $ 780,359,904 $ 321,181,852
Undistributed net investment income
(accumulated net investment loss) 4,995,837 (3,259) (6,382,367) 390,371
Accumulated net realized gain (loss) on
investments and foreign currencies (14,898,286) (8,547,318) (431,430,648) 3,823,574
Net unrealized appreciation (depreciation) of
investments and foreign currencies 32,497,674 3,388,063 (31,781,280) 4,914,687
------------- ------------- ------------- -------------
NET ASSETS $ 845,275,182 $ 67,367,581 $ 310,765,609 $ 330,310,484
============= ============= ============= =============
* Cost of securities $ 810,626,887 $ 60,633,954 $ 330,873,783 $ 368,656,718
</Table>
See Accompanying Notes to Financial Statements
20
<Page>
STATEMENTS OF ASSETS AND LIABILITIES as of September 30, 2003 (Unaudited)
<Table>
<Caption>
ING ING ING
ING HIGH YIELD HIGH YIELD INTERMEDIATE
GNMA INCOME BOND OPPORTUNITY BOND
FUND FUND FUND FUND
------------- ------------- ------------- -------------
CLASS A:
Net Assets $ 615,775,686 $ 41,710,367 $ 90,696,180 $ 184,329,456
Shares authorized unlimited unlimited unlimited unlimited
Par value $ 0.001 $ 0.001 $ 0.001 $ 0.001
Shares outstanding 69,121,800 4,843,305 13,137,554 17,351,942
Net asset value and redemption price per share $ 8.91 $ 8.61 $ 6.90 $ 10.62
Maximum offering price per share (4.75%)(1) $ 9.35 $ 9.04 $ 7.24 $ 11.15
CLASS B:
Net Assets $ 142,380,380 $ 16,843,329 $ 191,575,361 $ 66,223,305
Shares authorized unlimited unlimited unlimited unlimited
Par value $ 0.001 $ 0.001 $ 0.001 $ 0.001
Shares outstanding 16,055,457 1,955,671 27,597,254 6,245,459
Net asset value and redemption price per share(2) $ 8.87 $ 8.61 $ 6.94 $ 10.60
Maximum offering price per share $ 8.87 $ 8.61 $ 6.94 $ 10.60
CLASS C:
Net Assets $ 78,337,481 $ 8,813,885 $ 25,114,873 $ 65,973,569
Shares authorized unlimited unlimited unlimited unlimited
Par value $ 0.001 $ 0.001 $ 0.001 $ 0.001
Shares outstanding 8,823,856 1,023,336 3,620,176 6,217,644
Net asset value and redemption price per share(2) $ 8.88 $ 8.61 $ 6.94 $ 10.61
Maximum offering price per share $ 8.88 $ 8.61 $ 6.94 $ 10.61
CLASS I:
Net Assets $ 8,190,350 n/a n/a $ 13,784,154
Shares authorized unlimited n/a n/a unlimited
Par value $ 0.001 n/a n/a $ 0.001
Shares outstanding 918,588 n/a n/a 1,297,446
Net asset value and redemption price per share $ 8.92 n/a n/a $ 10.62
Maximum offering price per share $ 8.92 n/a n/a $ 10.62
CLASS M:
Net Assets $ 438,450 n/a $ 3,216,991 n/a
Shares authorized unlimited n/a unlimited n/a
Par value $ 0.001 n/a $ 0.001 n/a
Shares outstanding 49,156 n/a 466,367 n/a
Net asset value and redemption price per share $ 8.92 n/a $ 6.90 n/a
Maximum offering price per share (3.25%)(3) $ 9.22 n/a $ 7.13 n/a
CLASS Q:
Net Assets $ 152,835 n/a $ 162,204 n/a
Shares authorized unlimited n/a unlimited n/a
Par value $ 0.001 n/a $ 0.001 n/a
Shares outstanding 17,139 n/a 23,429 n/a
Net asset value and redemption price per share $ 8.92 n/a $ 6.92 n/a
Maximum offering price per share $ 8.92 n/a $ 6.92 n/a
</Table>
- ----------
(1) Maximum offering price is computed at 100/95.25 of net asset value. On
purchases of $50,000 or more, the offering price is reduced.
(2) Redemption price per share may be reduced for any applicable contingent
deferred sales charge.
(3) Maximum offering price is computed at 100/96.75 of net asset value. On
purchases of $50,000 or more, the offering price is reduced.
See Accompanying Notes to Financial Statements
21
<Page>
STATEMENTS OF ASSETS AND LIABILITIES as of September 30, 2003 (Unaudited)
<Table>
<Caption>
ING ING ING ING
NATIONAL STRATEGIC CLASSIC ING LEXINGTON
TAX-EXEMPT BOND BOND MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND FUND TRUST
--------------- ------------- ------------- ------------- -------------
ASSETS:
Investments in securities at value* $ 27,542,708 $ 44,959,770 $ -- $ -- $ --
Short-term investments at amortized cost -- 9,050,000 446,659,291 54,383,978 47,964,405
Cash 88,745 7,237 4,814 1,677 1,191
Receivables:
Investment securities sold -- 5,502,122 -- -- --
Fund shares sold 19,207 27,279 85,829 76,857 --
Dividends and interest 405,432 357,341 1,114,676 172,007 117,138
Other investments -- 7,753,044 -- -- --
Prepaid expenses 30,229 34,898 82,338 28,300 13,131
Reimbursement due from manager -- 2,789 -- 32,202 --
--------------- ------------- ------------- ------------- -------------
Total assets 28,086,321 67,694,480 447,946,948 54,695,021 48,095,865
--------------- ------------- ------------- ------------- -------------
LIABILITIES:
Payable for investment securities purchased -- 12,700,783 4,600,000 500,000 500,000
Payable for fund shares redeemed -- 64,181 4,163 60,784 --
Payable upon return of securities loaned -- 7,753,044 -- -- --
Payable to affiliates 22,176 39,969 206,577 55,653 23,229
Payable for trustee fees 393 5,635 1,098 1,744 66,509
Other accrued expenses and liabilities 122,721 165,080 720,749 126,650 140,197
--------------- ------------- ------------- ------------- -------------
Total liabilities 145,290 20,728,692 5,532,587 744,831 729,935
--------------- ------------- ------------- ------------- -------------
NET ASSETS $ 27,941,031 $ 46,965,788 $ 442,414,361 $ 53,950,190 $ 47,365,930
=============== ============= ============= ============= =============
NET ASSETS WERE COMPRISED OF:
Paid-in capital $ 25,742,447 $ 57,414,336 $ 442,447,710 $ 53,876,583 $ 47,366,545
Undistributed net investment income
(accumulated net investment loss) 259 (108,578) 2,071 75,355 --
Accumulated net realized gain (loss) on
investments and foreign currencies 387,404 (10,786,814) (35,420) (1,748) (615)
Net unrealized appreciation of investments
and foreign currencies 1,810,921 446,844 -- -- --
--------------- ------------- ------------- ------------- -------------
NET ASSETS $ 27,941,031 $ 46,965,788 $ 442,414,361 $ 53,950,190 $ 47,365,930
=============== ============= ============= ============= =============
* Cost of securities $ 25,731,787 $ 44,512,926 $ -- $ -- $ --
</Table>
See Accompanying Notes to Financial Statements
22
<Page>
STATEMENTS OF ASSETS AND LIABILITIES as of September 30, 2003 (Unaudited)
<Table>
<Caption>
ING ING ING ING
NATIONAL STRATEGIC CLASSIC ING LEXINGTON
TAX-EXEMPT BOND BOND MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND FUND TRUST
--------------- ------------- ------------- ------------- -------------
CLASS A:
Net Assets $ 23,975,812 $ 30,255,617 $ 440,840,037 $ 17,221,564 $ 47,365,930
Shares authorized unlimited unlimited unlimited unlimited unlimited
Par value $ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001
Shares outstanding 2,195,912 2,669,979 440,894,786 17,231,587 47,366,545
Net asset value and redemption price
per share $ 10.92 $ 11.33 $ 1.00 $ 1.00 $ 1.00
Maximum offering price per share $ 11.46(1) $ 11.90(1) $ 1.00 $ 1.00 $ 1.00
CLASS B:
Net Assets $ 2,759,390 $ 13,144,211 $ 1,034,339 $ 29,229,390 n/a
Shares authorized unlimited unlimited unlimited unlimited n/a
Par value $ 0.001 $ 0.001 $ 0.001 $ 0.001 n/a
Shares outstanding 252,857 1,190,974 1,034,804 29,232,126 n/a
Net asset value and redemption price
per share(2) $ 10.91 $ 11.04 $ 1.00 $ 1.00 n/a
Maximum offering price per share $ 10.91 $ 11.04 $ 1.00 $ 1.00 n/a
CLASS C:
Net Assets $ 1,205,829 $ 3,470,322 $ 539,985 $ 7,499,236 n/a
Shares authorized unlimited unlimited unlimited unlimited n/a
Par value $ 0.001 $ 0.001 $ 0.001 $ 0.001 n/a
Shares outstanding 110,415 298,567 539,843 7,502,330 n/a
Net asset value and redemption price
per share(2) $ 10.92 $ 11.62 $ 1.00 $ 1.00 n/a
Maximum offering price per share $ 10.92 $ 11.62 $ 1.00 $ 1.00 n/a
CLASS Q:
Net Assets n/a $ 95,638 n/a n/a n/a
Shares authorized n/a unlimited n/a n/a n/a
Par value n/a $ 0.001 n/a n/a n/a
Shares outstanding n/a 8,952 n/a n/a n/a
Net asset value and redemption price
per share n/a $ 10.68 n/a n/a n/a
Maximum offering price per share n/a $ 10.68 n/a n/a n/a
</Table>
- ----------
(1) Maximum offering price (4.75%) is computed at 100/95.25 of net asset value.
On purchases of $50,000 or more, the offering price is reduced.
(2) Redemption price per share may be reduced for any applicable contingent
deferred sales charge.
See Accompanying Notes to Financial Statements
23
<Page>
STATEMENTS OF OPERATIONS for the six months ended September 30, 2003
(Unaudited)
<Table>
<Caption>
ING ING ING
ING HIGH YIELD HIGH YIELD INTERMEDIATE
GNMA INCOME BOND OPPORTUNITY BOND
FUND(1) FUND FUND(1) FUND
------------- ------------- ------------- -------------
INVESTMENT INCOME:
Dividends $ -- $ 40,165 $ 166,163 $ 7,072
Interest 25,464,540 2,737,767 13,178,984 6,583,738
Securities lending income 116,805 1,997 12,889 10,211
------------- ------------- ------------- -------------
Total investment income 25,581,345 2,779,929 13,358,036 6,601,021
------------- ------------- ------------- -------------
EXPENSES:
Investment management fees 2,159,348 218,871 997,546 784,868
Distribution and service fees:
Class A 809,912 77,151 184,934 301,498
Class B 744,711 74,212 973,705 328,762
Class C 430,468 37,862 131,865 307,873
Class M 3,154 -- 12,457 --
Class Q 220 -- 934 --
Class T 6,436 -- 5,355 --
Transfer agent fees:
Class A 369,169 34,611 88,597 132,390
Class B 86,228 12,839 160,226 50,572
Class C 49,841 6,551 21,646 47,497
Class I 2,112 -- -- 226
Class M 493 -- 1,300 --
Class Q 46 -- 194 --
Class T 1,947 -- 1,697 --
Administrative service fees 446,081 33,672 166,445 156,972
Shareholder reporting expense 126,710 2,410 91,613 22,331
Registration fees 71,133 18,648 50,085 26,722
Professional fees 64,263 5,939 81,478 16,080
Custody and accounting expense 85,886 15,665 30,515 40,251
Trustee fees 18,856 549 5,686 1,607
Insurance expense 7,644 497 3,953 925
Miscellaneous expense 9,461 646 5,911 1,998
------------- ------------- ------------- -------------
Total expenses 5,494,119 540,123 3,016,142 2,220,572
------------- ------------- ------------- -------------
Less:
Net waived and reimbursed fees -- 21,482 94,043 85,791
------------- ------------- ------------- -------------
Net expenses 5,494,119 518,641 2,922,099 2,134,781
------------- ------------- ------------- -------------
Net investment income 20,087,226 2,261,288 10,435,937 4,466,240
------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, FOREIGN CURRENCIES AND FUTURES:
Net realized gain (loss) on:
Investments 958,028 705,855 (5,673,866) 1,863,310
Foreign currencies -- -- -- 11,870
Futures -- -- -- (916,783)
------------- ------------- ------------- -------------
Net realized gain (loss) on investments
and foreign currencies 958,028 705,855 (5,673,866) 958,397
------------- ------------- ------------- -------------
Net change in unrealized appreciation
(depreciation) on Investments (10,656,605) 1,762,414 20,471,526 1,563,727
------------- ------------- ------------- -------------
Net realized and unrealized gain (loss) on
investments, foreign currencies and futures (9,698,577) 2,468,269 14,797,660 2,522,124
------------- ------------- ------------- -------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 10,388,649 $ 4,729,557 $ 25,233,597 $ 6,988,364
============= ============= ============= =============
</Table>
- ----------
(1) Effective June 2, 2003, Class "T" shares converted into the corresponding
Class "A" shares within this portfolio.
See Accompanying Notes to Financial Statements
24
<Page>
STATEMENTS OF OPERATIONS for the six months ended September 30, 2003
(Unaudited)
<Table>
<Caption>
ING ING ING ING
NATIONAL STRATEGIC CLASSIC ING LEXINGTON
TAX-EXEMPT BOND BOND MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND FUND TRUST
--------------- ------------- ------------- ------------- -------------
INVESTMENT INCOME:
Dividends $ -- $ 14,434* $ -- $ -- $ --
Interest 648,500 1,250,177 2,797,580 354,528 292,751
Securities lending income -- 1,240 -- -- --
--------------- ------------- ------------- ------------- -------------
Total investment income 648,500 1,265,851 2,797,580 354,528 292,751
--------------- ------------- ------------- ------------- -------------
EXPENSES:
Investment management fees 71,623 109,522 561,339 101,322 120,368
Distribution and service fees:
Class A 43,157 54,042 1,678,023 23,042 --
Class B 14,133 51,632 5,326 153,713 --
Class C 5,806 14,783 2,666 43,615 --
Class Q -- 119 -- -- --
Transfer agent fees:
Class A 20,962 36,580 224,406 16,601 26,475
Class B 2,402 16,316 534 27,644 --
Class C 987 4,671 267 7,829 --
Class Q -- 24 -- -- --
Administrative service fees 14,325 24,354 -- 28,939 24,074
Shareholder reporting expense 3,861 11,644 105,055 27,520 3,130
Registration fees 18,114 29,915 40,155 27,262 12,958
Professional fees 2,818 6,792 57,636 10,060 3,371
Custody and accounting expense 1,457 5,940 51,440 10,840 5,819
Trustee fees 465 1,716 8,967 1,281 534
Insurance expense 274 565 5,088 39 588
Miscellaneous expense 625 355 5,812 1,116 851
--------------- ------------- ------------- ------------- -------------
Total expenses 201,009 368,970 2,746,714 480,823 198,168
--------------- ------------- ------------- ------------- -------------
Less:
Net waived and reimbursed fees 20,729 52,817 1,011,800 196,297 --
--------------- ------------- ------------- ------------- -------------
Net expenses 180,280 316,153 1,734,914 284,526 198,168
--------------- ------------- ------------- ------------- -------------
Net investment income 468,220 949,698 1,062,666 70,002 94,583
--------------- ------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on investments 79,614 1,405,950 (52) (12) (7)
Net change in unrealized appreciation
(depreciation) on investments 52,646 (829,192) -- -- --
--------------- ------------- ------------- ------------- -------------
Net realized and unrealized gain (loss)
on investments 132,260 576,758 (52) (12) (7)
--------------- ------------- ------------- ------------- -------------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 600,480 $ 1,526,456 $ 1,062,614 $ 69,990 $ 94,576
=============== ============= ============= ============= =============
</Table>
- ----------
* Dividends from investment in mutual fund(s) that are within the ING Family
of Funds.
See Accompanying Notes to Financial Statements
25
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
<Table>
<Caption>
ING GNMA INCOME FUND
----------------------------------
SIX MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, MARCH 31,
2003(1) 2003
--------------- ---------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 20,087,226 $ 36,889,960
Net realized gain on investments 958,028 5,042,643
Net change in unrealized appreciation (depreciation) of investments (10,656,605) 34,018,750
--------------- ---------------
Net increase in net assets resulting from operations 10,388,649 75,951,353
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A (15,571,568) (29,495,907)
Class B (3,051,558) (4,693,328)
Class C (1,758,472) (2,537,958)
Class I (207,999) (220,288)
Class M (18,709) (40,111)
Class Q (4,291) (10,700)
Class T (101,868) (469,273)
--------------- ---------------
Total distributions (20,714,465) (37,467,565)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 198,548,726 821,729,875
Dividends reinvested 13,884,174 30,193,127
--------------- ---------------
212,432,900 851,923,002
Cost of shares redeemed (279,591,762) (633,633,432)
--------------- ---------------
Net increase (decrease) in net asset resulting from capital share transactions (67,158,862) 218,289,570
--------------- ---------------
Net increase (decrease) in net assets (77,484,678) 256,773,358
NET ASSETS:
Net assets, beginning of period 922,759,860 665,986,502
--------------- ---------------
Net assets, end of period $ 845,275,182 $ 922,759,860
=============== ===============
Undistributed net investment income $ 4,995,837 $ 5,623,076
=============== ===============
</Table>
- ----------
(1) Effective June 2, 2003, Class "T" shares converted into the corresponding
Class "A" shares within this portfolio.
See Accompanying Notes to Financial Statements
26
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
<Table>
<Caption>
ING HIGH YIELD BOND FUND
----------------------------------
SIX MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, MARCH 31,
2003 2003
--------------- ---------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 2,261,288 $ 3,445,168
Net realized gain (loss) on investments 705,855 (3,397,962)
Net change in unrealized appreciation of investments 1,762,414 1,176,457
--------------- ---------------
Net increase in net assets resulting from operations 4,729,557 1,223,663
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A (1,574,578) (2,766,837)
Class B (459,136) (521,174)
Class C (234,351) (156,078)
--------------- ---------------
Total distributions (2,268,065) (3,444,089)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 32,516,066 29,329,351
Dividends reinvested 743,910 2,417,063
--------------- ---------------
33,259,976 31,746,414
Cost of shares redeemed (28,594,264) (16,116,161)
--------------- ---------------
Net increase in net asset resulting from capital share transactions 4,665,712 15,630,253
--------------- ---------------
Net increase in net assets 7,127,204 13,409,827
NET ASSETS:
Net assets, beginning of period 60,240,377 46,830,550
--------------- ---------------
Net assets, end of period $ 67,367,581 $ 60,240,377
=============== ===============
Undistributed net investment income (accumulated net investment loss)
at end of period $ (3,259) $ 3,518
=============== ===============
</Table>
See Accompanying Notes to Financial Statements
27
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
<Table>
<Caption>
ING HIGH YIELD OPPORTUNITY FUND
----------------------------------
SIX MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, MARCH 31,
2003(1) 2003
--------------- ---------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 10,435,937 $ 30,457,234
Net realized loss on investments and foreign currencies (5,673,866) (96,633,896)
Net change in unrealized appreciation of investments and foreign currencies 20,471,526 56,996,543
--------------- ---------------
Net increase (decrease) in net assets resulting from operations 25,233,597 (9,180,119)
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A (4,317,058) (9,456,286)
Class B (7,216,672) (21,289,988)
Class C (981,907) (2,702,939)
Class M (127,743) (371,212)
Class Q (32,884) (155,515)
Class T (77,747) (768,604)
--------------- ---------------
Total distributions (12,754,011) (34,744,544)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 160,250,385 133,859,674
Net proceeds from shares issued in merger -- 165,224,943
Dividends reinvested 4,112,746 12,333,581
--------------- ---------------
164,363,131 311,418,198
Cost of shares redeemed (195,711,533) (171,385,626)
--------------- ---------------
Net increase (decrease) in net asset resulting from capital share transactions (31,348,402) 140,032,572
--------------- ---------------
Net increase (decrease) in net assets (18,868,816) 96,107,909
NET ASSETS:
Net assets, beginning of period 329,634,425 233,526,516
--------------- ---------------
Net assets, end of period $ 310,765,609 $ 329,634,425
=============== ===============
Accumulated net investment loss $ (6,382,367) $ (4,064,293)
=============== ===============
</Table>
- ----------
(1) Effective June 2, 2003, Class "T" Shares converted into the corresponding
"A" Shares within this portfolio.
See Accompanying Notes to Financial Statements
28
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
<Table>
<Caption>
ING INTERMEDIATE BOND FUND
----------------------------------
SIX MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, MARCH 31,
2003 2003
--------------- ---------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 4,466,240 $ 4,368,653
Net realized gain on investments 958,397 6,354,721
Net change in unrealized appreciation of investments 1,563,727 3,644,655
--------------- ---------------
Net increase in net assets resulting from operations 6,988,364 14,368,029
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A (2,687,394) (2,646,393)
Class B (787,682) (883,176)
Class C (734,231) (640,872)
Class I (268,643) (477,266)
Net realized gain from investments:
Class A -- (1,231,072)
Class B -- (615,852)
Class C -- (439,608)
Class I -- (189,306)
--------------- ---------------
Total distributions (4,477,950) (7,123,545)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 169,029,601 332,254,935
Dividends reinvested 2,368,595 5,172,910
--------------- ---------------
171,398,196 337,427,845
Cost of shares redeemed (119,816,449) (137,354,984)
--------------- ---------------
Net increase in net asset resulting from capital share transactions 51,581,747 200,072,861
--------------- ---------------
Net increase in net assets 54,092,161 207,317,345
NET ASSETS:
Net assets, beginning of period 276,218,323 68,900,978
--------------- ---------------
Net assets, end of period $ 330,310,484 $ 276,218,323
=============== ===============
Undistributed net investment income $ 390,371 $ 402,081
=============== ===============
</Table>
See Accompanying Notes to Financial Statements
29
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
<Table>
<Caption>
ING NATIONAL TAX-EXEMPT BOND FUND
----------------------------------
SIX MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, MARCH 31,
2003 2003
--------------- ---------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 468,220 $ 942,720
Net realized gain on investments 79,614 554,367
Net change in unrealized appreciation of investments 52,646 1,064,463
--------------- ---------------
Net increase in net assets resulting from operations 600,480 2,561,550
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A (415,868) (864,277)
Class B (37,084) (65,210)
Class C (15,269) (13,233)
Net realized gain from investments:
Class A -- (278,763)
Class B -- (28,167)
Class C -- (5,340)
--------------- ---------------
Total distributions (468,221) (1,254,990)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 3,723,832 5,127,333
Dividends reinvested 162,190 1,192,567
--------------- ---------------
3,886,022 6,319,900
Cost of shares redeemed (3,580,054) (4,528,460)
--------------- ---------------
Net increase in net asset resulting from capital share transactions 305,968 1,791,440
--------------- ---------------
Net increase in net assets 438,227 3,098,000
NET ASSETS:
Net assets, beginning of period 27,502,804 24,404,804
--------------- ---------------
Net assets, end of period $ 27,941,031 $ 27,502,804
=============== ===============
Undistributed net investment income $ 259 $ 260
=============== ===============
</Table>
See Accompanying Notes to Financial Statements
30
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
<Table>
<Caption>
ING STRATEGIC BOND FUND
----------------------------------
SIX MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, MARCH 31,
2003 2003
--------------- ---------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 949,698 $ 2,452,863
Net realized gain (loss) on investments and foreign currencies 1,405,950 (1,656,314)
Net change in unrealized appreciation (depreciation) of investments
and foreign currencies (829,192) 3,254,804
--------------- ---------------
Net increase in net assets resulting from operations 1,526,456 4,051,353
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A (741,219) (1,899,039)
Class B (305,178) (676,354)
Class C (80,738) (238,634)
Class Q (2,596) (13,330)
--------------- ---------------
Total distributions (1,129,731) (2,827,357)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 29,822,446 47,353,582
Dividends reinvested 555,178 2,080,078
--------------- ---------------
30,377,624 49,433,660
Cost of shares redeemed (33,193,802) (52,572,135)
--------------- ---------------
Net decrease in net asset resulting from capital share transactions (2,816,178) (3,138,475)
--------------- ---------------
Net increase in net assets (2,419,453) (1,914,479)
NET ASSETS:
Net assets, beginning of period 49,385,241 51,299,720
--------------- ---------------
Net assets, end of period $ 46,965,788 $ 49,385,241
=============== ===============
Undistributed net investment income (Accumulated net investment loss) $ (108,578) $ 71,455
=============== ===============
</Table>
See Accompanying Notes to Financial Statements
31
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
<Table>
<Caption>
ING CLASSIC MONEY MARKET FUND
----------------------------------
SIX MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, MARCH 31,
2003 2003
--------------- ---------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 1,062,666 $ 5,124,447
Net realized loss on investments (52) (57)
--------------- ---------------
Net increase in net assets resulting from operations 1,062,614 5,124,390
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A (1,059,502) (5,114,775)
Class B (729) (7,398)
Class C (364) (2,274)
--------------- ---------------
Total distributions (1,060,595) (5,124,447)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 311,750,260 574,919,432
Dividends reinvested 1,039,295 4,997,911
--------------- ---------------
312,789,555 579,917,343
Cost of shares redeemed (331,022,020) (671,848,890)
--------------- ---------------
Net decrease in net asset resulting from capital share transactions (18,232,465) (91,931,547)
--------------- ---------------
Net decrease in net assets (18,230,446) (91,931,604)
NET ASSETS:
Net assets, beginning of period 460,644,807 552,576,411
--------------- ---------------
Net assets, end of period $ 442,414,361 $ 460,644,807
=============== ===============
Undistributed net investment income $ 2,071 $ --
=============== ===============
</Table>
See Accompanying Notes to Financial Statements
32
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
<Table>
<Caption>
ING MONEY MARKET FUND
----------------------------------
SIX MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, MARCH 31,
2003 2003
--------------- ---------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 70,002 $ 186,079
Net realized gain (loss) on investments (12) 4,302
--------------- ---------------
Net increase in net assets resulting from operations 69,990 190,381
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A (72,799) (182,584)
Class B (90) (1,872)
Class C (14) (1,623)
--------------- ---------------
Total distributions (72,903) (186,079)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 98,781,799 273,325,312
Dividends reinvested 64,281 143,653
--------------- ---------------
98,846,080 273,468,965
Cost of shares redeemed (106,231,752) (281,446,484)
--------------- ---------------
Net decrease in net asset resulting from capital share transactions (7,385,672) (7,977,519)
--------------- ---------------
Net decrease in net assets (7,388,585) (7,973,217)
NET ASSETS:
Net assets, beginning of period 61,338,775 69,311,992
--------------- ---------------
Net assets, end of period $ 53,950,190 $ 61,338,775
=============== ===============
Undistributed net investment income $ 75,355 $ 78,256
=============== ===============
</Table>
See Accompanying Notes to Financial Statements
33
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
<Table>
<Caption>
ING LEXINGTON MONEY MARKET TRUST
----------------------------------
SIX MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, MARCH 31,
2003 2003
--------------- ---------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 94,583 $ 361,267
Net realized loss on investments (7) (608)
--------------- ---------------
Net increase in net assets resulting from operations 94,576 360,659
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (94,583) (361,267)
--------------- ---------------
Total distributions (94,583) (361,267)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 9,232,139 20,789,645
Dividends reinvested 91,078 347,083
--------------- ---------------
9,323,217 21,136,728
Cost of shares redeemed (12,109,800) (26,205,992)
--------------- ---------------
Net decrease in net asset resulting from capital share transactions (2,786,583) (5,069,264)
--------------- ---------------
Net decrease in net assets (2,786,590) (5,069,872)
NET ASSETS:
Net assets, beginning of period 50,152,520 55,222,392
--------------- ---------------
Net assets, end of period $ 47,365,930 $ 50,152,520
=============== ===============
Undistributed net investment income $ -- $ --
=============== ===============
</Table>
See Accompanying Notes to Financial Statements
34
<Page>
ING GNMA INCOME FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS A
-------------------------------------------------------------------------------
THREE
SIX MONTHS YEAR YEAR MONTHS
ENDED ENDED ENDED ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, -------------------------------
2003(1) 2003 2002 2001(2) 2000(3) 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 9.00 8.53 8.63 8.41 8.08 8.53 8.40
Income (loss) from investment operations:
Net investment income $ 0.21 0.42 0.46 0.12 0.54 0.50 0.48
Net realized and unrealized gain (loss)
on investments $ (0.09) 0.49 (0.09) 0.22 0.27 (0.45) 0.13
Total from investment operations $ 0.12 0.91 0.37 0.34 0.81 0.05 0.61
Less distributions from:
Net investment income $ 0.21 0.44 0.47 0.12 0.48 0.50 0.48
Total distributions $ 0.21 0.44 0.47 0.12 0.48 0.50 0.48
Net asset value, end of period $ 8.91 9.00 8.53 8.63 8.41 8.08 8.53
TOTAL RETURN(4) % 1.42 10.82 4.38 4.09 10.36 0.58 7.52
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 615,776 666,433 535,903 449,460 368,615 376,580 273,591
Ratios to average net assets:
Expenses(5) % 1.03 1.13 1.22 1.16 1.06 0.99 1.01
Net investment income(5) % 4.64 4.78 5.32 5.75 6.54 6.04 5.85
Portfolio turnover rate % 101 75 76 33 65 25 54
<Caption>
CLASS B
----------------------------------------------------------------
SIX MONTHS YEAR YEAR THREE MONTHS OCTOBER 6,
ENDED ENDED ENDED ENDED 2000(6) TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, DEC. 31,
2003(1) 2003 2002 2001(2) 2000
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 8.96 8.50 8.61 8.40 8.20
Income (loss) from investment operations:
Net investment income $ 0.18 0.35 0.39 0.13 0.09
Net realized and unrealized gain (loss) on investments $ (0.09) 0.48 (0.09) 0.19 0.18
Total from investment operations $ 0.09 0.83 0.30 0.32 0.27
Less distributions from:
Net investment income $ 0.18 0.37 0.41 0.11 0.07
Total distributions $ 0.18 0.37 0.41 0.11 0.07
Net asset value, end of period $ 8.87 8.96 8.50 8.61 8.40
TOTAL RETURN(4) % 1.04 9.95 3.53 3.70 3.32
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 142,380 150,549 79,302 47,406 866
Ratios to average net assets:
Expenses(5) % 1.78 1.88 1.98 1.90 1.81
Net investment income(5) % 3.94 3.98 4.55 4.88 5.79
Portfolio turnover rate % 101 75 76 33 65
</Table>
(1) Effective August 1, 2003, ING Investments, LLC appointed Aeltus Investment
Management, Inc. as Sub-Adviser.
(2) The Fund changed its fiscal year end to March 31.
(3) Effective July 26, 2000, ING Investments, LLC became the Investment Adviser
of the Fund.
(4) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and excluding the deduction
of sales charges. Total return for less than one year is not annualized.
(5) Annualized for periods less than one year.
(6) Commencement of operations of class.
See Accompanying Notes to Financial Statements.
35
<Page>
ING GNMA INCOME FUND (UNAUDITED) (CONTINUED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS C
----------------------------------------------------------------
THREE
SIX MONTHS YEAR YEAR MONTHS OCTOBER 13,
ENDED ENDED ENDED ENDED 2000(3) TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, DEC. 31,
2003(1) 2003 2002 2001(2) 2000
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 8.97 8.51 8.61 8.40 8.24
Income (loss) from investment operations:
Net investment income $ 0.18 0.36 0.40 0.11 0.09
Net realized and unrealized gain (loss) on investments $ (0.09) 0.47 (0.09) 0.21 0.14
Total from investment operations $ 0.09 0.83 0.31 0.32 0.23
Less distributions from:
Net investment income $ 0.18 0.37 0.41 0.11 0.07
Total distributions $ 0.18 0.37 0.41 0.11 0.07
Net asset value, end of period $ 8.88 8.97 8.51 8.61 8.40
TOTAL RETURN(4) % 1.03 9.95 3.65 3.69 2.82
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 78,337 87,970 37,193 13,744 1,833
Ratios to average net assets:
Expenses(5) % 1.78 1.88 1.99 1.93 1.81
Net investment income(5) % 3.93 3.97 4.52 4.87 5.79
Portfolio turnover rate % 101 75 76 33 65
<Caption>
CLASS M
--------------------------------------------------------
SIX MONTHS YEAR YEAR FEBRUARY 23,
ENDED ENDED ENDED 2001(3) TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31,
2003(1) 2003 2002 2001
- --------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 9.01 8.54 8.63 8.51
Income (loss) from investment operations:
Net investment income $ 0.26 0.37 0.41 0.04
Net realized and unrealized gain (loss) on investments $ (0.16) 0.49 (0.07) 0.08
Total from investment operations $ 0.10 0.86 0.34 0.12
Less distributions from:
Net investment income $ 0.19 0.39 0.43 --
Total distributions $ 0.19 0.39 0.43 --
Net asset value, end of period $ 8.92 9.01 8.54 8.63
TOTAL RETURN(4) % 1.12 10.29 4.03 1.41
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 438 1,111 495 247
Ratios to average net assets:
Expenses(5) % 1.53 1.62 1.73 1.61
Net investment income(5) % 4.25 4.19 4.81 4.88
Portfolio turnover rate % 101 75 76 33
</Table>
(1) Effective August 1, 2003, ING Investments, LLC appointed Aeltus Investment
Management, Inc. as Sub-Adviser.
(2) The Fund changed its fiscal year end to March 31.
(3) Commencement of operations of class.
(4) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and excluding the deduction
of sales charges. Total return for less than one year is not annualized.
(5) Annualized for periods less than one year.
See Accompanying Notes to Financial Statements.
36
<Page>
ING HIGH YIELD BOND FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS A
----------------------------------------------------------------------------
SIX MONTHS YEAR YEAR FIVE MONTHS YEAR DECEMBER 15,
ENDED ENDED ENDED ENDED ENDED 1998(2) TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, OCTOBER 31, OCTOBER 31,
2003(6) 2003 2002 2001(1) 2000 1999
- -------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 8.29 8.74 9.36 9.24 9.96 10.00
Income (loss) from investment operations:
Net investment income $ 0.29 0.61 0.78 0.39 0.85 0.67
Net realized and unrealized gain (loss)
on investments $ 0.33 (0.45) (0.62) 0.12 (0.65) (0.04)
Total from investment operations $ 0.62 0.16 0.16 0.51 0.20 0.63
Less distributions from:
Net investment income $ 0.30 0.61 0.78 0.39 0.86 0.67
Net realized gain on investments $ -- -- -- -- 0.06 --
Total distributions $ 0.30 0.61 0.78 0.39 0.92 0.67
Net asset value, end of period $ 8.61 8.29 8.74 9.36 9.24 9.96
TOTAL RETURN(3) % 7.53 2.24 1.94 5.61 1.89 6.37
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 41,710 43,375 38,525 33,459 33,220 30,537
Ratios to average net assets:
Net expenses after expense reimbursement(4)(5) % 1.30 1.30 1.30 1.09 1.04 1.00
Gross expenses prior to expense
reimbursement(4) % 1.40 1.43 1.79 1.63 2.16 2.32
Net investment income after expense
reimbursement(4)(5) % 6.94 7.48 8.67 10.24 8.75 7.53
Portfolio turnover rate % 52 122 344 253 481 756
<Caption>
CLASS B
----------------------------------------------------------------------------
SIX MONTHS YEAR YEAR FIVE MONTHS YEAR DECEMBER 15,
ENDED ENDED ENDED ENDED ENDED 1998(2) TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, OCTOBER 31, OCTOBER 31,
2003(6) 2003 2002 2001(1) 2000 1999
- -------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 8.28 8.74 9.36 9.23 9.96 10.00
Income (loss) from investment operations:
Net investment income $ 0.26 0.55 0.72 0.36 0.78 0.60
Net realized and unrealized gain (loss)
on investments $ 0.33 (0.46) (0.62) 0.14 (0.66) (0.05)
Total from investment operations $ 0.59 0.09 0.10 0.50 0.12 0.55
Less distributions from:
Net investment income $ 0.26 0.55 0.72 0.37 0.79 0.59
Net realized gain on investments $ -- -- -- -- 0.06 --
Total distributions $ 0.26 0.55 0.72 0.37 0.85 0.59
Net asset value, end of period $ 8.61 8.28 8.74 9.36 9.23 9.96
TOTAL RETURN(3) % 7.25 1.37 1.29 5.43 1.02 5.57
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 16,843 11,584 6,673 5,025 3,702 2,374
Ratios to average net assets:
Net expenses after expense reimbursement(4)(5) % 2.05 2.05 2.05 1.84 1.79 1.72
Gross expenses prior to expense
reimbursement(4) % 2.05 2.07 2.44 2.28 2.41 2.64
Net investment income after expense
reimbursement(4)(5) % 6.20 6.73 7.85 9.49 7.99 6.90
Portfolio turnover rate % 52 122 344 253 481 756
</Table>
(1) The Fund changed its fiscal year end to March 31.
(2) Commencement of operations.
(3) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and excluding the deduction
of sales charges. Total return for less than one year is not annualized.
(4) Annualized for periods less than one year.
(5) The Investment Adviser has agreed to limit expenses (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
(6) Effective September 2, 2003 Aeltus Investment Management, Inc., replaced
ING Investment Management, LLC as the Sub-Adviser.
See Accompanying Notes to Financial Statements.
37
<Page>
ING HIGH YIELD BOND FUND (UNAUDITED) (CONTINUED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS C
----------------------------------------------------------------------------
SIX MONTHS YEAR YEAR FIVE MONTHS YEAR DECEMBER 15,
ENDED ENDED ENDED ENDED ENDED 1998(2) TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, OCTOBER 31, OCTOBER 31,
2003(6) 2003 2002 2001(1) 2000 1999
- -------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 8.28 8.74 9.36 9.23 9.96 10.00
Income (loss) from investment operations:
Net investment income $ 0.27 0.56 0.71 0.37 0.78 0.62
Net realized and unrealized gain (loss)
on investments $ 0.33 (0.46) (0.61) 0.12 (0.66) (0.06)
Total from investment operations $ 0.60 0.10 0.10 0.49 0.12 0.56
Less distributions from:
Net investment income $ 0.27 0.56 0.72 0.36 0.79 0.60
Net realized gain on investments $ -- -- -- -- 0.06 --
Total distributions $ 0.27 0.56 0.72 0.36 0.85 0.60
Net asset value, end of period $ 8.61 8.28 8.74 9.36 9.23 9.96
TOTAL RETURN(3) % 7.27 1.43 1.21 5.39 1.02 5.67
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 8,814 5,281 1,633 1,314 1,578 776
Ratios to average net assets:
Net expenses after expense reimbursement(4)(5) % 2.05 2.04 2.05 1.84 1.79 1.73
Gross expenses prior to expense reimbursement(4) % 2.05 2.06 2.44 2.29 2.40 2.66
Net investment income after expense
reimbursement(4)(5) % 6.21 6.72 7.92 9.42 7.98 7.01
Portfolio turnover rate % 52 122 344 253 481 756
</Table>
(1) The Fund changed its fiscal year end to March 31.
(2) Commencement of operations.
(3) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and excluding the deduction
of sales charges. Total return for less than one year is not annualized.
(4) Annualized for periods less than one year.
(5) The Investment Adviser has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
(6) Effective September 2, 2003 Aeltus Investment Management Inc., replaced ING
Investment Management, LLC as the Sub-Adviser.
See Accompanying Notes to Financial Statements.
38
<Page>
ING HIGH YIELD OPPORTUNITY FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS A
--------------------------------------------------------------------------------------
THREE
SIX MONTHS YEAR YEAR NINE MONTHS YEAR MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, JUNE 30, JUNE 30, MARCH 31,
2003(1) 2003 2002 2001(2) 2000 1999(3) 1999
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 6.66 7.51 8.69 10.80 11.57 11.66 12.72
Income (loss) from investment operations:
Net investment income $ 0.23 0.78 0.88 0.84 1.18 0.28 1.12
Net realized and unrealized gain (loss)
on investments $ 0.31 (0.84) (1.07) (2.09) (0.75) (0.09) (1.00)
Total from investment operations $ 0.54 (0.06) (0.19) (1.25) 0.43 0.19 0.12
Less distributions from:
Net investment income $ 0.30 0.79 0.99 0.86 1.20 0.28 1.18
Total distributions $ 0.30 0.79 0.99 0.86 1.20 0.28 1.18
Net asset value, end of period $ 6.90 6.66 7.51 8.69 10.80 11.57 11.66
TOTAL RETURN(4) % 7.85 (0.40) (1.84) (11.87) 3.96 1.60 1.13
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 90,696 101,603 53,122 55,230 34,416 16,795 17,327
Ratios to average net assets:
Net expenses after expense
reimbursement(5)(6) % 1.34 1.13 1.17 1.10 1.18 1.10 1.12
Gross expenses prior to expense
reimbursement(5) % 1.39 1.47 1.45 1.32 1.37 1.37 1.53
Net investment income after expense
reimbursement(5)(6) % 6.75 10.14 11.02 11.43 10.63 9.68 9.44
Portfolio turnover rate % 70 131 102 113 113 44 242
<Caption>
CLASS B
--------------------------------------------------------------------------------------
THREE
SIX MONTHS YEAR YEAR NINE MONTHS YEAR MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, JUNE 30, JUNE 30, MARCH 31,
2003(1) 2003 2002 2001(2) 2000 1999(3) 1999
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 6.69 7.54 8.71 10.81 11.58 11.66 12.71
Income (loss) from investment operations:
Net investment income $ 0.23 0.70 0.81 0.81 1.11 0.27 1.04
Net realized and unrealized gain (loss)
on investments $ 0.30 (0.81) (1.05) (2.10) (0.75) (0.09) (0.99)
Total from investment operations $ 0.53 (0.11) (0.24) (1.29) 0.36 0.18 0.05
Less distributions from:
Net investment income $ 0.28 0.74 0.93 0.81 1.13 0.26 1.10
Total distributions $ 0.28 0.74 0.93 0.81 1.13 0.26 1.10
Net asset value, end of period $ 6.94 6.69 7.54 8.71 10.81 11.58 11.66
TOTAL RETURN(4) % 7.62 (1.07) (2.49) (12.22) 3.28 1.53 0.55
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 191,575 192,643 143,742 181,175 103,246 41,882 42,960
Ratios to average net assets:
Net expenses after expense
reimbursement(5)(6) % 1.97 1.78 1.82 1.75 1.83 1.75 1.77
Gross expenses prior to expense
reimbursement(5) % 2.02 2.12 2.10 1.97 2.02 2.02 2.18
Net investment income after expense
reimbursement(5)(6) % 6.02 9.56 10.48 10.97 9.98 9.03 8.84
Portfolio turnover rate % 70 131 102 113 113 44 242
</Table>
(1) Effective August 1, 2003 ING Investments, LLC, appointed Aeltus Investment
Management, Inc. as Sub-Adviser.
(2) The Fund changed its fiscal year end to March 31.
(3) Effective May 24, 1999, ING Investments, LLC, became the Investment Adviser
of the Fund and the Fund changed its year end to June 30.
(4) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and excluding the deduction
of sales charges. Total return for less than one year is not annualized.
(5) Annualized for periods less than one year.
(6) The Investment Adviser has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
See Accompanying Notes to Financial Statements.
39
<Page>
ING HIGH YIELD OPPORTUNITY FUND (UNAUDITED) (CONTINUED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS C
--------------------------------------------------------------------------------------
THREE
SIX MONTHS YEAR YEAR NINE MONTHS YEAR MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, JUNE 30, JUNE 30, MARCH 31,
2003(1) 2003 2002 2001(2) 2000 1999(3) 1999
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 6.69 7.53 8.71 10.81 11.58 11.66 12.71
Income (loss) from investment operations:
Net investment income $ 0.22 0.69 0.80 0.81 1.10 0.27 1.04
Net realized and unrealized gain (loss)
on investments $ 0.31 (0.79) (1.05) (2.10) (0.74) (0.09) (0.99)
Total from investment operations $ 0.53 (0.10) (0.25) (1.29) 0.36 0.18 0.05
Less distributions from:
Net investment income $ 0.28 0.74 0.93 0.81 1.13 0.26 1.10
Total distributions $ 0.28 0.74 0.93 0.81 1.13 0.26 1.10
Net asset value, end of period $ 6.94 6.69 7.53 8.71 10.81 11.58 11.66
TOTAL RETURN(4) % 7.62 (0.96) (2.60) (12.22) 3.28 1.53 0.55
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 25,115 26,163 24,674 33,463 23,324 18,618 21,290
Ratios to average net assets:
Net expenses after expense
reimbursement(5)(6) % 1.97 1.78 1.81 1.75 1.83 1.75 1.77
Gross expenses prior to expense
reimbursement(5) % 2.02 2.13 2.09 1.97 2.02 2.02 2.18
Net investment income after expense
reimbursement(5)(6) % 6.04 9.61 10.47 10.93 9.98 9.03 8.79
Portfolio turnover rate % 70 131 102 113 113 44 242
<Caption>
CLASS M
-------------------------------
SIX MONTHS MAY 17,
ENDED 2002(7) TO
SEPTEMBER 30, MARCH 31,
2003(1) 2003
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 6.65 7.58
Income (loss) from investment operations:
Net investment income (loss) $ 0.24 0.54
Net realized and unrealized gain (loss) on investments $ 0.30 (0.81)
Total from investment operations $ 0.54 (0.27)
Less distributions from:
Net investment income $ 0.29 0.66
Total distributions $ 0.29 0.66
Net asset value, end of period $ 6.90 6.65
TOTAL RETURN(4) % 7.80 (3.16)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 3,217 3,353
Ratios to average net assets:
Net expenses after expense reimbursement(5)(6) % 1.62 1.52
Gross expenses prior to expense reimbursement(5) % 1.69 1.82
Net investment income after expense reimbursement(5)(6) % 6.38 9.41
Portfolio turnover rate % 70 131
</Table>
(1) Effective August 1, 2003 ING Investments, LLC, appointed Aeltus Investment
Management, Inc. as Sub-Adviser.
(2) The Fund changed its fiscal year end to March 31.
(3) Effective May 24, 1999, ING Investments, LLC, became the Investment Adviser
of the Fund and the Fund changed its year end to June 30.
(4) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and excluding the deduction
of sales charges. Total return for less than one year is not annualized.
(5) Annualized for periods less than one year.
(6) The Investment Adviser has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
(7) Commencement of operations of class.
See Accompanying Notes to Financial Statements.
40
<Page>
ING INTERMEDIATE BOND FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS A
----------------------------------------------------------------------------
SIX MONTHS YEAR YEAR FIVE MONTHS YEAR DECEMBER 15,
ENDED ENDED ENDED ENDED ENDED 1998(3) TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, OCTOBER 31, OCTOBER 31,
2003(1) 2003 2002 2001(2) 2000 1999
- -------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 10.51 9.91 10.18 9.52 9.40 10.00
Income (loss) from investment operations:
Net investment income $ 0.17 0.35 0.51 0.28 0.61 0.45
Net realized and unrealized gain (loss)
on investments $ 0.11 0.77 0.42 0.66 0.12 (0.60)
Total from investment operations $ 0.28 1.12 0.93 0.94 0.73 (0.15)
Less distributions from:
Net investment income $ 0.17 0.37 0.53 0.28 0.61 0.45
Net realized gain on investments $ -- 0.15 0.67 -- -- --
Total distributions $ 0.17 0.52 1.20 0.28 0.61 0.45
Net asset value, end of period $ 10.62 10.51 9.91 10.18 9.52 9.40
TOTAL RETURN(4) % 2.66 11.48 9.27 10.01 8.11 (1.46)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 184,329 146,649 41,503 33,597 29,893 32,013
Ratios to average net assets:
Net expenses after expense reimbursement(5)(6) % 1.07 1.14 1.15 1.13 1.00 0.96
Gross expenses prior to expense
reimbursement(5) % 1.17 1.24 1.36 1.53 2.08 2.12
Net investment income after expense
reimbursement(5)(6) % 3.12 3.21 4.93 6.94 6.48 5.38
Portfolio turnover rate % 313 639 1,216* 838 733 432
<Caption>
CLASS B
----------------------------------------------------------------------------
SIX MONTHS YEAR YEAR FIVE MONTHS YEAR DECEMBER 15,
ENDED ENDED ENDED ENDED ENDED 1998(3) TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, OCTOBER 31, OCTOBER 31,
2003(1) 2003 2002 2001(2) 2000 1999
- -------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 10.50 9.90 10.18 9.52 9.40 10.00
Income (loss) from investment operations:
Net investment income $ 0.13 0.28 0.44 0.26 0.53 0.40
Net realized and unrealized gain (loss)
on investments $ 0.10 0.76 0.40 0.66 0.13 (0.61)
Total from investment operations $ 0.23 1.04 0.84 0.92 0.66 (0.21)
Less distributions from:
Net investment income $ 0.13 0.29 0.45 0.26 0.54 0.39
Net realized gain on investments $ -- 0.15 0.67 -- -- --
Total distributions $ 0.13 0.44 1.12 0.26 0.54 0.39
Net asset value, end of period $ 10.60 10.50 9.90 10.18 9.52 9.40
TOTAL RETURN(4) % 2.18 10.64 8.37 9.74 7.30 (2.13)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 66,223 61,544 11,216 2,807 1,523 1,958
Ratios to average net assets:
Net expenses after expense reimbursement(5)(6) % 1.82 1.89 1.90 1.88 1.74 1.70
Gross expenses prior to expense
reimbursement(5) % 1.82 1.89 2.01 2.18 2.33 2.39
Net investment income after expense
reimbursement(5)(6) % 2.38 2.39 4.09 6.20 5.71 4.83
Portfolio turnover rate % 313 639 1,216* 838 733 432
</Table>
(1) Effective September 2, 2003 Aeltus Investment Management, Inc., replaced
ING Investment Management, LLC as the Sub-Adviser.
(2) The Fund changed its fiscal year end to March 31.
(3) Commencement of operations.
(4) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and excluding the deduction
of sales charges. Total return for less than one year is not annualized.
(5) Annualized for periods less than one year.
(6) The Investment Adviser has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments LLC within three years.
* Portfolio turnover was greater than expected during this period due to
active trading undertaken in response to market conditions that existed at
that time.
See Accompanying Notes to Financial Statements.
41
<Page>
ING INTERMEDIATE BOND FUND (UNAUDITED) (CONTINUED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS C
----------------------------------------------------------------------------
SIX MONTHS YEAR YEAR FIVE MONTHS YEAR DECEMBER 15,
ENDED ENDED ENDED ENDED ENDED 1998(3) TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, OCTOBER 31, OCTOBER 31,
2003(1) 2003 2002 2001(2) 2000 1999
- -------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 10.50 9.90 10.19 9.52 9.40 10.00
Income (loss) from investment operations:
Net investment income $ 0.13 0.28 0.44 0.26 0.54 0.42
Net realized and unrealized gain (loss)
on investments $ 0.11 0.76 0.39 0.67 0.12 (0.63)
Total from investment operations $ 0.24 1.04 0.83 0.93 0.66 (0.21)
Less distributions from:
Net investment income $ 0.13 0.29 0.45 0.26 0.54 0.39
Net realized gain on investments $ -- 0.15 0.67 -- -- --
Total distributions $ 0.13 0.44 1.12 0.26 0.54 0.39
Net asset value, end of period $ 10.61 10.50 9.90 10.19 9.52 9.40
TOTAL RETURN(4) % 2.28 10.68 8.24 9.86 7.32 (2.10)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 65,974 52,979 6,382 4,470 5,248 1,082
Ratios to average net assets:
Net expenses after expense reimbursement(5)(6) % 1.82 1.90 1.90 1.85 1.73 1.71
Gross expenses prior to expense
reimbursement(5) % 1.82 1.90 2.01 2.18 2.32 2.44
Net investment income after expense
reimbursement(5)(6) % 2.37 2.36 4.20 6.37 5.74 4.94
Portfolio turnover rate % 313 639 1,216* 838 733 432
</Table>
(1) Effective September 2, 2003 Aeltus Investment Management, Inc., replaced
ING Investment Management, LLC as the Sub-Adviser.
(2) The Fund changed its fiscal year end to March 31.
(3) Commencement of operations.
(4) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and excluding the deduction
of sales charges. Total return for less than one year is not annualized.
(5) Annualized for periods less than one year.
(6) The Investment Adviser has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments LLC within three years.
* Portfolio turnover was greater than expected during this period due to
active trading undertaken in response to market conditions that existed at
that time.
See Accompanying Notes to Financial Statements.
42
<Page>
ING NATIONAL TAX-EXEMPT BOND FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS A
----------------------------------------------------------------
SIX MONTHS YEAR YEAR FIVE MONTHS NOVEMBER 8,
ENDED ENDED ENDED ENDED 1999(3) TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, OCTOBER 31,
2003(1) 2003 2002 2001(2) 2000
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 10.87 10.32 10.50 10.11 10.00
Income (loss) from investment operations:
Net investment income $ 0.18 0.39 0.41 0.19 0.48
Net realized and unrealized gain (loss)
on investments $ 0.05 0.67 (0.18) 0.39 0.11
Total from investment operations $ 0.23 1.06 0.23 0.58 0.59
Less distributions from:
Net investment income $ 0.18 0.39 0.41 0.19 0.48
Net realized gain on investments $ -- 0.12 -- -- --
Total distributions $ 0.18 0.51 0.41 0.19 0.48
Net asset value, end of period $ 10.92 10.87 10.32 10.50 10.11
TOTAL RETURN(4) % 2.17 10.44 2.25 5.79 6.09
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 23,976 23,647 22,868 22,074 21,592
Ratios to average net assets:
Net expenses after expense reimbursement(5)(6) % 1.15 1.15 1.10 1.06 0.95
Gross expenses prior to expense
reimbursement(5) % 1.31 1.28 1.52 1.50 2.12
Net investment income after expense
reimbursement(5)(6) % 3.36 3.64 3.97 4.45 4.92
Portfolio turnover rate % 4 22 27 7 50
<Caption>
CLASS B
----------------------------------------------------------------
SIX MONTHS YEAR YEAR FIVE MONTHS NOVEMBER 8,
ENDED ENDED ENDED ENDED 1999(3) TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, OCTOBER 31,
2003(1) 2003 2002 2001(2) 2000
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 10.86 10.31 10.48 10.09 10.00
Income (loss) from investment operations:
Net investment income $ 0.14 0.31 0.34 0.17 0.38
Net realized and unrealized gain (loss)
on investments $ 0.05 0.67 (0.17) 0.39 0.11
Total from investment operations $ 0.19 0.98 0.17 0.56 0.49
Less distributions from:
Net investment income $ 0.14 0.31 0.34 0.17 0.40
Net realized gain on investments $ -- 0.12 -- -- --
Total distributions $ 0.14 0.43 0.34 0.17 0.40
Net asset value, end of period $ 10.91 10.86 10.31 10.48 10.09
TOTAL RETURN(4) % 1.79 9.65 1.59 5.54 5.02
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 2,759 2,792 1,265 588 311
Ratios to average net assets:
Net expenses after expense reimbursement(5)(6) % 1.90 1.90 1.84 1.83 1.67
Gross expenses prior to expense
reimbursement(5) % 1.96 1.94 2.16 2.17 2.32
Net investment income after expense
reimbursement(5)(6) % 2.62 2.86 3.22 3.69 3.93
Portfolio turnover rate % 4 22 27 7 50
</Table>
(1) Effective September 2, 2003, Aeltus Investment Management, Inc., replaced
Furman Selz Capital Management, LLC as the Sub-Adviser.
(2) The Fund changed its fiscal year end to March 31.
(3) Commencement of operations.
(4) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and excluding the deduction
of sales charges. Total return for less than one year is not annualized.
(5) Annualized for periods less than one year.
(6) The Investment Adviser has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
See Accompanying Notes to Financial Statements.
43
<Page>
ING NATIONAL TAX-EXEMPT BOND FUND (UNAUDITED) (CONTINUED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS C
----------------------------------------------------------------
SIX MONTHS YEAR YEAR FIVE MONTHS NOVEMBER 8,
ENDED ENDED ENDED ENDED 1999(3) TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, OCTOBER 31,
2003(1) 2003 2002 2001(2) 2000
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 10.87 10.33 10.49 10.11 10.00
Income (loss) from investment operations:
Net investment income $ 0.14 0.31 0.34 0.16 0.39
Net realized and unrealized gain (loss)
on investments $ 0.05 0.66 (0.16) 0.38 0.12
Total from investment operations $ 0.19 0.97 0.18 0.54 0.51
Less distributions from:
Net investment income $ 0.14 0.31 0.34 0.16 0.40
Net realized gains on investments $ -- 0.12 -- -- --
Total distributions $ 0.14 0.43 0.34 0.16 0.40
Net asset value, end of period $ 10.92 10.87 10.33 10.49 10.11
TOTAL RETURN(4) % 1.79 9.56 1.69 5.34 5.29
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 1,206 1,065 271 440 439
Ratios to average net assets:
Net expenses after expense reimbursement(5)(6) % 1.90 1.90 1.83 1.81 1.68
Gross expenses prior to expense
reimbursement(5) % 1.96 1.94 2.18 2.16 2.33
Net investment income after expense
reimbursement(5)(6) % 2.62 2.84 3.21 3.70 4.00
Portfolio turnover rate % 4 22 27 7 50
</Table>
(1) Effective September 2, 2003, Aeltus Investment Management, Inc., replaced
Furman Selz Capital Management, LLC as the Sub-Adviser.
(2) The Fund changed its fiscal year end to March 31.
(3) Commencement of operations.
(4) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and excluding the deduction
of sales charges. Total return for less than one year is not annualized.
(5) Annualized for periods less than one year.
(6) The Investment Adviser has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
See Accompanying Notes to Financial Statements.
44
<Page>
ING STRATEGIC BOND FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS A
--------------------------------------------------------------------------------------
THREE
SIX MONTHS YEAR YEAR NINE MONTHS YEAR MONTHS JULY 27,
ENDED ENDED ENDED ENDED ENDED ENDED 1998(4) TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, JUNE 30, JUNE 30, MARCH 31,
2003(1) 2003 2002 2001(2) 2000 1999(3) 1999
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 11.24 10.95 11.79 12.07 12.59 12.89 13.08
Income (loss) from investment operations:
Net investment income $ 0.23 0.54 0.75 0.23 0.92 0.26 0.53
Net realized and unrealized gain (loss)
on investments $ 0.13 0.38 (0.72) 0.08 (0.52) (0.42) (0.08)
Total from investment operations $ 0.36 0.92 0.03 0.31 0.40 (0.16) 0.45
Less distributions from:
Net investment income $ 0.27 0.63 0.87 0.59 0.92 0.14 0.53
Net realized gain on investments $ -- -- -- -- -- -- 0.11
Total distributions $ 0.27 0.63 0.87 0.59 0.92 0.14 0.64
Net asset value, end of period $ 11.33 11.24 10.95 11.79 12.07 12.59 12.89
TOTAL RETURN(5) % 3.24 8.73 0.26 2.69 3.42 (1.23) 5.60
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 30,256 31,599 34,387 39,105 2,726 2,736 5,751
Ratios to average net assets:
Net expenses after expense
reimbursement(6)(7) % 1.15 0.95 0.97 1.03 0.96 0.90 0.96
Gross expenses prior to expense
reimbursement(6) % 1.37 1.40 1.34 1.73 2.64 1.56 1.98
Net investment income after expense
reimbursement(6)(7) % 4.03 5.09 6.55 6.30 7.69 5.88 5.81
Portfolio turnover rate % 273 254 211 132 168 69 274
</Table>
<Table>
<Caption>
CLASS B
--------------------------------------------------------------------------------------
THREE
SIX MONTHS YEAR YEAR NINE MONTHS YEAR MONTHS JULY 27,
ENDED ENDED ENDED ENDED ENDED ENDED 1998(4) TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, JUNE 30, JUNE 30, MARCH 31,
2003(1) 2003 2002 2001(2) 2000 1999(3) 1999
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 10.95 10.68 11.53 11.80 12.33 12.61 12.78
Income (loss) from investment operations:
Net investment income $ 0.20 0.50 0.60 0.36 0.88 0.18 0.45
Net realized and unrealized gain (loss)
on investments $ 0.13 0.36 (0.62) (0.08) (0.53) (0.33) (0.05)
Total from investment operations $ 0.33 0.86 (0.02) 0.28 0.35 (0.15) 0.40
Less distributions from:
Net investment income $ 0.24 0.59 0.83 0.55 0.88 0.13 0.46
Net realized gain on investments $ -- -- -- -- -- -- 0.11
Total distributions $ 0.24 0.59 0.83 0.55 0.88 0.13 0.57
Net asset value, end of period $ 11.04 10.95 10.68 11.53 11.80 12.33 12.61
TOTAL RETURN(5) % 3.08 8.36 (0.18) 2.52 3.00 (1.20) 5.17
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 13,144 13,581 11,848 8,894 4,460 5,658 6,637
Ratios to average net assets:
Net expenses after expense
reimbursement(6)(7) % 1.55 1.35 1.38 1.53 1.36 1.29 1.37
Gross expenses prior to expense
reimbursement(6) % 1.77 1.80 1.75 2.55 3.04 1.95 2.42
Net investment income after expense
reimbursement(6)(7) % 3.64 4.68 5.98 6.71 7.29 5.49 5.35
Portfolio turnover rate % 273 254 211 132 168 69 274
</Table>
(1) Effective August 1, 2003 ING Investments, LLC, appointed Aeltus Investment
Management, Inc. as Sub-Adviser.
(2) The Fund changed its fiscal year end to March 31.
(3) Effective May 24, 1999, ING Investments, LLC, became the Investment Adviser
of the Fund and the Fund changed its year end to June 30.
(4) Commencement of operations.
(5) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and excluding the deduction
of sales charges. Total return for less than one year is not annualized.
(6) Annualized for periods less than one year.
(7) The Investment Manager has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
See Accompanying Notes to Financial Statements.
45
<Page>
ING STRATEGIC BOND FUND (UNAUDITED) (CONTINUED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS C
--------------------------------------------------------------------------------------
THREE
SIX MONTHS YEAR YEAR NINE MONTHS YEAR MONTHS JULY 27,
ENDED ENDED ENDED ENDED ENDED ENDED 1998(4) TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, JUNE 30, JUNE 30, MARCH 31,
2003(1) 2003 2002 2001(2) 2000 1999(3) 1999
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 11.52 11.20 12.05 12.30 12.81 13.10 13.27
Income (loss) from investment operations:
Net investment income $ 0.21 0.61 0.66 0.43 0.87 0.19 0.48
Net realized and unrealized gain (loss)
on investments $ 0.13 0.30 (0.68) (0.13) (0.51) (0.35) (0.06)
Total from investment operations $ 0.34 0.91 (0.02) 0.30 0.36 (0.16) 0.42
Less distributions from:
Net investment income $ 0.24 0.59 0.83 0.55 0.87 0.13 0.48
Net realized gain on investments $ -- -- -- -- -- -- 0.11
Total distributions $ 0.24 0.59 0.83 0.55 0.87 0.13 0.59
Net asset value, end of period $ 11.62 11.52 11.20 12.05 12.30 12.81 13.10
TOTAL RETURN(5) % 2.98 8.38 (0.17) 2.55 3.02 (1.21) 5.19
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 3,470 4,091 4,964 5,196 3,966 7,965 8,128
Ratios to average net assets:
Net expenses after expense
reimbursement(6)(7) % 1.55 1.35 1.38 1.51 1.36 1.29 1.36
Gross expenses prior to expense
reimbursement(6) % 1.77 1.80 1.75 2.55 3.04 1.95 2.41
Net investment income after expense
reimbursement(6)(7) % 3.65 4.70 6.04 6.71 7.29 5.49 5.36
Portfolio turnover rate % 273 254 211 132 168 69 274
</Table>
(1) Effective August 1, 2003 ING Investments, LLC, appointed Aeltus Investment
Management, Inc. as Sub-Adviser.
(2) The Fund changed its fiscal year end to March 31.
(3) Effective May 24, 1999, ING Investments, LLC, became the Investment Adviser
of the Fund and the Fund changed its year end to June 30.
(4) Commencement of operations.
(5) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and excluding the deduction
of sales charges. Total return for less than one year is not annualized.
(6) Annualized for periods less than one year.
(7) The Investment Manager has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
See Accompanying Notes to Financial Statements.
46
<Page>
ING CLASSIC MONEY MARKET FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS A
----------------------------------------------------------------------------
SIX MONTHS YEAR YEAR FIVE MONTHS YEAR DECEMBER 15,
ENDED ENDED ENDED ENDED ENDED 1998(3) TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, OCTOBER 31, OCTOBER 31,
2003(1) 2003 2002 2001(2) 2000 1999
- -------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.00 1.00 1.00 1.00 1.00 1.00
Income from investment operations:
Net investment income $ 0.00* 0.01 0.03 0.02 0.06 0.04
Total from investment operations $ 0.00* 0.01 0.03 0.02 0.06 0.04
Less distributions from:
Net investment income $ 0.00* 0.01 0.03 0.02 0.06 0.04
Total distributions $ 0.00* 0.01 0.03 0.02 0.06 0.04
Net asset value, end of period $ 1.00 1.00 1.00 1.00 1.00 1.00
TOTAL RETURN(4) % 0.24 1.06 2.83 2.36 5.70 3.98
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 440,840 458,964 549,999 515,651 440,651 228,124
Ratios to average net assets:
Net expenses after expense reimbursement(5)(6) % 0.77 0.77 0.77 0.77 0.74 0.73
Gross expenses prior to expense
reimbursement(5) % 1.22 1.27 1.27 1.30 1.42 1.67
Net investment income after expense
reimbursement(5)(6) % 0.47 1.06 2.75 5.61 5.59 4.59
<Caption>
CLASS B
----------------------------------------------------------------------------
SIX MONTHS YEAR YEAR FIVE MONTHS YEAR DECEMBER 15,
ENDED ENDED ENDED ENDED ENDED 1998(3) TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, OCTOBER 31, OCTOBER 31,
2003(1) 2003 2002 2001(2) 2000 1999
- -------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.00 1.00 1.00 1.00 1.00 1.00
Income from investment operations:
Net investment income $ 0.00* 0.00* 0.02 0.02 0.05 0.03
Total from investment operations $ 0.00* 0.00* 0.02 0.02 0.05 0.03
Less distributions from:
Net investment income $ 0.00* 0.00* 0.02 0.02 0.05 0.03
Total distributions $ 0.00* 0.00* 0.02 0.02 0.05 0.03
Net asset value, end of period $ 1.00 1.00 1.00 1.00 1.00 1.00
TOTAL RETURN(4) % 0.07 0.43 2.21 2.11 5.03 3.31
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 1,034 1,156 1,987 2,714 2,706 1,173
Ratios to average net assets:
Net expenses after expense reimbursement(5)(6) % 1.11 1.40 1.37 1.41 1.38 1.41
Gross expenses prior to expense
reimbursement(5) % 1.47 1.52 1.53 1.55 1.67 1.79
Net investment income after expense
reimbursement(5)(6) % 0.14 0.46 2.27 5.10 4.93 3.85
</Table>
(1) Effective September 2, 2003, Aeltus Investment Management, Inc. replaced
ING Investment Management, LLC as Sub-Adviser.
(2) The Fund changed its fiscal year end to March 31.
(3) Commencement of operations.
(4) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and excluding the deduction
of sales charges. Total return for less than one year is not annualized.
(5) Annualized for periods less than one year.
(6) The Investment Adviser has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
* Amount is less than $0.01 per share.
See Accompanying Notes to Financial Statements.
47
<Page>
ING CLASSIC MONEY MARKET FUND (UNAUDITED) (CONTINUED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS C
----------------------------------------------------------------------------
SIX MONTHS YEAR YEAR FIVE MONTHS YEAR DECEMBER 15,
ENDED ENDED ENDED ENDED ENDED 1998(3) TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, OCTOBER 31, OCTOBER 31,
2003(1) 2003 2002 2001(2) 2000 1999
- -------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.00 1.00 1.00 1.00 1.00 1.00
Income from investment operations:
Net investment income $ 0.00* 0.00* 0.02 0.02 0.05 0.03
Total from investment operations $ 0.00* 0.00* 0.02 0.02 0.05 0.03
Less distributions from:
Net investment income $ 0.00* 0.00* 0.02 0.02 0.05 0.03
Total distributions $ 0.00* 0.00* 0.02 0.02 0.05 0.03
Net asset value, end of period $ 1.00 1.00 1.00 1.00 1.00 1.00
TOTAL RETURN(4) % 0.07 0.42 2.20 2.08 5.03 3.30
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 540 524 590 2,583 2,035 444
Ratios to average net assets:
Net expenses after expense reimbursement(5)(6) % 1.11 1.40 1.38 1.40 1.39 1.41
Gross expenses prior to expense
reimbursement(5) % 1.47 1.52 1.53 1.55 1.67 1.78
Net investment income after expense
reimbursement(5)(6) % 0.14 0.42 2.44 5.00 5.03 3.89
</Table>
(1) Effective September 2, 2003, Aeltus Investment Management, Inc. replaced
ING Investment Management, LLC as Sub-Adviser.
(2) The Fund changed its fiscal year end to March 31.
(3) Commencement of operations.
(4) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and excluding the deduction
of sales charges. Total return for less than one year is not annualized.
(5) Annualized for periods less than one year.
(6) The Investment Adviser has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
* Amount is less than $0.01 per share.
See Accompanying Notes to Financial Statements.
48
<Page>
ING MONEY MARKET FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS A
----------------------------------------------------------------------------
SIX MONTHS YEAR YEAR NINE MONTHS NOVEMBER 24,
ENDED ENDED ENDED ENDED 1999(4) TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, JUNE 30,
2003(1) 2003 2002(2) 2001(3) 2000
- --------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.00 1.00 1.00 1.00 1.00
Income from investment operations:
Net investment income $ 0.00+ 0.01 0.02* 0.04* 0.02*
Total from investment operations $ 0.00+ 0.01 0.02 0.04 0.02
Less distributions from:
Net investment income $ 0.00+ 0.01 0.02 0.04 0.02
Total distributions $ 0.00+ 0.01 0.02 0.04 0.02
Net asset value, end of period $ 1.00 1.00 1.00 1.00 1.00
TOTAL RETURN(5) % 0.38 0.76 2.10 3.86 3.58
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 17,222 16,127 28,668 73,290 75,430
Ratios to average net assets:
Net expenses after expense reimbursement(6)(7) % 0.46 0.92 0.93** 0.91** 0.85**
Gross expenses prior to expense
reimbursement(6) % 1.14 1.14 0.99 0.74 2.28
Net investment income after expense
reimbursement(6)(7) % 0.75 0.77 2.26 5.23 5.18
<Caption>
CLASS B
----------------------------------------------------------------------------
SIX MONTHS YEAR YEAR NINE MONTHS JULY 12,
ENDED ENDED ENDED ENDED 1999(4) TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, JUNE 30,
2003(1) 2003 2002(2) 2001(3) 2000
- --------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.00 1.00 1.00 1.00 1.00
Income from investment operations:
Net investment income $ 0.00+ 0.00+ 0.01* 0.03* 0.03*
Total from investment operations $ 0.00+ 0.00+ 0.01 0.03 0.03
Less distributions from:
Net investment income $ 0.00+ 0.00+ 0.01 0.03 0.03
Total distributions $ 0.00+ 0.00+ 0.01 0.03 0.03
Net asset value, end of period $ 1.00 1.00 1.00 1.00 1.00
TOTAL RETURN(5) % 0.00++ 0.00++ 1.38 3.34 3.60
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 29,229 34,548 30,241 32,117 12,035
Ratios to average net assets:
Net expenses after expense reimbursement(6)(7) % 1.22 1.61 1.70** 1.64** 1.60**
Gross expenses prior to expense
reimbursement(6) % 1.90 1.91 1.75 1.50 3.03
Net investment income after expense
reimbursement(6)(7) % 0.00++ 0.01 1.26 4.31 3.96
</Table>
(1) Effective August 1, 2003 ING Investments, LLC, appointed Aeltus Investment
Management, Inc. as Sub-Adviser.
(2) Effective May 21, 2001, ING Investments, LLC took over direct management of
the Fund.
(3) The Fund changed its fiscal year end to March 31.
(4) Commencement of operations of class.
(5) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and excluding the deduction
of sales charges. Total return for less than one year is not annualized.
(6) Annualized for periods less than one year.
(7) The Investment Adviser has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
* Recognition of net investment income by the Fund was affected by the timing
of the declaration of dividends by the underlying investment company in
which the Fund invested.
** Does not include expenses of the investment company in which the Fund
invested prior to May 2001.
+ Amount is less than $0.01 per share.
++ Amount is less than 0.01% per share.
See Accompanying Notes to Financial Statements.
49
<Page>
ING MONEY MARKET FUND (UNAUDITED) (CONTINUED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS C
----------------------------------------------------------------------------
SIX MONTHS YEAR YEAR NINE MONTHS JULY 12,
ENDED ENDED ENDED ENDED 1999(4) TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, JUNE 30,
2003(1) 2003 2002(2) 2001(3) 2000
- --------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.00 1.00 1.00 1.00 1.00
Income from investment operations:
Net investment income $ 0.00+ 0.00+ 0.01* 0.03* 0.02*
Total from investment operations $ 0.00+ 0.00+ 0.01 0.03 0.02
Less distributions from:
Net investment income $ 0.00+ 0.00+ 0.01 0.03 0.02
Total distributions $ 0.00+ 0.00+ 0.01 0.03 0.02
Net asset value, end of period $ 1.00 1.00 1.00 1.00 1.00
TOTAL RETURN(5) % 0.00++ 0.01 1.33 3.34 3.58
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 7,499 10,664 10,403 27,404 5,431
Ratios to average net assets:
Net expenses after expense reimbursement(6)(7) % 1.22 1.62 1.68** 1.59** 1.60**
Gross expenses prior to expense
reimbursement(6) % 1.90 1.90 1.71 1.49 3.03
Net investment income after expense
reimbursement(6)(7) % 0.00++ 0.01 1.60 4.36 3.96
</Table>
(1) Effective August 1, 2003 ING Investments, LLC, appointed Aeltus Investment
Management, Inc. as Sub-Adviser.
(2) Effective May 21, 2001, ING Investments, LLC took over direct management of
the Fund.
(3) The Fund changed its fiscal year end to March 31.
(4) Commencement of operations of class.
(5) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and excluding the deduction
of sales charges. Total return for less than one year is not annualized.
(6) Annualized for periods less than one year.
(7) The Investment Adviser has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
* Recognition of net investment income by the Fund was affected by the timing
of the declaration of dividends by the underlying investment company in
which the Fund invested.
** Does not include expenses of the investment company in which the Fund
invested prior to May 2001.
+ Amount is less than $0.01 per share.
++ Amount is less than 0.01% per share.
See Accompanying Notes to Financial Statements.
50
<Page>
ING LEXINGTON MONEY MARKET TRUST (UNAUDITED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
THREE
SIX MONTHS YEAR YEAR MONTHS
ENDED ENDED ENDED ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, -------------------------------
2003(1) 2003 2002 2001(2) 2000(3) 1999 1998
- ----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Income from investment operations:
Net investment income $ 0.00* 0.01 0.02 0.01 0.05 0.0425 0.0455
Total from investment operations $ 0.00* 0.01 0.02 0.01 0.05 0.0425 0.0455
Less distributions from:
Net investment income $ 0.00* 0.01 0.02 0.01 0.05 0.0425 0.0455
Total distributions $ 0.00* 0.01 0.02 0.01 0.05 0.0425 0.0455
Net asset value, end of period $ 1.00 1.00 1.00 1.00 1.00 1.00 1.00
TOTAL RETURN(4) % 0.20 0.69 2.11 1.22 5.57 4.34 4.64
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 47,366 50,153 55,222 63,177 62,859 97,850 87,488
Ratios to average net assets:
Net expenses after expense
reimbursement(5)(6) % 0.82 0.92 0.98 0.92 1.00 1.00 1.00
Gross expenses prior to expense
reimbursement(5) % 0.82 0.92 1.08 0.92 1.08 1.01 1.05
Net investment income after expense
reimbursement(5)(6) % 0.39 0.69 2.15 4.85 5.53 4.26 4.56
</Table>
(1) Effective August 1, 2003 ING Investments, LLC, appointed Aeltus Investment
Management, Inc. as Sub-Adviser.
(2) The Trust changed its fiscal year end to March 31.
(3) Effective July 26, 2000 ING Investments, LLC became the Investment Adviser
of the Trust.
(4) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and excluding the deduction
of sales charges. Total return for less than one year is not annualized.
(5) The Investment Adviser has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
(6) Annualized for periods less than one year.
See Accompanying Notes to Financial Statements.
51
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited)
NOTE 1 -- ORGANIZATION
ORGANIZATION. ING Funds Trust ("Trust") is a Delaware business trust registered
as an open-end management investment company. The Trust was organized on July
30, 1998. It consists of nine separately managed series: ING GNMA Income Fund
("GNMA Fund"), ING High Yield Bond Fund ("High Yield Bond Fund"), ING High Yield
Opportunity Fund ("High Yield Opportunity Fund"), ING Intermediate Bond Fund
("Intermediate Bond Fund"), ING National Tax-Exempt Bond Fund ("National
Tax-Exempt Bond Fund"), ING Strategic Bond Fund ("Strategic Bond Fund"), ING
Lexington Money Market Trust ("Money Market Trust"), ING Classic Money Market
Fund and ING Money Market Fund.
The investment objective of each Fund is described in each Fund's prospectus.
Each Fund offers at least three of the following classes of shares: Class A,
Class B, Class C, Class I, Class M, Class Q and Class R, except for Money Market
Trust which only offers Class A Shares. The separate classes of shares differ
principally in the applicable sales charges (if any), transfer agent fees,
distribution fees and shareholder servicing fees. Shareholders of each class
also bear certain expenses that pertain to that particular class. All
shareholders bear the common expenses of the Fund and earn income from the
portfolio pro rata based on the average daily net assets of each class, without
distinction between share classes. Dividends and distributions 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. Class B shares, along with their pro rata reinvested dividend
shares, automatically convert to Class A shares approximately eight years after
purchase.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies are consistently followed by the
Funds in the preparation of their financial statements, and such policies are in
conformity with accounting principles generally accepted in the United States
for investment companies.
A. SECURITY VALUATION. Investments in equity securities traded on a national
securities exchange are valued at the last reported sale price. Securities
reported by the NASDAQ will be valued at NASDAQ official closing price.
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 the time such valuation is
determined by each Fund's custodian. Debt securities are valued at bid
prices obtained from independent services or from one or more dealers making
markets in the securities and may be adjusted based on the Fund's valuation
procedures. U.S. Government obligations are valued by using market
quotations or independent pricing services that use prices provided by
market-makers or estimates of market values obtained from yield data
relating to instruments or securities with similar characteristics.
Securities for which market quotations are not readily available are valued
at their respective fair values as determined in good faith and in
accordance with policies set by the Board of Trustees ("Board") of the
Funds. Among elements of analysis, the Board has authorized the use of one
or more research services to assist with the determination of the fair value
of foreign securities in light of significant events. Research services use
statistical analyses and quantitative models to help determine fair value as
of the time a Fund calculates its net asset value. Investments in securities
maturing in less than 60 days at the date of acquisition are valued at
amortized cost, which approximates market value.
Money Market Trust, ING Classic Money Market Fund and ING Money Market Fund
use the amortized cost method to value their portfolios securities. The
amortized cost method involves valuing a security at its cost and amortizing
any discount or premium over the period until maturity.
At September 30, 2003, the Intermediate Bond Fund contained four securities
for which bid prices obtained from one or more dealers making markets in the
securities were adjusted based on the Funds' valuation procedures. These
securities
52
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited)
(Continued)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
had a total value of $6,806,264 (this represents 2.46% of net assets) for
the Intermediate Bond Fund. In addition, at September 30, 2003, the High
Yield Bond Fund, the High Yield Opportunity Fund and the Strategic Bond Fund
contained one, eleven and two securities, respectively, for which market
quotations were not readily available and which were valued at their fair
value as determined in good faith and in accordance with policies set by the
Board. These securities had a total value of $0 (represents 0.00% of net
assets), $2,616,819 (represents 0.79% of net assets) and $200 (represents
0.00% of net assets) for the High Yield Bond Fund, the High Yield
Opportunity Fund and the Strategic Bond Fund, respectively.
B. SECURITY TRANSACTIONS AND REVENUE RECOGNITION. Securities transactions are
accounted for on the trade date. Realized gains and losses are reported on
the basis of identified cost of securities sold. Interest income is recorded
on an accrual basis. Dividend income is recorded on the ex-dividend date, or
for certain foreign securities, when the information becomes available to
the funds. Premium amortization and discount accretion are determined by the
effective yield method.
C. FOREIGN CURRENCY TRANSLATION. The books and records of the Funds are
maintained in U.S. dollars. Any foreign currency amounts are translated into
U.S. dollars on the following basis:
(1) Market value of investment securities, other assets and liabilities
-- at the exchange rates prevailing at the end of the day.
(2) Purchases and sales of investment securities, income and expenses
-- at the rates of exchange prevailing on the respective dates of
such transactions.
Although the net assets and the market values are presented at the foreign
exchange rates at the end of the day, the Funds do not isolate the portion
of the results of operations resulting from changes in foreign exchange
rates on investments from the fluctuations arising from changes in market
prices of securities held. Such fluctuations are included with the net
realized and unrealized gains or losses from investments. For securities
that are subject to foreign withholding tax upon disposition, liabilities
are recorded on the statement of assets and liabilities for the estimated
tax withholding based on the securities' current market values. 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 Fund's books, and
the U.S. dollar equivalent of the amounts actually received or paid. Net
unrealized foreign exchange gains and losses arise from changes in the value
of assets and liabilities other than investments in securities at fiscal
year end, resulting from changes in the exchange rate. Foreign security and
currency transactions may involve certain considerations and risks not
typically associated with investing in U.S. companies and U.S. Government
Securities. These risks include but are not limited to re-evaluation of
currencies and future adverse political and economic developments which
could cause securities and their markets to be less liquid and prices more
volatile than those of comparable U.S. companies and U.S. Government
Securities.
D. FOREIGN CURRENCY TRANSACTIONS AND FUTURES CONTRACTS. Certain Funds may enter
into foreign currency exchange transactions to convert to and from different
foreign currencies and to and from the U.S. dollar in connection with the
planned purchases or sales of securities. The Funds either enter into these
transactions on a spot basis at the spot rate prevailing in the foreign
currency exchange market or 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 Fund may enter into futures contracts involving foreign currency,
interest rates,
53
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited)
(Continued)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
securities and securities indices, for hedging purposes only. A futures
contract obligates the seller of the contract to deliver and the purchaser
of the contract to take delivery of the type of foreign currency, financial
instrument or security called for in the contract at a specified future time
for a specified price. Upon entering into such a contract, a Fund is
required to deposit and maintain as collateral such initial margin as
required by the exchange on which the contract is traded. Pursuant to the
contract, a Fund agrees to receive from or pay to the broker an amount equal
to the daily fluctuations in the value of the contract. Such receipts or
payments are known as variation margins and are recorded as unrealized gains
or losses by the Fund. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
E. DISTRIBUTIONS TO SHAREHOLDERS. The Funds record distributions to their
shareholders on ex-dividend date. National Tax-Exempt Bond Fund,
Intermediate Bond Fund, High Yield Opportunity Fund, High Yield Bond Fund,
ING Money Market Fund, ING Classic Money Market Fund and Money Market Trust
declare and become ex-dividend daily and pay dividends monthly. GNMA Fund
and Strategic Bond Fund declare and become ex-dividend monthly and pay
dividends monthly. Each Fund distributes capital gains, to the extent
available, annually.
F. FEDERAL INCOME TAXES. It is the policy of the Funds to comply with the
requirements of Subchapter M of the Internal Revenue Code that are
applicable to regulated investment companies and to distribute substantially
all of their net investment income and any net realized capital gains to
their shareholders.
Therefore, a federal income tax or excise tax provision is not required. In
addition, by distributing during each calendar year substantially all of its
net investment income and net realized capital gains, each Fund intends not
to be subject to any federal excise tax.
The Board intends to offset any net capital gains with any available capital
loss carryforward until each carryforward has been fully utilized or
expires. In addition, no capital gain distribution shall be made until the
capital loss carryforward has been fully utilized or expires.
G. USE OF ESTIMATES. Management of the Funds has made certain estimates and
assumptions relating to the reporting of assets, liabilities, income, and
expenses to prepare these financial statements in conformity with accounting
principles generally accepted in the United States. Actual results could
differ from these estimates.
H. REPURCHASE AGREEMENTS. Each Fund may invest in repurchase agreements only
with government securities dealers recognized by the Board of Governors of
the Federal Reserve System or with member banks of the Federal Reserve
System. Under such agreements, the seller of the security agrees to
repurchase the security at a mutually agreed upon time and price. The resale
price is in excess of the purchase price and reflects an agreed upon
interest rate for the period of time the agreement is outstanding. The
period of the repurchase agreements is usually short, from overnight to one
week, while the underlying securities generally have longer maturities. Each
Fund will always receive as collateral securities acceptable to it whose
market value is equal to at least 100% of the carrying amount of the
repurchase agreements, plus accrued interest, being invested by the Fund.
The underlying collateral is valued daily on a mark to market basis to
assure that the value, including accrued interest is at least equal to the
repurchase price. If the seller defaults, a Fund might incur a loss or delay
in the realization of proceeds if the value of the collateral securing the
repurchase agreement declines, and it might incur disposition costs in
liquidating the collateral.
I. SECURITIES LENDING. Each Fund (except GNMA Fund) has the option to
temporarily loan up to 30% of its total assets to brokers, dealers or other
financial institutions in exchange for a negotiated lender's fee. The
borrower is required to fully collateralize the loans with cash or U.S.
Government securities.
J. OPTIONS CONTRACTS. Certain Funds may purchase put and call options and may
write (sell) put options and covered call options. The Funds may engage in
option transactions as a hedge against adverse movements in the value of
portfolio holdings or to increase market exposure. Option contracts are
valued daily and unrealized gains or losses are recorded based upon the last
sales price on the principal exchange on which the options are traded. The
Funds will realize a gain or loss upon
54
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited)
(Continued)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
the expiration or closing of the option contract. When an option is
exercised, the proceeds on sales of the underlying security for a written
call option, the purchase cost of the security for a written put option, or
the cost of the security for a purchased put or call option is adjusted by
the amount of premium received or paid. Realized and unrealized gains or
losses on option contracts are reflected in the accompanying financial
statements. The risk in writing a call option is that the Funds give up the
opportunity for profit if the market price of the security increases and the
option is exercised. The risk in writing a put option is that the Funds may
incur a loss if the market price of the security decreases and the option is
exercised. The risk in buying an option is that the Funds pay a premium
whether or not the option is exercised. Risks may also arise from an
illiquid secondary market or from the inability of counterparties to meet
the terms of the contract.
K. ILLIQUID AND RESTRICTED SECURITIES. Illiquid securities are not readily
marketable. Disposing of illiquid investments may involve time-consuming
negotiation and legal expenses, and it may be difficult or impossible for
the Funds to sell them promptly at an acceptable price. Restricted
securities are those sold under Rule 144A of the Securities Act of 1933
(1933 Act) or are securities offered pursuant to Section 4(2) of the 1933
Act, and are subject to legal or contractual restrictions on resale and may
not be publicly sold without registration under the 1933 Act. Restricted
securities may be considered liquid pursuant to procedures adopted by the
Board or may be deemed illiquid because they may not be readily marketable.
GNMA Fund may not invest in illiquid securities. Money Market Trust may not
invest more than 5% of its net assets, in illiquid securities, Money Market
Fund and Classic Money Market Fund may not invest more than 10% of their net
assets in illiquid securities and all other Funds may not invest more than
15% of their net assets in illiquid securities. Illiquid and restricted
securities are valued using market quotations when readily available. In the
absence of market quotations, the securities are valued based upon their
fair value determined under procedures approved by the Board.
L. DELAYED DELIVERY TRANSACTION. The Funds may purchase or sell securities on a
when-issued or forward commitment basis. The price of the underlying
securities and date when the securities will be delivered and paid for are
fixed at the time the transaction is negotiated. The market value of such is
identified in the Funds' 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 Funds are required to hold liquid assets as collateral with
the Funds' custodian sufficient to cover the purchase price.
M. DOLLAR ROLL TRANSACTIONS. Certain Funds 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 Fund 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 Funds account for
dollar roll transactions as purchases and sales.
N. CONSTRUCTION LOAN SECURITIES (GNMA FUND). The GNMA Fund may purchase
construction loan securities, which are issued to finance building costs.
The funds are disbursed as needed or in accordance with a prearranged plan.
The securities provide for the timely payment to the registered holder of
interest at the specified rate plus scheduled installments of principal.
Upon completion of the construction phase, the construction loan securities
are terminated and project loan securities are issued. It is the Fund's
policy to record these GNMA certificates on trade date, and to segregate
assets to cover its commitments on trade date as well.
NOTE 3 -- INVESTMENT TRANSACTIONS
For the six-months ended September 30, 2003, the cost of purchases and proceeds
from the sales of securities, excluding short-term securities, were as follows:
<Table>
<Caption>
PURCHASES SALES
--------------- ----------------
GNMA Fund $ 878,195,136 $ 970,238,719
High Yield Bond Fund 36,882,059 31,763,874
High Yield Opportunity Fund 215,346,692 210,781,369
Intermediate Bond Fund 95,272,259 84,959,962
National Tax-Exempt Bond Fund 1,868,480 1,051,080
Strategic Bond Fund 113,834,958 110,653,954
</Table>
55
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited)
(Continued)
NOTE 3 -- INVESTMENT TRANSACTIONS (CONTINUED)
U.S. Government securities not included above were as follows:
<Table>
<Caption>
PURCHASES SALES
--------------- ----------------
GNMA Fund $ 878,195,136 $ 970,238,719
High Yield Bond Fund -- --
High Yield Opportunity Fund -- --
Intermediate Bond Fund 857,363,349 792,973,265
National Tax-Exempt Bond Fund -- --
Strategic Bond Fund 90,514,813 84,669,694
</Table>
NOTE 4 -- INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES
All the Funds included in this report have an Investment Management Agreement
with ING Investments, LLC (the "Investment Manager" or the "Adviser"), a
wholly-owned subsidiary of ING Groep N.V. The investment management agreements
compensate the Adviser with a fee, computed daily and payable monthly, based on
the average daily net assets of each Fund, at the following annual rates:
For GNMA Fund -- 0.60% for the first $150 million, 0.50% of the next $250
million, 0.45% of the next $400 million and 0.40% in excess of $800 million; for
National Tax-Exempt Bond and Intermediate Bond -- 0.50%; for Strategic Bond Fund
- -- 0.45% for the first $500 million, 0.40% of the next $250 million and 0.35% in
excess of $750 million; for High Yield Opportunity Fund -- 0.60%; for High Yield
Bond Fund -- 0.65%; for ING Money Market Fund -- 0.35%; for ING Classic Money
Market Fund -- 0.25%; for Money Market Trust -- 0.50% for the first $500 million
and 0.45% in excess of $500 million.
The fees payable to the Adviser were discounted for the National Tax-Exempt Bond
Fund, the Intermediate Bond Fund, the High Yield Bond Fund and the ING Classic
Money Market Fund by 75% in each Fund's first year of operations, and by 50% in
each Fund's second year of operations.
Prior to May 21, 2001, the Adviser did not charge a management fee for ING Money
Market Fund since the Fund invested solely in another open-end regulated
investment company. However, the Fund compensated the Adviser with an
administrative fee, computed daily and payable monthly, at an annual rate of
0.25% of average daily net assets.
Effective August 1, 2003, ING Aeltus serves as Sub-Adviser to the GNMA Fund,
High Yield Opportunity Fund, Strategic Bond Fund, ING Money Market Fund and
Money Market Trust pursuant to a sub-advisory agreement between the Adviser and
ING Aeltus.
Effective September 2, 2003, ING Aeltus serves as Sub-Adviser to High Yield Bond
Fund, Intermediate Bond Fund, National Tax-Exempt Bond Fund, and ING Classic
Money Market Fund pursuant to a sub-advisory agreement between the Adviser and
ING Aeltus.
Prior to September 2, 2003, Furman Selz Capital Management LLC (FSCM), an
affiliated registered investment advisor, served as Sub-Adviser to the National
Tax-Exempt Bond pursuant to a sub-advisory agreement between the Adviser and
FSCM. ING Investment Management LLC (IIM), a registered investment advisor,
served as Sub-Adviser to the Intermediate Bond Fund, High Yield Bond Fund and
ING Classic Money Market Fund pursuant to a sub-advisory agreement between the
Adviser and IIM.
ING Funds Services, LLC ("IFS") acts as administrator and provides certain
administrative and shareholder services necessary for Fund operations and is
responsible for the supervision of other service providers. For its services,
IFS is entitled to receive from the GNMA Fund, High Yield Bond Fund, High Yield
Opportunity Fund, Intermediate Bond Fund, National Tax-Exempt Bond Fund,
Strategic Bond Fund, ING Money Market Fund and Money Market Trust a fee at an
annual rate of 0.10% of its average daily net assets.
NOTE 5 -- DISTRIBUTION AND SERVICE FEES
Each share class of the Funds (except as noted below) has adopted a Plan
pursuant to Rule 12b-1 under the 1940 Act (the "12b-1 Plans"), whereby ING Funds
Distributor, LLC (the "Distributor") is reimbursed or compensated (depending on
the class of shares) by the Funds for expenses incurred in the distribution of
each Fund's shares ("Distribution Fees"). Pursuant to the 12b-1 Plans, the
Distributor is entitled to payment each month for actual expenses incurred in
the distribution and promotion of each Fund's shares, including expenses
incurred in printing prospectuses and reports used for sales purposes, expenses
incurred in preparing and printing sales literature and other such distribution
related expenses, including any distribution or shareholder servicing fees
("Service Fees") paid to securities dealers who
56
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited)
(Continued)
NOTE 5 -- DISTRIBUTION AND SERVICE FEES (CONTINUED)
have executed a distribution agreement with the Distributor. Under the 12b-1
Plans, each class of shares of the Fund pays the Distributor a combined
Distribution and Service Fee based on average daily net assets at the following
annual rates:
<Table>
<Caption>
CLASS A CLASS B CLASS C CLASS I CLASS M CLASS Q
------- ------- ------- ------- ------- -------
GNMA Fund 0.25% 1.00% 1.00% N/A 0.75% 0.25%
High Yield Bond
Fund 0.35% 1.00% 1.00% N/A N/A N/A
High Yield
Opportunity
Fund 0.35% 1.00% 1.00% N/A 0.75% 0.25%
Intermediate
Bond Fund 0.35% 1.00% 1.00% N/A N/A N/A
National
Tax-Exempt
Bond Fund 0.35% 1.00% 1.00% N/A N/A N/A
Strategic Bond
Fund 0.35% 0.75% 0.75% N/A N/A 0.25%
ING Classic Money
Market Fund 0.75% 1.00% 1.00% N/A N/A N/A
ING Money
Market Fund 0.25% 1.00% 1.00% N/A N/A N/A
Money Market
Trust N/A N/A N/A N/A N/A N/A
</Table>
During the six months ended September 30, 2003, the Distributor waived 0.10% of
the Distribution fee for National Tax-Exempt Bond Fund, Intermediate Bond Fund
and High Yield Bond Fund for Class A only and waived 0.45% of the Distribution
Fee for ING Classic Money Market Fund for Class A only.
During the six months ended September 30, 2003, the Distributor voluntarily
waived Distribution and Service fees of $1,008,896, $1,931 and $931 for the ING
Classic Money Market Fund for Class A, Class B and Class C, respectively.
The Distributor also receives the proceeds of initial sales charge paid by
shareholders upon the purchase of Class A and Class M shares, and the contingent
deferred sales charge paid by shareholders upon certain redemptions for Class A,
Class B, and Class C shares. For the six months ended September 30, 2003, the
Distributor earned the following amounts in sales charges:
<Table>
<Caption>
CLASS A CLASS B CLASS C CLASS M
SHARES SHARES SHARES SHARES
---------- -------- -------- --------
Initial Sales Charges $ 116,349 n/a n/a $ 54
Contingent Deferred Sales
Charges $ 114,108 $ -- $ 94,764 n/a
</Table>
NOTE 6 -- OTHER TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
At September 30, 2003 the Funds 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
INVESTMENT ACCRUED SHAREHOLDER
MANAGEMENT ADMINISTRATIVE SERVICES AND
FEES FEES DISTRIBUTION FEES TOTAL
--------------- --------------- ----------------- ---------------
GNMA Fund $ 338,455 $ 69,243 $ 307,656 $ 715,354
High Yield
Bond Fund 41,446 5,580 28,915 75,941
High Yield
Opportunity
Fund 175,471 26,137 207,710 409,318
Intermediate
Bond Fund 132,659 26,531 144,756 303,946
National
Tax-Exempt
Bond Fund 11,636 2,327 8,213 22,176
Strategic Bond
Fund 17,291 3,842 18,836 39,969
ING Classic
Money
Market
Fund 92,263 -- 114,314 206,577
ING Money
Market
Fund 16,377 4,679 34,597 55,653
Money Market
Trust 19,358 3,871 -- 23,229
</Table>
At September 30, 2003, ING Life Insurance and Annuity Co., a wholly-owned
indirect subsidiary of ING Groep N.V., held 39.3%, 8.2%, 77.9% and 37.5% of the
shares outstanding of High Yield Bond Fund, Intermediate Bond Fund, National
Tax-Exempt Bond Fund and Strategic Bond Fund, respectively. Control is defined
by the Investment Company Act of 1940 ("1940 Act") as the beneficial ownership,
either directly or through one or more controlled companies, of more than 25% of
the voting securities of a company. The 1940 Act defines affiliates as companies
that are under common control. Therefore, because High Yield Bond, National Tax
Exempt Bond, and Strategic Bond have a common owner that owns over 25% of the
outstanding securities of each of them, the three Funds may be deemed to be
affiliates of each other.
Each Fund has adopted a Retirement Policy covering all independent trustees of
the Fund who will have served as an independent trustee for at least five years
at the time of retirement. Benefits under this plan are based on an annual rate
as defined in the plan agreement.
A summary of the sales transactions during the six-months ended September 30,
2003, in which the issuer was part of the ING Family of Funds are presented
57
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited)
(Continued)
NOTE 6 -- OTHER TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED)
below. There were no purchases during the period and no shares were held at
September 30, 2003.
<Table>
<Caption>
REALIZED
SALES GAIN/(LOSS) ON
------------------------------ INVESTMENT
STRATEGIC BOND FUND: SHARES PROCEEDS SECURITIES
-------- --------------- ---------------
High Yield Bond Fund 159,416 $ 1,321,563 $ (41,587)
High Yield
Opportunity Fund 330,000 2,263,800 96,600
ING Prime Rate Trust 103,100 749,060 59,815
</Table>
NOTE 7 -- OTHER ACCRUED EXPENSES AND LIABILITIES
At September 30, 2003 the ING Money Market Fund and Money Market Trust had the
following payables included in Other Accrued Expenses and Liabilities on the
Statements of Assets and Liabilities that exceeded 5% of total liabilities:
<Table>
<Caption>
PAYABLE FOR
SHAREHOLDER
REPORTING
EXPENSE
-----------
ING Money Market $ 43,771
<Caption>
PAYABLE FOR
TRANSFER
AGENT FEES
-----------
Money Market Trust $ 58,541
</Table>
NOTE 8 -- EXPENSE LIMITATIONS
For the following Funds, pursuant to written expense limitation agreements, the
Investment Manager has agreed to limit expenses, excluding interest, taxes,
brokerage and extraordinary expenses to the following annual expenses to average
daily net assets ratios:
<Table>
<Caption>
CLASS A CLASS B CLASS C CLASS I CLASS M CLASS Q
------- ------- ------- ------- ------- -------
GNMA Fund 1.29% 2.04% 2.04% 1.04% 1.79% 1.29%
High Yield Bond
Fund 1.30% 2.05% 2.05% N/A N/A N/A
High Yield
Opportunity
Fund(1) 1.30% 1.95% 1.95% N/A 1.70% 1.20%
Intermediate
Bond Fund 1.15% 1.90% 1.90% 0.90% N/A N/A
National
Tax-Exempt
Bond Fund 1.15% 1.90% 1.90% N/A N/A N/A
Strategic Bond
Fund(2) 1.15% 1.55% 1.55% N/A N/A 1.05%
ING Classic Money
Market Fund 0.77% 1.41% 1.41% 0.31% N/A N/A
ING Money
Market Fund 1.50% 2.25% 2.25% N/A N/A N/A
Money Market
Trust 1.00% N/A N/A N/A N/A N/A
</Table>
- ----------
(1) Prior to April 1, 2003, the expense limitation rates for Class A, Class B,
Class C, Class M, Class Q and Class T were 1.10%, 1.75%, 1.75%, 1.50%, 1.00%
and 1.40% respectively.
(2) Prior to April 1, 2003, the expense limitation rates for Class A, Class B,
Class C, and Class Q were 0.95%, 1.35%, 1.35% and 0.85% respectively.
Each Fund will at a later date reimburse the Investment Manager for management
fees waived and other expenses assumed by the Investment Manager during the
previous 36 months, but only if, after such reimbursement, the Fund's expense
ratio does not exceed the percentage described above. Waived and reimbursed fees
and any recoupment by the Investment Manager of such waived and reimbursed fees
are reflected on the accompanying Statements of Operations for each Fund.
During the six months ended September 30, 2003, the Investment Manager
voluntarily reimbursed Class A, Class B and Class C of the ING Money Market Fund
$62,769, $104,031 and $29,497, respectively. These voluntary reimbursements were
in addition to any contractual obligations under the expense limitation
agreement.
As of September 30, 2003, the cumulative amounts of reimbursed fees that are
subject to possible recoupment by the Manager are as follows:
<Table>
High Yield Bond Fund $ 302,682
High Yield Opportunity Fund 2,063,620
Intermediate Bond Fund 192,324
National Tax-Exempt Bond Fund 192,489
Strategic Bond Fund 553,521
ING Classic Money Market Fund 2,041,879
ING Money Market Fund 503,668
</Table>
NOTE 9 -- LINE OF CREDIT
All of the Funds included in this report with the exception of GNMA Fund, 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 Bank of New York for an aggregate amount of $125,000,000. The proceeds may
be used only to: (1) temporarily finance the purchase and sale of securities;
(2) finance the redemption of shares of an investor in the Funds; and (3) enable
the Funds to meet other emergency expenses as defined in the Credit Agreement.
The Funds to which the line of credit is available pay a commitment fee equal to
0.09% per annum on the daily unused portion of the committed line amount payable
quarterly in arrears. At September 30, 2003, the Funds did not have any loans
outstanding.
58
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited)
(Continued)
NOTE 10 -- CAPITAL SHARES
Transaction in capital shares and dollars were as follows:
<Table>
<Caption>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
------------------------------ ------------------------------ ------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
2003 2003 2003 2003 2003 2003
-------------- -------------- -------------- -------------- -------------- --------------
GNMA FUND (NUMBER OF SHARES)
Shares sold 17,395,145 73,137,649 2,527,512 10,383,663 2,474,742 8,354,803
Dividends reinvested 1,501,244 2,826,216 215,858 323,671 120,278 181,211
Shares redeemed (23,811,381) (64,721,314) (3,487,921) (3,236,075) (3,576,955) (3,100,664)
-------------- -------------- -------------- -------------- -------------- --------------
Net increase (decrease) in
shares outstanding (4,914,992) 11,242,551 (744,551) 7,471,259 (981,935) 5,435,350
============== ============== ============== ============== ============== ==============
GNMA FUND ($)
Shares sold $ 150,583,452 $ 647,417,851 $ 22,445,176 $ 92,311,001 $ 22,024,570 $ 73,988,441
Dividends reinvested 10,691,981 25,045,619 1,904,595 2,864,197 1,062,957 1,606,627
Shares redeemed (205,236,552) (572,367,002) (30,831,380) (28,732,321) (31,593,326) (27,312,111)
-------------- -------------- -------------- -------------- -------------- --------------
Net increase (decrease) $ (43,961,119) $ 100,096,468 $ (6,481,609) $ 66,442,877 $ (8,505,799) $ 48,282,957
============== ============== ============== ============== ============== ==============
<Caption>
CLASS I SHARES CLASS M SHARES CLASS Q SHARES
------------------------------ ------------------------------ ------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
2003 2003 2003 2003 2003 2003
-------------- -------------- -------------- -------------- -------------- --------------
GNMA FUND (NUMBER OF SHARES)
Shares sold 386,847 791,663 3,038 89,509 -- 14,313
Dividends reinvested 23,481 24,697 1,553 3,490 316 544
Shares redeemed (262,760) (234,440) (78,786) (27,626) (3,531) (18,365)
-------------- -------------- -------------- -------------- -------------- --------------
Net increase (decrease) in shares
outstanding 147,568 581,920 (74,195) 65,373 (3,215) (3,508)
============== ============== ============== ============== ============== ==============
GNMA FUND ($)
Shares sold $ 3,468,333 $ 7,072,323 $ 27,195 $ 796,808 $ -- $ 126,826
Dividends reinvested 208,028 220,288 13,812 31,077 2,801 4,854
Shares redeemed (2,330,803) (2,096,498) (700,431) (247,442) (30,852) (164,519)
-------------- -------------- -------------- -------------- -------------- --------------
Net increase (decrease) $ 1,345,558 $ 5,196,113 $ (659,424) $ 580,443 $ (28,051) $ (32,839)
============== ============== ============== ============== ============== ==============
<Caption>
CLASS T SHARES
------------------------------
SIX MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, MARCH 31,
2003(1) 2003
-------------- --------------
GNMA FUND (NUMBER OF SHARES)
Shares sold -- 1,849
Dividends reinvested -- 47,505
Shares redeemed (1,062,777) (307,685)
-------------- --------------
Net decrease in shares outstanding (1,062,777) (258,331)
============== ==============
GNMA FUND ($)
Shares sold -- $ 16,625
Dividends reinvested -- 420,465
Shares redeemed $ (8,868,418) (2,713,539)
-------------- --------------
Net decrease $ (8,868,418) $ (2,276,449)
============== ==============
</Table>
- ----------
(1) Effective June 2, 2003, Class "T" shares converted into the corresponding
Class "A" shares within this portfolio.
59
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited)
(Continued)
NOTE 10 -- CAPITAL SHARES (CONTINUED)
<Table>
<Caption>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
------------------------------ ------------------------------ ------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
2003 2003 2003 2003 2003 2003
-------------- -------------- -------------- -------------- -------------- --------------
HIGH YIELD BOND FUND (NUMBER OF
SHARES)
Shares sold 2,448,386 1,975,025 873,538 983,987 581,974 621,983
Dividends reinvested 104,605 263,756 22,158 24,180 10,111 7,984
Shares redeemed (2,945,033) (1,412,180) (338,633) (373,376) (206,413) (179,197)
-------------- -------------- -------------- -------------- -------------- --------------
Net increase (decrease) in
shares outstanding (392,042) 826,601 557,063 634,791 385,672 450,770
============== ============== ============== ============== ============== ==============
HIGH YIELD BOND FUND ($)
Shares sold $ 20,112,740 $ 16,233,041 $ 7,435,058 $ 8,021,700 $ 4,968,268 $ 5,074,610
Dividends reinvested 501,617 2,154,434 165,879 197,420 76,414 65,209
Shares redeemed (23,987,826) (11,625,324) (2,850,859) (3,042,382) (1,755,579) (1,448,455)
-------------- -------------- -------------- -------------- -------------- --------------
Net increase (decrease) $ (3,373,469) $ 6,762,151 $ 4,750,078 $ 5,176,738 $ 3,289,103 $ 3,691,364
============== ============== ============== ============== ============== ==============
<Caption>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
------------------------------ ------------------------------ ------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
2003 2003 2003 2003 2003 2003
-------------- -------------- -------------- -------------- -------------- --------------
HIGH YIELD OPPORTUNITY FUND
(NUMBER OF SHARES)
Shares sold 12,907,896 16,263,300 1,577,065 2,298,165 919,640 1,076,535
Shares issued in merger -- 6,407,106 -- 14,095,676 -- 590,240
Dividends reinvested 215,038 585,206 317,552 993,995 48,732 136,259
Shares redeemed (15,240,303) (15,075,372) (3,072,209) (7,674,507) (1,258,019) (1,167,865)
-------------- -------------- -------------- -------------- -------------- --------------
Net increase (decrease) in
shares outstanding (2,117,369) 8,180,240 (1,177,592) 9,713,329 (289,647) 635,169
============== ============== ============== ============== ============== ==============
HIGH YIELD OPPORTUNITY FUND ($)
Shares sold $ 142,817,488 $ 110,029,139 $ 10,885,481 $ 15,652,565 $ 6,306,253 $ 7,417,867
Shares issued in merger -- 48,565,867 -- 107,380,857 -- 4,492,905
Dividends reinvested 1,524,437 3,931,634 2,174,783 6,722,293 333,640 925,570
Shares redeemed (104,407,850) (103,807,585) (21,065,857) (52,283,480) (8,618,215) (8,007,182)
-------------- -------------- -------------- -------------- -------------- --------------
Net increase (decrease) $ 39,934,075 $ 58,719,055 $ (8,005,593) $ 77,472,235 $ (1,978,322) $ 4,829,160
============== ============== ============== ============== ============== ==============
<Caption>
CLASS M SHARES CLASS Q SHARES CLASS T SHARES
------------------------------ ------------------------------ ------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
2003 2003 2003 2003 2003(1) 2003
-------------- -------------- -------------- -------------- -------------- --------------
HIGH YIELD OPPORTUNITY FUND
(NUMBER OF SHARES)
Shares sold 525 2,138 34,730 116,562 -- 1
Shares issued in merger -- 628,797 -- 2,500 -- --
Dividends reinvested 7,028 25,070 4,684 8,930 -- 77,085
Shares redeemed (45,366) (151,825) (152,385) (211,906) (743,254) (707,547)
-------------- -------------- -------------- -------------- -------------- --------------
Net increase (decrease) in
shares outstanding (37,813) 504,180 (112,971) (83,914) (743,254) (630,461)
============== ============== ============== ============== ============== ==============
HIGH YIELD OPPORTUNITY FUND ($)
Shares sold $ 3,569 $ 14,387 $ 237,594 $ 745,712 -- $ 4
Shares issued in merger -- 4,766,282 -- 19,032 -- --
Dividends reinvested 47,817 166,801 32,069 60,422 -- 526,861
Shares redeemed (310,162) (1,021,019) (1,031,766) (1,400,699) $ (60,277,683) (4,865,661)
-------------- -------------- -------------- -------------- -------------- --------------
Net increase (decrease) $ (258,776) $ 3,926,451 $ (762,103) $ (575,533) $ (60,277,683) $ (4,338,796)
============== ============== ============== ============== ============== ==============
</Table>
- ----------
(1) Effective June 2, 2003, Class "T" shares converted into the corresponding
Class "A" shares within this portfolio.
60
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited)
(Continued)
NOTE 10 -- CAPITAL SHARES (CONTINUED)
<Table>
<Caption>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
------------------------------ ------------------------------ ------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
2003 2003 2003 2003 2003 2003
-------------- -------------- -------------- -------------- -------------- --------------
INTERMEDIATE BOND FUND (NUMBER
OF SHARES)
Shares sold 11,813,334 20,485,344 1,690,327 5,721,047 2,541,919 5,249,312
Dividends reinvested 137,403 281,375 36,598 90,480 29,011 64,460
Shares redeemed (8,553,586) (10,999,640) (1,344,428) (1,081,565) (1,399,528) (912,120)
-------------- -------------- -------------- -------------- -------------- --------------
Net increase in shares
outstanding 3,397,151 9,767,079 382,497 4,729,962 1,171,402 4,401,652
============== ============== ============== ============== ============== ==============
INTERMEDIATE BOND FUND ($)
Shares sold $ 122,825,392 $ 212,009,071 $ 17,812,430 $ 59,045,245 $ 26,964,879 $ 54,232,649
Dividends reinvested 1,450,612 2,905,320 386,304 934,949 306,299 666,529
Shares redeemed (87,885,447) (113,708,272) (14,156,311) (11,172,225) (14,720,738) (9,420,954)
-------------- -------------- -------------- -------------- -------------- --------------
Net increase $ 36,390,557 $ 101,206,119 $ 4,042,423 $ 48,807,969 $ 12,550,440 $ 45,478,224
============== ============== ============== ============== ============== ==============
<Caption>
CLASS I SHARES
------------------------------
SIX MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, MARCH 31,
2003 2003
-------------- --------------
INTERMEDIATE BOND FUND (NUMBER
OF SHARES)
Shares sold 140,152 675,432
Dividends reinvested 21,313 64,547
Shares redeemed (295,440) (296,980)
-------------- --------------
Net increase (decrease) in
shares outstanding (133,975) 442,999
============== ==============
INTERMEDIATE BOND FUND ($)
Shares sold $ 1,426,900 $ 6,967,970
Dividends reinvested 225,380 666,112
Shares redeemed (3,053,953) (3,053,533)
-------------- --------------
Net increase (decrease) $ (1,401,673) $ 4,580,549
============== ==============
<Caption>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
------------------------------ ------------------------------ ------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
2003 2003 2003 2003 2003 2003
-------------- -------------- -------------- -------------- -------------- --------------
NATIONAL TAX EXEMPT BOND FUND
(NUMBER OF SHARES)
Shares sold 359,067 201,630 28,317 186,918 23,912 89,524
Dividends reinvested 20,105 106,045 1,197 3,809 816 1,437
Shares redeemed (358,966) (347,173) (33,639) (56,464) (12,240) (19,282)
-------------- -------------- -------------- -------------- -------------- --------------
Net increase (decrease) in
shares outstanding 20,206 (39,498) (4,125) 134,263 12,488 71,679
============== ============== ============== ============== ============== ==============
NATIONAL TAX EXEMPT BOND
FUND ($)
Shares sold $ 3,147,761 $ 2,164,822 $ 312,063 $ 1,990,453 $ 264,008 $ 972,058
Dividends reinvested 140,363 1,136,322 12,973 40,820 8,854 15,425
Shares redeemed (3,084,214) (3,715,337) (364,172) (604,556) (131,668) (208,567)
-------------- -------------- -------------- -------------- -------------- --------------
Net increase (decrease) $ 203,910 $ (414,193) $ (39,136) $ 1,426,717 $ 141,194 $ 778,916
============== ============== ============== ============== ============== ==============
</Table>
61
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited)
(Continued)
NOTE 10 -- CAPITAL SHARES (CONTINUED)
<Table>
<Caption>
CLASS A SHARES CLASS B SHARES
------------------------------------ ------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
2003 2003 2003 2003
---------------- ---------------- ---------------- ----------------
STRATEGIC BOND FUND (NUMBER OF SHARES)
Shares sold 1,353,689 2,926,400 133,465 512,495
Dividends reinvested 45,264 155,509 11,432 25,027
Shares redeemed (1,539,887) (3,411,267) (194,167) (406,134)
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in shares outstanding (140,934) (329,358) (49,270) 131,388
================ ================ ================ ================
STRATEGIC BOND FUND ($)
Shares sold $ 25,717,473 $ 32,008,296 $ 1,580,115 $ 5,478,867
Dividends reinvested 413,219 1,696,951 108,127 266,404
Shares redeemed (27,741,780) (37,277,857) (2,216,839) (4,331,111)
---------------- ---------------- ---------------- ----------------
Net increase (decrease) $ (1,611,088) $ (3,572,610) $ (528,597) $ 1,414,160
================ ================ ================ ================
<Caption>
CLASS C SHARES CLASS Q SHARES
------------------------------------ ------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
2003 2003 2003 2003
---------------- ---------------- ---------------- ----------------
STRATEGIC BOND FUND (NUMBER OF SHARES)
Shares sold 214,843 471,183 293 446,425
Dividends reinvested 3,258 9,972 241 511
Shares redeemed (274,764) (569,042) (2,418) (445,870)
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in shares outstanding (56,663) (87,887) (1,884) 1,066
================ ================ ================ ================
STRATEGIC BOND FUND ($)
Shares sold $ 2,521,270 $ 5,276,764 $ 3,588 $ 4,589,655
Dividends reinvested 31,727 111,460 2,105 5,263
Shares redeemed (3,209,524) (6,375,279) (25,659) (4,587,888)
---------------- ---------------- ---------------- ----------------
Net increase (decrease) $ (656,527) $ (987,055) $ (19,966) $ 7,030
================ ================ ================ ================
<Caption>
CLASS A SHARES CLASS B SHARES
------------------------------------ ------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
2003 2003 2003 2003
---------------- ---------------- ---------------- ----------------
CLASSIC MONEY MARKET FUND (NUMBER OF SHARES)
Shares sold 311,574,473 574,042,376 156,437 715,606
Dividends reinvested 1,038,210 4,988,511 720 7,165
Shares redeemed (330,737,844) (670,065,555) (279,115) (1,553,711)
---------------- ---------------- ---------------- ----------------
Net decrease in shares outstanding (18,125,161) (91,034,668) (121,958) (830,940)
================ ================ ================ ================
CLASSIC MONEY MARKET FUND ($)
Shares sold $ 311,574,325 $ 574,042,376 $ 156,551 $ 715,606
Dividends reinvested 1,038,210 4,988,511 720 7,165
Shares redeemed (330,739,124) (670,065,555) (279,115) (1,553,711)
---------------- ---------------- ---------------- ----------------
Net decrease $ (18,126,589) $ (91,034,668) $ (121,844) $ (830,940)
================ ================ ================ ================
</Table>
62
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited)
(Continued)
NOTE 10 -- CAPITAL SHARES (CONTINUED)
<Table>
<Caption>
CLASS C SHARES CLASS I SHARES
------------------------------------ ------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
2003 2003 2003 2003
---------------- ---------------- ---------------- ----------------
CLASSIC MONEY MARKET FUND (NUMBER OF SHARES)
Shares sold 19,325 161,450 -- --
Dividends reinvested 365 2,235 -- --
Shares redeemed (3,781) (229,528) -- (96)
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in shares outstanding 15,909 (65,843) -- (96)
================ ================ ================ ================
CLASSIC MONEY MARKET FUND ($)
Shares sold $ 19,384 $ 161,450 $ -- $ --
Dividends reinvested 365 2,235 -- --
Shares redeemed (3,781) (229,528) -- (96)
---------------- ---------------- ---------------- ----------------
Net increase (decrease) $ 15,968 $ (65,843) $ -- $ (96)
================ ================ ================ ================
<Caption>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
------------------------------ ------------------------------ ------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
2003 2003 2003 2003 2003 2003
-------------- -------------- -------------- -------------- -------------- --------------
MONEY MARKET FUND (NUMBER OF
SHARES)
Shares sold 51,888,081 184,248,289 30,635,692 42,880,018 16,388,672 46,197,005
Dividends reinvested 64,233 141,234 46 1,413 2 1,006
Shares redeemed (50,854,595) (196,931,916) (35,954,433) (38,576,774) (19,553,005) (45,937,794)
-------------- -------------- -------------- -------------- -------------- --------------
Net increase (decrease) in
shares outstanding 1,097,719 (12,542,393) (5,318,695) 4,304,657 (3,164,331) 260,217
============== ============== ============== ============== ============== ==============
MONEY MARKET FUND ($)
Shares sold $ 51,888,092 $ 184,248,289 $ 30,566,683 $ 42,880,018 $ 16,327,024 $ 46,197,005
Dividends reinvested 64,233 141,234 46 1,413 2 1,006
Shares redeemed (50,854,970) (196,931,916) (35,885,404) (38,576,774) (19,491,378) (45,937,794)
-------------- -------------- -------------- -------------- -------------- --------------
Net increase (decrease) $ 1,097,355 $ (12,542,393) $ (5,318,675) $ 4,304,657 $ (3,164,352) $ 260,217
============== ============== ============== ============== ============== ==============
<Caption>
CLASS A SHARES
--------------------------------
SIX MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, MARCH 31,
2003 2003
--------------- ---------------
LEXINGTON MONEY MARKET TRUST (NUMBER OF SHARES)
Shares sold 9,232,139 20,789,645
Dividends reinvested 91,078 347,083
Shares redeemed (12,109,800) (26,205,992)
--------------- ---------------
Net decrease in shares outstanding (2,786,583) (5,069,264)
=============== ===============
LEXINGTON MONEY MARKET TRUST ($)
Shares sold $ 9,232,139 $ 20,789,645
Dividends reinvested 91,078 347,083
Shares redeemed (12,109,800) (26,205,992)
--------------- ---------------
Net decrease $ (2,786,583) $ (5,069,264)
=============== ===============
</Table>
- ----------
(1) As of 8/25/03 Class I shares are no longer offered for sale.
63
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited)
(Continued)
NOTE 11 -- CREDIT RISK AND DEFAULTED SECURITIES
Although each Fund has a diversified portfolio, High Yield Opportunity Fund and
High Yield Bond Fund had 91.37% and 89.54%, respectively, of their portfolios
invested in lower rated and comparable quality unrated high yield securities.
Investments in high yield securities are accompanied by a greater degree of
credit risk and such lower rated securities tend to be more sensitive to
economic conditions than higher rated securities. The risk of loss due to
default by the issuer may be significantly greater for the holders of high
yielding securities, because such securities are generally unsecured and are
often subordinated to other creditors of the issuer.
Funds that held defaulted securities at September 30, 2003 were as follows:
<Table>
<Caption>
FUND SECURITY MARKET VALUE
- ---- -------- ------------
Strategic Bond
Fund WinStar Commnunications, Inc. $ 100
=========
High Yield International Utility Structures, Inc. $ 85,960
Opportunity Source Media, Inc. 1
Fund SA Telecommunications, Inc. 18
US Interactive 170,309
---------
$ 256,288
=========
</Table>
For financial reporting purposes, it is each Fund's accounting practice to
discontinue the accrual of income and to provide an estimate for probable losses
due to unpaid interest income on defaulted bonds for the current reporting
period. The High Yield Opportunity Fund and the the Intermediate Bond Fund had
interest write-offs of $159,640 and $523, respectively, as a result of defaulted
securities.
NOTE 12 -- 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 were as follows:
<Table>
<Caption>
SIX MONTHS ENDED ORDINARY TAX EXEMPT LONG-TERM
SEPTEMBER 30, 2003 INCOME INCOME CAPITAL GAINS
-------- ---------- -------------
GNMA Fund $ 20,714,465 $ -- $ --
High Yield Bond Fund 2,268,065 -- --
High Yield Opportunity Fund 12,754,011 -- --
Intermediate Bond Fund 4,477,950 -- --
National Tax-Exempt Fund -- 468,221 --
Strategic Bond Fund 1,129,731 -- --
ING Classic Money Market Fund 1,060,595 -- --
ING Money Market Fund 72,903 -- --
Money Market Trust 94,583 -- --
<Caption>
YEAR ENDED ORDINARY TAX EXEMPT LONG-TERM
MARCH 31, 2003 INCOME INCOME CAPITAL GAINS
-------- ---------- -------------
GNMA Fund $ 37,467,565 $ -- $ --
High Yield Bond Fund 3,444,089 -- --
High Yield Opportunity Fund 34,744,544 -- --
Intermediate Bond Fund 7,068,340 -- 55,205
National Tax-Exempt Fund 16,602 926,118 312,270
Strategic Bond Fund 2,827,357 -- --
ING Classic Money Market Fund 5,124,447 -- --
ING Money Market Fund 186,079 -- --
Money Market Trust 361,267 -- --
</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, wash sale deferrals, adjustments from mergers and other temporary
or permanent 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.
Capital loss carryforwards, which may be used to offset future realized capital
gains for federal income tax purposes were as follows at March 31, 2003:
<Table>
<Caption>
AMOUNT EXPIRATION DATES
------ ----------------
GNMA Income Fund $ 13,788,569 2004-2010
High Yield Bond Fund 8,468,506 2008-2011
High Yield Opportunity Fund 373,214,651 2004-2011
Strategic Bond Fund 12,105,934 2007-2011
ING Classic Money Market Fund 35,311 2011
ING Money Market Fund 1,279 2011
Money Market Trust 164 2011
</Table>
64
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited)
(Continued)
NOTE 12 -- FEDERAL INCOME TAXES (CONTINUED)
The capital loss carryforwards in High Yield Opportunity Fund includes
$64,227,424 of losses acquired from ING High Yield Fund. Utilization of GNMA
Fund, High Yield Opportunity Fund and Strategic Bond Fund capital loss
carryforwards will be subject to an annual limitation as prescribed by the
Internal Revenue Code.
NOTE 13 -- REORGANIZATIONS
On May 17, 2002, the High Yield Opportunity Fund as listed below ("Acquiring
Fund"), acquired the assets and certain liabilities of High Yield Fund, also
listed below ("Acquired Fund"), in a tax-free reorganization in exchange for
shares of the Acquiring Fund, pursuant to a plan of reorganization approved by
the Acquired Fund's shareholders. The number and value of shares issued by the
Acquiring Fund are presented in Note 10 -- Capital Shares. Net assets and
unrealized appreciation/(depreciation) as of the reorganization date were as
follows:
<Table>
<Caption>
ACQUIRED FUND
UNREALIZED
ACQUIRING ACQUIRED TOTAL NET ASSETS OF TOTAL NET ASSETS OF APPRECIATION
FUND FUND ACQUIRED FUND (000) ACQUIRING FUND (000) (DEPRECIATION)(000)
--------- -------- ------------------- -------------------- -------------------
High Yield
Opportunity
Fund ING High Yield Fund $ 165,225 $ 242,666 $ (3,897)
</Table>
The net assets of High Yield Opportunity Fund after the reorganization were
$407,891,000.
NOTE 14 -- ILLIQUID SECURITIES
Pursuant to guidelines adopted by the Funds' Board of Trustees, the following
securities have been deemed to be illiquid. The Funds currently limit investment
in illiquid securities to 15% (10% for ING Classic Money Market, ING Money
Market and Money Market Trust) of the Fund's net assets, at market value, at
time of purchase.
<Table>
<Caption>
PRINCIPAL INITIAL PERCENT
AMOUNT/ ACQUISITION OF NET
FUND SECURITY SHARES DATE COST VALUE ASSETS
- ---- -------- --------- ----------- ---- ----- -------
High Yield
Bond Fund O Sullivan Industries, Inc. 373 09/05/03 $ 3,300,000 $ -- 0.0%
O Sullivan Industries, Inc. 1,000 09/12/03 3,300,000 -- 0.0%
GT Group Telecom, Inc. 500 01/28/03 4,000,000 -- 0.0%
------------ ------------ ---
$ 10,600,000 $ -- 0.0%
============ ============ ===
ING Classic
Money Market
Fund Goldman Sachs Group, Inc., 1.130%, due 12/04/03 4,500,000 09/05/03 $ 4,500,000 $ 4,500,000 1.0%
Goldman Sachs Group, Inc., 1.140%, due 12/12/03 4,500,000 09/12/03 4,500,000 4,500,000 1.0%
Goldman Sachs Group, Inc., 1.400%, due 10/27/03 5,000,000 01/28/03 5,000,000 5,000,000 1.1%
M-MKT Trust Lly, 1.220%, due 02/19/04 5,400,000 02/19/03 5,398,957 5,398,957 1.2%
M-MKT Trust Series A-1, 1.270%, due 10/08/04 9,200,000 03/12/03 9,200,000 9,200,000 2.1%
------------ ------------ ---
$ 28,598,957 $ 28,598,957 6.4%
============ ============ ===
ING Money
Market Fund Goldman Sachs Group, Inc., 1.130%, due 12/04/03 600,000 09/05/03 $ 600,000 $ 600,000 1.1%
Goldman Sachs Group, Inc., 1.140%, due 12/12/03 600,000 09/12/03 600,000 600,000 1.1%
M-MKT Trust Series A-1, 1.270%, due 10/08/04 1,300,000 03/17/03 1,300,000 1,300,000 2.4%
------------ ------------ ---
$ 2,500,000 $ 2,500,000 4.6%
============ ============ ===
Money Market
Trust Goldman Sachs Group, Inc., 1.130%, due 12/04/03 500,000 09/05/03 $ 500,000 $ 500,000 1.1%
Goldman Sachs Group, Inc., 1.140%, due 12/12/03 500,000 09/12/03 500,000 500,000 1.1%
M-MKT Trust Series A-1, 1.270%, due 10/08/04 1,000,000 03/12/03 1,000,000 1,000,000 2.1%
------------ ------------ ---
$ 2,000,000 $ 2,000,000 4.3%
============ ============ ===
</Table>
65
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited)
(Continued)
NOTE 15 -- SECURITIES LENDING
Under an agreement with Bank of New York ("BNY"), the Funds (except GNMA Fund)
can lend their securities to approved brokers, dealers and other financial
institutions. Loans are collateralized by cash and U.S. Government Securities.
The collateral must be in an amount equal to at least 105% of the market value
of non-U.S. securities loaned and 102% of the market value of U.S. securities
loaned. The cash collateral received is invested in approved investments as
defined in the Securities Lending Agreement with BNY (the "Agreement"). The cash
collateral received is reflected on the Statement of Assets and Liabilities as
Other Investments. Generally, in the event of counterparty default, the Funds
have the right to use the collateral to offset losses incurred. The Agreement
contains certain guarantees by BNY in the event of counterparty default and/or a
borrower's failure to return a loaned security, however there would be a
potential loss to the Funds in the event the Funds are delayed or prevented from
exercising their right to dispose of the collateral. The Funds bear the risk of
loss with respect to the investment of collateral. Engaging in securities
lending could have a leveraging effect, which may intensify the credit, market
and other risks associated with investing in a Fund. At September 30, 2003, the
following Funds had securities on loan with the following market values:
<Table>
<Caption>
VALUE OF
SECURITIES VALUE OF
PORTFOLIO LOANED COLLATERAL
- --------- ---------- ----------
High Yield Bond Fund $ 16,237,223 $ 16,602,023
High Yield Opportunity Fund 81,157,392 82,978,167
Intermediate Bond Fund 70,544,278 71,635,383
Strategic Bond Fund 7,637,266 7,753,044
</Table>
NOTE 16 -- CHANGE IN FUNDS' AUDITORS
PricewaterhouseCoopers, LLP ("PwC") served as independent auditors for the
Funds. On May 28, 2003, the Funds' Board dismissed PwC and selected KPMG LLP
("KPMG") as independent auditors for the Funds for the fiscal year ending March
31, 2004 upon the recommendation of the Funds' Audit Committee. During the two
most recent fiscal years and through May 28, 2003, there was no disagreement
with PwC on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedures, which disagreements if
not resolved to PwC's satisfaction would have caused them to make reference in
connection with their opinion to the subject matter of the disagreement.
The audit reports of PwC on the financial statements of the Funds as of and for
the years ended March 31, 2003 and 2002 did not contain any adverse opinion or
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope, or accounting principles.
NOTE 17 -- SUBSEQUENT EVENTS
DIVIDENDS. Subsequent to September 30, 2003 the following Funds declared
dividends from net investment income of:
<Table>
<Caption>
PER SHARE
AMOUNT PAYABLE DATE RECORD DATE
--------- ------------ -----------
GNMA FUND
Class A $ 0.0360 October 3, 2003 September 30, 2003
Class B $ 0.0306 October 3, 2003 September 30, 2003
Class C $ 0.0305 October 3, 2003 September 30, 2003
Class I $ 0.0383 October 3, 2003 September 30, 2003
Class M $ 0.0321 October 3, 2003 September 30, 2003
Class Q $ 0.0365 October 3, 2003 September 30, 2003
Class A $ 0.0360 November 5, 2003 October 31, 2003
Class B $ 0.0304 November 5, 2003 October 31, 2003
Class C $ 0.0304 November 5, 2003 October 31, 2003
Class I $ 0.0384 November 5, 2003 October 31, 2003
Class M $ 0.0317 November 5, 2003 October 31, 2003
Class Q $ 0.0363 November 5, 2003 October 31, 2003
HIGH YIELD BOND FUND
Class A $ 0.0497 November 3, 2003 Daily
Class B $ 0.0442 November 3, 2003 Daily
Class C $ 0.0442 November 3, 2003 Daily
HIGH YIELD OPPORTUNITY FUND
Class A $ 0.0350 November 3, 2003 Daily
Class B $ 0.0306 November 3, 2003 Daily
Class C $ 0.0306 November 3, 2003 Daily
Class M $ 0.0318 November 3, 2003 Daily
Class Q $ 0.0346 November 3, 2003 Daily
INTERMEDIATE BOND FUND
Class A $ 0.0287 November 3, 2003 Daily
Class B $ 0.0227 November 3, 2003 Daily
Class C $ 0.0221 November 3, 2003 Daily
Class I $ 0.0314 November 3, 2003 Daily
</Table>
66
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited)
(Continued)
NOTE 17 -- SUBSEQUENT EVENTS (CONTINUED)
<Table>
<Caption>
PER SHARE
AMOUNT PAYABLE DATE RECORD DATE
--------- ------------ -----------
NATIONAL TAX-EXEMPT BOND FUND
Class A $ 0.0302 November 3, 2003 Daily
Class B $ 0.0233 November 3, 2003 Daily
Class C $ 0.0233 November 3, 2003 Daily
STRATEGIC BOND FUND
Class A $ 0.0400 October 3, 2003 September 30, 2003
Class B $ 0.0366 October 3, 2003 September 30, 2003
Class C $ 0.0358 October 3, 2003 September 30, 2003
Class Q $ 0.0429 October 3, 2003 September 30, 2003
Class A $ 0.0400 November 5, 2003 October 31, 2003
Class B $ 0.0364 November 5, 2003 October 31, 2003
Class C $ 0.0360 November 5, 2003 October 31, 2003
Class Q $ 0.0429 November 5, 2003 October 31, 2003
ING CLASSIC MONEY MARKET FUND
Class A $ 0.0003 November 3, 2003 Daily
Class B $ 0.0000 November 3, 2003 Daily
Class C $ 0.0000 November 3, 2003 Daily
ING MONEY MARKET FUND
Class A $ 0.0006 November 3, 2003 Daily
Class B $ 0.0000 November 3, 2003 Daily
Class C $ 0.0000 November 3, 2003 Daily
MONEY MARKET TRUST
Class A $ 0.0003 November 3, 2003 Daily
</Table>
67
<Page>
ING
GNMA
Income
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS: 87.9%
FEDERAL HOME LOAN
MORTGAGE CORPORATION: 0.4%
$ 708,994 7.000%, due 11/01/14 $ 753,013
1,773,443 7.500%, due 12/01/14-01/01/30 1,890,584
350,148 8.000%, due 01/01/30 377,302
---------------
3,020,899
---------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION: 0.4%
384,846 409,600
281,745 6.500%, due 06/01/14 298,003
613,862 7.500%, due 05/01/28 656,047
1,787,755 S 8.500%, due 08/01/11-09/01/15 1,987,153
---------------
3,350,803
---------------
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION: 87.1%
979,994 10.250%, due 08/15/29 1,069,973
55,531,485 5.000%, due 04/15/33-07/15/33 55,703,865
95,250,077 5.500%, due 02/20/23-07/15/33 97,739,104
553,463 5.650%, due 07/15/29 558,210
169,058,357 6.000%, due 04/20/24-09/15/33 175,295,995
1,784,126 6.250%, due 04/15/26-04/15/28 1,867,133
135,340 6.340%, due 02/15/29 137,161
574,186 6.350%, due 09/15/33 630,459
5,820,455 6.400%, due 10/15/33-08/15/38 6,408,481
1,170,272 6.470%, due 09/15/33 1,290,941
56,962,273 6.500%, due 02/15/22-02/15/40 61,175,561
15,420,232 6.625%, due 07/15/33-01/15/40 17,332,005
4,668,846 6.650%, due 12/15/13-09/15/32 5,200,466
3,525,311 6.670%, due 01/15/40 3,984,456
6,210,297 6.687%, due 07/15/40 7,042,676
395,226 6.700%, due 08/15/14-12/15/14 419,535
4,319,450 6.745%, due 10/15/39 4,889,893
13,468,691 6.750%, due 06/15/13-01/15/41 15,119,995
2,854,475 6.810%, due 07/15/39 3,246,536
4,090,695 6.820%, due 05/15/27-04/15/34 4,625,324
9,866,540 6.840%, due 10/15/36 11,271,338
1,806,448 6.870%, due 03/15/39 2,063,072
5,925,429 6.875%, due 01/15/29-02/15/40 6,725,436
2,185,841 6.900%, due 01/15/32 2,499,651
2,904,734 6.950%, due 12/15/29 2,910,254
99,794,392 7.000%, due 07/15/22-12/15/35 106,463,877
8,999,757 7.010%, due 02/15/37 10,264,141
956,985 7.050%, due 07/15/29 1,016,837
5,569,920 7.100%, due 11/15/39 6,393,762
8,966,962 7.125%, due 09/15/39 10,277,305
3,351,792 7.150%, due 07/15/36 3,854,921
4,202,918 7.250%, due 08/15/22-09/15/31 4,572,220
2,961,114 7.300%, due 08/15/36 3,414,143
10,034,934 7.500%, due 12/15/19-09/15/32 10,802,559
7,019,577 7.600%, due 08/15/31-06/15/40 8,044,330
10,944,891 7.625%, due 08/15/32-07/15/38 12,289,669
83,127 7.650%, due 12/15/12 87,792
532,244 7.700%, due 08/15/13 563,065
6,217,888 7.750%, due 06/15/14-12/15/35 6,994,049
1,103,887 7.800%, due 05/15/19-01/15/42 1,270,647
10,008,505 7.875%, due 09/15/29-04/15/38 11,143,756
14,147,633 8.000%, due 08/15/12-11/15/38 15,842,434
201,371 8.050%, due 07/15/19-04/15/21 220,241
1,361,823 8.100%, due 06/15/12-07/15/12 1,446,613
4,993,364 8.125%, due 05/15/38 5,721,115
5,574,874 8.150%, due 12/15/11-09/15/15 5,935,686
$ 5,745,292 S 8.200%, due 10/15/11-05/15/13 $ 6,114,192
2,053,264 8.250%, due 10/15/24-03/15/41 2,340,258
7,008,255 8.500%, due 12/15/29-10/15/31 7,555,477
119,017 8.750%, due 10/15/23-06/15/27 125,795
2,840,068 9.000%, due 05/15/20-12/15/34 3,026,322
1,377,893 9.250%, due 06/15/30 1,477,693
---------------
736,466,419
---------------
Total U.S. Government
Agency Obligations
(Cost $710,509,366) 742,838,121
---------------
U.S. TREASURY OBLIGATIONS: 5.3%
U.S. TREASURY NOTES: 5.3%
32,000,000 1.250%, due 05/31/05 31,991,264
13,000,000 1.500%, due 07/31/05 13,034,034
---------------
45,025,298
---------------
Total U.S. Treasury Obligations
(Cost $44,864,119) 45,025,298
---------------
Total Long-Term Investments
(Cost $755,373,485) 787,863,419
---------------
SHORT-TERM INVESTMENTS: 6.5%
U.S. TREASURY BILLS: 6.5%
500,000 0.000%, due 02/12/04 498,247
55,000,000 0.000%, due 03/11/04 54,762,895
---------------
55,261,142
---------------
Total Short-term Investments
(Cost $55,253,402) 55,261,142
---------------
TOTAL INVESTMENTS
IN SECURITIES (COST
$810,626,887)* 99.7% $ 843,124,561
OTHER ASSETS AND
LIABILITIES-NET 0.3 2,150,621
----- ---------------
NET ASSETS 100.0% $ 845,275,182
===== ===============
</Table>
* Cost for federal income tax purposes is the same as for financial statement
purposes. Net unrealized appreciation consists of:
<Table>
Gross Unrealized Appreciation $ 35,761,802
Gross Unrealized Depreciation (3,264,128)
---------------
Net Unrealized Appreciation $ 32,497,674
===============
</Table>
See Accompanying Notes to Financial Statements
68
<Page>
ING
High Yield
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
CORPORATE BONDS: 93.3%
ADVERTISING: 0.4
$ 10,000 # RH Donnelley Finance Corp. I,
due 10.875%, 12/15/12 $ 11,850
265,000 # Vertis, Inc., 9.750%, due
04/01/09 280,238
---------------
292,088
---------------
AEROSPACE/DEFENSE: 0.7%
45,000 L Armor Holdings, Inc., 8.250%,
due 08/15/13 47,813
155,000 L-3 Communications Corp.,
7.625%, due 06/15/12 168,563
215,000 Sequa Corp., 9.000%, due
08/01/09 236,499
---------------
452,875
---------------
AGRICULTURE: 0.2%
155,000 # Dimon, Inc., 7.750%,
due 06/01/13 159,650
---------------
159,650
---------------
APPAREL: 0.4%
250,000 # Phillips-Van Heusen, 8.125%,
due 05/01/13 263,125
---------------
263,125
---------------
AUTO MANUFACTURERS: 0.0%
15,000 L General Motors Corp., 7.125%,
due 07/15/13 15,763
5,000 L General Motors Corp., 7.200%,
due 01/15/11 5,276
---------------
21,039
---------------
AUTO PARTS & EQUIPMENT: 3.1%
500,000 CSK Auto, Inc., 12.000%, due
06/15/06 561,250
120,000 Dana Corp., 10.125%, due
03/15/10 134,700
180,000 Dura Operating Corp., 8.625%,
due 04/15/12 187,650
140,000 # Eagle-Picher Industries, 9.750%,
due 09/01/13 147,700
235,000 Lear Corp., 8.110%, due 05/15/09 271,425
170,000 Rexnord Corp., 10.125%, due
12/15/12 189,550
220,000 # Tenneco Automotive, Inc.,
10.250%, due 07/15/13 239,800
310,000 # TRW Automotive, Inc., 11.000%,
due 02/15/13 362,700
---------------
2,094,775
---------------
BEVERAGES: 0.3%
190,000 L Constellation Brands, Inc., 8.500%,
due 03/01/09 201,400
---------------
201,400
---------------
BUILDING MATERIALS: 0.3%
175,000 Nortek Holdings, Inc., 9.875%,
due 06/15/11 185,938
---------------
185,938
---------------
CHEMICALS: 2.6%
$ 130,000 L Equistar Funding Corp., 10.125%,
due 09/01/08 $ 129,350
120,000 # Equistar Funding Corp., 10.625%,
due 05/01/11 119,400
640,000 IMC Global, Inc., 10.875%, due
06/01/08 668,800
460,000 L Lyondell Chemical Co., 9.625%,
due 05/01/07 439,300
345,000 # Rockwood Specialties Group, Inc.,
10.625%, due 05/15/11 369,150
---------------
1,726,000
---------------
COMMERCIAL SERVICES: 2.9%
325,000 Coinmach Corp., 9.000%, due
02/01/10 347,750
205,000 Corrections Corp. of America,
7.500%, due 05/01/11 212,431
595,000 @@ Quebecor Media, Inc., 11.125%,
due 07/15/11 681,275
520,000 United Rentals North America, Inc.,
10.750%, due 04/15/08 578,500
100,000 United Rentals North America, Inc.,
10.750%, due 04/15/08 111,250
---------------
1,931,206
---------------
COMPUTERS: 0.2%
150,000 @@ Seagate Technology HDD Holdings,
8.000%, due 05/15/09 166,125
---------------
166,125
---------------
COSMETICS/PERSONAL CARE: 0.5%
365,000 L Chattem, Inc., 8.875%, due
04/01/08 366,825
---------------
366,825
---------------
DISTRIBUTION/WHOLESALE: 0.5%
340,000 # Aviall, Inc., 7.625%, due 07/01/11 350,200
---------------
350,200
---------------
DIVERSIFIED FINANCIAL SERVICES: 3.0%
145,000 @@,#,L Eircom Funding, 8.250%, due
08/15/13 156,600
170,000 # HLI Operating Co., Inc., 10.500%,
due 06/15/10 186,150
521,571 # Hollinger Participation Trust,
12.125%, due 11/15/10 590,027
460,000 Nexstar Finance, Inc., 12.000%,
due 04/01/08 517,500
325,000 Technical Olympic USA, Inc.,
9.000%, due 07/01/10 344,500
165,000 Technical Olympic USA, Inc.,
10.375%, due 07/01/12 178,200
50,000 # Universal City Development
Partners, 11.750%, due 04/01/10 56,500
---------------
2,029,477
---------------
ELECTRIC: 3.6%
745,000 # AES Corp., 8.750%, due 05/15/13 785,975
470,000 #,L Calpine Corp., 8.750%, due
07/15/13 432,400
215,000 Homer City Funding LLC, 8.734%,
due 10/01/26 221,450
</Table>
See Accompanying Notes to Financial Statements
69
<Page>
ING
High Yield
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
ELECTRIC (CONTINUED)
$ 250,000 Illinois Power Co., 11.500%, due
12/15/10 $ 301,250
275,000 # PG&E Corp., 6.875%, due
07/15/08 290,125
385,000 Teco Energy, Inc., 7.500%, due
06/15/10 392,219
---------------
2,423,419
---------------
ELECTRICAL COMPONENTS & EQUIPMENT: 0.2%
145,000 @@ FIMEP SA, 10.500%, due 02/15/13 164,575
---------------
164,575
---------------
ELECTRONICS: 0.8%
200,000 Fisher Scientific Intl., 8.125%, due
05/01/12 213,500
170,000 L Flextronics Intl. Ltd., 6.500%, due
05/15/13 169,575
165,000 Stoneridge, Inc., 11.500%, due
05/01/12 189,338
---------------
572,413
---------------
ENTERTAINMENT: 1.7%
100,000 Argosy Gaming Co., 9.000%, due
09/01/11 108,750
205,000 Carmike Cinemas, Inc., 10.375%,
due 02/01/09 216,275
315,000 Cinemark USA, Inc., 9.000%, due
02/01/13 337,838
255,000 Regal Cinemas, Inc., 9.375%, due
02/01/12 288,150
190,000 L Six Flags, Inc., 9.750%, due
06/15/07 187,625
---------------
1,138,638
---------------
ENVIRONMENTAL CONTROL: 2.1%
925,000 Allied Waste North America, 8.500%,
due 12/01/08 1,003,625
360,000 L Allied Waste North America,
10.000%, due 08/01/09 391,950
---------------
1,395,575
---------------
FOOD: 3.0%
400,000 # Del Monte Corp., 8.625%, due
12/15/12 438,999
250,000 #,L Domino's, Inc., 8.250%, due
07/01/11 265,313
300,000 Great Atlantic & Pacific Tea Co.,
9.125%, due 12/15/11 283,500
268,000 Michael Foods, Inc., 11.750%,
due 04/01/11 314,900
245,000 Pilgrims Pride Corp., 9.625%, due
09/15/11 265,825
135,000 Roundy's, Inc., 8.875%, due
06/15/12 141,750
25,000 # Smithfield Foods, Inc., 7.750%,
due 05/15/13 26,938
280,000 # Swift & Co., 12.500%, due
01/01/10 310,800
---------------
2,048,025
---------------
FOREST PRODUCTS & PAPER: 3.5%
$ 685,000 Appleton Papers, Inc., 12.500%,
due 12/15/08 $ 750,075
580,000 L Georgia-Pacific Corp., 8.125%,
due 05/15/11 606,100
180,000 L Georgia-Pacific Corp., 8.875%,
due 02/01/10 198,000
280,000 Georgia-Pacific Corp., 9.375%,
due 02/01/13 313,950
475,000 @@ Tembec Industries, Inc., 8.625%,
due 06/30/09 470,250
---------------
2,338,375
---------------
HEALTHCARE-PRODUCTS: 0.3%
215,000 # Medex, Inc., 8.875%, due 05/15/13 228,438
---------------
228,438
---------------
HEALTHCARE-SERVICES: 3.3%
300,000 L Alliance Imaging, Inc., 10.375%,
due 04/15/11 313,500
80,000 Coventry Health Care, Inc.,
8.125%, due 02/15/12 85,600
450,000 HCA, Inc., 7.875%, due 02/01/11 503,085
450,000 HCA, Inc., 8.750%, due 09/01/10 524,308
755,000 Tenet Healthcare Corp., 7.375%,
due 02/01/13 764,438
---------------
2,190,931
---------------
HOME BUILDERS: 2.0%
165,000 Beazer Homes USA, Inc., 8.375%,
due 04/15/12 179,025
195,000 # K. Hovnanian Enterprises, Inc.,
7.750%, due 05/15/13 201,825
140,000 KB Home, 7.750%, due 02/01/10 148,400
155,000 Meritage Corp., 9.750%,
due 06/01/11 170,500
95,000 Ryland Group, Inc., 8.000%, due
08/15/06 102,244
80,000 Ryland Group, Inc., 9.125%, due
06/15/11 90,500
165,000 Standard-Pacific Corp., 7.750%,
due 03/15/13 169,125
20,000 # WCI Communities, Inc., 7.875%,
due 10/01/13 20,150
250,000 WCI Communities, Inc., 10.625%,
due 02/15/11 275,000
---------------
1,356,769
---------------
HOUSEHOLD PRODUCTS/WARES: 1.0%
450,000 American Greetings, 11.750%,
due 07/15/08 515,250
155,000 # Rayovac Corp., 8.500%, due
10/01/13 160,425
---------------
675,675
---------------
IRON/STEEL: 0.3%
210,000 United States Steel Corp., 9.750%,
due 05/15/10 216,300
---------------
216,300
---------------
</Table>
See Accompanying Notes to Financial Statements
70
<Page>
ING
High Yield
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
LEISURE TIME: 0.7%
$ 300,000 @@ Royal Caribbean Cruises Ltd.,
8.000%, due 05/15/10 $ 318,000
160,000 # Worldspan Financing Corp.,
9.625%, due 06/15/11 168,400
---------------
486,400
---------------
LODGING: 7.0%
490,000 Ameristar Casinos, Inc., 10.750%,
due 02/15/09 559,825
275,000 Aztar Corp., 9.000%, due
08/15/11 298,719
225,000 Extended Stay America, Inc.,
9.875%, due 06/15/11 249,469
200,000 Hilton Hotels Corp., 7.625%, due
05/15/08 220,000
129,000 Host Marriott Corp., 7.875%, due
08/01/05 132,870
95,000 Host Marriott Corp., 7.875%, due
08/01/08 98,088
590,000 Mandalay Resort Group, 9.500%,
due 08/01/08 679,974
450,000 L MGM Mirage, 8.375%, due
02/01/11 497,250
75,000 MGM Mirage, 9.750%, due
06/01/07 85,219
155,000 Park Place Entertainment Corp.,
7.000%, due 04/15/13 161,006
520,000 L Park Place Entertainment Corp.,
7.875%, due 03/15/10 559,000
195,000 Park Place Entertainment Corp.,
9.375%, due 02/15/07 215,963
565,000 Starwood Hotels & Resorts
Worldwide, Inc., 7.875%, due
05/01/12 621,499
290,000 Venetian Casino Resort LLC,
11.000%, due 06/15/10 332,050
---------------
4,710,932
---------------
MEDIA: 13.4%
230,000 Allbritton Communications Co.,
7.750%, due 12/15/12 235,750
325,000 Block Communications, Inc.,
9.250%, due 04/15/09 349,375
265,000 @@ Canwest Media, Inc., 10.625%,
due 05/15/11 302,100
630,000 Charter Communications Holdings
Capital Corp., 9.625%,
due 11/15/09 489,825
180,000 L CSC Holdings, Inc., 7.625%, due
04/01/11 180,450
325,000 L CSC Holdings, Inc., 10.500%, due
05/15/16 359,125
75,000 Dex Media East Finance Co.,
9.875%, due 11/15/09 85,313
680,000 L Dex Media East Finance Co.,
12.125%, due 11/15/12 824,499
125,000 # Dex Media Finance Co., 8.500%,
due 08/15/10 136,563
400,000 #,L Dex Media Finance Co., 9.875%,
due 08/15/13 454,000
450,000 DirecTV Holdings LLC, 8.375%,
due 03/15/13 509,625
$ 280,000 # Echostar DBS Corp., 5.750%, due
10/01/08 $ 281,750
165,000 Entravision Communications
Corp., 8.125%, due 03/15/09 173,663
70,000 Granite Broadcasting Corp.,
8.875%, due 05/15/08 67,638
470,000 Granite Broadcasting Corp.,
10.375%, due 05/15/05 465,300
515,000 Gray Television, Inc., 9.250%, due
12/15/11 570,362
415,000 Hollinger Intl. Publishing, 9.000%,
due 12/15/10 439,381
65,000 @@,# Hollinger, Inc., 11.875%, due
03/01/11 72,150
125,000 Houghton Mifflin Co., 8.250%,
due 02/01/11 131,563
170,000 L Mediacom Broadband LLC,
11.000%, due 07/15/13 179,775
230,000 #,+ Nexstar Finance Holdings, Inc.,
0.000%, due 04/01/08 162,150
330,000 Paxson Communications Corp.,
10.750%, due 07/15/08 350,213
110,000 Primedia, Inc., 8.875%, due
05/15/11 114,675
140,000 Salem Communications Holding
Corp., 9.000%, due 07/01/11 151,375
195,000 Sinclair Broadcast Group, Inc.,
8.000%, due 03/15/12 206,700
240,000 Spanish Broadcasting System,
9.625%, due 11/01/09 255,000
565,000 @@,# Vivendi Universal SA, 9.250%,
due 04/15/10 651,868
0 Young Broadcasting, Inc., 8.500%,
due 12/15/08 0
198,000 Young Broadcasting, Inc., 9.000%,
due 01/15/06 199,980
498,000 Young Broadcasting, Inc.,
10.000%, due 03/01/11 530,369
---------------
8,930,537
---------------
MINING: 0.7%
415,000 Compass Minerals Group, Inc.,
10.000%, due 08/15/11 462,725
---------------
462,725
---------------
MISCELLANEOUS MANUFACTURING: 1.6%
180,000 Samsonite Corp, 10.750%, due
06/15/08 189,000
145,000 SPX Corp., 7.500%, due 01/01/13 153,338
720,000 @@ Tyco Intl. Group SA, 6.750%, due
02/15/11 763,200
---------------
1,105,538
---------------
OFFICE/BUSINESS EQUIP: 0.6%
375,000 Xerox Corp., 7.625%, due 06/15/13 371,719
---------------
371,719
---------------
OIL AND GAS: 4.2%
465,000 # Chesapeake Energy Corp., 7.500%,
due 09/15/13 490,575
90,000 # Energy Partners Ltd., 8.750%,
due 08/01/10 92,700
400,000 Nuevo Energy Co., 9.375%, due
10/01/10 435,000
</Table>
See Accompanying Notes to Financial Statements
71
<Page>
ING
High Yield
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
OIL AND GAS (CONTINUED)
$ 37,000 Nuevo Energy Co., 9.500%, due
06/01/08 $ 39,081
470,000 Swift Energy Co., 9.375%, due
05/01/12 509,949
225,000 Vintage Petroleum, Inc., 8.250%,
due 05/01/12 243,563
550,000 @@ Western Oil Sands, Inc., 8.375%,
due 05/01/12 625,624
375,000 Westport Resources Corp.,
8.250%, due 11/01/11 411,563
---------------
2,848,055
---------------
OIL AND GAS SERVICES: 2.2%
175,000 Grant Prideco Escrow Corp.,
9.000%, due 12/15/09 189,438
500,000 Grant Prideco, Inc., 9.625%, due
12/01/07 550,000
675,000 Hanover Equipment Trust, 8.500%,
due 09/01/08 698,625
50,000 Hanover Equipment Trust, 8.750%,
due 09/01/11 51,750
---------------
1,489,813
---------------
PACKAGING AND CONTAINERS: 5.7%
105,000 Ball Corp., 6.875%, due 12/15/12 108,806
430,000 # BWAY Finance Corp., 10.000%,
due 10/15/10 466,550
395,000 @@,# Crown European Holdings SA,
10.875%, due 03/01/13 437,463
375,000 Greif, Inc., 8.875%, due 08/01/12 407,813
180,000 @@,#,L Norampac, Inc., 6.750%, due
06/01/13 184,500
320,000 # Owens-Brockway, 8.250%, due
05/15/13 328,000
965,000 Owens-Brockway, 8.875%, due
02/15/09 1,032,549
300,000 L Owens-Illinois, Inc., 7.150%, due
05/15/05 308,250
540,000 Smurfit-Stone Container Corp.,
8.250%, due 10/01/12 566,999
---------------
3,840,930
---------------
PHARMACEUTICALS: 0.8%
50,000 AmerisourceBergen Corp., 7.250%,
due 11/15/12 51,125
425,000 AmerisourceBergen Corp., 8.125%,
due 09/01/08 463,250
---------------
514,375
---------------
PIPELINES: 3.4%
265,000 ANR Pipeline Co., 8.875%, due
03/15/10 284,875
245,000 L EL Paso Corp., 7.875%, due
06/15/12 207,025
125,000 GulfTerra Energy Finance Corp.,
10.625%, due 12/01/12 147,188
200,000 GulfTerra Energy Partners LP,
8.500%, due 06/01/10 216,500
200,000 Southern Natural Gas Co., 7.350%,
due 02/15/31 185,000
310,000 Southern Natural Gas Co., 8.000%,
due 03/01/32 303,025
$ 245,000 Tennessee Gas Pipeline Co.,
8.375%, due 06/15/32 $ 240,100
505,000 Transcontinental Gas Pipe Line
Corp., 8.875%, due 07/15/12 573,805
95,000 Williams Cos., Inc., 8.625%, due
06/01/10 101,413
---------------
2,258,931
---------------
REITs: 0.9%
350,000 L Felcor Lodging LP, 9.500%, due
09/15/08 378,000
65,000 Host Marriott LP, 9.500%, due
01/15/07 71,500
170,000 # La Quinta Properties, Inc., 8.875%,
due 03/15/11 185,088
---------------
634,588
---------------
RETAIL: 3.7%
400,000 Dollar General Corp., 8.625%,
due 06/15/10 446,500
70,000 # Group 1 Automotive, Inc., 8.250%,
due 08/15/13 75,775
335,000 L JC Penney Co., Inc., 7.600%, due
04/01/07 363,475
165,000 Rent-A-Center, Inc., 7.500%, due
05/01/10 174,281
415,000 S Rite Aid Corp., 7.625%, due
04/15/05 427,450
175,000 # Rite Aid Corp., 9.250%, due
06/01/13 186,375
80,000 Saks, Inc., 8.250%, due 11/15/08 88,000
330,000 Star Gas Finance Co., 10.250%,
due 02/15/13 353,100
310,000 Yum! Brands, Inc., 8.875%, due
04/15/11 362,700
---------------
2,477,656
---------------
SEMICONDUCTORS: 0.3%
70,000 AMI Semiconductor, Inc., 10.750%,
due 02/01/13 79,450
70,000 # Amkor Technology, Inc., 7.750%,
due 05/15/13 70,700
60,000 Amkor Technology, Inc., 9.250%,
due 02/15/08 65,100
---------------
215,250
---------------
TELECOMMUNICATIONS: 11.2%
470,000 #,L ACC Escrow Corp., 10.000%, due
08/01/11 507,600
540,000 #,L American Tower Corp., 9.375%,
due 02/01/09 553,500
275,000 + American Tower Escrow Corp.,
.000%, due 08/01/08 184,250
280,000 # Centennial Communications Corp.,
10.125%, due 06/15/13 289,800
225,000 L Crown Castle Intl. Corp., 9.375%,
due 08/01/11 241,313
350,000 L Crown Castle Intl. Corp., 10.750%,
due 08/01/11 390,250
205,000 # Dobson Communications Corp.,
8.875%, due 10/01/13 208,331
160,000 Dobson Communications Corp.,
10.875%, due 07/01/10 175,200
</Table>
See Accompanying Notes to Financial Statements
72
<Page>
ING
High Yield
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS (CONTINUED)
$ 125,000 Dobson/Sygnet Communications
Co., 12.250%, due 12/15/08 $ 134,688
115,000 # MetroPCS, Inc., 10.750%, due
10/01/11 117,875
540,000 L Nextel Communications, Inc.,
7.375%, due 08/01/15 548,100
600,000 L Nextel Communications, Inc.,
9.375%, due 11/15/09 653,999
110,000 L Nextel Partners, Inc., 12.500%,
due 11/15/09 125,950
445,000 Panamsat Corp., 8.500%, due
02/01/12 468,363
610,000 Qwest Communications Intl.,
7.500%, due 11/01/08 588,649
65,000 # Qwest Corp., 8.875%, due
03/15/12 72,475
601,000 # Qwest Services Corp., 14.000%,
due 12/15/14 725,707
295,000 @@ Rogers Wireless Communications,
Inc., 9.625%, due 05/01/11 340,725
210,000 # Spectrasite, Inc., 8.250%, due
05/15/10 222,600
295,000 @@ TELUS Corp., 8.000%, due 06/01/11 344,992
255,000 Triton PCS, Inc., 8.500%, due
06/01/13 274,763
305,000 # Western Wireless Corp., 9.250%,
due 07/15/13 312,625
---------------
7,481,755
---------------
Total Corporate Bonds
(Cost $59,474,872) 62,819,060
---------------
<Caption>
SHARES VALUE
- ---------------------------------------------------------------------------------------------------
PREFERRED STOCK: 1.8%
MEDIA: 1.8%
5,050 Cablevision Systems Corp. 528,987
2,919 @ Paxson Communications Corp. 263,462
4,150 Primedia, Inc. 399,438
---------------
1,191,887
---------------
TELECOMMUNICATIONS: 0.0%
373 @,@@,I,X O Sullivan Industries, Inc. --
---------------
--
---------------
Total Preferred Stock
(Cost $1,152,405) 1,191,887
---------------
<Caption>
NUMBER OF
WARRANTS VALUE
- ---------------------------------------------------------------------------------------------------
WARRANTS: 0.0%
TELECOMMUNICATIONS: 0.0%:
90 American Tower Corp.,
Expires 8/1/2008 11,070
500 @,@@,I,X GT Group Telecom, Inc.,
Expires 2/1/2010 --
1,000 @,@@,I,X O Sullivan Industries, Inc.,
Expires 10/15/2009 --
---------------
11,070
---------------
Total Warrants (Cost $6,677) 11,070
---------------
Total Long Term Investments
(Cost $60,633,954) 64,022,017
---------------
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 3.7%
REPURCHASE AGREEMENT: 3.7%
$ 2,507,000 Goldman Sachs Repurchase
Agreement dated 09/30/03,
1.090%, due 10/01/03,
$2,507,076 to be received upon
repurchase (Collateralized by
various U.S. Government
Securities, 0.000%-6.500%,
market value $2,524,579,
due 05/15/05-05/15/11) $ 2,507,000
---------------
Total Short-term
Investments
(Cost $2,507,000) 2,507,000
---------------
TOTAL INVESTMENTS IN
SECURITIES
(COST $63,140,954)* 98.8% $ 66,529,017
OTHER ASSETS AND
LIABILITIES-NET 1.2 838,564
----- ---------------
NET ASSETS 100.0% $ 67,367,581
===== ===============
</Table>
@ Non-income producing security
@@ Foreign Issuer
+ Step-up basis bonds. Interest rates shown reflect current and future
coupon rates.
# Securities with 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. These securities have been determined to be liquid
under the guidelines established by the Fund's Board of Trustees.
I Illiquid Security
X Market Value determined by ING Valuation Committee appointed by the Fund's
Board of Trustees.
L Loaned security, a portion or all of the security is on loan at September
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>
Gross Unrealized Appreciation $ 3,494,683
Gross Unrealized Depreciation (106,620)
---------------
Net Unrealized Appreciation $ 3,388,063
===============
</Table>
See Accompanying Notes to Financial Statements
73
<Page>
ING
High Yield
Opportunity
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
CORPORATE BONDS: 93.2%
ADVERTISING: 0.5%$
$ 55,000 # RH Donnelley Finance Corp. I,
10.875%, due 12/15/12 $ 65,175
1,390,000 # Vertis, Inc., 9.750%, due
04/01/09 1,469,925
---------------
1,535,100
---------------
AEROSPACE/DEFENSE: 0.7%
210,000 # Armor Holdings, Inc., 8.250%,
due 08/15/13 223,125
660,000 L L-3 Communications Corp.,
7.625%, due 06/15/12 717,750
1,075,000 L Sequa Corp., 8.875%, due
04/01/08 1,155,625
50,000 Sequa Corp., 9.000%, due
08/01/09 55,000
---------------
2,151,500
---------------
AGRICULTURE: 0.2%
600,000 # Dimon, Inc., 7.750%, due
06/01/13 618,000
---------------
618,000
---------------
APPAREL: 0.4%
1,225,000 # Phillips-Van Heusen, 8.125%,
due 05/01/13 1,289,313
---------------
1,289,313
---------------
AUTO MANUFACTURERS: 0.0%
70,000 General Motors Corp., 7.125%,
due 07/15/13 73,557
20,000 L General Motors Corp., 7.200%,
due 01/15/11 21,105
---------------
94,662
---------------
AUTO PARTS & EQUIPMENT: 2.4%
630,000 Dana Corp., 10.125%, due
03/15/10 707,175
900,000 L Dura Operating Corp., 8.625%,
due 04/15/12 938,250
630,000 # Eagle-Picher Industries, 9.750%,
due 09/01/13 664,650
1,030,000 Lear Corp., 8.110%, due
05/15/09 1,189,650
960,000 Rexnord Corp., 10.125%, due
12/15/12 1,070,400
1,070,000 #,L Tenneco Automotive, Inc.,
10.250%, due 07/15/13 1,166,300
1,485,000 #,L TRW Automotive, Inc.,
11.000%, due 02/15/13 1,737,450
---------------
7,473,875
---------------
BEVERAGES: 0.3%
895,000 Constellation Brands, Inc.,
8.500%, due 03/01/09 948,700
---------------
948,700
---------------
BUILDING MATERIALS: 0.3%
2,456,000 @,I,XX International Utility Structures,
@@,** Inc., 13.000%, due 02/01/08 85,960
895,000 Nortek Holdings, Inc., 9.875%,
due 06/15/11 950,938
---------------
1,036,898
---------------
CHEMICALS: 2.5%
$ 590,000 #,L Equistar Funding Corp.,
10.125%, due 09/01/08 $ 587,050
610,000 Equistar Funding Corp.,
10.625%, due 05/01/11 606,950
1,450,000 L IMC Global, Inc., 10.875%, due
06/01/08 1,515,250
1,400,000 IMC Global, Inc., 11.250%, due
06/01/11 1,463,000
1,685,000 L Lyondell Chemical Co., 9.625%,
due 05/01/07 1,609,175
1,735,000 #,L Rockwood Specialties Group,
Inc., 10.625%, due 05/15/11 1,856,450
---------------
7,637,875
---------------
COMMERCIAL SERVICES: 2.9%
1,365,000 Coinmach Corp., 9.000%, due
02/01/10 1,460,550
1,245,000 Corrections Corp. of America,
7.500%, due 05/01/11 1,290,131
3,205,000 @@ Quebecor Media, Inc., 11.125%,
due 07/15/11 3,669,725
2,220,000 L United Rentals North America,
Inc., 10.750%, due 04/15/08 2,469,750
---------------
8,890,156
---------------
COMPUTERS: 0.3%
800,000 @@ Seagate Technology HDD
Holdings, 8.000%, due
05/15/09 886,000
---------------
886,000
---------------
COSMETICS/PERSONAL CARE: 0.5%
1,630,000 L Chattem, Inc., 8.875%, due
04/01/08 1,638,150
---------------
1,638,150
---------------
DISTRIBUTION/WHOLESALE: 0.6%
1,720,000 #,L Aviall, Inc., 7.625%, due
07/01/11 1,771,600
---------------
1,771,600
---------------
DIVERSIFIED FINANCIAL SERVICES: 3.4%
680,000 @@,#,L Eircom Funding, 8.250%, due
08/15/13 734,400
850,000 # HLI Operating Co., Inc.,
10.500%, due 06/15/10 930,750
2,839,436 # Hollinger Participation Trust,
12.125%, due 11/15/10 3,212,112
2,305,000 Nexstar Finance, Inc., 12.000%,
due 04/01/08 2,593,125
1,630,000 L Technical Olympic USA, Inc.,
9.000%, due 07/01/10 1,727,800
895,000 Technical Olympic USA, Inc.,
10.375%, due 07/01/12 966,600
280,000 #,L Universal City Development
Partners, 11.750%, due
04/01/10 316,400
---------------
10,481,187
---------------
ELECTRIC: 3.8%
3,485,000 # AES Corp., 8.750%, due
05/15/13 3,676,675
</Table>
See Accompanying Notes to Financial Statements
74
<Page>
ING
High Yield
Opportunity
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
ELECTRIC (CONTINUED)
$ 2,190,000 #,L Calpine Corp., 8.750%, due
07/15/13 $ 2,014,800
1,065,000 L Homer City Funding LLC,
8.734%, due 10/01/26 1,096,950
1,250,000 Illinois Power Co, 11.500%, due
12/15/10 1,506,250
1,285,000 # PG&E Corp., 6.875%, due
07/15/08 1,355,675
2,005,000 L Teco Energy, Inc., 7.500%, due
06/15/10 2,042,594
---------------
11,692,944
---------------
ELECTRICAL COMPONENTS & EQUIPMENT: 0.3%
800,000 @@ FIMEP SA, 10.500%, due
02/15/13 908,000
---------------
908,000
---------------
ELECTRONICS: 0.8%
400,000 Fisher Scientific Intl., 8.125%,
due 05/01/12 427,000
910,000 @@,#,L Flextronics Intl. Ltd., 6.500%,
due 05/15/13 907,725
925,000 Stoneridge, Inc., 11.500%, due
05/01/12 1,061,438
---------------
2,396,163
---------------
ENTERTAINMENT: 2.3%
400,000 Argosy Gaming Co., 9.000%,
due 09/01/11 435,000
2,900,000 Carmike Cinemas, Inc., 10.375%,
due 02/01/09 3,059,500
1,510,000 L Cinemark USA, Inc., 9.000%,
due 02/01/13 1,619,475
1,200,000 Regal Cinemas, Inc., 9.375%,
due 02/01/12 1,356,000
835,000 L Six Flags, Inc., 9.750%, due
06/15/07 824,563
---------------
7,294,538
---------------
ENVIRONMENTAL CONTROL: 2.1%
750,000 Allied Waste North America,
7.875%, due 01/01/09 781,875
1,815,000 Allied Waste North America,
8.500%, due 12/01/08 1,969,275
1,700,000 Allied Waste North America,
8.875%, due 04/01/08 1,848,750
1,900,000 L Allied Waste North America,
10.000%, due 08/01/09 2,068,625
---------------
6,668,525
---------------
FOOD: 3.4%
2,120,000 #,L Del Monte Corp., 8.625%, due
12/15/12 2,326,699
1,230,000 # Domino's, Inc., 8.250%, due
07/01/11 1,305,338
1,680,000 Great Atlantic & Pacific Tea Co.,
9.125%, due 12/15/11 1,587,600
1,345,000 Michael Foods, Inc., 11.750%,
due 04/01/11 1,580,375
1,150,000 Pilgrims Pride Corp., 9.625%,
due 09/15/11 1,247,750
625,000 Roundy's, Inc., 8.875%, due
06/15/12 656,250
$ 385,000 # Smithfield Foods, Inc., 7.750%,
due 05/15/13 $ 414,838
1,240,000 #,L Swift & Co., 12.500%, due
01/01/10 1,376,400
---------------
10,495,250
---------------
FOREST PRODUCTS & PAPER: 3.3%
3,200,000 Appleton Papers, Inc., 12.500%,
due 12/15/08 3,504,000
1,660,000 L Georgia-Pacific Corp., 8.125%,
due 05/15/11 1,734,700
930,000 L Georgia-Pacific Corp., 8.875%,
due 02/01/10 1,023,000
1,870,000 Georgia-Pacific Corp., 9.375%,
due 02/01/13 2,096,738
630,000 @@ Tembec Industries, Inc., 7.750%,
due 03/15/12 595,350
1,350,000 @@ Tembec Industries, Inc., 8.625%,
due 06/30/09 1,336,500
---------------
10,290,288
---------------
HEALTHCARE-PRODUCTS: 0.4%
1,210,000 # Medex, Inc., 8.875%, due
05/15/13 1,285,625
---------------
1,285,625
---------------
HEALTHCARE-SERVICES: 1.6%
1,405,000 L Alliance Imaging, Inc., 10.375%,
due 04/15/11 1,468,225
3,460,000 Tenet Healthcare Corp., 7.375%,
due 02/01/13 3,503,250
---------------
4,971,475
---------------
HOME BUILDERS: 2.6%
1,650,000 DR Horton, Inc., 9.375%, due
03/15/11 1,806,750
970,000 # K. Hovnanian Enterprises, Inc.,
7.750%, due 05/15/13 1,003,950
430,000 KB Home, 7.750%, due 02/01/10 455,800
770,000 Meritage Corp., 9.750%, due
06/01/11 847,000
1,400,000 Ryland Group, Inc., 9.125%, due
06/15/11 1,583,750
815,000 L Standard-Pacific Corp., 7.750%,
due 03/15/13 835,375
15,000 # WCI Communities, Inc., 7.875%,
due 10/01/13 15,113
1,310,000 WCI Communities, Inc.,
10.625%, due 02/15/11 1,441,000
---------------
7,988,738
---------------
HOUSEHOLD PRODUCTS/WARES: 1.2%
2,725,000 American Greetings, 11.750%,
due 07/15/08 3,120,125
695,000 #,L Rayovac Corp, 8.500%, due
10/01/13 719,325
---------------
3,839,450
---------------
IRON/STEEL: 0.5%
875,000 Armco, Inc., 9.000%, due
09/15/07 634,375
750,000 L United States Steel Corp.,
9.750%, due 05/15/10 772,500
---------------
1,406,875
---------------
</Table>
See Accompanying Notes to Financial Statements
75
<Page>
ING
High Yield
Opportunity
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
LEISURE TIME: 0.7%
$ 1,300,000 @@,L Royal Caribbean Cruises Ltd.,
8.000%, due 05/15/10 $ 1,378,000
765,000 # Worldspan Financing Corp.,
9.625%, due 06/15/11 805,163
---------------
2,183,163
---------------
LODGING: 6.2%
2,170,000 Ameristar Casinos, Inc.,
10.750%, due 02/15/09 2,479,224
1,070,000 Aztar Corp., 9.000%, due
08/15/11 1,162,288
1,050,000 Extended Stay America, Inc.,
9.875%, due 06/15/11 1,164,188
910,000 L Hilton Hotels Corp., 7.625%,
due 05/15/08 1,001,000
440,000 Host Marriott Corp., 7.875%,
due 08/01/05 453,200
545,000 Host Marriott Corp., 7.875%,
due 08/01/08 562,713
960,000 Mandalay Resort Group,
9.500%, due 08/01/08 1,106,400
1,575,000 L MGM Mirage, 8.375%, due
02/01/11 1,740,375
1,150,000 MGM Mirage, 9.750%, due
06/01/07 1,306,688
740,000 Park Place Entertainment Corp.,
7.000%, due 04/15/13 768,675
2,495,000 L Park Place Entertainment Corp.,
7.875%, due 03/15/10 2,682,124
335,000 Park Place Entertainment Corp.,
9.375%, due 02/15/07 371,013
2,540,000 Starwood Hotels & Resorts
Worldwide, Inc., 7.875%, due
05/01/12 2,793,999
1,490,000 L Venetian Casino Resort LLC,
11.000%, due 06/15/10 1,706,050
---------------
19,297,937
---------------
MEDIA: 13.5%
1,170,000 Allbritton Communications Co.,
7.750%, due 12/15/12 1,199,250
1,520,000 Block Communications, Inc.,
9.250%, due 04/15/09 1,634,000
750,000 @@ Canwest Media, Inc., 10.625%,
due 05/15/11 855,000
950,000 L Charter Communications
Holdings Capital Corp.,
9.625%, due 11/15/09 738,625
1,750,000 L Charter Communications
Holdings, LLC, 11.125%, due
01/15/11 1,439,375
845,000 L CSC Holdings, Inc., 7.625%, due
04/01/11 847,113
1,640,000 L CSC Holdings, Inc., 10.500%,
due 05/15/16 1,812,200
365,000 L Dex Media East Finance Co.,
9.875%, due 11/15/09 415,188
2,950,000 L Dex Media East Finance Co.,
12.125%, due 11/15/12 3,576,874
625,000 # Dex Media Finance Co., 8.500%,
due 08/15/10 682,813
1,665,000 # Dex Media Finance Co., 9.875%,
due 08/15/13 1,889,775
$ 2,315,000 DirecTV Holdings LLC, 8.375%,
due 03/15/13 $ 2,621,738
1,260,000 # Echostar DBS Corp., 5.750%,
due 10/01/08 1,267,875
840,000 Entravision Communications
Corp., 8.125%, due 03/15/09 884,100
1,185,000 Granite Broadcasting Corp.,
8.875%, due 05/15/08 1,145,006
1,915,000 Granite Broadcasting Corp.,
10.375%, due 05/15/05 1,895,850
2,460,000 Gray Television, Inc., 9.250%,
due 12/15/11 2,724,450
2,100,000 Hollinger Intl. Publishing,
9.000%, due 12/15/10 2,223,375
320,000 @@,# Hollinger, Inc., 11.875%, due
03/01/11 355,200
590,000 Houghton Mifflin Co, 8.250%,
due 02/01/11 620,975
920,000 Mediacom Broadband LLC,
11.000%, due 07/15/13 972,900
1,180,000 Nexstar Finance Holdings, Inc.,
0.000%, due 04/01/13 831,900
1,645,000 L Paxson Communications Corp.,
10.750%, due 07/15/08 1,745,756
215,000 #,L Primedia, Inc., 8.000%, due
05/15/13 218,225
655,000 Salem Communications Holding
Corp., 9.000%, due 07/01/11 708,219
875,000 Sinclair Broadcast Group, Inc.,
8.000%, due 03/15/12 927,500
623,056 @,X,** Source Media, Inc., 12.000%,
due 11/01/04 1
1,105,000 Spanish Broadcasting System,
9.625%, due 11/01/09 1,174,063
2,935,000 @@,#,L Vivendi Universal SA, 9.250%,
due 04/15/10 3,386,255
0 L Young Broadcasting, Inc.,
8.500%, due 12/15/08 0
2,605,000 Young Broadcasting, Inc.,
10.000%, due 03/01/11 2,774,324
---------------
41,567,925
---------------
MINING: 0.7%
2,035,000 Compass Minerals Group, Inc.,
10.000%, due 08/15/11 2,269,025
---------------
2,269,025
---------------
MISCELLANEOUS MANUFACTURING: 1.7%
875,000 Samsonite Corp, 10.750%, due
06/15/08 918,750
725,000 L SPX Corp., 7.500%, due 01/01/13 766,688
3,260,000 @@ Tyco Intl. Group SA, 6.750%,
due 02/15/11 3,455,600
---------------
5,141,038
---------------
OFFICE/BUSINESS EQUIP: 0.5%
1,705,000 Xerox Corp., 7.625%, due
06/15/13 1,690,081
---------------
1,690,081
---------------
OIL AND GAS: 3.9%
2,330,000 # Chesapeake Energy Corp.,
7.500%, due 09/15/13 2,458,149
</Table>
See Accompanying Notes to Financial Statements
76
<Page>
ING
High Yield
Opportunity
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
OIL AND GAS (CONTINUED)
$ 430,000 # Energy Partners Ltd., 8.750%,
due 08/01/10 $ 442,900
1,113,000 Nuevo Energy Co., 9.500%, due
06/01/08 1,175,606
2,155,000 Swift Energy Co., 9.375%, due
05/01/12 2,338,175
955,000 Vintage Petroleum, Inc., 8.250%,
due 05/01/12 1,033,788
2,250,000 @@ Western Oil Sands, Inc., 8.375%,
due 05/01/12 2,559,374
975,000 # Westport Resources Corp.,
8.250%, due 11/01/11 1,070,063
950,000 Westport Resources Corp.,
8.250%, due 11/01/11 1,042,625
---------------
12,120,680
---------------
OIL AND GAS SERVICES: 2.3%
2,950,000 Grant Prideco Escrow Corp.,
9.000%, due 12/15/09 3,193,375
2,040,000 L Hanover Equipment Trust,
8.500%, due 09/01/08 2,111,400
1,800,000 L Hanover Equipment Trust,
8.750%, due 09/01/11 1,863,000
---------------
7,167,775
---------------
PACKAGING AND CONTAINERS: 5.5%
580,000 L Ball Corp., 6.875%, due
12/15/12 601,025
2,105,000 # BWAY Finance Corp., 10.000%,
due 10/15/10 2,283,925
2,145,000 @@,# Crown European Holdings SA,
10.875%, due 03/01/13 2,375,588
1,600,000 Greif, Inc., 8.875%, due 08/01/12 1,740,000
860,000 @@,#,L Norampac, Inc., 6.750%, due
06/01/13 881,500
1,850,000 # Owens-Brockway, 8.250%, due
05/15/13 1,896,250
4,215,000 Owens-Brockway, 8.875%, due
02/15/09 4,510,049
16,823 X,#,& Russell-Stanley Holdings, Inc.,
9.000%, due 11/30/08 8,159
500,000 Smurfit-Stone Container Corp.,
8.250%, due 10/01/12 525,000
2,000,000 Stone Container Corp., 9.750%,
due 02/01/11 2,190,000
---------------
17,011,496
---------------
PHARMACEUTICALS: 0.5%
1,615,000 AmerisourceBergen Corp.,
7.250%, due 11/15/12 1,651,338
---------------
1,651,338
---------------
PIPELINES: 3.6%
1,110,000 L ANR Pipeline Co., 8.875%, due
03/15/10 1,193,250
1,130,000 #,L EL Paso Corp, 7.875%, due
06/15/12 954,850
1,950,000 GulfTerra Energy Partners LP,
8.500%, due 06/01/10 2,110,875
1,230,000 L Southern Natural Gas Co.,
7.350%, due 02/15/31 1,137,750
1,300,000 Southern Natural Gas Co.,
8.000%, due 03/01/32 1,270,750
$ 1,375,000 Tennessee Gas Pipeline Co.,
8.375%, due 06/15/32 $ 1,347,500
2,355,000 L Transcontinental Gas Pipe Line
Corp., 8.875%, due 07/15/12 2,675,868
455,000 L Williams Cos., Inc., 8.625%, due
06/01/10 485,713
---------------
11,176,556
---------------
REITs: 1.2%
270,000 Felcor Lodging LP, 8.500%, due
06/01/11 288,900
1,900,000 L Felcor Lodging LP, 9.500%, due
09/15/08 2,052,000
400,000 L Host Marriott LP, 9.500%, due
01/15/07 440,000
885,000 # La Quinta Properties, Inc.,
8.875%, due 03/15/11 963,544
---------------
3,744,444
---------------
RETAIL: 3.7%
1,365,000 Dollar General Corp., 8.625%,
due 06/15/10 1,523,681
330,000 # Group 1 Automotive, Inc.,
8.250%, due 08/15/13 357,225
1,570,000 L JC Penney Co., Inc., 7.600%,
due 04/01/07 1,703,450
995,000 Rent-A-Center, Inc., 7.500%,
due 05/01/10 1,050,969
2,270,000 L Rite Aid Corp., 7.625%, due
04/15/05 2,338,100
965,000 #,L Rite Aid Corp., 9.250%, due
06/01/13 1,027,725
370,000 L Saks, Inc., 8.250%, due 11/15/08 407,000
1,540,000 Star Gas Finance Co., 10.250%,
due 02/15/13 1,647,800
1,365,000 Yum! Brands, Inc., 8.875%, due
04/15/11 1,597,050
---------------
11,653,000
---------------
SEMICONDUCTORS: 0.3%
360,000 AMI Semiconductor, Inc.,
10.750%, due 02/01/13 408,600
345,000 #,L Amkor Technology, Inc., 7.750%,
due 05/15/13 348,450
290,000 Amkor Technology, Inc., 9.250%,
due 02/15/08 314,650
---------------
1,071,700
---------------
TELECOMMUNICATIONS: 11.2%
2,210,000 #,L ACC Escrow Corp., 10.000%,
due 08/01/11 2,386,800
2,450,000 L American Tower Corp., 9.375%,
due 02/01/09 2,511,250
1,430,000 American Tower Escrow Corp.,
0.000%, due 08/01/08 958,100
1,315,000 # Centennial Communications
Corp., 10.125%, due 06/15/13 1,361,025
3,245,000 L Crown Castle Intl. Corp.,
10.750%, due 08/01/11 3,618,174
940,000 # Dobson Communications Corp.,
8.875%, due 10/01/13 955,275
800,000 Dobson Communications Corp.,
10.875%, due 07/01/10 876,000
</Table>
See Accompanying Notes to Financial Statements
77
<Page>
ING
High Yield
Opportunity
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS (CONTINUED)
$ 670,000 Dobson/Sygnet
Communications Co.,
12.250%, due 12/15/08 $ 721,925
3,600,000 X,I ICG Services, Inc., 10.000%, due
02/15/08 4
525,000 # MetroPCS, Inc., 10.750%, due
10/01/11 538,125
2,420,000 L Nextel Communications, Inc.,
7.375%, due 08/01/15 2,456,300
2,710,000 L Nextel Communications, Inc.,
9.375%, due 11/15/09 2,953,899
630,000 L Nextel Partners, Inc., 12.500%,
due 11/15/09 721,350
2,085,000 Panamsat Corp., 8.500%, due
02/01/12 2,194,463
1,370,000 Qwest Communications Intl.,
7.500%, due 11/01/08 1,322,050
315,000 #,L Qwest Corp., 8.875%, due
03/15/12 351,225
3,714,000 #,L Qwest Services Corp., 13.500%,
due 12/15/10 4,345,379
405,000 #,L Qwest Services Corp., 14.000%,
due 12/15/14 489,038
1,415,000 @@ Rogers Wireless
Communications, Inc.,
9.625%, due 05/01/11 1,634,325
17,300,000 @,X,I, SA Telecommunications, Inc.,
#,** 10.000%, due 08/15/06 18
985,000 # Spectrasite, Inc., 8.250%, due
05/15/10 1,044,100
325,000 @@ TELUS Corp., 8.000%, due
06/01/11 380,076
1,215,000 L Triton PCS, Inc., 8.500%, due
06/01/13 1,309,163
8,267,451 @,X,I,** US Interactive, 12.000%, due
04/17/05 170,309
1,410,000 #,L Western Wireless Corp., 9.250%,
due 07/15/13 1,445,250
6,250,000 I,**,@ WinStar Communications, Inc.,
12.750%, due 04/15/10 625
---------------
34,744,248
---------------
TRANSPORTATION: 0.4%
1,120,000 Gulfmark Offshore, Inc., 8.750%,
due 06/01/08 1,142,400
---------------
1,142,400
---------------
Total Corporate Bonds
(Cost $307,369,902) 289,323,693
---------------
<Caption>
SHARES VALUE
- ---------------------------------------------------------------------------------------------------
COMMON STOCK: 1.1%
MEDIA: 1.1%
52,616 @,X Classic Cable, Inc. 3,456,872
---------------
3,456,872
---------------
PACKAGING AND CONTAINERS: 0.0%
100,000 @,#,X Russell-Stanley Holdings, Inc. 10
---------------
10
---------------
RETAIL: 0.0%
341,370 @,X International Fast Food Corp. --
---------------
--
---------------
TELECOMMUNICATIONS: 0.0%
61,806 @,X Adelphia Business Solutions $ 6
132 @,@@ Completel Europe NV 2,744
483,445 X,I International Wireless
Communications Holdings, Inc. 48
2,350 X,I Jordan Telecommunications 95,504
15 @ Mpower Holding Corp. 22
---------------
98,324
---------------
Total Common Stock
(Cost $17,296,914) 3,555,206
---------------
PREFERRED STOCK: 2.0%
MEDIA: 2.0%
26,100 Cablevision Systems Corp. 2,733,974
15,956 @ Paxson Communications Corp. 1,440,018
20,550 Primedia, Inc. 1,977,938
---------------
Total Preferred Stock
(Cost $5,956,238) 6,151,930
---------------
<Caption>
NUMBER OF
WARRANTS VALUE
- ---------------------------------------------------------------------------------------------------
WARRANTS: 0.0%
BUILDING MATERIALS: 0.0%
3,100 @,#,I Dayton Superior Corp.,
Expires 06/15/09 31
---------------
31
---------------
COMMERCIAL SERVICES: 0.0%
92,950 @,X,I Comforce Corp.,
Expires 12/01/09 930
---------------
930
---------------
DIVERSIFIED FINANCIAL SERVICES: 0.0%
5,480 @,X,I North Atlantic Trading Co.,
Expires 6/15/2007 1
---------------
1
---------------
TELECOMMUNICATIONS: 0.0%
490 @,# American Tower Corp.,
Expires 8/1/2008 60,269
6,600 @,#,X ICG Communications, Inc.,
Expires 10/15/05 1
3,833 @,X US Interactive, Expires 04/17/05 --
---------------
60,270
---------------
Total Warrants
(Cost $250,729) 61,232
---------------
Total Long-Term Investments
(Cost $330,873,783) 299,092,061
---------------
</Table>
See Accompanying Notes to Financial Statements
78
<Page>
ING
High Yield
Opportunity
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 2.3%
REPURCHASE AGREEMENT: 2.3%
$ 7,261,000 Morgan Stanley Repurchase
Agreement dated 9/30/03, 1.050%,
due 10/01/03, 7,261,000 to be
received upon repurchase
(Collateralized by $7,265,000
Federal Home Loan Mortgage
Notes, 2.500% Market Value
$7,408,786 due 12/15/2005) $ 7,261,000
---------------
Total Short-term Investments
(Cost $7,261,000) 7,261,000
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $338,134,783)* 98.6% $ 306,353,061
OTHER ASSETS AND
LIABILITIES-NET 1.4 4,412,548
----- ---------------
NET ASSETS 100.0% $ 310,765,609
===== ===============
</Table>
@ Non-income producing security
@@ Foreign Issuer
& Payment-in-kind
REITs Real Estate Investment Trusts
# Securities with purchases pursuant to Rule 144A, under the Securities Act
of 1933 and may not be resold subject to that rule except to qualified
institutional buyers. These securities have been determined to be liquid
under the guidelines established by the Funds' Board of
Directors/Trustees.
I Illiquid Security
L Loaned security, a portion or all of the security is on loan at
September 30, 2003
** Defaulted security
X Fair value determined by ING Funds Valuation Committee appointed by the
Funds' Board of Directors/Trustees.
XX Value of Securities obtained from one or more dealers making markets in
the securities which have been adjusted based on the Fund's valuation
procedures
* Cost for federal income tax purposes is the same as for financial
statement purposes. Net unrealized depreciation consists of:
<Table>
Gross Unrealized Appreciation $ 15,316,007
Gross Unrealized Depreciation (47,097,729)
---------------
Net Unrealized Depreciation $ (31,781,722)
===============
</Table>
See Accompanying Notes to Financial Statements
79
<Page>
ING
Intermediate
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
CORPORATE BONDS: 26.8%
AGRICULTURE: 0.0%
$ 35,000 #,L Dimon, Inc., 7.750%,
due 06/01/13 $ 36,050
---------------
36,050
---------------
AIRLINES: 0.9%
327,695 American Airlines, Inc.,
6.977%, due 05/23/21 283,208
2,042,000 American Airlines, Inc.,
7.024%, due 10/15/09 1,996,033
472,170 Continental Airlines, Inc.,
6.545%, due 08/02/20 462,609
381,907 US Airways Pass Through Trust,
6.850%, due 01/30/18 357,890
---------------
3,099,740
---------------
APPAREL: 0.0%
55,000 # Phillips-Van Heusen, 8.125%,
due 05/01/13 57,888
---------------
57,888
---------------
AUTO MANUFACTURERS: 1.2%
847,000 Ford Motor Co., 6.375%,
due 02/01/29 691,801
1,038,000 Ford Motor Co., 6.625%,
due 10/01/28 877,373
2,164,000 L General Motors Corp.,
8.375%, due 07/15/33 2,269,051
---------------
3,838,225
---------------
AUTO PARTS & EQUIPMENT: 0.0%
45,000 Rexnord Corp., 10.125%,
due 12/15/12 50,175
15,000 #,L TRW Automotive, Inc.,
11.000%, due 02/15/13 17,550
---------------
67,725
---------------
BANKS: 4.0%
583,000 Bank of America Corp., 6.375%,
due 02/15/08 656,406
500,000 # BankAmerica Institutional,
Class A, 8.070%, due 12/31/26 586,195
148,000 # BankAmerica Institutional, Class B,
7.700%, due 12/31/26 167,056
74,000 Barnett Capital I, 8.060%, due
12/01/26 86,163
180,000 Barnett Capital II, 7.950%,
due 12/01/26 207,265
140,000 BNY Capital I, 7.970%,
due 12/31/26 160,650
1,175,000 @@,# Credit Suisse First Boston/London,
7.900%, due 05/29/49 1,340,521
2,045,000 # Dresdner Funding Trust I, 8.151%,
due 06/30/31 2,243,597
74,000 FBS Capital I, 8.090%,
due 11/15/26 84,497
397,000 First Union Institutional
Capital II, 7.850%, due 01/01/27 455,142
150,000 Fleet Capital Trust II, 7.920%,
due 12/11/26 164,646
973,000 @@ HSBC Holdings PLC, 7.500%,
due 07/15/09 1,154,809
$ 588,000 M&T Bank Corp., 3.850%,
due 04/01/13 $ 590,362
1,110,000 Mellon Capital I, 7.720%,
due 12/01/26 1,262,547
380,000 S NB Capital Trust IV, 8.250%,
due 04/15/27 452,983
1,630,000 L RBS Capital Trust I, 4.709%,
due 12/29/49 1,580,200
670,000 S Wells Fargo & Co., 3.120%,
due 08/15/08 668,238
80,000 # Wells Fargo Capital A, 7.730%,
due 12/01/26 91,089
865,000 #,L Westpac Capital Trust III,
5.819%, due 12/29/49 901,184
---------------
12,853,550
---------------
BEVERAGES: 0.8%
1,060,000 @@,#,L Cia Brasileira de Bebidas,
8.750%, due 09/15/13 1,075,900
295,000 @@,# Coca-Cola HBC Finance BV,
5.125%, due 09/17/13 304,042
284,000 @@,#,L Coca-Cola HBC Finance BV,
5.500%, due 09/17/15 299,141
990,000 #,S Miller Brewing Co., 4.250%,
due 08/15/08 1,018,231
---------------
2,697,314
---------------
CHEMICALS: 0.1%
217,000 L Dow Chemical Co., 5.750%,
due 11/15/09 232,542
---------------
232,542
---------------
COMMERCIAL SERVICES: 0.0%
75,000 Coinmach Corp., 9.000%,
due 02/01/10 80,250
---------------
80,250
---------------
DIVERSIFIED FINANCIAL SERVICES: 3.2%
838,000 L Boeing Capital Corp., 7.375%,
due 09/27/10 975,339
1,175,000 @@,#,XX Brazilian Merchant Voucher
Receivables Ltd., 5.911%,
due 06/15/11 1,158,843
559,000 Capital One Bank, 5.750%,
due 09/15/10 589,206
417,000 CitiCorp Capital I, 7.933%,
due 02/15/27 485,078
85,000 X Corestates Capital Trust I,
8.000%, due 12/15/26 98,941
953,000 S Countrywide Home Loans, Inc.,
4.250%, due 12/19/07 983,083
15,000 @@,#,L Eircom Funding, 8.250%,
due 08/15/13 16,200
449,000 # Farmers Exchange Capital,
7.050%, due 07/15/28 421,358
555,000 # Farmers Exchange Capital,
7.200%, due 07/15/48 492,955
351,000 L Ford Motor Credit Co., 5.625%,
due 10/01/08 355,404
409,000 Ford Motor Credit Co., 7.375%,
due 10/28/09 436,488
865,000 S General Electric Capital Corp.,
3.500%, due 08/15/07 881,791
</Table>
See Accompanying Notes to Financial Statements
80
<Page>
ING
Intermediate
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (CONTINUED)
$ 412,000 General Motors Acceptance
Corp., 6.625%, due 10/15/05 $ 439,154
10,000 # HLI Operating Co., Inc.,
10.500%, due 06/15/10 10,950
4,447 # Hollinger Participation Trust,
12.125%, due 11/15/10 5,031
679,000 S,L Lehman Brothers Holdings, Inc.,
3.500%, due 08/07/08 681,120
645,000 #,XX Mangrove Bay Pass-Through
Trust, 6.102%, due 07/15/33 637,312
5,000 S Nexstar Finance, Inc., 12.000%,
due 04/01/08 5,625
680,000 @@,# PF Export Receivables Master
Trust, 3.748%, due 06/01/13 675,182
696,800 @@,# PF Export Receivables Master
Trust, 6.436%, due 06/01/15 697,319
5,000 Technical Olympic USA, Inc.,
9.000%, due 07/01/10 5,300
10,000 #,L Universal City Development
Partners, 11.750%,
due 04/01/10 11,300
315,000 # Wachovia Capital Trust V,
7.965%, due 06/01/27 383,170
---------------
10,446,149
---------------
ELECTRIC: 2.4%
335,000 # Calpine Corp., 6.853%,
due 07/15/07 315,319
360,000 #,S,L Consumers Energy Co.,
4.250%, due 04/15/08 365,260
667,000 #,S Consumers Energy Co.,
4.800%, due 02/17/09 684,854
45,000 L Homer City Funding LLC,
8.734%, due 10/01/26 46,350
910,000 # Indianapolis Power & Light,
6.300%, due 07/01/13 934,969
639,000 Nisource Finance Corp.,
6.150%, due 03/01/13 685,368
411,000 Nisource Finance Corp.,
7.625%, due 11/15/05 454,729
911,000 #,S Ohio Edison Co., 4.000%,
due 05/01/08 901,528
1,310,000 Ohio Power Co., 6.375%,
due 07/15/33 1,334,892
600,000 # Oncor Electric Delivery Co.,
6.375%, due 01/15/15 659,819
490,000 Penn Electric Co., 6.625%,
due 04/01/19 519,478
535,000 #,S PG&E Corp., 6.875%,
due 07/15/08 564,425
523,000 #,L TXU Energy Co., 7.000%,
due 03/15/13 569,734
---------------
8,036,725
---------------
ELECTRONICS: 0.0%
50,000 Fisher Scientific Intl., 8.125%,
due 05/01/12 53,375
40,000 Stoneridge, Inc., 11.500%,
due 05/01/12 45,900
---------------
99,275
---------------
ENTERTAINMENT: 0.0%
$ 45,000 S Carmike Cinemas, Inc.,
10.375%, due 02/01/09 $ 47,475
---------------
47,475
---------------
ENVIRONMENTAL CONTROL: 0.1%
403,000 Allied Waste North America,
7.625%, due 01/01/06 423,150
---------------
423,150
---------------
FOOD: 1.3%
65,000 Great Atlantic & Pacific Tea Co.,
9.125%, due 12/15/11 61,425
292,000 L Kroger Co., 5.500%,
due 02/01/13 305,973
427,000 Kroger Co., 7.250%,
due 06/01/09 497,451
784,000 Safeway, Inc., 4.800%,
due 07/16/07 826,366
1,150,000 Supervalu, Inc., 7.875%,
due 08/01/09 1,345,672
1,077,000 Tyson Foods, Inc., 7.250%,
due 10/01/06 1,200,370
---------------
4,237,257
---------------
FOREST PRODUCTS & PAPER: 0.7%
570,000 @@ Abitibi-Consolidated, Inc.,
6.950%, due 12/15/06 594,582
321,000 @@,S Abitibi-Consolidated, Inc.,
6.950%, due 04/01/08 330,760
472,000 S Fort James Corp., 6.625%,
due 09/15/04 486,160
60,000 Georgia-Pacific Corp., 9.375%,
due 02/01/13 67,275
742,000 Weyerhaeuser Co., 6.875%,
due 12/15/33 787,207
---------------
2,265,984
---------------
HOME BUILDERS: 0.0%
30,000 Beazer Homes USA, Inc.,
8.375%, due 04/15/12 32,550
10,000 # K. Hovnanian Enterprises, Inc.,
7.750%, due 05/15/13 10,350
15,000 Meritage Corp., 9.750%,
due 06/01/11 16,500
15,000 Ryland Group, Inc., 8.000%,
due 08/15/06 16,144
30,000 Ryland Group, Inc., 9.125%,
due 06/15/11 33,937
---------------
109,481
---------------
INSURANCE: 0.8%
839,000 # Farmers Insurance Exchange,
8.625%, due 05/01/24 858,266
644,000 #,S Monumental Global Funding II,
3.850%, due 03/03/08 658,686
1,043,000 #,L Zurich Capital Trust I, 8.376%,
due 06/01/37 1,199,362
---------------
2,716,314
---------------
</Table>
See Accompanying Notes to Financial Statements
81
<Page>
ING
Intermediate
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
LODGING: 0.5%
$ 40,000 S,L Hilton Hotels Corp., 7.625%,
due 05/15/08 $ 44,000
674,000 MGM Mirage, 6.000%,
due 10/01/09 680,739
20,000 Park Place Entertainment Corp.,
7.000%, due 04/15/13 20,775
403,000 Park Place Entertainment Corp.,
9.375%, due 02/15/07 446,323
403,000 Starwood Hotels & Resorts
Worldwide, Inc., 7.375%,
due 05/01/07 434,233
---------------
1,626,070
---------------
MEDIA: 0.5%
25,000 Allbritton Communications Co.,
7.750%, due 12/15/12 25,625
330,000 L AOL Time Warner, Inc., 6.875%,
due 05/01/12 371,001
20,000 DirecTV Holdings LLC, 8.375%,
due 03/15/13 22,650
271,000 # Echostar DBS Corp., 4.410%,
due 10/01/08 277,436
373,000 # Echostar DBS Corp., 5.750%,
due 10/01/08 375,331
5,000 S Granite Broadcasting Corp.,
8.875%, due 05/15/08 4,831
60,000 Granite Broadcasting Corp.,
10.375%, due 05/15/05 59,400
10,000 Gray Television, Inc., 9.250%,
due 12/15/11 11,075
15,000 S,L Paxson Communications Corp.,
10.750%, due 07/15/08 15,919
30,000 Salem Communications Holding
Corp., 9.000%, due 07/01/11 32,438
445,000 Time Warner, Inc., 6.950%, due
01/15/28 471,655
---------------
1,667,361
---------------
MISCELLANEOUS MANUFACTURING: 0.3%
1,120,000 General Electric Co., 5.000%,
due 02/01/13 1,150,269
5,000 L SPX Corp., 7.500%,
due 01/01/13 5,288
---------------
1,155,557
---------------
MULTI-NATIONAL: 0.6%
946,000 @@ Corp Andina de Fomento CAF,
5.200%, due 05/21/13 939,576
913,000 @@ Corp Andina de Fomento CAF,
6.875%, due 03/15/12 1,015,809
---------------
1,955,385
---------------
OIL AND GAS: 2.3%
721,000 Amerada Hess Corp., 5.900%,
due 08/15/06 777,740
655,000 L Amerada Hess Corp., 7.125%,
due 03/15/33 690,985
15,000 # Energy Partners Ltd., 8.750%,
due 08/01/10 15,450
923,000 Enterprise Products Partners LP,
6.875%, due 03/01/33 998,154
2,384,000 @@,+ Husky Oil Co., 8.900%,
due 08/15/28 2,804,179
$ 46,000 S Nuevo Energy Co., 9.500%,
due 06/01/08 $ 48,588
1,149,000 L Pemex Project Funding Master
Trust, 7.375%, due 12/15/14 1,240,920
490,000 L Valero Energy Corp., 7.500%,
due 04/15/32 547,348
499,000 Valero Energy Corp., 8.750%,
due 06/15/30 624,210
---------------
7,747,574
---------------
PACKAGING AND CONTAINERS: 0.6%
50,000 Greif, Inc., 8.875%, due
08/01/12 54,375
911,000 #,L Sealed Air Corp., 5.625%,
due 07/15/13 924,578
1,019,000 #,S Sealed Air Corp., 6.950%,
due 05/15/09 1,140,374
---------------
2,119,327
---------------
PIPELINES: 0.7%
926,000 L CenterPoint Energy Resources
Corp., 8.125%, due 07/15/05 993,508
184,000 Duke Energy Field Services LLC,
7.500%, due 08/16/05 201,886
25,000 GulfTerra Energy Finance Corp.,
10.625%, due 12/01/12 29,438
809,000 Kinder Morgan Energy
Partners LP, 7.300%,
due 08/15/33 936,027
45,000 Southern Natural Gas Co.,
7.350%, due 02/15/31 41,625
20,000 Transcontinental Gas Pipe
Line Corp., 8.875%,
due 07/15/12 22,725
---------------
2,225,209
---------------
REAL ESTATE: 0.7%
875,000 S EOP Operating LP, 7.750%,
due 11/15/07 1,018,461
1,043,000 S Liberty Property LP, 7.750%,
due 04/15/09 1,240,444
---------------
2,258,905
---------------
REITs: 0.6%
580,000 Simon Property Group LP,
4.875%, due 03/18/10 599,143
1,125,000 S Simon Property Group LP,
6.375%, due 11/15/07 1,252,675
---------------
1,851,818
---------------
RETAIL: 0.2%
25,000 Dollar General Corp., 8.625%,
due 06/15/10 27,906
482,000 S Sears Roebuck Acceptance,
6.250%, due 05/01/09 535,961
---------------
563,867
---------------
SAVINGS AND LOANS: 0.3%
985,000 S Washington Mutual, Inc.,
4.375%, due 01/15/08 1,022,505
---------------
1,022,505
---------------
</Table>
See Accompanying Notes to Financial Statements
82
<Page>
ING
Intermediate
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
SEMICONDUCTORS: 0.0%
$ 15,000 AMI Semiconductor, Inc.,
10.750%, due 02/01/13 $ 17,025
10,000 #,L Amkor Technology, Inc.,
7.750%, due 05/15/13 10,100
---------------
27,125
---------------
SOVEREIGN: 0.6%
475,000 @@ Dominican Republic,
9.040%, due 01/23/13 415,710
874,000 @@ Federal Republic of Brazil,
2.188%, due 04/15/12 707,128
478,000 @@ Republic of Ecuador, 10.000%,
due 08/15/30 300,889
293,000 @@ Republic of El Salvador, 7.750%,
due 01/24/23 310,057
402,046 @@ Republic of Panama, 1.938%,
due 07/17/16 345,538
---------------
2,079,322
---------------
TELECOMMUNICATIONS: 3.4%
25,000 #,L ACC Escrow Corp., 10.000%,
due 08/01/11 27,000
15,000 #,S,L American Tower Corp., 9.375%,
due 02/01/09 15,375
623,000 S AT&T Corp., 6.000%, due
03/15/09 671,758
770,000 L AT&T Corp., 7.800%,
due 11/15/11 891,628
365,000 L AT&T Corp., 8.500%,
due 11/15/31 433,660
864,000 AT&T Wireless Services, Inc.,
8.125%, due 05/01/12 1,027,814
5,000 L Crown Castle Intl. Corp.,
10.750%, due 08/01/11 5,575
15,000 S Qwest Communications Intl.,
7.500%, due 11/01/08 14,475
5,000 #,L Qwest Services Corp.,
14.000%, due 12/15/14 6,038
921,000 Sprint Capital Corp., 6.000%,
due 01/15/07 992,012
1,491,000 Sprint Capital Corp., 6.875%,
due 11/15/28 1,459,124
1,648,000 TCI Communications Finance,
9.650%, due 03/31/27 1,954,939
1,015,000 @@ TELUS Corp., 8.000%,
due 06/01/11 1,187,007
1,472,000 L Verizon Florida, Inc.,
6.125%, due 01/15/13 1,613,130
740,000 Verizon Virginia, Inc.,
4.625%, due 03/15/13 729,683
---------------
11,029,218
---------------
Total Corporate Bonds
(Cost $85,706,947) 88,674,337
---------------
U.S. GOVERNMENT AGENCY OBLIGATIONS: 41.2%
FEDERAL HOME LOAN
MORTGAGE CORPORATION: 5.3%
2,553,530 1.245%, due 05/25/31 2,554,280
1,629,076 1.260%, due 04/25/30 1,629,739
1,111,062 1.270%, due 01/25/32 1,112,419
2,249,861 1.460%, due 02/15/32 2,255,784
43,046 1.510%, due 10/15/24 43,079
$ 3,220,000 L 2.875%, due 09/15/05 $ 3,298,575
235,000 4.000%, due 04/15/21 240,773
3,081,499 5.500%, due 05/15/31 3,138,229
2,880,000 5.875%, due 03/21/11 3,172,461
---------------
17,445,339
---------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION: 34.9%
477,796 1.320%, due 11/26/32 476,097
1,345,175 1.510%, due 04/18/28 1,351,436
742,007 1.570%, due 12/25/29 721,256
1,048,086 1.670%, due 01/25/32 1,063,840
3,330,000 L 2.375%, due 04/13/06 3,340,087
975,000 2.859%, due 12/26/29 980,571
3,320,000 L 2.875%, due 05/19/08 3,274,068
3,253,000 4.000%, due 09/02/08 3,342,337
1,734,000 4.000%, due 06/25/16 1,776,441
3,000,000 4.500%, due 10/18/18 TBA 3,025,314
1,509,000 XX 4.750%, due 12/25/42 1,543,660
9,010,000 5.000%, due 10/15/18 TBA 9,232,439
12,535,000 5.000%, due 11/15/33 TBA 12,495,828
5,820,000 L 5.250%, due 04/15/07 6,364,519
85,000 5.500%, due 10/15/18 TBA 87,948
1,606,487 5.500%, due 02/01/23 1,654,173
11,820,000 5.500%, due 11/01/32 TBA 12,015,763
131,013 6.000%, due 08/01/16 136,797
4,500,000 6.000%, due 09/01/17 4,698,832
1,444,047 6.000%, due 11/01/22 1,497,078
2,030,670 6.000%, due 07/25/24 2,143,616
2,564,615 6.000%, due 06/25/27 2,577,455
612,482 6.000%, due 07/25/29 616,101
2,097,078 6.000%, due 08/01/33 2,176,702
18,685,000 6.000%, due 11/15/33 TBA 19,233,872
88,612 6.500%, due 07/01/29 92,476
1,000,100 6.500%, due 08/01/29 1,045,348
1,000,000 6.500%, due 07/25/30 1,061,167
774,003 6.500%, due 06/01/31 807,094
7,642 6.500%, due 06/01/31 7,969
2,527,379 6.500%, due 07/01/31 2,640,072
4,247 6.500%, due 07/01/31 4,428
103,771 6.500%, due 08/01/31 108,207
64,830 6.500%, due 09/01/31 67,657
9,071 6.500%, due 09/01/31 9,459
33,711 6.500%, due 09/01/31 35,152
960,307 6.500%, due 11/01/31 1,001,363
30,522 6.500%, due 11/01/31 31,827
517,634 6.500%, due 04/01/32 539,740
74,352 6.500%, due 04/01/32 77,527
747,156 6.500%, due 06/01/32 779,064
440,713 6.500%, due 06/01/32 459,535
164,133 6.500%, due 07/01/32 171,142
563,093 6.500%, due 07/01/32 587,141
28,950 6.500%, due 07/01/32 30,186
434,957 6.500%, due 07/01/32 453,532
654,349 6.500%, due 07/01/32 682,294
165,530 6.500%, due 07/01/32 172,599
179,097 6.500%, due 08/01/32 186,745
302,794 6.500%, due 08/01/32 315,726
161,067 6.500%, due 08/01/32 167,946
42,757 6.500%, due 08/01/32 44,583
717,118 6.500%, due 09/01/32 747,743
1,310,782 6.500%, due 09/01/32 1,366,762
362,455 6.500%, due 01/01/33 377,934
</Table>
See Accompanying Notes to Financial Statements
83
<Page>
ING
Intermediate
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (CONTINUED)
$ 490,292 6.500%, due 02/01/33 $ 511,206
11,111,602 6.565%, due 02/17/29 932,817
25,554 7.000%, due 09/01/28 27,084
25,975 7.000%, due 03/01/30 27,515
26,055 7.000%, due 12/01/31 27,584
26,283 7.000%, due 02/01/32 27,818
1,895,934 7.000%, due 04/01/32 2,007,209
284,972 7.000%, due 06/01/32 301,550
1,318,632 7.500%, due 12/25/41 1,446,787
---------------
115,208,218
---------------
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION: 1.0%
2,000,000 6.000%, due 10/01/32 TBA 2,077,500
209,693 7.000%, due 09/15/29 223,234
2,616,214 7.130%, due 06/16/31 320,482
234,784 8.000%, due 01/20/31 251,981
74,159 10.000%, due 03/15/19 84,162
60,763 10.000%, due 01/15/21 69,045
119,144 10.000%, due 01/15/21 135,383
94,091 10.000%, due 01/15/21 106,915
---------------
3,268,702
---------------
Total U.S. Government
Agency Obligations
(Cost $135,546,175) 135,922,259
---------------
U.S. TREASURY OBLIGATIONS: 12.4%
U.S. TREASURY BONDS: 1.8%
5,436,000 S,L 5.375%, due 02/15/31 5,835,209
---------------
5,835,209
---------------
U.S. TREASURY NOTES: 10.6%
19,252,000 S,L 2.000%, due 08/31/05 19,465,582
300,000 L 2.375%, due 08/15/06 304,254
2,500,000 S,L 3.000%, due 01/31/04 2,517,190
3,483,000 L 3.125%, due 09/15/08 3,532,525
9,191,000 S,L 4.250%, due 08/15/13 9,424,727
---------------
35,244,278
---------------
Total U.S. Treasury
Obligations (Cost
$40,259,615) 41,079,487
---------------
ASSET-BACKED SECURITIES: 5.6%
AUTOMOBILE ASSET BACKED SECURITIES: 0.8%
1,500,000 Capital Auto Receivables
Asset Trust, 2.750%,
due 04/16/07 1,528,208
910,000 Nissan Auto Receivables
Owner Trust, 2.610%,
due 07/15/08 919,459
200,000 USAA Auto Owner Trust,
2.040%, due 02/16/10 199,146
---------------
2,646,813
---------------
CREDIT CARD ASSET BACKED SECURITIES: 1.0%
560,000 Bank One Issuance Trust,
4.540%, due 09/15/10 574,548
530,000 Capital One Master Trust,
4.900%, due 03/15/10 566,035
1,335,000 Citibank Credit Card Issuance
Trust, 5.650%, due 06/16/08 1,451,851
$ 650,000 Fleet Credit Card Master
Trust II, 2.400%, due
07/15/08 $ 656,335
---------------
3,248,769
---------------
HOME EQUITY ASSET BACKED SECURITIES: 3.7%
3,582,491 EQCC Trust, 1.420%, due
11/25/31 3,587,553
975,000 Equity One Abs, Inc., 2.976%,
due 09/25/33 987,848
1,198,111 New Century Home Equity
Loan Trust, 1.400%,
due 07/25/30 1,197,040
2,267,087 New Century Home Equity
Loan Trust, 1.400%,
due 06/20/31 2,265,498
846,289 Residential Asset Securities
Corp., 1.350%,
due 09/25/31 844,816
1,444,353 Residential Asset Securities
Corp., 1.420%,
due 06/25/32 1,446,473
488,000 Residential Funding
Mortgage Securities II,
3.450%, due 01/25/16 498,508
1,500,000 Saxon Asset Securities Trust,
3.960%, due 06/25/33 1,506,268
---------------
12,334,004
---------------
OTHER ASSET BACKED SECURITIES: 0.1%
210,932 @@,#,I,S Garanti Trade Payment
Rights Master Trust,
10.810%, due 06/15/04 213,947
---------------
213,947
---------------
Total Asset Backed Securities
(Cost $18,372,720) 18,443,533
---------------
COLLATERALIZED MORTGAGE OBLIGATION: 23.7%
AGENCY COLLATERAL MORTGAGE
OBLIGATION: 0.5%
1,525,675 Vendee Mortgage Trust,
5.847%, due 09/15/23 1,566,091
---------------
1,566,091
---------------
COMMERCIAL MORTGAGE
BACKED SECURITIES: 5.9%
1,170,000 Chase Manhattan Bank - First
Union National Bank,
7.439%, due 08/15/31 1,376,867
950,000 CS First Boston Mortgage
Securities Corp., 3.382%,
due 05/15/38 919,151
702,635 CS First Boston Mortgage
Securities Corp., 3.727%,
due 03/15/35 705,113
688,000 DLJ Commercial Mortgage
Corp., 7.300%,
due 06/10/32 805,714
1,050,000 GE Capital Commercial
Mortgage Corp., 5.994%,
due 12/10/35 1,163,949
645,000 JP Morgan Chase Commercial
Mortgage Securities Corp.,
5.161%, due 10/12/37 673,493
</Table>
See Accompanying Notes to Financial Statements
84
<Page>
ING
Intermediate
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
COMMERCIAL MORTGAGE
BACKED SECURITIES (CONTINUED)
$ 1,350,000 JP Morgan Chase Commercial
Mortgage Securities Corp.,
6.162%, due 05/12/34 $ 1,504,618
1,780,000 JP Morgan Chase Commercial
Mortgage Securities Corp.,
6.244%, due 04/15/35 1,984,191
1,330,000 LB-UBS Commercial Mortgage
Trust, 4.659%, due 12/15/26 1,369,364
1,040,000 LB-UBS Commercial Mortgage
Trust, 6.226%, due 03/15/26 1,162,887
400,000 Morgan Stanley Capital I,
7.020%, due 03/15/32 462,244
1,780,000 Mortgage Capital Funding, Inc.,
6.663%, due 03/18/30 2,010,970
4,046,431 Prudential Commercial
Mortgage Trust, 3.669%,
due 02/11/36 4,055,133
400,000 Salomon Brothers Mortgage
Securities VII, 7.520%, due
12/18/09 473,290
750,000 Wachovia Bank Commercial
Mortgage Trust, 3.989%,
due 06/15/35 717,404
---------------
19,384,388
---------------
WHOLE LOAN COLLATERALLIZED MORTGAGE: 15.9%
987,996 ABN Amro Mortgage Corp,
1.610%, due 03/25/18 991,665
825,654 ABN Amro Mortgage Corp.,
6.500%, due 02/25/32 839,786
1,644,529 Bank of America Alternative
Loan Trust, 5.500%, due
02/25/33 1,701,480
680,863 Bank of America Mortgage
Securities, 4.413%, due
03/25/33 693,430
237,038 Bank of America Mortgage
Securities, 5.242%, due
02/25/32 241,538
61,087 Bank of America Mortgage
Securities, 6.250%, due
10/25/32 61,090
245,360 Bank of America Mortgage
Securities, 6.500%, due
01/25/32 252,868
490,719 Bank of America Mortgage
Securities, 6.500%, due
01/25/32 506,790
4,546,133 Bear Stearns Asset Backed
Securities, Inc., 5.625%,
due 11/25/32 4,641,383
1,085,481 CitiCorp Mortgage Securities,
Inc., 1.570%, due 03/25/33 1,086,888
71,165 CitiCorp Mortgage Securities,
Inc., 6.250%, due 11/25/16 72,385
4,105,581 Countrywide Alternative Loan
Trust, 1.670%, due 04/25/33 4,114,757
5,618,741 Countrywide Home Loans,
1.510%, due 08/25/18 5,576,709
1,324,638 Countrywide Home Loans,
1.620%, due 04/25/18 1,330,814
512,537 Countrywide Home Loans,
1.620%, due 11/25/32 513,281
$ 292,368 GSR Mortgage Loan Trust,
1.820%, due 07/25/32 $ 293,209
2,932,905 MASTR Alternative Loans
Trust, 6.500%, due 05/25/33 2,993,859
849,442 MASTR Asset Securitization
Trust, 8.000%, due 06/25/33 879,738
4,200,000 +,XX MLCC Mortgage Investors Inc,
1.440%, due 10/25/28 4,200,000
358,139 Residential Accredit Loans,
Inc., 7.750%, due 05/25/27 357,940
9,384,551 Residential Funding Mortgage
Sec I, 1.560%, due 11/25/18 9,348,468
2,378,462 Washington Mutual, 1.620%,
due 01/25/18 2,384,319
3,010,150 Washington Mutual, 1.720%,
due 03/25/33 3,016,738
4,738,805 Washington Mutual, 5.000%,
due 06/25/18 4,892,103
1,460,000 Wells Fargo Mortgage Backed
Securities Trust, 4.500%,
due 08/25/18 1,395,983
101,824 Wells Fargo Mortgage Backed
Securities Trust, 6.000%,
due 12/25/16 103,845
---------------
52,491,066
---------------
WHOLE LOAN COLLATERALLIZED PLANNED
AMORTIZATION CLASS: 1.4%
2,178,202 MASTR Alternative Loans Trust,
8.500%, due 05/25/33 2,321,432
1,672,534 Residential Funding Mortgage
Sec I, 1.520%, due 11/25/17 1,681,304
611,305 Residential Funding Securities
Corp., 8.500%, due 05/25/33 679,042
---------------
4,681,778
---------------
Total Collateralized Mortgage
Obligation (Cost
$78,081,436) 78,123,323
---------------
OTHER BONDS: 3.4%
SOVEREIGN: 3.4%
571,000 @@ ARG Boden, 0.000%, due
08/03/12 358,874
740,000 @@ Brazilian Government Intl. Bond,
10.000%, due 08/07/11 728,900
515,000 @@ Brazilian Government Intl. Bond,
11.000%, due 08/17/40 489,250
943,000 @@,XX Central Bank of Nigeria,
0.000%, due 01/05/10 365,413
700,000 @@ Colombia Government Intl.
Bond, 10.000%, due 01/23/12 764,750
336,000 @@,L Colombia Government Intl.
Bond, 11.750%, due 02/25/20 395,640
518,000 @@,S,L Mexico Government Intl. Bond,
4.625%, due 10/08/08 529,655
809,000 @@,L Mexico Government Intl. Bond,
6.625%, due 03/03/15 851,876
389,000 @@,L Peru Government Intl. Bond,
9.125%, due 02/21/12 434,708
711,000 @@ Philippine Government Intl.
Bond, 9.875%, due 01/15/19 775,879
476,000 @@ Republic of Bulgaria, 8.250%,
due 01/15/15 544,699
</Table>
See Accompanying Notes to Financial Statements
85
<Page>
ING
Intermediate
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
SOVEREIGN (CONTINUED)
$ 202,000 @@ Republic of Peru, 4.500%,
due 03/07/17 $ 178,940
1,844,000 @@ Russia Government Intl. Bond,
5.000%, due 03/31/30 1,747,189
135,000 @@,L Turkey Government Intl. Bond,
9.500%, due 01/15/14 138,038
1,037,000 @@,L Turkey Government Intl. Bond,
12.375%, due 06/15/09 1,221,067
150,000 @@,# Ukraine Government Intl. Bond,
7.650%, due 06/11/13 150,000
168,562 @@ Ukraine Government Intl. Bond,
11.000%, due 03/15/07 187,797
385,000 @@,L Uruguay Government Intl. Bond,
7.500%, due 03/15/15 298,375
659,000 @@ Venezuela Government Intl.
Bond, 9.250%, due 09/15/27 512,702
634,000 @@,# Venezuela Government Intl.
Bond, 10.750%, due 09/19/13 586,450
---------------
Total Other Bonds
(Cost $10,623,097) 11,260,202
---------------
<Caption>
SHARES VALUE
- ---------------------------------------------------------------------------------------------------
PREFERRED STOCK: 0.0%
MEDIA: 0.0%
100 Cablevision Systems Corp. 10,475
27 @ Paxson Communications Corp. 2,392
550 Primedia, Inc. 52,937
---------------
Total Preferred Stock
(Cost $65,226) 65,804
---------------
<Caption>
NUMBER OF
WARRANTS VALUE
- ---------------------------------------------------------------------------------------------------
WARRANTS: 0.0%
TELECOMMUNICATIONS: 0.0%
20 American Tower Corp.,
Expires 8/1/2008 2,460
---------------
Total Warrants
(Cost $1,502) 2,460
---------------
Total Long Term Investments
(Cost $368,656,718 ) 373,571,405
---------------
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 3.8%
REPURCHASE AGREEMENT: 3.8%
$ 12,634,000 Morgan Stanley Repurchase
Agreement dated 09/30/03,
1.050%, due 10/01/03,
$12,634,368 to be received
upon repurchase (Collateralized
by various U.S. Government
Securities, 2.750%-6.500%,
market value $12,959,452,
due 11/15/05-03/14/08) $ 12,634,000
---------------
Total Short-term Investments
(Cost $12,634,000) 12,634,000
---------------
TOTAL INVESTMENTS IN
SECURITIES (COST
$381,290,718)* 116.9% $ 386,205,405
OTHER ASSETS AND
LIABILITIES-NET (16.9) (55,894,921)
----- ---------------
NET ASSETS 100.0% $ 330,310,484
===== ===============
</Table>
@ Non-income producing security
@@ Foreign Issuer
PLC Public Limited Company
REITs Real Estate Investment Trusts
TBA To be announced
+ Step-up basis bonds. Interest rates shown reflect current and future
coupon rates.
# Securities with purchases pursuant to Rule 144A, under the Securities Act
of 1933 and may not be resold subject to that rule except to qualified
institutional buyers. These securities have been determined to be liquid
under the guidelines established by the Funds' Board of
Directors/Trustees.
I Illiquid Security
L Loaned security, a portion or all of the security is on loan at
September 30, 2003.
XX Value of securities obtained from one or more dealers making markets in
the securities which have been adjusted based on the Fund's valuation
procedures.
* Cost for federal income tax purposes is the same as for financial
statement purposes. Net unrealized appreciation consists of:
<Table>
Gross Unrealized Appreciation $ 6,221,204
Gross Unrealized Depreciation (1,306,517)
---------------
Net Unrealized Appreciation $ 4,914,687
===============
</Table>
See Accompanying Notes to Financial Statements
86
<Page>
ING
National Tax Exempt
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
<Table>
<Caption>
PRINCIPAL
AMOUNT RATINGS(1) VALUE
- ------------------------------------------------------------------------------------
MUNICIPAL BONDS: 98.6%
CALIFORNIA: 10.5%
$ 500,000 California State Department
of Veterans Affairs, 4.700%,
due 12/01/09 Aa2/AA- $ 534,070
1,000,000 California State Department
of Water Resources, 5.500%,
due 05/01/07 A3/BBB+ 1,110,070
1,000,000 California State General
Obligation, 5.000%, due
02/01/14 A2/A 1,065,500
200,000 Los Angeles County
Metropolitan Transportation
Authority, 6.000%, due
07/01/08 A1/A+ 233,668
-------------
2,943,308
-------------
COLORADO: 3.9%
1,000,000 Interlocken Metropolitan
District Colorado Reference,
Series A, 5.750%, due
12/15/19 NR/AA 1,081,050
-------------
1,081,050
-------------
FLORIDA: 3.9%
1,000,000 Florida State Board of
Education, Series A, MBIA
Insured, 5.000%, due
06/01/14 NR/AAA 1,086,260
-------------
1,086,260
-------------
ILLINOIS: 8.9%
1,000,000 Chicago Illinois Skyway Toll
Bridge, 5.500%, due
01/01/31 Aaa/AAA 1,058,680
1,250,000 De Kalb-Ogle Etc. Counties
Community College District
No. 523, Fsa Insured, 5.750%,
due 02/01/11 Aaa/NR 1,428,050
-------------
2,486,730
-------------
MASSACHUSETTS: 7.6%
1,000,000 Massachusetts Housing
Finance Agency, 3.700%,
due 12/01/09 Aa3/AA- 1,039,640
5,000 Massachusetts Housing
Finance Agency, 6.375%,
due 04/01/21 A1/A+ 5,110
1,000,000 Massachusetts State Port
Authority Revenue, Series C,
5.750%, due 07/01/29 Aa3/A+ 1,071,180
-------------
2,115,930
-------------
NEVADA: 4.1%
1,100,000 Washoe County Nevada Gas &
Water Facilities, 6.300%, due
12/01/14 Aaa/AAA 1,142,240
-------------
1,142,240
-------------
NEW YORK: 22.5%
750,000 New York City Industrial
Development Agency,
6.250%, due 11/15/06 Aaa/AAA 806,805
$ 1,000,000 New York NY, General
Obligation, Series A, 5.625%,
due 12/01/13 A2/A $ 1,101,180
1,000,000 New York NY, General
Obligation, Series B, 5.000%,
due 08/01/07 A2/A 1,095,670
1,000,000 New York State Dormitory
Authority Revenue, Series A,
5.500%, due 07/01/15 Aaa/AAA 1,115,550
1,000,000 New York State Dormitory
Authority Revenue, Series C,
5.250%, due 04/01/16 Aaa/AAA 1,108,470
1,000,000 Tobacco Settlement Financing
Authority, 5.000%, due
06/01/10 NR/AA- 1,046,210
-------------
6,273,885
-------------
NORTH CAROLINA: 1.2%
295,000 New Hanover County, 5.750%,
due 11/01/12 Aa2/AA 339,678
-------------
339,678
-------------
OHIO: 0.9%
225,000 Euclid City School District,
5.200%, due 12/01/10 Aaa/AAA 248,015
-------------
248,015
-------------
OKLAHOMA: 8.4%
1,000,000 Oklahoma State Industrial
Authority Revenue
Reference, Health System
Obligation Group, Series A,
6.000%, due 08/15/19 Aaa/AAA 1,136,920
1,000,000 Payne County Oklahoma
Economic Development
Authority, Student Housing
Revenue, Collegiate Housing
Foundation, Series A,
6.375%, due 06/01/30 Baa3/NR 1,211,100
-------------
2,348,020
-------------
PENNSYLVANIA: 7.3%
1,000,000 Pennsylvania State Finance
Authority, 6.600%, due
11/01/09 NR/A 1,024,430
1,000,000 Philadelphia Pennsylvania
Hospitals & Higher
Education Facilities
Authority Revenue,
Jefferson Health System,
5.000%, due 05/15/18 A1/AA- 1,015,460
-------------
2,039,890
-------------
RHODE ISLAND: 7.8%
1,000,000 Rhode Island Clean Water
Finance Agency Revenue,
5.000%, due 10/01/14 Aaa/AAA 1,090,570
1,000,000 Rhode Island State &
Providence Plantations,
5.000%, due 06/01/15 Aaa/AAA 1,084,120
-------------
2,174,690
-------------
</Table>
See Accompanying Notes to Financial Statements
87
<Page>
ING
National Tax Exempt
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT RATINGS(1) VALUE
- ------------------------------------------------------------------------------------
TEXAS: 8.0%
$ 1,000,000 Laredo Texas Independent
School District, General
Obligation, PSF Guaranteed,
5.500%, due 08/01/20 Aaa/AAA $ 1,093,380
1,050,000 San Felipe Del Rio Texas
Independent School District,
General Obligation, PSF
Guaranteed, 5.500%, due
08/15/19 Aaa/AAA 1,155,662
-------------
2,249,042
-------------
WASHINGTON: 3.6%
1,000,000 Seattle Washington Municipal
Light & Power Revenue,
Series B, MBIA Insured,
5.000%, due 06/01/24 Aaa/AAA 1,013,970
-------------
1,013,970
-------------
Total Municipal Bonds
(Cost $25,731,787) 27,542,708
-------------
27,542,708
-------------
TOTAL INVESTMENTS IN SECURITIES
(COST $25,731,787)* 98.6% $ 27,542,708
OTHER ASSETS AND LIABILITIES-NET 1.4 398,323
----- -------------
NET ASSETS 100.0% $ 27,941,031
===== =============
</Table>
* Cost for federal income tax purposes is the same as for financial statement
purposes. Net unrealized appreciation consists of:
<Table>
Gross Unrealized Appreciation $ 1,832,734
Gross Unrealized Depreciation (21,813)
-------------
Net Unrealized Appreciation $ 1,810,921
=============
</Table>
(1) Credit ratings are provided by Moody's Investor Service, Inc. and Standard
and Poor's Rating Group (Unaudited)
MBIA Municipal Bond Insurance Association
FSA Financial Security Assurance
PSF Permanent School Fund
See Accompanying Notes to Financial Statements
88
<Page>
ING
Strategic
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------
CORPORATE BONDS: 27.0%
AIRLINES: 1.0%
$ 48,788 American Airlines, Inc., 6.977%,
due 05/23/21 $ 42,165
300,000 American Airlines, Inc., 7.024%,
due 10/15/09 293,247
68,569 Continental Airlines, Inc., 6.545%,
due 08/02/20 67,180
55,311 US Airways Pass Through Trust,
6.850%, due 01/30/18 51,832
-------------
454,424
-------------
AUTO MANUFACTURERS: 1.2%
122,000 Ford Motor Co., 6.375%, due
02/01/29 99,645
157,000 Ford Motor Co., 6.625%, due
10/01/28 132,705
320,000 L General Motors Corp., 8.375%,
due 07/15/33 335,535
-------------
567,885
-------------
BANKS: 4.2%
84,000 Bank of America Corp., 6.375%,
due 02/15/08 94,577
135,000 # Bank of New York Institutional
Capital Trust A, 7.780%, due
12/01/26 151,377
21,000 # BankAmerica Institutional, Class B,
7.700%, due 12/31/26 23,704
86,000 Barnett Capital I, 8.060%, due
12/01/26 100,136
25,000 Barnett Capital II, 7.950%, due
12/01/26 28,787
190,000 @@,# Credit Suisse First Boston/London,
7.900%, due 05/29/49 216,765
299,000 # Dresdner Funding Trust I, 8.151%,
due 06/30/31 328,036
86,000 FBS Capital I, 8.090%, due
11/15/26 98,199
175,000 First Union Institutional Capital II,
7.850%, due 01/01/27 200,629
141,000 @@ HSBC Holdings PLC, 7.500%, due
07/15/09 167,346
84,000 M&T Bank Corp., 3.850%, due
04/01/13 84,337
239,000 RBS Capital Trust I, 4.709%, due
12/29/49 231,698
110,000 Wells Fargo & Co., 3.120%, due
08/15/08 109,711
125,000 #,L Westpac Capital Trust III, 5.819%,
due 12/29/49 130,229
-------------
1,965,531
-------------
BEVERAGES: 0.8%
158,000 @@,# Cia Brasileira de Bebidas, 8.750%,
due 09/15/13 160,369
44,000 @@,# Coca-Cola HBC Finance BV,
5.125%, due 09/17/13 45,349
43,000 @@,#,L Coca-Cola HBC Finance BV,
5.500%, due 09/17/15 45,293
140,000 # Miller Brewing Co., 4.250%,
due 08/15/08 143,992
-------------
395,003
-------------
CHEMICALS: 0.1%
$ 31,000 L Dow Chemical Co., 5.750%, due
11/15/09 $ 33,220
-------------
33,220
-------------
DIVERSIFIED FINANCIAL SERVICES: 3.1%
122,000 Boeing Capital Corp., 7.375%,
due 09/27/10 141,994
175,000 @@,#,XX Brazilian Merchant Voucher
Receivables Ltd., 5.911%, due
06/15/11 172,594
82,000 Capital One Bank, 5.750%, due
09/15/10 86,431
21,000 CitiCorp Capital I, 7.933%, due
02/15/27 24,428
139,000 Countrywide Home Loans, Inc.,
4.250%, due 12/19/07 143,388
145,000 # Farmers Exchange Capital, 7.050%,
due 07/15/28 136,073
32,000 L Ford Motor Credit Co., 5.625%,
due 10/01/08 32,401
62,000 Ford Motor Credit Co., 7.375%,
due 10/28/09 66,167
126,000 General Electric Capital Corp.,
3.500%, due 08/15/07 128,446
60,000 General Motors Acceptance
Corp., 6.625%, due 10/15/05 63,954
99,000 L Lehman Brothers Holdings, Inc.,
3.500%, due 08/07/08 99,309
95,000 XX,# Mangrove Bay Pass-Through Trust,
6.102%, due 07/15/33 93,868
554 @@,I Nordea Kredit
Realkreditaktieselskab, 6.000%,
due 07/01/29 90
95,000 @@,# PF Export Receivables Master
Trust, 3.748%, due 06/01/13 94,327
97,455 @@,# PF Export Receivables Master
Trust, 6.436%, due 06/01/15 97,527
50,000 # Wachovia Capital Trust V, 7.965%,
due 06/01/27 60,821
-------------
1,441,818
-------------
ELECTRIC: 2.7%
47,000 # Calpine Corp., 6.853%, due
07/15/07 44,239
149,000 # Consumers Energy Co., 4.800%,
due 02/17/09 152,988
56,347 I East Coast Power LLC, 7.536%,
due 06/30/17 58,037
94,000 @@ Empresa Nacional de Electricidad
SA/Chile, 8.500%, due 04/01/09 102,300
20,000 @@,I Enersis SA/Cayman Island, 6.600%,
due 12/01/26 20,055
129,000 # Indianapolis Power & Light,
6.300%, due 07/01/13 132,540
92,000 Nisource Finance Corp., 6.150%,
due 03/01/13 98,676
59,000 Nisource Finance Corp., 7.625%,
due 11/15/05 65,277
131,000 # Ohio Edison Co., 4.000%, due
05/01/08 129,638
195,000 Ohio Power Co., 6.375%, due
07/15/33 198,706
</Table>
See Accompanying Notes to Financial Statements
89
<Page>
ING
Strategic
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------
ELECTRIC (CONTINUED)
$ 89,000 # Oncor Electric Delivery Co.,
6.375%, due 01/15/15 $ 97,873
71,000 Penn Electric Co., 6.625%, due
04/01/19 75,271
77,000 # TXU Energy Co., 7.000%, due
03/15/13 83,880
-------------
1,259,480
-------------
ENVIRONMENTAL CONTROL: 0.1%
58,000 L Allied Waste North America,
7.625%, due 01/01/06 60,900
-------------
60,900
-------------
FOOD: 1.3%
43,000 Kroger Co., 5.500%, due 02/01/13 45,058
63,000 Kroger Co., 7.250%, due 06/01/09 73,394
114,000 Safeway, Inc., 4.800%, due 07/16/07 120,160
169,000 Supervalu, Inc., 7.875%, due 197,756
158,000 Tyson Foods, Inc., 7.250%, due
10/01/06 176,099
-------------
612,467
-------------
FOREST PRODUCTS & PAPER: 0.7%
83,000 @@ Abitibi-Consolidated, Inc., 6.950%,
due 12/15/06 86,580
47,000 @@ Abitibi-Consolidated, Inc., 6.950%,
due 04/01/08 48,429
69,000 Fort James Corp., 6.625%, due
09/15/04 71,070
110,000 Weyerhaeuser Co., 6.875%, due
12/15/33 116,701
-------------
322,780
-------------
INSURANCE: 0.8%
134,000 # Farmers Insurance Exchange,
8.625%, due 05/01/24 137,077
94,000 # Monumental Global Funding II,
3.850%, due 03/03/08 96,144
132,000 # Zurich Capital Trust I, 8.376%,
due 06/01/37 151,788
-------------
385,009
-------------
IRON/STEEL: 0.0%
25,000 Armco, Inc., 9.000%, due
09/15/07 18,125
-------------
18,125
-------------
LODGING: 0.5%
100,000 MGM Mirage, 6.000%, due
10/01/09 101,000
58,000 Park Place Entertainment Corp.,
9.375%, due 02/15/07 64,235
59,000 Starwood Hotels & Resorts
Worldwide, Inc., 7.375%, due
05/01/07 63,573
-------------
228,808
-------------
MEDIA: 0.7%
48,000 L AOL Time Warner, Inc., 6.875%,
due 05/01/12 53,964
39,000 # Echostar DBS Corp., 0.000%, due
10/01/08 39,926
54,000 # Echostar DBS Corp., 5.750%, due
10/01/08 54,338
$ 100,000 L Mediacom Broadband LLC,
11.000%, due 07/15/13 $ 105,750
66,000 Time Warner, Inc., 6.950%, due
01/15/28 69,953
-------------
323,931
-------------
MISCELLANEOUS MANUFACTURING: 0.4%
170,000 General Electric Co., 5.000%, due
02/01/13 174,594
-------------
174,594
-------------
MULTI-NATIONAL: 0.6%
138,000 @@ Corp Andina de Fomento CAF,
5.200%, due 05/21/13 137,063
135,000 @@ Corp Andina de Fomento CAF,
6.875%, due 03/15/12 150,202
-------------
287,265
-------------
OIL AND GAS: 2.4%
105,000 Amerada Hess Corp., 5.900%,
due 08/15/06 113,263
95,000 L Amerada Hess Corp., 7.125%,
due 03/15/33 100,219
134,000 Enterprise Products Partners LP,
6.875%, due 03/01/33 144,911
355,000 @@ Husky Oil Co., 8.900%, due 417,569
170,000 L Pemex Project Funding Master
Trust, 7.375%, due 12/15/14 183,600
73,000 Valero Energy Corp., 7.500%,
due 04/15/32 81,544
73,000 Valero Energy Corp., 8.750%,
due 06/15/30 91,317
-------------
1,132,423
-------------
PACKAGING AND CONTAINERS: 0.6%
134,000 #,L Sealed Air Corp., 5.625%, due
07/15/13 135,997
150,000 # Sealed Air Corp., 6.950%, due
05/15/09 167,867
-------------
303,864
-------------
PIPELINES: 0.6%
136,000 CenterPoint Energy Resources
Corp., 8.125%, due 07/15/05 145,915
118,000 Kinder Morgan Energy
Partners LP, 7.300%,
due 08/15/33 136,528
-------------
282,443
-------------
REAL ESTATE: 0.7%
127,000 EOP Operating LP, 7.750%, due
11/15/07 147,822
153,000 Liberty Property LP, 7.750%, due
04/15/09 181,964
-------------
329,786
-------------
REITs: 0.6%
85,000 Simon Property Group LP,
4.875%, due 03/18/10 87,805
165,000 Simon Property Group LP,
6.375%, due 11/15/07 183,726
-------------
271,531
-------------
</Table>
See Accompanying Notes to Financial Statements
90
<Page>
ING
Strategic
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------
RETAIL: 0.2%
$ 65,000 Sears Roebuck Acceptance,
6.250%, due 05/01/09 $ 72,277
-------------
72,277
-------------
SAVINGS AND LOANS: 0.3%
142,000 Washington Mutual, Inc.,
4.375%, due 01/15/08 147,407
-------------
147,407
-------------
TELECOMMUNICATIONS: 3.4%
91,000 AT&T Corp., 6.000%, due 03/15/09 98,122
115,000 L AT&T Corp., 7.800%, due 11/15/11 133,165
55,000 L AT&T Corp., 8.500%, due 11/15/31 65,346
128,000 AT&T Wireless Services, Inc.,
8.125%, due 05/01/12 152,269
135,000 Sprint Capital Corp., 6.000%, due
01/15/07 145,409
216,000 Sprint Capital Corp., 6.875%, due
11/15/28 211,382
244,000 TCI Communications Finance,
9.650%, due 03/31/27 289,445
150,000 @@ TELUS Corp., 8.000%, due 06/01/11 175,420
59,000 Verizon Florida, Inc., 6.125%, due
01/15/13 64,657
280,000 Verizon Virginia, Inc., 4.625%, due
03/15/13 276,096
1,000,000 I,** WinStar Communications, Inc.,
0.000%, due 04/15/10 100
-------------
1,611,411
-------------
Total Corporate Bonds
(Cost $12,721,557) 12,682,382
-------------
U.S. GOVERNMENT AGENCY OBLIGATIONS: 43.6%
FEDERAL HOME LOAN MORTGAGE
CORPORATION: 3.2%
480,000 L 2.875%, due 09/15/05 491,712
51,955 5.500%, due 01/01/14 54,022
25,316 5.500%, due 02/01/14 26,323
440,000 5.875%, due 03/21/11 484,682
224,153 6.500%, due 02/01/32 234,132
232,960 7.000%, due 06/01/29 246,216
867 I 9.000%, due 06/01/06 907
-------------
1,537,994
-------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION: 38.6%
480,000 L 2.375%, due 04/13/06 481,454
490,000 L 2.875%, due 05/19/08 483,221
455,000 4.000%, due 09/02/08 467,496
228,000 XX 4.750%, due 12/25/42 233,237
1,300,000 5.000%, due 10/15/18 1,332,094
2,700,000 5.000%, due 11/15/33 2,691,562
850,000 5.250%, due 04/15/07 929,526
400,000 5.500%, due 10/15/18 413,875
1,750,000 5.500%, due 11/01/32 1,778,984
825,000 6.000%, due 09/01/17 861,452
298,224 6.000%, due 07/25/24 314,811
1,281,807 6.000%, due 02/01/32 1,323,191
606,485 6.000%, due 10/01/32 626,111
68,002 6.000%, due 10/01/32 70,203
1,000,000 6.000%, due 11/15/33 1,029,375
21,491 I 6.500%, due 02/01/09 22,773
76,446 6.500%, due 08/01/15 80,793
$ 491,591 6.500%, due 06/01/28 $ 513,511
584,653 6.500%, due 12/01/31 609,649
249,975 6.500%, due 07/01/32 260,573
442,750 6.500%, due 08/01/32 461,658
99,990 6.500%, due 09/01/32 104,261
84,094 6.500%, due 10/01/32 87,685
71,373 7.000%, due 03/01/15 75,964
450,000 7.000%, due 09/01/28 476,950
822,408 7.000%, due 09/01/32 870,252
89,832 7.000%, due 11/01/32 95,058
318,205 7.500%, due 07/01/21 340,073
1,035,881 7.500%, due 02/01/31 1,110,970
8,409 8.000%, due 08/01/30 9,087
861 I 9.500%, due 06/01/05 890
1,343 I 9.500%, due 07/01/06 1,358
1,798 I 9.500%, due 05/01/07 1,809
-------------
18,159,906
-------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION: 1.8%
117,197 6.500%, due 06/15/29 123,221
457,424 6.500%, due 05/15/31 480,848
45,193 7.500%, due 11/15/29 48,403
143,226 8.000%, due 06/20/30 153,741
15,452 8.000%, due 07/15/30 16,700
605 8.500%, due 02/15/21 667
-------------
823,580
-------------
Total U.S. Government Agency Obligations
(Cost $20,135,625) 20,521,480
-------------
U.S. TREASURY OBLIGATIONS: 10.2%
U.S. TREASURY BONDS: 1.8%
793,000 L 5.375%, due 02/15/31 851,236
-------------
851,236
-------------
U.S. TREASURY NOTES: 8.4%
665,000 L 2.000%, due 08/31/05 672,378
607,000 L 2.375%, due 08/15/06 615,607
700,000 S, L 3.000%, due 01/31/04 704,813
836,000 L 3.125%, due 09/15/08 847,887
1,093,000 L 4.250%, due 08/15/13 1,120,795
-------------
3,961,480
-------------
Total U.S. Treasury Obligations
(Cost $4,681,863) 4,812,716
-------------
ASSET-BACKED SECURITIES: 3.3%
AUTOMOBILE ASSET BACKED SECURITIES: 0.6%
300,000 USAA Auto Owner Trust, 2.040%,
due 02/16/10 298,719
-------------
298,719
-------------
COMMERCIAL MORTGAGE BACKED SECURITIES: 0.2%
68,000 GMAC Commercial Mortgage
Securities, Inc., 6.700%, due
04/15/34 78,154
-------------
78,154
-------------
CREDIT CARD ASSET BACKED SECURITIES: 1.5%
85,000 Bank One Issuance Trust, 4.540%,
due 09/15/10 87,208
</Table>
See Accompanying Notes to Financial Statements
91
<Page>
ING
Strategic
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------
CREDIT CARD ASSET BACKED
SECURITIES (CONTINUED)
$ 88,000 Capital One Master Trust, 4.900%,
due 03/15/10 $ 93,983
305,000 Citibank Credit Card Issuance
Trust, 5.650%, due 06/16/08 331,696
156,000 MBNA Credit Card Master Note
Trust, 4.950%, due 06/15/09 168,168
-------------
681,055
-------------
HOME EQUITY ASSET BACKED SECURITIES: 0.5%
207,814 Emergent Home Equity Loan
Trust, 7.080%, due 12/15/28 223,311
-------------
223,311
-------------
OTHER ASSET BACKED SECURITIES: 0.5%
85,000 Chase Funding Mortgage Loan
Asset-Backed Certificates,
2.734%, due 09/25/24 85,199
50,000 Chase Funding Mortgage Loan
Asset-Backed Certificates,
4.045%, due 05/25/33 50,182
115,000 Residential Asset Mortgage
Products, Inc., 2.140%, due
02/25/30 113,670
-------------
249,051
-------------
Total Asset Backed Securities
(Cost $1,517,331) 1,530,290
-------------
COLLATERALIZED MORTGAGE OBLIGATION: 7.5%
COMMERCIAL MORTGAGE BACKED SECURITIES: 5.9%
200,000 CS First Boston Mortgage
Securities Corp., 3.382%, due
05/15/38 193,505
480,000 CS First Boston Mortgage
Securities Corp., 3.861%, due
03/15/36 487,718
64,000 CS First Boston Mortgage
Securities Corp., 7.808%, due
04/14/62 76,645
350,000 DLJ Commercial Mortgage Corp.,
6.240%, due 11/12/31 391,743
925,000 DLJ Commercial Mortgage Corp.,
7.300%, due 06/10/32 1,083,264
160,000 GE Capital Commercial Mortgage
Corp., 5.994%, due 12/10/35 177,364
100,000 JP Morgan Chase Commercial
Mortgage Securities Corp.,
5.161%, due 10/12/37 104,417
250,000 Wachovia Bank Commercial
Mortgage Trust, 3.989%, due
06/15/35 239,135
-------------
2,753,791
-------------
WHOLE LOAN COLLATERALLIZED MORTGAGE: 0.7%
122,792 MASTR Asset Securitization Trust,
8.000%, due 06/25/33 127,172
200,000 Wells Fargo Mortgage Backed
Securities Trust, 4.500%, due
08/25/18 191,230
-------------
318,402
-------------
WL COLLATERALLIZED PLANNED AMORTIZATION
CLASS: 0.9%
$ 314,865 MASTR Alternative Loans Trust,
8.500%, due 05/25/33 $ 335,569
88,036 Residential Funding Securities
Corp., 8.500%, due 05/25/33 97,791
-------------
433,360
-------------
Total Collateralized Mortgage Obligation
(Cost $3,562,947) 3,505,553
-------------
OTHER BONDS: 4.1%
SOVEREIGN: 4.1%
128,000 @@ Brazilian Government Intl. Bond,
2.188%, due 04/15/12 103,561
150,000 @@ Brazilian Government Intl. Bond,
10.000%, due 08/07/11 147,750
70,000 @@ Brazilian Government Intl. Bond,
11.000%, due 08/17/40 66,500
138,000 XX Central Bank of Nigeria, 0.000%,
due 01/05/10 53,475
91,000 @@ Colombia Government Intl. Bond,
10.000%, due 01/23/12 99,418
49,000 @@ Colombia Government Intl. Bond,
11.750%, due 02/25/20 57,698
70,000 @@ Dominican Republic Intl. Bond,
9.040%, due 01/23/13 61,262
70,000 @@ Ecuador Government Intl. Bond,
6.000%, due 08/15/30 44,063
41,000 @@,# El Salvador Government Intl.
Bond, 7.750%, due 01/24/23 43,255
75,000 @@ Mexico Government Intl. Bond,
4.625%, due 10/08/08 76,688
118,000 @@,L Mexico Government Intl. Bond,
6.625%, due 03/03/15 124,254
50,399 @@ Panama Government Intl. Bond,
1.938%, due 07/17/16 43,315
47,000 @@ Peru Government Intl. Bond,
9.125%, due 02/21/12 52,523
100,000 @@ Philippine Government Intl. Bond,
9.875%, due 01/15/19 109,125
79,000 @@ Republic of Argentina, 1.369%,
due 08/03/12 49,652
70,000 @@ Republic of Bulgaria, 8.250%, due
01/15/15 80,103
30,000 @@ Republic of Peru, 4.500%, due
03/07/17 26,575
254,000 @@ Russia Government Intl. Bond,
5.000%, due 03/31/30 240,664
19,000 @@,L Turkey Government Intl. Bond,
9.500%, due 01/15/14 19,428
140,000 @@ Turkey Government Intl. Bond,
12.375%, due 06/15/09 164,849
22,000 @@ Ukraine Government Intl. Bond,
7.650%, due 06/11/13 22,000
20,907 @@,# Ukraine Government Intl. Bond,
11.000%, due 03/15/07 23,293
53,000 @@ Uruguay Government Intl. Bond,
7.500%, due 03/15/15 41,075
91,000 @@ Venezuela Government Intl. Bond,
9.250%, due 09/15/27 70,798
93,000 @@,# Venezuela Government Intl. Bond,
10.750%, due 09/19/13 86,025
-------------
Total Other Bonds
(Cost $1,893,603) 1,907,349
-------------
</Table>
See Accompanying Notes to Financial Statements
92
<Page>
ING
Strategic
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
NUMBER OF
WARRANTS VALUE
- ---------------------------------------------------------------------------------------
WARRANTS: 0.0%
DIVERSIFIED FINANCIAL SERVICES: 0.0%
250 @,I,X North Atlantic Trading Co.,
Expires 9/30/2003 $ --
-------------
Total Warrants
(Cost $0) --
-------------
Total Long-Term Investments
(Cost $44,512,926) 44,959,770
-------------
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 19.3%
REPURCHASE AGREEMENT: 19.3%
$ 9,050,000S Goldman Sachs Repurchase Agreement
dated 9/30/03, 1.090%, due 10/01/03
$9,050,274 to be received upon
repurchase (Collateralized by
$9,141,000 Various U.S. Government
obligations, 0.000% to 6.875%
Market Value $9,232,167 due
10/09/2003 to 09/30/2013) 9,050,000
-------------
Total Short-term Investments
(Cost $9,050,000) 9,050,000
-------------
TOTAL INVESTMENTS IN SECURITIES
(COST $53,562,926)* 115.0% $ 54,009,770
OTHER ASSETS AND LIABILITIES-NET (15.0) (7,043,982)
----- -------------
NET ASSETS 100.0% $ 46,965,788
===== =============
</Table>
@ Non-income producing security
@@ Foreign Issuer
REITs Real Estate Investment Trusts
# Securities with purchases pursuant to Rule 144A, under the Securities Act
of 1933 and may not be resold subject to that rule except to qualified
institutional buyers. These securities have been determined to be liquid
under the guidelines established by the Funds' Board of
Directors/Trustees.
I Illiquid Security
L Loaned security, a portion or all of the security is on loan at
September 30, 2003
S Segregated securities for when-issued or delayed delivery securities held
at September 30, 2003.
** Defaulted security
X Fair value determined by ING Funds Valuation Committee appointed by the
Funds' Board of Directors/Trustees.
XX Value of securities obtained from one or more dealers making markets in
the securities which have been adjusted based on the Fund's valuation
procedures.
* Cost for federal income tax purposes is the same as for financial
statement purposes. Net unrealized appreciation consists of:
<Table>
Gross Unrealized Appreciation $ 1,034,812
Gross Unrealized Depreciation (587,968)
-------------
Net Unrealized Appreciation $ 446,844
=============
</Table>
See Accompanying Notes to Financial Statements
93
<Page>
ING Classic
Money
Market(1) PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
CORPORATE NOTES: 47.4%
$ 4,500,000 American Honda Finance,
1.100%, due 10/23/03 $ 4,500,024
4,312,000 Associates Corp. NA, 5.750%,
due 11/01/03 4,327,528
2,900,000 Bank of America Corp.,
5.750%, due 03/01/04 2,953,048
2,750,000 Bank of New York Co., Inc.,
1.110%, due 10/27/04 2,750,000
1,800,000 Bank of Scotland, 1.110%,
due 01/22/04 1,800,204
3,500,000 Bank One NA, 1.040%,
due 02/24/04 3,499,859
4,400,000 Bank One NA, 1.160%,
due 02/23/04 4,402,442
5,900,000 @@ Barclays Bank PLC, 1.030%,
due 03/08/04 5,899,744
3,100,000 Bear Stearns Co., Inc.,
1.730%, due 05/24/04 3,112,665
1,180,000 Bell Atlantic, 5.875%,
due 02/01/04 1,196,797
5,000,000 Bellsouth Corp., 1.180%,
due 10/04/04 5,000,000
5,000,000 Bellsouth Corp., 4.160%,
due 04/26/04 5,076,826
5,000,000 BP Amoco Capital PLC,
1.045%, due 03/08/04 5,000,000
3,500,000 Chase Manhattan Bank,
1.080%, due 06/30/04 3,500,000
2,500,000 First Union National Bank,
1.316%, due 06/08/04 2,504,583
1,900,000 First Union National Bank,
1.370%, due 02/20/04 1,902,196
3,100,000 First Union National Bank,
1.403%, due 07/30/04 3,109,059
5,800,000 First USA Bank, 1.360%,
due 08/06/04 5,813,455
3,000,000 General Electric Capital Corp.,
1.120%, due 01/28/04 3,000,591
10,500,000 General Electric Capital Corp.,
1.180%, due 10/22/03 10,500,981
6,000,000 General Electric Capital Corp.,
1.200%, due 10/08/04 6,000,000
5,000,000 I Goldman Sachs Group Inc,
1.400%, due 10/27/03 5,000,000
2,000,000 GTE California, Inc., 6.750%,
due 03/15/04 2,047,583
4,650,000 GTE North, Inc., 6.000%,
due 01/15/04 4,713,024
6,100,000 HBOS Treasury Services PLC,
1.130%, due 10/22/04 6,100,000
4,500,000 HBOS Treasury Services PLC,
1.150%, due 08/23/04 4,503,252
1,800,000 Heller Financial, Inc., 6.000%,
due 03/19/04 1,838,567
3,000,000 JP Morgan Chase & Co.,
1.256%, due 02/05/04 3,001,876
7,700,000 Key Bank NA, 1.134%,
due 08/03/04 7,703,179
4,600,000 Lehman Brothers Holdings,
1.420%, due 06/10/04 4,610,602
5,400,000 I M-MKT Trust Lly, 1.220%,
due 02/19/04 5,398,957
$ 2,800,000 Merrill Lynch & Co., 1.160%,
due 11/19/03 $ 2,800,325
7,300,000 Merrill Lynch & Co., 1.420%,
due 03/08/04 7,310,922
4,000,000 Morgan Stanley, 1.414%,
due 02/02/04 4,004,681
5,500,000 @@ Rabobank Nederland NV,
1.043%, due 01/22/04 5,500,000
5,500,000 @@ Rabobank Nederland NV,
1.045%, due 01/23/04 5,500,000
3,600,000 @@ Royal Bank of Canada,
1.030%, due 03/15/04 3,599,669
6,000,000 Salomon Smith Barney,
1.240%, due 02/20/04 6,003,912
9,200,000 SBC Communications, Inc.,
4.180%, due 06/05/04 9,383,338
9,400,000 Toyota Motor Corp.,
1.070%, due 01/16/04 9,400,000
4,500,000 U.S. Bank National Association,
1.260%, due 04/13/04 4,504,573
2,500,000 US Bank NA, 1.170%,
due 11/14/03 2,500,287
5,900,000 Wells Fargo Bank NA,
1.060%, due 11/24/03 5,900,000
5,500,000 Wells Fargo Bank NA,
1.060%, due 01/26/04 5,500,000
3,000,000 Wells Fargo Bank NA,
1.060%, due 02/06/04 3,000,000
3,500,000 Wells Fargo Bank NA,
1.109%, due 10/01/04 3,500,000
---------------
Total Corporate Notes
(Cost $209,174,749) 209,174,749
---------------
COMMERCIAL PAPER: 25.1%
4,500,000 Concord Minutemen Capital
Co., 1.080%, due 01/13/04 4,485,960
8,050,000 Concord Minutemen Capital
Co., 1.150%, due 10/07/04 8,049,999
5,050,000 Concord Minutemen Capital
Co., 1.150%, due 10/08/04 5,050,000
4,500,000 Concord Minutemen Capital
Co., 1.150%, due 10/15/04 4,500,000
4,500,000 Crown Point Capital Co.,
1.060%, due 10/03/03 4,499,735
4,500,000 Crown Point Capital Co.,
1.060%, due 10/07/03 4,499,205
4,500,000 Crown Point Capital Co.,
0.950%, due 10/09/03 4,499,050
4,500,000 Crown Point Capital Co.,
1.060%, due 10/14/03 4,498,278
4,500,000 Edison Asset Securitization,
1.070%, due 11/03/03 4,495,586
4,400,000 Edison Asset Securitization,
1.140%, due 11/17/03 4,393,451
4,500,000 I Goldman Sachs Group, Inc.,
1.130%, due 12/04/03 4,500,000
4,500,000 I Goldman Sachs Group, Inc.,
1.140%, due 12/12/03 4,500,000
4,500,000 Jupiter Securitization Corp.,
1.070%, due 10/08/03 4,499,064
9,200,000 I M-MKT Trust Series A-1,
1.270%, due 10/08/04 9,200,000
4,500,000 Old Line Funding Corp.,
1.060%, due 10/06/03 4,499,338
</Table>
See Accompanying Notes to Financial Statements
94
<Page>
ING Classic
Money
Market(1) PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
COMMERCIAL PAPER (CONTINUED)
$ 9,100,000 St. Germain Holdings Ltd.,
1.080%, due 10/10/03 $ 9,097,565
4,500,000 St. Germain Holdings Ltd.,
1.060%, due 10/16/03 4,497,975
4,500,000 Thunder Bay Funding, Inc.,
1.050%, due 10/15/03 4,498,163
8,000,000 Verizon Global Funding,
1.230%, due 10/14/04 8,000,000
4,500,000 Yorktown Capital LLC,
1.050%, due 10/02/03 4,499,869
4,500,000 Yorktown Capital LLC,
1.050%, due 10/20/03 4,497,506
---------------
Total Commercial Paper
(Cost $111,260,744) 111,260,744
---------------
U.S. GOVERNMENT AGENCY OBLIGATIONS: 12.5%
4,200,000 Federal Home Loan Bank,
1.500%, due 09/03/04 4,200,000
6,300,000 Federal Home Loan Bank,
5.375%, due 01/05/04 6,369,481
2,700,000 Federal Home Loan Bank,
5.500%, due 02/25/04 2,744,266
1,200,000 Federal Home Loan Mortgage
Corp., 3.400%, due 02/20/04 1,209,294
4,600,000 Federal National Mortgage
Association, 5.125%,
due 02/13/04 4,664,596
5,000,000 Federal National Mortgage
Association, 1.200%,
due 08/23/04 5,000,000
4,500,000 Federal National Mortgage
Association, 1.250%,
due 07/07/04 4,500,000
4,400,000 Federal National Mortgage
Association, 1.250%,
due 08/27/04 4,400,000
4,400,000 Federal National Mortgage
Association, 1.300%,
due 08/30/04 4,400,000
6,800,000 Federal National Mortgage
Association, 1.450%,
due 09/14/04 6,800,000
8,600,000 Freddie Mac, 3.250%,
due 01/15/04 8,649,057
2,300,000 Student Loan Marketing
Association, 1.023%,
due 11/20/03 2,299,896
---------------
Total U.S. Government
Agency Obligations
(Cost $55,236,590) 55,236,590
---------------
CERTIFICATE OF DEPOSIT: 8.8%
5,500,000 @@ Bank of Scotland Treasury
Service, 1.620%, due 12/09/03 5,501,749
4,400,000 @@ Canadian Imperial Bank,
1.045%, due 12/15/03 4,400,046
4,500,000 Credit Suisse First Boston,
1.045%, due 10/16/03 4,499,931
5,900,000 State Street Bank & Trust,
1.220%, due 07/06/04 5,900,000
4,600,000 Washington Mutual Bank,
1.100%, due 11/13/03 4,600,000
4,600,000 Washington Mutual Bank,
1.106%, due 07/29/04 4,600,000
$ 4,500,000 Washington Mutual Bank,
1.220%, due 11/25/03 $ 4,500,000
5,100,000 Washington Mutual Bank,
1.290%, due 10/17/03 5,100,000
---------------
Total Certificate Of Deposit
(Cost $39,101,726) 39,101,726
---------------
ASSET-BACKED SECURITIES: 2.4%
3,519,405 Chase Manhattan
Auto Owner Trust,
1.060%, due 08/16/04 3,519,405
2,499,076 John Deere Owner Trust,
1.081%, due 08/13/04 2,499,076
4,600,000 Putnam Structured
Product Funding,
1.140%, due 11/17/03 4,600,001
---------------
Total Asset Backed Securities
(Cost $10,618,482) 10,618,482
---------------
REPURCHASE AGREEMENT: 4.8%
21,267,000 Goldman Sachs Repurchase
Agreement dated 09/30/03,
1.090%, due 10/01/03,
$21,267,644 to be received
upon repurchase
(Collateralized by various
U.S. Government Securities,
0.000%, market value
$21,905,010, due
08/15/05-02/15/25) 21,267,000
---------------
Total Repurchase Agreement
(Cost $21,267,000) 21,267,000
---------------
TOTAL INVESTMENTS
IN SECURITIES (COST
$446,659,291)* 101.0% $ 446,659,291
OTHER ASSETS AND
LIABILITIES-NET (1.0) (4,244,930)
----- ---------------
NET ASSETS 100.0% $ 442,414,361
===== ===============
</Table>
* Also represents cost for income tax purposes.
@@ Foreign Issuer
PLC Public Limited Company
I Illiquid Security
(1) All securities with a maturity date greater than one year have either a
variable rate, a demand feature, prerefunded, optional or mandatory put
resulting in an effective maturity of one year or less. Rate shown
reflects current rate.
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- --------------------------------------------------------------------------------
Asset Backed Commercial Paper 21.7%
Bank Holding Companies 5.4
Federal and Federally Sponsored Credit Agencies 12.4
Foreign Bank, Branches and Agencies 9.8
Management Services 1.8
National Commercial Banks 15.0
Personal Credit Institutions 11.9
Pharmaceutical Preparations 1.2
Security Brokers and Dealers 10.4
Short-term Business Credit 0.4
Telephone Communications 6.2
Repurchase Agreement 4.8
Other Assets and Liabilities (1.0)
-----
NET ASSETS 100.0%
=====
</Table>
See Accompanying Notes to Financial Statements
95
<Page>
ING
Money
Market
Fund(1) PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
CORPORATE NOTES: 48.4%
$ 1,200,000 American Honda Finance,
1.100%, due 10/23/03 $ 1,200,007
500,000 American Honda Finance,
1.260%, due 04/26/04 500,524
1,400,000 Associates Corp. NA, 5.750%,
due 11/01/03 1,405,212
800,000 Bank of America Corp.,
1.364%, due 05/03/04 801,391
400,000 Bank of America Corp.,
5.750%, due 03/01/04 407,317
500,000 Bank of New York Co., Inc.,
1.110%, due 10/27/04 500,000
1,080,000 Bank One Corp., 5.625%,
due 02/17/04 1,097,558
500,000 Bank One NA, 1.160%,
due 02/23/04 500,277
800,000 @@ Barclays Bank PLC, 1.030%,
due 03/08/04 799,965
400,000 Bear Stearns Co., Inc.,
1.730%, due 05/24/04 401,634
700,000 Bellsouth Corp., 4.160%,
due 04/06/04 710,756
400,000 Chase Manhattan Bank,
1.080%, due 06/30/04 400,000
350,000 First Union National Bank,
1.316%, due 06/08/04 350,642
400,000 First Union National Bank,
1.403%, due 07/30/04 401,169
750,000 First USA Bank, 1.360%,
due 08/06/04 751,740
1,300,000 General Electric Capital Corp.,
1.180%, due 10/22/03 1,300,101
1,000,000 General Electric Capital Corp.,
1.200%, due 10/08/04 1,000,000
1,290,000 GTE California, Inc., 6.750%,
due 03/15/04 1,320,600
800,000 HBOS Treasury Services PLC,
1.130%, due 10/22/04 800,000
500,000 HBOS Treasury Services PLC,
1.150%, due 08/23/04 500,361
500,000 JP Morgan Chase & Co.,
1.240%, due 12/29/03 500,176
300,000 JP Morgan Chase & Co.,
1.256%, due 02/05/04 300,188
1,000,000 Key Bank NA, 1.134%,
due 08/03/04 1,000,413
500,000 Keycorp, 1.390%, due 08/30/04 501,067
500,000 Lehman Brothers Holdings,
1.420%, due 06/10/04 501,152
400,000 Merrill Lynch & Co., 1.160%,
due 11/19/03 400,046
700,000 Merrill Lynch & Co., 6.800%,
due 11/03/03 703,439
700,000 Morgan Stanley Dean Witter,
5.625%, due 01/20/04 709,110
500,000 @@ Royal Bank of Canada,
1.030%, due 03/15/04 499,954
800,000 Salomon Smith Barney,
1.240%, due 02/20/04 800,522
450,000 Salomon Smith Barney,
1.260%, due 11/13/03 450,096
1,260,000 SBC Communications, Inc.,
4.180%, due 06/05/04 1,285,109
$ 1,200,000 U.S. Bank National Association,
1.260%, due 04/13/04 $ 1,201,220
2,100,000 Wells Fargo Bank NA, 1.060%,
due 11/24/03 2,099,999
---------------
Total Corporate Notes
(Cost $26,101,745) 26,101,745
---------------
COMMERCIAL PAPER: 26.3%
500,000 Concord Minutemen Capital Co.,
1.080%, due 01/13/04 498,440
1,250,000 Concord Minutemen Capital Co.,
1.150%, due 10/07/04 1,249,999
250,000 Concord Minutemen Capital Co.,
1.150%, due 10/08/04 250,000
500,000 Concord Minutemen Capital Co.,
1.150%, due 10/15/04 500,000
500,000 Crown Point Capital Co.,
1.060%, due 10/03/03 499,971
600,000 Crown Point Capital Co.,
1.060%, due 10/07/03 599,894
550,000 Crown Point Capital Co.,
1.060%, due 10/14/03 549,789
600,000 Edison Asset Securitization,
1.140%, due 11/17/03 599,107
600,000 I Goldman Sachs Group, Inc.,
1.130%, due 12/04/03 600,000
600,000 I Goldman Sachs Group, Inc.,
1.140%, due 12/12/03 600,000
1,300,000 I M-MKT Trust Series A-1,
1.270%, due 10/08/04 1,300,000
600,000 Old Line Funding Corp.,
1.050%, due 10/02/03 599,983
600,000 Old Line Funding Corp.,
1.060%, due 10/06/03 599,912
1,100,000 St. Germain Holdings Ltd.,
1.080%, due 10/10/03 1,099,706
600,000 St. Germain Holdings Ltd.,
1.060%, due 10/16/03 599,730
357,000 Stellar Funding Group,
1.250%, due 10/14/03 356,839
502,000 Thunder Bay Funding, Inc.,
1.070%, due 10/07/03 501,910
505,000 Thunder Bay Funding, Inc.,
1.110%, due 10/14/03 504,798
1,150,000 Verizon Global Funding,
1.230%, due 10/14/04 1,150,000
500,000 Windmill Funding, 1.060%,
due 10/21/03 499,706
500,000 Yorktown Capital LLC,
1.050%, due 10/02/03 499,985
550,000 Yorktown Capital LLC,
1.050%, due 10/20/03 549,695
---------------
Total Commercial Paper
(Cost $14,209,464) 14,209,464
---------------
U.S. GOVERNMENT AGENCY OBLIGATIONS: 12.4%
400,000 Federal Home Loan Bank,
1.500%, due 09/03/04 400,000
700,000 Federal Home Loan Bank,
5.375%, due 01/05/04 707,720
700,000 Federal National Mortgage
Association, 5.125%,
due 02/13/04 709,830
</Table>
See Accompanying Notes to Financial Statements
96
<Page>
ING
Money
Market
Fund(1) PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS (CONTINUED)
$ 600,000 Federal National Mortgage
Association, 1.200%,
due 08/23/04 $ 600,000
600,000 Federal National Mortgage
Association, 1.250%,
due 07/07/04 600,000
500,000 Federal National Mortgage
Association, 1.250%,
due 08/27/04 500,000
500,000 Federal National Mortgage
Association, 1.300%,
due 08/30/04 500,000
950,000 Federal National Mortgage
Association, 1.450%,
due 09/14/04 950,000
1,200,000 Freddie Mac, 3.250%,
due 01/15/04 1,206,849
500,000 Student Loan Marketing
Association, 1.023%,
due 11/20/03 499,977
---------------
Total U.S. Government
Agency Obligations
(Cost $6,674,376) 6,674,376
---------------
CERTIFICATES OF DEPOSIT: 7.0%
600,000 @@ Canadian Imperial Bank,
1.045%, due 12/15/03 600,006
500,000 Credit Suisse First Boston,
1.045%, due 10/16/03 499,992
800,000 State Street Bank & Trust,
1.220%, due 07/06/04 800,001
600,000 Washington Mutual Bank,
1.100%, due 11/13/03 600,000
600,000 Washington Mutual Bank,
1.220%, due 11/25/03 600,000
700,000 Washington Mutual Bank,
1.290%, due 10/17/03 700,000
---------------
Total Certificates Of Deposit
(Cost $3,799,999) 3,799,999
---------------
ASSET-BACKED SECURITIES: 2.3%
399,932 Chase Manhattan Auto
Owner Trust, 1.060%,
due 08/16/04 399,932
322,461 John Deere Owner Trust,
1.081%, due 08/13/04 322,461
500,000 Putnam Structured
Product Funding,
1.140%, due 11/17/03 500,001
---------------
Total Asset Backed Securities
(Cost $1,222,394) 1,222,394
---------------
REPURCHASE AGREEMENT: 4.4%
$ 2,376,000 Goldman Sachs Repurchase
Agreement dated 09/30/03,
1.090%, due 10/01/03,
$2,376,072 to be received
upon repurchase
(Collateralized by
$6,715,733 U.S. Treasury
Bond, 0.000%, market value
$2,447,280, due 05/15/22) $ 2,376,000
---------------
Total Repurchase Agreement
(Cost $2,376,000) 2,376,000
---------------
TOTAL INVESTMENTS
IN SECURITIES (COST
$54,383,978)* 100.8% $ 54,383,978
OTHER ASSETS AND
LIABILITIES-NET (0.8) (433,788)
----- ---------------
NET ASSETS 100.0% $ 53,950,190
===== ===============
</Table>
* Also represents cost for income tax purposes.
@@ Foreign Issuer
PLC Public Limited Company
I Illiquid Security
(1) All securities with a maturity date greater than one year have either a
variable rate, a demand feature, prerefunded, optional or mandatory put
resulting in an effective maturity of one year or less. Rate shown
reflects current rate.
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- ---------------------------------------------------------------------------------------------------
Asset Backed Commercial Paper 21.9%
Bank Holding Companies 7.6
Federal and Federally Sponsored Credit Agencies 12.4
Foreign Bank, Branches and Agencies 7.2
Management Services 2.1
National Commercial Banks 16.2
Personal Credit Institutions 12.4
Security Brokers and Dealers 10.5
Telephone Communications 6.1
Repurchase Agreement 4.4
Other Assets and Liabilities-Net (0.8)
-----
NET ASSETS 100.0%
=====
</Table>
See Accompanying Notes to Financial Statements
97
<Page>
ING Lexington
Money
Market
Trust(1) PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
CORPORATE NOTES: 44.7%
$ 800,000 Bank of America Corp.,
1.364%, due 05/03/04 $ 801,396
300,000 Bank of America Corp.,
5.750%, due 03/01/04 305,488
500,000 Bank of New York Co., Inc.,
1.110%, due 10/27/04 500,000
770,000 Bank One Corp., 5.625%,
due 02/17/04 782,519
500,000 Bank One NA, 1.160%,
due 02/23/04 500,277
600,000 @@ Barclays Bank PLC, 1.030%,
due 03/08/04 599,974
300,000 Bear Stearns Co., Inc., 1.730%,
due 05/24/04 301,226
600,000 Bellsouth Corp., 4.160%,
due 04/26/04 609,219
400,000 Chase Manhattan Bank,
1.080%, due 06/30/04 400,000
250,000 First Union National Bank,
1.316%, due 06/08/04 250,458
400,000 First Union National Bank,
1.403%, due 07/30/04 401,169
600,000 First USA Bank, 1.360%,
due 08/06/04 601,392
1,100,000 General Electric Capital Corp.,
1.180%, due 10/22/03 1,100,086
910,000 GTE California, Inc., 6.750%,
due 03/15/04 931,587
350,000 GTE North, Inc., 6.000%,
due 01/15/04 354,858
700,000 HBOS Treasury Services PLC,
1.130%, due 10/22/04 700,000
500,000 HBOS Treasury Services PLC,
1.150%, due 08/23/04 500,361
200,000 Heller Financial, Inc., 6.000%,
due 03/19/04 204,285
500,000 Household Finance Corp.,
1.376%, due 10/15/03 500,049
700,000 JP Morgan Chase & Co.,
1.256%, due 02/05/04 700,438
900,000 Key Bank NA, 1.134%,
due 08/03/04 900,367
500,000 Keycorp, 1.390%, due 08/30/04 501,067
400,000 Lehman Brothers Holdings,
1.420%, due 06/10/04 400,922
300,000 Merrill Lynch & Co., 1.160%,
due 11/19/03 300,035
400,000 Merrill Lynch & Co., 1.420%,
due 03/08/04 400,598
500,000 Merrill Lynch & Co., 6.800%,
due 11/03/03 502,456
500,000 Morgan Stanley Dean Witter,
5.625%, due 01/20/04 506,507
900,000 @@ Royal Bank of Canada, 1.030%,
due 03/15/04 899,917
700,000 Salomon Smith Barney, 1.240%,
due 02/20/04 700,456
1,650,000 Salomon Smith Barney, 1.260%,
due 11/13/03 1,650,351
1,070,000 SBC Communications, Inc.,
4.180%, due 06/05/04 1,091,323
500,000 US Bank National Association,
1.260%, due 04/13/04 500,508
$ 1,800,000 Wells Fargo Bank NA,
1.060%, due 11/24/03 $ 1,799,999
---------------
Total Corporate Notes
(Cost $21,199,288) 21,199,288
---------------
COMMERCIAL PAPER: 30.1%
500,000 Ciesco L.P., 1.070%,
due 10/07/03 499,911
500,000 Concord Minutemen
Capital Co., 1.080%,
due 01/13/04 498,440
700,000 Concord Minutemen
Capital Co., 1.150%,
due 10/07/04 699,999
1,100,000 Concord Minutemen
Capital Co., 1.150%,
due 10/08/04 1,099,999
500,000 Crown Point Capital Co.,
1.060%, due 10/03/03 499,971
500,000 Crown Point Capital Co.,
1.060%, due 10/07/03 499,912
500,000 Crown Point Capital Co.,
1.060%, due 10/14/03 499,809
500,000 Crown Point Capital Co.,
1.060%, due 10/20/03 499,720
600,000 Edison Asset Securitization,
1.070%, due 11/03/03 599,412
500,000 Edison Asset Securitization,
1.140%, due 11/17/03 499,256
500,000 I Goldman Sachs Group, Inc.,
1.130%, due 12/04/03 500,000
500,000 I Goldman Sachs Group, Inc.,
1.140%, due 12/12/03 500,000
500,000 Jupiter Securitization Corp.,
1.070%, due 10/08/03 499,896
1,000,000 I M-MKT Trust Series A-1,
1.270%, due 10/08/04 1,000,000
500,000 Old Line Funding Corp.,
1.050%, due 10/02/03 499,985
500,000 Old Line Funding Corp.,
1.060%, due 10/06/03 499,926
500,000 St. Germain Holdings Ltd.,
1.060%, due 10/10/03 499,868
500,000 St. Germain Holdings Ltd.,
1.080%, due 10/01/03 500,000
500,000 St. Germain Holdings Ltd.,
1.080%, due 10/16/03 499,775
500,000 Thunder Bay Funding, Inc.,
1.050%, due 10/15/03 499,796
500,000 Thunder Bay Funding, Inc.,
1.060%, due 10/28/03 499,603
500,000 Thunder Bay Funding, Inc.,
1.070%, due 10/07/03 499,911
500,000 Thunder Bay Funding, Inc.,
1.110%, due 10/14/03 499,800
850,000 Verizon Global Funding,
1.230%, due 10/14/04 850,000
500,000 Yorktown Capital LLC, 1.050%,
due 10/02/03 499,985
---------------
Total Commercial Paper
(Cost $14,244,974) 14,244,974
---------------
</Table>
See Accompanying Notes to Financial Statements
98
<Page>
ING Lexington
Money
Market
Trust(1) PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS: 12.0%
$ 400,000 Federal Home Loan Bank,
1.500%, due 09/03/04 $ 400,000
600,000 Federal Home Loan Bank,
5.375%, due 01/05/04 606,617
500,000 Federal National Mortgage
Association, 5.125%,
due 02/13/04 507,021
600,000 Federal National Mortgage
Association, 1.200%,
due 08/23/04 600,000
500,000 Federal National Mortgage
Association, 1.250%,
due 07/07/04 500,000
500,000 Federal National Mortgage
Association, 1.250%,
due 08/27/04 500,000
500,000 Federal National Mortgage
Association, 1.300%,
due 08/30/04 500,000
650,000 Federal National Mortgage
Association, 1.450%,
due 09/14/04 650,000
900,000 Freddie Mac, 3.250%,
due 01/15/04 905,136
500,000 Student Loan Marketing
Association, 1.023%,
due 11/20/03 499,977
---------------
Total U.S. Government
Agency Obligations
(Cost $5,668,751) 5,668,751
---------------
CERTIFICATES OF DEPOSIT: 6.8%
500,000 @@ Canadian Imperial Bank,
1.045%, due 12/15/03 500,005
500,000 Credit Suisse First Boston,
1.045%, due 10/16/03 499,992
600,000 State Street Bank & Trust,
1.220%, due 07/06/04 600,000
500,000 Washington Mutual Bank,
1.100%, due 11/13/03 500,000
500,000 Washington Mutual Bank,
1.220%, due 11/25/03 500,000
600,000 Washington Mutual Bank,
1.290%, due 10/17/03 600,001
---------------
Total Certificates Of Deposit
(Cost $3,199,998) 3,199,998
---------------
ASSET-BACKED SECURITIES: 2.6%
399,932 Chase Manhattan Auto
Owner Trust, 1.060%,
due 08/16/04 399,932
322,461 John Deere Owner Trust,
1.081%, due 08/13/04 322,461
500,000 Putnam Structured
Product Funding, 1.140%,
due 11/17/03 500,001
---------------
Total Asset Backed Securities
(Cost $1,222,394) 1,222,394
---------------
REPURCHASE AGREEMENT: 5.1%
$ 2,429,000 Goldman Sachs Repurchase
Agreement dated 09/30/03,
1.090%, due 10/01/03,
$2,429,074 to be received
upon repurchase
(Collateralized by $6,865,537
U.S. Treasury Bond, 0.000%,
market value $2,501,870
due 05/15/22) $ 2,429,000
---------------
Total Repurchase Agreement
(Cost $2,429,000) 2,429,000
---------------
TOTAL INVESTMENTS
IN SECURITIES (COST
$47,964,405)* 101.3% $ 47,964,405
OTHER ASSETS AND
LIABILITIES-NET (1.3) (598,475)
----- ---------------
NET ASSETS 100.0% $ 47,365,930
===== ===============
</Table>
* Also represents cost for income tax purposes.
@@ Foreign Issuer
PLC Public Limited Company
I Illiquid Security
(1) All securities with a maturity date greater than one year have either a
variable rate, a demand feature, prerefunded, optional or mandatory put
resulting in an effective maturity of one year or less. Rate shown
reflects current rate.
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- ---------------------------------------------------------------------------------------------------
Asset Backed Commercial Paper 26.7%
Bank Holding Companies 7.6
Federal and Federally Sponsored Credit Agencies 11.9
Foreign Bank, Branches and Agencies 6.0
Management Services 1.8
National Commercial Banks 16.7
Personal Credit Institutions 5.5
Security Brokers And Dealers 13.3
Short-term Business Credit 0.4
Telephone Communications 6.3
Repurchase Agreement 5.1
Other Assets and Liabilities-Net (1.3)
-----
NET ASSETS 100.0%
=====
</Table>
See Accompanying Notes to Financial Statements
99
<Page>
SHAREHOLDER MEETING INFORMATION (Unaudited)
A SPECIAL MEETING OF SHAREHOLDERS OF THE FUNDS WAS HELD JULY 22, 2003, AT THE
OFFICES OF ING FUNDS, 7337 EAST DOUBLETREE RANCH ROAD, SCOTTSDALE, AZ 85258.
A BRIEF DESCRIPTION OF EACH MATTER VOTED UPON AS WELL AS THE RESULTS ARE
OUTLINED BELOW:
1. To approve a Sub-Advisory Agreement between ING Investments, LLC and Aeltus
Investment Management, Inc., with no change in the Adviser, the portfolio
manager(s), or the overall management fee paid by the Fund.
3. To transact such other business, not currently contemplated, that may
properly come before the Special Meeting or any adjournment(s) thereof in the
discretion of the proxies or their substitutes.
<Table>
<Caption>
SHARES VOTED
AGAINST OR SHARES BROKER TOTAL SHARES
PROPOSAL SHARES VOTED FOR WITHHELD ABSTAINED NON-VOTE VOTED
-------- ---------------- ------------ --------- -------- ------------
ING GNMA Income Fund 1 78,774,693 1,440,831 2,032,327 -- 82,247,851
ING High Yield Opportunity Fund 1 44,274,656 691,453 904,261 -- 45,870,370
ING Strategic Bond Fund 1 3,660,225 88,691 60,347 -- 3,809,263
ING Money Market Fund 1 42,187,033 353,246 638,918 -- 43,179,197
ING Lexington Money Market Trust 1 22,746,719 1,122,465 1,899,996 -- 25,769,180
ING GNMA Income Fund 3 78,000,056 1,897,914 2,349,881 -- 82,247,851
ING High Yield Opportunity Fund 3 43,993,421 921,466 955,483 -- 45,870,370
ING Strategic Bond Fund 3 3,686,231 63,037 59,995 -- 3,809,263
ING Money Market Fund 3 41,846,993 518,632 813,572 -- 43,179,197
ING Lexington Money Market Trust 3 22,388,083 878,281 2,502,816 -- 25,769,180
</Table>
100
<Page>
TRUSTEE AND OFFICER INFORMATION (Unaudited)
The business and affairs of the Funds are managed under the direction of the
Funds' Board of Trustees. A trustee who is not an interested person of the Fund,
as defined in the 1940 Act, is an independent trustee ("Independent Trustee").
The Trustees of the Funds are listed below. The Statement of Additional
Information includes additional information about trustees of the Registrant and
is available, without charge, upon request at 1-800-992-0180.
<Table>
<Caption>
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH THE TIME DURING THE OVERSEEN HELD BY
AND AGE REGISTRANT(S) SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE
- ------------------------------ ------------- ---------- -------------------------- ------------- --------------------------
NON-INTERESTED TRUSTEES:
Paul S. Doherty(2) Trustee February Mr. Doherty is President 116 None
7337 E. Doubletree Ranch Rd. 2001 - and Partner, Doherty,
Scottsdale, Arizona 85258 present Wallace, Pillsbury and
Born: 1934 Murphy, P.C., Attorneys
(1996 - Present);
Director, Tambrands, Inc.
(1993 - 1998); and Trustee
of each of the funds
managed by Northstar
Investment Management
Corporation (1993 - 1999).
J. Michael Earley(3) Trustee February President and Chief 116 None
7337 E. Doubletree Ranch Rd. 2002 - Executive Officer, Bankers
Scottsdale, Arizona 85258 present Trust Company, N.A. (1992
Born: 1945 - Present).
R. Barbara Gitenstein(2) Trustee February President, College of New 116 None
7337 E. Doubletree Ranch Rd. 2002 - Jersey (1999 - Present).
Scottsdale, Arizona 85258 present Formerly, Executive Vice
Born: 1948 President and Provost,
Drake University (1992 -
1998).
Walter H. May(2) Trustee February Retired. Formerly, 116 Best Prep Charity
7337 E. Doubletree Ranch Rd. 2001 - Managing Director and (1991 - Present).
Scottsdale, Arizona 85258 present Director of Marketing,
Born: 1936 Piper Jaffray, Inc.;
Trustee of each of the
funds managed by Northstar
Investment Management
Corporation (1996 - 1999).
</Table>
101
<Page>
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
<Table>
<Caption>
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH THE TIME DURING THE OVERSEEN HELD BY
AND AGE REGISTRANT(S) SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE
- ------------------------------ ------------- ----------- -------------------------- ------------- --------------------------
David W.C. Putnam(3) Trustee February President and Director, 116 Director of F.L. Putnam
7337 E. Doubletree Ranch Rd. 2001 - F.L. Putnam Securities Securities company, Inc.
Scottsdale, Arizona 85258 present Company, Inc. and its (June 1978 to Present);
Born: 1939 affiliates; President, F.L. Putnam Investment
Secretary and Trustee, The Managment Company
Principled Equity Market (December 2001 to
Fund. Formerly, Trustee, Present); Asian Amerrican
Trust Realty Trust Bank and Trust company
(December Corp.; Anchor (June 1992 to Persent);
Investment Trust; Bow 2000 and Notre Dame Health Care
- Present); Ridge Mining Center (1991 to Present).
Company and each of the He is also a Trustee of
F.L. Putnam funds managed The Principiled Equity
by Northstar Investment Market Fund (November 1996
Foundation Management to Present); Anchor
Corporation (1994 - 1999). International Bond
(December 2000 - Present);
Progressive Capital
Accumulation Trust (August
1998 - Present);
Principled Equity Market
Fund (November 1996 -
Present), Mercy Endowment
Foundation (1995 -
Present); Director, F.L.
Putnam Investment
Management Company
(December 2001 - Present);
Asian American Bank and
Trust Company (June 1992 -
Present); and Notre Dame
Health Care Center (1991 -
Present) F.L. Putnam
Securities Company, Inc.
(June 1978 - Present); and
an Honorary Trustee, Mercy
Hospital (1973 - Present).
Blaine E. Rieke(3) Trustee October General Partner, Huntington 116 Morgan Chase Trust Co.
7337 E. Doubletree Ranch Rd. 1998 - Partners (January 1997 - (January 1998 - Present).
Scottsdale, Arizona 85258 present Present). Chairman of the
Born: 1933 Board and Trustee of each
of the funds managed by
ING Investment Management
Co. LLC (November 1998 -
February 2001).
Roger B. Vincent(3) Trustee February President, Springwell 116 Director, AmeriGas
7337 E. Doubletree Ranch Rd. 2002 - Corporation (1989 - Propane, Inc. (1998 -
Scottsdale, Arizona 85258 present Present). Formerly, Present).
Born: 1945 Director Tatham Offshore,
Inc. (1996 - 2000).
</Table>
102
<Page>
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
<Table>
<Caption>
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH THE TIME DURING THE OVERSEEN HELD BY
AND AGE REGISTRANT(S) SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE
- ------------------------------ ------------- ----------- -------------------------- ------------- --------------------------
Richard A. Wedemeyer(3) Trustee October Retired. Mr. Wedemeyer was 116 Touchstone Consulting
7337 E. Doubletree Ranch Rd. 1998 - formerly Vice President - Group (1997 - Present).
Scottsdale, Arizona 85258 present Finance and
Born: 1936 Administration, Channel
Corporation (June 1996 -
April 2002). Formerly
Trustee, First Choice
Funds (1997 - 2001); and
of each of the funds
managed by ING Investment
Management Co. LLC (1998 -
2001).
INTERESTED TRUSTEES:
Thomas J. McInerney(4) Trustee February Chief Executive Officer, 170 Director, Hemisphere, Inc.
7337 E. Doubletree Ranch Rd. 2001 - ING U.S. Financial (May 2003 - Present).
Scottsdale, Arizona 85258 present Services (September 2001 Director, Equitable Life
Born: 1956 to present); General Insurance Co., Golden
Manager and Chief American Life Insurance
Executive Officer, ING Co., Life Insurance
U.S. Worksite Financial Company of Georgia,
Services (December 2000 to Midwestern United Life
present); Member, ING Insurance Co., ReliaStar
Americas Executive Life Insurance Co.,
Committee (2001 to Security Life of Denver,
present); President, Chief Security Connecticut Life
Executive Officer and Insurance Co., Southland
Director of Northern Life Life Insurance Co., USG
Insurance Company (2001 to Annuity and Life Company
present), ING Aeltus and United Life and
Holding Company, Inc. Annuity Insurance Co. Inc.
(2000 to present), ING (March 2001 - Present);
Retail Holding Company Trustee, Ameribest Life
(1998 to present). Insurance Co., (2001 -
Formerly, ING Life 2003); Trustee, First
Insurance and Annuity Columbine Life Insurance
Company (1997 to November Co., (2001 - 2002); Member
2002), ING Retirement of the Board, National
Holdings, Inc. (1997 to Commission on Retirement
March 2003); General Policy. Competitiveness
Manager and Chief and Technology of
Executive Officer, ING Connecticut, Connecticut
Worksite Division Business and Industry
(December 2000 to October Association, Bushnell;
2001), President, ING-SCI, Connecticut Forum; Metro
Inc. (August 1997 to Hartford Chamber of
December 2000); President, Commerce and is Chairman,
Aetna Financial Services Concerned Citzens for
(August 1997 to December Effective Government.
2000); and has held a
variety of line and
corporate staff positions
since 1978.
</Table>
103
<Page>
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
<Table>
<Caption>
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH THE TIME DURING THE OVERSEEN HELD BY
AND AGE REGISTRANT(S) SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE
- ------------------------------ ------------- ----------- -------------------------- ------------- --------------------------
John G. Turner(5) Trustee February Chairman, Hillcrest 116 Director, Hormel Foods
7337 E. Doubletree Ranch Rd. 2001 - Capital Partners (May 2002 Corporation (March 2000 -
Scottsdale, Arizona 85258 present - Present); President, Present); Shopko Stores,
Born: 1939 Turner Investment Company Inc. (August 1999 -
(January 2002 - Present). Present); and M.A.
Mr. Turner was formerly Mortenson Company (March
Vice Chairman of ING 2002 - Present).
Americas (2000 - 2002);
Chairman and Chief
Executive Officer of
ReliaStar Financial Corp.
</Table>
- ----------
(1) Trustees serve until their successors are duly elected and qualified,
subject to the Board's retirement policy.
(2) Valuation Committee member.
(3) Audit Committee member.
(4) Mr. McInerney is an "interested person," as defined by the 1940 Act,
because of his affiliation with ING U.S. Financial Services and ING U.S.
Worksite Financial Services, both affiliates of ING Investments.
(5) Mr. Turner is an "interested person," as defined by the 1940 Act, because
of his affiliation with ING Americas, an affiliate of ING Investments.
104
<Page>
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
<Table>
<Caption>
PRINCIPAL
TERM OF OFFICE OCCUPATION(S)
NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE
AND AGE HELD WITH THE TRUST TIME SERVED(1) PAST FIVE YEARS
- ----------------------------- --------------------------------- -------------------------- -----------------------------------
James M. Hennessy President and Chief Executive February 2001 - present President and Chief Executive
7337 E. Doubletree Ranch Rd. Officer Officer of ING Capital Corporation,
Scottsdale, Arizona 85258 LLC, ING Funds Services, LLC, ING
Born: 1949 Chief Operating Officer February 2002 - present Advisors, Inc., ING Investments,
LLC, Lexington Funds Distributor,
Senior Executive Vice President October 2000 - February Inc., Express America T.C. Inc. and
and Secretary 2001 EAMC Liquidation Corp. (since
December 2001); Executive Vice
President and Chief Operating
Officer of ING Funds Distributor,
LLC (since June 2000).
Michael J. Roland Executive Vice President and February 2002 - present Executive Vice President, Chief
7337 E. Doubletree Ranch Rd. Assistant Secretary Financial Officer and Treasurer of
Scottsdale, Arizona 85258 ING Funds Services, LLC, ING Funds
Born: 1958 Principal Financial Officer October 2000 - present Distributor, LLC, ING Advisors,
Inc., ING Investments, LLC
Senior Vice President October 2000 - February (December 2001 to present),
2002 Lexington Funds Distributor, Inc.,
Express America T.C. Inc. and EAMC
Liquidation Corp. (since December
2001). Formerly, Executive Vice
President, Chief Financial Officer
and Treasurer of ING Quantitative
Management, Inc. (December 2001 to
October 2002); and Senior Vice
President, ING Funds Services, LLC,
ING Investments, LLC, and ING Funds
Distributor, LLC (June 1998 to
December 2001).
Stanley D. Vyner Executive Vice President October 2000 - present Executive Vice President of ING
7337 E. Doubletree Ranch Rd. Advisors, Inc. and ING Investments,
Scottsdale, Arizona 85258 LLC (July 2000 to present) and
Born: 1950 Chief Investment Officer of the
International Portfolios, ING
Investments, LLC (July 1996 to
present). Formerly, President and
Chief Executive Officer of ING
Investments, LLC (August 1996 to
August 2000).
Robert S. Naka Senior Vice President and October 2000 - present Senior Vice President and Assistant
7337 E. Doubletree Ranch Rd. Assistant Secretary Secretary of ING Funds Services,
Scottsdale, Arizona 85258 LLC, ING Funds Distributor, LLC,
Born: 1963 ING Advisors, Inc., ING
Investments, LLC (October 2001 to
present) and Lexington Funds
Distributor, Inc. (since December
2001). Formerly, Senior Vice
President and Assistant Secretary
for ING Quantitative Management,
Inc. (October 2001 to October
2002); Vice President, ING
Investments, LLC (April 1997 to
October 1999), and ING Funds
Services, LLC (February 1997 to
August 1999).
Kimberly A. Anderson Vice President February 2001 - present Vice President and Assistant
7337 E. Doubletree Ranch Rd. Secretary of ING Funds Services,
Scottsdale, Arizona 85258 Secretary February 2001 - August LLC, ING Funds Distributor, LLC,
Born: 1964 2003 ING Advisors, Inc., ING
Investments, LLC (since October
2001) and Lexington Funds
Distributor, Inc. (since December
2001). Formerly, Vice President for
ING Quantitative Management, Inc.
(October 2001 to October 2002);
Assistant Vice President of ING
Funds Services, LLC (November 1999
to January 2001) and has held
various other positions with ING
Funds Services, LLC for more than
the last five years.
</Table>
105
<Page>
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
<Table>
<Caption>
PRINCIPAL
TERM OF OFFICE OCCUPATION(S)
NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE
AND AGE HELD WITH THE TRUST TIME SERVED(1) PAST FIVE YEARS
- ----------------------------- --------------------------------- -------------------------- -----------------------------------
Robyn L. Ichilov Vice President October 2000 - present Vice President of ING Funds
7337 E. Doubletree Ranch Rd. Services, LLC (October 2001 to
Scottsdale, Arizona 85258 Treasurer March 2001 - present present) and ING Investments, LLC
Born: 1967 (August 1997 to present);
Accounting Manager, ING
Investments, LLC (November 1995 to
present).
J. David Greenwald Vice President August 2003 - present Vice President of Mutual Fund
7337 E. Doubletree Ranch Rd. Compliance of ING Funds Services,
Scottsdale, Arizona 85258 LLC (May 2003 - Present). Formerly
Born: 1957 Assistant Treasurer and Director of
Mutual Fund Compliance and
Operations of American Skandia, A
Prudential Financial Company
(October 1996 - May 2003).
Lauren D. Bensinger Vice President February 2003 - present Vice President and Chief Compliance
7337 E. Doubletree Ranch Rd. Officer, ING Funds Distributor,
Scottsdale, Arizona 85258 LLC. (July 1995 - Present); Vice
Born: 1957 President (February 1996 - Present)
and Chief Compliance Officer
(October 2001 - Present) ING
Investments, LLC; Vice President
and Chief Compliance Officer, ING
Advisors, Inc. (July 2000 -
Present), Vice President and Chief
Compliance Officer, ING
Quantitative Management, Inc. (July
2000 - September 2002), and Vice
President, ING Fund Services, LLC
(July 1995 - Present).
Theresa Kelety Secretary August 2003 - present Counsel, ING U.S. Financial
7337 E. Doubletree Ranch Rd. Services (April 2003 - Present).
Scottsdale, Arizona 85258 Formerly, Senior Associate with
Born: 1963 Shearman & Sterling (February 2000
- April 2003) and Associate with
Sutherland Asbill & Brennan (1996 -
February 2000).
Todd Modic Vice President August 2003 - present Vice President of Financial
7337 E. Doubletree Ranch Rd. Reporting - Fund Accounting of ING
Scottsdale, Arizona 85258 Assistant Vice President August 2001 - August 2003 Funds Services, LLC (September 2002
Born: 1967 to present). Director of Financial
Reporting of ING Investments, LLC (
March 2001 to September 2002).
Formerly, Director of Financial
Reporting, Axient Communications,
Inc. (May 2000 to January 2001) and
Director of Finance, Rural/Metro
Corporation (March 1995 to May
2000).
Susan P. Kinens Assistant Vice President February 2003 - present Assistant Vice President and
7337 E. Doubletree Ranch Rd. and Assistant Secretary Assistant Secretary, ING Funds
Scottsdale, Arizona 85258 Services, LLC (December 2002 -
Born: 1976 Present); and has held various
other positions with ING Funds
Services, LLC for more than the
last five years.
Maria M. Anderson Assistant Vice President August 2001 - present Assistant Vice President of ING
7337 E. Doubletree Ranch Rd. Funds Services, LLC (since October
Scottsdale, Arizona 85258 2001). Formerly, Manager of Fund
Born: 1958 Accounting and Fund Compliance, ING
Investments, LLC (September 1999 to
November 2001); and Section Manager
of Fund Accounting, Stein Roe
Mutual Funds (July 1998 to August
1999).
</Table>
- ----------
(1) The officers hold office until the next annual meeting of the Trustees and
until their successors have been elected and qualified.
106
<Page>
ING Funds Distributor, LLC offers the funds listed below. Before investing in a
fund, shareholders should carefully review the fund's prospectus. Investors may
obtain a copy of a prospectus of any ING Fund by calling (800) 992-0180.
INTERNATIONAL EQUITY FUNDS
ING Emerging Countries Fund
ING Foreign Fund
ING International Fund
ING International Growth Fund
ING International SmallCap Growth Fund
ING International Value Fund
ING Precious Metals Fund
ING Russia Fund
INTERNATIONAL GLOBAL EQUITY FUNDS
ING Global Equity Dividend Fund
ING Global Real Estate Fund
ING Worldwide Growth Fund
DOMESTIC EQUITY GROWTH FUNDS
ING Growth Fund
ING Growth + Value Fund
ING Growth Opportunities Fund
ING LargeCap Growth Fund
ING MidCap Opportunities Fund
ING SmallCap Opportunities Fund
ING Small Company Fund
ING Technology Fund
ING Disciplined LargeCap Fund
DOMESTIC EQUITY INDEX FUNDS
ING Index Plus LargeCap Fund
ING Index Plus MidCap Fund
ING Index Plus SmallCap Fund
DOMESTIC EQUITY VALUE FUNDS
ING Financial Services Fund
ING MagnaCap Fund
ING Tax Efficient Equity Fund
ING Value Opportunity Fund
ING SmallCap Value Fund
ING MidCap Value Fund
DOMESTIC EQUITY GROWTH AND INCOME FUNDS
ING Equity and Bond Fund
ING Convertible Fund
ING Real Estate Fund
ING Balanced Fund
ING Growth and Income Fund
FIXED INCOME FUNDS
ING Bond Fund
ING Classic Money Market Fund*
ING Government Fund
ING GNMA Income Fund
ING High Yield Opportunity Fund
ING High Yield Bond Fund
ING Intermediate Bond Fund
ING Lexington Money Market Trust*
ING National Tax Exempt Bond Fund
ING Money Market Fund*
ING Aeltus Money Market Fund*
ING Strategic Bond Fund
STRATEGIC ALLOCATION FUNDS
ING Strategic Allocation Growth Fund
ING Strategic Allocation Balanced Fund
ING Strategic Allocation Income Fund
LOAN PARTICIPATION FUND
ING Prime Rate Trust
ING Senior Income Fund
* An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks
to preserve the value of your investment at $1.00 per share, it is possible
to lose money by investing in the Fund.
<Page>
INVESTMENT MANAGER
ING Investments, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258
ADMINISTRATOR
ING Funds Services, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258
DISTRIBUTOR
ING Funds Distributor, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
1-800-334-3444
TRANSFER AGENT
DST Systems, Inc.
P.O. Box 419368
Kansas City, Missouri 64141-6368
CUSTODIAN
Bank of New York
100 Colonial Center Parkway, Suite 300
Lake Mary, FL 32746
LEGAL COUNSEL
Dechert
1775 Eye Street, N.W.
Washington, D.C. 20006
INDEPENDENT AUDITORS
KPMG LLP
99 High Street
Boston, MA 02110-2371
Prospectus containing more complete information regarding the Funds, including
charges and expenses, may be obtained by calling ING Funds Distributor, LLC at
1-800-992-0180. Please read the prospectus carefully before you invest or send
money. The Form N-PX (Proxy Voting Record) will be available without charge,
upon request, by calling 800-992-0180 on or about August 31, 2004; and on the
fund's website at www.ingfunds.com; and on the SEC's website www.sec.gov.
[ING FUNDS LOGO]
FIABCSAR0903-112803
<Page>
SEMI-ANNUAL REPORT
SEMI-ANNUAL REPORT
SEPTEMBER 30, 2003
CLASSES I AND Q
FIXED INCOME FUNDS
ING GNMA INCOME FUND
ING HIGH YIELD OPPORTUNITY FUND
ING INTERMEDIATE BOND FUND
ING STRATEGIC BOND FUND
[GRAPHIC]
[ING FUNDS LOGO]
<Page>
TABLE OF CONTENTS
<Table>
President's Letter 1
Market Perspective 3
Portfolio Managers' Reports 4
Index Descriptions 12
Statements of Assets and Liabilities 13
Statements of Operations 15
Statements of Changes in Net Assets 16
Financial Highlights 20
Notes to Financial Statements 24
Portfolios of Investments 36
Shareholder Meeting Information 55
Trustee and Officer Information 56
</Table>
<Page>
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<Page>
PRESIDENT'S LETTER
[PHOTO OF JAMES M. HENNESSY]
JAMES M. HENNESSY
Dear Shareholder,
What a difference a half a year can make. When writing my last letter to our
shareholders -- six months ago -- it was hard to escape the sense of anxiety
that many investors everywhere were experiencing. Now, less than a year later, I
believe there may be a renewed sense of optimism among investors -- cautious
optimism, to be sure, but optimism nonetheless.
And I believe there are good, solid reasons for this improved outlook. For one,
many key corporations have been reporting profits in recent months. Granted, the
numbers are modest, but they have been noteworthy, consistent and credible
because many of these same companies are employing stricter accounting standards
following the Enron debacle. Going hand-in-hand with these upbeat figures are
the improving price-to-earning ratios and improving valuations that many
investors are now seeing.
The reasons for renewed confidence continue. A year ago, there was much
uncertainty regarding the prospect of war. Now, much of that uncertainty is
behind us. Although many questions remain about the U.S.'s future role in Iraq,
the speed at which Baghdad fell was unprecedented and it brought a sense of calm
to many investors and triggered a positive impact on equities markets, which
reacted to the news with steady growth during the summer months. And while
mortgage and treasury-related sectors may have suffered in the blossoming equity
market, high-yield, floating-rate loan and convertible markets remain strong
enough to attract investors still squeamish about stocks.
This renewed confidence has been tempered, however, by recent events and news
stories concerning mutual fund trading practices, including after-hours trading
and market timing. I want to clearly state that ING Funds does not condone the
illegal practice of after-hours trading. In addition, it has been our
long-standing policy to discourage inappropriate market timing in our funds.
In fact, over the years, ING Funds has taken a variety of steps to address
inappropriate fund trading activity. We were among the first fund groups to
employ innovative techniques such as making extensive use of fair-value pricing
for foreign securities.
ING Funds believes that mutual funds are an important vehicle for individual
investors, because mutual funds provide the opportunity for investment in
professionally managed and monitored, diversified portfolios. As such, we
consider the fair treatment of committed investors to be of the utmost
importance. We continue to look for effective strategies to address fund trading
issues. We hope that the increased attention this issue is now receiving will
make it easier for the industry to effectively address inappropriate fund
trading in the future.
On behalf of everyone at ING Funds, thank you for your continued support. We
look forward to helping you meet your investment goals in the future.
Sincerely,
/s/ James M. Hennessy
James M. Hennessy
President
ING Funds
November 15, 2003
1
<Page>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<Page>
MARKET PERSPECTIVE: SIX MONTHS ENDED SEPTEMBER 30, 2003
This was a remarkable six months for the world's financial markets. The quick
end to major conflict in Iraq meant that risk premia(1) could and did decline
across all major asset classes. Equities and the riskier sectors of the fixed
income markets soared. The less risky parts of the bond market went on a wild
ride and ended up not very far from where they started.
In the FIXED INCOME MARKETS, post-war relief predictably reduced the risk premia
in high yield bonds. They are, after all, high yield because there is
significant chance that investors won't get their principal back. A more stable
business environment reduces that risk. The Credit Suisse First Boston (CSFB)
High Yield Bond Index gained 13.1% during the six months ended September 30th.
Less risky bonds did not perform as well. The Lehman Brothers U.S. Credit Index,
measuring returns on investment grade bonds, rose by 4.7%, while as a whole
government bonds were hard pressed to return their coupons. The Lehman Brothers
Government Bond Index rose just 1.7%. This, however, conceals the tumult in
high-grade bond markets during the period, when almost stock-like volatility was
seen. Much of this can be attributed to Federal Reserve Board's Federal Open
Market Committee ("FOMC" or the "Fed") Chairman Alan Greenspan. In May, he moved
markets by saying that the risk of deflation was small but that the Federal
Reserve might even buy bonds to forestall it, and that a second half recovery
was expected. This sent Treasury yields to decades-long low levels, even as
stocks continued their advance. The ten-year Treasury yield had started April at
3.82%. It sank to 3.10% on June 13th. Bond yields had already come off their low
points when the FOMC disappointed markets on June 25th by reducing the Fed Funds
rate by only 1/4%. But, in mid-July, when Greenspan appeared to downplay the
likelihood that the FOMC would buy bonds after all and presented a sanguine view
of the economy, bond yields started to soar. Bond markets stabilized in August
as it became clear that the slump of the previous month had been overdone. The
ten-year Treasury yield peaked at 4.60%. Then in September, as new doubts
emerged about the strength of the U.S. recovery, and supported by massive
Treasury purchases from abroad, bonds recovered most of what they had lost. By
the end of the period, stressed investors in the ten-year Treasury could reflect
that for all that volatility, the yield on September 30th was 3.94%; just 12
basis points above the rate on March 31st. And, if they sought a quieter life in
Treasury Bills, the price of the three-month T-Bill at September 30th was the
not-so-princely yield of 0.94% per annum.
World EQUITY MARKETS had their best six months in years. Global equities, as
measured by the Morgan Stanley Capital International (MSCI) World Index, jumped
22.7%. In the U.S., the Standard & Poors (S&P) 500 Index rose 18.5%. In tune
with the theme of shrinking risk premia, small cap stocks did much better than
mid cap stocks which in turn substantially outperformed large cap stocks. To
justify this there were increasingly encouraging signs. Second quarter Gross
Domestic Product (GDP) growth estimates were revised up to 3.3%, within which
corporate profits from current production rose 14.3% from the same quarter in
2002. Spending on equipment and software, a proxy for business investment, rose
by 8.3% (quarter over quarter at an annualized rate). Productivity growth was
estimated at the remarkable rate of 6.8%. And yet where were the jobs? The
September unemployment report showed another 93,000 decline in payrolls. The
nagging concern is that while growth, strong productivity and expanding profit
margins are eminently desirable, without jobs growth the recovery must surely
fade as consumers' incomes cannot rise fast enough to sustain it and those who
have a job feel less secure and confident about spending.
In CURRENCIES, the euro and the yen advanced to levels against the dollar not
seen in years, as the belief took hold that the U.S.'s burgeoning trade and
budget deficits, both approaching 5% of GDP, were unsustainable.
- ----------
(1) Risk premium (plural -- "premia") is the expected additional return required
by investors for securities that are perceived to be riskier than safer
investments.
See accompanying index descriptions on page 12.
3
<Page>
ING GNMA INCOME FUND Portfolio Managers' Report
PORTFOLIO MANAGEMENT TEAM: Denis P. Jamison, CFA and Roseann G. McCarthy, Aeltus
Investment Management, Inc. -- the Sub-Adviser.
GOAL: The ING GNMA Income Fund (the "Fund") seeks to generate a high level of
current income, consistent with liquidity and safety of principal, through
investment primarily in Government National Mortgage Association ("Ginnie Mae",
"GNMA") mortgage-backed securities (also known as GNMA Certificates) that are
guaranteed as to the timely payment of principal and interest by the U.S.
Government.
PERFORMANCE: For the six months ended September 30, 2003, the Fund's class Q
shares provided a total return of 1.44% compared to 1.18% for the Lehman
Brothers Mortgage-Backed Securities Index ("Lehman Mortgage Index").
PORTFOLIO SPECIFICS: The Fund has a large percentage of its assets invested in
call-protected, multi-family mortgages, and active duration management often
gives the Fund exposure to thirty-year U.S. Treasury bonds. Accordingly, the
Fund tends to be more sensitive to interest rate changes than other
GNMA-oriented mutual funds. That was apparent in the results for the six months
ended September 30th. From mid-April to mid-June, ten-year bond yields tumbled
about 4% to 3.1%. This was actually bad news for most mortgage investors because
borrowers increasingly refinanced their loans. These prepayments limited the
appreciation of mortgage securities and reduced investment income. With our
emphasis on securities with reduced call risk, the Fund outperformance
continued. For the three months ended June 30th, the Fund out performed the
Lehman Mortgage Index by forty basis points. The market, however, reversed
quickly in late June when it became clear that the Federal Reserve wasn't going
to support the bond market bubble. Yields started to climb and the ten-year U.S.
Treasury bonds reached 4.6% by early September. Unfortunately, we added mortgage
exposure in early July and despite our efforts to reduce interest rate
sensitivity later in the quarter, we couldn't salvage the return. We under
performed our benchmark by about twenty basis points in the three months ended
September 30, 2003, and the losses would have been a lot worse except for a
September bond rally. However, for the six month period as a whole we
outperformed the benchmark, especially due to a September bond market rally.
MARKET OUTLOOK: Bond price volatility increased during the September quarter.
Mortgage investors accounted for some of the increase as they bought and sold
U.S. Treasury securities to offset the swings in portfolio maturity caused by
changes in prepayments. However, investors also were reacting to uncertainties
regarding the pace of economic expansion, the value of the U.S. dollar, and the
massive increase in the Federal budget deficit. These will likely remain
concerns in the coming months. So, we anticipate continued wide price swings for
bonds; this will create both risks and opportunities. The Fund closed the
quarter with 6.5% of its assets in short-term U.S. Treasury securities. If
yields spike higher and investor sentiment for fixed income securities weakens,
we will likely use that liquidity to purchase longer-term bonds and increase the
interest rate sensitivity of the portfolio. And this process will likely be
reversed if the market rallies. We do not anticipate any significant trend
toward either higher or lower yields developing during the next six months.
Caution, flexibility, and liquidity may be the keys to good relative performance
in such a trendless, volatile market, and your Fund appears to be properly
positioned for this environment.
4
<Page>
Portfolio Managers' Report ING GNMA INCOME FUND
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED SEPTEMBER 30, 2003
----------------------------------------------------------
SINCE INCEPTION SINCE INCEPTION
OF CLASS I OF CLASS Q
1 YEAR 01/07/02 02/26/01
------ --------------- ---------------
Class I 3.14% 7.31% --
Class Q 2.88% -- 7.00%
Lehman Brothers Mortgage-Backed
Securities Index 3.50% 6.17%(1) 6.50%(2)
</Table>
The table above illustrates the total return of ING GNMA Income Fund against the
Lehman Brothers Mortgage-Backed Securities Index. The Index is unmanaged and has
no cash in its portfolio, imposes no sales charges and incurs no operating
expenses. An investor cannot invest directly in an index.
The performance table does not reflect the deduction of taxes that a shareholder
will pay on Fund distributions or the redemption of Fund shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Fund. Total returns would have been
lower had there been no waiver to the Fund.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING"
STATEMENTS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
(1) Since inception performance for index is shown from 01/01/02.
(2) Since inception performance for index is shown from 03/01/01.
PRINCIPAL RISK FACTOR(S): The market value of the Fund's portfolio securities
and the Fund's shares are neither insured or guaranteed by the U.S. Government.
GNMA certificates in the Fund's portfolio are subject to early prepayment. Net
Asset Value and Yield fluctuate. The value of the Fund's investment may fall
when interest rates rise. This Fund may be particularly sensitive to interest
rates because it primarily invests in U.S. Government securities. Debt
securities with longer durations tend to be more sensitive to changes in
interest rates, usually making them more voatile then debt securities with
shorter durations. Although FNMA and FHLMC are government sponsored enterprises,
their securities are not backed by the full faith and credit of the U.S.
Government. Consequently, there are somewhat greater credit risks involved with
investing in securities issued by those entities.
See accompanying index descriptions on page 12.
5
<Page>
ING HIGH YIELD OPPORTUNITY FUND Portfolio Managers' Report
PORTFOLIO MANAGEMENT TEAM: A team of investment professionals led by Greg
Jacobs, CFA and Kurt Kringelis, CFA, CPA, Aeltus Investment Management, Inc. --
the Sub-Adviser.
GOAL: The ING High Yield Opportunity Fund (the "Fund") seeks a high level of
current income and capital growth primarily through investments in high yield
(high risk) debt securities, which are commonly referred to as "Junk Bonds",
including those in the lowest ratings.
PERFORMANCE: For the six months ended September 30, 2003, the Fund's class Q
shares provided a total return of 7.95% compared to 13.07% for the Credit Suisse
First Boston High Yield Bond Index ("CSFB High Yield Bond Index").
PORTFOLIO SPECIFICS: The health of the high yield bond market is often dependent
on factors generally associated with equity investments. Recent economic
releases have demonstrated that consumers are willing to spend their tax relief,
and massive mortgage refinancing continues to have a beneficial impact on
disposable incomes. A number of monthly barometers have exceeded consensus
forecasts recently. Despite decreasing job contraction and the pace of layoffs,
many observers remain disquieted by the slow pace of recovery, the domestic
unemployment picture and poor consumer confidence.
Returns for the Fund lagged the index over the last six months primarily due to
the portfolio's conservative quality and sector positioning. Specifically, the
Fund's underweight in CCC and lower grade securities, as well as its underweight
in volatile sectors such as finance and utilities, contributed significantly to
underperformance.
From a fundamental standpoint, we remain constructive on the high yield market.
Issuers in general have been more focused on balance sheet maintenance than
financing growth plans. Many companies have taken advantage of the strong market
in 2003 to refinance debt and extend scheduled maturities. As a result, we have
seen the annual default rate for the high yield market drop from over 10% a year
to about 5% currently.
MARKET OUTLOOK: Notwithstanding the fundamental improvements and achieved
returns, opportunities abound. We believe that current trends will continue over
the next 6-12 months, causing further spread tightening across the market. The
outlook for a stronger fourth calendar quarter is compelling especially with the
consumer so willing to spend. The twin deficits -- federal and current account
- -- will remain challenges; and we are not optimistic on the dollar. An upward
economic trajectory is becoming more apparent, but the slope and speed of
improvement may be less than past recoveries.
As the fundamental environment improves, we expect that the high yield market
will continue to reward risk takers, and we have added exposure to lower-rated,
more volatile credits. However, we have not and will not deviate from our
long-term investment philosophy of building a portfolio consisting of sound
fundamental credits with solid balance sheets and improving operations.
Consistent with our philosophy, we will continue to be conservatively positioned
compared to the benchmark, though we have taken steps to bridge the risk gap
between the Fund and the benchmark.
6
<Page>
Portfolio Managers' Report ING HIGH YIELD OPPORTUNITY FUND
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED SEPTEMBER 30, 2003
--------------------------------------------------------
SINCE INCEPTION
OF CLASS Q
1 YEAR 5 YEAR 03/27/98
------ ------ ---------------
Class Q 17.68% 1.17% 0.06%
Credit Suisse First Boston
High Yield Bond Index 28.05% 5.81% 4.30%(1)
</Table>
The table above illustrates the total return of ING High Yield Opportunity Fund
against the Credit Suisse First Boston High Yield Bond Index. The Index is
unmanaged and has no cash in its portfolio, imposes no sales charges and incurs
no operating expenses. An investor cannot invest directly in an index.
The performance table does not reflect the deduction of taxes that a shareholder
will pay on Fund distributions or the redemption of Fund shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Fund. Total returns would have been
lower had there been no waiver to the Fund.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING"
STATEMENTS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY.
(1) Since inception performance for index is shown from 04/01/98.
PRINCIPAL RISK FACTOR(S): The Fund may be subject to more credit risk than other
income funds because it invests in high yield (or junk bond) debt securities,
which are considered predominately speculative with respect to the issuer's
continuing ability to meet interest and principal payments. This is especially
true during periods of economic uncertainty or economic downturns. The value of
the Fund's investments may fall when interest rates rise. Debt securities with
longer durations tend to be more sensitive to changes in interest rates, usually
making them more volatile than debt securities with shorter durations. High
yield bonds carry particular market risks and may experience greater volatility
and may be less liquid than higher quality investments. Foreign investing and
emerging markets do 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.
Investment in small-capitalization companies involves greater risk than is
customarily associated with larger, more established companies. The Fund could
lose money if it cannot sell a security at the time and price that would be most
beneficial to the Fund. Investment in small-capitalization companies involves
greater risk than is customarily associated with larger, more-established
companies. The securities may have limited market stability and may be subject
to more erratic market movements than securities of larger, more established
companies or the market averages in general.
See accompanying index descriptions on page 12.
7
<Page>
ING INTERMEDIATE BOND FUND Portfolio Managers' Report
PORTFOLIO MANAGEMENT: A team of investment professionals led by James B.
Kauffmann, Aeltus Investment Management, Inc. -- the Sub-Adviser.
GOAL: The ING Intermediate Bond Fund (the "Fund") seeks to provide investors
with a high level of current income, consistent with the preservation of capital
and liquidity by investing at least 80% of its assets in investment grade debt
securities.
PERFORMANCE: For the six months ended September 30, 2003, the Fund's class I
shares provided a total return of 2.86% compared to 2.35% for the Lehman
Brothers Aggregate Bond Index.
PORTFOLIO SPECIFICS: Our investment process seeks to outperform the Lehman
Brothers Aggregate Bond Index by emphasizing bond categories we believe are
attractive in terms of relative value and by selecting specific bonds that we
believe are the best opportunities in each category. Over the six-month period,
we tended to favor bonds issued by corporations, for example industrial,
financial and utility bonds, and also bonds supported by pools of mortgages on
real estate of various kinds.
From March 31, 2003 through September 30, 2003 the bond market produced positive
returns each month except June and July. The Fund generated its best return
compared to the Index in April, primarily because corporate bonds were the best
performing category, the Fund had an above-benchmark allocation to them, and the
bonds we owned produced better returns than the average for the corporate bond
sector.
After reaching forty-five year lows early in June, bond yields abruptly reversed
direction and climbed over 100 basis points (based on the ten-year U.S. Treasury
note), leaving July with the worst monthly decline in bond market values in
several years.
In fact, July witnessed one of the worst bond routs in memory, and it was the
only month in which the Fund did not outperform the Index. Hedging in the
mortgage market, confusing announcements from the Federal Reserve Board, and
positive economic releases together motivated investors to sell bonds and invest
elsewhere. Our process seldom leads us to make major adjustments based on the
outlook for interest rates. Accordingly, the Fund's modest underperformance in
July, when rates climbed sharply, was solely due to the Fund's positioning in
sectors and securities, and not a consequence of any attempt to forecast rates.
In the third calendar quarter overall, lower risk issues lagged behind as buyers
scrambled to add yield and became more comfortable with the macro economic
outlook. The bond groups we follow closely included, Agency bonds, which posted
a -0.35% return relative to similar U.S. Treasuries, following a summer full of
negative headlines, and mortgage-backed securities which sagged as well, -1.19%
during the quarter. On the other hand, credit-sensitive bonds had positive
excess returns, as risk aversion seemed to diminish. Industrials posted 0.89%,
financials posted 0.68%, and, despite a massive power blackout in the northeast
and mid-west, utilities were up 0.38% (all compared to similar U.S. Treasuries).
In general, the Fund benefited from a modest overweight to credit sensitive
bonds -- especially lower rated issues. In particular, our investment in high
yield bonds (issued by corporations judged to have relatively high credit risk)
and emerging market debt (bonds issued in developing market countries) produced
strong returns. Both sectors' returns are well into double digits calendar
year-to-date, and enhanced the Fund's performance over the entire reporting
period. Some deft trading in mortgage-backed securities and Agency bonds also
added value.
MARKET OUTLOOK: We believe that tax cuts, reduced corporate borrowing costs, and
negative real short rates are pushing the economy forward. Most domestic
economic measures are improving with the exception of unemployment, and
near-term prospects for inflationary problems remain muted. In our view, the
outlook going forward is compelling, especially with the consumer so willing to
spend. The twin deficits -- federal and current account -- will remain
challenges; and we are not optimistic on the dollar. Tactically, we are
overweight home and commercial mortgage-backed bonds, asset-backed securities,
and longer-dated corporate bonds, as well as high yield and emerging market
debt.
8
<Page>
Portfolio Managers' Report ING INTERMEDIATE BOND FUND
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED SEPTEMBER 30, 2003
----------------------------------------
SINCE INCEPTION
1 YEAR 01/08/02
------ ---------------
Class I 6.28% 8.70%
Lehman Brothers Aggregate Bond Index 5.41% 8.00%(1)
</Table>
The table above illustrates the total return of ING Intermediate Bond Fund
against the Lehman Brothers Aggregate Bond Index. The Index is unmanaged and has
no cash in its portfolio, imposes no sales charges and incurs no operating
expenses. An investor cannot invest directly in an index.
The performance table does not reflect the deduction of taxes that a shareholder
will pay on Fund distributions or the redemption of Fund shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Fund. Total returns would have been
lower had there been no waiver to the Fund.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING"
STATEMENTS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY.
(1) Since inception performance for index is shown from 01/01/02.
PRINCIPAL RISK FACTOR(S): Exposure to financial, market, prepayment and interst
rate risks. The value of an investment in the Fund is not guaranteed and will
fluctuate. Higher yeilding bonds are subject to greater volatility and credit
risks. The Fund invests in securities guaranteed by the U.S. Government as to
timely payment of interest and principal, but Fund shares are not insured or
guaranteed. Bonds have fixed principal and return if held to maturity, but may
fluctuate in the interim. The principal risks of investing in the Fund are those
generally attributable to bond investing, including increases in interest rates.
Generally, when interest rates rise, bond prices fall. Bonds with longer
maturities tend to be more sensitive to changes in interest rates. International
investing involves special risks including currency fluctuations, lower
liquidity, political and economic uncertainties and differences in accounting
standards. The Fund could lose money if it cannot sell a security at the time
and price that would be most beneficial to the Fund. Derivatives are subject to
the risk of loss due to changes in interest rates. The use of certain
derivatives may also have a leveraging effect, which may increase the volatility
of the Fund.
See accompanying index descriptions on page 12.
9
<Page>
ING STRATEGIC BOND FUND Portfolio Managers' Report
PORTFOLIO MANAGEMENT: A team of the Sub-Adviser's investment professionals led
by James B. Kaufmann, Aeltus Investment Management, Inc. -- the Sub-Adviser.
GOAL: The ING Strategic Bond Fund (the "Fund") seeks maximum total return by
investing primarily in debt securities issued by U.S. and foreign entities, as
well as U.S. and foreign governments and their agencies and instrumentalities,
that are rated investment grade by a nationally recognized statistical rating
agency, or of comparable quality if unrated.
PERFORMANCE: For the six months ended September 30, 2003, the Fund's class Q
shares provided a total return of 3.36% compared to the Lehman Brothers
Aggregate Bond Index, which returned 2.35% for the same period.
PORTFOLIO SPECIFICS: Our investment process seeks to outperform the Lehman
Brothers Aggregate Bond Index by emphasizing bond categories we believe are
attractive in terms of relative value and by selecting specific bonds that we
believe are the best opportunities in each category. Over the six-month period,
we tended to favor bonds issued by corporations, for example industrial,
financial and utility bonds, and also bonds supported by pools of mortgages on
real estate of various kinds.
From March 31, 2003 through September 30, 2003 the bond market produced positive
returns each month except June and July. The Fund generated its best return
compared to the Index in April, primarily because corporate bonds were the best
performing category, the Fund had an above-benchmark allocation to them, and the
bonds we owned produced better returns than the average for the corporate bond
sector.
After reaching forty-five year lows early in June, bond yields abruptly reversed
direction and climbed over 100 basis points (based on the ten-year U.S. Treasury
note), leaving July with the worst monthly decline in bond market values in
several years.
In fact, July witnessed one of the worst bond routs in memory, and it was the
only month in which the Fund did not outperform the Index. Hedging in the
mortgage market, confusing announcements from the Federal Reserve Board, and
positive economic releases together motivated investors to sell bonds and invest
elsewhere. Our process seldom leads us to make major adjustments based on the
outlook for interest rates. Accordingly, the Fund's modest underperformance in
July, when rates climbed sharply, was solely due to the Fund's positioning in
sectors and securities, and not a consequence of any attempt to forecast rates.
In the third calendar quarter overall, lower-risk issues lagged behind as buyers
scrambled to add yield and became more comfortable with the macro economic
outlook. The bond groups we follow closely, Agency bonds, posted a -0.35% return
relative to similar U.S. Treasuries, which following a summer full of negative
headlines, and mortgage-backed securities which sagged as well, -1.19% during
the quarter. On the other hand, credit-sensitive bonds had positive excess
returns, as risk aversion seemed to diminish. Industrials posted 0.89%,
financials posted 0.68%, and despite a massive power blackout in the northeast
and mid-west, utilities were up 0.38% (all compared to similar U.S. Treasuries).
In general, the Fund benefited from a modest overweight to credit sensitive
bonds -- especially lower rated issues. In particular, our investment in high
yield bonds (issued by corporations judged to have relatively high credit risk)
and emerging market debt (bonds issued in developing market countries) produced
strong returns. Both sectors' returns are well into double digits calendar
year-to-date, and enhanced the portfolio's performance over the entire reporting
period. Some deft trading in mortgage-backed securities and Agency bonds also
added value.
MARKET OUTLOOK: We believe that tax cuts, reduced corporate borrowing costs, and
negative real short rates are pushing the economy forward. Most domestic
economic measures are improving with the exception of unemployment, and
near-term prospects for inflationary problems remain muted. In our view, the
outlook going forward is compelling, especially with the consumer so willing to
spend. The twin deficits -- federal and current account -- will remain
challenges; and we are not optimistic on the dollar. Tactically, we are
overweight home and commercial mortgage-backed bonds, asset-backed securities,
and longer-dated corporate bonds, as well as high yield and emerging market
debt.
10
<Page>
Portfolio Managers' Report ING STRATEGIC BOND FUND
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED SEPTEMBER 30, 2003
----------------------------------------
SINCE INCEPTION
1 YEAR 5 YEAR 7/27/98
------ ------ ---------------
Class Q 8.11% 3.88% 4.22%
Lehman Brothers Aggregate Bond Index 5.41% 6.63% 7.22%(1)
</Table>
The table above illustrates the total return of ING Strategic Bond Fund against
the Lehman Brothers Aggregate Bond Index. The Index is unmanaged and has no cash
in its portfolio, imposes no sales charges and incurs no operating expenses. An
investor cannot invest directly in an index.
The performance table does not reflect the deduction of taxes that a shareholder
will pay on Fund distributions or the redemption of Fund shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Fund. Total returns would have been
lower had there been no waiver to the Fund.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING"
STATEMENTS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY.
(1) Since inception performance for index is shown from 08/01/98.
PRINCIPAL RISK FACTOR(S): High yield bonds have exposure to financial, market
and interest rate risks. High yields reflect the higher credit risks associated
with certain lower rated securities in the Fund's portfolio, and in some cases,
the lower market prices for those instruments. The Fund's investments in
mortgage-related securities may entail prepayment risk. The Fund may invest up
to 30% of its total assets in securities payable in foriegn currencies.
International investing does pose special risks, including currency fluctuation
and political risks not found in domestic investments. High yield securities may
be less liquid than higher quality investments. The Fund could lose money if it
cannot sell a secruity at the time and price that would be most beneficial to
the Fund. Derivatives are subject to the risk of changes in the market and the
risk of loss due to changes in interest rates. The use of certain derivatives
may also have a leveraging effect, which may increase the volatility of the
Fund.
See accompanying index descriptions on page 12.
11
<Page>
INDEX DESCRIPTIONS
THE CREDIT SUISSE FIRST BOSTON HIGH YIELD BOND INDEX serves as a benchmark to
evaluate the performance of low quality bonds. Low quality is defined as those
bonds in the range from BBB to CCC and defaults.
THE LEHMAN BROTHERS AGGREGATE BOND INDEX is a widely recognized, unmanaged index
of publicly issued investment grade U.S. Government, mortgage-backed,
asset-backed and corporate debt securities.
THE LEHMAN BROTHERS GOVERNMENT BOND INDEX is an index made up of the Treasury
Bond Index and the Agency Bond Index as well as the 1-3 Year Government Index
and the 20+ Year Treasury Index.
THE LEHMAN BROTHERS MORTGAGE-BACKED SECURITIES INDEX is an unmanaged index
composed of fixed income security mortgage pools sponsored by GNMA, FNMA and
FHLMC, including GNMA Graduated Payment Mortgages.
THE LEHMAN BROTHERS U.S. CREDIT INDEX includes investment grade bonds issued by
corporations and non-corporate entities.
THE MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDEX is an unmanaged index that
measures the performance of over 1,400 securities listed on exchanges in the
U.S., Europe, Canada, Australia, New Zealand and the Far East.
THE STANDARD & POORS 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.
All indices are unmanaged.
An investor cannot invest directly in an index.
12
<Page>
STATEMENTS OF ASSETS AND LIABILITIES as of September 30, 2003 (Unaudited)
<Table>
<Caption>
ING ING ING
ING HIGH YIELD INTERMEDIATE STRATEGIC
GNMA INCOME OPPORTUNITY BOND BOND
FUND FUND FUND FUND
-------------- -------------- -------------- --------------
ASSETS:
Investments in securities at value* $ 843,124,561 $ 299,092,061 $ 373,571,405 $ 44,959,770
Short-term investments at amortized cost -- 7,261,000 12,634,000 9,050,000
Cash 404,959 778,977 -- 7,237
Receivables:
Investment securities sold -- 640,575 43,744,094 5,502,122
Fund shares sold 517,672 212,115 1,071,712 27,279
Dividends and interest 3,915,629 7,498,567 2,364,897 357,341
Other investments -- 82,978,167 71,635,383 7,753,044
Prepaid expenses 69,256 69,998 32,882 34,898
Reimbursement due from manager -- -- 2,005 2,789
-------------- -------------- -------------- --------------
Total assets 848,032,077 $ 398,531,460 $ 505,056,378 $ 67,694,480
-------------- -------------- -------------- --------------
LIABILITIES:
Payable for investment securities purchased 1,040,827 1,406,650 101,369,045 12,700,783
Payable for fund shares redeemed 413,821 1,173,772 358,494 64,181
Income distribution payable -- 1,421,474 786,367 --
Payable upon return of securities loaned -- 82,978,167 71,635,383 7,753,044
Payable to affiliates 715,354 409,318 303,946 39,969
Payable to custodian -- -- 155,520 --
Payable for trustee fees 47,233 12,838 1,013 5,635
Other accrued expenses and liabilities 539,660 363,632 136,126 165,080
-------------- -------------- -------------- --------------
Total liabilities 2,756,895 87,765,851 174,745,894 20,728,692
-------------- -------------- -------------- --------------
NET ASSETS $ 845,275,182 $ 310,765,609 $ 330,310,484 $ 46,965,788
============== ============== ============== ==============
NET ASSETS WERE COMPRISED OF:
Paid-in capital $ 822,679,957 $ 780,359,904 $ 321,181,852 $ 57,414,336
Undistributed net investment income
(accumulated net investment loss) 4,995,837 (6,382,367) 390,371 (108,578)
Accumulated net realized gain (loss) on
investments and foreign currencies (14,898,286) (431,430,648) 3,823,574 (10,786,814)
Net unrealized appreciation (depreciation) of
investments and foreign currencies 32,497,674 (31,781,280) 4,914,687 446,844
-------------- -------------- -------------- --------------
NET ASSETS $ 845,275,182 $ 310,765,609 $ 330,310,484 $ 46,965,788
============== ============== ============== ==============
* Cost of securities $ 810,626,887 $ 330,873,783 $ 368,656,718 $ 44,512,926
</Table>
See Accompanying Notes to Financial Statements
13
<Page>
STATEMENTS OF ASSETS AND LIABILITIES as of September 30, 2003 (Unaudited)
<Table>
<Caption>
ING ING ING
ING HIGH YIELD INTERMEDIATE STRATEGIC
GNMA INCOME OPPORTUNITY BOND BOND
FUND FUND FUND FUND
-------------- -------------- -------------- --------------
CLASS A:
Net Assets $ 615,775,686 $ 90,696,180 $ 184,329,456 $ 30,255,617
Shares authorized unlimited unlimited unlimited unlimited
Par value $ 0.001 $ 0.001 $ 0.001 $ 0.001
Shares outstanding 69,121,800 13,137,554 17,351,942 2,669,979
Net asset value and redemption price per share $ 8.91 $ 6.90 $ 10.62 $ 11.33
Maximum offering price per share (4.75%)(1) $ 9.35 $ 7.24 $ 11.15 $ 11.90
CLASS B:
Net Assets $ 142,380,380 $ 191,575,361 $ 66,223,305 $ 13,144,211
Shares authorized unlimited unlimited unlimited unlimited
Par value $ 0.001 $ 0.001 $ 0.001 $ 0.001
Shares outstanding 16,055,457 27,597,254 6,245,459 1,190,974
Net asset value and redemption price per share(2) $ 8.87 $ 6.94 $ 10.60 $ 11.04
Maximum offering price per share $ 8.87 $ 6.94 $ 10.60 $ 11.04
CLASS C:
Net Assets $ 78,337,481 $ 25,114,873 $ 65,973,569 $ 3,470,322
Shares authorized unlimited unlimited unlimited unlimited
Par value $ 0.001 $ 0.001 $ 0.001 $ 0.001
Shares outstanding 8,823,856 3,620,176 6,217,644 298,567
Net asset value and redemption price per share(2) $ 8.88 $ 6.94 $ 10.61 $ 11.62
Maximum offering price per share $ 8.88 $ 6.94 $ 10.61 $ 11.62
CLASS I:
Net Assets $ 8,190,350 n/a $ 13,784,154 n/a
Shares authorized unlimited n/a unlimited n/a
Par value $ 0.001 n/a $ 0.001 n/a
Shares outstanding 918,588 n/a 1,297,446 n/a
Net asset value and redemption price per share $ 8.92 n/a $ 10.62 n/a
Maximum offering price per share $ 8.92 n/a $ 10.62 n/a
CLASS M:
Net Assets $ 438,450 $ 3,216,991 n/a n/a
Shares authorized unlimited unlimited n/a n/a
Par value $ 0.001 $ 0.001 n/a n/a
Shares outstanding 49,156 466,367 n/a n/a
Net asset value and redemption price per share $ 8.92 $ 6.90 n/a n/a
Maximum offering price per share (3.25%)(3) $ 9.22 $ 7.13 n/a n/a
CLASS Q:
Net Assets $ 152,835 $ 162,204 n/a $ 95,638
Shares authorized unlimited unlimited n/a unlimited
Par value $ 0.001 $ 0.001 n/a $ 0.001
Shares outstanding 17,139 23,429 n/a 8,952
Net asset value and redemption price per share $ 8.92 $ 6.92 n/a $ 10.68
Maximum offering price per share $ 8.92 $ 6.92 n/a $ 10.68
</Table>
- ----------
(1) Maximum offering price is computed at 100/95.25 of net asset value. On
purchases of $50,000 or more, the offering price is reduced.
(2) Redemption price per share may be reduced for any applicable contingent
deferred sales charge.
(3) Maximum offering price is computed at 100/96.75 of net asset value. On
purchases of $50,000 or more, the offering price is reduced.
See Accompanying Notes to Financial Statements
14
<Page>
STATEMENTS OF OPERATIONS for the six months ended September 30, 2003 (Unaudited)
<Table>
<Caption>
ING ING ING
ING HIGH YIELD INTERMEDIATE STRATEGIC
GNMA INCOME OPPORTUNITY BOND BOND
FUND(1) FUND(1) FUND FUND
-------------- -------------- -------------- --------------
INVESTMENT INCOME:
Dividends $ -- $ 166,163 $ 7,072 $ 14,434*
Interest 25,464,540 13,178,984 6,583,738 1,250,177
Securities lending income 116,805 12,889 10,211 1,240
-------------- -------------- -------------- --------------
Total investment income 25,581,345 13,358,036 6,601,021 1,265,851
-------------- -------------- -------------- --------------
EXPENSES:
Investment management fees 2,159,348 997,546 784,868 109,522
Distribution and service fees:
Class A 809,912 184,934 301,498 54,042
Class B 744,711 973,705 328,762 51,632
Class C 430,468 131,865 307,873 14,783
Class M 3,154 12,457 -- --
Class Q 220 934 -- 119
Class T 6,436 5,355 -- --
Transfer agent fees:
Class A 369,169 88,597 132,390 36,580
Class B 86,228 160,226 50,572 16,316
Class C 49,841 21,646 47,497 4,671
Class I 2,112 -- 226 --
Class M 493 1,300 -- --
Class Q 46 194 -- 24
Class T 1,947 1,697 -- --
Administrative service fees 446,081 166,445 156,972 24,354
Shareholder reporting expense 126,710 91,613 22,331 11,644
Registration fees 71,133 50,085 26,722 29,915
Professional fees 64,263 81,478 16,080 6,792
Custody and accounting expense 85,886 30,515 40,251 5,940
Trustee fees 18,856 5,686 1,607 1,716
Insurance expense 7,644 3,953 925 565
Miscellaneous expense 9,461 5,911 1,998 355
-------------- -------------- -------------- --------------
Total expenses 5,494,119 3,016,142 2,220,572 368,970
-------------- -------------- -------------- --------------
Less:
Net waived and reimbursed fees -- 94,043 85,791 52,817
-------------- -------------- -------------- --------------
Net expenses 5,494,119 2,922,099 2,134,781 316,153
-------------- -------------- -------------- --------------
Net investment income 20,087,226 10,435,937 4,466,240 949,698
-------------- -------------- -------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, FOREIGN CURRENCIES AND
FUTURES:
Net realized gain (loss) on:
Investments 958,028 (5,673,866) 1,863,310 1,405,950
Foreign currencies -- -- 11,870 --
Futures -- -- (916,783) --
-------------- -------------- -------------- --------------
Net realized gain (loss) on investments
and foreign currencies 958,028 (5,673,866) 958,397 1,405,950
-------------- -------------- -------------- --------------
Net change in unrealized appreciation
(depreciation) on Investments (10,656,605) 20,471,526 1,563,727 (829,192)
-------------- -------------- -------------- --------------
Net realized and unrealized gain (loss) on
investments, foreign currencies and futures (9,698,577) 14,797,660 2,522,124 576,758
-------------- -------------- -------------- --------------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 10,388,649 $ 25,233,597 $ 6,988,364 $ 1,526,456
============== ============== ============== ==============
</Table>
- ----------
(1) Effective June 2, 2003, Class "T" shares converted into the corresponding
Class "A" shares within this portfolio.
* Dividends from investment in mutual fund(s) that are within the ING Family
of Funds.
See Accompanying Notes to Financial Statements
15
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
<Table>
<Caption>
ING GNMA INCOME FUND
-------------------------------------
SIX MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, MARCH 31,
2003(1) 2003
-------------- --------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 20,087,226 $ 36,889,960
Net realized gain on investments 958,028 5,042,643
Net change in unrealized appreciation (depreciation) of investments (10,656,605) 34,018,750
-------------- --------------
Net increase in net assets resulting from operations 10,388,649 75,951,353
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A (15,571,568) (29,495,907)
Class B (3,051,558) (4,693,328)
Class C (1,758,472) (2,537,958)
Class I (207,999) (220,288)
Class M (18,709) (40,111)
Class Q (4,291) (10,700)
Class T (101,868) (469,273)
-------------- --------------
Total distributions (20,714,465) (37,467,565)
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 198,548,726 821,729,875
Dividends reinvested 13,884,174 30,193,127
-------------- --------------
212,432,900 851,923,002
Cost of shares redeemed (279,591,762) (633,633,432)
-------------- --------------
Net increase (decrease) in net asset resulting from capital share transactions (67,158,862) 218,289,570
-------------- --------------
Net increase (decrease) in net assets (77,484,678) 256,773,358
NET ASSETS:
Net assets, beginning of period 922,759,860 665,986,502
-------------- --------------
Net assets, end of period $ 845,275,182 $ 922,759,860
============== ==============
Undistributed net investment income $ 4,995,837 $ 5,623,076
============== ==============
</Table>
- ----------
(1) Effective June 2, 2003, Class "T" shares converted into the corresponding
Class "A" shares within this portfolio.
See Accompanying Notes to Financial Statements
16
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
<Table>
<Caption>
ING HIGH YIELD OPPORTUNITY FUND
-------------------------------------
SIX MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, MARCH 31,
2003(1) 2003
-------------- --------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 10,435,937 $ 30,457,234
Net realized loss on investments and foreign currencies (5,673,866) (96,633,896)
Net change in unrealized appreciation of investments and foreign currencies 20,471,526 56,996,543
-------------- --------------
Net increase (decrease) in net assets resulting from operations 25,233,597 (9,180,119)
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A (4,317,058) (9,456,286)
Class B (7,216,672) (21,289,988)
Class C (981,907) (2,702,939)
Class M (127,743) (371,212)
Class Q (32,884) (155,515)
Class T (77,747) (768,604)
-------------- --------------
Total distributions (12,754,011) (34,744,544)
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 160,250,385 133,859,674
Net proceeds from shares issued in merger -- 165,224,943
Dividends reinvested 4,112,746 12,333,581
-------------- --------------
164,363,131 311,418,198
Cost of shares redeemed (195,711,533) (171,385,626)
-------------- --------------
Net increase (decrease) in net asset resulting from capital share transactions (31,348,402) 140,032,572
-------------- --------------
Net increase (decrease) in net assets (18,868,816) 96,107,909
NET ASSETS:
Net assets, beginning of period 329,634,425 233,526,516
-------------- --------------
Net assets, end of period $ 310,765,609 $ 329,634,425
============== ==============
Accumulated net investment loss $ (6,382,367) $ (4,064,293)
============== ==============
</Table>
- ----------
(1) Effective June 2, 2003, Class "T" Shares converted into the corresponding
"A" Shares within this portfolio.
See Accompanying Notes to Financial Statements
17
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
<Table>
<Caption>
ING INTERMEDIATE BOND FUND
-------------------------------------
SIX MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, MARCH 31,
2003 2003
-------------- --------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 4,466,240 $ 4,368,653
Net realized gain on investments 958,397 6,354,721
Net change in unrealized appreciation of investments 1,563,727 3,644,655
-------------- --------------
Net increase in net assets resulting from operations 6,988,364 14,368,029
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A (2,687,394) (2,646,393)
Class B (787,682) (883,176)
Class C (734,231) (640,872)
Class I (268,643) (477,266)
Net realized gain from investments:
Class A -- (1,231,072)
Class B -- (615,852)
Class C -- (439,608)
Class I -- (189,306)
-------------- --------------
Total distributions (4,477,950) (7,123,545)
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 169,029,601 332,254,935
Dividends reinvested 2,368,595 5,172,910
-------------- --------------
171,398,196 337,427,845
Cost of shares redeemed (119,816,449) (137,354,984)
-------------- --------------
Net increase in net asset resulting from capital share transactions 51,581,747 200,072,861
-------------- --------------
Net increase in net assets 54,092,161 207,317,345
NET ASSETS:
Net assets, beginning of period 276,218,323 68,900,978
-------------- --------------
Net assets, end of period $ 330,310,484 $ 276,218,323
============== ==============
Undistributed net investment income $ 390,371 $ 402,081
============== ==============
</Table>
See Accompanying Notes to Financial Statements
18
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
<Table>
<Caption>
ING STRATEGIC BOND FUND
-------------------------------------
SIX MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, MARCH 31,
2003 2003
-------------- --------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 949,698 $ 2,452,863
Net realized gain (loss) on investments and foreign currencies 1,405,950 (1,656,314)
Net change in unrealized appreciation (depreciation) of investments
and foreign currencies (829,192) 3,254,804
-------------- --------------
Net increase in net assets resulting from operations 1,526,456 4,051,353
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A (741,219) (1,899,039)
Class B (305,178) (676,354)
Class C (80,738) (238,634)
Class Q (2,596) (13,330)
-------------- --------------
Total distributions (1,129,731) (2,827,357)
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 29,822,446 47,353,582
Dividends reinvested 555,178 2,080,078
-------------- --------------
30,377,624 49,433,660
Cost of shares redeemed (33,193,802) (52,572,135)
-------------- --------------
Net decrease in net asset resulting from capital share transactions (2,816,178) (3,138,475)
-------------- --------------
Net decrease in net assets (2,419,453) (1,914,479)
NET ASSETS:
Net assets, beginning of period 49,385,241 51,299,720
-------------- --------------
Net assets, end of period $ 46,965,788 $ 49,385,241
============== ==============
Undistributed net investment income (accumulated net investment loss) $ (108,578) $ 71,455
============== ==============
</Table>
See Accompanying Notes to Financial Statements
19
<Page>
ING GNMA INCOME FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS I CLASS Q
------------------------------------ -------------------------------------------------
SIX MONTHS YEAR JANUARY 7, SIX MONTHS YEAR YEAR FEBRUARY 26,
ENDED ENDED 2002(2) TO ENDED ENDED ENDED 2001(2) TO
SEPTEMBER 30, MARCH 31, MARCH 31, SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31,
2003(1) 2003 2002 2003(1) 2003 2002 2001
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 9.01 8.54 8.61 9.01 8.54 8.63 8.51
Income (loss) from investment operations:
Net investment income $ 0.21 0.44 0.10 0.22 0.44 0.39 0.04
Net realized and unrealized gain (loss)
on investments $ (0.07) 0.50 (0.10) (0.09) 0.47 (0.01) 0.08
Total from investment operations $ 0.14 0.94 0.00 0.13 0.91 0.38 0.12
Less distributions from:
Net investment income $ 0.23 0.47 0.07 0.22 0.44 0.47 --
Total distributions $ 0.23 0.47 0.07 0.22 0.44 0.47 --
Net asset value, end of period $ 8.92 9.01 8.54 8.92 9.01 8.54 8.63
TOTAL RETURN(3) % 1.57 11.18 0.04 1.44 10.90 4.50 1.41
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 8,190 6,946 1,615 153 183 204 476
Ratios to average net assets:
Expenses(4) % 0.72 0.78 0.88 0.97 1.04 1.12 1.14
Net investment income(4) % 4.96 5.00 5.83 4.75 4.89 5.35 5.42
Portfolio turnover rate % 101 75 76 101 75 76 33
</Table>
(1) Effective August 1, 2003, ING Investments, LLC appointed Aeltus Investment
Management, Inc. as Sub-Adviser.
(2) Commencement of operations of class.
(3) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value. Total return for less than
one year is not annualized.
(4) Annualized for periods less than one year.
See Accompanying Notes to Financial Statements.
20
<Page>
ING HIGH YIELD OPPORTUNITY FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS Q
-------------------------------------------------------------------------------------
SIX MONTHS YEAR YEAR NINE MONTHS YEAR THREE MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, JUNE 30, JUNE 30, MARCH 31,
2003(1) 2003 2002 2001(2) 2000 1999(3) 1999
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 6.68 7.54 8.71 10.82 11.59 11.68 12.72
Income (loss) from investment operations:
Net investment income $ 0.34 0.57 0.78 0.83 1.20 0.30 1.16
Net realized and unrealized gain (loss)
on investments $ 0.21 (0.62) (0.94) (2.07) (0.76) (0.11) (1.01)
Total from investment operations $ 0.55 (0.05) (0.16) (1.24) 0.44 0.19 0.15
Less distributions from:
Net investment income $ 0.31 0.81 1.01 0.87 1.21 0.28 1.19
Total distributions $ 0.31 0.81 1.01 0.87 1.21 0.28 1.19
Net asset value, end of period $ 6.92 6.68 7.54 8.71 10.82 11.59 11.68
TOTAL RETURN(4) % 7.95 (0.29) (1.56) (11.80) 4.04 1.63 1.40
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 162 912 1,660 3,041 6,882 3,229 6,502
Ratios to average net assets:
Net expenses after expense
reimbursement(5)(6) % 1.09 0.86 0.93 1.00 1.08 0.90 0.87
Gross expenses prior to expense
reimbursement(5) % 1.14 1.21 1.20 1.22 1.27 1.17 1.28
Net investment income after
expense reimbursement(5)(6) % 7.20 10.87 11.33 11.28 10.73 9.88 10.01
Portfolio turnover rate % 70 131 102 113 113 44 242
</Table>
(1) Effective August 1, 2003, ING Investments, LLC appointed Aeltus Investment
Management, Inc. as Sub-Adviser.
(2) The Fund changed its fiscal year end to March 31.
(3) Effective May 24, 1999, ING Investments, LLC became the Investment Adviser
of the Fund and the Fund changed its year end to June 30.
(4) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value. Total return for less than
one year is not annualized.
(5) Annualized for periods less than one year.
(6) The Investment Adviser agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
See Accompanying Notes to Financial Statements.
21
<Page>
ING INTERMEDIATE BOND FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS I
------------------------------------
SIX MONTHS YEAR JANUARY 8,
ENDED ENDED 2002(2) TO
SEPTEMBER 30, MARCH 31, MARCH 31,
2003(1) 2003 2002
- ----------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 10.51 9.91 9.99
Income (loss) from investment operations:
Net investment income $ 0.19 0.39 0.11
Net realized and unrealized gain (loss) on investments $ 0.11 0.76 (0.07)
Total from investment operations $ 0.30 1.15 0.04
Less distributions from:
Net investment income $ 0.19 0.40 0.12
Net realized gain on investments $ -- 0.15 --
Total distributions $ 0.19 0.55 0.12
Net asset value, end of period $ 10.62 10.51 9.91
TOTAL RETURN(3) % 2.86 11.88 0.36
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 13,784 15,046 9,800
Ratios to average net assets:
Net expenses after expense reimbursement(4)(5) % 0.65 0.73 0.82
Gross expenses prior to expense reimbursement(4) % 0.65 0.73 0.90
Net investment income after expense reimbursement(4)(5) % 3.56 3.70 0.05
Portfolio turnover rate % 313 639 1,216*
</Table>
(1) Effective September 2, 2003, Aeltus Investment Management, Inc., replaced
ING Investment Management, LLC as the Sub-Adviser.
(2) Commencement of operations of class.
(3) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value. Total return for less than
one year is not annualized.
(4) Annualized for periods less than one year.
(5) The Investment Adviser has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
* Portfolio turnover was greater than expected during this period due to
active trading undertaken in response to market conditions that existed at
that time.
See Accompanying Notes to Financial Statements.
22
<Page>
ING STRATEGIC BOND FUND (UNAUDITED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS Q
--------------------------------------------------------------------------------------
SIX MONTHS YEAR YEAR NINE MONTHS YEAR THREE MONTHS JULY 27,
ENDED ENDED ENDED ENDED ENDED ENDED 1998(4) TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, JUNE 30, JUNE 30, MARCH 31,
2003(1) 2003 2002 2001(2) 2000 1999(3) 1999
- ----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 10.61 10.36 11.18 11.45 11.99 12.26 12.43
Income (loss) from investment operations:
Net investment income $ 0.23 0.26 1.18 0.50 0.94 0.25 0.48
Net realized and unrealized gain (loss)
on investments $ 0.12 0.63 (1.12) (0.17) (0.54) (0.38) (0.04)
Total from investment operations $ 0.35 0.89 0.06 0.33 0.40 (0.13) 0.44
Less distributions from:
Net investment income $ 0.28 0.64 0.88 0.60 0.94 0.14 0.50
Net realized gain on investments $ -- -- -- -- -- -- 0.11
Total distributions $ 0.28 0.64 0.88 0.60 0.94 0.14 0.61
Net asset value, end of period $ 10.68 10.61 10.36 11.18 11.45 11.99 12.26
TOTAL RETURN(5) % 3.36 8.92 0.49 3.00 3.55 1.16 5.78
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 96 115 101 236 228 171 314
Ratios to average net assets:
Net expenses after expense
reimbursement(6)(7) % 0.87 0.67 0.73 1.00 0.86 0.71 0.69
Gross expenses prior to expense
reimbursement(6) % 1.08 1.12 1.10 2.06 2.54 1.37 1.74
Net investment income after
expense reimbursement(6)(7) % 4.32 5.21 7.12 7.17 7.79 6.07 6.03
Portfolio turnover rate % 273 254 211 132 168 69 274
</Table>
(1) Effective August 1, 2003, ING Investments, LLC appointed Aeltus Investment
Management, Inc. as Sub-Adviser.
(2) The Fund changed its fiscal year end to March 31.
(3) Effective May 24, 1999, ING Investments, LLC became the Investment Adviser
of the Fund and the Fund changed its year end to June 30.
(4) Commencement of operations.
(5) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value. Total return for less than
one year is not annualized.
(6) Annualized for periods less than one year.
(7) The Investment Adviser has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
See Accompanying Notes to Financial Statements.
23
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited)
NOTE 1 -- ORGANIZATION
ORGANIZATION. ING Funds Trust ("Trust") is a Delaware business trust registered
as an open-end management investment company. The Trust was organized on July
30, 1998. It consists of nine separately managed series. Four of the funds in
this report are: ING GNMA Income Fund ("GNMA Fund"), ING High Yield Opportunity
Fund ("High Yield Opportunity Fund"), ING Intermediate Bond Fund ("Intermediate
Bond Fund") and ING Strategic Bond Fund ("Strategic Bond Fund").
The investment objective of each Fund is described in each Fund's prospectus.
Each Fund offers at least three of the following classes of shares: Class A,
Class B, Class C, Class I, Class M, Class Q and Class R. The separate classes of
shares differ principally in the applicable sales charges (if any), transfer
agent fees, distribution fees and shareholder servicing fees. Shareholders of
each class also bear certain expenses that pertain to that particular class. All
shareholders bear the common expenses of the Fund and earn income from the
portfolio pro rata based on the average daily net assets of each class, without
distinction between share classes. Dividends and distributions 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
Funds in the preparation of their financial statements, and such policies are in
conformity with accounting principles generally accepted in the United States
for investment companies.
A. SECURITY VALUATION. Investments in equity securities traded on a national
securities exchange are valued at the last reported sale price. Securities
reported by the NASDAQ will be valued at NASDAQ official closing price.
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 the time such valuation is
determined by each Fund's custodian. Debt securities are valued at bid
prices obtained from independent services or from one or more dealers
making markets in the securities and may be adjusted based on the Fund's
valuation procedures. U.S. Government obligations are valued by using
market quotations or independent pricing services that use prices provided
by market-makers or estimates of market values obtained from yield data
relating to instruments or securities with similar characteristics.
Securities for which market quotations are not readily available are valued
at their respective fair values as determined in good faith and in
accordance with policies set by the Board of Trustees ("Board") of the
Funds. Among elements of analysis, the Board has authorized the use of one
or more research services to assist with the determination of the fair
value of foreign securities in light of significant events. Research
services use statistical analyses and quantitative models to help determine
fair value as of the time a Fund calculates its net asset value.
Investments in securities maturing in less than 60 days at the date of
acquisition are valued at amortized cost, which approximates market value.
At September 30, 2003, the Intermediate Bond Fund contained four securities
for which bid prices obtained from one or more dealers making markets in
the securities were adjusted based on the Funds' valuation procedures.
These securities had a total value of $6,806,264 (this represents 2.46% of
net assets) for the Intermediate Bond Fund. In addition, at September 30,
2003, the High Yield Opportunity Fund and the Strategic Bond Fund contained
eleven and two securities, respectively, for which market quotations were
not readily available and which were valued at their fair value as
determined in good faith and in accordance with policies set by the Board.
These securities had a total value of $2,616,819 (represents 0.79% of net
assets) and $200 (represents 0.00% of net assets) for the High Yield
Opportunity Fund and the Strategic Bond Fund, respectively.
24
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited) (Continued)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (continued)
B. SECURITY TRANSACTIONS AND REVENUE RECOGNITION. Securities transactions are
accounted for on the trade date. Realized gains and losses are reported on
the basis of identified cost of securities sold. Interest income is
recorded on an accrual basis. Dividend income is recorded on the
ex-dividend date, or for certain foreign securities, when the information
becomes available to the funds. Premium amortization and discount accretion
are determined by the effective yield method.
C. FOREIGN CURRENCY TRANSLATION. The books and records of the Funds are
maintained in U.S. dollars. Any foreign currency amounts are translated
into U.S. dollars on the following basis:
(1) Market value of investment securities, other assets and
liabilities -- at the exchange rates prevailing at the end of the
day.
(2) Purchases and sales of investment securities, income and expenses
-- at the rates of exchange prevailing on the respective dates of
such transactions.
Although the net assets and the market values are presented at the foreign
exchange rates at the end of the day, the Funds do not isolate the portion
of the results of operations resulting from changes in foreign exchange
rates on investments from the fluctuations arising from changes in market
prices of securities held. Such fluctuations are included with the net
realized and unrealized gains or losses from investments. For securities
that are subject to foreign withholding tax upon disposition, liabilities
are recorded on the statement of assets and liabilities for the estimated
tax withholding based on the securities' current market values. 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 Fund's books, and
the U.S. dollar equivalent of the amounts actually received or paid. Net
unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at
fiscal year end, resulting from changes in the exchange rate. Foreign
security and currency transactions may involve certain considerations and
risks not typically associated with investing in U.S. companies and U.S.
Government Securities. These risks include but are not limited to
re-evaluation of currencies and future adverse political and economic
developments which could cause securities and their markets to be less
liquid and prices more volatile than those of comparable U.S. companies and
U.S. Government Securities.
D. FOREIGN CURRENCY TRANSACTIONS AND FUTURES CONTRACTS. Certain Funds may
enter into foreign currency exchange transactions to convert to and from
different foreign currencies and to and from the U.S. dollar in connection
with the planned purchases or sales of securities. The Funds either enter
into these transactions on a spot basis at the spot rate prevailing in the
foreign currency exchange market or 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 Fund may enter into futures contracts involving foreign currency,
interest rates, securities and securities indices, for hedging purposes
only. A futures contract obligates the seller of the contract to deliver
and the purchaser of the contract to take delivery of the type of foreign
currency, financial instrument or security called for in the contract at a
specified future time for a specified price. Upon entering into such a
contract, a Fund is required to deposit and maintain as collateral such
initial margin as required by the exchange on which the contract is traded.
Pursuant to the contract, a Fund agrees to receive from or pay to the
broker an amount equal to the daily fluctuations in the value of the
contract. Such receipts or payments are known as variation margins and are
recorded as unrealized
25
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited) (Continued)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (continued)
gains or losses by the Fund. When the contract is closed, the Fund records
a realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
E. DISTRIBUTIONS TO SHAREHOLDERS. The Funds record distributions to their
shareholders on ex-dividend date. Intermediate Bond Fund and High Yield
Opportunity Fund declare and become ex-dividend daily and pay dividends
monthly. GNMA Fund and Strategic Bond Fund declare and become ex-dividend
monthly and pay dividends monthly. Each Fund distributes capital gains, to
the extent available, annually.
F. FEDERAL INCOME TAXES. It is the policy of the Funds to comply with the
requirements of Subchapter M of the Internal Revenue Code that are
applicable to regulated investment companies and to distribute
substantially all of their net investment income and any net realized
capital gains to their shareholders.
Therefore, a federal income tax or excise tax provision is not required. In
addition, by distributing during each calendar year substantially all of
its net investment income and net realized capital gains, each Fund intends
not to be subject to any federal excise tax.
The Board intends to offset any net capital gains with any available
capital loss carryforward until each carryforward has been fully utilized
or expires. In addition, no capital gain distribution shall be made until
the capital loss carryforward has been fully utilized or expires.
G. USE OF ESTIMATES. Management of the Funds has made certain estimates and
assumptions relating to the reporting of assets, liabilities, income, and
expenses to prepare these financial statements in conformity with
accounting principles generally accepted in the United States. Actual
results could differ from these estimates.
H. REPURCHASE AGREEMENTS. Each Fund may invest in repurchase agreements only
with government securities dealers recognized by the Board of Governors of
the Federal Reserve System or with member banks of the Federal Reserve
System. Under such agreements, the seller of the security agrees to
repurchase the security at a mutually agreed upon time and price. The
resale price is in excess of the purchase price and reflects an agreed upon
interest rate for the period of time the agreement is outstanding. The
period of the repurchase agreements is usually short, from overnight to one
week, while the underlying securities generally have longer maturities.
Each Fund will always receive as collateral securities acceptable to it
whose market value is equal to at least 100% of the carrying amount of the
repurchase agreements, plus accrued interest, being invested by the Fund.
The underlying collateral is valued daily on a mark to market basis to
assure that the value, including accrued interest is at least equal to the
repurchase price. If the seller defaults, a Fund might incur a loss or
delay in the realization of proceeds if the value of the collateral
securing the repurchase agreement declines, and it might incur disposition
costs in liquidating the collateral.
I. SECURITIES LENDING. Each Fund (except GNMA Fund) has the option to
temporarily loan up to 30% of its total assets to brokers, dealers or other
financial institutions in exchange for a negotiated lender's fee. The
borrower is required to fully collateralize the loans with cash or U.S.
Government securities.
J. OPTIONS CONTRACTS. Certain Funds may purchase put and call options and may
write (sell) put options and covered call options. The Funds may engage in
option transactions as a hedge against adverse movements in the value of
portfolio holdings or to increase market exposure. Option contracts are
valued daily and unrealized gains or losses are recorded based upon the
last sales price on the principal exchange on which the options are traded.
The Funds will realize a gain or loss upon the expiration or closing of the
option contract. When an option is exercised, the proceeds on sales of the
underlying security for a written call option, the purchase cost of the
security for a written put option, or the cost of the security for a
purchased put or call option is adjusted by the amount of premium received
or paid. Realized and unrealized gains or losses on option contracts are
reflected in the accompanying financial statements. The risk in writing a
call option is that the Funds give up the opportunity for profit if the
market price of the security increases and the option is exercised. The
risk in writing a put option is that the Funds may incur a loss if the
market price of the security decreases and the option is exercised. The
risk in buying an option is that the Funds pay a premium whether or not the
option is exercised.
26
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited) (Continued)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (continued)
Risks may also arise from an illiquid secondary market or from the
inability of counterparties to meet the terms of the contract.
K. ILLIQUID AND RESTRICTED SECURITIES. Illiquid securities are not readily
marketable. Disposing of illiquid investments may involve time-consuming
negotiation and legal expenses, and it may be difficult or impossible for
the Funds to sell them promptly at an acceptable price. Restricted
securities are those sold under Rule 144A of the Securities Act of 1933
(1933 Act) or are securities offered pursuant to Section 4(2) of the 1933
Act, and are subject to legal or contractual restrictions on resale and may
not be publicly sold without registration under the 1933 Act. Restricted
securities may be considered liquid pursuant to procedures adopted by the
Board or may be deemed illiquid because they may not be readily marketable.
GNMA Fund may not invest in illiquid securities and all other Funds may not
invest more than 15% of their net assets in illiquid securities. Illiquid
and restricted securities are valued using market quotations when readily
available. In the absence of market quotations, the securities are valued
based upon their fair value determined under procedures approved by the
Board.
L. DELAYED DELIVERY TRANSACTION. The Funds may purchase or sell securities on
a when-issued or forward commitment basis. The price of the underlying
securities and date when the securities will be delivered and paid for are
fixed at the time the transaction is negotiated. The market value of such
is identified in the Funds' 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 Funds are required to hold liquid assets as collateral with
the Funds' custodian sufficient to cover the purchase price.
M. DOLLAR ROLL TRANSACTIONS. Certain Funds 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 Fund 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 Funds
account for dollar roll transactions as purchases and sales.
N. CONSTRUCTION LOAN SECURITIES (GNMA FUND). The GNMA Fund may purchase
construction loan securities, which are issued to finance building costs.
The funds are disbursed as needed or in accordance with a prearranged plan.
The securities provide for the timely payment to the registered holder of
interest at the specified rate plus scheduled installments of principal.
Upon completion of the construction phase, the construction loan securities
are terminated and project loan securities are issued. It is the Fund's
policy to record these GNMA certificates on trade date, and to segregate
assets to cover its commitments on trade date as well.
NOTE 3 -- INVESTMENT TRANSACTIONS
For the six-months ended September 30, 2003, the cost of purchases and proceeds
from the sales of securities, excluding short-term securities, were as follows:
<Table>
<Caption>
PURCHASES SALES
-------------- --------------
GNMA Fund $ 878,195,136 $ 970,238,719
High Yield Opportunity Fund 215,346,692 210,781,369
Intermediate Bond Fund 95,272,259 84,959,962
Strategic Bond Fund 113,834,958 110,653,954
</Table>
U.S. Government securities not included above were as follows:
<Table>
<Caption>
PURCHASES SALES
-------------- --------------
GNMA Fund $ 878,195,136 $ 970,238,719
High Yield Opportunity Fund -- --
Intermediate Bond Fund 857,363,349 792,973,265
Strategic Bond Fund 90,514,813 84,669,694
</Table>
NOTE 4 -- INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES
All the Funds included in this report have an Investment Management Agreement
with ING Investments, LLC (the "Investment Manager" or the "Adviser"), a
wholly-owned subsidiary of ING Groep N.V. The investment management agreements
compensate the Adviser with a fee, computed daily
27
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited) (Continued)
and payable monthly, based on the average daily net assets of each Fund, at the
following annual rates:
For GNMA Fund -- 0.60% for the first $150 million, 0.50% of the next $250
million, 0.45% of the next $400 million and 0.40% in excess of $800 million; for
Intermediate Bond -- 0.50%; for Strategic Bond Fund -- 0.45% for the first $500
million, 0.40% of the next $250 million and 0.35% in excess of $750 million; for
High Yield Opportunity Fund -- 0.60%.
The fees payable to the Adviser were discounted for the Intermediate Bond Fund
by 75% in the Fund's first year of operations, and by 50% in the Fund's second
year of operations.
Effective August 1, 2003, ING Aeltus serves as Sub-Adviser to the GNMA Fund,
High Yield Opportunity Fund and Strategic Bond Fund pursuant to a sub-advisory
agreement between the Adviser and ING Aeltus.
Effective September 2, 2003, ING Aeltus serves as Sub-Adviser to Intermediate
Bond Fund pursuant to a sub-advisory agreement between the Adviser and ING
Aeltus.
Prior to September 2, 2003, ING Investment Management LLC (IIM), a registered
investment advisor, served as Sub-Adviser to the Intermediate Bond Fund pursuant
to a sub-advisory agreement between the Adviser and IIM.
ING Funds Services, LLC ("IFS") acts as administrator and provides certain
administrative and shareholder services necessary for Fund operations and is
responsible for the supervision of other service providers. For its services,
IFS is entitled to receive from the GNMA Fund, High Yield Opportunity Fund,
Intermediate Bond Fund and Strategic Bond Fund a fee at an annual rate of 0.10%
of its average daily net assets.
NOTE 5 -- DISTRIBUTION AND SERVICE FEES
Each share class of the Funds (except as noted below) has adopted a Plan
pursuant to Rule 12b-1 under the 1940 Act (the "12b-1 Plans"), whereby ING Funds
Distributor, LLC (the "Distributor") is reimbursed or compensated (depending on
the class of shares) by the Funds for expenses incurred in the distribution of
each Fund's shares ("Distribution Fees"). Pursuant to the 12b-1 Plans, the
Distributor is entitled to payment each month for actual expenses incurred in
the distribution and promotion of each Fund's shares, including expenses
incurred in printing prospectuses and reports used for sales purposes, expenses
incurred in preparing and printing sales literature and other such distribution
related expenses, including any distribution or shareholder servicing fees
("Service Fees") paid to securities dealers who have executed a distribution
agreement with the Distributor. Under the 12b-1 Plans, each class of shares of
the Fund pays the Distributor a combined Distribution and Service Fee based on
average daily net assets at the following annual rates:
<Table>
<Caption>
CLASS A CLASS B CLASS C CLASS I CLASS M CLASS Q
------- ------- ------- ------- ------- -------
GNMA Fund 0.25% 1.00% 1.00% N/A 0.75% 0.25%
High Yield
Opportunity
Fund 0.35% 1.00% 1.00% N/A 0.75% 0.25%
Intermediate
Bond Fund 0.35% 1.00% 1.00% N/A N/A N/A
Strategic Bond
Fund 0.35% 0.75% 0.75% N/A N/A 0.25%
</Table>
The Distributor also receives the proceeds of initial sales charge paid by
shareholders upon the purchase of Class A and Class M shares, and the contingent
deferred sales charge paid by shareholders upon certain redemptions for Class A,
Class B, and Class C shares. For the six months ended September 30, 2003, the
Distributor earned the following amounts in sales charges:
<Table>
<Caption>
CLASS A CLASS B CLASS C CLASS M
SHARES SHARES SHARES SHARES
--------- ------- -------- -------
Initial Sales Charges $ 103,841 n/a n/a $ 54
Contingent Deferred Sales
Charges $ 54,098 $ -- $ 81,109 n/a
</Table>
NOTE 6 -- OTHER TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
At September 30, 2003 the Funds 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
INVESTMENT ACCRUED SHAREHOLDER
MANAGEMENT ADMINISTRATIVE SERVICES AND
FEES FEES DISTRIBUTION FEES TOTAL
---------- -------------- ----------------- ------------
GNMA Fund $ 338,455 $ 69,243 $ 307,656 $ 715,354
High Yield
Opportunity
Fund 175,471 26,137 207,710 409,318
Intermediate
Bond Fund 132,659 26,531 144,756 303,946
Strategic Bond
Fund 17,291 3,842 18,836 39,969
</Table>
At September 30, 2003, ING Life Insurance and Annuity Co., a wholly-owned
indirect subsidiary of ING Groep N.V., held 8.2% and 37.5% of the shares
outstanding of Intermediate Bond Fund and Strategic Bond Fund, respectively.
28
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited) (Continued)
NOTE 6 -- OTHER TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (continued)
Each Fund has adopted a Retirement Policy covering all independent trustees of
the Fund who will have served as an independent trustee for at least five years
at the time of retirement. Benefits under this plan are based on an annual rate
as defined in the plan agreement.
A summary of the sales transactions during the six-months ended September 30,
2003, in which the issuer was part of the ING Family of Funds are presented
below. There were no purchases during the period and no shares were held at
September 30, 2003.
<Table>
<Caption>
REALIZED
STRATEGIC BOND FUND: SALES GAIN/(LOSS) ON
---------------------- INVESTMENT
SHARES PROCEEDS SECURITIES
-------- ----------- --------------
High Yield Bond Fund 159,416 $ 1,321,563 $ (41,587)
High Yield
Opportunity Fund 330,000 2,263,800 96,600
ING Prime Rate Trust 103,100 749,060 59,815
</Table>
NOTE 7 -- EXPENSE LIMITATIONS
For the following Funds, pursuant to written expense limitation agreements the
Investment Manager has agreed to limit expenses, excluding interest, taxes,
brokerage and extraordinary expenses to the following annual expenses to average
daily net assets ratios:
<Table>
<Caption>
CLASS A CLASS B CLASS C CLASS I CLASS M CLASS Q
------- ------- ------- ------- ------- -------
GNMA Fund 1.29% 2.04% 2.04% 1.04% 1.79% 1.29%
High Yield
Opportunity
Fund(1) 1.30% 1.95% 1.95% N/A 1.70% 1.20%
Intermediate
Bond Fund 1.15% 1.90% 1.90% 0.90% N/A N/A
Strategic Bond
Fund(2) 1.15% 1.55% 1.55% N/A N/A 1.05%
</Table>
- ----------
(1) Prior to April 1, 2003, the expense limitation rates for Class A, Class B,
Class C, Class M, Class Q and Class T were 1.10%, 1.75%, 1.75%, 1.50%,
1.00% and 1.40% respectively.
(2) Prior to April 1, 2003, the expense limitation rates for Class A, Class B,
Class C, and Class Q were 0.95%, 1.35%, 1.35% and 0.85% respectively.
Each Fund will at a later date reimburse the Investment Manager for management
fees waived and other expenses assumed by the Investment Manager during the
previous 36 months, but only if, after such reimbursement, the Fund's expense
ratio does not exceed the percentage described above. Waived and reimbursed fees
and any recoupment by the Investment Manager of such waived and reimbursed fees
are reflected on the accompanying Statements of Operations for each Fund.
As of September 30, 2003, the cumulative amounts of reimbursed fees that are
subject to possible recoupment by the Manager are as follows:
<Table>
High Yield Opportunity Fund $ 2,063,620
Intermediate Bond Fund 192,324
Strategic Bond Fund 553,521
</Table>
NOTE 8 -- LINE OF CREDIT
All of the Funds included in this report with the exception of GNMA Fund, 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 Bank of New York for an aggregate amount of $125,000,000. The proceeds may
be used only to: (1) temporarily finance the purchase and sale of securities;
(2) finance the redemption of shares of an investor in the Funds; and (3) enable
the Funds to meet other emergency expenses as defined in the Credit Agreement.
The Funds to which the line of credit is available pay a commitment fee equal to
0.09% per annum on the daily unused portion of the committed line amount payable
quarterly in arrears. At September 30, 2003, the Funds did not have any loans
outstanding.
29
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited) (Continued)
NOTE 9 -- CAPITAL SHARES
Transaction in capital shares and dollars were as follows:
<Table>
<Caption>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
------------------------------ ---------------------------- ----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
2003 2003 2003 2003 2003 2003
-------------- -------------- ------------- ------------- ------------- -------------
GNMA FUND (NUMBER OF SHARES)
Shares sold 17,395,145 73,137,649 2,527,512 10,383,663 2,474,742 8,354,803
Dividends reinvested 1,501,244 2,826,216 215,858 323,671 120,278 181,211
Shares redeemed (23,811,381) (64,721,314) (3,487,921) (3,236,075) (3,576,955) (3,100,664)
-------------- -------------- ------------- ------------- ------------- -------------
Net increase (decrease) in shares
outstanding (4,914,992) 11,242,551 (744,551) 7,471,259 (981,935) 5,435,350
============== ============== ============= ============= ============= =============
GNMA FUND ($)
Shares sold $ 150,583,452 $ 647,417,851 $ 22,445,176 $ 92,311,001 $ 22,024,570 $ 73,988,441
Dividends reinvested 10,691,981 25,045,619 1,904,595 2,864,197 1,062,957 1,606,627
Shares redeemed (205,236,552) (572,367,002) (30,831,380) (28,732,321) (31,593,326) (27,312,111)
-------------- -------------- ------------- ------------- ------------- -------------
Net increase (decrease) $ (43,961,119) $ 100,096,468 $ (6,481,609) $ 66,442,877 $ (8,505,799) $ 48,282,957
============== ============== ============= ============= ============= =============
<Caption>
CLASS I SHARES CLASS M SHARES CLASS Q SHARES
------------------------------ ---------------------------- ----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
2003 2003 2003 2003 2003 2003
-------------- -------------- ------------- ------------- ------------- -------------
GNMA FUND (NUMBER OF SHARES)
Shares sold 386,847 791,663 3,038 89,509 -- 14,313
Dividends reinvested 23,481 24,697 1,553 3,490 316 544
Shares redeemed (262,760) (234,440) (78,786) (27,626) (3,531) (18,365)
-------------- -------------- ------------- ------------- ------------- -------------
Net increase (decrease) in shares
outstanding 147,568 581,920 (74,195) 65,373 (3,215) (3,508)
============== ============== ============= ============= ============= =============
GNMA FUND ($)
Shares sold $ 3,468,333 $ 7,072,323 $ 27,195 $ 796,808 $ -- $ 126,826
Dividends reinvested 208,028 220,288 13,812 31,077 2,801 4,854
Shares redeemed (2,330,803) (2,096,498) (700,431) (247,442) (30,852) (164,519)
-------------- -------------- ------------- ------------- ------------- -------------
Net increase (decrease) $ 1,345,558 $ 5,196,113 $ (659,424) $ 580,443 $ (28,051) $ (32,839)
============== ============== ============= ============= ============= =============
<Caption>
CLASS T SHARES
------------------------------
SIX MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, MARCH 31,
2003(1) 2003
-------------- --------------
GNMA FUND (NUMBER OF SHARES)
Shares sold -- 1,849
Dividends reinvested -- 47,505
Shares redeemed (1,062,777) (307,685)
-------------- --------------
Net decrease in shares outstanding (1,062,777) (258,331)
============== ==============
GNMA FUND ($)
Shares sold -- $ 16,625
Dividends reinvested -- 420,465
Shares redeemed $ (8,868,418) (2,713,539)
-------------- --------------
Net decrease $ (8,868,418) $ (2,276,449)
============== ==============
</Table>
- ----------
(1) Effective June 2, 2003, Class "T" shares converted into the corresponding
Class "A" shares within this portfolio.
30
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited) (Continued)
NOTE 9 -- CAPITAL SHARES (continued)
<Table>
<Caption>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
------------------------------ ---------------------------- ----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
2003 2003 2003 2003 2003 2003
-------------- -------------- ------------- ------------- ------------- -------------
HIGH YIELD OPPORTUNITY FUND (NUMBER OF
SHARES)
Shares sold 12,907,896 16,263,300 1,577,065 2,298,165 919,640 1,076,535
Shares issued in merger -- 6,407,106 -- 14,095,676 -- 590,240
Dividends reinvested 215,038 585,206 317,552 993,995 48,732 136,259
Shares redeemed (15,240,303) (15,075,372) (3,072,209) (7,674,507) (1,258,019) (1,167,865)
-------------- -------------- ------------- ------------- ------------- -------------
Net increase (decrease) in shares
outstanding (2,117,369) 8,180,240 (1,177,592) 9,713,329 (289,647) 635,169
============== ============== ============= ============= ============= =============
HIGH YIELD OPPORTUNITY FUND ($)
Shares sold $ 142,817,488 $ 110,029,139 $ 10,885,481 $ 15,652,565 $ 6,306,253 $ 7,417,867
Shares issued in merger -- 48,565,867 -- 107,380,857 -- 4,492,905
Dividends reinvested 1,524,437 3,931,634 2,174,783 6,722,293 333,640 925,570
Shares redeemed (104,407,850) (103,807,585) (21,065,857) (52,283,480) (8,618,215) (8,007,182)
-------------- -------------- ------------- ------------- ------------- -------------
Net increase (decrease) $ 39,934,075 $ 58,719,055 $ (8,005,593) $ 77,472,235 $ (1,978,322) $ 4,829,160
============== ============== ============= ============= ============= =============
<Caption>
CLASS M SHARES CLASS Q SHARES CLASS T SHARES
------------------------------ ---------------------------- ----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
2003 2003 2003 2003 2003(1) 2003
-------------- -------------- ------------- ------------- ------------- -------------
HIGH YIELD OPPORTUNITY FUND (NUMBER OF
SHARES)
Shares sold 525 2,138 34,730 116,562 -- 1
Shares issued in merger -- 628,797 -- 2,500 -- --
Dividends reinvested 7,028 25,070 4,684 8,930 -- 77,085
Shares redeemed (45,366) (151,825) (152,385) (211,906) (743,254) (707,547)
-------------- -------------- ------------- ------------- ------------- -------------
Net increase (decrease) in shares
outstanding (37,813) 504,180 (112,971) (83,914) (743,254) (630,461)
============== ============== ============= ============= ============= =============
HIGH YIELD OPPORTUNITY FUND ($)
Shares sold $ 3,569 $ 14,387 $ 237,594 $ 745,712 -- $ 4
Shares issued in merger -- 4,766,282 -- 19,032 -- --
Dividends reinvested 47,817 166,801 32,069 60,422 -- 526,861
Shares redeemed (310,162) (1,021,019) (1,031,766) (1,400,699) $ (60,277,683) (4,865,661)
-------------- -------------- ------------- ------------- ------------- -------------
Net increase (decrease) $ (258,776) $ 3,926,451 $ (762,103) $ (575,533) $ (60,277,683) $ (4,338,796)
============== ============== ============= ============= ============= =============
<Caption>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
------------------------------ ---------------------------- ----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
2003 2003 2003 2003 2003 2003
-------------- -------------- ------------- ------------- ------------- -------------
INTERMEDIATE BOND FUND (NUMBER OF
SHARES)
Shares sold 11,813,334 20,485,344 1,690,327 5,721,047 2,541,919 5,249,312
Dividends reinvested 137,403 281,375 36,598 90,480 29,011 64,460
Shares redeemed (8,553,586) (10,999,640) (1,344,428) (1,081,565) (1,399,528) (912,120)
-------------- -------------- ------------- ------------- ------------- -------------
Net increase in shares outstanding 3,397,151 9,767,079 382,497 4,729,962 1,171,402 4,401,652
============== ============== ============= ============= ============= =============
INTERMEDIATE BOND FUND ($)
Shares sold $ 122,825,392 $ 212,009,071 $ 17,812,430 $ 59,045,245 $ 26,964,879 $ 54,232,649
Dividends reinvested 1,450,612 2,905,320 386,304 934,949 306,299 666,529
Shares redeemed (87,885,447) (113,708,272) (14,156,311) (11,172,225) (14,720,738) (9,420,954)
-------------- -------------- ------------- ------------- ------------- -------------
Net increase $ 36,390,557 $ 101,206,119 $ 4,042,423 $ 48,807,969 $ 12,550,440 $ 45,478,224
============== ============== ============= ============= ============= =============
</Table>
- ----------
(1) Effective June 2, 2003, Class "T" shares converted into the corresponding
Class "A" shares within this portfolio.
31
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited) (Continued)
NOTE 9 -- CAPITAL SHARES (continued)
<Table>
<Caption>
CLASS I SHARES
-----------------------------
SIX MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, MARCH 31,
2003 2003
-------------- -------------
INTERMEDIATE BOND FUND (NUMBER OF SHARES)
Shares sold 140,152 675,432
Dividends reinvested 21,313 64,547
Shares redeemed (295,440) (296,980)
-------------- -------------
Net increase (decrease) in shares outstanding (133,975) 442,999
============== =============
INTERMEDIATE BOND FUND ($)
Shares sold $ 1,426,900 $ 6,967,970
Dividends reinvested 225,380 666,112
Shares redeemed (3,053,953) (3,053,533)
-------------- -------------
Net increase (decrease) $ (1,401,673) $ 4,580,549
============== =============
<Caption>
CLASS A SHARES CLASS B SHARES
----------------------------- ----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
2003 2003 2003 2003
-------------- ------------- ------------- -------------
STRATEGIC BOND FUND (NUMBER OF SHARES)
Shares sold 1,353,689 2,926,400 133,465 512,495
Dividends reinvested 45,264 155,509 11,432 25,027
Shares redeemed (1,539,887) (3,411,267) (194,167) (406,134)
-------------- ------------- ------------- -------------
Net increase (decrease) in shares outstanding (140,934) (329,358) (49,270) 131,388
============== ============= ============= =============
STRATEGIC BOND FUND ($)
Shares sold $ 25,717,473 $ 32,008,296 $ 1,580,115 $ 5,478,867
Dividends reinvested 413,219 1,696,951 108,127 266,404
Shares redeemed (27,741,780) (37,277,857) (2,216,839) (4,331,111)
-------------- ------------- ------------- -------------
Net increase (decrease) $ (1,611,088) $ (3,572,610) $ (528,597) $ 1,414,160
============== ============= ============= =============
<Caption>
CLASS C SHARES CLASS Q SHARES
----------------------------- ----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
2003 2003 2003 2003
-------------- ------------- ------------- -------------
STRATEGIC BOND FUND (NUMBER OF SHARES)
Shares sold 214,843 471,183 293 446,425
Dividends reinvested 3,258 9,972 241 511
Shares redeemed (274,764) (569,042) (2,418) (445,870)
-------------- ------------- ------------- -------------
Net increase (decrease) in shares outstanding (56,663) (87,887) (1,884) 1,066
============== ============= ============= =============
STRATEGIC BOND FUND ($)
Shares sold $ 2,521,270 $ 5,276,764 $ 3,588 $ 4,589,655
Dividends reinvested 31,727 111,460 2,105 5,263
Shares redeemed (3,209,524) (6,375,279) (25,659) (4,587,888)
-------------- ------------- ------------- -------------
Net increase (decrease) $ (656,527) $ (987,055) $ (19,966) $ 7,030
============== ============= ============= =============
</Table>
32
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited) (Continued)
NOTE 10 -- CREDIT RISK AND DEFAULTED SECURITIES
Although each Fund has a diversified portfolio, High Yield Opportunity Fund had
91.37% of its portfolio invested in lower rated and comparable quality unrated
high yield securities. Investments in high yield securities are accompanied by a
greater degree of credit risk and such lower rated securities tend to be more
sensitive to economic conditions than higher rated securities. The risk of loss
due to default by the issuer may be significantly greater for the holders of
high yielding securities, because such securities are generally unsecured and
are often subordinated to other creditors of the issuer.
Funds that held defaulted securities at September 30, 2003 were as follows:
<Table>
<Caption>
FUND SECURITY MARKET VALUE
- ---- -------- ------------
Strategic Bond
Fund WinStar Commnunications, Inc. $ 100
=========
High Yield International Utility Structures, Inc. $ 85,960
Opportunity Source Media, Inc. 1
Fund SA Telecommunications, Inc. 18
US Interactive 170,309
---------
$ 256,288
=========
</Table>
For financial reporting purposes, it is each Fund's accounting practice to
discontinue the accrual of income and to provide an estimate for probable losses
due to unpaid interest income on defaulted bonds for the current reporting
period. The High Yield Opportunity Fund and the the Intermediate Bond Fund had
interest write-offs of $159,640 and $523, respectively, as a result of defaulted
securities.
NOTE 11 -- 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 were as follows:
<Table>
<Caption>
SIX MONTHS ENDED ORDINARY TAX EXEMPT LONG-TERM
SEPTEMBER 30, 2003 INCOME INCOME CAPITAL GAINS
------------ ---------- -------------
GNMA Fund $ 20,714,465 $ -- $ --
High Yield Opportunity
Fund 12,754,011 -- --
Intermediate Bond Fund 4,477,950 -- --
Strategic Bond Fund 1,129,731 -- --
<Caption>
YEAR ENDED ORDINARY TAX EXEMPT LONG-TERM
MARCH 31, 2003 INCOME INCOME CAPITAL GAINS
------------ ---------- -------------
GNMA Fund $ 37,467,565 $ -- $ --
High Yield Opportunity
Fund 34,744,544 -- --
Intermediate Bond Fund 7,068,340 -- 55,205
Strategic Bond Fund 2,827,357 -- --
</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, wash sale deferrals, adjustments from mergers and other temporary
or permanent 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.
Capital loss carryforwards, which may be used to offset future realized capital
gains for federal income tax purposes were as follows at March 31, 2003:
<Table>
<Caption>
AMOUNT EXPIRATION DATES
------------- ----------------
GNMA Income Fund $ 13,788,569 2004-2010
High Yield Opportunity Fund 373,214,651 2004-2011
Strategic Bond Fund 12,105,934 2007-2011
</Table>
The capital loss carryforwards in High Yield Opportunity Fund includes
$64,227,424 of losses acquired from ING High Yield Fund. Utilization of GNMA
Fund, High Yield Opportunity Fund and Strategic Bond Fund capital loss
carryforwards will be subject to an annual limitation as prescribed by the
Internal Revenue Code.
33
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited) (Continued)
NOTE 12 -- REORGANIZATIONS
On May 17, 2002, the High Yield Opportunity Fund as listed below ("Acquiring
Fund"), acquired the assets and certain liabilities of High Yield Fund, also
listed below ("Acquired Fund"), in a tax-free reorganization in exchange for
shares of the Acquiring Fund, pursuant to a plan of reorganization approved by
the Acquired Fund's shareholders. The number and value of shares issued by the
Acquiring Fund are presented in Note 9 -- Capital Shares. Net assets and
unrealized appreciation/(depreciation) as of the reorganization date were as
follows:
<Table>
<Caption>
ACQUIRED FUND
UNREALIZED
ACQUIRING ACQUIRED TOTAL NET ASSETS OF TOTAL NET ASSETS OF APPRECIATION
FUND FUND ACQUIRED FUND (000) ACQUIRING FUND (000) (DEPRECIATION)(000)
--------- -------- ------------------- -------------------- -------------------
High Yield
Opportunity
Fund ING High Yield Fund $ 165,225 $ 242,666 $ (3,897)
</Table>
The net assets of High Yield Opportunity Fund after the reorganization were
$407,891,000.
NOTE 13 -- SECURITIES LENDING
Under an agreement with Bank of New York ("BNY"), the Funds (except GNMA Fund)
can lend their securities to approved brokers, dealers and other financial
institutions. Loans are collateralized by cash and U.S. Government Securities.
The collateral must be in an amount equal to at least 105% of the market value
of non-U.S. securities loaned and 102% of the market value of U.S. securities
loaned. The cash collateral received is invested in approved investments as
defined in the Securities Lending Agreement with BNY (the "Agreement"). The cash
collateral received is reflected on the Statement of Assets and Liabilities as
Other Investments. Generally, in the event of counterparty default, the Funds
have the right to use the collateral to offset losses incurred. The Agreement
contains certain guarantees by BNY in the event of counterparty default and/or a
borrower's failure to return a loaned security, however there would be a
potential loss to the Funds in the event the Funds are delayed or prevented from
exercising their right to dispose of the collateral. The Funds bear the risk of
loss with respect to the investment of collateral. Engaging in securities
lending could have a leveraging effect, which may intensify the credit, market
and other risks associated with investing in a Fund. At September 30, 2003, the
following Funds had securities on loan with the following market values:
<Table>
<Caption>
VALUE OF
SECURITIES VALUE OF
PORTFOLIO LOANED COLLATERAL
- --------- ------------ ------------
High Yield Opportunity Fund $ 81,157,392 $ 82,978,167
Intermediate Bond Fund 70,544,278 71,635,383
Strategic Bond Fund 7,637,266 7,753,044
</Table>
34
<Page>
NOTES TO FINANCIAL STATEMENTS as of September 30, 2003 (Unaudited) (Continued)
NOTE 14 -- CHANGE IN FUNDS' AUDITORS
PricewaterhouseCoopers, LLP ("PwC") served as independent auditors for the
Funds. On May 28, 2003, the Funds' Board dismissed PwC and selected KPMG LLP
("KPMG") as independent auditors for the Funds for the fiscal year ending
October 31, 2003 upon the recommendation of the Funds' Audit Committee. During
the two most recent fiscal years and through May 28, 2003, there was no
disagreement with PwC on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures, which
disagreements if not resolved to PwC's satisfaction would have caused them to
make reference in connection with their opinion to the subject matter of the
disagreement.
The audit reports of PwC on the financial statements of the Funds as of and for
the years ended March 31, 2003 and 2002 did not contain any adverse opinion or
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope, or accounting principles.
NOTE 15 -- SUBSEQUENT EVENTS
DIVIDENDS. Subsequent to September 30, 2003 the following Funds declared
dividends from net investment income of:
<Table>
<Caption>
PER SHARE
AMOUNT PAYABLE DATE RECORD DATE
--------- ---------------- ------------------
GNMA FUND
Class A $ 0.0360 October 3, 2003 September 30, 2003
Class B $ 0.0306 October 3, 2003 September 30, 2003
Class C $ 0.0305 October 3, 2003 September 30, 2003
Class I $ 0.0383 October 3, 2003 September 30, 2003
Class M $ 0.0321 October 3, 2003 September 30, 2003
Class Q $ 0.0365 October 3, 2003 September 30, 2003
Class A $ 0.0360 November 5, 2003 October 31, 2003
Class B $ 0.0304 November 5, 2003 October 31, 2003
Class C $ 0.0304 November 5, 2003 October 31, 2003
Class I $ 0.0384 November 5, 2003 October 31, 2003
Class M $ 0.0317 November 5, 2003 October 31, 2003
Class Q $ 0.0363 November 5, 2003 October 31, 2003
<Caption>
PER SHARE
AMOUNT PAYABLE DATE RECORD DATE
--------- ---------------- ------------------
HIGH YIELD OPPORTUNITY FUND
Class A $ 0.0350 November 3, 2003 Daily
Class B $ 0.0306 November 3, 2003 Daily
Class C $ 0.0306 November 3, 2003 Daily
Class M $ 0.0318 November 3, 2003 Daily
Class Q $ 0.0346 November 3, 2003 Daily
INTERMEDIATE BOND FUND
Class A $ 0.0287 November 3, 2003 Daily
Class B $ 0.0227 November 3, 2003 Daily
Class C $ 0.0221 November 3, 2003 Daily
Class I $ 0.0314 November 3, 2003 Daily
STRATEGIC BOND FUND
Class A $ 0.0400 October 3, 2003 September 30, 2003
Class B $ 0.0366 October 3, 2003 September 30, 2003
Class C $ 0.0358 October 3, 2003 September 30, 2003
Class Q $ 0.0429 October 3, 2003 September 30, 2003
Class A $ 0.0400 November 5, 2003 October 31, 2003
Class B $ 0.0364 November 5, 2003 October 31, 2003
Class C $ 0.0360 November 5, 2003 October 31, 2003
Class Q $ 0.0429 November 5, 2003 October 31, 2003
</Table>
35
<Page>
ING
GNMA
Income
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS: 87.9%
FEDERAL HOME LOAN
MORTGAGE CORPORATION: 0.4%
$ 708,994 7.000%, due 11/01/14 $ 753,013
1,773,443 7.500%, due 12/01/14-01/01/30 1,890,584
350,148 8.000%, due 01/01/30 377,302
----------------
3,020,899
----------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION: 0.4%
384,846 409,600
281,745 6.500%, due 06/01/14 298,003
613,862 7.500%, due 05/01/28 656,047
1,787,755 S 8.500%, due 08/01/11-09/01/15 1,987,153
----------------
3,350,803
----------------
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION: 87.1%
979,994 10.250%, due 08/15/29 1,069,973
55,531,485 5.000%, due 04/15/33-07/15/33 55,703,865
95,250,077 5.500%, due 02/20/23-07/15/33 97,739,104
553,463 5.650%, due 07/15/29 558,210
169,058,357 6.000%, due 04/20/24-09/15/33 175,295,995
1,784,126 6.250%, due 04/15/26-04/15/28 1,867,133
135,340 6.340%, due 02/15/29 137,161
574,186 6.350%, due 09/15/33 630,459
5,820,455 6.400%, due 10/15/33-08/15/38 6,408,481
1,170,272 6.470%, due 09/15/33 1,290,941
56,962,273 6.500%, due 02/15/22-02/15/40 61,175,561
15,420,232 6.625%, due 07/15/33-01/15/40 17,332,005
4,668,846 6.650%, due 12/15/13-09/15/32 5,200,466
3,525,311 6.670%, due 01/15/40 3,984,456
6,210,297 6.687%, due 07/15/40 7,042,676
395,226 6.700%, due 08/15/14-12/15/14 419,535
4,319,450 6.745%, due 10/15/39 4,889,893
13,468,691 6.750%, due 06/15/13-01/15/41 15,119,995
2,854,475 6.810%, due 07/15/39 3,246,536
4,090,695 6.820%, due 05/15/27-04/15/34 4,625,324
9,866,540 6.840%, due 10/15/36 11,271,338
1,806,448 6.870%, due 03/15/39 2,063,072
5,925,429 6.875%, due 01/15/29-02/15/40 6,725,436
2,185,841 6.900%, due 01/15/32 2,499,651
2,904,734 6.950%, due 12/15/29 2,910,254
99,794,392 7.000%, due 07/15/22-12/15/35 106,463,877
8,999,757 7.010%, due 02/15/37 10,264,141
956,985 7.050%, due 07/15/29 1,016,837
5,569,920 7.100%, due 11/15/39 6,393,762
8,966,962 7.125%, due 09/15/39 10,277,305
3,351,792 7.150%, due 07/15/36 3,854,921
4,202,918 7.250%, due 08/15/22-09/15/31 4,572,220
2,961,114 7.300%, due 08/15/36 3,414,143
10,034,934 7.500%, due 12/15/19-09/15/32 10,802,559
7,019,577 7.600%, due 08/15/31-06/15/40 8,044,330
10,944,891 7.625%, due 08/15/32-07/15/38 12,289,669
83,127 7.650%, due 12/15/12 87,792
532,244 7.700%, due 08/15/13 563,065
6,217,888 7.750%, due 06/15/14-12/15/35 6,994,049
1,103,887 7.800%, due 05/15/19-01/15/42 1,270,647
10,008,505 7.875%, due 09/15/29-04/15/38 11,143,756
14,147,633 8.000%, due 08/15/12-11/15/38 15,842,434
201,371 8.050%, due 07/15/19-04/15/21 220,241
1,361,823 8.100%, due 06/15/12-07/15/12 1,446,613
4,993,364 8.125%, due 05/15/38 5,721,115
5,574,874 8.150%, due 12/15/11-09/15/15 5,935,686
$ 5,745,292 S 8.200%, due 10/15/11-05/15/13 $ 6,114,192
2,053,264 8.250%, due 10/15/24-03/15/41 2,340,258
7,008,255 8.500%, due 12/15/29-10/15/31 7,555,477
119,017 8.750%, due 10/15/23-06/15/27 125,795
2,840,068 9.000%, due 05/15/20-12/15/34 3,026,322
1,377,893 9.250%, due 06/15/30 1,477,693
----------------
736,466,419
----------------
Total U.S. Government
Agency Obligations
(Cost $710,509,366) 742,838,121
----------------
U.S. TREASURY OBLIGATIONS: 5.3%
U.S. TREASURY NOTES: 5.3%
32,000,000 1.250%, due 05/31/05 31,991,264
13,000,000 1.500%, due 07/31/05 13,034,034
----------------
45,025,298
----------------
Total U.S. Treasury Obligations
(Cost $44,864,119) 45,025,298
----------------
Total Long-Term Investments
(Cost $755,373,485) 787,863,419
----------------
SHORT-TERM INVESTMENTS: 6.5%
U.S. TREASURY BILLS: 6.5%
500,000 0.000%, due 02/12/04 498,247
55,000,000 0.000%, due 03/11/04 54,762,895
----------------
55,261,142
----------------
Total Short-term Investments
(Cost $55,253,402) 55,261,142
----------------
TOTAL INVESTMENTS
IN SECURITIES (COST
$810,626,887)* 99.7% $ 843,124,561
OTHER ASSETS AND
LIABILITIES-NET 0.3 2,150,621
----- ----------------
NET ASSETS 100.0% $ 845,275,182
===== ================
</Table>
* Cost for federal income tax purposes is the same as for financial statement
purposes. Net unrealized appreciation consists of:
<Table>
Gross Unrealized Appreciation $ 35,761,802
Gross Unrealized Depreciation (3,264,128)
----------------
Net Unrealized Appreciation $ 32,497,674
================
</Table>
See Accompanying Notes to Financial Statements
36
<Page>
ING
High Yield
Opportunity
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------
CORPORATE BONDS: 93.2%
ADVERTISING: 0.5%
$ 55,000 # RH Donnelley Finance Corp. I,
10.875%, due 12/15/12 $ 65,175
1,390,000 # Vertis, Inc., 9.750%, due
04/01/09 1,469,925
----------------
1,535,100
================
AEROSPACE/DEFENSE: 0.7%
210,000 # Armor Holdings, Inc., 8.250%,
due 08/15/13 223,125
660,000 L L-3 Communications Corp.,
7.625%, due 06/15/12 717,750
1,075,000 L Sequa Corp., 8.875%, due
04/01/08 1,155,625
50,000 Sequa Corp., 9.000%, due
08/01/09 55,000
----------------
2,151,500
----------------
AGRICULTURE: 0.2%
600,000 # Dimon, Inc., 7.750%, due
06/01/13 618,000
----------------
618,000
----------------
APPAREL: 0.4%
1,225,000 # Phillips-Van Heusen, 8.125%,
due 05/01/13 1,289,313
----------------
1,289,313
----------------
AUTO MANUFACTURERS: 0.0%
70,000 General Motors Corp., 7.125%,
due 07/15/13 73,557
20,000 L General Motors Corp., 7.200%,
due 01/15/11 21,105
----------------
94,662
----------------
AUTO PARTS & EQUIPMENT: 2.4%
630,000 Dana Corp., 10.125%, due
03/15/10 707,175
900,000 L Dura Operating Corp., 8.625%,
due 04/15/12 938,250
630,000 # Eagle-Picher Industries, 9.750%,
due 09/01/13 664,650
1,030,000 Lear Corp., 8.110%, due
05/15/09 1,189,650
960,000 Rexnord Corp., 10.125%, due
12/15/12 1,070,400
1,070,000 #,L Tenneco Automotive, Inc.,
10.250%, due 07/15/13 1,166,300
1,485,000 #,L TRW Automotive, Inc.,
11.000%, due 02/15/13 1,737,450
----------------
7,473,875
----------------
BEVERAGES: 0.3%
895,000 Constellation Brands, Inc.,
8.500%, due 03/01/09 948,700
----------------
948,700
----------------
BUILDING MATERIALS: 0.3%
2,456,000 @,I,XX International Utility Structures,
@@,** Inc., 13.000%, due 02/01/08 85,960
895,000 Nortek Holdings, Inc., 9.875%,
due 06/15/11 950,938
----------------
1,036,898
----------------
CHEMICALS: 2.5%
$ 590,000 #,L Equistar Funding Corp.,
10.125%, due 09/01/08 $ 587,050
610,000 Equistar Funding Corp.,
10.625%, due 05/01/11 606,950
1,450,000 L IMC Global, Inc., 10.875%, due
06/01/08 1,515,250
1,400,000 IMC Global, Inc., 11.250%, due
06/01/11 1,463,000
1,685,000 L Lyondell Chemical Co., 9.625%,
due 05/01/07 1,609,175
1,735,000 #,L Rockwood Specialties Group,
Inc., 10.625%, due 05/15/11 1,856,450
----------------
7,637,875
----------------
COMMERCIAL SERVICES: 2.9%
1,365,000 Coinmach Corp., 9.000%, due
02/01/10 1,460,550
1,245,000 Corrections Corp. of America,
7.500%, due 05/01/11 1,290,131
3,205,000 @@ Quebecor Media, Inc., 11.125%,
due 07/15/11 3,669,725
2,220,000 L United Rentals North America,
Inc., 10.750%, due 04/15/08 2,469,750
----------------
8,890,156
----------------
COMPUTERS: 0.3%
800,000 @@ Seagate Technology HDD
Holdings, 8.000%, due
05/15/09 886,000
----------------
886,000
----------------
COSMETICS/PERSONAL CARE: 0.5%
1,630,000 L Chattem, Inc., 8.875%, due
04/01/08 1,638,150
----------------
1,638,150
----------------
DISTRIBUTION/WHOLESALE: 0.6%
1,720,000 #,L Aviall, Inc., 7.625%, due
07/01/11 1,771,600
----------------
1,771,600
----------------
DIVERSIFIED FINANCIAL SERVICES: 3.4%
680,000 @@,#,L Eircom Funding, 8.250%, due
08/15/13 734,400
850,000 # HLI Operating Co., Inc.,
10.500%, due 06/15/10 930,750
2,839,436 # Hollinger Participation Trust,
12.125%, due 11/15/10 3,212,112
2,305,000 Nexstar Finance, Inc., 12.000%,
due 04/01/08 2,593,125
1,630,000 L Technical Olympic USA, Inc.,
9.000%, due 07/01/10 1,727,800
895,000 Technical Olympic USA, Inc.,
10.375%, due 07/01/12 966,600
280,000 #,L Universal City Development
Partners, 11.750%, due
04/01/10 316,400
----------------
10,481,187
----------------
ELECTRIC: 3.8%
3,485,000 # AES Corp., 8.750%, due
05/15/13 3,676,675
</Table>
See Accompanying Notes to Financial Statements
37
<Page>
ING
High Yield
Opportunity
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------
ELECTRIC (CONTINUED)
$ 2,190,000 #,L Calpine Corp., 8.750%, due
07/15/13 $ 2,014,800
1,065,000 L Homer City Funding LLC,
8.734%, due 10/01/26 1,096,950
1,250,000 Illinois Power Co, 11.500%, due
12/15/10 1,506,250
1,285,000 # PG&E Corp., 6.875%, due
07/15/08 1,355,675
2,005,000 L Teco Energy, Inc., 7.500%, due
06/15/10 2,042,594
----------------
11,692,944
----------------
ELECTRICAL COMPONENTS & EQUIPMENT: 0.3%
800,000 @@ FIMEP SA, 10.500%, due
02/15/13 908,000
----------------
908,000
----------------
ELECTRONICS: 0.8%
400,000 Fisher Scientific Intl., 8.125%,
due 05/01/12 427,000
910,000 @@,#,L Flextronics Intl. Ltd., 6.500%,
due 05/15/13 907,725
925,000 Stoneridge, Inc., 11.500%, due
05/01/12 1,061,438
----------------
2,396,163
----------------
ENTERTAINMENT: 2.3%
400,000 Argosy Gaming Co., 9.000%,
due 09/01/11 435,000
2,900,000 Carmike Cinemas, Inc., 10.375%,
due 02/01/09 3,059,500
1,510,000 L Cinemark USA, Inc., 9.000%,
due 02/01/13 1,619,475
1,200,000 Regal Cinemas, Inc., 9.375%,
due 02/01/12 1,356,000
835,000 L Six Flags, Inc., 9.750%, due
06/15/07 824,563
----------------
7,294,538
----------------
ENVIRONMENTAL CONTROL: 2.1%
750,000 Allied Waste North America,
7.875%, due 01/01/09 781,875
1,815,000 Allied Waste North America,
8.500%, due 12/01/08 1,969,275
1,700,000 Allied Waste North America,
8.875%, due 04/01/08 1,848,750
1,900,000 L Allied Waste North America,
10.000%, due 08/01/09 2,068,625
----------------
6,668,525
----------------
FOOD: 3.4%
2,120,000 #,L Del Monte Corp., 8.625%, due
12/15/12 2,326,699
1,230,000 # Domino's, Inc., 8.250%, due
07/01/11 1,305,338
1,680,000 Great Atlantic & Pacific Tea Co.,
9.125%, due 12/15/11 1,587,600
1,345,000 Michael Foods, Inc., 11.750%,
due 04/01/11 1,580,375
1,150,000 Pilgrims Pride Corp., 9.625%,
due 09/15/11 1,247,750
625,000 Roundy's, Inc., 8.875%, due
06/15/12 656,250
$ 385,000 # Smithfield Foods, Inc., 7.750%,
due 05/15/13 $ 414,838
1,240,000 #,L Swift & Co., 12.500%, due
01/01/10 1,376,400
----------------
10,495,250
----------------
FOREST PRODUCTS & PAPER: 3.3%
3,200,000 Appleton Papers, Inc., 12.500%,
due 12/15/08 3,504,000
1,660,000 L Georgia-Pacific Corp., 8.125%,
due 05/15/11 1,734,700
930,000 L Georgia-Pacific Corp., 8.875%,
due 02/01/10 1,023,000
1,870,000 Georgia-Pacific Corp., 9.375%,
due 02/01/13 2,096,738
630,000 @@ Tembec Industries, Inc., 7.750%,
due 03/15/12 595,350
1,350,000 @@ Tembec Industries, Inc., 8.625%,
due 06/30/09 1,336,500
----------------
10,290,288
----------------
HEALTHCARE-PRODUCTS: 0.4%
1,210,000 # Medex, Inc., 8.875%, due
05/15/13 1,285,625
----------------
1,285,625
----------------
HEALTHCARE-SERVICES: 1.6%
1,405,000 L Alliance Imaging, Inc., 10.375%,
due 04/15/11 1,468,225
3,460,000 Tenet Healthcare Corp., 7.375%,
due 02/01/13 3,503,250
----------------
4,971,475
----------------
HOME BUILDERS: 2.6%
1,650,000 DR Horton, Inc., 9.375%, due
03/15/11 1,806,750
970,000 # K. Hovnanian Enterprises, Inc.,
7.750%, due 05/15/13 1,003,950
430,000 KB Home, 7.750%, due 02/01/10 455,800
770,000 Meritage Corp., 9.750%, due
06/01/11 847,000
1,400,000 Ryland Group, Inc., 9.125%, due
06/15/11 1,583,750
815,000 L Standard-Pacific Corp., 7.750%,
due 03/15/13 835,375
15,000 # WCI Communities, Inc., 7.875%,
due 10/01/13 15,113
1,310,000 WCI Communities, Inc.,
10.625%, due 02/15/11 1,441,000
----------------
7,988,738
----------------
HOUSEHOLD PRODUCTS/WARES: 1.2%
2,725,000 American Greetings, 11.750%,
due 07/15/08 3,120,125
695,000 #,L Rayovac Corp, 8.500%, due
10/01/13 719,325
----------------
3,839,450
----------------
IRON/STEEL: 0.5%
875,000 Armco, Inc., 9.000%, due
09/15/07 634,375
750,000 L United States Steel Corp.,
9.750%, due 05/15/10 772,500
----------------
1,406,875
----------------
</Table>
See Accompanying Notes to Financial Statements
38
<Page>
ING
High Yield
Opportunity
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------
LEISURE TIME: 0.7%
$ 1,300,000 @@,L Royal Caribbean Cruises Ltd.,
8.000%, due 05/15/10 $ 1,378,000
765,000 # Worldspan Financing Corp.,
9.625%, due 06/15/11 805,163
----------------
2,183,163
----------------
LODGING: 6.2%
2,170,000 Ameristar Casinos, Inc.,
10.750%, due 02/15/09 2,479,224
1,070,000 Aztar Corp., 9.000%, due
08/15/11 1,162,288
1,050,000 Extended Stay America, Inc.,
9.875%, due 06/15/11 1,164,188
910,000 L Hilton Hotels Corp., 7.625%,
due 05/15/08 1,001,000
440,000 Host Marriott Corp., 7.875%,
due 08/01/05 453,200
545,000 Host Marriott Corp., 7.875%,
due 08/01/08 562,713
960,000 Mandalay Resort Group,
9.500%, due 08/01/08 1,106,400
1,575,000 L MGM Mirage, 8.375%, due
02/01/11 1,740,375
1,150,000 MGM Mirage, 9.750%, due
06/01/07 1,306,688
740,000 Park Place Entertainment Corp.,
7.000%, due 04/15/13 768,675
2,495,000 L Park Place Entertainment Corp.,
7.875%, due 03/15/10 2,682,124
335,000 Park Place Entertainment Corp.,
9.375%, due 02/15/07 371,013
2,540,000 Starwood Hotels & Resorts
Worldwide, Inc., 7.875%, due
05/01/12 2,793,999
1,490,000 L Venetian Casino Resort LLC,
11.000%, due 06/15/10 1,706,050
----------------
19,297,937
----------------
MEDIA: 13.5%
1,170,000 Allbritton Communications Co.,
7.750%, due 12/15/12 1,199,250
1,520,000 Block Communications, Inc.,
9.250%, due 04/15/09 1,634,000
750,000 @@ Canwest Media, Inc., 10.625%,
due 05/15/11 855,000
950,000 L Charter Communications
Holdings Capital Corp.,
9.625%, due 11/15/09 738,625
1,750,000 L Charter Communications
Holdings, LLC, 11.125%, due
01/15/11 1,439,375
845,000 L CSC Holdings, Inc., 7.625%, due
04/01/11 847,113
1,640,000 L CSC Holdings, Inc., 10.500%,
due 05/15/16 1,812,200
365,000 L Dex Media East Finance Co.,
9.875%, due 11/15/09 415,188
2,950,000 L Dex Media East Finance Co.,
12.125%, due 11/15/12 3,576,874
625,000 # Dex Media Finance Co., 8.500%,
due 08/15/10 682,813
1,665,000 # Dex Media Finance Co., 9.875%,
due 08/15/13 1,889,775
$ 2,315,000 DirecTV Holdings LLC, 8.375%,
due 03/15/13 $ 2,621,738
1,260,000 # Echostar DBS Corp., 5.750%,
due 10/01/08 1,267,875
840,000 Entravision Communications
Corp., 8.125%, due 03/15/09 884,100
1,185,000 Granite Broadcasting Corp.,
8.875%, due 05/15/08 1,145,006
1,915,000 Granite Broadcasting Corp.,
10.375%, due 05/15/05 1,895,850
2,460,000 Gray Television, Inc., 9.250%,
due 12/15/11 2,724,450
2,100,000 Hollinger Intl. Publishing,
9.000%, due 12/15/10 2,223,375
320,000 @@,# Hollinger, Inc., 11.875%, due
03/01/11 355,200
590,000 Houghton Mifflin Co, 8.250%,
due 02/01/11 620,975
920,000 Mediacom Broadband LLC,
11.000%, due 07/15/13 972,900
1,180,000 Nexstar Finance Holdings, Inc.,
0.000%, due 04/01/13 831,900
1,645,000 L Paxson Communications Corp.,
10.750%, due 07/15/08 1,745,756
215,000 #,L Primedia, Inc., 8.000%, due
05/15/13 218,225
655,000 Salem Communications Holding
Corp., 9.000%, due 07/01/11 708,219
875,000 Sinclair Broadcast Group, Inc.,
8.000%, due 03/15/12 927,500
623,056 @,X,** Source Media, Inc., 12.000%,
due 11/01/04 1
1,105,000 Spanish Broadcasting System,
9.625%, due 11/01/09 1,174,063
2,935,000 @@,#,L Vivendi Universal SA, 9.250%,
due 04/15/10 3,386,255
0 L Young Broadcasting, Inc.,
8.500%, due 12/15/08 0
2,605,000 Young Broadcasting, Inc.,
10.000%, due 03/01/11 2,774,324
----------------
41,567,925
----------------
MINING: 0.7%
2,035,000 Compass Minerals Group, Inc.,
10.000%, due 08/15/11 2,269,025
----------------
2,269,025
----------------
MISCELLANEOUS MANUFACTURING: 1.7%
875,000 Samsonite Corp, 10.750%, due
06/15/08 918,750
725,000 L SPX Corp., 7.500%, due 01/01/13 766,688
3,260,000 @@ Tyco Intl. Group SA, 6.750%,
due 02/15/11 3,455,600
----------------
5,141,038
----------------
OFFICE/BUSINESS EQUIP: 0.5%
1,705,000 Xerox Corp., 7.625%, due
06/15/13 1,690,081
----------------
1,690,081
----------------
OIL AND GAS: 3.9%
2,330,000 # Chesapeake Energy Corp.,
7.500%, due 09/15/13 2,458,149
</Table>
See Accompanying Notes to Financial Statements
39
<Page>
ING
High Yield
Opportunity
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------
OIL AND GAS (CONTINUED)
$ 430,000 # Energy Partners Ltd., 8.750%,
due 08/01/10 $ 442,900
1,113,000 Nuevo Energy Co., 9.500%, due
06/01/08 1,175,606
2,155,000 Swift Energy Co., 9.375%, due
05/01/12 2,338,175
955,000 Vintage Petroleum, Inc., 8.250%,
due 05/01/12 1,033,788
2,250,000 @@ Western Oil Sands, Inc., 8.375%,
due 05/01/12 2,559,374
975,000 # Westport Resources Corp.,
8.250%, due 11/01/11 1,070,063
950,000 Westport Resources Corp.,
8.250%, due 11/01/11 1,042,625
----------------
12,120,680
----------------
OIL AND GAS SERVICES: 2.3%
2,950,000 Grant Prideco Escrow Corp.,
9.000%, due 12/15/09 3,193,375
2,040,000 L Hanover Equipment Trust,
8.500%, due 09/01/08 2,111,400
1,800,000 L Hanover Equipment Trust,
8.750%, due 09/01/11 1,863,000
----------------
7,167,775
----------------
PACKAGING AND CONTAINERS: 5.5%
580,000 L Ball Corp., 6.875%, due
12/15/12 601,025
2,105,000 # BWAY Finance Corp., 10.000%,
due 10/15/10 2,283,925
2,145,000 @@,# Crown European Holdings SA,
10.875%, due 03/01/13 2,375,588
1,600,000 Greif, Inc., 8.875%, due 08/01/12 1,740,000
860,000 @@,#,L Norampac, Inc., 6.750%, due
06/01/13 881,500
1,850,000 # Owens-Brockway, 8.250%, due
05/15/13 1,896,250
4,215,000 Owens-Brockway, 8.875%, due
02/15/09 4,510,049
16,823 X,#,& Russell-Stanley Holdings, Inc.,
9.000%, due 11/30/08 8,159
500,000 Smurfit-Stone Container Corp.,
8.250%, due 10/01/12 525,000
2,000,000 Stone Container Corp., 9.750%,
due 02/01/11 2,190,000
----------------
17,011,496
----------------
PHARMACEUTICALS: 0.5%
1,615,000 AmerisourceBergen Corp.,
7.250%, due 11/15/12 1,651,338
----------------
1,651,338
----------------
PIPELINES: 3.6%
1,110,000 L ANR Pipeline Co., 8.875%, due
03/15/10 1,193,250
1,130,000 #,L EL Paso Corp, 7.875%, due
06/15/12 954,850
1,950,000 GulfTerra Energy Partners LP,
8.500%, due 06/01/10 2,110,875
1,230,000 L Southern Natural Gas Co.,
7.350%, due 02/15/31 1,137,750
1,300,000 Southern Natural Gas Co.,
8.000%, due 03/01/32 1,270,750
$ 1,375,000 Tennessee Gas Pipeline Co.,
8.375%, due 06/15/32 $ 1,347,500
2,355,000 L Transcontinental Gas Pipe Line
Corp., 8.875%, due 07/15/12 2,675,868
455,000 L Williams Cos., Inc., 8.625%, due
06/01/10 485,713
----------------
11,176,556
----------------
REITs: 1.2%
270,000 Felcor Lodging LP, 8.500%, due
06/01/11 288,900
1,900,000 L Felcor Lodging LP, 9.500%, due
09/15/08 2,052,000
400,000 L Host Marriott LP, 9.500%, due
01/15/07 440,000
885,000 # La Quinta Properties, Inc.,
8.875%, due 03/15/11 963,544
----------------
3,744,444
----------------
RETAIL: 3.7%
1,365,000 Dollar General Corp., 8.625%,
due 06/15/10 1,523,681
330,000 # Group 1 Automotive, Inc.,
8.250%, due 08/15/13 357,225
1,570,000 L JC Penney Co., Inc., 7.600%,
due 04/01/07 1,703,450
995,000 Rent-A-Center, Inc., 7.500%,
due 05/01/10 1,050,969
2,270,000 L Rite Aid Corp., 7.625%, due
04/15/05 2,338,100
965,000 #,L Rite Aid Corp., 9.250%, due
06/01/13 1,027,725
370,000 L Saks, Inc., 8.250%, due 11/15/08 407,000
1,540,000 Star Gas Finance Co., 10.250%,
due 02/15/13 1,647,800
1,365,000 Yum! Brands, Inc., 8.875%, due
04/15/11 1,597,050
----------------
11,653,000
----------------
SEMICONDUCTORS: 0.3%
360,000 AMI Semiconductor, Inc.,
10.750%, due 02/01/13 408,600
345,000 #, L Amkor Technology, Inc., 7.750%,
due 05/15/13 348,450
290,000 Amkor Technology, Inc., 9.250%,
due 02/15/08 314,650
----------------
1,071,700
----------------
TELECOMMUNICATIONS: 11.2%
2,210,000 #,L ACC Escrow Corp., 10.000%,
due 08/01/11 2,386,800
2,450,000 L American Tower Corp., 9.375%,
due 02/01/09 2,511,250
1,430,000 American Tower Escrow Corp.,
0.000%, due 08/01/08 958,100
1,315,000 # Centennial Communications
Corp., 10.125%, due 06/15/13 1,361,025
3,245,000 L Crown Castle Intl. Corp.,
10.750%, due 08/01/11 3,618,174
940,000 # Dobson Communications Corp.,
8.875%, due 10/01/13 955,275
800,000 Dobson Communications Corp.,
10.875%, due 07/01/10 876,000
</Table>
See Accompanying Notes to Financial Statements
40
<Page>
ING
High Yield
Opportunity
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS (CONTINUED)
$ 670,000 Dobson/Sygnet
Communications Co.,
12.250%, due 12/15/08 $ 721,925
3,600,000 X,I ICG Services, Inc., 10.000%, due
02/15/08 4
525,000 # MetroPCS, Inc., 10.750%, due
10/01/11 538,125
2,420,000 L Nextel Communications, Inc.,
7.375%, due 08/01/15 2,456,300
2,710,000 L Nextel Communications, Inc.,
9.375%, due 11/15/09 2,953,899
630,000 L Nextel Partners, Inc., 12.500%,
due 11/15/09 721,350
2,085,000 Panamsat Corp., 8.500%, due
02/01/12 2,194,463
1,370,000 Qwest Communications Intl.,
7.500%, due 11/01/08 1,322,050
315,000 #,L Qwest Corp., 8.875%, due
03/15/12 351,225
3,714,000 #,L Qwest Services Corp., 13.500%,
due 12/15/10 4,345,379
405,000 #,L Qwest Services Corp., 14.000%,
due 12/15/14 489,038
1,415,000 @@ Rogers Wireless Communications, Inc.,
9.625%, due 05/01/11 1,634,325
17,300,000 @,X,I, SA Telecommunications, Inc.,
#,** 10.000%, due 08/15/06 18
985,000 # Spectrasite, Inc., 8.250%, due
05/15/10 1,044,100
325,000 @@ TELUS Corp., 8.000%, due
06/01/11 380,076
1,215,000 L Triton PCS, Inc., 8.500%, due
06/01/13 1,309,163
8,267,451 @,X,I,** US Interactive, 12.000%, due
04/17/05 170,309
1,410,000 #,L Western Wireless Corp., 9.250%,
due 07/15/13 1,445,250
6,250,000 I,**,@ WinStar Communications, Inc.,
12.750%, due 04/15/10 625
----------------
34,744,248
----------------
TRANSPORTATION: 0.4%
1,120,000 Gulfmark Offshore, Inc., 8.750%,
due 06/01/08 1,142,400
----------------
1,142,400
----------------
Total Corporate Bonds
(Cost $307,369,902) 289,323,693
----------------
<Caption>
SHARES VALUE
- ----------------------------------------------------------------------------------------------------
COMMON STOCK: 1.1%
MEDIA: 1.1%
52,616 @,X Classic Cable, Inc. 3,456,872
----------------
3,456,872
----------------
PACKAGING AND CONTAINERS: 0.0%
100,000 @,#,X Russell-Stanley Holdings, Inc. 10
----------------
10
----------------
RETAIL: 0.0%
341,370 @,X International Fast Food Corp. --
----------------
--
----------------
TELECOMMUNICATIONS: 0.0%
61,806 @,X Adelphia Business Solutions $ 6
132 @,@@ Completel Europe NV 2,744
483,445 X,I International Wireless
Communications Holdings, Inc. 48
2,350 X,I Jordan Telecommunications 95,504
15 @ Mpower Holding Corp. 22
----------------
98,324
----------------
Total Common Stock
(Cost $17,296,914) 3,555,206
----------------
PREFERRED STOCK: 2.0%
MEDIA: 2.0%
26,100 Cablevision Systems Corp. 2,733,974
15,956 @ Paxson Communications Corp. 1,440,018
20,550 Primedia, Inc. 1,977,938
----------------
Total Preferred Stock
(Cost $5,956,238) 6,151,930
----------------
<Caption>
NUMBER OF
WARRANTS VALUE
- ----------------------------------------------------------------------------------------------------
WARRANTS: 0.0%
BUILDING MATERIALS: 0.0%
3,100 @,#,I Dayton Superior Corp.,
Expires 06/15/09 31
----------------
31
----------------
COMMERCIAL SERVICES: 0.0%
92,950 @,X,I Comforce Corp.,
Expires 12/01/09 930
----------------
930
----------------
DIVERSIFIED FINANCIAL SERVICES: 0.0%
5,480 @,X,I North Atlantic Trading Co.,
Expires 6/15/2007 1
----------------
1
----------------
TELECOMMUNICATIONS: 0.0%
490 @,# American Tower Corp.,
Expires 8/1/2008 60,269
6,600 @,#,X ICG Communications, Inc.,
Expires 10/15/05 1
3,833 @,X US Interactive, Expires 04/17/05 --
----------------
60,270
----------------
Total Warrants
(Cost $250,729) 61,232
----------------
Total Long-Term Investments
(Cost $330,873,783) 299,092,061
----------------
</Table>
See Accompanying Notes to Financial Statements
41
<Page>
ING
High Yield
Opportunity
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 2.3%
REPURCHASE AGREEMENT: 2.3%
$ 7,261,000 Morgan Stanley Repurchase
Agreement dated 9/30/03, 1.050%,
due 10/01/03, 7,261,000 to be received
upon repurchase (Collateralized by
$7,265,000 Federal Home Loan Mortgage
Notes, 2.500% Market Value $7,408,786 due
12/15/2005) $ 7,261,000
----------------
Total Short-term Investments
(Cost $7,261,000) 7,261,000
----------------
TOTAL INVESTMENTS IN SECURITIES
(COST $338,134,783)* 98.6% $ 306,353,061
OTHER ASSETS AND
LIABILITIES-NET 1.4 4,412,548
----- ----------------
NET ASSETS 100.0% $ 310,765,609
===== ================
</Table>
@ Non-income producing security
@@ Foreign Issuer
& Payment-in-kind
REITs Real Estate Investment Trusts
# Securities with purchases pursuant to Rule 144A, under the Securities Act
of 1933 and may not be resold subject to that rule except to qualified
institutional buyers. These securities have been determined to be liquid
under the guidelines established by the Funds' Board of
Directors/Trustees.
I Illiquid Security
L Loaned security, a portion or all of the security is on loan at September
30, 2003
** Defaulted security
X Fair value determined by ING Funds Valuation Committee appointed by the
Funds' Board of Directors/Trustees.
XX Value of Securities obtained from one or more dealers making markets in
the securities which have been adjusted based on the Fund's valuation
procedures
* Cost for federal income tax purposes is the same as for financial
statement purposes. Net unrealized depreciation consists of:
<Table>
Gross Unrealized Appreciation $ 15,316,007
Gross Unrealized Depreciation (47,097,729)
----------------
Net Unrealized Depreciation $ (31,781,722)
================
</Table>
See Accompanying Notes to Financial Statements
42
<Page>
ING
Intermediate
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------
CORPORATE BONDS: 26.8%
AGRICULTURE: 0.0%
$ 35,000 #,L Dimon, Inc., 7.750%,
due 06/01/13 $ 36,050
----------------
36,050
----------------
AIRLINES: 0.9%
327,695 American Airlines, Inc.,
6.977%, due 05/23/21 283,208
2,042,000 American Airlines, Inc.,
7.024%, due 10/15/09 1,996,033
472,170 Continental Airlines, Inc.,
6.545%, due 08/02/20 462,609
381,907 US Airways Pass Through Trust,
6.850%, due 01/30/18 357,890
----------------
3,099,740
----------------
APPAREL: 0.0%
55,000 # Phillips-Van Heusen, 8.125%,
due 05/01/13 57,888
----------------
57,888
----------------
AUTO MANUFACTURERS: 1.2%
847,000 Ford Motor Co., 6.375%,
due 02/01/29 691,801
1,038,000 Ford Motor Co., 6.625%,
due 10/01/28 877,373
2,164,000 L General Motors Corp.,
8.375%, due 07/15/33 2,269,051
----------------
3,838,225
----------------
AUTO PARTS & EQUIPMENT: 0.0%
45,000 Rexnord Corp., 10.125%,
due 12/15/12 50,175
15,000 #,L TRW Automotive, Inc.,
11.000%, due 02/15/13 17,550
----------------
67,725
----------------
BANKS: 4.0%
583,000 Bank of America Corp., 6.375%,
due 02/15/08 656,406
500,000 # BankAmerica Institutional,
Class A, 8.070%, due 12/31/26 586,195
148,000 # BankAmerica Institutional, Class B,
7.700%, due 12/31/26 167,056
74,000 Barnett Capital I, 8.060%, due
12/01/26 86,163
180,000 Barnett Capital II, 7.950%,
due 12/01/26 207,265
140,000 BNY Capital I, 7.970%,
due 12/31/26 160,650
1,175,000 @@,# Credit Suisse First Boston/London,
7.900%, due 05/29/49 1,340,521
2,045,000 # Dresdner Funding Trust I, 8.151%,
due 06/30/31 2,243,597
74,000 FBS Capital I, 8.090%,
due 11/15/26 84,497
397,000 First Union Institutional
Capital II, 7.850%, due 01/01/27 455,142
150,000 Fleet Capital Trust II, 7.920%,
due 12/11/26 164,646
973,000 @@ HSBC Holdings PLC, 7.500%,
due 07/15/09 1,154,809
$ 588,000 M&T Bank Corp., 3.850%,
due 04/01/13 $ 590,362
1,110,000 Mellon Capital I, 7.720%,
due 12/01/26 1,262,547
380,000 S NB Capital Trust IV, 8.250%,
due 04/15/27 452,983
1,630,000 L RBS Capital Trust I, 4.709%,
due 12/29/49 1,580,200
670,000 S Wells Fargo & Co., 3.120%,
due 08/15/08 668,238
80,000 # Wells Fargo Capital A, 7.730%,
due 12/01/26 91,089
865,000 #,L Westpac Capital Trust III,
5.819%, due 12/29/49 901,184
----------------
12,853,550
----------------
BEVERAGES: 0.8%
1,060,000 @@,#,L Cia Brasileira de Bebidas,
8.750%, due 09/15/13 1,075,900
295,000 @@,# Coca-Cola HBC Finance BV,
5.125%, due 09/17/13 304,042
284,000 @@,#,L Coca-Cola HBC Finance BV,
5.500%, due 09/17/15 299,141
990,000 #,S Miller Brewing Co., 4.250%,
due 08/15/08 1,018,231
----------------
2,697,314
----------------
CHEMICALS: 0.1%
217,000 L Dow Chemical Co., 5.750%,
due 11/15/09 232,542
----------------
232,542
----------------
COMMERCIAL SERVICES: 0.0%
75,000 Coinmach Corp., 9.000%,
due 02/01/10 80,250
----------------
80,250
----------------
DIVERSIFIED FINANCIAL SERVICES: 3.2%
838,000 L Boeing Capital Corp., 7.375%,
due 09/27/10 975,339
1,175,000 @@,#,XX Brazilian Merchant Voucher
Receivables Ltd., 5.911%,
due 06/15/11 1,158,843
559,000 Capital One Bank, 5.750%,
due 09/15/10 589,206
417,000 CitiCorp Capital I, 7.933%,
due 02/15/27 485,078
85,000 X Corestates Capital Trust I,
8.000%, due 12/15/26 98,941
953,000 S Countrywide Home Loans, Inc.,
4.250%, due 12/19/07 983,083
15,000 @@,#,L Eircom Funding, 8.250%,
due 08/15/13 16,200
449,000 # Farmers Exchange Capital,
7.050%, due 07/15/28 421,358
555,000 # Farmers Exchange Capital,
7.200%, due 07/15/48 492,955
351,000 L Ford Motor Credit Co., 5.625%,
due 10/01/08 355,404
409,000 Ford Motor Credit Co., 7.375%,
due 10/28/09 436,488
865,000 S General Electric Capital Corp.,
3.500%, due 08/15/07 881,791
</Table>
See Accompanying Notes to Financial Statements
43
<Page>
ING
Intermediate
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (CONTINUED)
$ 412,000 General Motors Acceptance
Corp., 6.625%, due 10/15/05 $ 439,154
10,000 # HLI Operating Co., Inc.,
10.500%, due 06/15/10 10,950
4,447 # Hollinger Participation Trust,
12.125%, due 11/15/10 5,031
679,000 S,L Lehman Brothers Holdings, Inc.,
3.500%, due 08/07/08 681,120
645,000 #,XX Mangrove Bay Pass-Through
Trust, 6.102%, due 07/15/33 637,312
5,000 S Nexstar Finance, Inc., 12.000%,
due 04/01/08 5,625
680,000 @@,# PF Export Receivables Master
Trust, 3.748%, due 06/01/13 675,182
696,800 @@,# PF Export Receivables Master
Trust, 6.436%, due 06/01/15 697,319
5,000 Technical Olympic USA, Inc.,
9.000%, due 07/01/10 5,300
10,000 #,L Universal City Development
Partners, 11.750%,
due 04/01/10 11,300
315,000 # Wachovia Capital Trust V,
7.965%, due 06/01/27 383,170
----------------
10,446,149
----------------
ELECTRIC: 2.4%
335,000 # Calpine Corp., 6.853%,
due 07/15/07 315,319
360,000 #,S,L Consumers Energy Co.,
4.250%, due 04/15/08 365,260
667,000 #,S Consumers Energy Co.,
4.800%, due 02/17/09 684,854
45,000 L Homer City Funding LLC,
8.734%, due 10/01/26 46,350
910,000 # Indianapolis Power & Light,
6.300%, due 07/01/13 934,969
639,000 Nisource Finance Corp.,
6.150%, due 03/01/13 685,368
411,000 Nisource Finance Corp.,
7.625%, due 11/15/05 454,729
911,000 #,S Ohio Edison Co., 4.000%,
due 05/01/08 901,528
1,310,000 Ohio Power Co., 6.375%,
due 07/15/33 1,334,892
600,000 # Oncor Electric Delivery Co.,
6.375%, due 01/15/15 659,819
490,000 Penn Electric Co., 6.625%,
due 04/01/19 519,478
535,000 #,S PG&E Corp., 6.875%,
due 07/15/08 564,425
523,000 #,L TXU Energy Co., 7.000%,
due 03/15/13 569,734
----------------
8,036,725
----------------
ELECTRONICS: 0.0%
50,000 Fisher Scientific Intl., 8.125%,
due 05/01/12 53,375
40,000 Stoneridge, Inc., 11.500%,
due 05/01/12 45,900
----------------
99,275
----------------
ENTERTAINMENT: 0.0%
$ 45,000 S Carmike Cinemas, Inc.,
10.375%, due 02/01/09 $ 47,475
----------------
47,475
----------------
ENVIRONMENTAL CONTROL: 0.1%
403,000 Allied Waste North America,
7.625%, due 01/01/06 423,150
----------------
423,150
----------------
FOOD: 1.3%
65,000 Great Atlantic & Pacific Tea Co.,
9.125%, due 12/15/11 61,425
292,000 L Kroger Co., 5.500%,
due 02/01/13 305,973
427,000 Kroger Co., 7.250%,
due 06/01/09 497,451
784,000 Safeway, Inc., 4.800%,
due 07/16/07 826,366
1,150,000 Supervalu, Inc., 7.875%,
due 08/01/09 1,345,672
1,077,000 Tyson Foods, Inc., 7.250%,
due 10/01/06 1,200,370
----------------
4,237,257
----------------
FOREST PRODUCTS & PAPER: 0.7%
570,000 @@ Abitibi-Consolidated, Inc.,
6.950%, due 12/15/06 594,582
321,000 @@,S Abitibi-Consolidated, Inc.,
6.950%, due 04/01/08 330,760
472,000 S Fort James Corp., 6.625%,
due 09/15/04 486,160
60,000 Georgia-Pacific Corp., 9.375%,
due 02/01/13 67,275
742,000 Weyerhaeuser Co., 6.875%,
due 12/15/33 787,207
----------------
2,265,984
----------------
HOME BUILDERS: 0.0%
30,000 Beazer Homes USA, Inc.,
8.375%, due 04/15/12 32,550
10,000 # K. Hovnanian Enterprises, Inc.,
7.750%, due 05/15/13 10,350
15,000 Meritage Corp., 9.750%,
due 06/01/11 16,500
15,000 Ryland Group, Inc., 8.000%,
due 08/15/06 16,144
30,000 Ryland Group, Inc., 9.125%,
due 06/15/11 33,937
----------------
109,481
----------------
INSURANCE: 0.8%
839,000 # Farmers Insurance Exchange,
8.625%, due 05/01/24 858,266
644,000 #,S Monumental Global Funding II,
3.850%, due 03/03/08 658,686
1,043,000 #,L Zurich Capital Trust I, 8.376%,
due 06/01/37 1,199,362
----------------
2,716,314
----------------
</Table>
See Accompanying Notes to Financial Statements
44
<Page>
ING
Intermediate
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------
LODGING: 0.5%
$ 40,000 S,L Hilton Hotels Corp., 7.625%,
due 05/15/08 $ 44,000
674,000 MGM Mirage, 6.000%,
due 10/01/09 680,739
20,000 Park Place Entertainment Corp.,
7.000%, due 04/15/13 20,775
403,000 Park Place Entertainment Corp.,
9.375%, due 02/15/07 446,323
403,000 Starwood Hotels & Resorts
Worldwide, Inc., 7.375%,
due 05/01/07 434,233
----------------
1,626,070
----------------
MEDIA: 0.5%
25,000 Allbritton Communications Co.,
7.750%, due 12/15/12 25,625
330,000 L AOL Time Warner, Inc., 6.875%,
due 05/01/12 371,001
20,000 DirecTV Holdings LLC, 8.375%,
due 03/15/13 22,650
271,000 # Echostar DBS Corp., 4.410%,
due 10/01/08 277,436
373,000 # Echostar DBS Corp., 5.750%,
due 10/01/08 375,331
5,000 S Granite Broadcasting Corp.,
8.875%, due 05/15/08 4,831
60,000 Granite Broadcasting Corp.,
10.375%, due 05/15/05 59,400
10,000 Gray Television, Inc., 9.250%,
due 12/15/11 11,075
15,000 S,L Paxson Communications Corp.,
10.750%, due 07/15/08 15,919
30,000 Salem Communications Holding
Corp., 9.000%, due 07/01/11 32,438
445,000 Time Warner, Inc., 6.950%, due
01/15/28 471,655
----------------
1,667,361
----------------
MISCELLANEOUS MANUFACTURING: 0.3%
1,120,000 General Electric Co., 5.000%,
due 02/01/13 1,150,269
5,000 L SPX Corp., 7.500%,
due 01/01/13 5,288
----------------
1,155,557
----------------
MULTI-NATIONAL: 0.6%
946,000 @@ Corp Andina de Fomento CAF,
5.200%, due 05/21/13 939,576
913,000 @@ Corp Andina de Fomento CAF,
6.875%, due 03/15/12 1,015,809
----------------
1,955,385
----------------
OIL AND GAS: 2.3%
721,000 Amerada Hess Corp., 5.900%,
due 08/15/06 777,740
655,000 L Amerada Hess Corp., 7.125%,
due 03/15/33 690,985
15,000 # Energy Partners Ltd., 8.750%,
due 08/01/10 15,450
923,000 Enterprise Products Partners LP,
6.875%, due 03/01/33 998,154
2,384,000 @@,+ Husky Oil Co., 8.900%,
due 08/15/28 2,804,179
$ 46,000 S Nuevo Energy Co., 9.500%,
due 06/01/08 $ 48,588
1,149,000 L Pemex Project Funding Master
Trust, 7.375%, due 12/15/14 1,240,920
490,000 L Valero Energy Corp., 7.500%,
due 04/15/32 547,348
499,000 Valero Energy Corp., 8.750%,
due 06/15/30 624,210
----------------
7,747,574
----------------
PACKAGING AND CONTAINERS: 0.6%
50,000 Greif, Inc., 8.875%, due
08/01/12 54,375
911,000 #,L Sealed Air Corp., 5.625%,
due 07/15/13 924,578
1,019,000 #,S Sealed Air Corp., 6.950%,
due 05/15/09 1,140,374
----------------
2,119,327
----------------
PIPELINES: 0.7%
926,000 L CenterPoint Energy Resources
Corp., 8.125%, due 07/15/05 993,508
184,000 Duke Energy Field Services LLC,
7.500%, due 08/16/05 201,886
25,000 GulfTerra Energy Finance Corp.,
10.625%, due 12/01/12 29,438
809,000 Kinder Morgan Energy
Partners LP, 7.300%,
due 08/15/33 936,027
45,000 Southern Natural Gas Co.,
7.350%, due 02/15/31 41,625
20,000 Transcontinental Gas Pipe
Line Corp., 8.875%,
due 07/15/12 22,725
----------------
2,225,209
----------------
REAL ESTATE: 0.7%
875,000 S EOP Operating LP, 7.750%,
due 11/15/07 1,018,461
1,043,000 S Liberty Property LP, 7.750%,
due 04/15/09 1,240,444
----------------
2,258,905
----------------
REITs: 0.6%
580,000 Simon Property Group LP,
4.875%, due 03/18/10 599,143
1,125,000 S Simon Property Group LP,
6.375%, due 11/15/07 1,252,675
----------------
1,851,818
----------------
RETAIL: 0.2%
25,000 Dollar General Corp., 8.625%,
due 06/15/10 27,906
482,000 S Sears Roebuck Acceptance,
6.250%, due 05/01/09 535,961
----------------
563,867
----------------
SAVINGS AND LOANS: 0.3%
985,000 S Washington Mutual, Inc.,
4.375%, due 01/15/08 1,022,505
----------------
1,022,505
----------------
</Table>
See Accompanying Notes to Financial Statements
45
<Page>
ING
Intermediate
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------
SEMICONDUCTORS: 0.0%
$ 15,000 AMI Semiconductor, Inc.,
10.750%, due 02/01/13 $ 17,025
10,000 #,L Amkor Technology, Inc.,
7.750%, due 05/15/13 10,100
----------------
27,125
----------------
SOVEREIGN: 0.6%
475,000 @@ Dominican Republic,
9.040%, due 01/23/13 415,710
874,000 @@ Federal Republic of Brazil,
2.188%, due 04/15/12 707,128
478,000 @@ Republic of Ecuador, 10.000%,
due 08/15/30 300,889
293,000 @@ Republic of El Salvador, 7.750%,
due 01/24/23 310,057
402,046 @@ Republic of Panama, 1.938%,
due 07/17/16 345,538
----------------
2,079,322
----------------
TELECOMMUNICATIONS: 3.4%
25,000 #,L ACC Escrow Corp., 10.000%,
due 08/01/11 27,000
15,000 #, S,L American Tower Corp., 9.375%,
due 02/01/09 15,375
623,000 S AT&T Corp., 6.000%, due
03/15/09 671,758
770,000 L AT&T Corp., 7.800%,
due 11/15/11 891,628
365,000 L AT&T Corp., 8.500%,
due 11/15/31 433,660
864,000 AT&T Wireless Services, Inc.,
8.125%, due 05/01/12 1,027,814
5,000 L Crown Castle Intl. Corp.,
10.750%, due 08/01/11 5,575
15,000 S Qwest Communications Intl.,
7.500%, due 11/01/08 14,475
5,000 #,L Qwest Services Corp.,
14.000%, due 12/15/14 6,038
921,000 Sprint Capital Corp., 6.000%,
due 01/15/07 992,012
1,491,000 Sprint Capital Corp., 6.875%,
due 11/15/28 1,459,124
1,648,000 TCI Communications Finance,
9.650%, due 03/31/27 1,954,939
1,015,000 @@ TELUS Corp., 8.000%,
due 06/01/11 1,187,007
1,472,000 L Verizon Florida, Inc.,
6.125%, due 01/15/13 1,613,130
740,000 Verizon Virginia, Inc.,
4.625%, due 03/15/13 729,683
----------------
11,029,218
----------------
Total Corporate Bonds
(Cost $85,706,947) 88,674,337
----------------
U.S. GOVERNMENT AGENCY OBLIGATIONS: 41.2%
FEDERAL HOME LOAN
MORTGAGE CORPORATION: 5.3%
2,553,530 1.245%, due 05/25/31 2,554,280
1,629,076 1.260%, due 04/25/30 1,629,739
1,111,062 1.270%, due 01/25/32 1,112,419
2,249,861 1.460%, due 02/15/32 2,255,784
43,046 1.510%, due 10/15/24 43,079
$ 3,220,000 L 2.875%, due 09/15/05 $ 3,298,575
235,000 4.000%, due 04/15/21 240,773
3,081,499 5.500%, due 05/15/31 3,138,229
2,880,000 5.875%, due 03/21/11 3,172,461
----------------
17,445,339
----------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION: 34.9%
477,796 1.320%, due 11/26/32 476,097
1,345,175 1.510%, due 04/18/28 1,351,436
742,007 1.570%, due 12/25/29 721,256
1,048,086 1.670%, due 01/25/32 1,063,840
3,330,000 L 2.375%, due 04/13/06 3,340,087
975,000 2.859%, due 12/26/29 980,571
3,320,000 L 2.875%, due 05/19/08 3,274,068
3,253,000 4.000%, due 09/02/08 3,342,337
1,734,000 4.000%, due 06/25/16 1,776,441
3,000,000 4.500%, due 10/18/18 TBA 3,025,314
1,509,000 XX 4.750%, due 12/25/42 1,543,660
9,010,000 5.000%, due 10/15/18 TBA 9,232,439
12,535,000 5.000%, due 11/15/33 TBA 12,495,828
5,820,000 L 5.250%, due 04/15/07 6,364,519
85,000 5.500%, due 10/15/18 TBA 87,948
1,606,487 5.500%, due 02/01/23 1,654,173
11,820,000 5.500%, due 11/01/32 TBA 12,015,763
131,013 6.000%, due 08/01/16 136,797
4,500,000 6.000%, due 09/01/17 4,698,832
1,444,047 6.000%, due 11/01/22 1,497,078
2,030,670 6.000%, due 07/25/24 2,143,616
2,564,615 6.000%, due 06/25/27 2,577,455
612,482 6.000%, due 07/25/29 616,101
2,097,078 6.000%, due 08/01/33 2,176,702
18,685,000 6.000%, due 11/15/33 TBA 19,233,872
88,612 6.500%, due 07/01/29 92,476
1,000,100 6.500%, due 08/01/29 1,045,348
1,000,000 6.500%, due 07/25/30 1,061,167
774,003 6.500%, due 06/01/31 807,094
7,642 6.500%, due 06/01/31 7,969
2,527,379 6.500%, due 07/01/31 2,640,072
4,247 6.500%, due 07/01/31 4,428
103,771 6.500%, due 08/01/31 108,207
64,830 6.500%, due 09/01/31 67,657
9,071 6.500%, due 09/01/31 9,459
33,711 6.500%, due 09/01/31 35,152
960,307 6.500%, due 11/01/31 1,001,363
30,522 6.500%, due 11/01/31 31,827
517,634 6.500%, due 04/01/32 539,740
74,352 6.500%, due 04/01/32 77,527
747,156 6.500%, due 06/01/32 779,064
440,713 6.500%, due 06/01/32 459,535
164,133 6.500%, due 07/01/32 171,142
563,093 6.500%, due 07/01/32 587,141
28,950 6.500%, due 07/01/32 30,186
434,957 6.500%, due 07/01/32 453,532
654,349 6.500%, due 07/01/32 682,294
165,530 6.500%, due 07/01/32 172,599
179,097 6.500%, due 08/01/32 186,745
302,794 6.500%, due 08/01/32 315,726
161,067 6.500%, due 08/01/32 167,946
42,757 6.500%, due 08/01/32 44,583
717,118 6.500%, due 09/01/32 747,743
1,310,782 6.500%, due 09/01/32 1,366,762
362,455 6.500%, due 01/01/33 377,934
</Table>
See Accompanying Notes to Financial Statements
46
<Page>
ING
Intermediate
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (CONTINUED)
$ 490,292 6.500%, due 02/01/33 $ 511,206
11,111,602 6.565%, due 02/17/29 932,817
25,554 7.000%, due 09/01/28 27,084
25,975 7.000%, due 03/01/30 27,515
26,055 7.000%, due 12/01/31 27,584
26,283 7.000%, due 02/01/32 27,818
1,895,934 7.000%, due 04/01/32 2,007,209
284,972 7.000%, due 06/01/32 301,550
1,318,632 7.500%, due 12/25/41 1,446,787
----------------
115,208,218
----------------
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION: 1.0%
2,000,000 6.000%, due 10/01/32 TBA 2,077,500
209,693 7.000%, due 09/15/29 223,234
2,616,214 7.130%, due 06/16/31 320,482
234,784 8.000%, due 01/20/31 251,981
74,159 10.000%, due 03/15/19 84,162
60,763 10.000%, due 01/15/21 69,045
119,144 10.000%, due 01/15/21 135,383
94,091 10.000%, due 01/15/21 106,915
----------------
3,268,702
----------------
Total U.S. Government
Agency Obligations
(Cost $135,546,175) 135,922,259
----------------
U.S. TREASURY OBLIGATIONS: 12.4%
U.S. TREASURY BONDS: 1.8%
5,436,000 S,L 5.375%, due 02/15/31 5,835,209
----------------
5,835,209
----------------
U.S. TREASURY NOTES: 10.6%
19,252,000 S,L 2.000%, due 08/31/05 19,465,582
300,000 L 2.375%, due 08/15/06 304,254
2,500,000 S,L 3.000%, due 01/31/04 2,517,190
3,483,000 L 3.125%, due 09/15/08 3,532,525
9,191,000 S,L 4.250%, due 08/15/13 9,424,727
----------------
35,244,278
----------------
Total U.S. Treasury
Obligations (Cost
$40,259,615) 41,079,487
----------------
ASSET-BACKED SECURITIES: 5.6%
AUTOMOBILE ASSET BACKED SECURITIES: 0.8%
1,500,000 Capital Auto Receivables
Asset Trust, 2.750%,
due 04/16/07 1,528,208
910,000 Nissan Auto Receivables
Owner Trust, 2.610%,
due 07/15/08 919,459
200,000 USAA Auto Owner Trust,
2.040%, due 02/16/10 199,146
----------------
2,646,813
----------------
CREDIT CARD ASSET BACKED SECURITIES: 1.0%
560,000 Bank One Issuance Trust,
4.540%, due 09/15/10 574,548
530,000 Capital One Master Trust,
4.900%, due 03/15/10 566,035
1,335,000 Citibank Credit Card Issuance
Trust, 5.650%, due 06/16/08 1,451,851
$ 650,000 Fleet Credit Card Master
Trust II, 2.400%, due
07/15/08 $ 656,335
----------------
3,248,769
----------------
HOME EQUITY ASSET BACKED SECURITIES: 3.7%
3,582,491 EQCC Trust, 1.420%, due
11/25/31 3,587,553
975,000 Equity One Abs, Inc., 2.976%,
due 09/25/33 987,848
1,198,111 New Century Home Equity
Loan Trust, 1.400%,
due 07/25/30 1,197,040
2,267,087 New Century Home Equity
Loan Trust, 1.400%,
due 06/20/31 2,265,498
846,289 Residential Asset Securities
Corp., 1.350%,
due 09/25/31 844,816
1,444,353 Residential Asset Securities
Corp., 1.420%,
due 06/25/32 1,446,473
488,000 Residential Funding
Mortgage Securities II,
3.450%, due 01/25/16 498,508
1,500,000 Saxon Asset Securities Trust,
3.960%, due 06/25/33 1,506,268
----------------
12,334,004
----------------
OTHER ASSET BACKED SECURITIES: 0.1%
210,932 @@,#,I,S Garanti Trade Payment
Rights Master Trust,
10.810%, due 06/15/04 213,947
----------------
213,947
----------------
Total Asset Backed Securities
(Cost $18,372,720) 18,443,533
----------------
COLLATERALIZED MORTGAGE OBLIGATION: 23.7%
AGENCY COLLATERAL MORTGAGE
OBLIGATION: 0.5%
1,525,675 Vendee Mortgage Trust,
5.847%, due 09/15/23 1,566,091
----------------
1,566,091
----------------
COMMERCIAL MORTGAGE
BACKED SECURITIES: 5.9%
1,170,000 Chase Manhattan Bank - First
Union National Bank,
7.439%, due 08/15/31 1,376,867
950,000 CS First Boston Mortgage
Securities Corp., 3.382%,
due 05/15/38 919,151
702,635 CS First Boston Mortgage
Securities Corp., 3.727%,
due 03/15/35 705,113
688,000 DLJ Commercial Mortgage
Corp., 7.300%,
due 06/10/32 805,714
1,050,000 GE Capital Commercial
Mortgage Corp., 5.994%,
due 12/10/35 1,163,949
645,000 JP Morgan Chase Commercial
Mortgage Securities Corp.,
5.161%, due 10/12/37 673,493
</Table>
See Accompanying Notes to Financial Statements
47
<Page>
ING
Intermediate
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------
COMMERCIAL MORTGAGE
BACKED SECURITIES (CONTINUED)
$ 1,350,000 JP Morgan Chase Commercial
Mortgage Securities Corp.,
6.162%, due 05/12/34 $ 1,504,618
1,780,000 JP Morgan Chase Commercial
Mortgage Securities Corp.,
6.244%, due 04/15/35 1,984,191
1,330,000 LB-UBS Commercial Mortgage
Trust, 4.659%, due 12/15/26 1,369,364
1,040,000 LB-UBS Commercial Mortgage
Trust, 6.226%, due 03/15/26 1,162,887
400,000 Morgan Stanley Capital I,
7.020%, due 03/15/32 462,244
1,780,000 Mortgage Capital Funding, Inc.,
6.663%, due 03/18/30 2,010,970
4,046,431 Prudential Commercial
Mortgage Trust, 3.669%,
due 02/11/36 4,055,133
400,000 Salomon Brothers Mortgage
Securities VII, 7.520%, due
12/18/09 473,290
750,000 Wachovia Bank Commercial
Mortgage Trust, 3.989%,
due 06/15/35 717,404
----------------
19,384,388
----------------
WHOLE LOAN COLLATERALLIZED MORTGAGE: 15.9%
987,996 ABN Amro Mortgage Corp,
1.610%, due 03/25/18 991,665
825,654 ABN Amro Mortgage Corp.,
6.500%, due 02/25/32 839,786
1,644,529 Bank of America Alternative
Loan Trust, 5.500%, due
02/25/33 1,701,480
680,863 Bank of America Mortgage
Securities, 4.413%, due
03/25/33 693,430
237,038 Bank of America Mortgage
Securities, 5.242%, due
02/25/32 241,538
61,087 Bank of America Mortgage
Securities, 6.250%, due
10/25/32 61,090
245,360 Bank of America Mortgage
Securities, 6.500%, due
01/25/32 252,868
490,719 Bank of America Mortgage
Securities, 6.500%, due
01/25/32 506,790
4,546,133 Bear Stearns Asset Backed
Securities, Inc., 5.625%,
due 11/25/32 4,641,383
1,085,481 CitiCorp Mortgage Securities,
Inc., 1.570%, due 03/25/33 1,086,888
71,165 CitiCorp Mortgage Securities,
Inc., 6.250%, due 11/25/16 72,385
4,105,581 Countrywide Alternative Loan
Trust, 1.670%, due 04/25/33 4,114,757
5,618,741 Countrywide Home Loans,
1.510%, due 08/25/18 5,576,709
1,324,638 Countrywide Home Loans,
1.620%, due 04/25/18 1,330,814
512,537 Countrywide Home Loans,
1.620%, due 11/25/32 513,281
$ 292,368 GSR Mortgage Loan Trust,
1.820%, due 07/25/32 $ 293,209
2,932,905 MASTR Alternative Loans
Trust, 6.500%, due 05/25/33 2,993,859
849,442 MASTR Asset Securitization
Trust, 8.000%, due 06/25/33 879,738
4,200,000 +,XX MLCC Mortgage Investors Inc,
1.440%, due 10/25/28 4,200,000
358,139 Residential Accredit Loans,
Inc., 7.750%, due 05/25/27 357,940
9,384,551 Residential Funding Mortgage
Sec I, 1.560%, due 11/25/18 9,348,468
2,378,462 Washington Mutual, 1.620%,
due 01/25/18 2,384,319
3,010,150 Washington Mutual, 1.720%,
due 03/25/33 3,016,738
4,738,805 Washington Mutual, 5.000%,
due 06/25/18 4,892,103
1,460,000 Wells Fargo Mortgage Backed
Securities Trust, 4.500%,
due 08/25/18 1,395,983
101,824 Wells Fargo Mortgage Backed
Securities Trust, 6.000%,
due 12/25/16 103,845
----------------
52,491,066
----------------
WHOLE LOAN COLLATERALLIZED PLANNED
AMORTIZATION CLASS: 1.4%
2,178,202 MASTR Alternative Loans Trust,
8.500%, due 05/25/33 2,321,432
1,672,534 Residential Funding Mortgage
Sec I, 1.520%, due 11/25/17 1,681,304
611,305 Residential Funding Securities
Corp., 8.500%, due 05/25/33 679,042
----------------
4,681,778
----------------
Total Collateralized Mortgage
Obligation (Cost
$78,081,436) 78,123,323
----------------
OTHER BONDS: 3.4%
SOVEREIGN: 3.4%
571,000 @@ ARG Boden, 0.000%, due
08/03/12 358,874
740,000 @@ Brazilian Government Intl. Bond,
10.000%, due 08/07/11 728,900
515,000 @@ Brazilian Government Intl. Bond,
11.000%, due 08/17/40 489,250
943,000 @@,XX Central Bank of Nigeria,
0.000%, due 01/05/10 365,413
700,000 @@ Colombia Government Intl.
Bond, 10.000%, due 01/23/12 764,750
336,000 @@,L Colombia Government Intl.
Bond, 11.750%, due 02/25/20 395,640
518,000 @@,S,L Mexico Government Intl. Bond,
4.625%, due 10/08/08 529,655
809,000 @@,L Mexico Government Intl. Bond,
6.625%, due 03/03/15 851,876
389,000 @@,L Peru Government Intl. Bond,
9.125%, due 02/21/12 434,708
711,000 @@ Philippine Government Intl.
Bond, 9.875%, due 01/15/19 775,879
476,000 @@ Republic of Bulgaria, 8.250%,
due 01/15/15 544,699
</Table>
See Accompanying Notes to Financial Statements
48
<Page>
ING
Intermediate
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------
SOVEREIGN (CONTINUED)
$ 202,000 @@ Republic of Peru, 4.500%,
due 03/07/17 $ 178,940
1,844,000 @@ Russia Government Intl. Bond,
5.000%, due 03/31/30 1,747,189
135,000 @@,L Turkey Government Intl. Bond,
9.500%, due 01/15/14 138,038
1,037,000 @@,L Turkey Government Intl. Bond,
12.375%, due 06/15/09 1,221,067
150,000 @@,# Ukraine Government Intl. Bond,
7.650%, due 06/11/13 150,000
168,562 @@ Ukraine Government Intl. Bond,
11.000%, due 03/15/07 187,797
385,000 @@,L Uruguay Government Intl. Bond,
7.500%, due 03/15/15 298,375
659,000 @@ Venezuela Government Intl.
Bond, 9.250%, due 09/15/27 512,702
634,000 @@,# Venezuela Government Intl.
Bond, 10.750%, due 09/19/13 586,450
----------------
Total Other Bonds
(Cost $10,623,097) 11,260,202
----------------
<Caption>
SHARES VALUE
- ----------------------------------------------------------------------------------------------------
PREFERRED STOCK: 0.0%
MEDIA: 0.0%
100 Cablevision Systems Corp. 10,475
27 @ Paxson Communications Corp. 2,392
550 Primedia, Inc. 52,937
----------------
Total Preferred Stock
(Cost $65,226) 65,804
----------------
<Caption>
NUMBER OF
WARRANTS VALUE
- ----------------------------------------------------------------------------------------------------
WARRANTS: 0.0%
TELECOMMUNICATIONS: 0.0%
20 American Tower Corp.,
Expires 8/1/2008 2,460
----------------
Total Warrants
(Cost $1,502) 2,460
----------------
Total Long Term Investments
(Cost $368,656,718 ) 373,571,405
----------------
<Caption>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 3.8%
REPURCHASE AGREEMENT: 3.8%
$ 12,634,000 Morgan Stanley Repurchase
Agreement dated
09/30/03, 1.050%,
due 10/01/03,
$12,634,368 to be
received upon
repurchase
(Collateralized by
various U.S.
Government
Securities,
2.750%-6.500%,
market value
$12,959,452,
due 11/15/05-03/14/08) $ 12,634,000
----------------
Total Short-term Investments
(Cost $12,634,000) 12,634,000
----------------
TOTAL INVESTMENTS IN
SECURITIES (COST
$381,290,718)* 116.9% $ 386,205,405
OTHER ASSETS AND
LIABILITIES-NET (16.9) (55,894,921)
----- ----------------
NET ASSETS 100.0% $ 330,310,484
===== ================
</Table>
@ Non-income producing security
@@ Foreign Issuer
PLC Public Limited Company
REITs Real Estate Investment Trusts
TBA To be announced
+ Step-up basis bonds. Interest rates shown reflect current and future
coupon rates.
# Securities with purchases pursuant to Rule 144A, under the Securities Act
of 1933 and may not be resold subject to that rule except to qualified
institutional buyers. These securities have been determined to be liquid
under the guidelines established by the Funds' Board of
Directors/Trustees.
I Illiquid Security
L Loaned security, a portion or all of the security is on loan at September
30, 2003.
XX Value of securities obtained from one or more dealers making markets in
the securities which have been adjusted based on the Fund's valuation
procedures.
* Cost for federal income tax purposes is the same as for financial
statement purposes. Net unrealized appreciation consists of:
<Table>
Gross Unrealized Appreciation $ 6,221,204
Gross Unrealized Depreciation (1,306,517)
----------------
Net Unrealized Appreciation $ 4,914,687
================
</Table>
See Accompanying Notes to Financial Statements
49
<Page>
ING
Strategic
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------
CORPORATE BONDS: 27.0%
AIRLINES: 1.0%
$ 48,788 American Airlines, Inc., 6.977%,
due 05/23/21 $ 42,165
300,000 American Airlines, Inc., 7.024%,
due 10/15/09 293,247
68,569 Continental Airlines, Inc., 6.545%,
due 08/02/20 67,180
55,311 US Airways Pass Through Trust,
6.850%, due 01/30/18 51,832
----------------
454,424
----------------
AUTO MANUFACTURERS: 1.2%
122,000 Ford Motor Co., 6.375%, due
02/01/29 99,645
157,000 Ford Motor Co., 6.625%, due
10/01/28 132,705
320,000 L General Motors Corp., 8.375%,
due 07/15/33 335,535
----------------
567,885
----------------
BANKS: 4.2%
84,000 Bank of America Corp., 6.375%,
due 02/15/08 94,577
135,000 # Bank of New York Institutional
Capital Trust A, 7.780%, due
12/01/26 151,377
21,000 # BankAmerica Institutional, Class B,
7.700%, due 12/31/26 23,704
86,000 Barnett Capital I, 8.060%, due
12/01/26 100,136
25,000 Barnett Capital II, 7.950%, due
12/01/26 28,787
190,000 @@,# Credit Suisse First Boston/London,
7.900%, due 05/29/49 216,765
299,000 # Dresdner Funding Trust I, 8.151%,
due 06/30/31 328,036
86,000 FBS Capital I, 8.090%, due
11/15/26 98,199
175,000 First Union Institutional Capital II,
7.850%, due 01/01/27 200,629
141,000 @@ HSBC Holdings PLC, 7.500%, due
07/15/09 167,346
84,000 M&T Bank Corp., 3.850%, due
04/01/13 84,337
239,000 RBS Capital Trust I, 4.709%, due
12/29/49 231,698
110,000 Wells Fargo & Co., 3.120%, due
08/15/08 109,711
125,000 #,L Westpac Capital Trust III, 5.819%,
due 12/29/49 130,229
----------------
1,965,531
----------------
BEVERAGES: 0.8%
158,000 @@,# Cia Brasileira de Bebidas, 8.750%,
due 09/15/13 160,369
44,000 @@,# Coca-Cola HBC Finance BV,
5.125%, due 09/17/13 45,349
43,000 @@,#,L Coca-Cola HBC Finance BV,
5.500%, due 09/17/15 45,293
140,000 # Miller Brewing Co., 4.250%,
due 08/15/08 143,992
----------------
395,003
----------------
CHEMICALS: 0.1%
$ 31,000 L Dow Chemical Co., 5.750%, due
11/15/09 $ 33,220
----------------
33,220
----------------
DIVERSIFIED FINANCIAL SERVICES: 3.1%
122,000 Boeing Capital Corp., 7.375%,
due 09/27/10 141,994
175,000 @@,#,XX Brazilian Merchant Voucher
Receivables Ltd., 5.911%, due
06/15/11 172,594
82,000 Capital One Bank, 5.750%, due
09/15/10 86,431
21,000 CitiCorp Capital I, 7.933%, due
02/15/27 24,428
139,000 Countrywide Home Loans, Inc.,
4.250%, due 12/19/07 143,388
145,000 # Farmers Exchange Capital, 7.050%,
due 07/15/28 136,073
32,000 L Ford Motor Credit Co., 5.625%,
due 10/01/08 32,401
62,000 Ford Motor Credit Co., 7.375%,
due 10/28/09 66,167
126,000 General Electric Capital Corp.,
3.500%, due 08/15/07 128,446
60,000 General Motors Acceptance
Corp., 6.625%, due 10/15/05 63,954
99,000 L Lehman Brothers Holdings, Inc.,
3.500%, due 08/07/08 99,309
95,000 XX,# Mangrove Bay Pass-Through Trust,
6.102%, due 07/15/33 93,868
554 @@,I Nordea Kredit
Realkreditaktieselskab, 6.000%,
due 07/01/29 90
95,000 @@,# PF Export Receivables Master
Trust, 3.748%, due 06/01/13 94,327
97,455 @@,# PF Export Receivables Master
Trust, 6.436%, due 06/01/15 97,527
50,000 # Wachovia Capital Trust V, 7.965%,
due 06/01/27 60,821
----------------
1,441,818
----------------
ELECTRIC: 2.7%
47,000 # Calpine Corp., 6.853%, due
07/15/07 44,239
149,000 # Consumers Energy Co., 4.800%,
due 02/17/09 152,988
56,347 I East Coast Power LLC, 7.536%,
due 06/30/17 58,037
94,000 @@ Empresa Nacional de Electricidad
SA/Chile, 8.500%, due 04/01/09 102,300
20,000 @@,I Enersis SA/Cayman Island, 6.600%,
due 12/01/26 20,055
129,000 # Indianapolis Power & Light,
6.300%, due 07/01/13 132,540
92,000 Nisource Finance Corp., 6.150%,
due 03/01/13 98,676
59,000 Nisource Finance Corp., 7.625%,
due 11/15/05 65,277
131,000 # Ohio Edison Co., 4.000%, due
05/01/08 129,638
195,000 Ohio Power Co., 6.375%, due
07/15/33 198,706
</Table>
See Accompanying Notes to Financial Statements
50
<Page>
ING
Strategic
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------
ELECTRIC (CONTINUED)
$ 89,000 # Oncor Electric Delivery Co.,
6.375%, due 01/15/15 $ 97,873
71,000 Penn Electric Co., 6.625%, due
04/01/19 75,271
77,000 # TXU Energy Co., 7.000%, due
03/15/13 83,880
----------------
1,259,480
----------------
ENVIRONMENTAL CONTROL: 0.1%
58,000 L Allied Waste North America,
7.625%, due 01/01/06 60,900
----------------
60,900
----------------
FOOD: 1.3%
43,000 Kroger Co., 5.500%, due 02/01/13 45,058
63,000 Kroger Co., 7.250%, due 06/01/09 73,394
114,000 Safeway, Inc., 4.800%, due 07/16/07 120,160
169,000 Supervalu, Inc., 7.875%, due 197,756
158,000 Tyson Foods, Inc., 7.250%, due
10/01/06 176,099
----------------
612,467
----------------
FOREST PRODUCTS & PAPER: 0.7%
83,000 @@ Abitibi-Consolidated, Inc., 6.950%,
due 12/15/06 86,580
47,000 @@ Abitibi-Consolidated, Inc., 6.950%,
due 04/01/08 48,429
69,000 Fort James Corp., 6.625%, due
09/15/04 71,070
110,000 Weyerhaeuser Co., 6.875%, due
12/15/33 116,701
----------------
322,780
----------------
INSURANCE: 0.8%
134,000 # Farmers Insurance Exchange,
8.625%, due 05/01/24 137,077
94,000 # Monumental Global Funding II,
3.850%, due 03/03/08 96,144
132,000 # Zurich Capital Trust I, 8.376%,
due 06/01/37 151,788
----------------
385,009
----------------
IRON/STEEL: 0.0%
25,000 Armco, Inc., 9.000%, due
09/15/07 18,125
----------------
18,125
----------------
LODGING: 0.5%
100,000 MGM Mirage, 6.000%, due
10/01/09 101,000
58,000 Park Place Entertainment Corp.,
9.375%, due 02/15/07 64,235
59,000 Starwood Hotels & Resorts
Worldwide, Inc., 7.375%, due
05/01/07 63,573
----------------
228,808
----------------
MEDIA: 0.7%
48,000 L AOL Time Warner, Inc., 6.875%,
due 05/01/12 53,964
39,000 # Echostar DBS Corp., 0.000%, due
10/01/08 39,926
54,000 # Echostar DBS Corp., 5.750%, due
10/01/08 54,338
$ 100,000 L Mediacom Broadband LLC,
11.000%, due 07/15/13 $ 105,750
66,000 Time Warner, Inc., 6.950%, due
01/15/28 69,953
----------------
323,931
----------------
MISCELLANEOUS MANUFACTURING: 0.4%
170,000 General Electric Co., 5.000%, due
02/01/13 174,594
----------------
174,594
----------------
MULTI-NATIONAL: 0.6%
138,000 @@ Corp Andina de Fomento CAF,
5.200%, due 05/21/13 137,063
135,000 @@ Corp Andina de Fomento CAF,
6.875%, due 03/15/12 150,202
----------------
287,265
----------------
OIL AND GAS: 2.4%
105,000 Amerada Hess Corp., 5.900%,
due 08/15/06 113,263
95,000 L Amerada Hess Corp., 7.125%,
due 03/15/33 100,219
134,000 Enterprise Products Partners LP,
6.875%, due 03/01/33 144,911
355,000 @@ Husky Oil Co., 8.900%, due 417,569
170,000 L Pemex Project Funding Master
Trust, 7.375%, due 12/15/14 183,600
73,000 Valero Energy Corp., 7.500%,
due 04/15/32 81,544
73,000 Valero Energy Corp., 8.750%,
due 06/15/30 91,317
----------------
1,132,423
----------------
PACKAGING AND CONTAINERS: 0.6%
134,000 #,L Sealed Air Corp., 5.625%, due
07/15/13 135,997
150,000 # Sealed Air Corp., 6.950%, due
05/15/09 167,867
----------------
303,864
----------------
PIPELINES: 0.6%
136,000 CenterPoint Energy Resources
Corp., 8.125%, due 07/15/05 145,915
118,000 Kinder Morgan Energy
Partners LP, 7.300%,
due 08/15/33 136,528
----------------
282,443
----------------
REAL ESTATE: 0.7%
127,000 EOP Operating LP, 7.750%, due
11/15/07 147,822
153,000 Liberty Property LP, 7.750%, due
04/15/09 181,964
----------------
329,786
----------------
REITs: 0.6%
85,000 Simon Property Group LP,
4.875%, due 03/18/10 87,805
165,000 Simon Property Group LP,
6.375%, due 11/15/07 183,726
----------------
271,531
----------------
</Table>
See Accompanying Notes to Financial Statements
51
<Page>
ING
Strategic
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------
RETAIL: 0.2%
$ 65,000 Sears Roebuck Acceptance,
6.250%, due 05/01/09 $ 72,277
----------------
72,277
----------------
SAVINGS AND LOANS: 0.3%
142,000 Washington Mutual, Inc.,
4.375%, due 01/15/08 147,407
----------------
147,407
----------------
TELECOMMUNICATIONS: 3.4%
91,000 AT&T Corp., 6.000%, due 03/15/09 98,122
115,000 L AT&T Corp., 7.800%, due 11/15/11 133,165
55,000 L AT&T Corp., 8.500%, due 11/15/31 65,346
128,000 AT&T Wireless Services, Inc.,
8.125%, due 05/01/12 152,269
135,000 Sprint Capital Corp., 6.000%, due
01/15/07 145,409
216,000 Sprint Capital Corp., 6.875%, due
11/15/28 211,382
244,000 TCI Communications Finance,
9.650%, due 03/31/27 289,445
150,000 @@ TELUS Corp., 8.000%, due 06/01/11 175,420
59,000 Verizon Florida, Inc., 6.125%, due
01/15/13 64,657
280,000 Verizon Virginia, Inc., 4.625%, due
03/15/13 276,096
1,000,000 I,** WinStar Communications, Inc.,
0.000%, due 04/15/10 100
----------------
1,611,411
----------------
Total Corporate Bonds
(Cost $12,721,557) 12,682,382
----------------
U.S. GOVERNMENT AGENCY OBLIGATIONS: 43.6%
FEDERAL HOME LOAN MORTGAGE
CORPORATION: 3.2%
480,000 L 2.875%, due 09/15/05 491,712
51,955 5.500%, due 01/01/14 54,022
25,316 5.500%, due 02/01/14 26,323
440,000 5.875%, due 03/21/11 484,682
224,153 6.500%, due 02/01/32 234,132
232,960 7.000%, due 06/01/29 246,216
867 I 9.000%, due 06/01/06 907
----------------
1,537,994
----------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION: 38.6%
480,000 L 2.375%, due 04/13/06 481,454
490,000 L 2.875%, due 05/19/08 483,221
455,000 4.000%, due 09/02/08 467,496
228,000 XX 4.750%, due 12/25/42 233,237
1,300,000 5.000%, due 10/15/18 1,332,094
2,700,000 5.000%, due 11/15/33 2,691,562
850,000 5.250%, due 04/15/07 929,526
400,000 5.500%, due 10/15/18 413,875
1,750,000 5.500%, due 11/01/32 1,778,984
825,000 6.000%, due 09/01/17 861,452
298,224 6.000%, due 07/25/24 314,811
1,281,807 6.000%, due 02/01/32 1,323,191
606,485 6.000%, due 10/01/32 626,111
68,002 6.000%, due 10/01/32 70,203
1,000,000 6.000%, due 11/15/33 1,029,375
21,491 I 6.500%, due 02/01/09 22,773
76,446 6.500%, due 08/01/15 80,793
$ 491,591 6.500%, due 06/01/28 $ 513,511
584,653 6.500%, due 12/01/31 609,649
249,975 6.500%, due 07/01/32 260,573
442,750 6.500%, due 08/01/32 461,658
99,990 6.500%, due 09/01/32 104,261
84,094 6.500%, due 10/01/32 87,685
71,373 7.000%, due 03/01/15 75,964
450,000 7.000%, due 09/01/28 476,950
822,408 7.000%, due 09/01/32 870,252
89,832 7.000%, due 11/01/32 95,058
318,205 7.500%, due 07/01/21 340,073
1,035,881 7.500%, due 02/01/31 1,110,970
8,409 8.000%, due 08/01/30 9,087
861 I 9.500%, due 06/01/05 890
1,343 I 9.500%, due 07/01/06 1,358
1,798 I 9.500%, due 05/01/07 1,809
----------------
18,159,906
----------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION: 1.8%
117,197 6.500%, due 06/15/29 123,221
457,424 6.500%, due 05/15/31 480,848
45,193 7.500%, due 11/15/29 48,403
143,226 8.000%, due 06/20/30 153,741
15,452 8.000%, due 07/15/30 16,700
605 8.500%, due 02/15/21 667
----------------
823,580
----------------
Total U.S. Government Agency
Obligations
(Cost $20,135,625) 20,521,480
----------------
U.S. TREASURY OBLIGATIONS: 10.2%
U.S. TREASURY BONDS: 1.8%
793,000 L 5.375%, due 02/15/31 851,236
----------------
851,236
----------------
U.S. TREASURY NOTES: 8.4%
665,000 L 2.000%, due 08/31/05 672,378
607,000 L 2.375%, due 08/15/06 615,607
700,000 S, L 3.000%, due 01/31/04 704,813
836,000 L 3.125%, due 09/15/08 847,887
1,093,000 L 4.250%, due 08/15/13 1,120,795
----------------
3,961,480
----------------
Total U.S. Treasury Obligations
(Cost $4,681,863) 4,812,716
----------------
ASSET-BACKED SECURITIES: 3.3%
AUTOMOBILE ASSET BACKED SECURITIES: 0.6%
300,000 USAA Auto Owner Trust, 2.040%,
due 02/16/10 298,719
----------------
298,719
----------------
COMMERCIAL MORTGAGE BACKED SECURITIES: 0.2%
68,000 GMAC Commercial Mortgage
Securities, Inc., 6.700%, due
04/15/34 78,154
----------------
78,154
----------------
CREDIT CARD ASSET BACKED SECURITIES: 1.5%
85,000 Bank One Issuance Trust, 4.540%,
due 09/15/10 87,208
</Table>
See Accompanying Notes to Financial Statements
52
<Page>
ING
Strategic
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------
CREDIT CARD ASSET BACKED
SECURITIES (CONTINUED)
$ 88,000 Capital One Master Trust, 4.900%,
due 03/15/10 $ 93,983
305,000 Citibank Credit Card Issuance
Trust, 5.650%, due 06/16/08 331,696
156,000 MBNA Credit Card Master Note
Trust, 4.950%, due 06/15/09 168,168
----------------
681,055
----------------
HOME EQUITY ASSET BACKED SECURITIES: 0.5%
207,814 Emergent Home Equity Loan
Trust, 7.080%, due 12/15/28 223,311
----------------
223,311
----------------
OTHER ASSET BACKED SECURITIES: 0.5%
85,000 Chase Funding Mortgage Loan
Asset-Backed Certificates,
2.734%, due 09/25/24 85,199
50,000 Chase Funding Mortgage Loan
Asset-Backed Certificates,
4.045%, due 05/25/33 50,182
115,000 Residential Asset Mortgage
Products, Inc., 2.140%, due
02/25/30 113,670
----------------
249,051
----------------
Total Asset Backed Securities
(Cost $1,517,331) 1,530,290
----------------
COLLATERALIZED MORTGAGE OBLIGATION: 7.5%
COMMERCIAL MORTGAGE BACKED SECURITIES: 5.9%
200,000 CS First Boston Mortgage
Securities Corp., 3.382%, due
05/15/38 193,505
480,000 CS First Boston Mortgage
Securities Corp., 3.861%, due
03/15/36 487,718
64,000 CS First Boston Mortgage
Securities Corp., 7.808%, due
04/14/62 76,645
350,000 DLJ Commercial Mortgage Corp.,
6.240%, due 11/12/31 391,743
925,000 DLJ Commercial Mortgage Corp.,
7.300%, due 06/10/32 1,083,264
160,000 GE Capital Commercial Mortgage
Corp., 5.994%, due 12/10/35 177,364
100,000 JP Morgan Chase Commercial
Mortgage Securities Corp.,
5.161%, due 10/12/37 104,417
250,000 Wachovia Bank Commercial
Mortgage Trust, 3.989%, due
06/15/35 239,135
----------------
2,753,791
----------------
WHOLE LOAN COLLATERALLIZED MORTGAGE: 0.7%
122,792 MASTR Asset Securitization Trust,
8.000%, due 06/25/33 127,172
200,000 Wells Fargo Mortgage Backed
Securities Trust, 4.500%, due
08/25/18 191,230
----------------
318,402
----------------
WL COLLATERALLIZED PLANNED AMORTIZATION
CLASS: 0.9%
$ 314,865 MASTR Alternative Loans Trust,
8.500%, due 05/25/33 $ 335,569
88,036 Residential Funding Securities
Corp., 8.500%, due 05/25/33 97,791
----------------
433,360
----------------
Total Collateralized Mortgage
Obligation
(Cost $3,562,947) 3,505,553
----------------
OTHER BONDS: 4.1%
SOVEREIGN: 4.1%
128,000 @@ Brazilian Government Intl. Bond,
2.188%, due 04/15/12 103,561
150,000 @@ Brazilian Government Intl. Bond,
10.000%, due 08/07/11 147,750
70,000 @@ Brazilian Government Intl. Bond,
11.000%, due 08/17/40 66,500
138,000 XX Central Bank of Nigeria, 0.000%,
due 01/05/10 53,475
91,000 @@ Colombia Government Intl. Bond,
10.000%, due 01/23/12 99,418
49,000 @@ Colombia Government Intl. Bond,
11.750%, due 02/25/20 57,698
70,000 @@ Dominican Republic Intl. Bond,
9.040%, due 01/23/13 61,262
70,000 @@ Ecuador Government Intl. Bond,
6.000%, due 08/15/30 44,063
41,000 @@,# El Salvador Government Intl.
Bond, 7.750%, due 01/24/23 43,255
75,000 @@ Mexico Government Intl. Bond,
4.625%, due 10/08/08 76,688
118,000 @@,L Mexico Government Intl. Bond,
6.625%, due 03/03/15 124,254
50,399 @@ Panama Government Intl. Bond,
1.938%, due 07/17/16 43,315
47,000 @@ Peru Government Intl. Bond,
9.125%, due 02/21/12 52,523
100,000 @@ Philippine Government Intl. Bond,
9.875%, due 01/15/19 109,125
79,000 @@ Republic of Argentina, 1.369%,
due 08/03/12 49,652
70,000 @@ Republic of Bulgaria, 8.250%, due
01/15/15 80,103
30,000 @@ Republic of Peru, 4.500%, due
03/07/17 26,575
254,000 @@ Russia Government Intl. Bond,
5.000%, due 03/31/30 240,664
19,000 @@,L Turkey Government Intl. Bond,
9.500%, due 01/15/14 19,428
140,000 @@ Turkey Government Intl. Bond,
12.375%, due 06/15/09 164,849
22,000 @@ Ukraine Government Intl. Bond,
7.650%, due 06/11/13 22,000
20,907 @@,# Ukraine Government Intl. Bond,
11.000%, due 03/15/07 23,293
53,000 @@ Uruguay Government Intl. Bond,
7.500%, due 03/15/15 41,075
91,000 @@ Venezuela Government Intl. Bond,
9.250%, due 09/15/27 70,798
93,000 @@,# Venezuela Government Intl. Bond,
10.750%, due 09/19/13 86,025
----------------
Total Other Bonds
(Cost $1,893,603) 1,907,349
----------------
</Table>
See Accompanying Notes to Financial Statements
53
<Page>
ING
Strategic
Bond
Fund PORTFOLIO OF INVESTMENTS as of September 30, 2003 (Unaudited)
(Continued)
<Table>
<Caption>
NUMBER OF
WARRANTS VALUE
- ----------------------------------------------------------------------------------------------------
WARRANTS: 0.0%
DIVERSIFIED FINANCIAL SERVICES: 0.0%
250 @,I,X North Atlantic Trading Co.,
Expires 9/30/2003 $ --
----------------
Total Warrants
(Cost $0) --
----------------
Total Long-Term Investments
(Cost $44,512,926) 44,959,770
----------------
<Caption>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 19.3%
REPURCHASE AGREEMENT: 19.3%
$ 9,050,000S Goldman Sachs Repurchase
Agreement dated 9/30/03,
1.090%, due 10/01/03 $9,050,274
to be received upon repurchase
(Collateralized by $9,141,000
Various U.S. Government
obligations, 0.000% to 6.875%
Market Value $9,232,167 due
10/09/2003 to 09/30/2013) 9,050,000
----------------
Total Short-term
Investments
(Cost $9,050,000) 9,050,000
----------------
TOTAL INVESTMENTS IN
SECURITIES (COST
$53,562,926)* 115.0% $ 54,009,770
OTHER ASSETS AND
LIABILITIES-NET (15.0) (7,043,982)
----- ----------------
NET ASSETS 100.0% $ 46,965,788
===== ================
</Table>
@ Non-income producing security
@@ Foreign Issuer
REITs Real Estate Investment Trusts
# Securities with purchases pursuant to Rule 144A, under the Securities Act
of 1933 and may not be resold subject to that rule except to qualified
institutional buyers. These securities have been determined to be liquid
under the guidelines established by the Funds' Board of
Directors/Trustees.
I Illiquid Security
L Loaned security, a portion or all of the security is on loan at
September 30, 2003
S Segregated securities for when-issued or delayed delivery securities held
at September 30, 2003.
** Defaulted security
X Fair value determined by ING Funds Valuation Committee appointed by the
Funds' Board of Directors/Trustees.
XX Value of securities obtained from one or more dealers making markets in
the securities which have been adjusted based on the Fund's valuation
procedures.
* Cost for federal income tax purposes is the same as for financial
statement purposes. Net unrealized appreciation consists of:
<Table>
Gross Unrealized Appreciation $ 1,034,812
Gross Unrealized Depreciation (587,968)
----------------
Net Unrealized Appreciation $ 446,844
================
</Table>
See Accompanying Notes to Financial Statements
54
<Page>
SHAREHOLDER MEETING INFORMATION (Unaudited)
A SPECIAL MEETING OF SHAREHOLDERS OF THE FUNDS WAS HELD JULY 22, 2003, AT THE
OFFICES OF ING FUNDS, 7337 EAST DOUBLETREE RANCH ROAD, SCOTTSDALE, AZ 85258.
A BRIEF DESCRIPTION OF EACH MATTER VOTED UPON AS WELL AS THE RESULTS ARE
OUTLINED BELOW:
1. To approve a Sub-Advisory Agreement between ING Investments, LLC and Aeltus
Investment Management, Inc., with no change in the Adviser, the portfolio
manager(s), or the overall management fee paid by the Fund.
3. To transact such other business, not currently contemplated, that may
properly come before the Special Meeting or any adjournment(s) thereof in the
discretion of the proxies or their substitutes.
<Table>
<Caption>
SHARES VOTED
AGAINST OR SHARES BROKER TOTAL SHARES
PROPOSAL SHARES VOTED FOR WITHHELD ABSTAINED NON-VOTE VOTED
-------- ---------------- ------------ ---------- -------- -------------
ING GNMA Income Fund 1 78,774,693 1,440,831 2,032,327 -- 82,247,851
ING High Yield Opportunity Fund 1 44,274,656 691,453 904,261 -- 45,870,370
ING Strategic Bond Fund 1 3,660,225 88,691 60,347 -- 3,809,263
ING GNMA Income Fund 3 78,000,056 1,897,914 2,349,881 -- 82,247,851
ING High Yield Opportunity Fund 3 43,993,421 921,466 955,483 -- 45,870,370
ING Strategic Bond Fund 3 3,686,231 63,037 59,995 -- 3,809,263
</Table>
55
<Page>
TRUSTEE AND OFFICER INFORMATION (Unaudited)
The business and affairs of the Funds are managed under the direction of the
Funds' Board of Trustees. A trustee who is not an interested person of the Fund,
as defined in the 1940 Act, is an independent trustee ("Independent Trustee").
The Trustees of the Funds are listed below. The Statement of Additional
Information includes additional information about trustees of the Registrant and
is available, without charge, upon request at 1-800-992-0180.
<Table>
<Caption>
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH THE TIME DURING THE OVERSEEN HELD BY
AND AGE REGISTRANT(S) SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE
- ---------------------------- ---------------- ------------- ------------------------- --------------- -----------------------
NON-INTERESTED TRUSTEES:
Paul S. Doherty(2) Trustee February Mr. Doherty is 116 None
7337 E. Doubletree Ranch Rd. 2001 - President and Partner,
Scottsdale, Arizona 85258 present Doherty, Wallace,
Born: 1934 Pillsbury and Murphy,
P.C., Attorneys (1996 -
Present); Director,
Tambrands, Inc. (1993 -
1998); and Trustee of
each of the funds
managed by Northstar
Investment Management
Corporation (1993 -
1999).
J. Michael Earley(3) Trustee February President and Chief 116 None
7337 E. Doubletree Ranch Rd. 2002 - Executive Officer,
Scottsdale, Arizona 85258 present Bankers Trust Company,
Born: 1945 N.A. (1992 - Present).
R. Barbara Gitenstein(2) Trustee February President, College of 116 None
7337 E. Doubletree Ranch Rd. 2002 - New Jersey (1999 -
Scottsdale, Arizona 85258 present Present). Formerly,
Born: 1948 Executive Vice President
and Provost, Drake
University (1992 - 1998).
Walter H. May(2) Trustee February Retired. Formerly, 116 Best Prep Charity
7337 E. Doubletree Ranch Rd. 2001 - Managing Director and (1991 - Present).
Scottsdale, Arizona 85258 present Director of Marketing,
Born: 1936 Piper Jaffray, Inc.;
Trustee of each of the
funds managed by
Northstar Investment
Management
Corporation (1996 -
1999).
</Table>
56
<Page>
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
<Table>
<Caption>
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH THE TIME DURING THE OVERSEEN HELD BY
AND AGE REGISTRANT(S) SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE
- ---------------------------- ---------------- ------------- ------------------------- -------------- -----------------------
David W.C. Putnam(3) Trustee February President and Director, 116 Director of F.L.
7337 E. Doubletree Ranch Rd. 2001 - F.L. Putnam Securities Putnam Securities
Scottsdale, Arizona 85258 present Company, Inc. and its company, Inc. (June
Born: 1939 affiliates; President, 1978 to Present);
Secretary and Trustee, F.L. Putnam
The Principled Equity Investment Managment
Market Fund. Formerly, Company (December
Trustee, Trust Realty 2001 to Present);
Trust (December Corp.; Asian Amerrican Bank
Anchor Investment and Trust company
Trust; Bow 2000 - (June 1992 to
Present); Ridge Mining Persent); and Notre
Company and each of Dame Health Care
the F.L. Putnam funds Center (1991 to
managed by Northstar Present). He is also
Investment Foundation a Trustee of The
Management Corporation Principiled Equity
(1994 - 1999). Market Fund
(November 1996 to
Present); Anchor
International Bond
(December 2000 -
Present);
Progressive Capital
Accumulation Trust
(August 1998 -
Present); Principled
Equity Market Fund
(November 1996 -
Present), Mercy
Endowment Foundation
(1995 - Present);
Director, F.L.
Putnam Investment
Management Company
(December 2001 -
Present); Asian
American Bank and
Trust Company (June
1992 - Present); and
Notre Dame Health
Care Center (1991 -
Present) F.L. Putnam
Securities Company,
Inc. (June 1978 -
Present); and an
Honorary Trustee,
Mercy Hospital (1973 -
Present).
Blaine E. Rieke(3) Trustee October General Partner, 116 Morgan Chase Trust Co.
7337 E. Doubletree Ranch Rd. 1998 - Huntington Partners (January 1998 -
Scottsdale, Arizona 85258 present (January 1997 - Present).
Born: 1933 Present). Chairman of
the Board and Trustee
of each of the funds
managed by ING
Investment Management
Co. LLC (November
1998 - February 2001).
Roger B. Vincent(3) Trustee February President, Springwell 116 Director, AmeriGas
7337 E. Doubletree Ranch Rd. 2002 - Corporation (1989 - Propane, Inc. (1998 -
Scottsdale, Arizona 85258 present Present). Formerly, Present).
Born: 1945 Director Tatham
Offshore, Inc. (1996 -
2000).
</Table>
57
<Page>
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
<Table>
<Caption>
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH THE TIME DURING THE OVERSEEN HELD BY
AND AGE REGISTRANT(S) SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE
- ---------------------------- ---------------- ------------- ------------------------- --------------- -----------------------
Richard A. Wedemeyer(3) Trustee October Retired. 116 Touchstone Consulting
7337 E. Doubletree Ranch Rd. 1998 - Mr. Wedemeyer was Group (1997 - Present).
Scottsdale, Arizona 85258 present formerly Vice
Born: 1936 President - Finance
and Administration,
Channel Corporation
(June 1996 - April 2002).
Formerly Trustee, First
Choice Funds (1997
- 2001); and of each
of the funds managed by
ING Investment
Management Co. LLC
(1998 - 2001).
INTERESTED TRUSTEES:
Thomas J. McInerney(4) Trustee February Chief Executive Officer, 170 Director, Hemisphere,
7337 E. Doubletree Ranch Rd. 2001 - ING U.S. Financial Inc. (May 2003 -
Scottsdale, Arizona 85258 present Services (September Present). Director,
Born: 1956 2001 to present); Equitable Life
General Manager and Insurance Co., Golden
Chief Executive Officer, American Life
ING U.S. Worksite Insurance Co., Life
Financial Services Insurance Company of
(December 2000 to Georgia, Midwestern
present); Member, ING United Life Insurance
Americas Executive Co., ReliaStar Life
Committee (2001 to Insurance Co.,
present); President, Security Life of
Chief Executive Officer Denver, Security
and Director of Connecticut Life
Northern Life Insurance Insurance Co.,
Company (2001 to Southland Life
present), ING Aeltus Insurance Co., USG
Holding Company, Inc. Annuity and Life
(2000 to present), ING Company and United
Retail Holding Life and Annuity
Company (1998 to Insurance Co. Inc.
present). Formerly, ING (March 2001 -
Life Insurance and Present); Trustee,
Annuity Company Ameribest Life
(1997 to November Insurance Co., (2001 -
2002), ING Retirement 2003); Trustee, First
Holdings, Inc. (1997 to Columbine Life
March 2003); General Insurance Co., (2001 -
Manager and Chief 2002); Member of the
Executive Officer, ING Board, National
Worksite Division Commission on
(December 2000 to Retirement Policy.
October 2001), Competitiveness and
President, ING-SCI, Inc. Technology of
(August 1997 to Connecticut,
December 2000); Connecticut Business
President, Aetna and Industry
Financial Services Association, Bushnell;
(August 1997 to Connecticut Forum;
December 2000); and Metro Hartford Chamber
has held a variety of of Commerce and is
line and corporate staff Chairman, Concerned
positions since 1978. Citzens for Effective
Government.
</Table>
58
<Page>
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
<Table>
<Caption>
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH THE TIME DURING THE OVERSEEN HELD BY
AND AGE REGISTRANT(S) SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE
- ---------------------------- ---------------- ------------- ------------------------- --------------- -----------------------
John G. Turner(5) Trustee February Chairman, Hillcrest 116 Director, Hormel Foods
7337 E. Doubletree Ranch Rd. 2001 - Capital Partners Corporation (March
Scottsdale, Arizona 85258 present (May 2002 - Present); 2000 - Present); Shopko
Born: 1939 President, Turner Stores, Inc. (August
Investment Company 1999 - Present); and
(January 2002 - M.A. Mortenson
Present). Mr. Turner Company (March 2002 -
was formerly Vice Present).
Chairman of ING
Americas (2000 - 2002);
Chairman and Chief
Executive Officer of
ReliaStar Financial
Corp.
</Table>
- ----------
(1) Trustees serve until their successors are duly elected and qualified,
subject to the Board's retirement policy.
(2) Valuation Committee member.
(3) Audit Committee member.
(4) Mr. McInerney is an "interested person," as defined by the 1940 Act, because
of his affiliation with ING U.S. Worksite Financial Services, an affiliate
of ING Investments.
(5) Mr. Turner is an "interested person," as defined by the 1940 Act, because of
his affiliation with ING Americas, an affiliate of ING Investments.
59
<Page>
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
<Table>
<Caption>
PRINCIPAL
TERM OF OFFICE OCCUPATION(S)
NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE
AND AGE HELD WITH THE TRUST TIME SERVED(1) PAST FIVE YEARS
- ---------------------------- ------------------------- ------------------------- ---------------------------------------
James M. Hennessy President and Chief February 2001 - President and Chief Executive
7337 E. Doubletree Ranch Rd. Executive Officer present Officer of ING Capital Corporation,
Scottsdale, Arizona 85258 LLC, ING Funds Services, LLC, ING
Born: 1949 Chief Operating February 2002 - Advisors, Inc., ING Investments,
Officer present LLC, Lexington Funds Distributor,
Inc., Express America T.C. Inc. and
Senior Executive Vice October 2000 - EAMC Liquidation Corp. (since
President and February 2001 December 2001); Executive Vice
Secretary President and Chief Operating
Officer of ING Funds Distributor,
LLC (since June 2000).
Michael J. Roland Executive Vice February 2002 - Executive Vice President, Chief
7337 E. Doubletree Ranch Rd. President and present Financial Officer and Treasurer of
Scottsdale, Arizona 85258 Assistant Secretary ING Funds Services, LLC, ING Funds
Born: 1958 Distributor, LLC, ING Advisors, Inc.,
Principal Financial October 2000 - ING Investments, LLC
Officer present (December 2001 to present),
Lexington Funds Distributor, Inc.,
Senior Vice President October 2000 - Express America T.C. Inc. and
February 2002 EAMC Liquidation Corp. (since
December 2001). Formerly,
Executive Vice President, Chief
Financial Officer and Treasurer of
ING Quantitative Management,
Inc. (December 2001 to
October 2002); and Senior Vice
President, ING Funds Services, LLC,
ING Investments, LLC, and ING
Funds Distributor, LLC (June 1998
to December 2001).
Stanley D. Vyner Executive Vice October 2000 - Executive Vice President of ING
7337 E. Doubletree Ranch Rd. President present Advisors, Inc. and ING Investments,
Scottsdale, Arizona 85258 LLC (July 2000 to present) and
Born: 1950 Chief Investment Officer of the
International Portfolios, ING
Investments, LLC (July 1996 to
present). Formerly, President and
Chief Executive Officer of ING
Investments, LLC (August 1996 to
August 2000).
Robert S. Naka Senior Vice President October 2000 - Senior Vice President and Assistant
7337 E. Doubletree Ranch Rd. and Assistant present Secretary of ING Funds Services,
Scottsdale, Arizona 85258 Secretary LLC, ING Funds Distributor, LLC,
Born: 1963 ING Advisors, Inc., ING
Investments, LLC (October 2001 to
present) and Lexington Funds
Distributor, Inc. (since
December 2001). Formerly, Senior
Vice President and Assistant
Secretary for ING Quantitative
Management, Inc. (October 2001
to October 2002); Vice President,
ING Investments, LLC (April 1997
to October 1999), and ING Funds
Services, LLC (February 1997 to
August 1999).
Kimberly A. Anderson Vice President February 2001 - Vice President and Assistant
7337 E. Doubletree Ranch Rd. present Secretary of ING Funds Services,
Scottsdale, Arizona 85258 LLC, ING Funds Distributor, LLC,
Born: 1964 Secretary February 2001 - ING Advisors, Inc., ING Investments,
August 2003 LLC (since October 2001) and
Lexington Funds Distributor, Inc.
(since December 2001). Formerly,
Vice President for ING Quantitative
Management, Inc. (October 2001
to October 2002); Assistant Vice
President of ING Funds Services,
LLC (November 1999 to
January 2001) and has held various
other positions with ING Funds
Services, LLC for more than the last
five years.
</Table>
60
<Page>
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
<Table>
<Caption>
PRINCIPAL
TERM OF OFFICE OCCUPATION(S)
NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE
AND AGE HELD WITH THE TRUST TIME SERVED(1) PAST FIVE YEARS
- ---------------------------- ------------------------- ------------------------- ---------------------------------------
Robyn L. Ichilov Vice President October 2000 - Vice President of ING Funds
7337 E. Doubletree Ranch Rd. present Services, LLC (October 2001to
Scottsdale, Arizona 85258 present) and ING Investments, LLC
Born: 1967 Treasurer March 2001 - present (August 1997 to present);
Accounting Manager, ING
Investments, LLC (November 1995
to present).
J. David Greenwald Vice President August 2003 - present Vice President of Mutual Fund
7337 E. Doubletree Ranch Rd. Compliance of ING Funds Services,
Scottsdale, Arizona 85258 LLC (May 2003 - Present). Formerly
Born: 1957 Assistant Treasurer and Director of
Mutual Fund Compliance and
Operations of American Skandia,
A Prudential Financial Company
(October 1996 - May 2003).
Lauren D. Bensinger Vice President February 2003 - Vice President and Chief
7337 E. Doubletree Ranch Rd. present Compliance Officer, ING Funds
Scottsdale, Arizona 85258 Distributor, LLC. (July 1995 -
Born: 1957 Present); Vice President
(February 1996 - Present) and
Chief Compliance Officer
(October 2001 - Present) ING
Investments, LLC; Vice President
and Chief Compliance Officer, ING
Advisors, Inc. (July 2000 - Present),
Vice President and Chief
Compliance Officer, ING
Quantitative Management, Inc.
(July 2000 - September 2002), and
Vice President, ING Fund Services,
LLC (July 1995 - Present).
Theresa Kelety Secretary August 2003 - present Counsel, ING U.S. Financial Services
7337 E. Doubletree Ranch Rd. (April 2003 - Present). Formerly,
Scottsdale, Arizona 85258 Senior Associate with Shearman &
Born: 1963 Sterling (February 2000 -
April 2003) and Associate with
Sutherland Asbill & Brennan
(1996 - February 2000).
Todd Modic Vice President August 2003 - present Vice President of Financial
7337 E. Doubletree Ranch Rd. Reporting - Fund Accounting of
Scottsdale, Arizona 85258 Assistant Vice August 2001 - ING Funds Services, LLC
Born: 1967 President August 2003 (September 2002 to present).
Director of Financial Reporting of
ING Investments, LLC ( March 2001
to September 2002). Formerly,
Director of Financial Reporting,
Axient Communications, Inc.
(May 2000 to January 2001) and
Director of Finance, Rural/Metro
Corporation (March 1995 to
May 2000).
Susan P. Kinens Assistant Vice February 2003 - Assistant Vice President and
7337 E. Doubletree Ranch Rd. President and present Assistant Secretary, ING Funds
Scottsdale, Arizona 85258 Assistant Secretary Services, LLC (December 2002 -
Born: 1976 Present); and has held various
other positions with ING Funds
Services, LLC for more than the
last five years.
Maria M. Anderson Assistant Vice August 2001 - present Assistant Vice President of ING
7337 E. Doubletree Ranch Rd. President Funds Services, LLC (since
Scottsdale, Arizona 85258 October 2001). Formerly, Manager
Born: 1958 of Fund Accounting and Fund
Compliance, ING Investments, LLC
(September 1999 to November
2001); and Section Manager of
Fund Accounting, Stein Roe
Mutual Funds (July 1998 to
August 1999).
</Table>
- ----------
(1) The officers hold office until the next annual meeting of the Trustees and
until their successors have been elected and qualified.
61
<Page>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<Page>
ING Funds Distributor, LLC offers the funds listed below. Before investing in a
fund, shareholders should carefully review the fund's prospectus. Investors may
obtain a copy of a prospectus of any ING Fund by calling (800) 992-0180.
INTERNATIONAL EQUITY FUNDS
ING Emerging Countries Fund
ING Foreign Fund
ING International Fund
ING International Growth Fund
ING International SmallCap Growth Fund
ING International Value Fund
ING Precious Metals Fund
ING Russia Fund
INTERNATIONAL GLOBAL EQUITY FUNDS
ING Global Equity Dividend Fund
ING Global Real Estate Fund
ING Worldwide Growth Fund
DOMESTIC EQUITY GROWTH FUNDS
ING Growth Fund
ING Growth + Value Fund
ING Growth Opportunities Fund
ING LargeCap Growth Fund
ING MidCap Opportunities Fund
ING SmallCap Opportunities Fund
ING Small Company Fund
ING Technology Fund
ING Disciplined LargeCap Fund
DOMESTIC EQUITY INDEX FUNDS
ING Index Plus LargeCap Fund
ING Index Plus MidCap Fund
ING Index Plus SmallCap Fund
DOMESTIC EQUITY VALUE FUNDS
ING Financial Services Fund
ING MagnaCap Fund
ING Tax Efficient Equity Fund
ING Value Opportunity Fund
ING SmallCap Value Fund
ING MidCap Value Fund
DOMESTIC EQUITY GROWTH AND INCOME FUNDS
ING Equity and Bond Fund
ING Convertible Fund
ING Real Estate Fund
ING Balanced Fund
ING Growth and Income Fund
FIXED INCOME FUNDS
ING Bond Fund
ING Classic Money Market Fund*
ING Government Fund
ING GNMA Income Fund
ING High Yield Opportunity Fund
ING High Yield Bond Fund
ING Intermediate Bond Fund
ING Lexington Money Market Trust*
ING National Tax Exempt Bond Fund
ING Money Market Fund*
ING Aeltus Money Market Fund*
ING Strategic Bond Fund
STRATEGIC ALLOCATION FUNDS
ING Strategic Allocation Growth Fund
ING Strategic Allocation Balanced Fund
ING Strategic Allocation Income Fund
LOAN PARTICIPATION FUND
ING Prime Rate Trust
ING Senior Income Fund
* An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks
to preserve the value of your investment at $1.00 per share, it is possible
to lose money by investing in the Fund.
<Page>
INVESTMENT MANAGER
ING Investments, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258
ADMINISTRATOR
ING Funds Services, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258
DISTRIBUTOR
ING Funds Distributor, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
1-800-334-3444
TRANSFER AGENT
DST Systems, Inc.
P.O. Box 419368
Kansas City, Missouri 64141-6368
CUSTODIAN
Bank of New York
100 Colonial Center Parkway, Suite 300
Lake Mary, FL 32746
LEGAL COUNSEL
Dechert
1775 Eye Street, N.W.
Washington, D.C. 20006
INDEPENDENT AUDITORS
KPMG LLP
99 High Street
Boston, MA 02110-2371
Prospectus containing more complete information regarding the Funds, including
charges and expenses, may be obtained by calling ING Funds Distributor, LLC at
1-800-992-0180. Please read the prospectus carefully before you invest or send
money. The Form N-PX (Proxy Voting Record) will be available without charge,
upon request, by calling 800-992-0180 on or about August 31, 2004; and on the
fund's website at www.ingfunds.com; and on the SEC's website www.sec.gov.
[ING FUNDS LOGO] FII&QSAR0903-112803
<Page>
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 Funds Trust
----------------
By /s/ James M. Hennessy
-----------------------------------------------------
James M. Hennessy
President and Chief Executive Officer
Date December 9, 2003
--------------------------------------------------
<Page>
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 December 9, 2003
---------------------------------------------------
By /s/ Michael J. Roland
-----------------------------------------------------
Michael J. Roland
Executive Vice President and Chief Financial Officer
Date December 9, 2003
---------------------------------------------------