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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-02565
---------------------------------------------
ING VP Money Market Portfolio
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
7337 E. Doubletree Ranch Rd., Scottsdale, AZ 85258
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(Address of principal executive offices) (Zip code)
CT Corporation System, 101 Federal Street, Boston, MA 02110
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(Name and address of agent for service)
Registrant's telephone number, including area code: 1-800-992-0180
----------------------------
Date of fiscal year end: December 31
-----------
Date of reporting period: December 31, 2003
--------------------------
ITEM 1. REPORTS TO STOCKHOLDERS.
The following is a copy of the report transmitted to stockholders pursuant to
Rule 30e-1 under the Act (17 CFR 270.30e-1):
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ANNUAL REPORT
ANNUAL REPORT
DECEMBER 31, 2003
CLASSES R AND S
ING VARIABLE PRODUCT PORTFOLIOS
INTERNATIONAL EQUITY PORTFOLIO
ING VP INTERNATIONAL EQUITY PORTFOLIO
DOMESTIC EQUITY GROWTH PORTFOLIOS
ING VP GROWTH PORTFOLIO
ING VP SMALL COMPANY PORTFOLIO
ING VP TECHNOLOGY PORTFOLIO
DOMESTIC EQUITY VALUE PORTFOLIO
ING VP VALUE OPPORTUNITY PORTFOLIO
DOMESTIC EQUITY AND INCOME PORTFOLIOS
ING VP BALANCED PORTFOLIO
ING VP GROWTH AND INCOME PORTFOLIO
FIXED INCOME PORTFOLIOS
ING VP BOND PORTFOLIO
ING VP MONEY MARKET PORTFOLIO
[GRAPHIC]
[ING FUNDS LOGO]
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TABLE OF CONTENTS
<Table>
President's Letter 1
Market Perspective 2
Portfolio Managers' Reports:
International Equity Portfolio 4
Domestic Equity Growth Portfolios 6
Domestic Equity Value Portfolio 12
Domestic Equity and Income Portfolios 14
Fixed Income Portfolios 18
Index Descriptions 21
Independent Auditors' Report 22
Statements of Assets and Liabilities 23
Statements of Operations 25
Statements of Changes in Net Assets 27
Financial Highlights 32
Notes to Financial Statements 41
Portfolios of Investments 51
Tax Information 84
Director and Officer Information 85
</Table>
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(THIS PAGE INTENTIONALLY LEFT BLANK)
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PRESIDENT'S LETTER
[PHOTO OF JAMES M. HENNESSY]
JAMES M. HENNESSY
Dear Shareholder,
What a difference a few months can make. In my last letter to our shareholders
in the semi-annual report, it was hard to escape the sense of anxiety that many
investors were experiencing. Now, six months later, I believe there may be a
renewed sense of optimism among investors -- cautious optimism, to be sure, but
optimism never the less.
And I believe there are good, solid reasons for this improved outlook. For one,
many key corporations have been reporting profits in recent months. Granted, the
numbers are modest, but they have been noteworthy, consistent and credible
because many of these same companies are employing stricter accounting standards
following the Enron debacle. Going hand-in-hand with these upbeat figures are
the improving price-to-earning ratios and improving valuations that many
investors are now seeing.
The reasons for renewed confidence reach beyond the shores of the U.S. as well.
Overall, world markets are reporting strong gains. This is certainly true of
Japan, where the economy has been showing welcome signs of recovery in recent
months. That recovery, in turn, has helped trigger increases in business
activity and consumer confidence there.
We are seeing similar surges in consumer confidence in several key European
markets, and, although, some European markets remain sluggish, overall,
financial benchmarks from Europe reflect steady growth. Markets in the United
Kingdom, in particular, are reporting impressive returns, thanks in no small
part to England's robust housing market as well as strong figures coming from
the consumer in that country.
This renewed confidence has been tempered, however, by recent events and news
stories concerning mutual fund trading practices, including after-hours trading
and market timing. As with many financial services companies, ING Investments,
LLC ("ING Investments"), investment adviser to the ING Funds and affiliates of
ING Investments (collectively, "ING") have received requests for information
from various governmental and self-regulatory agencies in connection with
investigations related to trading in investment company shares. In each case,
full cooperation and responses are being provided. ING is also completing an
internal review of investment company share trading as well as a review of their
policies and procedures in this area. ING will reimburse any ING Portfolio
affected by inappropriate late trading or market timing for any improper profits
that accrued to any person who engaged in improper frequent or late trading for
which ING is responsible.
Also, I want to clearly state that ING Funds does not condone the illegal
practice of after-hours trading. In addition, it has been our long-standing
policy to discourage inappropriate 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.
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
February 16, 2004
1
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MARKET PERSPECTIVE: YEAR ENDED DECEMBER 31, 2003
In 2003 GLOBAL EQUITIES recorded their first year of positive returns since
1999. As measured by the Morgan Stanley Capital International ("MSCI") World
Index, global stocks rose 33.8% for the year. For the second half of 2003,
global stocks returned 19.8%. In both figures about three quarters of the return
was due to stock market movements and the rest to dollar weakness. The dollar
occupied the financial spotlight for much of the second six months. Japanese and
particularly Chinese government intervention to keep their currencies low
against the dollar underscored frustration in the U.S. that signs of an
improving economy were not being accompanied by job growth. However, the dollar
weakened against the freely floating euro and other European currencies as even
increasingly impressive economic reports from the U.S. could not banish fears
about its large trade and budget deficits. For the second six months of the
period, the euro appreciated 9.8% against the dollar, 20.2% for all of 2003. At
year-end, the Bank of Japan announced that it had spent an astonishing $187
billion in 2003 to stem the rise in the yen.
Most U.S. FIXED INCOME classes had a much more subdued second six months as one
might expect in a strong environment for equities. Bond prices were supported by
the apparent absence of any inflationary pressures and the belief that until
they appear, the Federal Reserve ("Fed") will not raise interest rates. For the
six-month period, the Lehman Brothers Aggregate Bond Index of investment grade
bonds returned 0.17%, much less than the average coupon. For the year, the total
return was 4.10%. Within this the Lehman Brothers U.S. Corporate Investment
Grade Index returned 0.49% for the second six months and the U.S. Treasury Index
lost 1.45%. For 2003, these indices returned 8.24% and 2.24%, respectively.
There was a pronounced steepening of the yield curve as ten-year Treasury yields
rose from 3.53% at the end of June to 4.26% at year end while the 90-day
Treasury Bill yield rose just 7 basis points to 91 basis points, never spending
a day above 100 basis points. By contrast, 2003 was the year in which the high
yield market redeemed itself after several years of disappointing performance.
The rally that began late in October of 2002 continued throughout 2003, leading
to the best high yield market performance since 1991. For the year, the high
yield market returned 28.97%. While 2002 was a year that was marred by fraud and
corporate malfeasance, 2003 was a year of balance sheet repair. Many troubled
issuers resorted to creative financing techniques to take out bank debt and to
refinance and extend maturities. Bond prices for most issuers rose as this
future refinancing risk was far outweighed by the immediate benefit of a
significantly diminished near- to medium- term risk of default. The declining
default risk was manifested throughout the year by a fall in the default rate
from a peak of 11.7% in February 2002 to 5.26% in December 2003.
THE U.S. EQUITIES market returned 15.2% in the second half of 2003 based on the
Standard & Poor's ("S&P") 500 Index including dividends and returned 28.71% for
the whole year. At current price-to-earnings levels, 18 times 2004 earnings,
many are worried about valuations after the tremendous rebound from the lows in
early March. Much of the recent acceleration in gross domestic product ("GDP"),
to 8.2% growth in the third quarter and the strength in consumer demand, has
come from the effect of large tax cuts, the mortgage refinancing boom as
interest rates declined and an accommodative monetary policy by which the Fed
has kept real short term interest rates negative, even with very tame inflation.
Corporate profits have improved and balance sheets have been repaired, without
question, but this in large measure has been based on cost cutting and a lack of
hiring. Only from about the middle of the last quarter did the level of new
unemployment claims break convincingly below the 400,000 level. This has
restrained employment costs both because the number of employees has been kept
down and because their wage bargaining power has accordingly remained low. Some
commentators argue that these bullish forces are surely unsustainable. The bulls
say this is just the "wall of worry" that markets tend to climb, that employment
growth will reinvigorate demand and that major indices are still well off their
all time highs. True, the advance in 2003 was powered by smaller, lower quality
stocks but this is natural as sentiment improves after a bear market. By the end
of 2003, the recovery was becoming more broadly based and there is still plenty
of appreciation left in the bigger companies, say the optimists.
In INTERNATIONAL MARKETS, Japan soared 32.1% in dollar terms in the second half
of 2003 based on the MSCI Japan Index, slightly more than half of this due to
the strength of the yen despite the efforts of the Bank of Japan, as noted
earlier, to hold it down. For the year, Japanese stocks returned 35.9%. By the
end of the year the broad market was trading at just over 18 times earnings for
2004, similar to the S&P 500.
2
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MARKET PERSPECTIVE: YEAR ENDED DECEMBER 31, 2003
Since the semi-annual report, the news has been mixed for Japanese business. The
good news of the seventh consecutive quarter of economic growth, rising
machinery orders and industrial production was soured by the realization that it
was entirely driven by exports, with domestic demand weak. Japan's twin
problems: chronic deflation and a banking system paralyzed by non-performing
loans remain to be solved. Much of the strength of the Japanese market seems to
have been fueled by foreign money, with the local investor still not convinced.
European excluding United Kingdom ("ex UK") markets advanced 26.7% in dollars in
the last six months of 2003, including nearly 10% currency appreciation,
according to the MSCI Europe ex UK Index. By the end of 2003, dollar investors
had a gain of 42.6% for the year and markets in this region were still trading
on average at just 14.6 times 2004 earnings. Third quarter GDP managed a 0.4%
increase after a decline in the second quarter. As in Japan, this was entirely
sourced from exports despite the strengthening euro, since consumer spending was
stagnant and business investment down.
Nonetheless industrial production in France and Germany, over half of the
Eurozone's economy, was rising smartly by the end of the year and unemployment
edging down. German business confidence rose to the highest in three years. Many
commentators believe that regional stocks are cheap in relation to earnings
growth projected to be more than 20% in 2004 and that the rally is not over. The
UK market gained 22.3% in dollars in the second half of 2003, nearly half of
this due to currency, according to the MSCI UK Index. For the whole year, the
dollar return was 32.1%. At those levels the UK market was trading at about 18
times 2004 earnings, again similar to the S&P 500. As in other regions, UK
business and economic prospects improved during the six months. But there was
more to this than exports. Services, manufacturing and construction were all
accelerating by year-end. Third quarter GDP growth was revised up to 0.8% over
the second quarter, while the unemployment rate fell to 5%, the lowest in
decades. In November, the Bank of England became the first of the world's major
central banks to raise interest rates.
See accompanying index descriptions on page 21.
3
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ING VP INTERNATIONAL EQUITY PORTFOLIO Portfolio Managers' Report
PORTFOLIO MANAGEMENT TEAM: A team of equity investment specialists, Aeltus
Investment Management, Inc. - the Sub-Adviser.
GOAL: The ING VP International Equity Portfolio (the "Portfolio") seeks
long-term capital growth primarily through investment in a diversified portfolio
of common stocks principally traded in countries outside of the United States.
PERFORMANCE: For the year ended December 31, 2003, the Portfolio's Class R
shares, excluding any charges, returned 32.05% compared to MSCI EAFE Index,
which returned 39.17% for the same period.
PORTFOLIO SPECIFICS: On balance, the Portfolio's positioning proved too
conservative during the last 12-month period, especially in the months following
the market's turnaround in mid-March. Lesser quality stocks with little or no
earnings visibility, often with stretched balance sheets and mediocre management
track records, dominated the rebound. Our "Growth at a Reasonable Price" (GARP)
strategy, in which we assess the attractiveness of stocks' growth in relation to
valuations, encountered a strong headwind. The bulk of the performance shortfall
for the year was consequently generated in this post-war period. This effect was
most pronounced in Japan, in the period from February to April, where the forced
liquidation by domestic pension funds of quality liquid names was an additional
negative factor.
Our regional allocation contributed negatively for the year, largely in the
final quarter. Our modest overweight in underperforming Japan in this quarter
and our underweight position in Pan-Europe, which outperformed, held back
results. The bulk of the performance deficit was, however, attributable to
unsuccessful stock selection within the regions. Japan, which represents about
21% of the benchmark, accounted for the entire stock selection shortfall. With
our focus firmly on financially strong companies with visible growth prospects,
at a time where investors rotated aggressively into smaller, generally
domestically oriented but weakly capitalized companies, proved disadvantageous.
The stock selection result within Europe (71% of the benchmark) was neutral,
while the result from Developed Asia/Australia (8% of the benchmark) was
modestly positive. Excluding the opportunity cost of holding some cash reserves
in a rising market, which was over 150 basis points from less than 5% on
average, our sector allocation strategy cost some performance. Our overweight in
the lagging energy sector and our underweight in the strong performing
industrial sector explain most of this shortfall.
Most of the performance deficit is, however, due to the positioning of the
Portfolio within the economic sectors. Stock selection was negative in most of
the economic sectors. On balance, the shortfall was the result of stocks not
held by the Portfolio, particularly stocks with a small weighting in the index.
The largest negative contributions arose in the industrials, consumer
discretionary, health care, and financial sectors. At the stock level, the
result in the financial sector was hurt by not owning or under-owning such
strong performers as Sumitomo Mitsui Financial Group (a Japanese bank), British
bank Barclays PLC, Telecom Italia, and Allianz (a German diversified insurer).
Our positions in Matsui Securities (on-line broking, Japan) and Mitsibushi Tokyo
(Japanese bank) partly offset this negative impact. Portfolio holding
Koninklijke Numico N.V. (a Dutch food producer) fell sharply as sales at U.S.
nutrition product subsidiary GNC declined early in the review period. A strong
performance by Hong Kong trading and real estate company Li & Fung Limited
contributed materially to the positive stock selection in Developed Asia.
MARKET OUTLOOK: We began the year with the Portfolio in a cyclically neutral
position. As the year progressed, our stock selection process increasingly
favored a more pro-cyclical stance. By year-end this was reflected in modest
overweight positions in cyclically sensitive sectors such as technology,
manufacturing, and basic materials. An overweight in the banking sector
underlines our expectation that the profitability of these stocks will recover
strongly, as a synchronized global recovery gains traction. We are underweight
the consumer goods sector, as the combination of high relative valuations and
stable but relatively low earnings growth in a cyclical recovery should restrict
the potential here. We remain cautious on the telecommunications sector, as the
rate of secular earnings decline is likely to overpower the increase in cyclical
demand. Sustained high oil prices and attractive valuations support our
continued overweight of the traditionally defensive energy sector. Elsewhere, at
year-end we had a small underweight in the defensive utilities sector and had
market weights in health care and non-bank financials. We maintain a modest
overweight position in Japan, as this market is expected to have the most
leverage to an accelerating global economy. In aggregate, the Portfolio now has
a small valuation premium versus the benchmark but is expected to experience
higher earnings growth through 2004 and into 2005.
4
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Portfolio Managers' Report ING VP INTERNATIONAL EQUITY PORTFOLIO
[CHART]
<Table>
<Caption>
ING VP INTERNATIONAL EQUITY PORTFOLIO CLASS R MSCI EAFE INDEX
12/22/97 $ 10,000 $ 10,000
12/31/97 $ 10,270 $ 10,000
12/31/98 $ 12,213 $ 12,033
12/31/99 $ 18,482 $ 15,318
12/31/2000 $ 14,725 $ 13,180
12/31/2001 $ 11,209 $ 10,385
12/31/2002 $ 8,219 $ 8,759
12/31/2003 $ 10,853 $ 12,190
</Table>
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED DECEMBER 31, 2003
-------------------------------------------------------
SINCE INCEPTION SINCE INCEPTION
OF CLASS R OF CLASS S
1 YEAR 5 YEAR 12/22/97 11/01/01
------ ------ --------------- ----------------
Class R 32.05% -2.35% 1.37% --
Class S 31.62% -- -- 0.97%
MSCI EAFE Index 39.17% 0.26% 3.36%(1) 9.79%
</Table>
Based upon a $10,000 initial investment, the table and graph above illustrate
the total return of ING VP International Equity Portfolio against the MSCI EAFE
Index. The Index has no cash in its portfolio, imposes no sales charges and
incurs no operating expenses. An investor cannot invest directly in an index.
The Portfolio's performance is shown without the imposition of any expenses or
charges which are, or may be, imposed under your annuity contract or life
insurance policy. Total returns would have been lower if such expenses or
charges were included.
Performance table and graph do not reflect the deduction of taxes that a
shareholder will pay on portfolio distributions or the redemption of portfolio
shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and operating expenses otherwise payable by the Portfolio, subject to
possible later reimbursement during a three-year period. Total returns would
have been lower had there been no waiver to the Portfolio.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO
WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING"
STATEMENTS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGER'S
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE DAILY.
(1) Since inception performance for the index is shown from 01/01/98.
PRINCIPAL RISK FACTOR(S): Price volatility and other risks that accompany an
investment in foreign equities. Sensitive to currency exchange rates,
international political and economic conditions and other risks that affect
foreign securities. Other investment strategies pose risks to the Portfolio.
Convertible securities' values may fall when interest rates rise; changes in
market prices of securities or interest rates may result in a loss on
derivatives; and portfolio securities on loan may not be available on a timely
basis, resulting in a lost opportunity to sell them at a desirable price. High
portfolio turnover rates involve greater expenses to the Portfolio.
See accompanying index descriptions on page 21.
5
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ING VP GROWTH PORTFOLIO Portfolio Managers' Report
PORTFOLIO MANAGEMENT TEAM: A team of equity investment specialists led by
Kenneth Bragdon, CFA, Aeltus Investment Management, Inc. - the Sub-Adviser.
GOAL: The ING VP Growth Portfolio (the "Portfolio") seeks growth of capital
through investment in a diversified portfolio consisting primarily of common
stocks and securities convertible into common stocks believed to offer growth
potential.
PERFORMANCE: For the year ended December 31, 2003, the Portfolio's Class R
shares, excluding any charges, provided a total return of 30.36% compared to the
Russell 1000 Growth Index, which returned 29.75% for the same period.
PORTFOLIO SPECIFICS: Strong stock selection in the health care and consumer
discretionary sectors were the primary drivers of the Portfolio's outperformance
relative to the benchmark for the year ended December 31, 2003. In the health
care sector, our holdings in managed care providers Aetna, Inc. and Coventry
Health Care rose significantly during the period as strong pricing and
enrollment trends, as well as accretive acquisitions, drove earnings estimates
higher. We also avoided several large-cap stocks in the sector that
significantly underperformed during the period, such as Merck & Co and Medtronic
Inc. In the consumer discretionary sector, our holdings in internet service
providers and e-commerce companies performed exceptionally well during the year,
reflecting strong on-line advertising and shopping trends. Our holdings in Yahoo
and Expedia were among the best performing stocks in the portfolio.
Our performance was negatively impacted by stock selection in the technology
sector. In the first half of 2003, the outbreak and spread of the Severe Acute
Respiratory Syndrome (SARS) virus resulted in disappointing earnings from a
number of companies with a large presence in Asia. Several of our semiconductor
holdings were impacted, including Microchip, which had to twice reduce its sales
and earnings growth expectations. Our holdings in Intuit underperformed due
largely to investor concern over sales of the company's TurboTax product as a
result of competition from lower-cost, on-line alternatives from government
agencies. In addition, software sales to the Intuit's small and medium business
customers turned out to be less resistant to broad economic pressures than
anticipated. Finally, software stocks underperformed the broader technology
group as many corporations put off signing new license agreements pending an
improvement in business trends. Within the software group, our holdings in
PeopleSoft proved disappointing as ongoing price pressure and lower deal volume
kept earnings estimates under pressure for much of 2003.
MARKET OUTLOOK: We believe that the combination of stimulative tax policy,
accommodative monetary policy, low interest rates, and a weaker dollar will
continue to drive strong economic growth in the months ahead. Recent economic
data point to continued strength in industrial production and an improving
employment picture. Despite the recent rally, in our view equity valuations
remain attractive relative to other asset classes. We continue to believe that
these factors create a positive backdrop for the equity markets overall and for
growth stocks in particular. As always, we continue to invest in companies
displaying positive business momentum and attractive valuation.
6
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Portfolio Managers' Report ING VP GROWTH PORTFOLIO
[CHART]
<Table>
<Caption>
ING VP GROWTH PORTFOLIO CLASS R RUSSELL 1000 GROWTH INDEX
12/13/96 $ 10,000 $ 10,000
12/31/96 $ 10,153 $ 10,000
12/31/97 $ 13,505 $ 13,048
12/31/98 $ 18,593 $ 18,099
12/31/99 $ 25,095 $ 24,101
12/31/2000 $ 22,095 $ 18,697
12/31/2001 $ 16,115 $ 14,878
12/31/2002 $ 11,451 $ 10,729
12/31/2003 $ 14,928 $ 13,921
</Table>
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED DECEMBER 31, 2003
------------------------------------------------------
SINCE INCEPTION SINCE INCEPTION
OF CLASS R OF CLASS S
1 YEAR 5 YEAR 12/13/96 11/01/01
------ ------ --------------- ---------------
Class R 30.36% -4.26% 5.85% --
Class S 30.01% -- -- 1.47%
Russell 1000 Growth Index 29.75% -5.11% 4.49%(1) 1.08%
</Table>
Based upon a $10,000 initial investment, the table and graph above illustrate
the total return of ING VP Growth Portfolio against the Russell 1000 Growth
Index. The Index has no cash in its portfolio, imposes no sales charges and
incurs no operating expenses. An investor cannot invest directly in an index.
The Portfolio's performance is shown without the imposition of any expenses or
charges which are, or may be, imposed under your annuity contract or life
insurance policy. Total returns would have been lower if such expenses or
charges were included.
Performance table and graph do not reflect the deduction of taxes that a
shareholder will pay on portfolio distributions or the redemption of portfolio
shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and operating expenses otherwise payable by the Portfolio, subject to
possible later reimbursement during a three-year period. Total returns would
have been lower had there been no waiver to the Portfolio.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO
WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING"
STATEMENTS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGER'S
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE DAILY.
(1) Since inception performance for the index is shown from 12/01/96.
PRINCIPAL RISK FACTOR(S): The Principal risks of investing in the Portfolio are
those generally attributable to stock investing. They include sudden and
unpredictable drops in the value of the market as a whole and periods of
lackluster or negative performance. Growth-oriented stocks typically sell at
relatively high valuations as compared to other types of stocks. Historically,
growth-oriented stocks have been more volatile than value oriented stocks. The
value of convertible securities may fall when interest rates rise. Other
investment strategies pose risks to the Portfolio. Changes in market prices of
securities or interest rates may result in a loss on derivatives; portfolio
securities on loan may not be available on a timely basis, resulting in a lost
opportunity to sell them at a desirable price; and price volatility and other
risks accompany investments in foreign securities and in smaller companies. High
portfolio turnover rates involve greater expenses to the Portfolio.
See accompanying index descriptions on page 21.
7
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ING VP SMALL COMPANY PORTFOLIO Portfolio Managers' Report
PORTFOLIO MANAGEMENT TEAM: A team of equity investment specialists led by
Carolie Burroughs, CFA, Aeltus Investment Management, Inc. - the Sub-Adviser.
GOAL: The ING VP Small Company Portfolio (the "Portfolio") seeks growth of
capital primarily through investment in a diversified portfolio of common stocks
and securities convertible into common stocks of companies with smaller market
capitalizations.
PERFORMANCE: For the year ended December 31, 2003, the Portfolio's Class R
shares, excluding any charges, returned 37.47% compared to the Russell 2000
Index, which returned 47.25% for the same period.
PORTFOLIO SPECIFICS: Stock selection in the producer durables and technology
sectors contributed positively to the Portfolio's performance. Stock selection
in the consumer discretionary and materials and processing sectors was a drag on
performance. An overweight position in the technology sector helped performance,
while our slight underweight position in the health care sector hurt
performance. The largest individual positive contributors to performance during
the year were SanDisk, Webex Communications, and InterDigital Communications.
The largest individual negative contributors to performance were Palm, Sierra
Pacific Resources, and NPS Pharmaceuticals.
During the period we shifted from a slight overweight to a slight underweight
position in the financial services sector. We reduced our position in the
consumer discretionary sector from an overweight to market weight by mid-year,
then to an underweighting in the fourth quarter. We added to the autos and
transportation, materials and processing, health care, and producer durables
sectors, as economic data improved and the market began to broaden in the fall.
We maintained our overweight in the technology sector. Toward the beginning of
the fourth quarter, we trimmed our larger, higher market risk, year-to-date
strong performers and redeployed the capital into smaller, market risk neutral
stocks in anticipation of the seasonal profit-taking that typically occurs in
the fourth calendar quarter. We maintain the +/-5% collar for all of our sector
active weights and a style neutral position to avoid being negatively impacted
by market reversals. On average, our cash position was 2-4%.
MARKET OUTLOOK: As the economic recovery gains momentum, we expect the market to
continue its upward trend in 2004. Although market volatility levels allow for
speculative investors to remain in the small-cap space, we expect stocks with
better fundamentals to outperform in 2004. We have recently witnessed a greater
degree of vacillation between growth and value styles since August 2003.
Consequently, the performance of the Russell 2000 Growth Index and Russell 2000
Value Index and the Russell 2000 Index and the S&P Small Cap 600 Index is
converging.
We expect the small-cap cycle to follow its course and smaller capitalization
stocks to outperform their large-cap brethren for the following reasons. First,
the economic recovery appears to be underway. We believe small-cap stocks offer
better fundamentals as demonstrated by the earnings and revenue growth reported
in 2003. Second, access to capital for small-cap stocks improved in 2003.
Attractive interest rates and an appetite for commercial lending by the banking
industry should bode well for smaller capitalization stocks. Strong equity
issuance should persist in 2004 as large-cap portfolio managers continue to seek
opportunities further down the asset class spectrum. Finally, consolidation was
up 25% over 2002. We expect this to continue as many firms have
opportunistically improved their balance sheets and are poised to invest.
We look forward to 2004. In our view, the Portfolio is well positioned to
benefit as the small-cap cycle continues to move up the market cap spectrum and
better quality stocks begin to consistently outperform.
8
<Page>
Portfolio Managers' Report ING VP SMALL COMPANY PORTFOLIO
[CHART]
<Table>
<Caption>
ING VP SMALL COMPANY PORTFOLIO CLASS R RUSSELL 2000 INDEX
12/27/96 $ 10,000 $ 10,000
12/31/96 $ 10,075 $ 10,000
12/31/97 $ 13,549 $ 12,236
12/31/98 $ 13,698 $ 11,924
12/31/99 $ 17,923 $ 14,459
12/31/2000 $ 19,128 $ 14,022
12/31/2001 $ 19,893 $ 14,371
12/31/2002 $ 15,272 $ 11,427
12/31/2003 $ 20,994 $ 16,827
</Table>
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED DECEMBER 31, 2003
------------------------------------------------------
SINCE INCEPTION SINCE INCEPTION
OF CLASS R OF CLASS S
1 YEAR 5 YEAR 12/27/96 11/01/01
------ ------ --------------- ---------------
Class R 37.47% 8.91% 11.23% --
Class S 37.76% -- -- 7.44%
Russell 2000 Index 47.25% 7.13% 7.72%(1) 14.44%
</Table>
Based upon a $10,000 initial investment, the table and graph above illustrate
the total return of ING VP Small Company Portfolio against the Russell 2000
Index. The Index has no cash in its portfolio, imposes no sales charges and
incurs no operating expenses. An investor cannot invest directly in an index.
The Portfolio's performance is shown without the imposition of any expenses or
charges which are, or may be, imposed under your annuity contract or life
insurance policy. Total returns would have been lower if such expenses or
charges were included.
Performance table and graph do not reflect the deduction of taxes that a
shareholder will pay on portfolio distributions or the redemption of portfolio
shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and operating expenses otherwise payable by the Portfolio, subject to
possible later reimbursement during a three-year period. Total returns would
have been lower had there been no waiver to the Portfolio.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO
WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING"
STATEMENTS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER, ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGER'S
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE DAILY.
(1) Since inception performance for the index is shown from 01/01/97.
PRINCIPAL RISK FACTOR(S): Exposure to financial and market risks that accompany
investments in equities. In exchange for higher growth potential, investing in
stocks of smaller companies may entail greater price volatility and less
liquidity than investing in stocks of larger companies. International investing
poses special risks, including currency fluctuations, economical and political
risks not found in domestic investments. Other investment strategies pose risks
to the Portfolio. Convertible securities' values may fall when interest rates
rise; changes in market prices of securities or interest rates may result in a
loss on derivatives; and portfolio securities on loan may not be available on a
timely basis, resulting in a lost opportunity to sell them at a desirable price.
High portfolio turnover rates involve greater expenses to the Portfolio.
See accompanying index descriptions on page 21.
9
<Page>
ING VP TECHNOLOGY PORTFOLIO Portfolio Managers' Report
PORTFOLIO MANAGEMENT TEAM: Ronald E. Elijah and Roderick R. Berry, Portfolio
Managers, AIC Asset Management, LLC - the Sub-Adviser. (1)
GOAL: The ING VP Technology Portfolio (the "Portfolio") seeks long-term capital
appreciation by investing at least 80% of its assets in common stocks and
securities convertible into common stock of companies in the information
technology industry sector.
PERFORMANCE: For the year ended December 31, 2003, the Portfolio's Class R
shares returned 45.49% versus the Goldman Sachs Technology Industry Composite
Index, which returned 54.18% for the same period.
PORTFOLIO SPECIFICS: ING Investments, LLC, the Adviser provides the following
report on the Portfolio. In the Portfolio Managers' semi-annual letter it was
pointed out that performance had lagged because of the emphasis on companies
with a large capitalization in an environment in which smaller stocks had led
the market. In the second half of the year smaller stocks also tended to out
perform although the trend was less pronounced. Since the Portfolio had a
somewhat smaller cap bias than the benchmark as represented by the above Index,
performance benefited as a result. Performance in the second half did well
against the competitive averages but again did not match the Index, falling
short by 130 basis points. One of the main reasons was the cash holding which
averaged 6.4%. In a market which rose by over 25% this held back performance by
over 150 basis points. Performance was enhanced however, by the heavy over
weight in semi-conductor related sub-sectors. The substantial under weighting in
the computer hardware and systems software companies also benefited portfolio
returns. This was partially eroded by under weighting the communications
equipment stocks which on average performed very well. Stock selection was
disappointing in most sub-sectors, especially those that had been over weighted
the most: semi-conductors and semi-conductor equipment. It was best among the
data processing and outsourced services companies, which unfortunately had been
slightly under weighted.
- ----------
(1) On December 17, 2003, the Board approved a special meeting of shareholders
to be held during the first quarter of 2004 to approve a change in
sub-adviser of ING VP Technology Portfolio from AIC Asset Management, LLC
to BlackRock Advisors, Inc. ("BlackRock"). Effective January 1, 2004,
BlackRock began acting as sub-adviser to ING VP Technology Portfolio under
an interim sub-advisory agreement. Thomas P. Cullar, CFA and Daniel M. Rea
serve as Portfolio Managers. In connection with the change in sub-adviser,
the Board has also approved changes to the name and non-fundamental
investment strategy and policies of ING VP Technology Portfolio. The
following changes to ING VP Technology Portfolio will become effective
February 17, 2004: (1) a name change to ING VP Global Science and
Technology Portfolio, and (2) strategy and policy changes in which the
Portfolio will become a global fund investing 80% of its assets in common
stocks and securities convertible into common stock of companies in the
science and technology sectors.
10
<Page>
Portfolio Managers' Report ING VP TECHNOLOGY PORTFOLIO
[CHART]
<Table>
<Caption>
ING VP TECHNOLOGY PORTFOLIO CLASS R(1) GOLDMAN SACHS TECHNOLOGY INDUSTRY COMPOSITE INDEX(2)
5/1/2000 $ 10,000 $ 10,000
12/31/2000 $ 5,880 $ 5,880
12/31/2001 $ 4,530 $ 4,208
12/31/2002 $ 2,660 $ 2,514
12/31/2003 $ 3,870 $ 3,876
</Table>
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS FOR THE
PERIODS ENDED DECEMBER 31, 2003
---------------------------------------
SINCE INCEPTION
OF CLASS R
1 YEAR 05/01/00
------ ---------------
Class R 45.49% -22.80%
Goldman Sachs Technology Industry
Composite Index 54.18% -22.76%
</Table>
Based upon a $10,000 initial investment, the table and graph above illustrate
the total return of ING VP Technology Portfolio against the Goldman Sachs
Technology Industry Composite Index. The Index has no cash in its portfolio,
imposes no sales charges and incurs no operating expenses. An investor cannot
invest directly in an index. The Portfolio's performance is shown without the
imposition of any expenses or charges which are, or may be, imposed under your
annuity contract or life insurance policy. Total returns would have been lower
if such expenses or charges were included.
Performance table and graph do not reflect the deduction of taxes that a
shareholder will pay on portfolio distributions or the redemption of portfolio
shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and operating expenses otherwise payable by the Portfolio, subject to
possible later reimbursement during a three-year period. Total returns would
have been lower had there been no waiver to the Portfolio.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO
WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING"
STATEMENTS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE DAILY.
PRINCIPAL RISK FACTOR(S): The Principal risks of investing in the Portfolio are
those generally attributable to stock investing. The Portfolio could lose money
if the issuer of a debt security defaults. The Portfolio concentrates its
investments in information technology industries and will tend to experience
more volatility than funds not concentrated in one industry. Stocks of small and
mid-cap companies tend to be less liquid and more volatile than stocks of larger
companies and can be particularly sensitive to expected changes in interest
rates, borrowing costs and earnings. Foreign securities may be riskier, more
volatile and less liquid than their U.S. counterparts. When the Portfolio lends
securities, they may not be available on a timely basis and it may lose the
opportunity to sell them at a desirable price. Investments in derivatives are
subject to the risk that changes in interest rates or market prices may result
in a loss.
See accompanying index descriptions on page 21.
11
<Page>
ING VP VALUE OPPORTUNITY PORTFOLIO Portfolio Managers' Report
PORTFOLIO MANAGEMENT TEAM: A team of equity investment specialists led by
William F. Coughlin, CFA, Aeltus Investment Management, Inc. - the Sub-Adviser.
GOAL: The ING VP Value Opportunity Portfolio (the "Portfolio") seeks growth of
capital primarily through investment in a diversified portfolio of common stocks
and securities convertible into common stock.
PERFORMANCE: For the year ended December 31, 2003, the Portfolio's Class R
shares, excluding any charges, returned 24.59% compared to the S&P 500 Index,
which returned 28.71% over the same period.
PORTFOLIO SPECIFICS: Stock selection in the industrials and utility sectors
contributed positively to the Portfolio's performance. On the other hand, stock
selection in the energy and technology sectors was a drag on performance. An
overweight position in the strongly performing technology sector helped
performance, while our slight underweight position in the consumer discretionary
sector hurt performance.
For most of the past twelve months, the quantitative models used to identify
attractive stocks did not perform well as companies that we view as of lower
quality with suspect business models and weakened balance sheets were the best
performers. During most of the year, while the Portfolio's performance generally
benefited from improving technology share prices, it was hampered by continuing
underperformance by the health care sector.
MARKET OUTLOOK: There were many domestic and international problems that were
encountered by the markets during 2003. We witnessed a major invasion and
conflict in Iraq, lingering corporate governance problems from companies such as
Tyco, HealthSouth, and even the New York Stock Exchange, and regulators focusing
inquiries on the massive mutual fund industry. On homeland security, we ended
the year at the orange level of terror alert. And yet, despite the problems and
concerns, we believe the markets are in very sound shape going into 2004. In our
view, strengths include strong consumer spending and a corresponding housing
market, increasing industrial production, declining unemployment from a June
high of 6.4% to a current level of 5.9%, and a strong outlook for 2004 gross
domestic product growth, with low inflation and ongoing low interest rates. One
other positive that has been overlooked by many investors is the impact of the
tax cut passed by Congress in March 2003. Beginning in 2003, dividends from
stocks and long-term capital gains will be taxed at a maximum rate of 15% for
individual investors. We think that this will have a positive effect on the
shares of companies with good dividend yields as we move through 2004.
12
<Page>
Portfolio Managers' Report ING VP VALUE OPPORTUNITY PORTFOLIO
[CHART]
<Table>
<Caption>
ING VP VALUE OPPORTUNITY PORTFOLIO CLASS R S&P 500 Index
12/13/96 $ 10,000 $ 10,000
12/31/96 $ 10,215 $ 9,805
12/31/97 $ 14,235 $ 13,078
12/31/98 $ 17,423 $ 16,839
12/31/99 $ 20,834 $ 20,397
12/31/2000 $ 22,958 $ 18,524
12/31/2001 $ 20,751 $ 16,324
12/31/2002 $ 15,363 $ 12,716
12/31/2003 $ 19,142 $ 16,367
</Table>
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED DECEMBER 31, 2003
------------------------------------------------------
SINCE INCEPTION SINCE INCEPTION
OF CLASS R OF CLASS S
1 YEAR 5 YEAR 12/13/96 07/16/01
------ ------ --------------- ---------------
Class R 24.59% 1.90% 9.64% --
Class S 24.21% -- -- -6.96%
S&P 500 Index 28.71% -0.57% 7.20%(1) -1.83%(2)
</Table>
Based upon a $10,000 initial investment, the table and graph above illustrate
the total return of ING VP Value Opportunity Portfolio against the S&P 500
Index. The Index has no cash in its portfolio, imposes no sales charges and
incurs no operating expenses. An investor cannot invest directly in an index.
The Portfolio's performance is shown without the imposition of any expenses or
charges which are, or may be, imposed under your annuity contract or life
insurance policy. Total returns would have been lower if such expenses or
charges were included.
Performance table and graph do not reflect the deduction of taxes that a
shareholder will pay on portfolio distributions or the redemption of portfolio
shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and operating expenses otherwise payable by the Portfolio, subject to
possible later reimbursement during a three-year period. Total returns would
have been lower had there been no waiver to the Portfolio.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO
WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING"
STATEMENTS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER, ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGER'S
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE DAILY.
(1) Since inception performance for the index is shown from 12/01/96.
(2) Since inception performance for the index is shown from 08/01/01.
PRINCIPAL RISK FACTOR(S): The Principal risks of investing in the Portfolio are
those generally attributable to stock investing. They include sudden and
unpredictable drops in the value of the market as a whole and periods of
lackluster or negative performance. Because the prices of value-oriented stocks
tend to correlate more closely with economic cycles than growth-oriented stocks,
they generally are more sensitive to changing economic conditions, such as
changes in interest rates, corporate earnings and industrial production. Other
investment strategies pose risks to the Portfolio. Convertible securities'
values may fall when interest rates rise; changes in market prices of securities
or interest rates may result in a loss on derivatives; portfolio securities on
loan may not be available on a timely basis, resulting in a lost opportunity to
sell them at a desirable price; and price volatility and other risks accompany
investments in foreign securities and in small-/mid-sized companies.
See accompanying index descriptions on page 21.
13
<Page>
ING VP BALANCED PORTFOLIO Portfolio Managers' Report
PORTFOLIO MANAGEMENT TEAM: Neil Kochen, CFA and James B. Kauffmann, Aeltus
Investment Management, Inc. - the Sub-Adviser.
GOAL: The ING VP Balanced Portfolio (the "Portfolio") seeks to maximize
investment return consistent with reasonable safety of principal, by investing
in a diversified portfolio of one or more of the following asset classes:
stocks, bonds and cash equivalents, based on the judgment of the Portfolio's
management, of which of those sectors or mix thereof offers the best investment
prospects.
PERFORMANCE: For the year ended December 31, 2003, the Portfolio's Class R
shares, excluding any charges, returned 18.87% compared to the Composite Index
(60% S&P 500 Index/ 40% Lehman Brothers Aggregate Bond Index), which returned
18.48% over the same period.
PORTFOLIO SPECIFICS: The equity component of the Portfolio outperformed the S&P
500 Index, primarily due to strong sector allocation and exposure to small- and
mid-cap stocks, which outperformed large-caps by a wide margin in 2003. An
overweight in technology stocks and an underweight in consumer staples played
the greatest roles in enhancing results, while an underweight in the materials
sector had a modest negative effect because this sector had good performance.
Our health care stocks performed well, but our technology holdings posted weak
results. Stocks having the largest positive impact on performance were Intel,
General Electric, and Cisco Systems. Stocks with the largest negative impact on
performance were Merck, Freddie Mac, and Verizon.
Our overweight to riskier sectors of the bond market early in the year -
including cable, telecom, electric, and retail - was a clear winner, and
security selection within those sectors was particularly beneficial. The
portfolio also reaped the rewards of a robust high yield market. High yield was,
indeed, the asset class of choice for investors in the first quarter of 2003.
Credit sectors continued to post positive excess returns during the second
quarter. Other positives included an underweight in mortgages and an overall
yield advantage to the benchmark. Commitments to high yield and emerging market
debt enhanced our performance versus the index as the emerging market sector
produced 8.41% of excess return and the high yield sector printed 7.73% of
excess returns for the second quarter.
During the third quarter, hedging in the mortgage market, miscues from the
Federal Reserve ("Fed"), and positive economic releases resulted in one of the
worst bond routs in history. Overall, lower risk issues benefited as buyers
scrambled to add yield and became more comfortable with the macroeconomic
outlook. The Portfolio benefited from an overweight to credit sectors -
especially lower rated issues, high yield, and emerging market debt - and some
deft trading in mortgages and agencies during the period. However, our short
duration posture did not entirely offset the damage resulting from the major
sell off in July.
Chief sources of outperformance during the fourth quarter continued to include
an overweight in longer-dated and lower quality credits and our short duration
posture also proved beneficial. Despite the fact that yields on Treasuries rose
across the maturity spectrum, the magnitude of the increases appeared low given
the economic picture. Three- and five-year maturities performed the worst; yet,
Treasury bills were virtually unchanged in the face of the Fed's accommodative
stance. Sectors key to our portfolio position outperformed. Industrials posted
1.45% of excess returns; utilities outperformed by 1.38%. Securitized sectors -
including asset-backed and commercial mortgage-backed securities - tallied
0.64%, while home mortgages provided 0.66% of excess returns. High yield trumped
all bond sectors with 6.37% of excess returns, and emerging markets tallied a
hefty 5.04% of excess returns during the fourth quarter.
MARKET OUTLOOK: After a shaky start to the year, both the financial markets and
the economy began to firm in the spring and early summer. Stocks are up strongly
from their March lows, and despite being beat up in July, the bond market turned
in positive results for the year. The market's upswing can be attributed to a
number of factors including accelerating gross domestic product (GDP), low
inflation, supportive monetary and fiscal policy and strengthening industrial
production, productivity and business investment. Employment still remains the
weak link in economic recovery; however, even employment is showing signs of
improvement with the unemployment rate down to 5.9%, off of the June high of
6.4%. Initial jobless claims are also trailing downward with December coming in
at an average of 356,000, the lowest since January 2001.
The current characteristics of the equity portion of the Portfolio include a
slightly above benchmark size and quality bias, while maintaining a slightly
below benchmark valuation tilt. This is a direct result of our use of
historically predictive business momentum, valuation, and market recognition
factors in our stock ranking models. We believe that, given the extended rally
of smaller, lower quality stocks, this may be an advantageous position as the
market returns to stocks with the strong business fundamentals favored by our
models.
On the fixed income side, we do not believe current Treasury yields reflect the
pace of the quickening economy. The Fed has been unusually aggressive in
jawboning interest rates down, and our current account deficit with Asian
economies has been recycled back into the U.S. debt markets. Tactically, we are
short in duration in the face of improving global economic fundamentals. We are
overweight home and commercial mortgages, asset-backed securities, and
longer-dated corporate bonds. Valuations are stretched in credit and mortgage
markets; yet alternatives are few as bond managers seek to add incremental yield
in the face of a rising rate environment. We maintain a significant overweight
in both the high yield and emerging markets.
14
<Page>
Portfolio Managers' Report ING VP BALANCED PORTFOLIO
[CHART]
<Table>
<Caption>
ING VP BALANCED PORTFOLIO CLASS R(1) S&P 500 INDEX(2) LEHMAN BROTHERS AGGREGATE BOND INDEX(3)
12/31/93 $ 10,000 $ 10,000 $ 10,000
12/31/94 $ 9,965 $ 10,133 $ 9,708
12/31/95 $ 12,678 $ 13,933 $ 11,502
12/31/96 $ 14,602 $ 17,172 $ 11,920
12/31/97 $ 17,885 $ 22,903 $ 13,070
12/31/98 $ 20,913 $ 29,489 $ 14,206
12/31/99 $ 23,759 $ 35,722 $ 14,089
12/31/2000 $ 23,625 $ 32,440 $ 15,727
12/31/2001 $ 22,631 $ 28,588 $ 17,055
12/31/2002 $ 20,298 $ 22,270 $ 18,804
12/31/2003 $ 24,128(1) $ 28,664(2) $ 19,576(3)
<Caption>
COMPOSITE INDEX (60% S&P 500/40% Lehman Brothers Aggregate Bond Index)(4)
12/31/93 $ 10,000
12/31/94 $ 9,967
12/31/95 $ 12,924
12/31/96 $ 14,859
12/31/97 $ 18,368
12/31/98 $ 22,223
12/31/99 $ 24,890
12/31/2000 $ 24,642
12/31/2001 $ 23,727
12/31/2002 $ 21,397
12/31/2003 $ 25,351(4)
</Table>
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED DECEMBER 31, 2003
----------------------------------------------
SINCE INCEPTION
OF CLASS S
1 YEAR 5 YEAR 10 YEAR 05/29/03
------ ------ ------- ---------------
Class R 18.87% 2.90% 9.20% --
Class S -- -- -- 10.51%
S&P 500 Index 28.71% -0.57% 11.10% 16.61%(1)
Lehman Brothers Aggregate Bond
Index 4.10% 6.62% 6.95% -0.03%(1)
Composite Index (60% S&P 500
Index/40% Lehman Brothers
Aggregate Bond Index) 18.48% 2.67% 9.75% 9.78%(1)
</Table>
Based upon a $10,000 initial investment, the table and graph above illustrate
the total return of ING VP Balanced Portfolio against the S&P 500 Index, Lehman
Brothers Aggregate Bond Index and Composite Index (60% S&P 500 Index, 40% Lehman
Brothers Aggregate Bond Index). The Indices have no cash in their portfolios,
impose no sales charges and incur no operating expenses. An investor cannot
invest directly in an index. The Portfolio's performance is shown without the
imposition of any expenses or charges which are, or may be, imposed under your
annuity contract or life insurance policy. Total returns would have been lower
if such expenses or charges were included.
Performance table and graph do not reflect the deduction of taxes that a
shareholder will pay on portfolio distributions or the redemption of portfolio
shares.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO
WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING"
STATEMENTS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE DAILY.
(1) Since inception performance for the index is shown from 06/01/03.
PRINCIPAL RISK FACTOR(S): The Principal risks of investing in the Portfolio are
those generally attributable to stock and bond investing. Because the
Portfolio's assets are allocated between equities and fixed income securities,
the Portfolio may underperform stock funds when stocks are in favor and
underperform bond funds when bonds are in favor. Investments in high yield bonds
are high risk investments. Certain high yield/high risk bonds carry particular
market, repayment and credit risks and may experience greater volatility in
market value than investment grade corporate bonds. International investing does
pose special risks including currency fluctuations, economic and political risks
not found in investments that are solely domestic. Risks of foreign investing
are generally intensified for investments in emerging markets. Stocks of smaller
companies tend to be less liquid and more volatile than stocks of larger
companies. Further, stocks of smaller companies also can be particularly
sensitive to expected changes in interest rates, borrowing costs and earnings.
Other investment strategies pose risks to the Portfolio. Convertible securities'
values may fall when interest rates rise; changes in market prices of securities
or interest rates may result in a loss on derivatives; and portfolio securities
on loan may not be available on a timely basis, resulting in a lost opportunity
to sell them at a desirable price.
See accompanying index descriptions on page 21.
15
<Page>
ING VP GROWTH AND INCOME PORTFOLIO Portfolio Managers' Report
PORTFOLIO MANAGEMENT TEAM: A team of investment professionals, each of whom
specializes in a particular asset class, led by Donald Townswick, CFA, Aeltus
Investment Management, Inc. - the Sub-Adviser.
GOAL: The ING VP Growth and Income Portfolio (the "Portfolio") seeks to
maximize total return through investments in a diversified portfolio of common
stocks and securities convertible into common stock believed to offer
above-average growth potential. It is anticipated that capital appreciation and
investment income will both be major factors in achieving total return.
PERFORMANCE: For the year ended December 31, 2003, the Portfolio's Class R
shares, excluding any charges, returned 26.07% compared to the S&P 500 Index
which returned 28.71% over the same period.
PORTFOLIO SPECIFICS: The Portfolio struggled during the first three quarters of
2003. The market continued the trend it set during the fourth quarter of 2002 by
rewarding speculative stocks (those with no earnings, negative earnings growth,
and questionable futures) during the nine-month period. As the year closed,
though, the Portfolio began to hit its stride as the market began once again to
reward higher quality stocks.
For the year, the finance sector was the biggest positive contributor to
results. In a declining interest rate environment, the mortgage business is
typically strong, as more families can afford homes and more homeowners
refinance their mortgages. Countrywide Financial, a major player in this
business, appreciated significantly during the year and was a major holding in
the Portfolio for most of 2003.
We also purchased a position in Amazon.com during the third quarter in
anticipation of a rebound in retail sales linked to stronger economic growth in
the economy. This investment paid off as retail sales did indeed surprise on the
high side of Wall Street expectations, and the stock performed well.
Relative performance was negatively affected during the year by our emphasis on
quality in selecting technology stocks. The blue chip tech stocks we owned, such
as Microsoft, tended to lag the other more speculative stocks in the S&P 500
Index, such as Yahoo and Veritas Software. Despite this, we believe it is still
imperative to invest in fundamentally sound companies.
MARKET OUTLOOK: We believe that the market is poised to have another good year
in 2004. We don't envision much if any deterioration of economic fundamentals in
the U.S. during the year, and would not be surprised if we saw fundamentals
strengthen further. The market had come a long way from its trough, but still
has a ways to go even to rescale its peaks of 2000.
16
<Page>
Portfolio Managers' Report ING VP GROWTH AND INCOME PORTFOLIO
[CHART]
<Table>
<Caption>
ING VP GROWTH AND INCOME PORTFOLIO CLASS R S&P 500 Index
12/31/93 $ 10,000 $ 10,000
12/31/94 $ 9,903 $ 10,133
12/31/95 $ 13,097 $ 13,933
12/31/96 $ 16,300 $ 17,172
12/31/97 $ 21,172 $ 22,903
12/31/98 $ 24,240 $ 29,489
12/31/99 $ 28,462 $ 35,722
12/31/2000 $ 25,341 $ 32,440
12/31/2001 $ 20,678 $ 28,588
12/31/2002 $ 15,510 $ 22,270
12/31/2003 $ 19,553 $ 28,664
</Table>
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED DECEMBER 31, 2003
----------------------------------------------
SINCE INCEPTION
OF CLASS S
1 YEAR 5 YEAR 10 YEAR 06/11/03
------ ------ ------- ---------------
Class R 26.07% -4.20% 6.93% --
Class S -- -- -- 11.89%
S&P 500 Index 28.71% -0.57% 11.10% 16.61%(1)
</Table>
Based upon a $10,000 initial investment, the table and graph above illustrate
the total return of ING VP Growth and Income Portfolio against the S&P 500
Index. The Index has no cash in its portfolio, imposes no sales charges and
incurs no operating expenses. An investor cannot invest directly in an index.
The Portfolio's performance is shown without the imposition of any expenses or
charges which are, or may be, imposed under your annuity contract or life
insurance policy. Total returns would have been lower if such expenses or
charges were included.
Performance table and graph do not reflect the deduction of taxes that a
shareholder will pay on portfolio distributions or the redemption of portfolio
shares.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO
WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING"
STATEMENTS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGER'S
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE DAILY.
(1) Since inception performance for the index is shown from 06/01/03.
PRINCIPAL RISK FACTOR(S): Those generally attributable to stock investing. They
include sudden and unpredictable drops in the value of the market as a whole and
periods of lackluster or negative performance. International investing involves
special risks including currency fluctuations, lower liquidity, political and
economic uncertainties, and differences in accounting standards. Risks of
foreign investing are generally intensified for investment in emerging markets.
In exchange for higher growth potential, investing in stocks of mid-sized and
smaller companies may entail greater price volatility and less liquidity than
investing in stocks of larger companies. Other investment strategies pose risks
to the Portfolio. Convertible securities' values may fall when interest rates
rise; changes in market prices of securities or interest rates may result in a
loss on derivatives; portfolio securities on loan may not be available on a
timely basis, resulting in a lost opportunity to sell them at a desirable price;
the prices of mortgage-related securities are sensitive to changes in interest
rates and prepayment patterns; and high-yield securities are subject to
volatility and principal and income risk. High portfolio turnover rates involve
greater expenses to the Portfolio.
See accompanying index descriptions on page 21.
17
<Page>
ING VP BOND PORTFOLIO Portfolio Managers' Report
PORTFOLIO MANAGEMENT: James B. Kauffmann, Aeltus Investment Management, Inc. -
the Sub-Adviser.
GOAL: The ING VP Bond Portfolio (the "Portfolio") seeks to maximize total
return consistent with reasonable risk, through investments in a diversified
portfolio consisting of investment-grade debt securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities. It is anticipated that
capital appreciation and investment income will both be major factors in
achieving total return.
PERFORMANCE: For the year ended December 31, 2003, the Portfolio's Class R
shares, excluding any charges, returned 6.30% compared to the Lehman Brothers
Aggregate Bond Index, which returned 4.10% over the same period.
PORTFOLIO SPECIFICS: While reports in the financial press hyperventilated about
the "2003 Bond Market Rout," the Lehman Brothers Aggregate Bond Index posted a
4.10% of total return during the period. The Lehman Brothers High Yield Bond
Index tallied 28.97% of total return second only to the rally in 1991. But
emerging markets trumped all bond sectors with 30.13% of total return.
Investment-grade corporates rallied throughout the first quarter of 2003; yet,
more conservative names and industries lagged the riskier in March. As the
quarter progressed, we saw diminished value in these safer high-grade names and
reduced them. Our overweight to riskier sectors, including cable, telecom,
electric, and retail, was a clear winner, and security selection within those
sectors was particularly beneficial. Overall the Portfolio was overweight three
of the five best performing industries and underweight autos, which performed
poorly. An overweight versus commercial mortgages at the expense of agencies was
a drag, while an overweight in asset-backed securities was a small boost. The
Portfolio also reaped the rewards of a robust high yield market. High yield was,
indeed, the asset class of choice for investors in the first quarter of 2003.
High yield market performance was driven by large rallies in the market's most
volatile sectors.
Credit sectors continued to post positive excess returns during the second
quarter. During the period, Industrials returned 2.48% of excess return;
utilities returned 2.15%; and financial returned 2.07%. An overweight to the
credit sectors boosted relative returns. Other positives also included an
underweight in mortgages and an overall yield advantage to the benchmark.
Commitments to high yield and emerging market debt enhanced our performance
versus the benchmark as the emerging market sector produced 8.41% of excess
return and the high yield sector posted 7.73% of excess return for the second
quarter.
During the third quarter, hedging in the mortgage market, miscues from the Fed,
and positive economic releases resulted in one of the worst bond routs in
history. Overall, lower risk issues benefited as buyers scrambled to add yield
and became more comfortable with the macro economic outlook. The Portfolio
benefited from an overweight to credit - especially lower rated issues, high
yield, and emerging market debt - and some deft trading in mortgages and
agencies during the period. However, our short duration posture did not entirely
offset the damage resulting from the major market sell-off in July.
The chief sources of the Portfolio's outperformance during the fourth quarter
continued to include an overweight in longer-dated and lower quality credits.
This has been a theme for most of the year, and our short duration posture also
proved beneficial. Despite the fact that yields on Treasuries rose across the
maturity spectrum, the magnitude of the increases appeared low given the
economic picture. Three- and five-year maturities performed the worst; yet,
Treasury bills were virtually unchanged in the face of the Fed's accommodative
stance. Sectors key to our position outperformed. Industrials posted 1.45% of
excess return, and utilities outperformed by 1.38%. Securitized sectors -
including asset-backed and commercial mortgage-backed securities - tallied
0.64%, while home mortgages provided 0.66% of excess returns. High yield trumped
all bond sectors with 6.37% of excess returns, and emerging markets tallied a
hefty 5.04% of excess returns during the fourth quarter.
MARKET OUTLOOK: We believe that the economy is on the mend, and the process - so
far - has produced only upside surprises. The consumer has not been shy about
spending 80% of the proceeds of the recent tax cuts, which now means that
consumption has expanded for the last 46 quarters. Yet, market pundits wonder
what will carry the spendthrift shopper in months to come. The next big surge in
tax reductions will hit the economy with next year's tax refund season. Given
that consumption represents 70% of the economy, concerns remain that the
outsized strength of the third quarter may sap some vigor from first quarter of
2004. However, late in 2004 the expiring accelerated depreciation allowance
should provide a boost in business capital expenditures.
Employment and resource utilization remain soft for this stage of a recovery,
but the picture is improving. The near-term prospects for inflationary problems
remain slight as the U.S. imports disinflation from abroad; productivity is
gaining; labor costs are contained; and pricing power is still transitory.
Ultimately, job creation and income growth may be the keys to a sustainable
recovery. The twin deficits - federal and current account - will remain
challenges in the near term; and we are not optimistic on the dollar. Treasury
yields do not yet, in our opinion, reflect the pace of the quickening economy.
The Fed has been unusually aggressive in jawboning interest rates down, and our
current account deficit with Asian economies has been recycled back into the
U. S. debt markets. Tactically, we are short in duration in the face of
improving global economic fundamentals. We are overweight home and commercial
mortgages, asset-backed securities, and longer-dated corporate bonds. Valuations
are stretched in credit and mortgage markets; yet alternatives are few as bond
managers seek to add incremental yield in the face of a rising rate environment.
We maintain a significant overweight in both the high yield and emerging
markets.
18
<Page>
Portfolio Managers' Report ING VP BOND PORTFOLIO
[CHART]
<Table>
<Caption>
ING VP BOND PORTFOLIO CLASS R LEHMAN BROTHERS AGGREGATE BOND INDEX
12/31/93 $ 10,000 $ 10,000
12/31/94 $ 9,617 $ 9,708
12/31/95 $ 11,370 $ 11,502
12/31/96 $ 11,779 $ 11,920
12/31/97 $ 12,757 $ 13,070
12/31/98 $ 13,795 $ 14,206
12/31/99 $ 13,693 $ 14,089
12/31/2000 $ 15,013 $ 15,727
12/31/2001 $ 16,326 $ 17,055
12/31/2002 $ 17,687 $ 18,804
12/31/2003 $ 18,801 $ 19,576
</Table>
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED DECEMBER 31, 2003
----------------------------------------------
SINCE INCEPTION
OF CLASS S
1 YEAR 5 YEAR 10 YEAR 05/03/02
------ ------ ------- ---------------
Class R 6.30% 6.38% 6.51% --
Class S 6.04% -- -- 8.16%
Lehman Brothers Aggregate Bond
Index 4.10% 6.62% 6.95% 7.32%(1)
</Table>
Based upon a $10,000 initial investment, the table and graph above illustrate
the total return of ING VP Bond Portfolio against the Lehman Brothers Aggregate
Bond Index. The Index has has no cash in its portfolio, imposes no sales charges
and incurs no operating expenses. An investor cannot invest directly in an
index. The Portfolio's performance is shown without the imposition of any
expenses or charges which are, or may be, imposed under your annuity contract or
life insurance policy. Total returns would have been lower if such expenses or
charges were included.
Performance table and graph do not reflect the deduction of taxes that a
shareholder will pay on portfolio distributions or the redemption of portfolio
shares.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO
WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING"
STATEMENTS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE DAILY.
(1) Since inception performance for the index is shown from 5/1/02.
PRINCIPAL RISK FACTOR(S): Those generally attributable to debt investing,
including increases in interest rates and loss of principal. Generally, when
interest rates rise, bond prices fall. Bonds with longer maturities tend to be
more sensitive to changes in interest rates. For all bonds there is a risk that
the issuer will default. High-yield bonds generally are more susceptible to the
risk of default than higher rated bonds. International investing does pose
special risks including currency fluctuation, economic and political risks not
found in investments that are solely domestic. Risks of foreign investing are
generally intensified for investments in emerging markets. Other investment
strategies pose risks to the Portfolio. Convertible securities' values may fall
when interest rates rise; portfolio securities on loan may not be available on a
timely basis, resulting in a lost opportunity to sell them at a desirable price;
and the prices of mortgage-related securities are sensitive to changes in
interest rates and prepayment patterns. High portfolio turnover rates involve
greater expenses to the Portfolio.
See accompanying index descriptions on page 21.
19
<Page>
ING VP MONEY MARKET PORTFOLIO Portfolio Managers' Report
PORTFOLIO MANAGEMENT TEAM: A team of fixed-income specialists led by Jennifer J.
Thompson, CFA, Aeltus Investment Management, Inc. - the Sub-Adviser.
GOAL: The ING VP Money Market Portfolio (the "Portfolio") seeks to provide high
current return, consistent with preservation of capital and liquidity, through
investment in high-quality money market instruments.
PORTFOLIO SPECIFICS: The LIBOR ("London InterBank Offered Rate") curve was flat
and, at times, inverted throughout the first half. As we entered the second half
of the year and market participants became more optimistic about the economic
outlook, the curve steepened. Twelve-month LIBOR ended the year at approximately
1.46%, only about 2 basis points higher than where it began the year, although
it fluctuated to as low as 0.99% in June. One-month LIBOR declined from 1.38% to
1.12%, which is attributed to the Fed ease in June. By year-end, the spread
between one-month LIBOR and 12-month LIBOR was 34 basis points, up from 6 basis
points at the beginning of the year.
Throughout most of the year, the Portfolio utilized a number of strategies to
enhance yield. The percentage of floating rate notes owned was increased to
approximately 50% because of their potential for outperformance in a rising rate
environment and because they generally reset at rates higher than short-term
commercial paper, certificates of deposit, and bank notes. In addition, we
purchased callable paper, which added yield over straight bullet maturities, and
continued to do so throughout the year. We also attempted to take advantage of
the volatility in 12-month LIBOR and purchased callable and other long paper
whenever rates backed up. Consequently, the portfolio was barbelled for most of
the year. (The term "barbell" describes a portfolio with holdings heavily
concentrated in both very short-term and extremely long-term maturities.) In
addition to adding yield, the barbell strategy also resulted in a good hedge to
the decline in the Fed Funds rate during the first half of the year. Using such
strategies, the Portfolio's weighted average maturity remained longer than
competitors throughout the period but shortened somewhat to 61 days at year-end
versus 55 days on average for competitors.
MARKET OUTLOOK: The FOMC (Federal Open Market Committee) has been very clear
about its ability and desire to be patient when considering increases in its Fed
Funds target rate. With inflation at historically low levels, continued strong
productivity, a still soft-yet-strengthening labor market, and a significant
resources gap, the Fed will wait for repeated and strong signs of improvements
in the pace of economic expansion before ending its highly accommodative
monetary stance. More specifically, we believe the Fed will be patient until at
least mid-year before increasing the Fed Funds target.
Nevertheless, the markets may begin to price in an increase in rates well before
the Fed is inclined to move, particularly if labor markets improve dramatically
and the dollar declines precipitously. We will continue to utilize the barbell
strategy as long as long rates make sense given reasonable Fed Funds rate
increase expectations. Currently, the Portfolio's weighted average maturity is
expected to remain longer than competitors'.
20
<Page>
INDEX DESCRIPTIONS
The GOLDMAN SACHS TECHNOLOGY INDUSTRY COMPOSITE INDEX is a modified
capitalization-weighted index of selected technology stocks. The index was
developed with a base value of 100 as of April 30, 1996.
The LEHMAN BROTHERS AGGREGATE BOND INDEX is an unmanaged index composed of
securities from the Lehman Brothers Government/Corporate Bond Index,
Mortgage-Backed Securities Index and the Asset-Backed Securities Index. Total
return comprises price appreciation/depreciation and income as a percentage of
the original investment. Indices are rebalanced monthly by market
capitalization.
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 $100 million, and at least 1 year to maturity.
The MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) EAFE INDEX is an unmanaged index
that measures the performance of securities listed on exchanges in markets in
Europe, Australia and the Far East.
The MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) EUROPE, EX UK, INDEX is a free
float-adjusted market capitalization index that is designed to measure developed
market equity performance in Europe, excluding the UK.
The MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) JAPAN INDEX is a free
float-adjusted market capitalization index that is designed to measure developed
market equity performance in Japan.
The MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) UK INDEX is a free
float-adjusted market capitalization index that is designed to measure developed
market equity performance in the UK.
The MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) WORLD INDEX is an unmanaged
index that reflects the stock markets of 22 countries, including the United
States, Europe, Canada, Australia, New Zealand and the Far East - comprising
approximately 1,500 securities - with values expressed in U.S. dollars.
The NASDAQ COMPOSITE INDEX is an unmanaged index that measures all Nasdaq
domestic and non-U.S.-based common stocks listed on the Nasdaq Stock Market.
The RUSSELL 1000 GROWTH INDEX measures the performance of those Russell 1000
companies with higher price-to-book ratios and higher forecasted growth values.
The RUSSELL 2000 INDEX measures the performance of the 2,000 smallest companies
in the Russell 3000 Index, which represents approximately 10% of the total
market capitalization of the Russell 3000 Index.
The RUSSELL 2000 GROWTH INDEX is an unmanaged index that measures the
performance of those Russell 2000 companies with higher price-to-book ratios and
higher forecasted growth values.
The RUSSELL 2000 VALUE INDEX is an unmanaged index that measures the performance
of those Russell 2000 companies with lower price-to-book ratios and lower
forecasted growth values.
The STANDARD AND POOR'S (S&P) 500 INDEX is an unmanaged capitalization-weighted
index of 500 stocks designed to measure performance of the broad domestic
economy through changes in the aggregate market value of 500 stocks representing
all major industries.
The STANDARD AND POOR'S (S&P) SMALLCAP 600 Index is an unmanaged
capitalization-weighted index representing all major industries in the small-cap
of the U.S. stock market.
All indices are unmanaged.
An investor cannot invest directly in an index.
21
<Page>
INDEPENDENT AUDITORS' REPORT
The Board of Directors, Board of Trustees and Shareholders
of ING Variable Portfolios, Inc., ING VP Balanced Portfolio, Inc.,
ING Variable Funds, ING VP Bond Portfolio, and ING VP Money Market Portfolio
We have audited the accompanying statements of assets and liabilities of ING VP
International Equity Portfolio, ING VP Growth Portfolio, ING VP Small Company
Portfolio, ING VP Technology Portfolio, and ING VP Value Opportunity Portfolio,
each a series of ING Variable Portfolios, Inc., ING VP Balanced Portfolio, Inc.,
ING VP Growth and Income Portfolio, a series of ING Variable Funds, ING VP Bond
Portfolio, and ING VP Money Market Portfolio, including the portfolios of
investments, as of December 31, 2003, and the related statements of operations
for the year then ended, the statements of changes in net assets for each of the
years in the two-year period then ended, and the financial highlights for each
of the years or periods in the five-year period then ended. These financial
statements and financial highlights are the responsibility of management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 2003, by correspondence with the custodian
and brokers, or by other appropriate auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
aforementioned portfolios as of December 31, 2003, the results of their
operations, the changes in their net assets, and the financial highlights for
the periods specified in the first paragraph above, in conformity with
accounting principles generally accepted in the United States of America.
/s/ KPMG LLP
Boston, Massachusetts
February 16, 2004
22
<Page>
STATEMENTS OF ASSETS AND LIABILITIES as of December 31, 2003
<Table>
<Caption>
ING VP ING VP ING VP
INTERNATIONAL ING VP SMALL ING VP VALUE
EQUITY GROWTH COMPANY TECHNOLOGY OPPORTUNITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------- ------------- -------------
ASSETS:
Investments in securities at value+* $ 38,277,620 $ 221,780,118 $ 442,579,173 $ 95,547,141 $ 245,566,904
Repurchase agreement 2,324,000 3,949,000 19,852,000 -- 4,066,000
Cash 2,627 25 -- 2,309,057 610
Cash collateral for futures -- 160,000 490,000 -- --
Cash collateral for securities loaned -- 44,574,839 91,692,274 18,359,779 5,884,027
Foreign currencies at value** 162,122 -- -- -- --
Receivables:
Investment securities sold -- 1,769,001 2,264,550 -- 207,891,873
Dividends and interest 61,837 251,624 394,550 13,536 217,884
Futures variation margin -- 5,800 -- -- --
Prepaid expenses 218 4,316 8,788 9,271 6,179
Reimbursement due from manager 17,295 -- -- -- --
------------- ------------- ------------- ------------- -------------
Total assets 40,845,719 272,494,723 557,281,335 116,238,784 463,633,477
------------- ------------- ------------- ------------- -------------
LIABILITIES:
Payable for investment securities purchased -- 3,091,449 -- -- 197,816,639
Payable for futures variation margin -- -- 119,000 -- --
Payable upon receipt of securities loaned -- 44,574,839 91,692,274 18,359,779 5,884,027
Payable to affiliates 30,077 122,214 312,495 81,655 141,620
Payable for director fees 762 6,699 7,048 2,116 2,161
Other accrued expenses and liabilities 81,171 77,178 81,924 52,756 64,885
------------- ------------- ------------- ------------- -------------
Total liabilities 112,010 47,872,379 92,212,741 18,496,306 203,909,332
------------- ------------- ------------- ------------- -------------
NET ASSETS $ 40,733,709 $ 224,622,344 $ 465,068,594 $ 97,742,478 $ 259,724,145
============= ============= ============= ============= =============
NET ASSETS WERE COMPRISED OF:
Paid-in capital $ 65,297,893 $ 414,956,066 $ 428,276,816 $ 142,841,199 $ 293,196,423
Undistributed net investment income 423,613 265,408 1,457,156 -- 2,068,557
Accumulated net realized loss on
investments, foreign currencies
and futures (31,532,573) (219,626,870) (45,683,414) (62,723,464) (41,115,583)
Net unrealized appreciation on investments,
foreign currencies and futures 6,544,776 29,027,740 81,018,036 17,624,743 5,574,748
------------- ------------- ------------- ------------- -------------
NET ASSETS $ 40,733,709 $ 224,622,344 $ 465,068,594 $ 97,742,478 $ 259,724,145
============= ============= ============= ============= =============
+Including securities on loan at value $ -- $ 43,310,084 $ 87,686,096 $ 17,805,606 $ 5,701,200
*Cost of investments in securities $ 31,740,131 $ 192,800,666 $ 361,792,464 $ 77,922,398 $ 239,992,156
**Cost of foreign currencies $ 160,455 $ -- $ -- $ -- $ --
CLASS R
Net assets $ 40,536,819 $ 224,329,985 $ 464,228,268 $ 97,742,478 $ 257,447,564
Shares authorized 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000
Par value $ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001
Shares outstanding 5,368,949 25,114,298 26,557,537 25,251,162 21,316,098
Net asset value and redemption price
per share $ 7.55 $ 8.93 $ 17.48 $ 3.87 $ 12.08
CLASS S
Net assets $ 196,890 $ 292,359 $ 840,326 n/a $ 2,276,581
Shares authorized 100,000,000 100,000,000 100,000,000 n/a 100,000,000
Par value $ 0.001 $ 0.001 $ 0.001 n/a $ 0.001
Shares outstanding 26,147 32,907 48,045 n/a 189,227
Net asset value and redemption price
per share $ 7.53 $ 8.88 $ 17.49 n/a $ 12.03
</Table>
See Accompanying Notes to Financial Statements
23
<Page>
STATEMENTS OF ASSETS AND LIABILITIES as of December 31, 2003 (Continued)
<Table>
<Caption>
ING VP ING VP
ING VP GROWTH AND ING VP MONEY
BALANCED INCOME BOND MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------- ---------------- ---------------- ----------------
ASSETS:
Investments in securities at value+* $ 1,399,720,832 $ 3,765,916,574 $ 1,313,256,094 $ --
Short-term investments** 22,807,463 -- 35,502,920 1,145,921,984
Repurchase agreement 22,240,000 30,634,000 32,391,000 87,454,000
Cash 212,694 -- 691,544 --
Cash collateral for futures 361,355 -- 982,500 --
Cash collateral for securities loaned 344,944,815 994,326,273 227,355,932 42,605,175
Foreign currencies at value*** -- -- 187 --
Receivables:
Investment securities sold 19,829,611 -- 19,152,503 --
Dividends and interest 5,321,249 3,110,331 10,310,034 4,858,095
Prepaid expenses 27,035 64,655 31,436 32,768
---------------- ---------------- ---------------- ----------------
Total assets 1,815,465,054 4,794,051,833 1,639,674,150 1,280,872,022
---------------- ---------------- ---------------- ----------------
LIABILITIES:
Payable for investment securities purchased 198,282 -- 208,951,769 --
Payable for investment securities puchased on
a when-issued basis 93,653,506 -- 4,698,984 --
Payable for futures variation margin 34,874 -- 93,934 --
Payable upon receipt of securities loaned 344,944,815 994,326,273 227,355,932 42,605,175
Payable to affiliates 637,172 1,746,061 477,011 320,639
Payable to custodian -- -- -- 54,999
Payable for director fees 37,104 126,234 32,714 47,461
Other accrued expenses and liabilities 216,504 689,056 260,351 260,122
---------------- ---------------- ---------------- ----------------
Total liabilities 439,722,257 996,887,624 441,870,695 43,288,396
---------------- ---------------- ---------------- ----------------
NET ASSETS $ 1,375,742,797 $ 3,797,164,209 $ 1,197,803,455 $ 1,237,583,626
================ ================ ================ ================
NET ASSETS WERE COMPRISED OF:
Paid-in capital $ 1,438,625,694 $ 6,277,099,694 $ 1,092,458,345 $ 1,228,922,000
Undistributed net investment income 28,837,175 33,190,956 54,279,546 12,927,120
Accumulated net realized gain (loss) on
investments, foreign currencies, futures
and swaps (206,116,841) (3,159,818,441) 30,759,500 (4,507,148)
Net unrealized appreciation on investments,
foreign currencies and futures 114,396,769 646,692,000 20,306,064 241,654
---------------- ---------------- ---------------- ----------------
NET ASSETS $ 1,375,742,797 $ 3,797,164,209 $ 1,197,803,455 $ 1,237,583,626
================ ================ ================ ================
+ Including securities on loan at value $ 334,996,396 $ 962,139,005 $ 222,084,541 $ 41,775,056
* Cost of investments in securities $ 1,285,050,524 $ 3,119,285,180 $ 1,292,198,383 $ --
** Cost of short-term investments $ 22,798,204 $ -- $ 35,492,862 $ 1,145,680,330
*** Cost of foreign currencies $ -- $ -- $ 162 $ --
CLASS R
Net assets $ 1,374,514,548 $ 3,795,441,240 $ 1,126,442,377 $ 1,237,583,626
Shares authorized 2,000,000,000 unlimited unlimited unlimited
Par value $ 0.001 $ 1.000 $ 1.000 $ 1.000
Shares outstanding 109,924,597 207,613,674 79,602,368 95,658,948
Net asset value and redemption price per share $ 12.50 $ 18.28 $ 14.15 $ 12.94
CLASS S
Net assets $ 1,228,249 $ 1,722,969 $ 71,361,078 n/a
Shares authorized 2,000,000,000 unlimited unlimited n/a
Par value $ 0.001 $ 1.000 $ 1.000 n/a
Shares outstanding 98,358 94,359 5,051,566 n/a
Net asset value and redemption price per share $ 12.49 $ 18.26 $ 14.13 n/a
</Table>
See Accompanying Notes to Financial Statements
24
<Page>
STATEMENTS OF OPERATIONS for the Year Ended December 31, 2003
<Table>
<Caption>
ING VP ING VP ING VP
INTERNATIONAL ING VP SMALL ING VP VALUE
EQUITY GROWTH COMPANY TECHNOLOGY OPPORTUNITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------- ------------- -------------
INVESTMENT INCOME:
Dividends (net of foreign taxes)* $ 715,179 $ 1,624,490 $ 4,461,448 $ 126,226 $ 3,650,557
Interest 9,696 75,194 164,478 19,320 40,731
Securities loaned income -- 4,008 50,490 975 320
Other -- -- 4,655 4,139 --
------------- ------------- ------------- ------------- -------------
Total investment income 724,875 1,703,692 4,681,071 150,660 3,691,608
------------- ------------- ------------- ------------- -------------
EXPENSES:
Investment management fees 281,272 1,209,657 2,646,249 617,677 1,367,093
Distribution and service fees:
Class S 140 424 1,088 19 3,749
Transfer agent fees 11,315 10,258 10,920 9,828 10,920
Administrative service fees 18,200 110,883 194,055 35,760 125,315
Shareholder reporting expense 10,598 17,530 24,226 10,973 18,189
Registration fees 5,709 30 2,504 814 3,687
Professional fees 29,856 30,651 37,290 26,970 31,152
Custody and accounting expense 94,538 36,358 66,522 7,265 39,816
Directors' fees 1,877 11,851 20,088 2,639 7,266
Insurance expense 452 3,699 5,789 1,132 3,817
Miscellaneous expense 4,299 6,943 12,689 3,393 8,509
------------- ------------- ------------- ------------- -------------
Total expenses 458,256 1,438,284 3,021,420 716,470 1,619,513
------------- ------------- ------------- ------------- -------------
Less:
Net waived and reimbursed (recouped) fees 80,813 -- -- (4,750) --
------------- ------------- ------------- ------------- -------------
Net expenses 377,443 1,438,284 3,021,420 721,220 1,619,513
------------- ------------- ------------- ------------- -------------
Net investment income (loss) 347,432 265,408 1,659,651 (570,560) 2,072,095
------------- ------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, FOREIGN CURRENCIES AND
FUTURES:
Net realized gain (loss) on:
Investments 589,977 11,863,933 26,719,760 (4,912,495) 37,412,990
Foreign currencies 75,219 -- -- -- --
Futures 15,273 979,973 655,238 -- --
------------- ------------- ------------- ------------- -------------
Net realized gain (loss) on investments,
foreign currencies and futures 680,469 12,843,906 27,374,998 (4,912,495) 37,412,990
------------- ------------- ------------- ------------- -------------
Net change in unrealized appreciation or
depreciation on investments,
foreign currencies and futures 8,992,547 40,849,949 85,411,831 29,432,822 12,066,267
------------- ------------- ------------- ------------- -------------
Net realized and unrealized gain on
investments, foreign currencies and
futures 9,673,016 53,693,855 112,786,829 24,520,327 49,479,257
------------- ------------- ------------- ------------- -------------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 10,020,448 $ 53,959,263 $ 114,446,480 $ 23,949,767 $ 51,551,352
============= ============= ============= ============= =============
- ----------
* Foreign Taxes $ 87,834 $ 2,000 $ 3,476 $ 5,953 $ --
</Table>
See Accompanying Notes to Financial Statements
25
<Page>
STATEMENTS OF OPERATIONS for the Year Ended December 31, 2003
<Table>
<Caption>
ING VP ING VP
ING VP GROWTH AND ING VP MONEY
BALANCED INCOME BOND MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------- ---------------- ---------------- ----------------
INVESTMENT INCOME:
Dividends $ 11,435,899 $ 53,001,645 $ 112,477 $ 134
Interest 21,462,261 620,057 54,689,410 17,950,861
Securities loaned income 88,515 58,305 118,462 --
Other 451,000 378,033 -- --
---------------- ---------------- ---------------- ----------------
Total investment income 33,437,675 54,058,040 54,920,349 17,950,995
---------------- ---------------- ---------------- ----------------
EXPENSES:
Investment management fees 6,314,014 17,484,951 5,118,316 3,562,504
Distribution and service fees:
Class S 852 1,615 179,692 --
Transfer agent fees 4,532 19,292 22,075 4,004
Administrative service fees 694,531 1,923,339 703,758 783,740
Shareholder reporting expense 86,195 264,510 61,219 81,944
Registration fees 230 749 12,644 9,285
Professional fees 77,144 134,077 75,114 70,899
Custody and accounting expense 238,923 637,321 331,473 329,235
Directors' fees 76,562 223,835 89,533 107,109
Insurance expense 24,381 84,813 22,269 29,552
Miscellaneous expense 37,406 102,498 42,147 40,623
---------------- ---------------- ---------------- ----------------
Total expenses 7,554,770 20,877,000 6,658,240 5,018,895
---------------- ---------------- ---------------- ----------------
Net investment income 25,882,905 33,181,040 48,262,109 12,932,100
---------------- ---------------- ---------------- ----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, FOREIGN CURRENCIES,
FUTURES AND SWAPS:
Net realized gain (loss) on:
Investments 45,859,861 89,596,835 38,110,461 (169)
Foreign currencies 1,152,918 9,916 2,834,378 --
Futures and swaps (261,668) -- (1,635,859) --
---------------- ---------------- ---------------- ----------------
Net realized gain (loss) on investments, foreign
currencies, futures and swaps 46,751,111 89,606,751 39,308,980 (169)
---------------- ---------------- ---------------- ----------------
Net change in unrealized appreciation or
depreciation on investments, foreign
currencies and futures 148,117,399 694,994,792 (10,863,858) (56,131)
---------------- ---------------- ---------------- ----------------
Net realized and unrealized gain on investments,
foreign currencies, futures and swaps 194,868,510 784,601,543 28,445,122 (56,300)
---------------- ---------------- ---------------- ----------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 220,751,415 $ 817,782,583 $ 76,707,231 $ 12,875,800
================ ================ ================ ================
</Table>
See Accompanying Notes to Financial Statements
26
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
ING VP
INTERNATIONAL ING VP
EQUITY PORTFOLIO GROWTH PORTFOLIO
----------------------------------- -----------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2003 2002 2003 2002
---------------- ---------------- ---------------- ----------------
FROM OPERATIONS:
Net investment income (loss) $ 347,432 $ 162,363 $ 265,408 $ (151,362)
Net realized gain (loss) on investments,
foreign currencies and futures 680,469 (8,255,262) 12,843,906 (70,073,222)
Net change in unrealized appreciation or
depreciation of investments, foreign
currencies and futures 8,992,547 (4,414,002) 40,849,949 (15,240,955)
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in net assets
resulting from operations 10,020,448 (12,506,901) 53,959,263 (85,465,539)
---------------- ---------------- ---------------- ----------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class R (358,677) (93,596) -- --
Class S (496) -- -- --
---------------- ---------------- ---------------- ----------------
Total distributions (359,173) (93,596) -- --
---------------- ---------------- ---------------- ----------------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 72,160,848 80,512,745 12,590,272 35,492,407
Dividends reinvested 359,173 93,596 -- --
---------------- ---------------- ---------------- ----------------
72,520,021 80,606,341 12,590,272 35,492,407
Cost of shares redeemed (70,372,573) (87,743,989) (23,009,289) (74,579,328)
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in net assets
resulting from capital share transactions 2,147,448 (7,137,648) (10,419,017) (39,086,921)
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in net assets 11,808,723 (19,738,145) 43,540,246 (124,552,460)
NET ASSETS:
Beginning of year 28,924,986 48,663,131 181,082,098 305,634,558
---------------- ---------------- ---------------- ----------------
End of year $ 40,733,709 $ 28,924,986 $ 224,622,344 $ 181,082,098
================ ================ ================ ================
Undistributed net investment income
at end of year $ 423,613 $ 357,132 $ 265,408 $ --
================ ================ ================ ================
</Table>
See Accompanying Notes to Financial Statements
27
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
<Table>
<Caption>
ING VP ING VP
SMALL COMPANY TECHNOLOGY
PORTFOLIO PORTFOLIO
----------------------------------- -----------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2003 2002 2003 2002
---------------- ---------------- ---------------- ----------------
FROM OPERATIONS:
Net investment income (loss) $ 1,659,651 $ 1,305,149 $ (570,560) $ (498,251)
Net realized gain (loss) on investments,
foreign currencies and futures 27,374,998 (66,845,231) (4,912,495) (15,534,432)
Net change in unrealized appreciation or
depreciation of investments, foreign
currencies and futures 85,411,831 (26,970,408) 29,432,822 (15,966,037)
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in net assets resulting
from operations 114,446,480 (92,510,490) 23,949,767 (31,998,720)
---------------- ---------------- ---------------- ----------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class R (922,009) (1,576,315) -- --
Class S (698) (603) -- --
---------------- ---------------- ---------------- ----------------
Total distributions (922,707) (1,576,918) -- --
---------------- ---------------- ---------------- ----------------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 156,127,616 175,762,621 71,880,902 66,979,389
Dividends reinvested 922,707 1,576,918 -- --
---------------- ---------------- ---------------- ----------------
157,050,323 177,339,539 71,880,902 66,979,389
Cost of shares redeemed (94,578,973) (135,522,236) (43,653,684) (52,304,809)
---------------- ---------------- ---------------- ----------------
Net increase in net assets
resulting from capital share transactions 62,471,350 41,817,303 28,227,218 14,674,580
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in net assets 175,995,123 (52,270,105) 52,176,985 (17,324,140)
NET ASSETS:
Beginning of year 289,073,471 341,343,576 45,565,493 62,889,633
---------------- ---------------- ---------------- ----------------
End of year $ 465,068,594 $ 289,073,471 $ 97,742,478 $ 45,565,493
================ ================ ================ ================
Undistributed net investment income
at end of year $ 1,457,156 $ 919,164 $ -- $ --
================ ================ ================ ================
</Table>
See Accompanying Notes to Financial Statements
28
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
<Table>
<Caption>
ING VP ING VP
VALUE OPPORTUNITY BALANCED
PORTFOLIO PORTFOLIO
----------------------------------- -----------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2003 2002 2003 2002
---------------- ---------------- ---------------- ----------------
FROM OPERATIONS:
Net investment income $ 2,072,095 $ 1,144,646 $ 25,882,905 $ 28,271,047
Net realized gain (loss) on investments,
foreign currencies, futures and swaps 37,412,990 (61,487,644) 46,751,111 (154,844,006)
Net change in unrealized appreciation or
depreciation of investments, foreign
currencies and futures 12,066,267 (8,717,153) 148,117,399 (34,537,848)
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in net assets
resulting from operations 51,551,352 (69,060,151) 220,751,415 (161,110,807)
---------------- ---------------- ---------------- ----------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class R (1,764,212) (951,142) (25,549,004) (14,989,364)
Class S (9,646) (3,459) (288) --
---------------- ---------------- ---------------- ----------------
Total distributions (1,773,858) (954,601) (25,549,292) (14,989,364)
---------------- ---------------- ---------------- ----------------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 21,198,747 86,392,780 38,550,583 23,017,801
Dividends reinvested 1,773,858 954,601 25,549,292 14,989,364
---------------- ---------------- ---------------- ----------------
22,972,605 87,347,381 64,099,875 38,007,165
Cost of shares redeemed (25,587,631) (24,364,504) (106,333,010) (230,189,224)
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in net assets
resulting from capital share transactions (2,615,026) 62,982,877 (42,233,135) (192,182,059)
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in net assets 47,162,468 (7,031,875) 152,968,988 (368,282,230)
NET ASSETS:
Beginning of year 212,561,677 219,593,552 1,222,773,809 1,591,056,039
---------------- ---------------- ---------------- ----------------
End of year $ 259,724,145 $ 212,561,677 $ 1,375,742,797 $ 1,222,773,809
================ ================ ================ ================
Undistributed net investment income
at end of year $ 2,068,557 $ 1,770,320 $ 28,837,175 $ 24,589,706
================ ================ ================ ================
</Table>
See Accompanying Notes to Financial Statements
29
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
<Table>
<Caption>
ING VP ING VP
GROWTH AND INCOME BOND
PORTFOLIO PORTFOLIO
----------------------------------- -----------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2003 2002 2003 2002
---------------- ---------------- ---------------- ----------------
FROM OPERATIONS:
Net investment income $ 33,181,040 $ 37,957,496 $ 48,262,109 $ 39,840,504
Net realized gain (loss) on investments,
foreign currencies, futures and swaps 89,606,751 (891,690,878) 39,308,980 17,457,903
Net change in unrealized appreciation or
depreciation of investments, foreign
currencies and futures 694,994,792 (459,505,600) (10,863,858) 31,731,171
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in net assets
resulting from operations 817,782,583 (1,313,238,982) 76,707,231 89,029,578
---------------- ---------------- ---------------- ----------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class R -- (38,495,841) (9,725,157) (36,706,026)
Class S -- -- (564,795) (1,364,988)
Net realized gain on investments:
Class R -- -- (10,936,141) (5,077,726)
Class S -- -- (736,552) (25,540)
---------------- ---------------- ---------------- ----------------
Total distributions -- (38,495,841) (21,962,645) (43,174,280)
---------------- ---------------- ---------------- ----------------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 14,108,788 27,763,650 184,777,059 265,499,333
Dividends reinvested -- 38,475,273 21,950,695 43,149,619
---------------- ---------------- ---------------- ----------------
14,108,788 66,238,923 206,727,754 308,648,952
Cost of shares redeemed (559,975,741) (828,611,395) (319,226,990) (122,508,850)
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in net assets
resulting from capital share transactions (545,866,953) (762,372,472) (112,499,236) 186,140,102
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in net assets 271,915,630 (2,114,107,295) (57,754,650) 231,995,400
NET ASSETS:
Beginning of year 3,525,248,579 5,639,355,874 1,255,558,105 1,023,562,705
---------------- ---------------- ---------------- ----------------
End of year $ 3,797,164,209 $ 3,525,248,579 $ 1,197,803,455 $ 1,255,558,105
================ ================ ================ ================
Undistributed net investment income
(accumulated net investment loss)
at end of year $ 33,190,956 $ -- $ 54,279,546 $ (2,461,388)
================ ================ ================ ================
</Table>
See Accompanying Notes to Financial Statements
30
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
<Table>
<Caption>
ING VP
MONEY MARKET
PORTFOLIO
------------------------------------
YEAR YEAR
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2003 2002
---------------- ----------------
FROM OPERATIONS:
Net investment income $ 12,932,100 $ 24,749,106
Net realized gain (loss) on investments (169) 23,728
Net change in unrealized appreciation or depreciation of investments (56,131) (340,945)
---------------- ----------------
Net increase in net assets resulting from operations 12,875,800 24,431,889
---------------- ----------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class R (24,741,578) (57,317,722)
---------------- ----------------
Total distributions (24,741,578) (57,317,722)
---------------- ----------------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 1,899,695,014 2,748,252,013
Dividends reinvested 24,741,578 57,317,722
---------------- ----------------
1,924,436,592 2,805,569,735
Cost of shares redeemed (2,226,653,637) (2,739,754,578)
---------------- ----------------
Net increase (decrease) in net assets resulting from capital share
transactions (302,217,045) 65,815,157
---------------- ----------------
Net increase (decrease) in net assets (314,082,823) 32,929,324
NET ASSETS:
Beginning of year 1,551,666,449 1,518,737,125
---------------- ----------------
End of year $ 1,237,583,626 $ 1,551,666,449
================ ================
Undistributed net investment income $ 12,927,120 $ 24,736,598
================ ================
</Table>
See Accompanying Notes to Financial Statements
31
<Page>
ING VP INTERNATIONAL EQUITY PORTFOLIO FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS R
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 5.78 7.90 10.40 15.92 11.59
Income from investment operations:
Net investment income (loss) $ 0.06 0.03 0.02 (0.02) (0.01)
Net realized and unrealized gain (loss)
on investments $ 1.78 (2.13) (2.51) (3.17) 5.78
Total from investment operations $ 1.84 (2.10) (2.49) (3.19) 5.77
Less distributions from:
Net investment income $ 0.07 0.02 0.01 0.01 0.15
Net realized gains on investments $ -- -- -- 2.32 1.29
Total distributions $ 0.07 0.02 0.01 2.33 1.44
Net asset value, end of year $ 7.55 5.78 7.90 10.40 15.92
TOTAL RETURN(1) % 32.05 (26.68) (23.88) (20.33) 51.33
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of year (000's) $ 40,537 28,917 48,652 52,210 43,548
Ratios to average net assets:
Net expenses after expense reimbursement(2) % 1.15 1.15 1.15 1.15 1.15
Gross expenses prior to expense reimbursement % 1.38 1.46 1.26 1.34 1.62
Net investment income (loss) after expense
reimbursement(2) % 1.04 0.40 0.23 (0.18) 0.13
Portfolio turnover rate % 85 266 229 212 169
<Caption>
CLASS S
------------------------------------------
NOVEMBER 1,
YEAR ENDED DECEMBER 31, 2001(4) TO
-------------------------- DECEMBER 31,
2003 2002 2001
- ---------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 5.78 7.90 7.38
Income from investment operations:
Net investment income $ (0.01) 0.01 --
Net realized and unrealized gain (loss) on investments $ 1.82 (2.13) 0.52
Total from investment operations $ 1.81 (2.12) 0.52
Less distributions from:
Net investment income $ 0.06 -- --
Total distributions $ 0.06 -- --
Net asset value, end of period $ 7.53 5.78 7.90
TOTAL RETURN(1) % 31.62 (26.84) 7.05
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 197 8 11
Ratios to average net assets:
Net expenses after expense reimbursement(2)(3) % 1.40 1.40 1.39
Gross expenses prior to expense reimbursement(2) % 1.63 1.71 1.49
Net investment income after expense reimbursement(2)(3) % 0.79 0.15 0.01
Portfolio turnover rate % 85 266 229
</Table>
(1) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and does not reflect the
effect of insurance contract charges. Total return for periods less than
one year is not annualized.
(2) The Adviser has agreed to limit expenses, (excluding interest, taxes,
brokerage and extraordinary expenses) subject to possible recoupment by ING
Investments, LLC within three years.
(3) Annualized for periods less than one year.
(4) Commencement of operations of class.
See Accompanying Notes to Financial Statements
32
<Page>
ING VP GROWTH PORTFOLIO FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS R
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 6.85 9.64 14.99 17.32 13.53
Income from investment operations:
Net investment income (loss) $ 0.01 (0.01) (0.01) 0.01 0.03
Net realized and unrealized gain (loss)
on investments $ 2.07 (2.78) (3.87) (2.02) 4.62
Total from investment operations $ 2.08 (2.79) (3.88) (2.01) 4.65
Less distributions from:
Net investment income $ -- -- 0.01 0.01 0.02
Net realized gains on investments $ -- -- 1.46 0.31 0.84
Total distributions $ -- -- 1.47 0.32 0.86
Net asset value, end of year $ 8.93 6.85 9.64 14.99 17.32
TOTAL RETURN(1) % 30.36 (28.94) (27.06) (11.95) 34.97
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of year (000's) $ 224,330 181,029 305,624 460,578 369,845
Ratios to average net assets:
Expenses % 0.71 0.72 0.70 0.70 0.71
Net investment income (loss) % 0.13 (0.06) (0.08) 0.06 0.20
Portfolio turnover rate % 162 241 216 179 138
<Caption>
CLASS S
-------------------------------------------
NOVEMBER 1,
YEAR ENDED DECEMBER 31, 2001(3) TO
-------------------------- DECEMBER 31,
2003 2002 2001
- ----------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 6.83 9.63 8.96
Income from investment operations:
Net investment loss $ 0.00* (0.01) --
Net realized and unrealized gain (loss) on investments $ 2.05 (2.79) 0.67
Total from investment operations $ 2.05 (2.80) 0.67
Net asset value, end of period $ 8.88 6.83 9.63
TOTAL RETURN(1) % 30.01 (29.08) 7.48
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 292 53 11
Ratios to average net assets:
Expenses(2) % 0.96 0.97 0.94
Net investment loss(2) % (0.10) (0.31) (0.32)
Portfolio turnover rate % 162 241 216
</Table>
(1) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and does not reflect the
effect of insurance contract charges. Total return for periods less than
one year is not annualized.
(2) Annualized for periods less than one year.
(3) Commencement of operations of class.
* Amount is less than $0.01 per share.
See Accompanying Notes to Financial Statements
33
<Page>
ING VP SMALL COMPANY PORTFOLIO FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS R
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 12.75 16.68 16.65 16.52 12.79
Income from investment operations:
Net investment income $ 0.06 0.05 0.06 0.11 0.08
Net realized and unrealized gain (loss)
on investments $ 4.71 (3.91) 0.58 1.09 3.84
Total from investment operations $ 4.77 (3.86) 0.64 1.20 3.92
Less distributions from:
Net investment income $ 0.04 0.07 0.10 0.02 0.06
Net realized gains on investments $ -- -- 0.51 1.05 0.13
Total distributions $ 0.04 0.07 0.61 1.07 0.19
Net asset value, end of year $ 17.48 12.75 16.68 16.65 16.52
TOTAL RETURN(1) % 37.47 (23.23) 4.00 6.72 30.85
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of year (000's) $ 464,228 288,890 341,332 273,617 149,416
Ratios to average net assets:
Expenses % 0.85 0.87 0.86 0.87 0.88
Net investment income % 0.47 0.39 0.50 0.80 0.64
Portfolio turnover rate % 178 371 240 330 256
<Caption>
CLASS S
------------------------------------------
NOVEMBER 1,
YEAR ENDED DECEMBER 31, 2001(3) TO
-------------------------- DECEMBER 31,
2003 2002 2001
- ---------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 12.72 16.68 14.90
Income from investment operations:
Net investment income (loss) $ 0.01 (0.04) --
Net realized and unrealized gain (loss) on investments $ 4.79 (3.86) 1.78
Total from investment operations $ 4.80 (3.90) 1.78
Less distribution from:
Net investment income $ 0.03 0.06 --
Total distribution $ 0.03 0.06 --
Net asset value, end of period $ 17.49 12.72 16.68
TOTAL RETURN(1) % 37.76 (23.45) 11.95
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 840 184 11
Ratios to average net assets:
Expenses(2) % 1.10 1.12 1.10
Net investment income(2) % 0.22 0.14 0.29
Portfolio turnover rate % 178 371 240
</Table>
(1) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and does not reflect the
effect of insurance contract charges. Total return for periods less than
one year is not annualized.
(2) Annualized for periods less than one year.
(3) Commencement of operations of class.
See Accompanying Notes to Financial Statements
34
<Page>
ING VP TECHNOLOGY PORTFOLIO FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS R
-----------------------------------------------------------
MAY 1,
YEAR ENDED DECEMBER 31, 2000(4) TO
------------------------------------------- DECEMBER 31,
2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 2.66 4.53 5.88 10.00
Income from investment operations:
Net investment loss $ (0.02) (0.03) (0.02) (0.02)
Net realized and unrealized loss on investments $ 1.23 (1.84) (1.33) (4.10)
Total from investment operations $ 1.21 (1.87) (1.35) (4.12)
Net asset value, end of period $ 3.87 2.66 4.53 5.88
TOTAL RETURN(1) % 45.49 (41.28) (22.96) (41.20)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 97,742 45,559 62,878 44,621
Ratios to average net assets:
Net expenses after expense
reimbursement/recoupment(2)(3) % 1.11 1.11 1.11 1.15
Gross expenses prior to expense
reimbursement/recoupment(2) % 1.10 1.12 1.11 1.20
Net investment loss after expense
reimbursement/recoupment(2)(3) % (0.88) (0.89) (0.49) (0.61)
Portfolio turnover rate % 15 61 129 150
- ---------------------------------------------------------------------------------------------------------------------
</Table>
(1) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and does not reflect the
effect of insurance contract charges. Total return for periods less than
one year is not annualized.
(2) Annualized for periods less than one year.
(3) The Adviser has agreed to limit expenses, (excluding interest, taxes,
brokerage and extraordinary expenses) subject to possible recoupment by ING
Investments, LLC within three years.
(4) Commencement of operations of class.
See Accompanying Notes to Financial Statements
35
<Page>
ING VP VALUE OPPORTUNITY PORTFOLIO FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS R
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 9.77 13.25 15.34 16.42 14.41
Income from investment operations:
Net investment income $ 0.10 0.04 0.03 0.07 0.10
Net realized and unrealized gain (loss)
on investments $ 2.29 (3.47) (1.43) 1.49 2.71
Total from investment operations $ 2.39 (3.43) (1.40) 1.56 2.81
Less distributions from:
Net investment income $ 0.08 0.05 0.05 0.03 0.08
Net realized gains on investments $ -- -- 0.64 2.61 0.72
Total distributions $ 0.08 0.05 0.69 2.64 0.80
Net asset value, end of year $ 12.08 9.77 13.25 15.34 16.42
TOTAL RETURN(1) % 24.59 (25.96) (9.62) 10.19 19.58
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of year (000's) $ 257,448 211,470 219,287 116,029 85,030
Ratios to average net assets:
Expenses % 0.70 0.72 0.71 0.75 0.73
Net investment income % 0.91 0.51 0.54 0.58 0.69
Portfolio turnover rate % 251 304 185 171 125
<Caption>
CLASS S
------------------------------------------
JULY 16,
YEAR ENDED DECEMBER 31, 2001(3) TO
-------------------------- DECEMBER 31,
2003 2002 2001
- ---------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 9.75 13.24 14.58
Income from investment operations:
Net investment income $ 0.04 0.01 --
Net realized and unrealized gain (loss) on investments $ 2.31 (3.46) (1.34)
Total from investment operations $ 2.35 (3.45) (1.34)
Less distributions from:
Net investment income $ 0.07 0.04 --
Total distributions $ 0.07 0.04 --
Net asset value, end of period $ 12.03 9.75 13.24
TOTAL RETURN(1) % 24.21 (26.12) (9.19)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 2,277 1,092 307
Ratios to average net assets:
Expenses(2) % 0.95 0.97 0.96
Net investment income(2) % 0.64 0.26 0.29
Portfolio turnover rate % 251 304 185
</Table>
(1) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and does not reflect the
effect of insurance contract charges. Total return for periods less than
one year is not annualized.
(2) Annualized for periods less than one year.
(3) Commencement of operations of class.
See Accompanying Notes to Financial Statements
36
<Page>
ING VP BALANCED PORTFOLIO FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS R
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 10.73 12.09 13.40 15.57 15.73
Income from investment operations:
Net investment income $ 0.25 0.25 0.31 0.43 0.44
Net realized and unrealized gain (loss)
on investments $ 1.76 (1.49) (0.87) (0.49) 1.56
Total from investment operations $ 2.01 (1.24) (0.56) (0.06) 2.00
Less distributions from:
Net investment income $ 0.24 0.12 0.28 0.46 0.40
Net realized gains on investments $ -- -- 0.47 1.65 1.76
Total distributions $ 0.24 0.12 0.75 2.11 2.16
Net asset value, end of year $ 12.50 10.73 12.09 13.40 15.57
TOTAL RETURN(1) % 18.87 (10.31) (4.21) (0.56) 13.60
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of year (millions) $ 1,375 1,223 1,591 1,777 1,988
Ratios to average net assets:
Expenses % 0.60 0.60 0.59 0.59 0.59
Net investment income % 2.04 2.00 2.46 2.72 2.81
Portfolio turnover rate % 333 345 167 182 136
<Caption>
CLASS S
-------------
MAY 29,
2003(3) TO
DECEMBER 31,
2003
- --------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 11.53
Income from investment operations:
Net investment income $ 0.34
Net realized and unrealized gain on investments $ 0.85
Total from investment operations $ 1.19
Less distributions from:
Net investment income $ 0.23
Total distributions $ 0.23
Net asset value, end of period $ 12.49
TOTAL RETURN(1) % 10.51
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (millions) $ 1
Ratios to average net assets:
Expenses(2) % 0.83
Net investment income(2) % 3.06
Portfolio turnover rate % 333
</Table>
(1) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and does not reflect the
effect of insurance contract charges. Total return for periods less than
one year is not annualized.
(2) Annualized for periods less than one year.
(3) Commencement of operations of class.
See Accompanying Notes to Financial Statements
37
<Page>
ING VP GROWTH AND INCOME PORTFOLIO FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS R
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 14.50 19.54 24.12 30.69 31.87
Income from investment operations:
Net investment income $ 0.16 0.16 0.14 0.17 0.31
Net realized and unrealized gain (loss)
on investments $ 3.62 (5.04) (4.58) (3.46) 4.86
Total from investment operations $ 3.78 (4.88) (4.44) (3.29) 5.17
Less distributions from:
Net investment income $ -- 0.16 0.14 0.16 0.34
Net realized gains on investments $ -- -- -- 3.12 6.01
Total distributions $ -- 0.16 0.14 3.28 6.35
Net asset value, end of year $ 18.28 14.50 19.54 24.12 30.69
TOTAL RETURN(1): % 26.07 (24.99) (18.40) (10.97) 17.42
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of year (millions) $ 3,795 3,525 5,639 7,797 10,029
Ratios to average net assets:
Expenses % 0.60 0.59 0.59 0.58 0.58
Net investment income % 0.95 0.83 0.62 0.55 0.89
Portfolio turnover rate % 150 246 185 149 133
<Caption>
CLASS S
-------------
JUNE 11,
2003(3) TO
DECEMBER 31,
2003
- --------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 16.32
Income from investment operations:
Net investment income $ 0.04
Net realized and unrealized income on investments $ 1.90
Total from investment operations $ 1.94
Net asset value, end of period $ 18.26
TOTAL RETURN(1): % 11.89
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (millions) $ 2
Ratios to average net assets:
Expenses(2) % 0.84
Net investment income(2) % 0.57
Portfolio turnover rate % 150
</Table>
(1) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and does not reflect the
effect of insurance contract charges. Total return for periods less than
one year is not annualized.
(2) Annualized for periods less than one year.
(3) Commencement of operations of class.
See Accompanying Notes to Financial Statements
38
<Page>
ING VP BOND PORTFOLIO FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS R
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 13.53 12.95 12.61 12.17 13.06
Income from investment operations:
Net investment income $ 0.56 0.45 0.59 0.79 0.76
Net realized and unrealized gain (loss)
on investments $ 0.29 0.63 0.51 0.37 (0.86)
Total from investment operations $ 0.85 1.08 1.10 1.16 (0.10)
Less distributions from:
Net investment income $ 0.11 0.43 0.65 0.72 0.75
Net realized gains on investments $ 0.12 0.07 0.11 -- 0.04
Total distributions $ 0.23 0.50 0.76 0.72 0.79
Net asset value, end of year $ 14.15 13.53 12.95 12.61 12.17
TOTAL RETURN(1) % 6.30 8.33 8.75 9.64 (0.74)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of year (000's) $ 1,126,442 1,205,968 1,023,563 711,211 717,472
Ratios to average net assets:
Expenses % 0.50 0.49 0.50 0.50 0.49
Net investment income % 3.77 3.50 5.06 6.29 5.77
Portfolio turnover rate % 521 565 219 334 201
</Table>
<Table>
<Caption>
CLASS S
----------------------------
YEAR MAY 3,
ENDED 2002(3) TO
DECEMBER 31, DECEMBER 31,
2003 2002
- --------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 13.53 13.05
Income from investment operations:
Net investment income $ 0.49 0.16
Net realized and unrealized gain on investments $ 0.32 0.81
Total from investment operations $ 0.81 0.97
Less distributions from:
Net investment income $ 0.09 0.42
Net realized gains on investments $ 0.12 0.07
Total distributions $ 0.21 0.49
Net asset value, end of period $ 14.13 13.53
TOTAL RETURN(1) % 6.04 7.45
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 71,361 49,590
Ratios to average net assets:
Expenses(2) % 0.75 0.74
Net investment income(2) % 3.52 3.25
Portfolio turnover rate % 521 565
</Table>
(1) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and does not reflect the
effect of insurance contract charges. Total return for periods less than
one year is not annualized.
(2) Annualized for periods less than one year.
(3) Commencement of operations of class.
See Accompanying Notes to Financial Statements
39
<Page>
ING VP MONEY MARKET PORTFOLIO FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS R
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 13.03 13.33 13.61 13.42 13.39
Income from investment operations:
Net investment income $ 0.08 0.21 0.50 0.83 0.59
Net realized and unrealized gain(loss)
on investments $ 0.03 -- 0.01 (0.02) 0.06
Total from investment operations $ 0.11 0.21 0.51 0.81 0.65
Less distributions from:
Net investment income $ 0.20 0.51 0.79 0.62 0.62
Total distributions $ 0.20 0.51 0.79 0.62 0.62
Net asset value, end of year $ 12.94 13.03 13.33 13.61 13.42
TOTAL RETURN(1) % 0.92 1.66 3.94 6.38 5.08
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of year (000's) $ 1,237,584 1,551,666 1,518,737 1,195,930 1,157,818
Ratios to average net assets:
Expenses % 0.35 0.34 0.34 0.34 0.34
Net investment income % 0.91 1.63 4.07 6.20 5.04
</Table>
(1) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and does not reflect the
effect of insurance contract charges.
See Accompanying Notes to Financial Statements
40
<Page>
NOTES TO FINANCIAL STATEMENTS as of December 31, 2003
NOTE 1 -- ORGANIZATION
Organization. The ING Variable Product Portfolios are comprised of ING Variable
Portfolios, Inc., ING VP Balanced Portfolio, Inc., ING Variable Funds, ING VP
Bond Portfolio and ING VP Money Market Portfolio, all of which are open-end
investment management companies registered under the Investment Company Act of
1940, as amended.
The ING Variable Portfolios, Inc. is a company incorporated under the laws of
Maryland on June 4, 1996 and has eight separate portfolios. The five portfolios
that are in this report are: ING VP International Equity Portfolio
("International"), ING VP Growth Portfolio ("Growth"), ING VP Small Company
Portfolio ("Small Company"), ING VP Technology Portfolio ("Technology"), and ING
VP Value Opportunity Portfolio ("Value Opportunity"). ING VP Balanced Portfolio,
Inc. ("Balanced") is a company incorporated under the laws of Maryland on
December 14, 1988. ING Variable Funds is a incorporated under the laws of
Massachusetts on January 25, 1984 with one portfolio, ING VP Growth and Income
Portfolio ("Growth and Income"). ING VP Bond Portfolio is a business trust under
the laws of Massachusetts on January 25, 1984 with one portfolio, ING VP Bond
Portfolio ("Bond"). ING VP Money Market Portfolio is a business trust under the
laws of Massachusetts on January 25, 1984 with one portfolio, ING VP Money
Market Portfolio ("Money Market").
Each Portfolio offers class R shares. International, Growth, Small Company,
Technology, Value Opportunity, Balanced, Growth and Income and Bond also offer
class S shares. The two classes differ principally in applicable distribution
and service fees. Shareholders of each class also bear certain expenses that
pertain to that particular class. All shareholders bear the common expenses of
the Portfolios and earn income from the portfolio pro rata based on the average
daily net assets of each class, without discrimination between share classes.
Dividends are determined separately for each class based on income and expenses
allocable to each class. Realized gains are allocated to each class pro rata
based on the net assets of each class on the date of distribution. No class has
preferential dividend rights. Differences in per share dividend rates generally
result from the relative weighting of pro rata income and realized gain
allocations and from differences in separate class expenses, including
distribution, and shareholder servicing fees.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies are consistently followed by the
Portfolios in the preparation of their financial statements, and such policies
are in conformity with accounting principles generally accepted in the United
States of America for investment companies.
A. SECURITY VALUATION. Investments in equity securities traded on a national
securities exchange are valued at the last reported sale price. Portfolio
securities reported by NASDAQ will be valued at NASDAQ official closing
price. Portfolio securities traded on an exchange or NASDAQ for which there
has been no sale and equity securities traded in the over-the-counter-market
are valued at the mean between the last reported bid and ask prices. All
investments quoted in foreign currencies will be valued daily in U.S. dollars
on the basis of the foreign currency exchange rates prevailing at that time.
Debt securities are valued at bid prices obtained from independent services
or from one or more dealers making markets in the securities. U.S. Government
obligations are valued by using market quotations or independent pricing
services which use prices provided by market-makers or estimates of market
values obtained from yield data relating to instruments or securities with
similar characteristics.
Securities and assets for which market quotations are not readily available
(which may include certain restricted securities which are subject to
limitations as to their sale) are valued at their fair values as determined
in good faith by or under the supervision of the Portfolios' Board of
Directors ("Board"), in accordance with methods that are specifically
authorized by the Board. Securities traded on exchanges, including foreign
exchanges, which close earlier than the time that a Portfolio calculates its
net asset value may also be valued at their fair values as determined in good
faith by or under the supervision of a Portfolio's Board, in accordance with
methods that are specifically authorized by the Board. If a significant event
which is likely to impact the value of one or more foreign securities held by
a Portfolio occurs after the time at which the
41
<Page>
NOTES TO FINANCIAL STATEMENTS as of December 31, 2003 (Continued)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
foreign market for such security(ies) closes but before the time that the
Portfolio's net asset value is calculated on any business day, such event may
be taken into account in determining the fair value of such security(ies) at
the time the Portfolio calculates its net asset value. For these purposes,
significant events after the close of trading on a foreign market may
include, among others, securities trading in the U.S. and other markets,
corporate announcements, natural and other disasters, and political and other
events. Among other elements of analysis, the Board has authorized the use of
one or more research services to assist with the determination of the fair
value of foreign securities in light of significant events. Research services
use statistical analyses and quantitative models to help determine fair value
as of the time a Portfolio calculates its net asset value. Unlike the closing
price of a security on an exchange, fair value determinations employ elements
of judgment, and the fair value assigned to a security may not represent the
actual value that a Portfolio could obtain if it were to sell the security at
the time of the close of the NYSE.
Investments in securities maturing in less than 60 days at the date of
valuation are valued at amortized cost, which, when combined with accrued
interest, approximates market value.
B. SECURITY TRANSACTIONS AND REVENUE RECOGNITION. Securities transactions are
accounted for on the trade date. Realized gains and losses are reported on
the basis of identified cost of securities sold. Interest income is recorded
on an accrual basis except when collection is not expected. Dividend income
is recorded on the ex-dividend date, or for certain foreign securities, when
the information becomes available to the portfolios. Premium amortization and
discount accretion are determined by the effective yield method.
C. FOREIGN CURRENCY TRANSLATION. The books and records of the portfolios are
maintained in U.S. dollars. Any foreign currency amounts are translated into
U.S. dollars on the following basis:
(1) Market value of investment securities, other assets and liabilities --
at the exchange rates prevailing at the end of the day.
(2) Purchases and sales of investment securities, income and expenses --
at the rates of exchange prevailing on the respective dates of such
transactions.
Although the net assets and the market values are presented at the foreign
exchange rates at the end of the day, the Portfolios do not isolate the
portion of the results of operations resulting from changes in foreign
exchange rates on investments from the fluctuations arising from changes in
market prices of securities held. Such fluctuations are included with the net
realized and unrealized gains or losses from investments. For securities,
which are subject to foreign withholding tax upon disposition, liabilities
are recorded on the statement of assets and liabilities for the estimated tax
withholding based on the securities current market value. Upon disposition,
realized gains or losses on such securities are recorded net of foreign
withholding tax. Reported net realized foreign exchange gains or losses arise
from sales and maturities of short-term securities, sales of foreign
currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Portfolio's books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise from
changes in the value of assets and liabilities other than investments in
securities at fiscal year end, resulting from changes in the exchange rate.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with investing in U.S. companies and U.S.
Government securities. These risks include but are not limited to
re-evaluation of currencies and future adverse political and economic
developments which could cause securities and their markets to be less liquid
and prices more volatile than those of comparable U.S. companies and U.S.
Government securities.
D. FOREIGN CURRENCY TRANSACTIONS AND FUTURES CONTRACTS. Certain portfolios may
enter into foreign currency exchange transactions to convert to and from
different foreign currencies and to and from the U.S. dollar in connection
with the planned purchases or sales of securities. The Portfolios either
enter into these transactions on a spot basis at the spot rate prevailing in
the foreign currency exchange market or use forward foreign currency
contracts to purchase or sell foreign currencies. When the contract is
fulfilled or closed, gains or losses are realized. Until then,
42
<Page>
NOTES TO FINANCIAL STATEMENTS as of December 31, 2003 (Continued)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
the gain or loss is included in unrealized appreciation or depreciation.
Risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their forward contracts and
from the potential inability of counterparties to meet the terms of their
forward contracts and from unanticipated movements in the value of foreign
currencies relative to the U.S. dollar.
Each Portfolio may enter into futures contracts involving foreign currency,
interest rates, securities and securities indices. A futures contract
obligates the seller of the contract to deliver and the purchaser of the
contract to take delivery of the type of foreign currency, financial
instrument or security called for in the contract at a specified future time
for a specified price. Upon entering into such a contract, a Portfolio is
required to deposit and maintain as collateral such initial margin as
required by the exchange on which the contract is traded. Pursuant to the
contract, a Portfolio agrees to receive from or pay to the broker an amount
equal to the daily fluctuations in the value of the contract. Such receipts
or payments are known as variation margins and are recorded as unrealized
gains or losses by the Portfolio. When the contract is closed, the Portfolio
records a realized gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it was
closed.
E. DISTRIBUTIONS TO SHAREHOLDERS. Dividends from net investment income and
capital gains, if any, are declared and paid annually by the International,
Growth, Small Company, Technology, Value Opportunity, Balanced and Money
Market Portfolios; and declared and paid semi-annually by Bond and Growth and
Income Portfolios. The Portfolios may make distributions on a more frequent
basis to comply with the distribution requirements of the Internal Revenue
Code. The characteristics of income and gains to be distributed are
determined in accordance with income tax regulations, which may differ from
accounting principles generally accepted in the United States of America for
investment companies. Distributions are recorded on the ex-dividend date.
F. FEDERAL INCOME TAXES. It is the policy of the Portfolios to comply with
subchapter M of the Internal Revenue Code and related excise tax provisions
applicable to requlated investment companies and to distribute substantially
all of their net investment income and any net realized capital gains to
their shareholders. Therefore, no federal income tax provision is required.
No capital gain distributions shall be made until any capital loss
carryforwards have been fully utilized or expired.
G. USE OF ESTIMATES. Management of the Portfolios has made certain estimates and
assumptions relating to the reporting of assets, liabilities, income, and
expenses to prepare these financial statements in conformity with accounting
principles generally accepted in the United States of America for investment
companies. Actual results could differ from these estimates.
H. REPURCHASE AGREEMENTS. Each Portfolio may invest in repurchase agreements
only with government securities dealers recognized by the Board of Governors
of the Federal Reserve System or with member banks of the Federal Reserve
System. Under such agreements, the seller of the security agrees to
repurchase it at a mutually agreed upon time and price. The resale price is
in excess of the purchase price and reflects an agreed upon interest rate for
the period of time the agreement is outstanding. The period of the repurchase
agreements is usually short, from overnight to one week, while the underlying
securities generally have longer maturities. Each Portfolio will receive as
collateral cash or securities whose market value is equal to at least 100% of
the carrying amount of the repurchase agreements, plus accrued interest,
being invested by the Portfolio. The underlying collateral is valued daily on
a mark-to-market basis to assure that the value, including accrued interest
is at least equal to the repurchase price. If the seller defaults, a
Portfolio might incur a loss or delay in the realization of proceeds if the
value of the collateral securing the repurchase agreement declines, and it
might incur disposition costs in liquidating the collateral.
I. SECURITIES LENDING. Each Portfolio has the option to temporarily loan up to
30% of its total assets to brokers, dealers or other financial institutions
in exchange for a negotiated lender's fee. The borrower is required to fully
collateralize the loans with cash or U.S. Government securities.
J. ILLIQUID AND RESTRICTED SECURITIES. The Portfolios may invest up to 15% (10%
for Money Market) of their net assets in illiquid securities. Illiquid
securities are not readily marketable. Disposing of illiquid investments may
involve time-consuming negotiation and legal expenses, and it
43
<Page>
NOTES TO FINANCIAL STATEMENTS as of December 31, 2003 (Continued)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
may be difficult or impossible for the Portfolios to sell them promptly at an
acceptable price. The Portfolios may also invest in restricted securities,
which include those sold under Rule 144A of the Securities Act of 1933 (1933
Act) or securities offered pursuant to Section 4(2) of the 1933 Act, and/or
are subject to legal or contractual restrictions on resale and may not be
publicly sold without registration under the 1933 Act. Certain restricted
securities may be considered liquid pursuant to guidelines approved by the
Board or may be deemed to be illiquid because they may not be readily
marketable. Illiquid and restricted securities are valued using market
quotations when readily available. In the absence of market quotations, the
securities are valued based upon their fair value determined under procedures
approved by the Board.
K. DELAYED DELIVERY TRANSACTIONS. Balanced, Growth and Income, and Bond
Portfolios may purchase or sell securities on a when-issued or forward
commitment basis. The price of the underlying securities and date when the
securities will be delivered and paid for are fixed at the time the
transaction is negotiated. The market value of such is identified in the
Portfolios' Portfolio of Investments. Losses may arise due to changes in the
market value of the securities or from the inability of counterparties to
meet the terms of the contract. In connection with such purchases, the
Portfolios are required to hold liquid assets as collateral with the
Portfolios' custodian sufficient to cover the purchase price.
L. MORTGAGE DOLLAR ROLL TRANSACTIONS. In connection with a portfolio's ability
to purchase or sell securities on a when-issued basis, Balanced, Growth and
Income, and Bond Portfolios may engage in dollar roll transactions with
respect to mortgage-backed securities issued by Government National Mortgage
Association, Federal National Mortgage Association and Federal Home Loan
Mortgage Corp. In a dollar roll transaction, a Portfolio sells a
mortgage-backed security to a financial institution, such as a bank or
broker/dealer, and simultaneously agrees to repurchase a substantially
similar (i.e., same type, coupon, and maturity) security from the institution
on a delayed delivery basis at an agreed upon price. The mortgage-backed
securities that are repurchased will bear the same interest rate as those
sold, but generally will be collateralized by different pools of mortgages
with different prepayment histories. The Portfolios account for dollar roll
transactions as purchases and sales.
M. OPTIONS CONTRACTS. Balanced, Growth and Income, and Bond may purchase put and
call options and may write (sell) put options and covered call options. The
Portfolios may engage in option transactions as a hedge against adverse
movements in the value of portfolio holdings or to increase market exposure.
Option contracts are valued daily and unrealized gains or losses are recorded
based upon the last sales price on the principal exchange on which the
options are traded. The Portfolios will realize a gain or loss upon the
expiration or closing of the option contract. When an option is exercised,
the proceeds on sales of the underlying security for a written call option,
the purchase cost of the security for a written put option, or the cost of
the security for a purchased put or call option is adjusted by the amount of
premium received or paid. Realized and unrealized gains or losses on option
contracts are reflected in the accompanying financial statements. The risk in
writing a call option is that the Portfolios give up the opportunity for
profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Portfolios may incur
a loss if the market price of the security decreases and the option is
exercised. The risk in buying an option is that the Portfolios pay a premium
whether or not the option is exercised. Risks may also arise from an illiquid
secondary market or from the inability of counterparties to meet the terms of
the contract.
N. SWAP CONTRACTS. The Balanced and Bond Portfolios may enter into interest rate
swaps, currency swaps and other types of swap agreements, including swaps on
securities and indices. A swap is an agreement between two parties pursuant
to which each party agrees to make one or more payments to the other on
regularly scheduled dates over a stated term, based on different interest
rates, currency exchange rates, security prices, the prices or rates of other
types of financial instruments or assets or the levels of specified indices.
During the term of the swap, changes in the value of the swap are recognized
by marking-to-market the value of the swap. For each swap contract, a capital
gain or loss is recognized on each contract's respective payment date.
NOTE 3 -- INVESTMENT TRANSACTIONS
For the year ended December 31, 2003, the cost of purchases and proceeds from
the sales of securities,
44
<Page>
NOTES TO FINANCIAL STATEMENTS as of December 31, 2003 (Continued)
excluding U.S. Government and short-term securities, were as follows:
<Table>
<Caption>
PURCHASES SALES
---------------- ----------------
International $ 26,707,947 $ 27,027,123
Growth 315,843,206 325,584,931
Small Company 659,456,854 603,440,796
Technology 36,055,663 9,286,222
Value Opportunity 558,825,981 567,458,841
Balanced 1,910,839,243 2,043,796,495
Growth and Income 5,176,001,818 5,667,751,254
Bond 1,233,383,210 1,387,635,039
</Table>
U.S. Government securities not included above were as follows:
<Table>
<Caption>
PURCHASES SALES
---------------- -----------------
Balanced $ 2,230,784,933 $ 2,109,897,074
Bond 5,252,107,553 5,007,518,005
</Table>
NOTE 4 -- INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES
Each of the Portfolios has entered into an Investment Management Agreement with
ING Investments, LLC (the "Investment Manager" or the "Adviser"), a wholly-owned
subsidiary of ING Groep N.V. The investment management agreements compensate the
Adviser with a fee, computed daily and payable monthly, based on the average
daily net assets of each Portfolio, at the following annual rates:
<Table>
<Caption>
AS A PERCENTAGE OF AVERAGE NET ASSETS
-------------------------------------
International 0.85%
Growth 0.60%
Small Company 0.75%
Technology 0.95%
Value Opportunity 0.60%
Balanced 0.50%
Growth and Income 0.50% on first $10 billion;
0.45% on next $5 billion; and
0.425% over $15 billion
Bond 0.40%
Money Market 0.25%
</Table>
The Adviser entered into a subadvisory agreement with Aeltus Investment
Management, Inc. (ING Aeltus), a wholly owned subsidiary of ING Groep N.V.
effective March 1, 2002. ING Aeltus acts as Sub-Advisor to all Portfolios except
the Technology Portfolio. Subject to such policies as the Board or the Adviser
may determine, ING Aeltus manages the Portfolios' assets in accordance with the
Portfolios' investment objectives, policies, and limitations.
Pursuant to a subadvisory agreement between the Adviser and AIC Asset
Management, LLC ("AIC"), AIC served as Sub-Adviser to the Technology Portfolio
until December 31, 2003.
Pursuant to an Administrative Services Agreement, ING Funds Services, LLC
("IFS") acts as administrator and provides certain administrative and
shareholder services necessary for Portfolio operations and is responsible for
the supervision of other service providers.
IFS is entitled to receive from each Portfolio a fee at an annual rate of 0.055%
on the first $5 billion of daily net assets and 0.03% thereafter.
NOTE 5 -- DISTRIBUTION AND SERVICE FEES
Class S shares of the Portfolios have adopted a Plan pursuant to Rule 12b-1
under the 1940 Act (the "12b-1 Plans"), whereby ING Funds Distributor, LLC (the
"Distributor") is reimbursed or compensated by the Portfolios for expenses
incurred in the distribution of each Portfolio's shares ("Distribution Fees").
Pursuant to the 12b-1 Plans, the Distributor is entitled to a payment each month
to reimburse or compensate expenses incurred in the distribution and promotion
of each Portfolio's shares, including expenses incurred in printing prospectuses
and reports used for sales purposes, expenses incurred in preparing and printing
sales literature and other such distribution related expenses, including any
distribution or shareholder servicing fees ("Service Fees") paid to securities
dealers who have executed a distribution agreement with the Distributor. Under
the 12b-1 Plans, Class S shares of the Portfolios pay the Distributor a fee
calculated at an annual rate of 0.25% of average daily net assets.
NOTE 6 -- OTHER TRANSACTIONS WITH AFFILIATED AND RELATED PARTIES
At December 31, 2003 the Portfolios had the following amounts recorded in
payable to affiliates on the accompanying Statements of Assets and Liabilities
(see Notes 4 and 5):
<Table>
<Caption>
ACCRUED ACCRUED
INVESTMENT ACCRUED SHAREHOLDER
MANAGEMENT ADMINISTRATIVE SERVICES AND
FEES FEES DISTRIBUTION FEES TOTAL
------------ -------------- ----------------- ------------
International $ 28,214 $ 1,826 $ 37 $ 30,077
Growth 111,898 10,255 61 122,214
Small Company 290,985 21,336 174 312,495
Technology 77,186 4,468 1 81,655
Value Opportunity 129,310 11,851 459 141,620
Balanced 573,832 63,111 229 637,172
Growth and Income 1,572,722 172,994 345 1,746,061
Bond 406,203 55,842 14,966 477,011
Money Market 262,828 57,811 -- 320,639
</Table>
Each Portfolio has adopted a Deferred Compensation Plan (the "Plan"), which
allows eligible non-affiliated directors as described in the Plan to defer the
receipt of all or a portion of the directors' fees payable. The deferred fees
are invested in various funds advised by ING Investments, LLC until distribution
in accordance with the Plan.
45
<Page>
NOTES TO FINANCIAL STATEMENTS as of December 31, 2003 (Continued)
NOTE 7 -- EXPENSE LIMITATIONS
For the following Portfolios, the Investment Manager has voluntarily agreed to
limit expenses, excluding interest, taxes, brokerage and extraordinary expenses
to the levels listed below:
<Table>
<Caption>
CLASS R CLASS S
------- -------
International 1.15% 1.40%
Growth 0.80% 1.05%
Small Company 0.95% 1.20%
Technology 1.15% 1.40%
Value Opportunity 0.80% 1.05%
</Table>
The Investment Manager will, at a later date, recoup from each Portfolio,
expenses reimbursed by the Investment Manager during the previous 36 months, but
only if, after such recoupment, the Portfolio's expense ratio does not exceed
the percentage described above. Waived and reimbursed fees net of any recoupment
by the Investment Manager of such waived and reimbursed fees are reflected on
the accompanying Statements of Operations.
As of December 31, 2003, the cumulative amount of reimbursed fees that are
subject to possible recoupment by the Investment Manager are as follows:
<Table>
International $ 162,574
</Table>
NOTE 8 -- LINE OF CREDIT
The Portfolios, in addition to certain other funds managed by the Adviser, have
entered into an unsecured committed revolving line of credit agreement (the
"Credit Agreement ") with a syndicate of banks led by Citibank, N.A. for an
aggregate amount of $150,000,000. The proceeds may be used only to: (1)
temporarily finance the purchase and sale of securities; (2) finance the
redemption of shares of an investor in the funds; and (3) enable the funds to
meet other emergency expenses as defined in the Credit Agreement. The funds to
which the line of credit is available pay a commitment fee equal to 0.09% per
annum on the daily unused portion of the committed line amount. Each of the
Portfolios will pay its pro rata share of both the agent and commitment fee.
Generally, borrowings under the Credit Agreement accrue interest at the Federal
Funds Rate plus a specified margin. Repayments generally must be made within 30
days after the date of a revolving credit advance. The following Portfolios
utilized the line of credit during the year ended December 31, 2003:
<Table>
<Caption>
APPROXIMATE APPROXIMATE
DAYS AVERAGE DAILY WEIGHTED AVERAGE
UTILIZED BALANCE INTEREST RATE
-------- ------------- ----------------
International 2 490,000 1.69%
Value Opportunity 4 390,000 1.75%
Growth and Income 5 4,044,000 1.59%
Bond 1 20,000,000 1.50%
</Table>
NOTE 9 -- CAPITAL SHARES TRANSACTIONS
Transactions in capital shares and dollars were as follows:
<Table>
<Caption>
CLASS R SHARES CLASS S SHARES
------------------------------ ------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2003 2002 2003 2002
------------- ------------- ------------- -------------
INTERNATIONAL (NUMBER OF SHARES)
Shares sold 11,733,163 12,211,157 27,260 --
Dividends reinvested 58,321 13,352 81 --
Shares redeemed (11,428,928) (13,375,503) (2,549) --
------------- ------------- ------------- -------------
Net increase (decrease) in shares outstanding 362,556 (1,150,994) 24,792 --
============= ============= ============= =============
INTERNATIONAL ($)
Shares sold $ 71,979,031 $ 80,512,745 $ 181,817 $ --
Dividends reinvested 358,677 93,596 496 --
Shares redeemed (70,356,174) (87,743,989) (16,399) --
------------- ------------- ------------- -------------
Net increase (decrease) $ 1,981,534 $ (7,137,648) $ 165,914 $ --
============= ============= ============= =============
</Table>
<Table>
<Caption>
CLASS R SHARES CLASS S SHARES
------------------------------ ------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2003 2002 2003 2002
------------- ------------- ------------- -------------
GROWTH (NUMBER OF SHARES)
Shares sold 2,152,470 4,049,562 32,996 6,802
Shares redeemed (3,481,590) (9,317,320) (7,885) (122)
------------- ------------- ------------- -------------
Net increase (decrease) in shares outstanding (1,329,120) (5,267,758) 25,111 6,680
============= ============= ============= =============
GROWTH ($)
Shares sold $ 12,336,815 $ 35,440,835 $ 253,457 $ 51,572
Shares redeemed (22,951,012) (74,578,416) (58,277) (912)
------------- ------------- ------------- -------------
Net increase (decrease) $ (10,614,197) $ (39,137,581) $ 195,180 $ 50,660
============= ============= ============= =============
</Table>
46
<Page>
NOTES TO FINANCIAL STATEMENTS as of December 31, 2003 (Continued)
NOTE 9 -- CAPITAL SHARES TRANSACTIONS (CONTINUED)
<Table>
<Caption>
CLASS R SHARES CLASS S SHARES
------------------------------ ------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2003 2002 2003 2002
------------- ------------- ------------- -------------
SMALL COMPANY (NUMBER OF SHARES)
Shares sold 10,395,221 11,534,225 40,070 16,344
Dividends reinvested 63,065 105,298 48 40
Shares redeemed (6,562,287) (9,435,640) (6,503) (2,625)
------------- ------------- ------------- -------------
Net increase in shares outstanding 3,895,999 2,203,883 33,615 13,759
============= ============= ============= =============
SMALL COMPANY ($)
Shares sold $ 155,510,623 $ 175,512,145 $ 616,993 $ 250,476
Dividends reinvested 922,009 1,576,315 698 603
Shares redeemed (94,475,400) (135,484,865) (103,573) (37,371)
------------- ------------- ------------- -------------
Net increase $ 61,957,232 $ 41,603,595 $ 514,118 $ 213,708
============= ============= ============= =============
</Table>
<Table>
<Caption>
CLASS R SHARES CLASS S SHARES
------------------------------ ------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2003 2002 2003 2002
------------- ------------- ------------- -------------
TECHNOLOGY (NUMBER OF SHARES)
Shares sold 22,057,248 18,405,609 -- --
Shares redeemed (13,940,003) (15,147,805) (2,551) --
------------- ------------- ------------- -------------
Net increase (decrease) in shares outstanding 8,117,245 3,257,804 (2,551) --
============= ============= ============= =============
TECHNOLOGY ($)
Shares sold $ 71,880,902 $ 66,979,389 $ -- $ --
Shares redeemed (43,644,308) (52,304,809) (9,376) --
------------- ------------- ------------- -------------
Net increase (decrease) $ 28,236,594 $ 14,674,580 $ (9,376) $ --
============= ============= ============= =============
</Table>
<Table>
<Caption>
CLASS R SHARES CLASS S SHARES
------------------------------ ------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2003 2002 2003 2002
------------- ------------- ------------- -------------
VALUE OPPORTUNITY (NUMBER OF SHARES)
Shares sold 2,108,112 7,209,302 92,628 104,635
Dividends reinvested 164,266 82,208 901 300
Shares redeemed (2,598,835) (2,198,402) (16,336) (16,084)
------------- ------------- ------------- -------------
Net increase (decrease) in shares outstanding (326,457) 5,093,108 77,193 88,851
============= ============= ============= =============
VALUE OPPORTUNITY ($)
Shares sold $ 20,200,109 $ 85,145,155 $ 998,638 $ 1,247,625
Dividends reinvested 1,764,212 951,142 9,646 3,459
Shares redeemed (25,416,002) (24,195,900) (171,629) (168,604)
------------- ------------- ------------- -------------
Net increase (decrease) $ (3,451,681) $ 61,900,397 $ 836,655 $ 1,082,480
============= ============= ============= =============
</Table>
<Table>
<Caption>
CLASS R SHARES CLASS S SHARES
---------------------------------- ---------------
YEAR YEAR PERIOD
ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
2003 2002 2003(1)
--------------- --------------- ---------------
BALANCED (NUMBER OF SHARES)
Shares sold 3,154,493 1,996,574 101,813
Dividends reinvested 2,206,304 1,341,931 25
Shares redeemed (9,380,661) (20,950,203) (3,480)
--------------- --------------- ---------------
Net increase (decrease) in shares outstanding (4,019,864) (17,611,698) 98,358
=============== =============== ===============
BALANCED ($)
Shares sold $ 37,356,123 $ 23,017,801 $ 1,194,460
Dividends reinvested 25,549,004 14,989,364 288
Shares redeemed (106,290,993) (230,189,224) (42,017)
--------------- --------------- ---------------
Net increase (decrease) $ (43,385,866) $ (192,182,059) $ 1,152,731
=============== =============== ===============
</Table>
- ----------
(1) Class S commenced operations on May 29, 2003.
47
<Page>
NOTES TO FINANCIAL STATEMENTS as of December 31, 2003 (Continued)
NOTE 9 -- CAPITAL SHARES TRANSACTIONS (CONTINUED)
<Table>
<Caption>
CLASS R SHARES CLASS S SHARES
---------------------------------- ---------------
YEAR YEAR PERIOD
ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
2003 2002 2003(1)
--------------- --------------- ---------------
GROWTH AND INCOME (NUMBER OF SHARES)
Shares sold 801,513 1,580,665 98,693
Dividends reinvested -- 2,604,961 --
Shares redeemed (36,272,651) (49,721,251) (4,334)
--------------- --------------- ---------------
Net increase (decrease) in shares outstanding (35,471,138) (45,535,625) 94,359
=============== =============== ===============
GROWTH AND INCOME ($)
Shares sold $ 12,502,845 $ 27,763,650 $ 1,605,943
Dividends reinvested -- 38,475,273 --
Shares redeemed (559,904,868) (828,611,395) (70,873)
--------------- --------------- ---------------
Net increase (decrease) $ (547,402,023) $ (762,372,472) $ 1,535,070
=============== =============== ===============
</Table>
<Table>
<Caption>
CLASS R SHARES CLASS S SHARES
------------------------------ ------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2003 2002 2003 2002(2)
------------- ------------- ------------- -------------
BOND (NUMBER OF SHARES)
Shares sold 8,501,280 15,194,847 6,385,067 4,594,043
Dividends reinvested 1,474,950 3,110,914 93,017 103,425
Shares redeemed (19,495,518) (8,233,251) (5,092,213) (1,031,773)
------------- ------------- ------------- -------------
Net increase (decrease) in shares outstanding (9,519,288) 10,072,510 1,385,871 3,665,695
============= ============= ============= =============
BOND ($)
Shares sold $ 103,976,909 $ 203,392,793 $ 80,800,150 $ 62,106,540
Dividends reinvested 20,649,302 41,759,091 1,301,393 1,390,528
Shares redeemed (256,344,288) (108,669,400) (62,882,702) (13,839,450)
------------- ------------- ------------- -------------
Net increase (decrease) $(131,718,077) $ 136,482,484 $ 19,218,841 $ 49,657,618
============= ============= ============= =============
</Table>
<Table>
<Caption>
CLASS R SHARES CLASS R SHARES
--------------- ---------------
YEAR YEAR
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2003 2002
--------------- ---------------
MONEY MARKET (NUMBER OF SHARES)
Shares sold 168,980,560 212,328,316
Dividends reinvested 1,928,116 4,467,825
Shares redeemed (194,376,129) (211,631,167)
--------------- ---------------
Net increase (decrease) in shares outstanding (23,467,453) 5,164,974
=============== ===============
MONEY MARKET ($)
Shares sold $ 1,899,695,014 $ 2,748,252,013
Dividends reinvested 24,741,578 57,317,722
Shares redeemed (2,226,653,637) (2,739,754,578)
--------------- ---------------
Net increase (decrease) $ (302,217,045) $ 65,815,157
=============== ===============
</Table>
- ----------
(1) Class S commenced operations on June 11, 2003.
(2) Class S commenced operations of May 3, 2002.
48
<Page>
NOTES TO FINANCIAL STATEMENTS as of December 31, 2003 (Continued)
NOTE 10 -- ILLIQUID SECURITIES
Pursuant to guidelines adopted by the Portfolios' Board, the following
securities have been deemed to be illiquid.
Each Portfolio currently limits investment in illiquid securities to 15% (10%
for Money Market) of the Portfolios' net assets, at market value, at time of
purchase.
<Table>
<Caption>
INITIAL PERCENT
PRINCIPAL ACQUISITION OF NET
PORTFOLIO SECURITY AMOUNT DATE COST VALUE ASSETS
- --------- --------------------------------------------- ------------ ----------- ------------ ------------ -------
Money Money Market Trust, 1.250%, due 02/19/04 $ 18,300,000 02/19/03 $ 18,298,772 $ 18,300,000 1.5%
Market Money Market Trust, LLY, 1.220%, due 12/03/04 13,500,000 06/09/02 13,500,000 13,500,000 1.1%
Money Market Trust, Series A, 1.313%, due
01/07/05 31,400,000 05/15/03 31,400,000 31,400,000 2.5%
New Castle CDO I Ltd., 1.171%, due 02/24/04 13,900,000 10/23/03 13,900,000 13,900,000 1.1%
------------ ------------ -------
$ 77,098,772 $ 77,100,000 6.2%
============ ============ =======
</Table>
NOTE 11 -- SECURITIES LENDING
Under an agreement with Bank of New York ("BNY"), the Portfolios 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 Cash
collateral for securities loaned. Generally, in the event of counterparty
default, the Portfolios 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 Portfolios in the event the
Portfolios are delayed or prevented from exercising their right to dispose of
the collateral. The Portfolios bear the risk of loss with respect to the
investment of collateral. Engaging in securities lending could have a leveraging
effect, which may intensify the credit, market and other risks associated with
investing in a Portfolio. At December 31, 2003, the Portfolios had securities on
loan with the following market values:
<Table>
<Caption>
VALUE OF VALUE OF
SECURITIES LOANED COLLATERAL
----------------- -------------
Growth $ 43,310,084 $ 44,574,839
Small Company 87,686,096 91,692,274
Technology 17,805,606 18,359,779
Value Opportunity 5,701,200 5,884,027
Balanced 334,996,396 344,944,815
Growth and Income 962,139,005 994,326,273
Bond 222,084,541 227,355,932
Money Market 41,775,056 42,605,175
</Table>
NOTE 12 -- FEDERAL INCOME TAXES
The amount of distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations, which
may differ from accounting principles generally accepted in the United States of
America for investment companies. These book/tax differences may be either
temporary or permanent. Permanent differences are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences are not reclassified. Key differences include the treatment of
short-term capital gains, foreign currency transactions, and wash sale
deferrals. Distributions in excess of net investment income and/or net realized
capital gains for tax purposes are reported as distributions of paid-in capital.
The following permanent tax differences have been reclassified as of December
31, 2003:
<Table>
<Caption>
UNDISTRIBUTED ACCUMULATED
NET INVESTMENT NET REALIZED
PAID-IN INCOME ON GAINS
CAPITAL INVESTMENTS (LOSSES)
--------- -------------- ------------
International $ -- $ 78,222 $ (78,222)
Small Company (324,559) (198,952) 523,511
Technology (570,560) 570,560 --
Balanced -- 3,913,856 (3,913,856)
Growth and Income (153,095) 9,916 143,179
Bond -- 18,768,777 (18,768,777)
</Table>
49
<Page>
NOTES TO FINANCIAL STATEMENTS as of December 31, 2003 (Continued)
NOTE 12 -- FEDERAL INCOME TAXES (CONTINUED)
The tax composition of dividends and distributions to shareholders was as
follows:
<Table>
<Caption>
YEAR ENDED DECEMBER 31, 2003 YEAR ENDED DECEMBER 31, 2002
---------------------------- -----------------------------
ORDINARY INCOME ORDINARY INCOME
--------------- ---------------
International $ 359,173 $ 93,596
Small Company 922,707 1,576,918
Value Opportunity 1,773,858 954,601
Balanced 25,549,292 14,989,364
Growth and Income --- 38,495,841
Bond 21,962,645 43,174,280
Money Market 24,741,578 57,317,722
</Table>
The tax-basis components of distributable earnings and the expiration dates of
the capital loss carryforwards which may be used to offset future realized
capital gains for federal income tax purposes as of December 31, 2003 are as
follows:
<Table>
<Caption>
UNDISTRIBUTED UNREALIZED POST-OCTOBER CAPITAL
UNDISTRIBUTED LONG-TERM APPRECIATION/ CAPITAL LOSS EXPIRATION
ORDINARY INCOME CAPITAL GAINS (DEPRECIATION) LOSS CARRYFORWARDS DATES
--------------- ------------- -------------- ------------ -------------- ---------------
International $ 545,405 $ -- $ 6,033,217 $ -- $ (31,082,627) 2009-2010
Growth 265,408 -- 23,195,510 -- (213,794,639) 2009-2010
Small Company 1,348,855 -- 80,538,898 -- (45,095,976) 2010
Technology --- -- 16,945,141 -- (62,043,862) 2008-2011
Value Opportunity 2,068,557 -- 4,530,305 -- (40,071,141) 2010
Balanced 28,837,555 -- 88,019,444 -- (179,731,625) 2010
Growth and Income 33,190,956 -- 557,309,702 -- (3,066,957,003) 2009-2011
Bond 83,876,309 932,079 20,650,719 (91,082) -- 2012
Money Market 12,927,121 -- 241,654 -- (4,467,999) 2008-2009; 2011
</Table>
NOTE 13 -- OTHER INFORMATION (UNAUDITED)
As with many financial services companies, ING Investments and affiliates of ING
Investments (collectively, "ING") have received requests for information from
various governmental and self-regulatory agencies in connection with
investigations related to trading in investment company shares. In each case,
full cooperation and responses are being provided. ING is also completing an
internal review of investment company share trading as well as a review of their
policies and procedures in this area. ING will reimburse any ING Portfolio
affected by inappropriate late trading or market timing for any improper profits
that accrued to any person who engaged in improper frequent or late trading for
which ING is responsible.
NOTE 14 -- SUBSEQUENT EVENTS
On December 17, 2003, the Board approved a special meeting of shareholders to be
held during the first quarter of 2004 to approve a change in sub-adviser of the
Technology Portfolio from AIC Asset Management, LLC to BlackRock Advisors, Inc.
("BlackRock"). Effective January 1, 2004, BlackRock began acting as sub-adviser
to the Technology Portfolio under an interim sub-advisory agreement. In
connection with the change in sub-adviser, the Board has also approved changes
to the name and nonfundamental investment strategy and policies of the
Technology Portfolio. The Board has approved the following changes to the
Technology Portfolio: (1) a name change to ING Global Science and Technology
Portfolio, (2) strategy and policy changes in which the Portfolio will become a
global fund investing 80% of its assets in common stocks and securities
convertible into common stock of companies in the science and technology
sectors.
Effective December 29, 2003, the Board approved the following changes to the
Value Opportunity Portfolio: (1) a change in the portfolio manager to a team led
by William F. Coughlin; (2) a change in investment strategy to align the
strategy of the Value Opportunity Portfolio with the new investment team's
investment style; and (3) a change in the primary and secondary indices to where
the Value Opportunity Portfolio's performance is benchmarked to those that are
more representative of the new investment strategy. The new indices will run
side-by-side with the current S&P 500 Index for a 12-month period, after which
the S&P 500 Index will be dropped.
On December 17, 2003, the Board approved a special meeting of shareholders to be
held during the first quarter of 2004 to approve a change in sub-adviser of the
Growth and Income Portfolio from ING Aeltus to Wellington Management Company,
LLP.
DIVIDENDS. Subsequent to December 31, 2003, Money Market Portfolio declared
dividends of:
<Table>
<Caption>
PER SHARE PAYABLE RECORD
TYPE AMOUNT DATE DATE
---- ----------- ---------------- ----------------
Class R NII $ 0.135808 January 29, 2004 January 26, 2004
</Table>
50
<Page>
ING
VP
International
Equity Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003
<Table>
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------------------------------
COMMON STOCK: 94.0%
AUSTRALIA: 4.9%
41,400 AMP Ltd $ 156,276
35,500 BHP Billiton Ltd. 323,131
9,700 Foodland Associated Ltd. 142,243
77,100 Macquarie Infrastructure Group 198,261
52,400 Mayne Group Ltd. 129,137
14,700 National Australia Bank Ltd. 330,737
36,600 Rinker Group Ltd 181,032
36,700 Seven Network Ltd. 170,116
12,800 St. George Bank Ltd. 188,425
19,700 TABCorp. Holdings Ltd. 166,843
--------------
1,986,201
--------------
BELGIUM: 0.9%
18,000 Fortis 363,106
--------------
363,106
--------------
FINLAND: 1.6%
26,100 Nokia OYJ ADR 443,700
16,400 Stora Enso OYJ 222,438
--------------
666,138
--------------
FRANCE: 10.9%
4,500 Accor 203,970
900 Air Liquide 159,040
10,600 Alcatel SA 136,716
39,500 @ Alstom 62,279
4,500 Aventis SA 298,330
10,300 AXA 221,383
8,300 BNP Paribas 524,463
5,300 Bouygues 185,716
4,400 @ Cap Gemini SA 196,708
11,100 Credit Agricole SA 265,138
1,000 Groupe Danone 163,219
3,200 Lafarge SA 286,122
7,500 Peugeot SA 382,560
900 Pinault-Printemps-Redoute 87,241
3,000 Schneider Electric SA 196,668
10,500 Suez SA 211,871
3,648 Total SA 676,841
7,500 @ Vivendi Universal SA 182,524
--------------
4,440,789
--------------
GERMANY: 6.7%
7,900 Bayer AG 233,801
10,700 Commerzbank AG 208,790
8,300 DaimlerChrysler AG 385,785
3,000 Deutsche Boerse AG 164,762
21,800 @ Deutsche Telekom AG 396,987
5,700 E.ON AG 373,644
4,400 Metro AG 194,989
5,200 @ MLP AG 102,886
1,700 SAP AG 282,855
5,000 Siemens AG 400,831
--------------
2,745,330
--------------
GREECE: 0.5%
7,200 Alpha Bank A.E. 218,101
--------------
218,101
--------------
HONG KONG: 1.8%
35,000 Cheung Kong Holdings Ltd. $ 278,736
488,000 CITIC International Financial
Holdings Ltd. 264,432
112,000 Li & Fung Ltd. 192,239
--------------
735,407
--------------
ITALY: 2.6%
10,100 Assicurazioni Generali S.p.A. 268,172
26,400 ENI-Ente Nazionale
Idrocarburi S.p.A. 500,308
53,300 Unicredito Italiano S.p.A. 288,141
--------------
1,056,621
--------------
JAPAN: 24.4%
19,000 Ajinomoto Co., Inc. 218,717
5,700 @ Bandai Co. Ltd. 144,296
13,000 Bridgestone Corp. 175,895
4,000 Canon, Inc. 190,217
8,200 Chubu Electric Power Co., Inc. 171,009
17,000 Dai Nippon Printing Co. Ltd. 240,103
8,000 Daikin Industries Ltd. 186,006
35,000 Hitachi Ltd. 209,629
7,000 Ito-Yokado Co. Ltd. 222,058
8,400 JFE Holdings, Inc. 230,189
73,000 Kajima Corp. 238,474
1,100 Keyence Corp. 232,364
17,000 Matsushita Electric
Industrial Co. Ltd. 236,570
26 Millea Holdings, Inc. 345,005
48 Mitsubishi Tokyo Financial
Group, Inc. 374,267
45,000 Mitsui & Co. Ltd. 364,613
97 @ Mizuho Financial Group, Inc. 298,711
1,900 Nidec Corp. 181,956
48,000 Nippon Yusen Kabushiki Kaisha 218,216
39,100 Nissan Motor Co. Ltd. 440,966
3,500 Nitto Denko Corp. 187,630
150 NTT Docomo, Inc. 343,006
58,000 OJI Paper Co. Ltd. 375,250
4,000 Olympus Corp. 87,291
59,000 Osaka Gas Co. Ltd. 159,653
13,000 Sanken Electric Co Ltd 182,399
22,000 Sharp Corp. 348,248
4,700 Shin-Etsu Chemical Co. Ltd. 192,958
11,000 Shionogi & Co. Ltd. 205,395
2,500 SMC Corp. 311,461
7,700 Sony Corp. 266,856
47 @ Sumitomo Mitsui Financial
Group, Inc. 254,092
8,900 Suzuki Motor Corp. 132,091
78,000 The Bank of Fukuoka Ltd. 328,419
34,000 Toshiba Corp. 129,763
16,000 Tostem Inax Holding Corp. 309,274
17,800 Toyota Motor Corp. 608,825
49 @ UFJ Holdings Inc. 239,085
8 @ Yahoo Japan Corp. 107,985
6,300 Yamanouchi Pharmaceutical
Co. Ltd. 196,481
--------------
9,885,423
--------------
LUXEMBOURG: 0.6%
14,100 Arcelor 246,714
--------------
246,714
--------------
</Table>
See Accompanying Notes to Financial Statements
51
<Page>
ING
VP
International
Equity Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003 (Continued)
<Table>
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------------------------------
NETHERLANDS: 5.8%
21,300 Aegon NV $ 317,478
7,200 @ ASML Holding NV 144,133
18,200 @ Koninklijke Ahold NV 138,658
9,200 Koninklijke Philips Electronics NV 269,145
20,800 Royal Dutch Petroleum Co. 1,089,221
6,200 Unilever NV ADR 405,487
--------------
2,364,122
--------------
PORTUGAL: 1.3%
52,000 Portugal Telecom SGPS SA 523,411
--------------
523,411
--------------
SINGAPORE: 0.4%
19,000 DBS Group Holdings Ltd. 164,564
--------------
164,564
--------------
SPAIN: 1.3%
26,100 Banco Bilbao Vizcaya
Argentaria SA 360,488
2,800 Banco Popular Espanol 167,377
--------------
527,865
--------------
SWITZERLAND: 8.8%
30,770 @ ABB Ltd. 155,996
3,250 Adecco SA 209,868
10,400 Credit Suisse Group 379,444
1,470 Nestle SA 367,103
12,680 Novartis AG 580,379
5,680 Roche Holding AG 574,196
3,500 Stmicroelectronics NV 95,041
4,200 Swiss Reinsurance 284,491
8,300 UBS AG 568,065
2,582 Zurich Financial Services AG 373,241
--------------
3,587,824
--------------
UNITED KINGDOM: 21.5%
26,200 Amvescap PLC 191,506
10,600 Anglo American PLC 230,450
8,700 Astrazeneca PLC 418,028
158,433 BP PLC 1,288,281
48,900 Centrica PLC 184,707
99,600 @ Colt Telecom Group PLC 169,133
23,600 Compass Group PLC 160,932
23,700 Diageo PLC 311,700
16,500 GlaxoSmithKline PLC ADR 769,230
32,900 HBOS PLC 427,560
41,400 @ HHG PLC ADR 29,945
65,500 HSBC Holdings PLC 1,031,419
351,500 @ Invensys PLC 114,836
22,700 LogicaCMG PLC 106,324
52,262 National Grid Transco PLC 376,073
36,500 Prudential PLC 309,224
26,200 Reed Elsevier PLC 219,012
19,403 Royal Bank of Scotland Group PLC 572,870
49,800 Sage Group PLC 157,231
74,800 @ Tesco PLC 345,137
445,941 Vodafone Group PLC 1,108,027
24,700 WPP Group PLC 242,386
--------------
8,764,011
--------------
Total Common Stock
(Cost $31,697,793) 38,275,627
--------------
RIGHTS: 0.0%
FRANCE: 0.0%
39,500 @ Alstom $ 1,495
--------------
1,495
--------------
Total Rights
(Cost $16,522) 1,495
--------------
WARRANTS: 0.0%
FRANCE: 0.0%
39,500 @ Alstom, Expires 01/09/04 498
--------------
498
--------------
Total Warrants (Cost $25,816) 498
--------------
Total Long-Term Investments
(Cost $31,740,131) 38,277,620
--------------
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 5.7%
REPURCHASE AGREEMENT: 5.7%
$ 2,324,000 Morgan Stanley Repurchase
Agreement dated 12/31/03, 0.970%, due 01/02/04, $2,324,125
to be received upon repurchase (Collateralized by $2,370,000
Federal Home Loan Mortgage Corporation, 0.000%, Market Value
$2,371,550, due 09/09/05) 2,324,000
--------------
Total Short-term Investments
(Cost $2,324,000) 2,324,000
--------------
TOTAL INVESTMENTS IN
SECURITIES (COST
$34,064,131)* 99.7% $ 40,601,620
OTHER ASSETS AND
LIABILITIES-NET 0.3 132,089
----- --------------
NET ASSETS 100.0% $ 40,733,709
===== ==============
</Table>
@ Non-income producing security
ADR American Depositary Receipt
* Cost for federal income tax purposes is $34,574,022. Net
unrealized appreciation consists of:
<Table>
Gross Unrealized Appreciation $ 6,456,362
Gross Unrealized Depreciation (428,764)
--------------
Net Unrealized Appreciation $ 6,027,598
==============
</Table>
See Accompanying Notes to Financial Statements
52
<Page>
ING
VP
International
Equity Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003 (Continued)
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Advertising 0.6%
Auto Manufacturers 4.8
Auto Parts and Equipment 0.4
Banks 19.1
Beverages 0.8
Building Materials 2.4
Chemicals 1.9
Commercial Services 1.9
Computers 0.8
Distribution/Wholesale 1.4
Diversified Financial Services 1.2
Electric 2.3
Electrical Components and Equipment 1.7
Electronics 1.2
Engineering and Construction 1.4
Entertainment 0.4
Food 4.9
Food Service 0.4
Forest Products and Paper 1.4
Gas 0.8
Hand/Machine Tools 1.7
Home Furnishings 1.2
Insurance 5.6
Internet 0.3
Iron/Steel 1.2
Lodging 0.5
Machinery-Diversified 0.2
Media 1.4
Mining 1.4
Miscellaneous Manufacturing 1.5
Office/Business Equipment 0.5
Oil and Gas 8.6
Pharmaceuticals 7.5
Real Estate 0.7
Retail 0.8
Semiconductors 1.0
Software 1.1
Telecommunications 7.6
Toys/Games/Hobbies 0.4
Transportation 0.5
Water 0.5
Repurchase Agreement 5.7
Other Assets and Liabilities, Net 0.3
-----
NET ASSETS 100.0%
=====
</Table>
See Accompanying Notes to Financial Statements
53
<Page>
ING
VP
Growth
Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003
<Table>
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------------------------------
COMMON STOCK: 98.7%
AUTO MANUFACTURERS: 1.6%
42,900 Paccar, Inc. $ 3,651,648
--------------
3,651,648
--------------
BEVERAGES: 1.4%
58,100 Anheuser-Busch Cos., Inc. 3,060,708
--------------
` 3,060,708
--------------
BIOTECHNOLOGY: 2.8%
53,272 @ Amgen, Inc. 3,292,210
50,800 @,L Chiron Corp. 2,895,092
--------------
6,187,302
--------------
COMMERCIAL SERVICES: 1.1%
96,000 @,@@ Accenture Ltd. 2,526,720
--------------
2,526,720
--------------
COMPUTERS: 4.4%
148,800 @ Dell, Inc. 5,053,248
27,300 Diebold, Inc. 1,470,651
176,800 @ EMC Corp. 2,284,256
38,800 @ Storage Technology Corp. 999,100
--------------
9,807,255
--------------
COSMETICS/PERSONAL CARE: 2.5%
66,800 Estee Lauder Cos., Inc. 2,622,568
28,900 Procter & Gamble Co. 2,886,532
--------------
5,509,100
--------------
DIVERSIFIED FINANCIAL SERVICES: 7.2%
31,900 American Express Co. 1,538,537
10,700 Bear Stearns Cos., Inc. 855,465
52,600 L Capital One Financial Corp. 3,223,854
41,100 Citigroup, Inc. 1,994,994
17,600 L Goldman Sachs Group, Inc. 1,737,648
65,900 L Merrill Lynch & Co., Inc. 3,865,035
50,700 Morgan Stanley 2,934,009
--------------
16,149,542
--------------
ENGINEERING & CONSTRUCTION: 0.8%
37,000 @ Jacobs Engineering Group, Inc. 1,776,370
--------------
1,776,370
--------------
ENTERTAINMENT: 1.6%
71,400 GTECH Holdings Corp. 3,533,586
--------------
3,533,586
--------------
HEALTHCARE-PRODUCTS: 5.5%
37,900 @@ Alcon, Inc. 2,294,466
63,400 @ Boston Scientific Corp. 2,330,584
46,400 @ Guidant Corp. 2,793,280
41,900 @ St. Jude Medical, Inc. 2,570,565
35,800 @,L Varian Medical Systems, Inc. 2,473,780
--------------
12,462,675
--------------
HEALTHCARE-SERVICES: 1.0%
31,100 @ DaVita Inc 1,212,900
16,200 @ Pacificare Health Systems 1,095,120
--------------
2,308,020
--------------
HOME FURNISHINGS: 0.6%
16,700 Harman Intl. Industries, Inc. 1,235,466
--------------
1,235,466
--------------
INTERNET: 2.7%
55,600 @,L eBay, Inc. $ 3,591,204
54,800 @,L Yahoo!, Inc. 2,475,316
--------------
6,066,520
--------------
IRON/STEEL: 0.9%
52,700 @,L International Steel Group 2,052,665
--------------
2,052,665
--------------
MACHINERY-DIVERSIFIED: 1.2%
43,000 Deere & Co. 2,797,150
--------------
2,797,150
--------------
MEDIA: 4.4%
50,600 Clear Channel
Communications, Inc. 2,369,598
132,379 @ Hughes Electronics Corp. 2,190,872
223,900 Walt Disney Co. 5,223,587
--------------
9,784,057
--------------
MINING: 1.5%
30,800 Alcoa, Inc. 1,170,400
26,200 L Freeport-McMoRan
Copper & Gold, Inc. 1,103,806
15,800 @ Phelps Dodge Corp. 1,202,222
--------------
3,476,428
--------------
MISCELLANEOUS MANUFACTURING: 9.9%
27,300 @ 3M Co. 2,321,319
28,197 L Danaher Corp. 2,587,075
39,100 Eaton Corp. 4,222,018
423,200 General Electric Co. 13,110,736
--------------
22,241,148
--------------
OIL AND GAS: 2.3%
29,000 Devon Energy Corp. 1,660,540
55,000 @,@@,L Nabors Industries Ltd. 2,282,500
25,000 L Valero Energy Corp. 1,158,500
--------------
5,101,540
--------------
OIL AND GAS SERVICES: 2.5%
212,200 Halliburton Co. 5,517,200
--------------
5,517,200
--------------
PHARMACEUTICALS: 12.3%
124,300 @,L Caremark Rx, Inc. 3,148,519
155,300 @ Endo Pharmaceuticals
Holdings, Inc. 2,991,078
54,800 @,L Forest Laboratories, Inc. 3,386,640
82,900 @,L Gilead Sciences, Inc. 4,819,806
380,980 S Pfizer, Inc. 13,460,022
--------------
27,806,065
--------------
RETAIL: 10.2%
47,900 @ Bed Bath & Beyond, Inc. 2,076,465
64,600 @,L Chico's FAS, Inc. 2,386,970
95,000 Federated Department Stores 4,477,350
140,200 Home Depot, Inc. 4,975,698
64,200 McDonald's Corp. 1,594,086
139,700 L Wal-Mart Stores, Inc. 7,411,085
--------------
22,921,654
--------------
</Table>
See Accompanying Notes to Financial Statements
54
<Page>
ING
VP
Growth
Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003 (Continued)
<Table>
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------------------------------
SEMICONDUCTORS: 10.4%
178,600 @ Applied Materials, Inc. $ 4,009,570
344,900 Intel Corp. 11,105,780
85,400 Linear Technology Corp. 3,592,778
26,200 @,L Qlogic Corp. 1,351,920
115,100 Texas Instruments, Inc. 3,381,638
--------------
23,441,686
--------------
SOFTWARE: 5.6%
379,600 Microsoft Corp. 10,454,184
59,600 @,L Veritas Software Corp. 2,214,736
--------------
12,668,920
--------------
TELECOMMUNICATIONS: 4.3%
399,200 @ Cisco Systems, Inc. 9,696,568
--------------
9,696,568
--------------
Total Common Stock
(Cost $192,800,546) 221,779,993
--------------
PREFERRED STOCK: 0.0%
MEDIA: 0.0%
4 News Corp. Ltd. 125
--------------
125
--------------
Total Preferred Stock
(Cost $120) 125
--------------
Total-Long Term Investments
(Cost $192,800,666) 221,780,118
--------------
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 1.8%
REPURCHASE AGREEMENT: 1.8%
$ 3,949,000 Goldman Sachs Repurchase Agreement
dated 12/31/03, 0.990%, due 01/02/04,
$3,949,217 to be received upon
repurchase (Collateralized by various
U.S. Government Agency
Obligations, 0.000%-7.125%,
Market Value $4,031,904
due 02/13/04-01/26/16) $ 3,949,000
--------------
Total Short-term Investments
(Cost $3,949,000) 3,949,000
--------------
TOTAL INVESTMENTS IN
SECURITIES (COST
$196,749,666)* 100.5% $ 225,729,118
OTHER ASSETS AND
LIABILITIES-NET (0.5) (1,106,774)
----- --------------
NET ASSETS 100.0% $ 224,622,344
===== ==============
</Table>
@ Non-income producing security
@@ Foreign Issuer
L Loaned security, a portion or all of the security is on loan at December
31, 2003.
S Segregated securities for futures contracts held at December 31, 2003.
* Cost for federal income tax purposes is $202,533,608. Net unrealized
appreciation consists of:
<Table>
Gross Unrealized Appreciation $ 24,372,471
Gross Unrealized Depreciation (1,176,961)
--------------
Net Unrealized Appreciation $ 23,195,510
==============
</Table>
Information concerning long open futures contracts at December 31, 2003 is shown
below:
<Table>
<Caption>
NOTIONAL
NO. OF MARKET EXPIRATION UNREALIZED
CONTRACTS VALUE DATE GAIN
---------------------------------------------------
LONG CONTRACT
S&P 500 Index 8 $ 2,221,200 Mar-04 $ 48,288
------------ ---------
$ 2,221,200 $ 48,288
============ =========
</Table>
See Accompanying Notes to Financial Statements
55
<Page>
ING
VP
Small
Company Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003
<Table>
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------------------------------
COMMON STOCK: 95.1%
AEROSPACE/DEFENSE: 0.7%
95,000 @ United Defense Industries, Inc. $ 3,028,600
--------------
3,028,600
--------------
AGRICULTURE: 1.0%
192,000 L Delta & Pine Land Co. 4,876,800
--------------
4,876,800
--------------
AIRLINES: 1.4%
180,400 @,L AMR Corp. 2,336,180
254,250 @,L Continental Airlines, Inc. 4,136,648
--------------
6,472,828
--------------
APPAREL: 0.6%
160,000 @,L Quiksilver, Inc. 2,836,800
--------------
2,836,800
--------------
BANKS: 2.9%
60,000 Chittenden Corp. 2,018,400
139,900 Greater Bay BanCorp. 3,984,352
9,027 IBERIABANK Corp 532,593
93,000 Local Financial Corp. 1,938,120
68,700 L Provident Bankshares Corp. 2,022,528
75,950 @@ R&G Financial Corp. 3,022,810
--------------
13,518,803
--------------
BIOTECHNOLOGY: 1.2%
31,500 @ Martek Biosciences Corp. 2,046,555
64,000 @,L Myogen Inc 915,200
107,500 @ Telik, Inc. 2,473,575
--------------
5,435,330
--------------
CHEMICALS: 1.2%
116,600 @,L Cabot Microelectronics Corp. 5,713,400
--------------
5,713,400
--------------
COMMERCIAL SERVICES: 2.1%
32,000 @ Advisory Board Co. 1,117,120
82,400 @ Corinthian Colleges, Inc. 4,578,144
159,200 Gevity HR Inc 3,540,608
24,100 @ LECG Corp 551,649
--------------
9,787,521
--------------
COMPUTERS: 7.0%
107,300 @,L CACI Intl., Inc. 5,216,926
159,000 @ Electronics For Imaging 4,137,180
179,200 @,L Hutchinson Technology, Inc. 5,508,607
128,000 @,L Intergraph Corp. 3,061,760
291,500 @ Lexar Media, Inc. 5,080,845
162,000 @,L Manhattan Associates, Inc. 4,477,680
51,000 @ Merge Technologies Inc 899,640
95,300 MTS Systems Corp 1,832,619
25,000 @ SI International Inc 488,750
63,450 Talx Corp. 1,461,254
--------------
32,165,261
--------------
DIVERSIFIED FINANCIAL SERVICES: 2.9%
76,700 @,L Affiliated Managers Group 5,337,553
224,000 @ Investment Technology
Group, Inc. 3,617,600
320,000 @,L Knight Trading Group Inc 4,684,800
--------------
13,639,953
--------------
ELECTRICAL COMPONENTS & EQUIPMENT: 1.4%
87,700 Ametek, Inc. $ 4,232,402
115,600 @ Rayovac Corp. 2,421,820
--------------
6,654,222
--------------
ELECTRONICS: 4.8%
38,200 Analogic Corp. 1,566,200
192,000 @ Benchmark Electronics, Inc. 6,683,520
186,100 @ Checkpoint Systems, Inc. 3,519,151
85,450 @ Itron, Inc. 1,568,862
9,500 @,L NVE Corp 487,350
76,150 @ Photon Dynamics, Inc. 3,064,276
10,500 @,L Taser International Inc 864,885
127,400 @ Trimble Navigation Ltd. 4,744,376
--------------
22,498,620
--------------
ENERGY-ALTERNATE SOURCES: 0.9%
224,000 @ Headwaters, Inc. 4,394,880
--------------
4,394,880
--------------
ENGINEERING & CONSTRUCTION: 1.8%
153,600 @@ Chicago Bridge & Iron
Co NV ADR 4,439,040
166,400 @ URS Corp. 4,161,664
--------------
8,600,704
--------------
ENTERTAINMENT: 1.4%
256,050 @ Alliance Gaming Corp. 6,311,633
--------------
6,311,633
--------------
FOOD: 1.1%
159,950 @ Hain Celestial Group, Inc. 3,712,440
116,900 @ Wild Oats Markets Inc 1,511,517
--------------
5,223,957
--------------
FOREST PRODUCTS & PAPER: 1.6%
416,000 @,L Louisiana-Pacific Corp. 7,438,080
--------------
7,438,080
--------------
HEALTHCARE-PRODUCTS: 1.8%
107,400 Cyberonics, Inc. 3,437,874
56,000 Encore Medical Corp 456,400
152,550 @ Wright Medical Group, Inc. 4,643,622
--------------
8,537,896
--------------
HEALTHCARE-SERVICES: 2.8%
134,000 @ Kindred Healthcare Inc 6,965,320
42,200 @ Psychiatric Solutions, Inc. 881,980
312,500 Select Medical Corp. 5,087,500
--------------
12,934,800
--------------
HOME BUILDERS: 1.5%
143,800 Standard-Pacific Corp. 6,981,490
--------------
6,981,490
--------------
HOUSEHOLD PRODUCTS/WARES: 0.5%
88,400 @ Central Garden And Pet Co. 2,477,852
--------------
2,477,852
--------------
INSURANCE: 2.2%
222,900 L Amerus Group Co. 7,794,813
44,800 Landamerica Financial
Group, Inc. 2,341,248
--------------
10,136,061
--------------
</Table>
See Accompanying Notes to Financial Statements
56
<Page>
ING
VP
Small
Company Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003 (Continued)
<Table>
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------------------------------
INTERNET: 2.9%
50,500 @,L Ask Jeeves $ 915,060
128,000 @ Covad Communications
Group Inc 460,800
15,400 @ Equinix Inc 434,280
129,500 @ Lionbridge Technologies 1,244,495
241,550 Netbank, Inc. 3,224,693
125,800 @ Netegrity, Inc. 1,296,998
288,000 @,L Webex Communications, Inc. 5,788,800
--------------
13,365,126
--------------
LEISURE TIME: 0.5%
160,050 @,L K2, Inc. 2,434,361
--------------
2,434,361
--------------
LODGING: 0.1%
70,100 @ Interstate Hotels & Resorts Inc 375,035
--------------
375,035
--------------
MACHINERY-CONSTRUCTION & MINING: 1.2%
193,600 @ Terex Corp. 5,513,728
--------------
5,513,728
--------------
MACHINERY-DIVERSIFIED: 2.1%
96,000 Briggs & Stratton 6,470,400
25,900 L Middleby Corp 1,048,173
139,900 Wabtec Corp 2,383,896
--------------
9,902,469
--------------
MEDIA: 1.8%
256,000 @ Cumulus Media, Inc. 5,632,000
63,150 Liberty Corp. 2,853,749
--------------
8,485,749
--------------
OIL AND GAS: 4.7%
158,900 @ Denbury Resources, Inc. 2,210,299
153,600 @ Newfield Exploration Co. 6,841,343
79,450 @ Nuevo Energy Co. 1,920,307
126,200 Patina Oil & Gas Corp. 6,182,538
195,644 @ Southwestern Energy Co. 4,675,892
--------------
21,830,379
--------------
PHARMACEUTICALS: 7.3%
208,500 @ Alkermes, Inc. 2,814,750
109,700 @,L Amylin Pharmaceuticals, Inc. 2,437,534
111,200 @,@@ Angiotech Pharmaceuticals, Inc. 5,115,199
89,600 L Eon Labs Inc 4,565,120
134,100 @,L Ilex Oncology, Inc. 2,849,625
115,000 @,L Medicines Co. 3,387,900
87,600 @,L MGI Pharma, Inc. 3,604,740
134,400 @,L NPS Pharmaceuticals, Inc. 4,131,456
55,900 @,L OSI Pharmaceuticals Inc 1,800,539
153,600 @ Vicuron Pharmaceuticals Inc 2,864,640
--------------
33,571,503
--------------
REAL ESTATE: 7.1%
111,300 Alexandria Real Estate
Equities, Inc. 6,444,269
47,600 CBL & Associates Properties, Inc. 2,689,400
119,800 Corporate Office Properties
Trust Sbi MD 2,515,800
230,400 @,L Felcor Lodging Trust, Inc. 2,552,832
107,200 Newcastle Investment Corp. 2,905,120
56,300 Pennsylvania Real Estate
Investment Trust $ 2,043,690
242,550 Reckson Associates Realty Corp. 5,893,965
39,800 L Rgency Centers Corp. 1,586,030
95,600 SL Green Realty Corp. 3,924,380
71,550 Washington Real Estate
Investment Trust 2,089,260
--------------
32,644,746
--------------
RETAIL: 4.3%
320,000 Claire's Stores, Inc. 6,028,800
96,000 @,L Electronics Boutique
Holdings Corp. 2,197,440
256,000 @,L Hollywood Entertainment Corp 3,520,000
128,000 @ Men's Wearhouse, Inc. 3,201,280
278,650 @ Movie Gallery, Inc. 5,205,182
--------------
20,152,702
--------------
SAVINGS AND LOANS: 4.3%
146,400 Commercial Federal Corp. 3,910,344
31,300 Connecticut Bancshares, Inc. 1,613,202
222,700 First Niagara Financial Group Inc 3,320,457
38,400 @ Firstfed Financial Corp. 1,670,400
182,300 Staten Island Bancorp, Inc. 4,101,750
75,600 L Waypoint Financial Corp. 1,639,764
86,800 WSFS Financial Corp. 3,892,980
--------------
20,148,897
--------------
SEMICONDUCTORS: 3.7%
224,200 @ Axcelis Technologies, Inc. 2,291,324
380,000 @ Cirrus Logic, Inc. 2,914,600
38,000 @ Nanometrics, Inc. 558,980
176,100 @ Power Integrations, Inc. 5,892,306
115,200 @,L Rudolph Technologies, Inc. 2,827,008
97,200 @ Veeco Instruments, Inc. 2,741,040
--------------
17,225,258
--------------
SOFTWARE: 5.8%
308,150 @ Activision, Inc. 5,608,329
105,500 @ Avid Technology, Inc. 5,064,000
16,700 @ Callidus Software Inc 295,423
113,600 @,L Evolving Systems, Inc. 1,510,880
82,500 @ Progress Software Corp. 1,687,950
102,400 @ Serena Software, Inc. 1,879,040
194,400 @ Sybase, Inc. 4,000,752
116,200 @ Take-Two Interactive
Software, Inc. 3,347,722
203,150 @,L THQ, Inc. 3,435,267
--------------
26,829,363
--------------
TELECOMMUNICATIONS: 4.5%
576,000 @,L Adaptec, Inc. 5,086,080
168,400 @,L Advanced Fibre Communication 3,393,260
52,800 @,L Aspect Communications Corp. 832,128
63,000 @ Interdigital
Communications Corp. 1,300,320
63,700 @,L Intrado, Inc. 1,398,215
63,700 @,L Plantronics, Inc. 2,079,805
435,200 @,L RF Micro Devices, Inc. 4,373,760
145,900 Western Wireless Corp 2,678,724
--------------
21,142,292
--------------
</Table>
See Accompanying Notes to Financial Statements
57
<Page>
ING
VP
Small
Company Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003 (Continued)
<Table>
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------------------------------
TOYS/GAMES/HOBBIES: 0.4%
67,200 @,L Leapfrog Enterprises, Inc. $ 1,782,816
--------------
1,782,816
--------------
TRANSPORTATION: 1.6%
89,600 @ Landstar System, Inc. 3,408,384
96,000 @,L Overnite Corp 2,184,000
98,100 @ Sirva Inc 1,916,874
--------------
7,509,258
--------------
Total Common Stock
(Cost $361,792,464) 442,579,173
--------------
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 4.3%
REPURCHASE AGREEMENT: 4.3%
$ 19,852,000 S Morgan Stanley Repurchase
Agreement dated 12/31/03,
0.970%, due 01/02/04,
$19,853,070 to be received upon
repurchase (Collateralized by
$20,240,000 Federal Home Loan
Mortgage Corporation, 0.000%,
Market Value $20,253,240,
due 09/09/05) 19,852,000
--------------
Total Short-term Investments
(Cost $19,852,000) 19,852,000
--------------
TOTAL INVESTMENTS IN
SECURITIES (COST
$381,644,464)* 99.4% $ 462,431,173
OTHER ASSETS AND
LIABILITIES-NET 0.6 2,637,421
----- --------------
NET ASSETS 100.0% $ 465,068,594
===== ==============
</Table>
@ Non-income producing security
@@ Foreign Issuer
ADR American Depositary Receipt
L Loaned security, a portion or all of the security is on loan at December
31, 2003.
S Segregated securities for futures contracts held at December 31, 2003.
* Cost for federal income tax purposes is $381,892,275. Net unrealized
appreciation consists of:
<Table>
Gross Unrealized Appreciation $ 87,099,748
Gross Unrealized Depreciation (6,560,850)
--------------
Net Unrealized Appreciation $ 80,538,898
==============
</Table>
Information concerning open long futures contracts at December 31, 2003 is shown
below:
<Table>
<Caption>
NOTIONAL
NO. OF MARKET EXPIRATION UNREALIZED
CONTRACTS VALUE DATE GAIN
---------------------------------------------------
LONG CONTRACT
Russell 2000 Index 35 $ 9,751,000 Mar-04 $ 231,327
------------ ----------
$ 9,751,000 $ 231,327
============ ==========
</Table>
See Accompanying Notes to Financial Statements
58
<Page>
ING
VP
Technology
Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003
<Table>
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------------------------------
COMMON STOCK: 97.8%
COMPUTERS: 15.1%
35,650 @,L Affiliated Computer Services, Inc. $ 1,941,499
700 @ Anteon Intl. Corp. 25,235
63,000 @,L Computer Sciences Corp. 2,786,490
99,750 @ Dell, Inc. 3,387,510
180,300 @ EMC Corp. 2,329,476
118,100 Hewlett-Packard Co. 2,712,757
17,400 @ International Business
Machines Corp. 1,612,632
--------------
14,795,599
--------------
DISTRIBUTION/WHOLESALE: 3.1%
52,200 L CDW Corp. 3,015,072
--------------
3,015,072
--------------
ELECTRONICS: 5.9%
247,500 @@,L Flextronics Intl. Ltd. 3,672,900
167,800 @,L Sanmina-SCI Corp. 2,115,958
--------------
5,788,858
--------------
INTERNET: 6.8%
42,800 @,L eBay, Inc. 2,764,452
84,900 @,L Yahoo!, Inc. 3,834,933
--------------
6,599,385
--------------
RETAIL: 3.1%
58,775 Best Buy Co., Inc. 3,070,406
--------------
3,070,406
--------------
SEMICONDUCTORS: 44.2%
143,300 @,L Altera Corp. 3,252,910
94,200 @,L Amkor Technology, Inc. 1,715,382
49,650 @ Analog Devices, Inc. 2,266,523
170,900 @ Applied Materials, Inc. 3,836,705
125,450 Intel Corp. 4,039,490
63,900 @,L Kla-Tencor Corp. 3,749,013
154,250 @ Lam Research Corp. 4,982,274
141,750 @,L Micron Technology, Inc. 1,909,373
88,000 @,L Novellus Systems, Inc. 3,700,400
47,000 @,L Qlogic Corp. 2,425,200
109,200 @@ Stmicroelectronics NV ADR 2,949,492
234,808 @,@@ Taiwan Semiconductor
Manufacturing Co. Ltd. ADR 2,404,434
96,250 Texas Instruments, Inc. 2,827,825
78,700 @,L Xilinx, Inc. 3,048,838
--------------
43,107,859
--------------
SOFTWARE: 14.9%
88,700 L Computer Associates Intl., Inc. 2,425,058
42,000 @ Electronic Arts, Inc. 2,006,760
18,550 First Data Corp. 762,220
51,550 @ Intuit, Inc. 2,727,511
132,000 Microsoft Corp. 3,635,279
229,700 @ Oracle Corp. 3,032,040
--------------
14,588,868
--------------
TELECOMMUNICATIONS: 4.7%
188,600 @ Cisco Systems, Inc. $ 4,581,094
--------------
4,581,094
--------------
Total Common Stock
(Cost $77,922,398) 95,547,141
--------------
TOTAL INVESTMENTS IN
SECURITIES (COST
$77,922,398)* 97.8% $ 95,547,141
OTHER ASSETS AND
LIABILITIES-NET 2.2 2,195,337
----- --------------
NET ASSETS 100.0% $ 97,742,478
===== ==============
</Table>
@ Non-income producing security
@@ Foreign Issuer
ADR American Depositary Receipt
L Loaned security, a portion or all of the security is on loan at December
31, 2003.
* Cost for federal income tax purposes is $78,602,000. Net unrealized
appreciation consists of:
<Table>
Gross Unrealized Appreciation $ 17,588,142
Gross Unrealized Depreciation (643,001)
--------------
Net Unrealized Appreciation $ 16,945,141
==============
</Table>
See Accompanying Notes to Financial Statements
59
<Page>
ING
VP Value
Opportunity
Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003
<Table>
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------------------------------
COMMON STOCK: 94.5%
AEROSPACE/DEFENSE: 3.0%
85,700 General Dynamics Corp. $ 7,746,423
--------------
7,746,423
--------------
AGRICULTURE: 3.0%
142,200 Altria Group, Inc. 7,738,524
--------------
7,738,524
--------------
APPAREL: 1.5%
56,800 Nike, Inc. 3,888,528
--------------
3,888,528
--------------
BANKS: 6.0%
96,100 L Bank of America Corp. 7,729,323
131,200 Wells Fargo & Co. 7,726,368
--------------
15,455,691
--------------
BUILDING MATERIALS: 1.5%
138,500 Masco Corp. 3,796,285
--------------
3,796,285
--------------
CHEMICALS: 4.0%
155,300 Dow Chemical Co. 6,455,821
101,700 Praxair, Inc. 3,884,940
--------------
10,340,761
--------------
COMPUTERS: 2.5%
279,700 Hewlett-Packard Co. 6,424,709
--------------
6,424,709
--------------
COSMETICS/PERSONAL CARE: 2.0%
87,600 Kimberly-Clark Corp. 5,176,284
--------------
5,176,284
--------------
DIVERSIFIED FINANCIAL SERVICES: 14.3%
133,000 Citigroup, Inc. 6,455,820
139,000 Fannie Mae 10,433,340
89,500 Freddie Mac 5,219,640
153,900 Merrill Lynch & Co., Inc. 9,026,235
109,900 Morgan Stanley 6,359,913
--------------
37,494,948
--------------
ELECTRICAL COMPONENTS AND EQUIPMENT: 3.0%
120,200 Emerson Electric Co. 7,782,950
--------------
7,782,950
--------------
ELECTRONICS: 3.5%
309,300 @@ Koninklijke Philips
Electronics NV ADR 8,997,537
--------------
8,997,537
--------------
FOOD: 4.5%
126,000 @@ Nestle SA ADR 7,884,450
60,400 @@ Unilever NV ADR 3,919,960
--------------
11,804,410
--------------
FOREST PRODUCTS AND PAPER: 2.0%
120,500 International Paper Co. $ 5,194,755
--------------
5,194,755
--------------
HEALTHCARE-PRODUCTS: 2.0%
102,300 Beckman Coulter, Inc. 5,199,909
--------------
5,199,909
--------------
HEALTHCARE-SERVICES: 3.0%
72,300 Quest Diagnostics 5,285,853
160,700 @ Tenet Healthcare Corp. 2,579,235
--------------
7,865,088
--------------
INSURANCE: 6.7%
117,900 American Intl. Group 7,814,412
85,100 John Hancock Financial
Services, Inc. 3,191,250
191,700 Metlife, Inc. 6,454,539
--------------
17,460,201
--------------
MEDIA: 2.5%
72,400 Gannett Co., Inc. 6,455,184
--------------
6,455,184
--------------
MISCELLANEOUS MANUFACTURING: 3.0%
233,400 Honeywell Intl., Inc. 7,802,562
--------------
7,802,562
--------------
OIL AND GAS: 14.0%
63,000 Apache Corp. 5,109,300
184,000 @@ BP PLC ADR 9,080,400
106,200 ChevronTexaco Corp. 9,174,618
190,600 Exxon Mobil Corp. 7,814,600
99,400 @@ Royal Dutch Petroleum
Co. ADR 5,207,566
--------------
36,386,484
--------------
PHARMACEUTICALS: 3.5%
137,700 Bristol-Myers Squibb Co. 3,938,220
112,400 Merck & Co., Inc. 5,192,880
--------------
9,131,100
--------------
RETAIL: 2.0%
210,300 McDonald's Corp. 5,221,749
--------------
5,221,749
--------------
SAVINGS AND LOANS: 3.0%
192,900 Washington Mutual, Inc. 7,739,148
--------------
7,739,148
--------------
TELECOMMUNICATIONS: 4.0%
200,200 SBC Communications, Inc. 5,219,214
149,500 Verizon Communications, Inc. 5,244,460
--------------
10,463,674
--------------
Total Common Stock
(Cost $239,992,156) 245,566,904
--------------
</Table>
See Accompanying Notes to Financial Statements
60
<Page>
ING
Value
Opportunity
Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003 (Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 1.6%
REPURCHASE AGREEMENT: 1.6%
$ 4,066,000 Goldman Sachs Repurchase
Agreement dated 12/31/03,
0.990%, due 01/02/04,
$4,066,224 to be received upon
repurchase (Collateralized by
various U.S. Government Agency
Obligations, 0.000%-7.875%,
Market Value $4,161,585
due 04/15/04-02/15/23) $ 4,066,000
--------------
Total Short-term Investments
(Cost $4,066,000) 4,066,000
--------------
TOTAL INVESTMENTS IN
SECURITIES (COST
$244,058,156)* 96.1% $ 249,632,904
OTHER ASSETS AND
LIABILITIES-NET 3.9 10,091,241
----- --------------
NET ASSETS 100.0% $ 259,724,145
===== ==============
</Table>
@ Non-income producing security
@@ Foreign Issuer
ADR American Depositary Receipt
L Loaned security, a portion or all of the security is on loan at December
31, 2003.
* Cost for federal income tax purposes is $245,102,599. Net unrealized
appreciation consists of:
<Table>
Gross Unrealized Appreciation $ 5,170,465
Gross Unrealized Depreciation (640,160)
--------------
Net Unrealized Appreciation $ 4,530,305
==============
</Table>
See Accompanying Notes to Financial Statements
61
<Page>
ING
VP
Balanced
Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003
<Table>
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------------------------------
COMMON STOCK: 58.7%
ADVERTISING: 0.3%
43,300 Omnicom Group $ 3,781,389
--------------
3,781,389
--------------
AEROSPACE/DEFENSE: 0.8%
53,850 L Boeing Co. 2,269,239
56,000 L Rockwell Collins, Inc. 1,681,680
75,800 United Technologies Corp. 7,183,566
--------------
11,134,485
--------------
AGRICULTURE: 0.7%
128,550 L Altria Group, Inc. 6,995,691
78,100 Monsanto Co. 2,247,718
6,675 L RJ Reynolds Tobacco
Holdings, Inc. 388,151
--------------
9,631,560
--------------
AIRLINES: 0.2%
38,350 @,L Alaska Air Group, Inc. 1,046,572
91,525 @ Frontier Airlines, Inc. 1,305,146
--------------
2,351,718
--------------
APPAREL: 0.6%
62,175 Liz Claiborne, Inc. 2,204,726
57,000 L Nike, Inc. 3,902,220
50,525 L Reebok Intl. Ltd. 1,986,643
--------------
8,093,589
--------------
AUTO MANUFACTURERS: 0.7%
314,250 L Ford Motor Co. 5,028,000
33,950 L General Motors Corp. 1,812,930
35,050 L Paccar, Inc. 2,983,456
--------------
9,824,386
--------------
AUTO PARTS AND EQUIPMENT: 0.2%
142,500 Delphi Corp. 1,454,925
90,875 @ Dura Automotive Systems, Inc. 1,160,474
--------------
2,615,399
--------------
BANKS: 3.3%
165,400 L Bank of America Corp. 13,303,121
72,300 Bank One Corp. 3,296,157
164,150 Fremont General Corp. 2,775,777
109,475 Hibernia Corp. 2,573,757
99,250 SouthTrust Corp. 3,248,453
116,600 US Bancorp 3,472,348
185,850 Wachovia Corp. 8,658,751
106,850 Wells Fargo & Co. 6,292,396
28,900 Zions Bancorporation 1,772,437
--------------
45,393,197
--------------
BEVERAGES: 0.9%
155,100 Coca-Cola Co. 7,871,325
106,950 PepsiCo, Inc. 4,986,009
--------------
12,857,334
--------------
BIOTECHNOLOGY: 0.9%
17,250 @,L Alexion Pharmaceuticals, Inc. 293,595
78,550 @ Amgen, Inc. 4,854,390
142,775 @ Applera Corp - Celera
Genomics Group 1,986,000
49,200 @,L Geron Corp. 490,524
99,025 @ Intermune, Inc. $ 2,293,419
27,925 @,L Invitrogen Corp. 1,954,750
--------------
11,872,678
--------------
CHEMICALS: 0.5%
59,900 Dow Chemical Co. 2,490,043
45,300 L Engelhard Corp. 1,356,735
165,225 @,L Hercules, Inc. 2,015,745
26,075 L Sigma-Aldrich Corp. 1,490,969
--------------
7,353,492
--------------
COMMERCIAL SERVICES: 1.1%
216,700 @,L Cendant Corp. 4,825,909
29,775 @,L Corporate Executive Board Co. 1,389,599
55,600 H&R Block, Inc. 3,078,572
100,400 L Paychex, Inc. 3,734,880
83,575 @ Rent-A-Center, Inc. 2,497,221
--------------
15,526,181
--------------
COMPUTERS: 2.4%
108,300 @,L Apple Computer, Inc. 2,314,371
163,450 @,L Dell, Inc. 5,550,762
428,700 @,L EMC Corp. 5,538,804
188,750 Hewlett-Packard Co. 4,335,588
104,400 International Business
Machines Corp. 9,675,791
40,250 @,L Lexmark Intl., Inc. 3,165,260
95,750 @,L Network Appliance, Inc. 1,965,748
56,150 @,L PalmOne, Inc. 659,763
--------------
33,206,087
--------------
COSMETICS/PERSONAL CARE: 1.0%
172,200 Gillette Co. 6,324,906
78,350 Procter & Gamble Co. 7,825,598
--------------
14,150,504
--------------
DIVERSIFIED FINANCIAL SERVICES: 5.4%
45,600 @,L Affiliated Managers Group 3,173,304
82,550 American Express Co. 3,981,387
28,100 L Bear Stearns Cos., Inc. 2,246,595
61,500 L Capital One Financial Corp. 3,769,335
320,100 Citigroup, Inc. 15,537,653
49,200 Countrywide Financial Corp. 3,731,820
66,425 Doral Financial Corp. 2,144,199
62,600 L Fannie Mae 4,698,756
268,400 JP Morgan Chase & Co. 9,858,331
59,150 Lehman Brothers Holdings, Inc. 4,567,563
139,600 L Merrill Lynch & Co., Inc. 8,187,540
151,550 Morgan Stanley 8,770,199
61,600 New Century Financial Corp. 2,443,672
83,200 @ Providian Financial Corp. 968,448
--------------
74,078,802
--------------
ELECTRIC: 1.7%
183,950 @ AES Corp. 1,736,488
98,850 L Centerpoint Energy, Inc. 957,857
51,300 Constellation Energy Group, Inc. 2,008,908
19,950 L Dominion Resources, Inc. 1,273,409
159,425 DPL, Inc. 3,328,793
109,950 Edison Intl. 2,411,204
14,550 Entergy Corp. 831,242
73,300 Exelon Corp. 4,864,187
53,575 L Great Plains Energy, Inc. 1,704,757
</Table>
See Accompanying Notes to Financial Statements
62
<Page>
ING
VP
Balanced
Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003 (Continued)
<Table>
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------------------------------
ELECTRIC (CONTINUED)
46,400 Southern Co. $ 1,403,600
99,700 L TXU Corp. 2,364,884
--------------
22,885,329
--------------
ELECTRICAL COMPONENTS AND EQUIPMENT: 0.1%
25,950 Emerson Electric Co. 1,680,263
--------------
1,680,263
--------------
ELECTRONICS: 0.5%
41,525 @ Benchmark Electronics, Inc. 1,445,485
48,900 @,L Fisher Scientific Intl. 2,022,993
87,650 @ Itron, Inc. 1,609,254
146,700 @,L Sanmina-SCI Corp. 1,849,887
--------------
6,927,619
--------------
ENGINEERING AND CONSTRUCTION: 0.1%
33,575 Granite Construction, Inc. 788,677
--------------
788,677
--------------
ENTERTAINMENT: 0.3%
83,350 @ Alliance Gaming Corp. 2,054,578
35,125 L GTECH Holdings Corp. 1,738,336
--------------
3,792,914
--------------
FOOD: 0.3%
149,650 L Conagra Foods, Inc. 3,949,264
--------------
3,949,264
--------------
FOREST PRODUCTS AND PAPER: 0.5%
74,900 L Georgia-Pacific Corp. 2,297,183
131,350 @ Louisiana-Pacific Corp. 2,348,538
53,575 Rayonier, Inc. 2,223,898
--------------
6,869,619
--------------
GAS: 0.1%
64,675 L Oneok, Inc. 1,428,024
--------------
1,428,024
--------------
HAND/MACHINE TOOLS: 0.0%
20,200 L Snap-On, Inc. 651,248
--------------
651,248
--------------
HEALTHCARE-PRODUCTS: 1.6%
156,250 @ Boston Scientific Corp. 5,743,750
75,350 L Guidant Corp. 4,536,070
182,250 Johnson & Johnson 9,415,035
4,775 @,L Patterson Dental Co. 306,364
34,300 @ Respironics, Inc. 1,546,587
--------------
21,547,806
--------------
HEALTHCARE-SERVICES: 1.6%
44,850 @,L Anthem, Inc. 3,363,750
89,675 @ Humana, Inc. 2,049,074
17,275 @ Mid Atlantic Medical Services 1,119,420
47,625 Oxford Health Plans 2,071,688
50,775 @,L Pacificare Health Systems 3,432,390
104,700 L UnitedHealth Group, Inc. 6,091,445
39,150 @ WellPoint Health Networks 3,797,159
--------------
21,924,926
--------------
HOME BUILDERS: 0.1%
3,925 @,L NVR, Inc. 1,829,050
--------------
1,829,050
--------------
HOME FURNISHINGS: 0.3%
28,600 L Harman Intl. Industries, Inc. $ 2,115,828
21,650 Whirlpool Corp. 1,572,873
--------------
3,688,701
--------------
HOUSEHOLD PRODUCTS/WARES: 0.2%
40,350 Fortune Brands, Inc. 2,884,622
--------------
2,884,622
--------------
INSURANCE: 2.4%
81,850 @@ ACE Ltd. 3,390,227
160,500 L American Intl. Group 10,637,939
46,150 Cigna Corp. 2,653,625
106,950 Fidelity National Financial, Inc. 4,147,521
92,850 First American Corp. 2,764,145
42,475 Landamerica Financial
Group, Inc. 2,219,744
55,900 Lincoln National Corp. 2,256,683
115,600 Prudential Financial, Inc. 4,828,612
--------------
32,898,496
--------------
INTERNET: 0.8%
114,850 @,L Autobytel, Inc. 1,042,838
225,025 @,L Earthlink, Inc. 2,250,250
35,700 @,L eBay, Inc. 2,305,863
71,250 @,L Gric Communications, Inc. 384,750
113,950 @ RSA Security, Inc. 1,618,090
85,800 @,L Symantec Corp. 2,972,970
202,400 @ Verso Technologies Inc 647,680
--------------
11,222,441
--------------
MACHINERY-CONSTRUCTION AND MINING: 0.1%
21,550 Caterpillar, Inc. 1,789,081
--------------
1,789,081
--------------
MACHINERY-DIVERSIFIED: 0.8%
23,450 Briggs & Stratton 1,580,530
35,725 L Cummins, Inc. 1,748,382
64,500 Deere & Co. 4,195,724
55,800 L Rockwell Automation, Inc. 1,986,480
17,850 Tecumseh Products Co. 864,476
--------------
10,375,592
--------------
MEDIA: 1.4%
127,050 @,L Comcast Corp. 4,176,134
51,650 L McGraw-Hill Cos., Inc. 3,611,368
255,200 @,L Time Warner, Inc. 4,591,048
99,300 Viacom, Inc. 4,406,934
126,900 L Walt Disney Co. 2,960,577
--------------
19,746,061
--------------
METAL FABRICATE/HARDWARE: 0.2%
51,075 Quanex Corp. 2,354,558
--------------
2,354,558
--------------
MINING: 0.3%
59,750 Alcoa, Inc. 2,270,500
27,700 L Newmont Mining Corp. 1,346,497
--------------
3,616,997
--------------
MISCELLANEOUS MANUFACTURING: 2.7%
108,500 @,L 3M Co. 9,225,755
64,000 @ Ceradyne Inc 2,179,840
42,550 L Danaher Corp. 3,903,963
</Table>
See Accompanying Notes to Financial Statements
63
<Page>
ING
VP
Balanced
Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003 (Continued)
<Table>
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------------------------------
MISCELLANEOUS MANUFACTURING (CONTINUED)
620,800 General Electric Co. $ 19,232,383
120,950 @@ Tyco Intl. Ltd. 3,205,175
--------------
37,747,116
--------------
OIL AND GAS: 3.7%
129,750 ChevronTexaco Corp. 11,209,102
107,050 L ConocoPhillips 7,019,269
65,250 Devon Energy Corp. 3,736,215
396,400 Exxon Mobil Corp. 16,252,399
57,675 @ Houston Exploration Co. 2,106,291
57,150 @ Newfield Exploration Co. 2,545,461
95,950 Occidental Petroleum Corp. 4,052,928
55,950 Pogo Producing Co. 2,702,385
21,750 L Sunoco, Inc. 1,112,513
--------------
50,736,563
--------------
PACKAGING AND CONTAINERS: 0.2%
87,050 @,L Owens-Illinois, Inc. 1,035,025
27,250 @,L Sealed Air Corp. 1,475,315
--------------
2,510,340
--------------
PHARMACEUTICALS: 2.5%
95,900 Abbott Laboratories 4,468,940
69,250 Eli Lilly & Co. 4,870,353
139,450 Merck & Co., Inc. 6,442,590
83,950 @,L NPS Pharmaceuticals, Inc. 2,580,623
468,500 Pfizer, Inc. 16,552,105
--------------
34,914,611
--------------
PIPELINES: 0.2%
42,275 National Fuel Gas Co. 1,033,201
154,900 Williams Cos., Inc. 1,521,118
--------------
2,554,319
--------------
REAL ESTATE: 0.7%
34,775 Avalonbay Communities, Inc. 1,662,245
56,675 Chelsea Property Group, Inc. 3,106,357
41,075 Kimco Realty Corp. 1,838,106
59,475 L LNR Property Corp. 2,944,607
--------------
9,551,315
--------------
RETAIL: 4.9%
75,900 @ Bed Bath & Beyond, Inc. 3,290,265
72,000 Best Buy Co., Inc. 3,761,280
113,700 @,L Costco Wholesale Corp. 4,227,366
49,750 Federated Department Stores 2,344,718
191,300 L Gap, Inc. 4,440,073
261,500 Home Depot, Inc. 9,280,635
8,900 @,L Krispy Kreme Doughnuts, Inc. 325,740
48,400 Lowe's Cos., Inc. 2,680,876
208,200 McDonald's Corp. 5,169,606
46,000 L RadioShack Corp. 1,411,280
133,400 @ Staples, Inc. 3,641,820
103,200 @,L Starbucks Corp. 3,411,792
41,850 L United Auto Group, Inc. 1,309,905
265,000 Wal-Mart Stores, Inc. 14,058,249
172,300 L Walgreen Co. 6,268,274
32,800 Wendy's Intl., Inc. 1,287,072
--------------
66,908,951
--------------
SAVINGS AND LOANS: 0.5%
125,200 Bankatlantic BanCorp., Inc. $ 2,378,800
40,475 @ Firstfed Financial Corp. 1,760,663
126,800 Flagstar Bancorp, Inc. 2,716,056
--------------
6,855,519
--------------
SEMICONDUCTORS: 3.4%
27,275 @,L Advanced Micro Devices, Inc. 406,398
110,650 @ Altera Corp. 2,511,755
280,100 @,L Applied Materials, Inc. 6,288,245
535,800 @ Applied Micro Circuits Corp. 3,204,084
314,000 @ Cirrus Logic, Inc. 2,408,380
625,250 L Intel Corp. 20,133,049
283,825 @,L LSI Logic Corp. 2,517,528
80,550 L Maxim Integrated Products 4,011,390
126,525 @ Mindspeed Technologies, Inc. 866,696
195,200 @,L Silicon Image, Inc. 1,411,296
111,600 Texas Instruments, Inc. 3,278,808
--------------
47,037,629
--------------
SOFTWARE: 3.2%
67,700 Adobe Systems, Inc. 2,660,610
40,550 Autodesk, Inc. 996,719
25,600 @ Avid Technology, Inc. 1,228,800
133,600 @,L BMC Software, Inc. 2,491,640
45,750 @,L Citrix Systems, Inc. 970,358
148,050 L Computer Associates Intl., Inc. 4,047,687
20,300 @,L D&B Corp. 1,029,413
75,800 L IMS Health, Inc. 1,884,388
652,600 L Microsoft Corp. 17,972,603
333,000 @ Oracle Corp. 4,395,599
166,125 @,L Scansoft, Inc. 883,785
146,850 @ Siebel Systems, Inc. 2,036,810
107,300 @,L Veritas Software Corp. 3,987,268
--------------
44,585,680
--------------
TELECOMMUNICATIONS: 3.5%
118,350 @ Avaya, Inc. 1,531,449
274,250 Bellsouth Corp. 7,761,274
684,300 @ Cisco Systems, Inc. 16,621,646
56,050 @,L Comverse Technology, Inc. 985,920
137,200 Motorola, Inc. 1,930,404
208,850 @,L Nextel Communications, Inc. 5,860,331
43,450 @,L PTEK Holdings, Inc. 382,795
33,000 L Qualcomm, Inc. 1,779,690
65,125 @,L Safenet, Inc. 2,003,896
45,750 Scientific-Atlanta, Inc. 1,248,975
96,550 @,L Tellabs, Inc. 813,917
171,050 Verizon Communications, Inc. 6,000,434
331,900 @ Zhone Technologies, Inc. 1,639,586
--------------
48,560,317
--------------
TOYS/GAMES/HOBBIES: 0.3%
60,050 Hasbro, Inc. 1,277,864
127,450 Mattel, Inc. 2,455,962
--------------
3,733,826
--------------
TRANSPORTATION: 0.5%
114,850 @ OMI Corp. 1,025,611
71,350 L United Parcel Service, Inc. 5,319,142
--------------
6,344,753
--------------
Total Common Stock
(Cost $701,591,749) 806,763,028
--------------
</Table>
See Accompanying Notes to Financial Statements
64
<Page>
ING
VP
Balanced
Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003 (Continued)
<Table>
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------------------------------
PREFERRED STOCK: 0.5%
AUTO PARTS AND EQUIPMENT: 0.2%
87,080 Delphi Trust I $ 2,293,687
--------------
2,293,687
--------------
BANKS: 0.2%
272 #,XX DG Funding Trust 2,951,200
--------------
2,951,200
--------------
MEDIA: 0.0%
100 @ Cablevision Systems Corp. 10,525
400 @ Primedia, Inc. 39,300
--------------
49,825
--------------
OIL AND GAS: 0.1%
73,080 @@ Nexen, Inc. 1,911,042
--------------
1,911,042
--------------
Total Preferred Stock
(Cost $7,009,959) 7,205,754
--------------
WARRANTS: 0.0%
BANKS: 0.0%
250 XX Central Bank of Nigeria --
--------------
DISTRIBUTION/WHOLESALE: 0.0%
2,978 @ Timco Aviation Services,
Expires 02/27/06 --
--------------
Total Warrants
(Cost $210) --
--------------
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------
CORPORATE BONDS: 11.4%
AGRICULTURE: 0.0%
$ 55,000 # Dimon, Inc., 7.750%,
due 06/01/13 56,925
--------------
56,925
--------------
AIRLINES: 0.8%
1,114,000 L American Airlines Inc,
6.817%, due 05/23/11 1,003,823
3,598,000 S,L American Airlines, Inc.,
7.024%, due 10/15/09 3,593,337
1,930,000 S American Airlines, Inc.,
7.324%, due 10/15/09 1,670,255
1,078,000 Continental Airlines Inc,
7.875%, due 07/02/18 1,085,002
736,030 L Continental Airlines, Inc.,
6.545%, due 08/02/20 727,900
609,260 L Continental Airlines, Inc.,
6.900%, due 07/02/19 601,760
435,000 S Delta Air Lines, Inc., 7.299%,
due 09/18/06 392,832
507,000 S Delta Air Lines, Inc., 7.779%,
due 11/18/05 466,717
1,294,093 US Airways Pass Through Trust,
6.850%, due 01/30/18 1,239,005
--------------
10,780,631
--------------
AUTO MANUFACTURERS: 0.3%
1,749,000 Ford Motor Co., 6.375%,
due 02/01/29 1,564,904
$ 386,000 L Ford Motor Co., 6.625%,
due 10/01/28 $ 356,103
2,285,000 L General Motors Corp.,
8.375%, due 07/15/33 2,660,432
--------------
4,581,439
--------------
AUTO PARTS AND EQUIPMENT: 0.0%
15,000 HLI Operating Co Inc,
10.500%, due 06/15/10 17,344
25,000 TRW Automotive Inc,
11.000%, due 02/15/13 29,562
--------------
46,906
--------------
BANKS: 1.9%
1,309,000 #,@@ Banco Bradesco SA, 8.750%,
due 10/24/13 1,374,450
883,000 S Bank of America Corp.,
6.375%, due 02/15/08 979,221
163,000 # BankAmerica Institutional,
Class B, 7.700%, due 12/31/26 182,970
485,000 BankBoston Capital Trust III,
1.920%, due 06/15/27 464,486
128,000 BankBoston Corp., 1.780%,
due 06/08/28 119,937
112,000 Barnett Capital I, 8.060%,
due 12/01/26 128,226
200,000 Barnett Capital II, 7.950%,
due 12/01/26 227,711
310,000 BNY Capital I, 7.970%,
due 12/31/26 349,042
380,000 Chase Capital VI, 1.788%,
due 08/01/28 359,173
746,000 # Corestates Capital Trust II,
1.800%, due 01/15/27 706,557
3,511,000 #,L Dresdner Funding Trust I,
8.151%, due 06/30/31 4,019,595
112,000 FBS Capital I, 8.090%,
due 11/15/26 128,595
587,000 First Union Institutional
Capital II, 7.850%,
due 01/01/27 665,443
335,000 Fleet Capital Trust II, 7.920%,
due 12/11/26 378,158
1,425,000 #,@@ HBOS PLC, 5.375%,
due 11/29/49 1,427,890
320,000 @@,C Hongkong & Shanghai
Banking Corp. Ltd., 1.313%,
due 07/29/49 261,498
410,000 @@,C HSBC Bank PLC, 1.350%,
due 06/29/49 330,212
1,508,000 @@,S HSBC Holdings PLC, 7.500%,
due 07/15/09 1,765,257
894,000 M & T Bank Corp., 3.850%,
due 04/01/13 888,952
1,770,000 Mellon Capital I, 7.720%,
due 12/01/26 1,990,514
640,000 @@,C National Westminster Bank PLC,
1.313%, due 11/29/49 531,999
243,000 Nationsbank Cap Trust III,
1.700%, due 01/15/27 229,148
925,000 NB Capital Trust IV, 8.250%,
due 04/15/27 1,074,228
1,167,000 # Rabobank Capital Funding II,
5.260%, due 12/29/49 1,171,316
</Table>
See Accompanying Notes to Financial Statements
65
<Page>
ING
VP
Balanced
Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003 (Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------
BANKS (CONTINUED)
$ 715,000 L RBS Capital Trust I, 4.709%,
due 12/29/49 $ 685,195
390,000 @@,C Societe Generale, 1.309%,
due 11/29/49 316,477
250,000 @@,C Standard Chartered PLC,
1.250%, due 07/29/49 182,586
740,000 @@,C Standard Chartered PLC,
1.275%, due 01/29/49 561,667
1,690,000 @@,C Standard Chartered PLC,
1.400%, due 12/29/49 1,269,597
2,060,000 @@,C Standard Chartered PLC,
1.500%, due 11/29/49 1,544,129
346,000 Wachovia Capital Trust II,
1.650%, due 01/15/27 327,410
920,000 S Wells Fargo & Co., 3.120%,
due 08/15/08 909,817
180,000 # Wells Fargo Capital A,
7.730%, due 12/01/26 201,491
--------------
25,752,947
--------------
BEVERAGES: 0.3%
1,662,000 #,@@,L Cia Brasileira de Bebidas,
8.750%, due 09/15/13 1,770,030
381,000 S,L Constellation Brands, Inc.,
8.000%, due 02/15/08 424,815
1,525,000 #, S Miller Brewing Co., 4.250%,
due 08/15/08 1,546,939
--------------
3,741,784
--------------
CHEMICALS: 0.0%
330,000 S,L Dow Chemical Co., 5.750%,
due 11/15/09 353,755
--------------
353,755
--------------
COMMERCIAL SERVICES: 0.1%
269,000 @@,L Quebecor Media, Inc.,
11.125%, due 07/15/11 312,713
971,000 S United Rentals
North America, Inc.,
10.750%, due 04/15/08 1,097,230
--------------
1,409,943
--------------
DISTRIBUTION/WHOLESALE: 0.0%
2,871 @,S Timco Aviation Services,
0.000%, due 01/02/07 158
--------------
158
--------------
DIVERSIFIED FINANCIAL SERVICES: 1.2%
1,285,000 Boeing Capital Corp., 7.375%,
due 09/27/10 1,479,050
1,886,000 #,@@ Brazilian Merchant Voucher
Receivables Ltd., 5.911%,
due 06/15/11 1,848,280
930,000 CitiCorp Capital I, 7.933%,
due 02/15/27 1,075,596
212,000 Citigroup Capital II, 7.750%,
due 12/01/36 239,789
195,000 # Corestates Capital Trust I,
8.000%, due 12/15/26 221,928
1,443,000 S,L Countrywide Home Loans, Inc.,
4.250%, due 12/19/07 1,489,569
25,000 Eircom Funding, 8.250%,
due 08/15/13 27,813
$ 228,000 # Farmers Exchange Capital,
7.050%, due 07/15/28 $ 214,000
1,095,000 # Farmers Exchange Capital,
7.200%, due 07/15/48 984,444
746,000 Ford Motor Credit Co,
7.375%, due 02/01/11 814,223
135,000 S,L Ford Motor Credit Co.,
5.625%, due 10/01/08 138,733
7,212 # Hollinger Participation Trust,
12.125%, due 11/15/10 8,600
2,228,000 XX,# Mangrove Bay Pass-Through
Trust, 6.102%, due 07/15/33 2,196,228
535,000 S Nexstar Finance, Inc.,
12.000%, due 04/01/08 605,888
1,070,000 # OneAmerica Financial
Partners, Inc., 7.000%,
due 10/15/33 1,062,521
1,005,000 #,@@ PF Export Receivables Master
Trust, 3.748%, due 06/01/13 980,202
1,015,527 #,@@ PF Export Receivables Master
Trust, 6.436%, due 06/01/15 1,035,924
307,000 # Power Receivable Finance LLC,
6.290%, due 01/01/12 320,714
782,000 # Takefuji Corp, 9.200%,
due 04/15/11 867,681
218,000 Technical Olympic USA, Inc.,
9.000%, due 07/01/10 235,440
108,000 Technical Olympic USA, Inc.,
10.375%, due 07/01/12 121,500
15,000 # Universal City Development
Partners, 11.750%,
due 04/01/10 17,625
510,000 # Wachovia Capital Trust V,
7.965%, due 06/01/27 588,848
--------------
16,574,596
--------------
ELECTRIC: 1.1%
600,000 #,S Consumers Energy Co.,
4.250%, due 04/15/08 606,580
963,000 #,S Consumers Energy Co.,
4.800%, due 02/17/09 985,461
424,000 @@,S,L Empresa Nacional de
Electricidad SA/Chile,
7.750%, due 07/15/08 463,344
3,242,000 @@ Empresa Nacional de
Electricidad SA/Chile,
8.350%, due 08/01/13 3,651,841
251,000 Enserch Capital I, 2.510%,
due 07/01/28 218,923
8,000 Enterprise Capital Trust II,
2.360%, due 06/30/28 7,077
1,902,000 Firstenergy Corp., 7.375%,
due 11/15/31 1,952,681
1,394,000 # Indianapolis Power & Light,
6.300%, due 07/01/13 1,440,698
623,000 S Nisource Finance Corp.,
7.625%, due 11/15/05 680,924
1,411,000 #,S Ohio Edison Co., 4.000%,
due 05/01/08 1,381,256
1,974,000 Ohio Power Co., 6.375%,
due 07/15/33 1,980,394
800,000 #,S PG&E Corp., 6.875%,
due 07/15/08 870,000
</Table>
See Accompanying Notes to Financial Statements
66
<Page>
ING
VP
Balanced
Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003 (Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------
ELECTRIC (CONTINUED)
$ 307,000 #, S Power Contract Financing
LLC, 5.200%, due 02/01/06 $ 311,766
306,000 #,L Power Contract Financing
LLC, 6.256%, due 02/01/10 323,116
--------------
14,874,061
--------------
ELECTRONICS: 0.0%
55,000 Stoneridge, Inc., 11.500%,
due 05/01/12 65,175
--------------
65,175
--------------
ENTERTAINMENT: 0.1%
438,000 L Cinemark USA, Inc., 9.000%,
due 02/01/13 494,940
430,000 S,L Six Flags, Inc., 9.750%,
due 06/15/07 450,963
--------------
945,903
--------------
ENVIRONMENTAL CONTROL: 0.1%
1,186,000 S Allied Waste North America,
7.625%, due 01/01/06 1,254,195
--------------
1,254,195
--------------
FOOD: 0.5%
480,000 Kroger Co., 5.500%,
due 02/01/13 489,071
665,000 S Kroger Co., 7.250%,
due 06/01/09 758,436
1,189,000 S Safeway, Inc., 4.800%,
due 07/16/07 1,235,099
1,747,000 S,L Supervalu, Inc., 7.875%,
due 08/01/09 2,040,121
1,638,000 S Tyson Foods, Inc., 7.250%,
due 10/01/06 1,796,096
--------------
6,318,823
--------------
FOREST PRODUCTS AND PAPER: 0.3%
983,000 @@,S Abitibi-Consolidated, Inc.,
6.950%, due 12/15/06 1,030,005
553,000 @@,S,L Abitibi-Consolidated, Inc.,
6.950%, due 04/01/08 580,001
863,000 Georgia-Pacific Corp.,
8.875%, due 02/01/10 988,135
1,151,000 Weyerhaeuser Co., 7.375%,
due 03/15/32 1,255,375
--------------
3,853,516
--------------
HOME BUILDERS: 0.0%
25,000 Meritage Corp., 9.750%,
due 06/01/11 28,063
--------------
28,063
--------------
INSURANCE: 0.3%
1,459,000 # Farmers Insurance Exchange,
8.625%, due 05/01/24 1,529,121
975,000 #, S Monumental Global Funding II,
3.850%, due 03/03/08 984,655
1,603,000 #,L Zurich Capital Trust I, 8.376%,
due 06/01/37 1,846,350
--------------
4,360,126
--------------
LEISURE TIME: 0.1%
$ 698,000 @@,S,L Royal Caribbean Cruises Ltd.,
7.000%, due 10/15/07 $ 743,370
--------------
743,370
--------------
LODGING: 0.3%
756,000 S Mandalay Resort Group,
10.250%, due 08/01/07 873,180
1,128,000 S MGM Mirage, 6.000%,
due 10/01/09 1,164,660
1,128,000 S Park Place Entertainment Corp.,
9.375%, due 02/15/07 1,280,280
630,000 S Starwood Hotels & Resorts
Worldwide, Inc., 7.375%,
due 05/01/07 683,550
--------------
4,001,670
--------------
MEDIA: 0.4%
500,000 L AOL Time Warner, Inc., 6.875%,
due 05/01/12 563,740
698,000 # CCO Holdings LLC/CCO Holdings
Capital Corp., 8.750%,
due 11/15/13 713,705
473,000 L CSC Holdings, Inc., 10.500%,
due 05/15/16 543,950
809,000 #,L Dex Media, Inc., 8.000%,
due 11/15/13 853,494
426,000 DirecTV Holdings LLC, 8.375%,
due 03/15/13 496,290
420,000 #, S,L Echostar DBS Corp., 4.410%,
due 10/01/08 439,425
578,000 #,@@,S,L Echostar DBS Corp., 5.750%,
due 10/01/08 587,393
20,000 S,L Paxson Communications Corp.,
10.750%, due 07/15/08 21,925
50,000 Salem Communications Holding
Corp., 9.000%, due 07/01/11 54,625
432,000 S Spanish Broadcasting System,
9.625%, due 11/01/09 463,320
692,000 Time Warner, Inc., 6.950%,
due 01/15/28 741,735
368,000 S Young Broadcasting, Inc.,
8.500%, due 12/15/08 397,440
--------------
5,877,042
--------------
MISCELLANEOUS MANUFACTURING: 0.1%
1,665,000 L General Electric Co., 5.000%,
due 02/01/13 1,686,923
--------------
1,686,923
--------------
MULTI-NATIONAL: 0.2%
1,480,000 @@ Corp Andina de Fomento CAF,
5.200%, due 05/21/13 1,476,324
1,428,000 @@ Corp Andina de Fomento CAF,
6.875%, due 03/15/12 1,587,472
--------------
3,063,796
--------------
OIL AND GAS: 0.7%
675,000 Chesapeake Energy Corp.,
9.000%, due 08/15/12 779,625
20,000 Energy Partners Ltd., 8.750%,
due 08/01/10 20,900
</Table>
See Accompanying Notes to Financial Statements
67
<Page>
ING
VP
Balanced
Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003 (Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------
OIL AND GAS (CONTINUED)
$ 1,410,000 Enterprise Products Partners LP,
6.875%, due 03/01/33 $ 1,413,363
3,579,000 @@ Husky Oil Co., 8.900%,
due 08/15/28 4,151,639
1,879,000 Pemex Project Funding Master
Trust, 7.375%, due 12/15/14 2,015,228
715,000 Valero Energy Corp., 7.500%,
due 04/15/32 799,333
755,000 Valero Energy Corp., 8.750%,
due 06/15/30 944,954
--------------
10,125,042
--------------
PACKAGING AND CONTAINERS: 0.4%
540,000 @@ Crown European Holdings SA,
10.875%, due 03/01/13 637,875
1,302,000 S Owens-Brockway, 8.875%,
due 02/15/09 1,433,828
1,385,000 #,L Sealed Air Corp., 5.625%,
due 07/15/13 1,419,860
1,560,000 #, S Sealed Air Corp., 6.950%,
due 05/15/09 1,755,212
--------------
5,246,775
--------------
PIPELINES: 0.4%
1,734,000 S CenterPoint Energy Resources
Corp., 8.125%, due 07/15/05 1,852,644
3,246,000 #,L Plains All American Pipeline
LP/PAA Finance Corp,
5.625%, due 12/15/13 3,290,632
70,000 L Southern Natural Gas Co.,
7.350%, due 02/15/31 69,475
--------------
5,212,751
--------------
REAL ESTATE: 0.4%
1,318,000 S EOP Operating LP, 7.750%,
due 11/15/07 1,512,188
1,585,000 S Liberty Property LP, 7.750%,
due 04/15/09 1,853,571
360,000 Liberty Property Trust,
6.375%, due 08/15/12 388,094
860,000 Simon Property Group LP,
4.875%, due 03/18/10 877,753
1,752,000 S Simon Property Group LP,
6.375%, due 11/15/07 1,933,782
--------------
6,565,388
--------------
RETAIL: 0.0%
40,000 L Dollar General Corp., 8.625%,
due 06/15/10 45,150
--------------
45,150
--------------
SAVINGS AND LOANS: 0.1%
1,495,000 S Washington Mutual, Inc.,
4.375%, due 01/15/08 1,538,324
--------------
1,538,324
--------------
SEMICONDUCTORS: 0.0%
20,000 L Amkor Technology Inc,
7.750%, due 05/15/13 21,550
--------------
21,550
--------------
TELECOMMUNICATIONS: 1.3%
$ 146,000 #,L ACC Escrow Corp., 10.000%,
due 08/01/11 $ 163,520
506,000 S,L American Tower Corp.,
9.375%, due 02/01/09 541,420
218,000 #,L American Towers, Inc.,
7.250%, due 12/01/11 222,905
3,400,000 L AT&T Corp., 8.050%,
due 11/15/11 3,920,328
1,346,000 L AT&T Wireless Services, Inc.,
8.125%, due 05/01/12 1,585,789
431,000 @,S,L,** MCI Communications Corp.,
0.000%, due 08/15/06 349,110
430,000 Nextel Communications, Inc.,
7.375%, due 08/01/15 464,400
421,000 S Nextel Communications, Inc.,
9.375%, due 11/15/09 460,995
432,000 # Qwest Corp., 9.125%,
due 03/15/12 497,880
524,000 # Qwest Services Corp.,
13.500%, due 12/15/10 639,280
5,000 L Qwest Services Corp.,
14.000%, due 12/15/14 6,388
1,400,000 S,L Sprint Capital Corp., 6.000%,
due 01/15/07 1,496,508
1,704,000 Sprint Capital Corp., 6.875%,
due 11/15/28 1,668,662
1,572,000 TCI Communications Finance,
9.650%, due 03/31/27 1,902,120
2,481,000 Verizon Florida, Inc., 6.125%,
due 01/15/13 2,660,664
950,000 L Verizon Virginia, Inc., 4.625%,
due 03/15/13 917,622
--------------
17,497,591
--------------
Total Corporate Bonds
(Cost $152,523,322) 156,624,318
--------------
COLLATERALIZED MORTGAGE OBLIGATIONS AND
ASSET-BACKED SECURITIES: 10.0%
AUTOMOBILE: 0.1%
300,000 Capital Auto Receivables Asset
Trust, 2.750%, due 04/16/07 303,629
1,590,000 Nissan Auto Receivables Owner
Trust, 2.610%, due 07/15/08 1,592,683
--------------
1,896,312
--------------
COMMERCIAL: 2.2%
2,060,000 L Chase Manhattan Bank-First
Union National Bank,
7.439%, due 08/15/31 2,398,159
1,500,000 CS First Boston Mortgage
Securities Corp., 3.382%,
due 05/15/38 1,433,601
1,338,155 CS First Boston Mortgage
Securities Corp., 3.727%,
due 03/15/35 1,325,864
3,600,000 First Union National
Bank-Bank of America
Commercial Mortgage
Trust, 6.136%, due 03/15/33 3,948,688
500,000 GE Capital Commercial
Mortgage Corp., 6.531%,
due 05/15/33 561,054
</Table>
See Accompanying Notes to Financial Statements
68
<Page>
ING
VP
Balanced
Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003 (Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------
COMMERCIAL (CONTINUED)
$ 900,000 L JP Morgan Chase Commercial
Mortgage Securities Corp.,
5.161%, due 10/12/37 $ 926,717
200,000 L JP Morgan Chase Commercial
Mortgage Securities Corp.,
6.162%, due 05/12/34 219,861
3,120,000 JP Morgan Chase Commercial
Mortgage Securities Corp.,
6.244%, due 04/15/35 3,431,832
2,340,000 LB-UBS Commercial Mortgage
Trust, 4.659%, due 12/15/26 2,377,261
3,800,000 LB-UBS Commercial Mortgage
Trust, 6.133%, due 12/15/30 4,182,696
1,850,000 LB-UBS Commercial Mortgage
Trust, 6.226%, due 03/15/26 2,044,357
3,000,000 LB-UBS Commercial Mortgage
Trust, 7.370%, due 08/15/26 3,493,175
3,120,000 Mortgage Capital Funding, Inc.,
6.663%, due 03/18/30 3,475,465
203,473 Prudential Commercial
Mortgage Trust, 3.669%,
due 02/11/36 201,296
--------------
30,020,026
--------------
CREDIT CARD: 0.2%
775,000 Citibank Credit Card Issuance
Trust, 5.650%, due 06/16/08 832,820
1,270,000 Fleet Credit Card Master
Trust II, 2.400%,
due 07/15/08 1,273,308
--------------
2,106,128
--------------
HOME EQUITY: 1.4%
3,969,897 XX Bayview Financial Acquisition
Trust, 1.641%, due 12/28/34 3,969,897
240,000 Equity One Abs, Inc., 2.976%,
due 09/25/33 241,358
2,807,579 Merrill Lynch Mortgage
Investors, Inc.,1.501%,
due 07/25/34 2,809,332
1,024,696 Residential Asset Mortgage
Products, Inc., 1.429%,
due 06/25/33 1,024,021
7,915,159 Residential Asset Securities
Corp., 1.429%, due 12/25/33 7,915,159
940,000 Residential Funding Mortgage
Securities II, 3.450%,
due 01/25/16 951,689
2,625,000 Saxon Asset Securities Trust,
3.960%, due 06/25/33 2,586,801
--------------
19,498,257
--------------
OTHER ASSET BACKED SECURITIES: 0.7%
1,729,386 XX Amortizing Residential
Collateral Trust, 1.369%,
due 05/25/32 1,728,305
941,000 Chase Funding Mortgage Loan
Asset-Backed Certificates,
1.419%, due 07/25/33 941,613
5,290,000 PP&L Transition Bond Co. LLC,
7.050%, due 06/25/09 5,915,700
1,190,000 Residential Asset Mortgage
Products, Inc., 2.140%,
due 02/25/30 1,163,315
--------------
9,748,933
--------------
WHOLE LOAN COLLATERALIZED MORTGAGE: 4.5%
$ 9,986,041 XX Bank of America Mortgage
Securities, 1.570%,
due 12/25/33 $ 9,992,282
2,855,972 Bank of America Mortgage
Securities, 4.413%,
due 03/25/33 2,898,951
1,356,528 XX Bank of America Mortgage
Securities, 5.500%,
due 11/25/33 1,348,898
2,378,124 Citicorp Mortgage Securities,
Inc., 1.619%, due 10/25/33 2,372,250
1,558,435 Countrywide Alternative Loan
Trust, 1.519%, due 07/25/18 1,555,371
5,530,000 CS First Boston Mortgage
Securities Corp., 4.187%,
due 10/25/33 5,525,159
4,046,831 MASTR Alternative Loans Trust,
6.500%, due 05/25/33 4,180,825
1,971,235 XX MASTR Asset Securitization
Trust, 1.591%, due 11/25/33 1,972,160
1,187,430 MASTR Asset Securitization
Trust, 8.000%, due 06/25/33 1,277,619
5,412,000 XX MLCC Mortgage Investors Inc,
1.469%, due 01/25/29 5,412,000
3,157,296 Residential Accredit Loans, Inc.,
1.569%, due 03/25/18 3,155,687
9,941,621 XX Sequoia Mortgage Trust,
1.469%, due 01/20/34 9,941,621
6,454,323 XX Washington Mutual, 1.720%,
due 01/25/34 6,450,289
4,275,079 Washington Mutual, 5.000%,
due 06/25/18 4,352,240
2,225,000 Wells Fargo Mortgage Backed
Securities Trust, 4.500%,
due 08/25/18 2,097,047
--------------
62,532,399
--------------
WHOLE LOAN COLLATERALIZED PLANNED
AMORTIZATION CLASS: 0.9%
4,789,434 GSR Mortgage Loan Trust,
1.519%, due 10/25/32 4,795,630
3,145,657 MASTR Alternative Loans Trust,
8.500%, due 05/25/33 3,269,671
3,138,000 Residential Funding Securities
Corp., 4.750%, due 02/25/33 3,153,948
916,631 Residential Funding Securities
Corp., 8.500%, due 05/25/33 1,031,903
--------------
12,251,152
--------------
Total Collateralized Mortgage
Obligations and
Asset-Backed Securities
(Cost $136,375,490) 138,053,207
--------------
U.S. GOVERNMENT AGENCY OBLIGATIONS: 15.4%
FEDERAL HOME LOAN MORTGAGE
CORPORATION: 4.0%
9,037,496 1.813%, due 04/15/32 9,023,591
993,000 4.000%, due 04/15/21 1,013,207
2,530,000 L 4.250%, due 06/15/05 2,627,069
8,366,538 5.500%, due 05/01/23 8,558,169
5,062,635 5.500%, due 05/15/31 5,145,584
2,000,000 W 5.500%, due 01/01/32 2,024,376
2,375,000 5.875%, due 03/21/11 2,578,124
</Table>
See Accompanying Notes to Financial Statements
69
<Page>
ING
VP
Balanced
Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003 (Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION (CONTINUED)
$ 3,441,000 6.000%, due 01/15/28 $ 3,610,652
13,850,000 W 6.000%, due 01/15/34 14,313,115
1,164,917 6.500%, due 11/01/28 1,221,915
4,030,000 W 6.500%, due 01/15/34 4,221,425
--------------
54,337,227
--------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION: 10.1%
3,011,679 1.541%, due 10/25/33 3,021,802
5,240,000 L 2.375%, due 04/13/06 5,240,550
240,000 L 2.859%, due 12/26/29 239,680
5,345,000 L 2.875%, due 05/19/08 5,219,852
2,495,000 L 4.000%, due 09/02/08 2,529,374
7,331,000 4.000%, due 06/25/16 7,467,285
3,200,000 W 4.500%, due 01/15/19 3,204,000
2,403,000 4.750%, due 12/25/42 2,484,955
14,665,000 W 5.000%, due 01/01/17 14,958,300
20,360,000 W 5.000%, due 01/15/34 20,150,049
7,235,000 5.250%, due 04/15/07 7,793,426
122,233 5.500%, due 02/01/17 126,847
11,511,000 W 5.500%, due 01/01/33 11,662,082
5,920,231 6.000%, due 07/01/16 6,218,241
1,027,457 6.000%, due 07/01/16 1,079,177
165,362 6.000%, due 08/01/16 173,686
3,070,530 6.000%, due 07/25/24 3,211,558
3,730,888 6.000%, due 07/25/29 3,871,823
1,585,300 6.000%, due 07/25/29 1,645,131
14,845,000 W 6.000%, due 01/15/34 15,346,020
6,002,760 6.500%, due 04/01/30 6,283,636
383,923 7.000%, due 09/01/28 407,080
220,647 7.000%, due 06/01/29 233,881
20,599 7.000%, due 06/01/29 21,834
87,340 7.000%, due 06/01/29 92,657
2,319 7.000%, due 08/01/29 2,458
20,424 7.000%, due 10/01/29 21,649
627,052 7.000%, due 11/01/29 664,663
1,997 7.000%, due 01/01/30 2,116
408,615 7.000%, due 01/01/30 433,124
597,121 7.000%, due 03/01/30 632,937
504,482 7.000%, due 01/01/31 534,315
2,735,156 7.000%, due 06/01/31 2,900,135
874,515 7.000%, due 08/01/31 926,213
24,040 7.000%, due 08/01/31 25,461
215,349 7.000%, due 09/01/31 228,080
167,680 7.000%, due 10/01/31 177,592
20,639 7.000%, due 10/01/31 21,859
763,913 7.000%, due 12/01/31 809,071
158,978 7.000%, due 01/01/32 168,376
101,215 7.000%, due 01/01/32 107,198
357,610 7.000%, due 02/01/32 378,751
755,069 7.000%, due 03/01/32 799,782
65,430 7.000%, due 03/01/32 69,304
22,307 7.000%, due 04/01/32 23,628
206,340 7.000%, due 05/01/32 218,558
53,985 7.000%, due 05/01/32 57,182
587,681 7.000%, due 06/01/32 622,481
350,195 7.000%, due 06/01/32 370,932
415,206 7.000%, due 07/01/32 439,751
105,285 7.000%, due 07/01/32 111,520
468,353 7.000%, due 07/01/32 496,040
471,702 7.000%, due 10/01/32 499,597
387,296 7.500%, due 10/01/30 414,007
228,513 7.500%, due 10/01/30 244,273
$ 224,694 7.500%, due 11/01/30 $ 240,191
157,137 7.500%, due 11/01/30 167,974
1,064,713 7.500%, due 06/25/32 1,163,199
1,346,350 7.500%, due 01/25/48 1,470,888
1,774,669 9.500%, due 10/01/16 1,987,595
--------------
140,113,826
--------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION: 1.3%
434,387 4.375%, due 04/20/28 444,384
111,041 5.000%, due 12/20/29 113,480
627,521 6.500%, due 10/15/31 662,130
2,973,489 6.500%, due 05/15/32 3,135,858
1,465,865 7.000%, due 09/15/24 1,573,289
660,954 7.000%, due 10/15/24 709,313
1,561,051 7.000%, due 10/15/24 1,675,264
397,679 7.000%, due 11/15/24 426,846
3,984,957 7.500%, due 12/15/23 4,306,066
725,304 7.500%, due 11/20/30 772,884
3,091,913 8.000%, due 12/15/17 3,406,110
235,000 8.000%, due 07/15/24 257,124
--------------
17,482,748
--------------
Total U.S. Government
Agency Obligations
(Cost $210,155,109) 211,933,801
--------------
U.S. TREASURY OBLIGATIONS: 4.2%
U.S. TREASURY BONDS: 1.0%
5,204,000 S,L 5.375%, due 02/15/31 5,428,631
7,310,000 S,L 6.250%, due 08/15/23 8,334,262
--------------
13,762,893
--------------
U.S. TREASURY NOTES: 2.8%
5,081,000 S,L 1.875%, due 11/30/05 5,092,117
5,081,000 L 1875%, due 12/31/05 5,085,964
9,750,000 S,L 2.250%, due 07/31/04 9,820,463
467,000 S,L 2.625%, due 11/15/06 471,269
11,424,000 S,L 3.375%, due 12/15/08 11,505,226
6,078,000 S,L 4.250%, due 11/15/13 6,073,253
--------------
38,048,292
--------------
U.S. TREASURY STRIP PRINCIPAL: 0.4%
11,220,000 S,L 5.060%, due 05/15/16 6,090,272
--------------
6,090,272
--------------
Total U.S. Treasury Obligations
(Cost $58,007,165) 57,901,457
--------------
OTHER BONDS: 1.5%
SOVEREIGN: 1.5%
887,000 @@,** ARG Boden, 5.490%,
due 08/03/12 556,859
1,211,000 @@ Brazilian Government Intl.
Bond, 2.188%, due 04/15/12 1,095,030
1,119,000 @@ Brazilian Government Intl.
Bond, 10.000%, due 08/07/11 1,242,090
803,000 @@ Brazilian Government Intl.
Bond, 11.000%, due 08/17/40 887,315
1,473,000 @@,XX Central Bank of Nigeria,
5.900%, due 01/05/10 559,740
966,000 @@ Colombia Government Intl.
Bond, 10.000%, due 01/23/12 1,062,600
</Table>
See Accompanying Notes to Financial Statements
70
<Page>
ING
VP
Balanced
Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003 (Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------
SOVEREIGN (CONTINUED)
$ 366,000 @@,L Colombia Government Intl.
Bond, 11.750%, due 02/25/20 $ 442,860
741,000 @@ Dominican Republic Intl. Bond,
9.040%, due 01/23/13 566,297
746,000 @@ Ecuador Government Intl.
Bond, 7.000%, due 08/15/30 579,195
765,000 @@,S Mexico Government Intl.
Bond, 4.625%, due 10/08/08 776,475
1,198,000 @@,L Mexico Government Intl.
Bond, 6.625%, due 03/03/15 1,242,925
797,219 @@ Panama Government Intl.
Bond, 1.938%, due 07/17/16 697,142
106,000 @@,L Panama Government Intl.
Bond, 9.375%, due 07/23/12 121,370
315,000 @@ Peru Government Intl. Bond,
4.500%, due 03/07/17 282,987
551,000 @@ Peru Government Intl. Bond,
9.125%, due 02/21/12 617,120
1,113,000 @@ Philippine Government Intl.
Bond, 9.875%, due 01/15/19 1,182,563
743,000 @@ Republic of Bulgaria, 8.250%,
due 01/15/15 880,050
421,000 @@ Republic of Salvador, 7.750%,
due 01/24/23 447,616
2,750,000 @@ Russia Government Intl. Bond,
5.000%, due 03/31/30 2,643,437
211,000 @@ Turkey Government Intl. Bond,
9.500%, due 01/15/14 244,760
1,454,000 @@,S Turkey Government Intl. Bond,
12.375%, due 06/15/09 1,868,389
350,000 @@,L Ukraine Government Intl.
Bond, 7.650%, due 06/11/13 365,750
251,536 #,@@,S Ukraine Government Intl.
Bond, 11.000%, due 03/15/07 280,334
217,000 @@ Uruguay Government Intl.
Bond, 7.250%, due 02/15/11 188,248
504,000 @@,L Uruguay Government Intl.
Bond, 7.500%, due 03/15/15 405,720
1,028,000 @@ Venezuela Government Intl.
Bond, 9.250%, due 09/15/27 940,620
990,000 #,@@,L Venezuela Government Intl.
Bond, 10.750%, due 09/19/13 1,061,775
---------------
Total Other Bonds
(Cost $19,387,520) 21,239,267
---------------
Total Long-Term Investments
(Cost $1,285,050,524) 1,399,720,832
---------------
SHORT-TERM INVESTMENTS: 3.3%
COMMERCIAL PAPER: 1.7%
5,200,000 S Concord Minuteman Cap
B-CPIB 1.180%, due 01/05/05 5,202,033
1,500,000 S Concord Minuteman Cap
B-CPIB 1.180%, due 01/10/05 1,500,000
5,600,000 S Concord Minuteman Cap
B-CPIB 1.180%, due 01/10/05, 5,600,000
1,500,000 S General Motors Acceptance
Corp., 1.370%, due 01/08/04 1,499,670
3,000,000 S General Motors Acceptance
Corp., 1.350%, due 01/09/04 2,999,220
6,000,000 S Royal Bank of Scotland,
1.410%, due 10/21/04 6,006,540
---------------
22,807,463
---------------
REPURCHASE AGREEMENT: 1.6%
$ 22,240,000 S Goldman Sachs Repurchase
Agreement dated 12/31/03,
0.990%, due 01/02/04,
$22,241,223 to be received
upon repurchase
(Collateralized by various
U.S. Government Agency
Obligations, 0.000%-6.704%,
Market Value $22,684,928,
due 01/09/04-11/15/30) $ 22,240,000
---------------
22,240,000
---------------
Total Short-term Investments
(Cost $45,038,204) 45,047,463
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $1,330,088,728)* 105.0% $ 1,444,768,295
---------------
OTHER ASSETS AND
LIABILITIES-NET (5.0) (69,025,498)
----- ---------------
NET ASSETS 100.0% $ 1,375,742,797
===== ===============
</Table>
@ Non-income producing security
@@ Foreign Issuer
XX Value of securities obtained from one or more dealers making markets in
the securities which have been adjusted based on the Portfolio's
valuation procedures
# 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 Portfolio's Board of Trustees.
W When-issued or delayed delivery security.
L Loaned security, a portion or all of the security is on loan at December
31, 2003.
** Defaulted security
S Segregated securities for futures, when-issued or delayed delivery
securities held at December 31,2003.
C Bond may be called prior to maturity date.
* Cost for federal income tax purposes is $1,356,748,851. Net unrealized
appreciation consists of:
<Table>
Gross Unrealized Appreciation $ 95,853,533
Gross Unrealized Depreciation (7,834,089)
--------------
Net Unrealized Appreciation $ 88,019,444
==============
</Table>
Information concerning open futures contracts at December 31, 2003 is shown
below:
<Table>
<Caption>
NOTIONAL
NO. OF MARKET EXPIRATION UNREALIZED
CONTRACTS VALUE DATE GAIN/(LOSS)
-------------------------------------------------
LONG CONTRACT
U.S. 2 Year
Treasury Note 124 $ 26,541,813 Mar-04 $ 198,943
============= ==========
SHORT CONTRACT
U.S. 10 Year
Treasury Note 248 $ (27,841,876) Mar-04 $ (481,741)
============= ==========
</Table>
See Accompanying Notes to Financial Statements
71
<Page>
ING
VP
Growth and
Income Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003
<Table>
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------------------------------
COMMON STOCK: 99.2%
AEROSPACE/DEFENSE: 1.0%
400,000 L United Technologies Corp. $ 37,908,000
--------------
37,908,000
--------------
AGRICULTURE: 0.5%
350,000 L Altria Group, Inc. 19,047,000
--------------
19,047,000
--------------
APPAREL: 0.6%
630,000 Jones Apparel Group, Inc. 22,194,900
--------------
22,194,900
--------------
AUTO MANUFACTURERS: 2.0%
4,700,000 L Ford Motor Co. 75,200,000
--------------
75,200,000
--------------
BANKS: 7.0%
945,000 L Bank of America Corp. 76,006,350
770,000 Bank One Corp. 35,104,300
1,900,000 L Wachovia Corp. 88,521,000
1,100,000 L Wells Fargo & Co. 64,779,000
--------------
264,410,650
--------------
BEVERAGES: 1.9%
910,000 L Coca-Cola Co. 46,182,500
549,300 PepsiCo, Inc. 25,608,366
--------------
71,790,866
--------------
BIOTECHNOLOGY: 1.3%
785,000 @,L Amgen, Inc. 48,513,000
--------------
48,513,000
--------------
BUILDING MATERIALS: 1.3%
481,600 @ American Standard Cos., Inc. 48,497,120
--------------
48,497,120
--------------
CHEMICALS: 1.2%
1,000,000 L Du Pont EI de Nemours & Co. 45,890,000
--------------
45,890,000
--------------
COMMERCIAL SERVICES: 1.2%
669,700 L Equifax, Inc. 16,407,650
556,000 L H&R Block, Inc. 30,785,720
--------------
47,193,370
--------------
COMPUTERS: 0.8%
950,000 @ Dell, Inc. 32,262,000
--------------
32,262,000
--------------
COSMETICS/PERSONAL CARE: 1.7%
665,000 L Procter & Gamble Co. 66,420,200
--------------
66,420,200
--------------
DIVERSIFIED FINANCIAL SERVICES: 12.0%
921,700 L Bear Stearns Cos., Inc. 73,689,915
2,400,000 Citigroup, Inc. 116,496,000
1,409,600 @,L E*TRADE Group, Inc. 17,831,440
180,000 L Fannie Mae 13,510,800
135,000 Freddie Mac 7,873,200
2,600,000 JP Morgan Chase & Co. 95,498,000
735,000 Lehman Brothers Holdings, Inc. 56,756,700
1,170,600 L Merrill Lynch & Co., Inc. 68,655,690
--------------
450,311,745
--------------
ELECTRIC: 0.6%
1,000,000 @ Edison Intl. $ 21,930,000
--------------
21,930,000
--------------
ELECTRONICS: 0.3%
500,000 L Applera Corp. - Applied
Biosystems Group 10,355,000
--------------
10,355,000
--------------
ENTERTAINMENT: 1.8%
1,950,000 L International Game
Technology 69,615,000
--------------
69,615,000
--------------
HEALTHCARE-PRODUCTS: 4.2%
650,000 Bausch & Lomb, Inc. 33,735,000
150,000 CR Bard, Inc. 12,187,500
665,000 @,L Guidant Corp. 40,033,000
1,140,000 L Johnson & Johnson 58,892,400
220,000 @ St. Jude Medical, Inc. 13,497,000
--------------
158,344,900
--------------
HEALTHCARE-SERVICES: 2.4%
775,000 L UnitedHealth Group, Inc. 45,089,500
475,000 @ WellPoint Health Networks 46,070,250
--------------
91,159,750
--------------
HOME BUILDERS: 1.3%
250,000 Centex Corp. 26,912,500
265,000 Ryland Group, Inc. 23,489,600
--------------
50,402,100
--------------
INSURANCE: 2.6%
1,000,000 L American Intl. Group 66,280,000
275,000 Loews Corp. 13,598,750
475,000 Prudential Financial, Inc. 19,840,750
--------------
99,719,500
--------------
INTERNET: 3.2%
1,400,000 @,L Amazon.Com, Inc. 73,696,000
760,000 @,L eBay, Inc. 49,088,400
--------------
122,784,400
--------------
MEDIA: 3.6%
250,000 L Echostar
Communications Corp. 8,500,000
271,800 McGraw-Hill Cos., Inc. 19,004,256
500,000 L Tribune Co. 25,800,000
2,625,000 L Walt Disney Co. 61,241,250
800,000 @,L XM Satellite Radio
Holdings, Inc. 21,088,000
--------------
135,633,506
--------------
MISCELLANEOUS MANUFACTURING: 5.8%
500,000 L Eastman Kodak Co. 12,835,000
1,448,000 General Electric Co. 44,859,040
2,450,000 Honeywell Intl., Inc. 81,903,500
490,000 ITT Industries, Inc. 36,362,900
367,700 @,L SPX Corp. 21,624,437
786,000 @@ Tyco Intl. Ltd. 20,829,000
--------------
218,413,877
--------------
OFFICE/BUSINESS EQUIPMENT: 1.3%
3,498,900 @,L Xerox Corp. 48,284,820
--------------
48,284,820
--------------
</Table>
See Accompanying Notes to Financial Statements
72
<Page>
ING
VP
Growth and
Income Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003 (Continued)
<Table>
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------------------------------
OIL AND GAS: 4.3%
430,000 Devon Energy Corp. $ 24,621,800
2,545,500 Exxon Mobil Corp. 104,365,500
772,500 Occidental Petroleum Corp. 32,630,400
--------------
161,617,700
--------------
OIL AND GAS SERVICES: 0.4%
360,000 @ Cooper Cameron Corp. 16,776,000
--------------
16,776,000
--------------
PACKAGING AND CONTAINERS: 0.5%
724,900 @ Pactiv Corp. 17,325,110
--------------
17,325,110
--------------
PHARMACEUTICALS: 3.8%
1,450,000 Merck & Co., Inc. 66,990,000
1,210,000 Pfizer, Inc. 42,749,300
788,775 @,L Watson Pharmaceuticals, Inc. 36,283,650
--------------
146,022,950
--------------
RETAIL: 5.0%
199,000 @,L Advance Auto Parts 16,198,600
750,000 CVS Corp. 27,090,000
2,540,000 L Gap, Inc. 58,953,400
500,000 Limited Bra 9,015,000
700,000 RadioShack Corp. 21,476,000
1,081,900 L Wal-Mart Stores, Inc. 57,394,795
--------------
190,127,795
--------------
SAVINGS AND LOANS: 1.3%
1,250,000 L Washington Mutual, Inc. 50,150,000
--------------
50,150,000
--------------
SEMICONDUCTORS: 4.1%
3,537,200 Intel Corp. 113,897,840
2,250,000 @,L LSI Logic Corp. 19,957,500
633,400 @,L PMC - Sierra, Inc. 12,763,010
186,800 @,L Qlogic Corp. 9,638,880
--------------
156,257,230
--------------
SOFTWARE: 7.3%
660,000 @,L Electronic Arts, Inc. 31,534,800
6,886,600 L Microsoft Corp. 189,656,964
4,314,400 @ Oracle Corp. 56,950,080
--------------
278,141,844
--------------
TELECOMMUNICATIONS: 11.3%
6,423,000 @,L AT&T Wireless Services, Inc. 51,319,770
685,000 Bellsouth Corp. 19,385,500
5,970,000 @ Cisco Systems, Inc. 145,011,300
4,700,000 L Motorola, Inc. 66,129,000
3,483,700 @,L Nextel Communications, Inc. 97,752,622
600,000 L Qualcomm, Inc. 32,358,000
690,000 L Scientific-Atlanta, Inc. 18,837,000
--------------
430,793,192
--------------
TRANSPORTATION: 1.6%
820,000 L United Parcel Service, Inc. 61,131,000
--------------
61,131,000
--------------
Total Common Stock
(Cost $3,118,354,934) 3,764,624,525
--------------
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------
CORPORATE BONDS: 0.0%
OIL AND GAS: 0.0%
$ 532,000 Devon Energy Corp.,
4.90%, due 08/15/08 $ 545,965
727,000 Devon Energy Corp.,
4.95%, due 08/15/08 746,084
---------------
Total Corporate Bonds
(Cost $930,246) 1,292,049
---------------
Total Long-Term Investments
(Cost $3,119,285,180) 3,765,916,574
---------------
SHORT-TERM INVESTMENTS: 0.8%
REPURCHASE AGREEMENT: 0.8%
30,634,000 Goldman Sachs Repurchase
Agreement dated 12/31/03, 0.990%,
due 01/02/04, $30,635,685 to be
received upon repurchase
(Collateralized by various
U.S. Government Agency
Obligations, 0.000%-6.875%,
Market Value $31,261,051,
due 01/30/04-2/15/23) 30,634,000
---------------
Total Short-term Investments
(Cost $30,634,000) 30,634,000
---------------
TOTAL INVESTMENTS IN
SECURITIES (COST
$3,149,919,180)* 100.0% $ 3,796,550,574
OTHER ASSETS AND
LIABILITIES-NET 0.0 613,635
----- ---------------
NET ASSETS 100.0% $ 3,797,164,209
===== ===============
</Table>
@ Non-income producing security
@@ Foreign Issuer
ADR American Depositary Receipt
L Loaned security, a portion or all of the security is on loan at
December 31, 2003.
* Cost for federal income tax purposes is $3,239,301,478. Net unrealized
appreciation consists of:
<Table>
Gross Unrealized Appreciation $ 577,905,711
Gross Unrealized Depreciation (20,656,615)
---------------
Net Unrealized Appreciation $ 557,249,096
===============
</Table>
See Accompanying Notes to Financial Statements
73
<Page>
ING
VP
Bond
Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------
CORPORATE BONDS: 31.1%
AGRICULTURE: 0.0%
$ 145,000 #,S Dimon, Inc., 7.750%,
due 06/01/13 $ 150,075
--------------
150,075
--------------
AIRLINES: 2.1%
2,555,000 S,L American Airlines Inc,
6.817%, due 05/23/11 2,302,304
8,226,000 S,L American Airlines, Inc.,
7.024%, due 10/15/09 8,215,338
4,447,000 S American Airlines, Inc.,
7.324%, due 10/15/09 3,848,510
2,476,000 Continental Airlines Inc,
7.875%, due 07/02/18 2,492,082
1,824,451 L Continental Airlines, Inc.,
6.545%, due 08/02/20 1,804,299
1,441,830 Continental Airlines, Inc.,
6.900%, due 07/02/19 1,424,083
1,022,000 S Delta Air Lines, Inc.,
7.299%, due 09/18/06 922,930
1,152,000 S Delta Air Lines, Inc.,
7.779%, due 11/18/05 1,060,469
2,954,289 US Airways Pass Through Trust,
6.850%, due 01/30/18 2,828,530
--------------
24,898,545
--------------
AUTO MANUFACTURERS: 0.9%
3,989,000 Ford Motor Co., 6.375%,
due 02/01/29 3,569,126
880,000 Ford Motor Co., 6.625%,
due 10/01/28 811,840
5,230,000 L General Motors Corp.,
8.375%, due 07/15/33 6,089,305
--------------
10,470,271
--------------
AUTO PARTS & EQUIPMENT: 0.0%
45,000 S HLI Operating Co Inc,
10.500%, due 06/15/10 52,031
70,000 # TRW Automotive, Inc.,
11.000%, due 02/15/13 82,775
--------------
134,806
--------------
BANKS: 5.1%
3,006,000 #,@@ Banco Bradesco SA, 8.750%,
due 10/24/13 3,156,300
2,267,000 S Bank of America Corp.,
6.375%, due 02/15/08 2,514,037
569,000 # BankAmerica Institutional,
Class B, 7.700%,
due 12/31/26 638,710
1,105,000 BankBoston Capital Trust III,
1.920%, due 06/15/27 1,058,262
294,000 BankBoston Corp., 1.780%,
due 06/08/28 275,480
289,000 Barnett Capital I, 8.060%,
due 12/01/26 330,868
695,000 Barnett Capital II, 7.950%,
due 12/01/26 791,295
810,000 BNY Capital I, 7.970%,
due 12/31/26 912,013
856,000 Chase Capital VI, 1.788%,
due 08/01/28 809,085
$ 1,711,000 # Corestates Capital Trust II,
1.800%, due 01/15/27 $ 1,620,534
8,356,000 #,L Dresdner Funding Trust I,
8.151%, due 06/30/31 9,566,432
289,000 FBS Capital I, 8.090%,
due 11/15/26 331,822
1,560,000 First Union Institutional
Capital II, 7.850%,
due 01/01/27 1,768,469
885,000 Fleet Capital Trust II, 7.920%,
due 12/11/26 999,014
3,237,000 #,@@,L HBOS PLC, 5.375%,
due 11/29/49 3,243,565
735,000 @@,C Hongkong & Shanghai
Banking Corp. Ltd.,
1.313%, due 07/29/49 600,627
960,000 @@,C HSBC Bank PLC, 1.350%,
due 06/29/49 773,180
3,778,000 @@,S HSBC Holdings PLC, 7.500%,
due 07/15/09 4,422,508
2,186,000 M & T Bank Corp., 3.850%,
due 04/01/13 2,173,656
4,770,000 Mellon Capital I, 7.720%,
due 12/01/26 5,364,265
1,450,000 @@,C National Westminster Bank
PLC, 1.313%, due 11/29/49 1,205,310
576,000 Nationsbank Cap Trust III,
1.700%, due 01/15/27 543,166
2,415,000 NB Capital Trust IV, 8.250%,
due 04/15/27 2,804,607
2,670,000 # Rabobank Capital Funding II,
5.260%, due 12/29/49 2,679,874
1,622,000 L RBS Capital Trust I, 4.709%,
due 12/29/49 1,554,385
890,000 @@,C Societe Generale, 1.309%,
due 11/29/49 722,216
570,000 @@,C Standard Chartered PLC,
1.250%, due 07/29/49 416,297
1,710,000 @@,C Standard Chartered PLC,
1.275%, due 01/29/49 1,297,907
3,860,000 @@,C Standard Chartered PLC,
1.400%, due 12/29/49 2,899,790
4,710,000 @@,C Standard Chartered PLC,
1.500%, due 11/29/49 3,530,508
764,000 Wachovia Capital Trust II,
1.650%, due 01/15/27 722,952
2,351,000 S,L Wells Fargo & Co., 3.120%,
due 08/15/08 2,324,979
470,000 # Wells Fargo Capital A,
7.730%, due 12/01/26 526,116
--------------
62,578,229
--------------
BEVERAGES: 0.8%
4,088,000 #, @@, L Cia Brasileira de Bebidas,
8.750%, due 09/15/13 4,353,720
893,000 S,L Constellation Brands, Inc.,
8.000%, due 02/15/08 995,695
3,591,000 #,S Miller Brewing Co., 4.250%,
due 08/15/08 3,642,660
--------------
8,992,075
--------------
</Table>
See Accompanying Notes to Financial Statements
74
<Page>
ING
VP
Bond
Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003 (Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------
CHEMICALS: 0.1%
$ 898,000 S,L Dow Chemical Co., 5.750%,
due 11/15/09 $ 962,643
--------------
962,643
--------------
COMMERCIAL SERVICES: 0.3%
616,000 @@,S Quebecor Media, Inc.,
11.125%, due 07/15/11 716,100
2,230,000 S,L United Rentals North
America, Inc., 10.750%,
due 04/15/08 2,519,900
--------------
3,236,000
--------------
DIVERSIFIED FINANCIAL SERVICES: 3.3%
3,365,000 S Boeing Capital Corp.,
7.375%, due 09/27/10 3,873,155
4,840,000 #,@@,S Brazilian Merchant Voucher
Receivables Ltd., 5.911%,
due 06/15/11 4,743,199
444,000 CitiCorp Capital I, 7.933%,
due 02/15/27 513,510
487,000 Citigroup Capital II, 7.750%,
due 12/01/36 550,836
1,119,000 # Corestates Capital Trust I,
8.000%, due 12/15/26 1,273,525
3,535,000 S,L Countrywide Home Loans,
Inc., 4.250%, due 12/19/07 3,649,082
65,000 @@,# Eircom Funding, 8.250%,
due 08/15/13 72,313
118,000 #,L Farmers Exchange Capital,
7.050%, due 07/15/28 110,754
2,935,000 #,L Farmers Exchange Capital,
7.200%, due 07/15/48 2,638,671
1,703,000 S Ford Motor Credit Co,
7.375%, due 02/01/11 1,858,743
272,000 S,L Ford Motor Credit Co.,
5.625%, due 10/01/08 279,521
18,933 #,S Hollinger Participation Trust,
12.125%, due 11/15/10 22,578
5,069,000 XX,# Mangrove Bay Pass-Through
Trust, 6.102%, due 07/15/33 4,996,715
1,231,000 S Nexstar Finance, Inc.,
12.000%, due 04/01/08 1,394,108
2,624,000 # OneAmerica Financial
Partners, Inc., 7.000%,
due 10/15/33 2,605,658
2,660,000 #,@@,S PF Export Receivables Master
Trust, 3.748%, due 06/01/13 2,594,365
2,695,418 #,@@ PF Export Receivables Master
Trust, 6.436%, due 06/01/15 2,749,556
715,000 S Power Receivable Finance LLC,
6.290%, due 01/01/12 746,939
1,802,000 S Takefuji Corp, 9.200%,
due 04/15/11 1,999,440
501,000 S Technical Olympic USA, Inc.,
9.000%, due 07/01/10 541,080
250,000 S Technical Olympic USA, Inc.,
10.375%, due 07/01/12 281,250
50,000 #,S Universal City Development
Partners, 11.750%,
due 04/01/10 58,750
1,340,000 # Wachovia Capital Trust V,
7.965%, due 06/01/27 1,547,168
--------------
39,100,916
--------------
ELECTRIC: 3.0%
$ 1,700,000 #,S,L Consumers Energy Co.,
4.250%, due 04/15/08 $ 1,718,644
2,287,000 #,S,L Consumers Energy Co.,
4.800%, due 02/17/09 2,340,342
1,038,000 @@,S Empresa Nacional de
Electricidad SA/Chile,
7.750%, due 07/15/08 1,134,319
7,402,000 @@ Empresa Nacional de
Electricidad SA/Chile,
8.350%, due 08/01/13 8,337,730
576,000 Enserch Capital I, 2.510%,
due 07/01/28 502,390
19,000 Enterprise Capital Trust II,
2.360%, due 06/30/28 16,809
4,364,000 Firstenergy Corp., 7.375%,
due 11/15/31 4,480,283
3,426,000 #,S Indianapolis Power & Light,
6.300%, due 07/01/13 3,540,768
1,598,000 S Nisource Finance Corp.,
7.625%, due 11/15/05 1,746,576
3,329,000 #, S Ohio Edison Co., 4.000%,
due 05/01/08 3,258,825
4,665,000 Ohio Power Co., 6.375%,
due 07/15/33 4,680,110
2,152,000 #,S,L PG&E Corp., 6.875%,
due 07/15/08 2,340,300
715,000 #,S Power Contract Financing
LLC, 5.200%, due 02/01/06 726,099
715,000 #,S Power Contract Financing
LLC, 6.256%, due 02/01/10 754,994
--------------
35,578,189
--------------
ELECTRONICS: 0.0%
155,000 S Stoneridge, Inc., 11.500%,
due 05/01/12 183,675
--------------
183,675
--------------
ENTERTAINMENT: 0.2%
996,000 L Cinemark USA, Inc., 9.000%,
due 02/01/13 1,125,480
986,000 S,L Six Flags, Inc., 9.750%,
due 06/15/07 1,034,068
--------------
2,159,548
--------------
ENVIRONMENTAL CONTROL: 0.2%
2,721,000 S Allied Waste North America,
7.625%, due 01/01/06 2,877,458
--------------
2,877,458
--------------
Food: 1.3%
1,300,000 Kroger Co., 5.500%,
due 02/01/13 1,324,567
1,656,000 S Kroger Co., 7.250%,
due 06/01/09 1,888,678
2,908,000 S Safeway, Inc., 4.800%,
due 07/16/07 3,020,746
4,180,000 S Supervalu, Inc., 7.875%,
due 08/01/09 4,881,342
3,898,000 S Tyson Foods, Inc., 7.250%,
due 10/01/06 4,274,227
--------------
15,389,560
--------------
</Table>
See Accompanying Notes to Financial Statements
75
<Page>
ING
VP
Bond
Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003 (Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------
FOREST PRODUCTS & PAPER: 0.8%
$ 2,280,000 @@,S, Abitibi-Consolidated, Inc.,
6.950%, due 12/15/06 $ 2,389,025
1,267,000 @@,S,L Abitibi-Consolidated, Inc.,
6.950%, due 04/01/08 1,328,864
1,980,000 S Georgia-Pacific Corp.,
8.875%, due 02/01/10 2,267,100
2,879,000 Weyerhaeuser Co., 7.375%,
due 03/15/32 3,140,073
--------------
9,125,062
--------------
HOME BUILDERS: 0.0%
60,000 S Meritage Corp., 9.750%,
due 06/01/11 67,350
10,000 Standard-Pacific Corp.,
7.750%, due 03/15/13 10,650
--------------
78,000
--------------
INSURANCE: 0.9%
3,353,000 # Farmers Insurance Exchange,
8.625%, due 05/01/24 3,514,149
2,318,000 #,S Monumental Global
Funding II, 3.850%,
due 03/03/08 2,340,955
3,798,000 #,L Zurich Capital Trust I, 8.376%,
due 06/01/37 4,374,570
--------------
10,229,674
--------------
LEISURE TIME: 0.1%
1,611,000 @@,S,L Royal Caribbean Cruises Ltd.,
7.000%, due 10/15/07 1,715,715
--------------
1,715,715
--------------
LODGING: 0.8%
1,736,000 S,L Mandalay Resort Group,
10.250%, due 08/01/07 2,005,080
2,603,000 S,L MGM Mirage, 6.000%,
due 10/01/09 2,687,598
2,603,000 S Park Place Entertainment
Corp., 9.375%, due 02/15/07 2,954,405
1,563,000 S Starwood Hotels & Resorts
Worldwide, Inc., 7.375%,
due 05/01/07 1,695,855
--------------
9,342,938
--------------
MEDIA: 1.2%
1,213,000 S,L AOL Time Warner, Inc.,
6.875%, due 05/01/12 1,367,633
1,611,000 # CCO Holdings Capital Corp.,
8.750%, due 11/15/13 1,647,248
1,162,000 L CSC Holdings, Inc., 10.500%,
due 05/15/16 1,336,300
1,856,000 #,L Dex Media, Inc., 8.000%,
due 11/15/13 1,958,079
978,000 DirecTV Holdings LLC,
8.375%, due 03/15/13 1,139,370
1,036,000 #,S,L Echostar DBS Corp., 4.410%,
due 10/01/08 1,083,915
1,424,000 @@, #,S,L Echostar DBS Corp., 5.750%,
due 10/01/08 1,447,140
60,000 S,L Paxson Communications Corp.,
10.750%, due 07/15/08 65,775
$ 125,000 S Salem Communications
Holding Corp., 9.000%,
due 07/01/11 $ 136,563
991,000 S,L Spanish Broadcasting System,
9.625%, due 11/01/09 1,062,848
1,727,000 Time Warner, Inc., 6.950%,
due 01/15/28 1,851,121
846,000 S Young Broadcasting, Inc.,
8.500%, due 12/15/08 913,680
--------------
14,009,672
--------------
MISCELLANEOUS MANUFACTURING: 0.3%
4,036,000 L General Electric Co., 5.000%,
due 02/01/13 4,089,142
--------------
4,089,142
--------------
MULTI-NATIONAL: 0.6%
3,860,000 @@ Corp Andina de Fomento
CAF, 5.200%, due 05/21/13 3,850,412
3,539,000 @@,S Corp Andina de Fomento
CAF, 6.875%, due 03/15/12 3,934,218
--------------
7,784,630
--------------
OIL AND GAS: 2.1%
1,547,000 S Chesapeake Energy Corp.,
9.000%, due 08/15/12 1,786,785
50,000 #,S Energy Partners Ltd., 8.750%,
due 08/01/10 52,250
3,342,000 Enterprise Products Partners
LP, 6.875%, due 03/01/33 3,349,971
9,282,000 @@ Husky Oil Co., 8.900%,
due 08/15/28 10,767,120
4,613,000 Pemex Project Funding Master
Trust, 7.375%, due 12/15/14 4,947,443
1,895,000 L Valero Energy Corp., 7.500%,
due 04/15/32 2,118,511
1,873,000 Valero Energy Corp., 8.750%,
due 06/15/30 2,344,237
--------------
25,366,317
--------------
PACKAGING AND CONTAINERS: 1.0%
1,239,000 @@,#,L Crown European Holdings SA,
10.875%, due 03/01/13 1,463,569
2,968,000 #,S Owens-Brockway, 8.875%,
due 02/15/09 3,268,510
3,391,000 #,S,L Sealed Air Corp., 5.625%,
due 07/15/13 3,476,351
3,776,000 #,S Sealed Air Corp., 6.950%,
due 05/15/09 4,248,514
--------------
12,456,944
--------------
PIPELINES: 1.0%
4,001,000 S,L CenterPoint Energy Resources
Corp., 8.125%, due 07/15/05 4,274,756
7,371,000 Plains All American Pipeline
LP/PAA Finance Corp,
5.625%, due 12/15/13 7,472,352
180,000 L Southern Natural Gas Co.,
7.350%, due 02/15/31 178,650
--------------
11,925,758
--------------
</Table>
See Accompanying Notes to Financial Statements
76
<Page>
ING
VP
Bond
Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003 (Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------
REAL ESTATE: 1.3%
$ 3,249,000 S EOP Operating LP, 7.750%,
due 11/15/07 $ 3,727,691
3,744,000 S,L Liberty Property LP, 7.750%,
due 04/15/09 4,378,406
548,000 S Liberty Property Trust,
6.375%, due 08/15/12 590,765
2,190,000 S Simon Property Group LP,
4.875%, due 03/18/10 2,235,208
4,152,000 S,L Simon Property Group LP,
6.375%, due 11/15/07 4,582,799
--------------
15,514,869
--------------
RETAIL: 0.0%
115,000 S,L Dollar General Corp., 8.625%,
due 06/15/10 129,806
--------------
129,806
--------------
SAVINGS AND LOANS: 0.3%
3,640,000 S Washington Mutual, Inc.,
4.375%, due 01/15/08 3,745,484
--------------
3,745,484
--------------
SEMICONDUCTORS: 0.0%
65,000 #,L Amkor Technology, Inc.,
7.750%, due 05/15/13 70,038
--------------
70,038
--------------
TELECOMMUNICATIONS: 3.4%
336,000 #,S,L ACC Escrow Corp., 10.000%,
due 08/01/11 376,320
1,168,000 #,S,L American Tower Corp.,
9.375%, due 02/01/09 1,249,760
497,000 #,S,L American Towers, Inc.,
7.250%, due 12/01/11 508,183
7,597,000 S,L AT&T Corp., 8.050%,
due 11/15/11 8,759,629
3,213,000 S,L AT&T Wireless Services, Inc.,
8.125%, due 05/01/12 3,785,393
1,001,000 @,S,L,** MCI Communications Corp.,
0.000%, due 08/15/06 810,810
993,000 L Nextel Communications, Inc.,
7.375%, due 08/01/15 1,072,440
967,000 S Nextel Communications, Inc.,
9.375%, due 11/15/09 1,058,865
1,022,000 #,S,L Qwest Corp., 9.125%,
due 03/15/12 1,177,855
1,207,000 #,S Qwest Services Corp.,
13.500%, due 12/15/10 1,472,540
20,000 L Qwest Services Corp.,
14.000%, due 12/15/14 25,550
3,423,000 S Sprint Capital Corp., 6.000%,
due 01/15/07 3,658,961
3,919,000 L Sprint Capital Corp., 6.875%,
due 11/15/28 3,837,728
3,587,000 TCI Communications Finance,
9.650%, due 03/31/27 4,340,270
5,962,000 S,L Verizon Florida, Inc., 6.125%,
due 01/15/13 6,393,743
$ 2,000,000 Verizon Virginia, Inc., 4.625%,
due 03/15/13 $ 1,931,836
--------------
40,459,883
--------------
Total Corporate Bonds
(Cost $362,915,661) 372,755,922
--------------
COLLATERALIZED MORTGAGE OBLIGATIONS AND ASSET-BACKED
SECURITIES: 26.0%
AGENCY : 0.4%
4,676,604 Vendee Mortgage Trust,
5.850%, due 09/15/23 4,743,689
--------------
4,743,689
--------------
AUTOMOBILE: 1.1%
9,200,000 Capital Auto Receivables
Asset Trust, 2.750%,
due 04/16/07 9,311,280
4,320,000 Nissan Auto Receivables
Owner Trust, 2.610%,
due 07/15/08 4,327,290
--------------
13,638,570
--------------
COMMERCIAL: 6.6%
6,167,579 L Chase Manhattan Bank-First
Union National Bank,
7.439%, due 08/15/31 7,180,017
1,750,000 CS First Boston Mortgage
Securities Corp., 3.382%,
due 05/15/38 1,672,534
3,712,771 L CS First Boston Mortgage
Securities Corp., 3.727%,
due 03/15/35 3,678,670
5,200,000 First Union National
Bank-Bank of America
Commercial Mortgage
Trust, 6.136%, due 03/15/33 5,703,661
7,300,000 GE Capital Commercial
Mortgage Corp., 6.531%,
due 05/15/33 8,191,389
6,350,000 L JP Morgan Chase Commercial
Mortgage Securities Corp.,
6.162%, due 05/12/34 6,980,571
9,380,000 JP Morgan Chase Commercial
Mortgage Securities Corp.,
6.244%, due 04/15/35 10,317,495
7,030,000 LB-UBS Commercial Mortgage
Trust, 4.659%, due 12/15/26 7,141,942
2,000,000 LB-UBS Commercial Mortgage
Trust, 6.133%, due 12/15/30 2,201,419
5,220,000 LB-UBS Commercial Mortgage
Trust, 6.226%, due 03/15/26 5,768,401
4,500,000 LB-UBS Commercial Mortgage
Trust, 7.370%, due 08/15/26 5,239,762
9,380,000 Mortgage Capital Funding,
Inc., 6.663%, due 03/18/30 10,448,672
4,437,654 Prudential Commercial
Mortgage Trust, 3.669%,
due 02/11/36 4,390,179
--------------
78,914,712
--------------
CREDIT CARD: 1.1%
8,800,000 Citibank Credit Card Issuance
Trust, 5.650%, due 06/16/08 9,456,535
</Table>
See Accompanying Notes to Financial Statements
77
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Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003 (Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------
CREDIT CARD (CONTINUED)
$ 3,460,000 Fleet Credit Card Master
Trust II, 2.400%,
due 07/15/08 $ 3,469,013
--------------
12,925,548
--------------
HOME EQUITY: 3.1%
9,163,559 XX Bayview Financial Acquisition
Trust, 1.641%, due 12/28/34 9,163,559
695,000 Equity One Abs, Inc., 2.976%,
due 09/25/33 698,933
6,425,471 Merrill Lynch Mortgage
Investors, Inc., 1.501%,
due 07/25/34 6,429,484
2,345,873 Residential Asset Mortgage
Products, Inc., 1.429%,
due 06/25/33 2,344,328
8,623,565 Residential Asset Securities
Corp., 1.429%, due 12/25/33 8,623,565
2,602,000 Residential Funding Mortgage
Securities II, 3.450%,
due 01/25/16 2,634,356
7,465,000 Saxon Asset Securities Trust,
3.960%, due 06/25/33 7,356,370
--------------
37,250,595
--------------
OTHER ASSET BACKED SECURITIES: 0.8%
3,958,906 XX Amortizing Residential
Collateral Trust, 1.369%,
due 05/25/32 3,956,431
2,154,000 Chase Funding Mortgage
Loan Asset-Backed
Certificates, 1.419%,
due 07/25/33 2,155,402
3,256,000 Residential Asset Mortgage
Products, Inc., 2.140%,
due 02/25/30 3,182,986
--------------
9,294,819
--------------
WHOLE LOAN COLLATERALIZED MORTGAGE: 9.1%
1,517,505 Bank of America Alternative
Loan Trust, 5.500%,
due 02/25/33 1,564,508
10,450,392 XX Bank of America Mortgage
Securities, 1.570%,
due 12/25/33 10,456,923
3,484,286 Bank of America Mortgage
Securities, 4.413%,
due 03/25/33 3,536,721
3,555,417 XX Bank of America Mortgage
Securities, 5.500%,
due 11/25/33 3,535,418
5,150,036 Bear Stearns Asset Backed
Securities, Inc., 5.625%,
due 11/25/32 5,239,067
5,497,448 Citicorp Mortgage Securities,
Inc., 1.619%, due 10/25/33 5,483,868
3,552,501 Countrywide Alternative
Loan Trust, 1.519%,
due 07/25/18 3,545,518
7,305,000 CS First Boston Mortgage
Securities Corp., 4.187%,
due 10/25/33 7,298,605
$ 11,921,113 MASTR Alternative Loans
Trust, 6.500%, due 05/25/33 $ 12,315,831
4,555,325 XX MASTR Asset Securitization
Trust, 1.591%, due 11/25/33 4,557,462
3,047,355 MASTR Asset Securitization
Trust, 8.000%, due 06/25/33 3,278,812
12,496,000 XX MLCC Mortgage Investors Inc,
1.469%, due 01/25/29 12,496,000
7,296,192 Residential Accredit Loans,
Inc., 1.569%, due 03/25/18 7,292,474
9,941,621 XX Sequoia Mortgage Trust,
1.469%, due 01/20/34 9,941,621
9,574,492 XX Washington Mutual, 1.720%,
due 01/25/34 9,568,508
3,813,654 Washington Mutual, 5.000%,
due 06/25/18 3,882,487
5,950,000 Wells Fargo Mortgage Backed
Securities Trust, 4.500%,
due 08/25/18 5,607,833
--------------
109,601,656
--------------
WHOLE LOAN COLLATERALIZED - OTHER: 1.3%
2,801,520 Residential Funding Mtg Sec I,
0.000%, due 05/25/33 2,786,892
5,503,205 Structured Asset Securities
Corp, 5.500%, due 07/25/33 5,538,056
7,362,000 XX Thornburg Mortgage
Securities Trust, 1.499%,
due 12/25/33 7,362,001
--------------
15,686,949
--------------
WHOLE LOAN COLLATERALIZED PLANNED
AMORTIZATION CLASS: 2.5%
11,056,409 GSR Mortgage Loan Trust,
1.519%, due 10/25/32 11,070,711
8,072,390 MASTR Alternative Loans
Trust, 8.500%, due 05/25/33 8,390,633
7,610,000 Residential Funding Securities
Corp., 4.750%, due 02/25/33 7,648,676
2,351,187 Residential Funding Securities
Corp., 8.500%, due 05/25/33 2,646,865
--------------
29,756,885
--------------
Total Collateralized Mortgage
Obligations and
Asset-Backed Securities
(Cost $309,980,837) 311,813,423
--------------
U.S. GOVERNMENT AGENCY OBLIGATIONS: 39.1%
FEDERAL HOME LOAN MORTGAGE
CORPORATION: 11.8%
20,687,990 1.813%, due 04/15/32 20,656,160
1,477,000 4.000%, due 04/15/21 1,507,056
5,780,000 L 4.250%, due 06/15/05 6,001,761
22,171,279 5.500%, due 05/01/23 22,679,099
13,500,360 5.500%, due 05/15/31 13,721,557
5,435,000 5.875%, due 03/21/11 5,899,834
7,875,000 6.000%, due 01/15/28 8,263,262
44,630,000 W 6.000%, due 01/15/34 46,122,337
13,371,000 W 6.500%, due 01/15/34 14,006,123
514,279 7.500%, due 12/01/11 548,997
1,869,397 7.500%, due 11/01/28 2,011,622
--------------
141,417,808
--------------
</Table>
See Accompanying Notes to Financial Statements
78
<Page>
ING
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Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003 (Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION: 24.3%
$ 6,896,945 1.541%, due 10/25/33 $ 6,920,127
12,235,000 L 2.375%, due 04/13/06 12,236,284
695,000 2.859%, due 12/26/29 694,073
12,455,000 L 2.875%, due 05/19/08 12,163,379
5,735,000 L 4.000%, due 09/02/08 5,814,011
10,904,000 4.000%, due 06/25/16 11,106,709
5,000,000 W 4.500%, due 01/15/19 5,006,250
5,939,000 4.750%, due 12/25/42 6,141,552
37,710,000 W 5.000%, due 01/01/17 38,464,199
46,385,000 W 5.000%, due 01/15/34 45,906,677
16,530,000 L 5.250%, due 04/15/07 17,805,851
55,763 5.500%, due 11/01/16 57,873
520,388 5.500%, due 12/01/16 540,081
302,601 5.500%, due 12/01/16 314,053
342,253 5.500%, due 02/01/17 355,172
28,180 5.500%, due 04/01/17 29,242
600,467 5.500%, due 04/01/17 623,095
420,307 5.500%, due 09/01/17 436,146
450,832 5.500%, due 11/01/17 467,821
95,271 5.500%, due 02/01/18 98,861
24,554 5.500%, due 03/01/18 25,480
506,983 5.500%, due 04/01/18 526,135
26,423 5.500%, due 06/01/18 27,421
479,736 5.500%, due 06/01/18 497,858
419,837 5.500%, due 10/01/18 435,658
15,530,000 W 5.500%, due 01/01/33 15,733,830
464,184 6.000%, due 06/01/16 487,550
3,134,524 6.000%, due 07/01/16 3,292,309
42,400 6.000%, due 08/01/16 44,535
264,523 6.000%, due 03/01/17 277,865
3,226,856 6.000%, due 03/01/17 3,389,608
5,092,860 6.000%, due 04/01/17 5,349,726
337,930 6.000%, due 08/01/17 354,974
3,613,744 6.000%, due 09/01/17 3,796,009
8,080,497 6.000%, due 07/25/24 8,451,629
1,741,928 6.000%, due 07/01/29 1,805,174
8,575,806 6.000%, due 07/25/29 8,899,759
3,645,797 6.000%, due 07/25/29 3,783,394
21,990,000 W 6.000%, due 01/15/34 22,732,162
8,000,000 6.500%, due 09/25/23 8,503,581
8,124,848 6.500%, due 08/01/29 8,505,018
671,025 6.500%, due 01/01/32 702,025
871,221 6.500%, due 09/01/32 911,560
570,325 6.500%, due 10/01/32 596,731
1,137,010 6.500%, due 10/01/32 1,189,655
67,330 7.000%, due 08/01/25 71,518
76,610 7.000%, due 10/01/25 81,375
27,897 7.000%, due 11/01/25 29,632
96,591 7.000%, due 12/01/25 102,598
54,002 7.000%, due 12/01/25 57,361
120,302 7.000%, due 12/01/25 127,784
79,199 7.000%, due 02/01/26 84,125
184,710 7.000%, due 02/01/26 196,198
145,567 7.000%, due 03/01/26 154,533
62,542 7.000%, due 03/01/26 66,394
171,672 7.000%, due 03/01/26 182,349
63,646 7.000%, due 03/01/26 67,566
96,799 7.000%, due 03/01/26 102,819
664,605 7.000%, due 01/01/30 704,469
6,050,889 7.000%, due 06/01/31 6,415,866
1,262,329 7.000%, due 06/01/32 1,337,080
347,080 7.500%, due 07/01/11 371,390
481,995 7.500%, due 10/01/30 515,237
$ 396,128 7.500%, due 11/01/30 $ 423,449
261,742 7.500%, due 11/01/30 279,794
5,251,270 7.500%, due 06/25/32 5,737,012
6,643,260 7.500%, due 01/25/48 7,257,761
728,464 10.000%, due 02/25/19 826,779
--------------
290,694,191
--------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION: 3.0%
463,523 4.375%, due 04/20/28 474,190
312,061 5.000%, due 12/20/29 318,914
3,600,000 W 6.000%, due 01/01/34 3,741,750
11,015,726 6.500%, due 10/15/31 11,623,252
336,261 7.000%, due 04/15/26 359,665
291,155 7.000%, due 04/15/26 311,420
270,846 7.000%, due 04/15/26 289,697
488,518 7.000%, due 04/15/26 522,520
1,016,496 7.000%, due 05/15/32 1,083,591
107,379 7.500%, due 04/15/22 116,020
15,001 7.500%, due 05/15/22 16,208
6,903 7.500%, due 06/15/22 7,458
7,295 7.500%, due 06/15/22 7,882
10,194 7.500%, due 08/15/22 11,015
9,685 7.500%, due 06/15/24 10,445
10,235 7.500%, due 06/15/24 11,039
65,802 7.500%, due 01/15/26 70,824
5,486 7.500%, due 07/15/26 5,905
87,312 7.500%, due 03/15/29 93,766
174,893 7.500%, due 04/15/29 187,823
3,947 7.500%, due 08/15/29 4,239
357,791 7.500%, due 08/15/29 384,242
126,614 7.500%, due 09/15/29 135,974
103,178 7.500%, due 10/15/29 110,806
174,423 7.500%, due 12/15/29 187,331
106,959 7.500%, due 01/15/30 114,831
381,389 7.500%, due 02/15/30 409,460
2,717 7.500%, due 02/15/30 2,917
158,047 7.500%, due 05/15/30 169,679
30,078 7.500%, due 06/15/30 32,292
36,348 7.500%, due 06/15/30 39,023
5,418 7.500%, due 07/15/30 5,817
4,444 7.500%, due 07/15/30 4,771
126,962 7.500%, due 07/15/30 136,307
2,845 7.500%, due 08/15/30 3,054
44,467 7.500%, due 08/15/30 47,740
3,600 7.500%, due 08/15/30 3,865
192,198 7.500%, due 10/15/30 206,344
4,016 7.500%, due 11/15/30 4,312
3,567 7.500%, due 11/15/30 3,829
4,157 7.500%, due 11/15/30 4,463
4,030 7.500%, due 11/15/30 4,325
900,075 7.500%, due 11/20/30 959,121
4,585 7.500%, due 12/15/30 4,923
100,549 7.500%, due 12/15/30 107,950
3,074 7.500%, due 01/15/31 3,299
3,163 7.500%, due 01/15/31 3,394
5,047 7.500%, due 01/15/31 5,417
3,529 7.500%, due 02/15/31 3,788
75,540 7.500%, due 02/15/31 81,077
5,601 7.500%, due 02/15/31 6,011
913 7.500%, due 02/15/31 980
1,010 7.500%, due 02/15/31 1,084
3,173 7.500%, due 02/15/31 3,407
11,325 7.500%, due 03/15/31 12,156
</Table>
See Accompanying Notes to Financial Statements
79
<Page>
ING
VP
Bond
Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003 (Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION (CONTINUED)
$ 62,588 7.500%, due 03/15/31 $ 67,176
107,404 7.500%, due 04/15/31 115,276
26,035 7.500%, due 09/15/31 27,943
2,500,416 7.500%, due 12/15/31 2,684,319
338,282 7.500%, due 01/15/32 363,197
261,667 7.500%, due 02/15/32 280,849
53,694 7.500%, due 03/15/32 57,630
294,210 7.500%, due 03/15/32 315,880
16,560 7.500%, due 04/15/32 17,774
205,768 7.500%, due 05/15/32 220,852
304,058 7.500%, due 06/15/32 326,348
85,914 7.500%, due 06/15/32 92,213
305,970 7.500%, due 07/15/32 328,400
575,325 7.500%, due 08/15/32 617,501
1,947,405 7.500%, due 09/15/32 2,090,166
5,202,978 8.000%, due 12/15/17 5,731,700
--------------
35,808,836
--------------
Total U.S. Government
Agency Obligations
(Cost $463,287,803) 467,920,835
--------------
U.S. TREASURY OBLIGATIONS: 7.6%
U.S. TREASURY BONDS: 2.9%
13,436,000 S,L 5.375%, due 02/15/31 14,015,965
18,500,000 S,L 6.250%, due 08/15/23 21,092,183
--------------
35,108,148
--------------
U.S. TREASURY NOTES: 3.5%
6,866,000 S,L 1.875%, due 11/30/05 6,881,023
6,867,000 1.875%, due 12/31/05 6,873,709
1,637,000 S,L 2.625%, due 11/15/06 1,651,964
16,632,000 S,L 3.375%, due 12/15/08 16,750,253
8,849,000 S,L 4.250%, due 11/15/13 8,842,089
--------------
40,999,038
--------------
U.S. TREASURY STRIP PRINCIPAL: 1.2%
27,550,000 S,L 5.060%, due 05/15/16 14,954,278
--------------
14,954,278
--------------
Total U.S. Treasury Obligations
(Cost $91,304,411) 91,061,464
--------------
OTHER BONDS: 4.4%
SOVEREIGN: 4.4%
2,207,000 @@,**,S ARG Boden, 5.490%,
due 08/03/12 1,385,555
2,765,000 @@,S Brazilian Government Intl.
Bond, 2.188%, due 04/15/12 2,500,213
2,550,000 @@,S Brazilian Government Intl.
Bond, 10.000%,
due 08/07/11 2,830,500
1,954,000 @@ Brazilian Government Intl.
Bond, 11.000%,
due 08/17/40 2,159,170
3,632,000 @@,XX,S Central Bank of Nigeria,
5.090%, due 01/05/10 1,380,160
2,615,000 @@,S Colombia Government Intl.
Bond, 10.000%,
due 01/23/12 2,876,500
$ 828,000 @@,L Colombia Government Intl.
Bond, 11.750%,
due 02/25/20 $ 1,001,880
2,068,000 @@,S Dominican Republic Intl.
Bond, 9.040%, due 01/23/13 1,580,434
2,099,000 @@ Ecuador Government Intl.
Bond, 7.000%, due 08/15/30 1,629,666
2,150,000 @@,S Mexico Government Intl.
Bond, 4.625%, due 10/08/08 2,182,250
3,202,000 @@ Mexico Government Intl.
Bond, 6.625%, due 03/03/15 3,322,075
1,777,707 @@,L Panama Government Intl.
Bond, 1.938%, due 07/17/16 1,554,546
260,000 @@,S,L Panama Government Intl.
Bond, 9.375%, due 07/23/12 297,700
879,000 @@ Peru Government Intl. Bond,
4.500%, due 03/07/17 789,668
1,259,000 @@,S Peru Government Intl. Bond,
9.125%, due 02/21/12 1,410,080
2,857,000 @@ Philippine Government Intl.
Bond, 9.875%, due 01/15/19 3,035,563
2,084,000 @@ Republic of Bulgaria, 8.250%,
due 01/15/15 2,468,404
1,137,000 @@ Republic of Salvador, 7.750%,
due 01/24/23 1,208,882
7,196,000 @@ Russia Government Intl. Bond,
5.000%, due 03/31/30 6,917,154
521,000 @@,L Turkey Government Intl.
Bond, 9.500%, due 01/15/14 604,360
3,372,000 @@,S Turkey Government Intl. Bond,
12.375%, due 06/15/09 4,333,020
569,000 #,@@,S,L Ukraine Government Intl.
Bond, 7.650%, due 06/11/13 594,605
639,620 #,@@,S Ukraine Government Intl.
Bond, 11.000%,
due 03/15/07 712,850
498,000 @@,S Uruguay Government Intl.
Bond, 7.250%, due 02/15/11 432,015
1,238,000 @@,L Uruguay Government Intl.
Bond, 7.500%, due 03/15/15 996,590
2,539,000 @@ Venezuela Government Intl.
Bond, 9.250%, due 09/15/27 2,323,185
2,440,000 #,@@,L Venezuela Government Intl.
Bond, 10.750%,
due 09/19/13 2,616,900
--------------
Total Other Bonds
(Cost $48,600,892) 53,143,925
--------------
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------------------------------
PREFERRED STOCK: 1.4%
AUTO PARTS AND EQUIPMENT: 0.4%
202,640 Delphi Trust I 5,337,538
--------------
5,337,538
--------------
BANKS: 0.6%
620 #,XX DG Funding Trust 6,726,999
--------------
6,726,999
--------------
MEDIA: 0.0%
400 Cablevision Systems Corp. 42,100
1,150 Primedia, Inc. 112,988
--------------
155,088
--------------
</Table>
See Accompanying Notes to Financial Statements
80
<Page>
ING
VP
Bond
Portfolio PORTFOLIO OF INVESTMENTS as of December 31, 2003 (Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------
OIL AND GAS: 0.4%
$ 166,000 @@ Nexen, Inc. $ 4,340,900
--------------
4,340,900
--------------
Total Preferred Stock
(Cost $16,108,149) 16,560,525
--------------
WARRANTS: 0.0%
BANKS: 0.0%
750 XX Central Bank of Nigeria --
--------------
Total Warrants (Cost $630) --
--------------
Total Long-Term Investments
(Cost $1,292,198,383) 1,313,256,094
--------------
SHORT-TERM INVESTMENTS: 5.7%
COMMERCIAL PAPER: 3.0%
5,700,000 S Concord Minuteman Cap
B-CPIB, 1.180%, due 01/05/05 5,702,229
1,500,000 S Concord Minuteman Cap
B-CPIB, 1.180%, due 01/10/05 1,500,000
5,600,000 S Concord Minuteman Cap
B-CPIB, 1.180%, due 01/10/05 5,600,000
4,700,000 S Daimler Chrysler, 1.330%,
due 01/15/04 4,697,791
3,000,000 S General Motors Acceptance
Corp., 1.350%, due 01/09/04 2,999,220
5,000,000 S General Motors Acceptance
Corp., 1.370%, due 01/08/04 4,998,900
4,000,000 General Motors Acceptance
Corp., 1.370%, due 01/14/04 3,998,240
6,000,000 S Royal Bank of Scotland,
1.410%, due 10/21/04 6,006,540
--------------
35,502,920
--------------
REPURCHASE AGREEMENT: 2.7%
32,391,000 S Goldman Sachs Repurchase
Agreement dated 12/31/03,
0.990%, due 01/02/04,
$32,392,782 to be
received upon repurchase
(Collateralized by various
U.S. Government Agency
Obligations, 0.000%-8.065%,
Market Value $33,042,368,
due 01/21/04-04/26/29) 32,391,000
--------------
32,391,000
--------------
Total Short-term
Investments
(Cost $67,883,862) $ 67,893,920
--------------
TOTAL INVESTMENTS IN
SECURITIES (COST
$1,360,082,245)* 115.3% $1,381,150,014
OTHER ASSETS AND
LIABILITIES-NET (15.3) (183,346,559)
----- --------------
NET ASSETS 100.0% $1,197,803,455
===== ==============
</Table>
@ Non-income producing security
@@ Foreign Issuer
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.
# 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 Portfolio's Board of Trustees.
W When-issued or delayed delivery security.
L Loaned security, a portion or all of the security is on loan at December
31, 2003.
** Defaulted security
S Segregated securities for futures, when-issued or delayed delivery
securities held at December 31, 2003.
C Bond may be called prior to maturity date.
* Cost for federal income tax purposes is $1,360,499,295. Net unrealized
appreciation consists of:
<Table>
Gross Unrealized Appreciation $ 25,552,659
Gross Unrealized Depreciation (4,901,940)
--------------
Net Unrealized Appreciation $ 20,650,719
==============
</Table>
Information concerning open futures contracts at December 31, 2003 is shown
below:
<Table>
<Caption>
NOTIONAL
NO. OF MARKET EXPIRATION UNREALIZED
CONTRACTS VALUE DATE GAIN/(LOSS)
--------------------------------------------------
LONG CONTRACT
U.S. 2 Year
Treasury Note 334 $ 71,491,658 Mar-04 $ 535,863
============= ============
SHORT CONTRACT
U.S. 10 Year
Treasury Note 668 $ (73,695,848) Mar-04 $ (1,297,593)
============= ============
</Table>
See Accompanying Notes to Financial Statements
81
<Page>
ING
VP
Money
Market Portfolio(1) PORTFOLIO OF INVESTMENTS as of December 31, 2003
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------
CORPORATE NOTES: 44.2%
$ 12,700,000 Associates Corp Of N. America,
5.800%, due 04/20/04 $ 12,876,289
9,760,000 Bank of America Corp, 5.750%,
due 03/01/04 9,830,475
9,500,000 # Bank of New York Co., Inc.,
1.131%, due 01/27/05 9,500,000
5,800,000 Bank Of Scotland, 1.170%,
due 01/22/04 5,800,348
18,100,000 Bank One Delaware NA, 1.390%,
due 08/06/04 18,131,259
16,000,000 Bank One NA Illinois, 1.040%,
due 02/24/04 16,000,000
16,000,000 Bank One NA Illinois, 1.040%,
due 03/04/04 16,000,000
14,000,000 Bank One NA Illinois, 1.200%,
due 02/23/04 14,002,840
17,900,000 Barclays Bank PLC, 1.030%,
due 03/08/04 17,900,000
9,200,000 Bear Stearns Cos., Inc., 1.770%,
due 05/24/04 9,223,000
17,000,000 # BellSouth Corp, 4.160%,
due 04/26/04 17,148,750
16,000,000 BP Capital Markets PLC, 1.045%,
due 03/08/04 16,000,000
11,300,000 Chase Manhattan Bank USA,
1.100%, due 06/30/04 11,300,000
19,000,000 Citigroup Global Markets Holdings,
Inc., 1.269%, due 02/20/04 19,004,807
18,850,000 General Electric Capital Corp.,
1.141%, due 01/28/04 18,851,527
16,000,000 General Electric Capital Corp.,
1.250%, due 01/07/05 16,020,000
14,650,000 GTE North Inc, 6.000%,
due 01/15/04 14,668,313
19,500,000 # HBOS Treasury Services PLC,
1.160%, due 01/24/05 19,503,315
14,000,000 # HBOS Treasury Services PLC,
1.176%, due 08/23/04 14,008,456
6,100,000 Heller Financial, Inc., 6.000%,
due 03/19/04 6,161,000
23,900,000 KeyBank National Association,
1.183%, due 08/03/04 23,911,616
13,800,000 Lehman Brothers Holdings, Inc.,
1.470%, due 06/10/04 13,821,169
23,950,000 Merrill Lynch & Co., Inc., 1.470%,
due 03/08/04 23,979,938
18,000,000 Rabobank Nederland NV/NY,
1.043%, due 01/22/04 18,001,980
18,000,000 Rabobank Nederland NV/NY,
1.045%, due 01/23/04 18,000,000
30,000,000 # SBC Communications, Inc., 4.180%,
due 06/05/04 30,482,760
31,000,000 Toyota Motor Credit Corp.,
1.104%, due 01/16/04 30,999,999
13,800,000 US Bank National Association,
1.300%, due 04/13/04 13,802,401
3,920,000 Verizon New Jersey, Inc., 5.875%,
due 02/01/04 3,934,700
8,000,000 Wachovia Bank NA/Charlotte,
1.350%, due 06/08/04 8,009,289
5,600,000 Wachovia Bank NA/Charlotte,
1.410%, due 02/20/04 5,600,000
$ 9,800,000 Wachovia Bank NA/Charlotte,
1.450%, due 07/30/04 $ 9,819,944
14,100,000 Washington Mutual Bank,
1.159%, due 07/29/04 14,101,932
13,700,000 Washington Mutual Bank FA,
1.480%, due 05/17/04 13,717,125
18,000,000 Wells Fargo Bank NA, 1.081%,
due 01/26/04 18,000,000
9,000,000 Wells Fargo Bank NA, 1.110%,
due 02/06/04 9,000,000
10,000,000 Wells Fargo/Old, 1.160%,
due 02/01/05 10,000,000
--------------
Total Corporate Notes
(Cost $546,962,959) 547,113,232
--------------
COMMERCIAL PAPER: 27.0%
12,300,000 Blue Ridge Asset Funding,
0.000%, due 01/14/04 12,300,000
10,000,000 Concord Minuteman Cap
B-CPIB, 1.180%, due 01/05/05 10,003,910
28,000,000 Concord Minuteman Cap
B-CPIB, 1.180%, due 01/10/05 28,000,000
14,200,000 Concord Minutemen, .000%,
due 01/13/04 14,195,030
9,500,000 Concord Minutemen Cap,
1.160%, due 01/13/05 9,500,038
12,600,000 Crown Point Cap, 1.100%,
due 02/03/04 12,584,250
12,000,000 Crown Point Cap Co., 1.170%,
due 05/14/04 11,955,000
12,500,000 Edison Asset Securitization,
0.000%, due 01/12/04 12,500,000
6,000,000 Household Finance Corp.,
0.000%, due 01/06/04 5,999,083
12,300,000 Jupiter Securitization, 1.080%,
due 01/29/04 12,284,624
18,300,000 #,I Money Market Trust, 1.250%,
due 02/19/04 18,300,000
13,500,000 #,I Money Market Trust LLY,
1.220%, due 12/03/04 13,500,000
31,400,000 #,I Money Market Trust Series A,
1.313%, due 01/07/05 31,400,000
12,200,000 Morgan Stanley Dean Witter,
1.080%, due 02/04/04 12,187,556
12,600,000 Old Line Funding Corp., 1.100%,
due 01/21/04 12,592,300
13,500,000 Royal Bank of Scotland,
1.410%, due 10/21/04 13,498,913
12,500,000 St. Germain Holdings, .000%,
due 01/02/04 12,500,000
12,300,000 St. Germain Holdings, .000%,
due 01/08/04 12,300,000
12,500,000 St. Germain Holdings, .000%,
due 01/09/04 12,500,000
12,200,000 Thunder Bay Funding, 1.090%,
due 02/09/04 12,184,750
12,400,000 Variable Funding, 1.080%,
due 01/20/04 12,400,000
24,600,000 Verizon Global Funding,
1.260%, due 01/11/05 24,601,501
5,000,000 Windmill Funding, .000%,
due 01/30/04 4,993,750
</Table>
See Accompanying Notes to Financial Statements
82
<Page>
ING
VP
Money
Market Portfolio(1) PORTFOLIO OF INVESTMENTS as of December 31, 2003 (Continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------
COMMERCIAL PAPER (CONTINUED)
$ 12,300,000 Windmill Funding, 1.080%,
due 01/27/04 $ 12,284,625
--------------
Total Commercial Paper
(Cost $334,545,661) 334,565,330
--------------
U.S. GOVERNMENT AGENCY OBLIGATIONS: 14.8%
FEDERAL HOME LOAN BANK: 4.0%
12,700,000 1.500%, due 12/07/04 12,731,750
7,800,000 1.510%, due 12/08/04 7,800,000
20,200,000 5.375%, due 01/05/04 20,209,283
8,900,000 5.500%, due 02/25/04 8,957,485
--------------
49,698,518
--------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION: 2.6%
28,000,000 L 3.250%, due 01/15/04 28,020,975
3,900,000 3.400%, due 02/20/04 3,909,750
--------------
31,930,725
--------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION: 8.2%
15,700,000 1.200%, due 08/23/04 15,700,000
13,700,000 1.250%, due 08/27/04 13,700,000
13,800,000 1.300%, due 08/30/04 13,800,000
13,500,000 1.350%, due 11/02/04 13,501,229
13,200,000 1.430%, due 11/15/04 13,202,653
7,500,000 1.450%, due 09/14/04 7,501,530
8,000,000 1.630%, due 01/03/05 8,010,000
16,000,000 L 5.125%, due 02/13/04 16,071,564
--------------
101,486,976
--------------
Total U.S. Government
Agency Obligations
(Cost $183,067,172) 183,116,219
--------------
CERTIFICATES OF DEPOSIT: 3.5%
11,700,000 Dexia Bank, 1.508%,
due 12/07/04 11,715,678
13,600,000 HBOS Treasury Services,
1.120%, due 01/28/04 13,600,198
17,900,000 State Street Bank & Trust,
1.220%, due 07/06/04 17,905,549
--------------
Total Certificates Of Deposit
(Cost $43,201,016) 43,221,425
--------------
COLLATERALIZED MORTGAGE OBLIGATIONS: 3.1%
5,572,674 Chase Manhattan Auto Owner
Trust, 1.060%, due 08/16/04 5,575,735
4,730,847 John Deere Owner Trust,
1.081%, due 08/13/04 4,730,043
13,900,000 #,X,I Newcastle CDO I Ltd., 1.171%,
due 02/24/04 13,900,000
13,700,000 #,XX Putnam Structured Product CDO,
1.183%, due 02/16/04 13,700,000
--------------
Total Collateralized
Mortgage Obligations
(Cost $37,903,522) 37,905,778
--------------
Total Short-Term
Investments
(Cost $1,145,680,330) 1,145,921,984
--------------
REPURCHASE AGREEMENT: 7.1%
$ 87,454,000 Goldman Sachs Repurchase
Agreement dated 12/31/03,
0.990%, due 01/02/04,
$87,458,810 to be received
upon repurchase
(Collateralized by
various U.S. Government
Agency Obligations,
0.000%-6.000%,
Market Value $89,276,935
due 11/12/04-08/15/23) $ 87,454,000
--------------
Total Repurchase Agreement
(Cost $87,454,000) 87,454,000
--------------
TOTAL INVESTMENTS IN
SECURITIES (COST
$1,233,134,330)* 99.7% $1,233,375,984
OTHER ASSETS AND
LIABILITIES-NET 0.3 4,207,642
----- --------------
NET ASSETS 100.0% $1,237,583,626
===== ==============
</Table>
(1) All securities with a maturity date greater than one year have either a
variable rate, a demand feature, are prerefunded, a optional or mandatory
put resulting in an effective maturity of one year or less. Rate shown
reflects current rate.
X Fair value determined by ING Funds Pricing Committee appointed by the
Portfolio's Board of Trustees.
XX Value of Securities obtained from one or more dealers making markets in
the securities which have been adjusted based on the Portfolio's
valuation procedures.
I Illiquid Security
# Securities with purchases pursuant to Rule 144A, under the securities Act
of 1933 and may not be resold subject to that rule except to qualified
institutional buyers. These securities have been determined to be liquid
under the guidelines established by the Portfolio's Board of Trustees.
L Loaned security, a portion or all of the security is on loan at December
31, 2003.
* Cost for federal income tax purposes is the same as for financial
statement purposes. Net unrealized appreciation consists of:
<Table>
Gross Unrealized Appreciation $ 275,363
Gross Unrealized Depreciation (33,709)
--------------
Net Unrealized Appreciation $ 241,654
==============
</Table>
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -----------------------------------------------------------------------------------------------
Automobile Sequential 0.4%
Commercial Banks-Central U.S. 6.8
Commercial Banks-Eastern U.S. 9.1
Commercial Banks-Southern U.S. 1.9
Diversified Financial Services 3.9
Fiduciary Banks 0.8
Finance-Auto Loans 2.5
Finance-Commercial 0.5
Finance-consumer loans 0.5
Finance-Investment Banker/Broker 6.3
Finance-other services 1.0
Money Center Banks 5.4
Oil Comp-Integrated 1.3
Other Asset Backed Security 2.6
S&L/Thrifts-Western U.S. 2.2
Sovereign Agency 14.8
Special Purpose Entity 21.5
Super-Regional Banks-U.S. 3.8
Telecom Services 2.0
Telephone-Integrated 5.3
Repurchase Agreement 7.1
Other Assets and Liabilities, Net 0.3
-----
NET ASSETS 100.0%
=====
</Table>
See Accompanying Notes to Financial Statements
83
<Page>
TAX INFORMATION (Unaudited)
Dividends paid during the year ended December 31, 2003 were as follows:
<Table>
<Caption>
FUND NAME TYPE PER SHARE AMOUNT
- --------- ---- ----------------
International Equity
Class R NII $ 0.0674
Class S NII $ 0.0633
Small Company
Class R NII $ 0.0394
Class S NII $ 0.0281
Value Opportunity
Class R NII $ 0.0826
Class S NII $ 0.0714
Balanced
Class R NII $ 0.2357
Class S NII $ 0.2334
Bond
Class R NII $ 0.1083
Class S NII $ 0.0934
Class R STCG $ 0.1217
Class S STCG $ 0.1217
Money Market
Class R NII $ 0.2034
</Table>
- ----------
NII -- Net investment income
STCG -- Short-term capital gain
Of the ordinary distributions made during the year ended December 31, 2003, the
following percentages qualify for the dividends received deduction available to
corporate shareholders:
<Table>
International Equity 23.05%
Small Company 100%
Value Opportunity 11.92%
Balanced 42.67%
Bond --
Money Market --
</Table>
The foreign taxes paid or withheld of $87,834 in total and $0.02 per share for
the International Equity Portfolio represents taxes incurred by the Portfolio
from foreign sources. Foreign taxes paid or withheld should be included in
taxable income with an offsetting deduction from gross income or as a credit for
taxes paid to foreign governments.
Above figures may differ from those cited elsewhere in this report due to
differences in the calculation of income and gains under accounting principles
generally accepted in the United States of America (book) and Internal Revenue
Service (tax) purposes.
Shareholders are strongly advised to consult their own tax advisers with respect
to the tax consequences of their Investments in the Portfolios. In January 2004,
shareholders, excluding corporate shareholders, received an IRS 1099-DIV
regarding the federal tax status of the dividends and distributions received by
them in calendar 2003.
84
<Page>
DIRECTOR AND OFFICER INFORMATION (Unaudited)
The business and affairs of the Portfolios are managed under the direction of
the Portfolios' Board of Directors. Information pertaining to the Director and
Officers of the Portfolios is set forth below. The Statement of Additional
Information includes additional information about directors of the Registrant
and is available, without charge, upon request at 1-800-992-0180.
<Table>
<Caption>
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH TIME DURING THE OVERSEEN HELD BY
AND AGE COMPANY SERVED(1) PAST FIVE YEARS BY DIRECTOR DIRECTOR
------------- ----------- ---------- --------------- ------------- -------------
INDEPENDENT DIRECTORS
Albert E. DePrince, Jr. Director June, Director, Business and 54 --
7337 E. Doubletree Ranch Road 1998 Economic Research
Scottsdale, AZ 85258 to Center (1999 to
Born: 1941 Present present) and Professor
of Economics and
Finance, Middle
Tennessee State
University (1991 to
present).
Maria T. Fighetti Director April, Formerly, Associate 54 --
7337 E. Doubletree Ranch Road 1994 Commissioner, Contract
Scottsdale, AZ 85258 to Management -- Health
Born: 1943 Present Services for New York
City Department of
Mental Health, Mental
Retardation and Alcohol
Services (1973 to
2002).
Sidney Koch Director April, Financial Adviser and 54 --
7337 E. Doubletree Ranch Road 1994 Self-Employed
Scottsdale, AZ 85258 to (January 1993 to
Born: 1935 Present present).
Corine T. Norgaard Director June, Dean, Barney School of 54 Director/Trustee, Mass
7337 E. Doubletree Ranch Road 1991 Business, University of Mutual Corporate
Scottsdale, AZ 85258 to Hartford (August 1996 Investors
Born: 1937 Present to present).
Edward T. O'Dell Director June, Formerly, 54 --
7337 E. Doubletree Ranch Road 2002 Partner/Chairman of
Scottsdale, AZ 85258 to Financial Service Group,
Born: 1935 Present Goodwin Proctor LLP
(June 1966 to September
2000); Chairman,
Committee I --
International Bar
Association (1995 to
1999).
Joseph E. Obermeyer(2) Director January, President, Obermeyer & 54 --
7337 E. Doubletree Ranch Road 2003 Associates, Inc.
Scottsdale, AZ 85258 to (November 1999 to
Born: 1957 Present present) and Senior
Manager, Arthur
Anderson LLP (1995 to
October 1999).
</Table>
85
<Page>
DIRECTOR 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 TIME DURING THE OVERSEEN HELD BY
AND AGE COMPANY SERVED(1) PAST FIVE YEARS BY DIRECTOR DIRECTOR
------------- ----------- ---------- --------------- ------------- -------------
DIRECTORS WHO ARE "INTERESTED PERSONS"
J. Scott Fox(3) Director December, President and Chief 54 Mr. Fox is a Director of
Aeltus Investment 1997 Executive Officer IPC Financial Network,
Management, Inc. to (April 2001 to present), Inc.
10 State House Square Present Managing Director and
Hartford, CT Chief Operating Officer
Born: 1955 (April 1994 to April
2001), Chief Financial
Officer (April 1994 to
July 2001), Aeltus
Investment Management,
Inc.; Executive Vice
President (April 2001 to
present), Director,
Chief Operating Officer
(February 1995 to
present), Chief
Financial Officer,
Managing Director
(February 1995 to April
2001), Aeltus Capital,
Inc.
</Table>
86
<Page>
DIRECTOR 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 TIME DURING THE OVERSEEN HELD BY
AND AGE COMPANY SERVED(1) PAST FIVE YEARS BY DIRECTOR DIRECTOR
------------- ----------- ---------- --------------- ------------- -------------
DIRECTORS WHO ARE "INTERESTED PERSONS"
Thomas J. McInerney(4) Director April, Chief Executive Officer, 170 Director, Hemisphere,
7337 E. Doubletree Ranch Rd. 2002 to ING U.S. Financial Inc. (May 2003 -
Scottsdale, AZ 85258 Present Services (September Present). Trustee, ING
Born: 1956 2001 to present); Investors Trust
General Manager and (February 2002 -
Chief Executive Officer, Present); Director,
ING U.S. Worksite Equitable Life Insurance
Financial Services Co., Golden American
(December 2000 to Life Insurance Co., Life
present); Member, ING Insurance Company of
Americas Executive Georgia, Midwestern
Committee (2001 to United Life Insurance
present); President, Co., ReliaStar Life
Chief Executive Officer Insurance Co., Security
and Director of Life of Denver, Security
Northern Life Insurance Connecticut Life
Company (2001 to Insurance Co.,
present), ING Aeltus Southland Life
Holding Company, Inc. Insurance Co., USG
(2000 to present), ING Annuity and Life
Retail Holding Company, and United
Company (1998 to Life and Annuity
present). Formerly, ING Insurance Co. Inc
Life Insurance and (March 2001 - Present);
Annuity Company Trustee, 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), Governor's Council on
President, ING-SCI, Inc. Economic
(August 1997 to Competitiveness and
December 2000); Technology of
President, Aetna Connecticut,
Financial Services Connecticut Business
(August 1997 to and Industry
December 2000) Association, Bushnell;
Connecticut Forum;
Metro Hartford
Chamber of Commerce;
and is Chairman,
Concerned Citizens for
Effective Government.
</Table>
- ----------
(1) Directors serve until their successors are duly elected and qualified,
subject to the Board's retirement policy.
(2) Mr. Obermeyer was elected to the Board on January 1, 2003.
(3) Mr. Fox is an "interested person", as defined under the 1940 Act, because
of his relationship with ING Aeltus an affiliate of ING Investments.
(4) Mr. McInerney is an "interested person", as defined under the 1940 Act,
because of his relationship with ING U.S. Financial Services and ING U.S.
Worksite Financial Services, both affiliates of ING Investments, LLC.
87
<Page>
DIRECTOR 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 COMPANY SERVICE(1) LAST FIVE YEARS
------------- ----------------- -------------- ---------------
OFFICERS:
James M. Hennessy President, Chief February 2002 - President and Chief Executive
7337 E. Doubletree Ranch Rd. Executive Officer, and Present Officer, ING Capital Corporation,
Scottsdale, AZ 85258 Chief Operating LLC, ING Funds Services, LLC, ING
Born: 1949 Officer Advisors, Inc., ING Investments, LLC,
Lexington Funds Distributor, Inc.,
Express America T.C., Inc. and
EAMC Liquidation Corp.
(December 2001 - Present);
Executive Vice President and Chief
Operating Officer and ING Funds
Distributor, LLC (June 2000 -
Present). Formerly, Executive Vice
President and Chief Operating
Officer, ING Quantitative
Management, Inc. (October 2001 -
September 2002), Senior Executive
Vice President (June 2000 -
December 2000) and Secretary
(April 1995 - December 2000), ING
Capital Corporation, LLC, ING Funds
Services, LLC, ING Investments, LLC,
ING Advisors, Inc., Express America
T.C., Inc. and EAMC Liquidation
Corp.; Executive Vice President, ING
Capital Corporation, LLC and its
affiliates (May 1998 - June 2000);
and Senior Vice President, ING
Capital Corporation, LLC and its
affiliates (April 1995 - April 1998).
Stanley D. Vyner Executive Vice February 2002 - Executive Vice President of ING
7337 E. Doubletree Ranch Rd. President Present Advisors, Inc. and ING Investments,
Scottsdale, AZ 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).
Michael J. Roland Executive Vice April 2002 - Executive Vice President, Chief
7337 E. Doubletree Ranch Rd. President and Present Financial Officer and Treasurer of
Scottsdale, AZ 85258 Assistant Secretary ING Funds Services, LLC, ING Funds
Born: 1958 Distributor, LLC, ING Advisors, Inc.,
Principal Financial February 2002 - ING Investments, LLC, Lexington
Officer Present Funds Distributor, Inc., Express
America T.C. Inc. and EAMC
Liquidation Corp. (December 2001
to present). Formerly, Executive
Vice President, Chief Financial
Officer and Treasurer ING
Quantitative Management
(December 2001 - September 2002),
formerly, Senior Vice President,
ING Funds Services, LLC, ING
Investments, LLC, and ING Funds
Distributor, LLC (June 1998 to
December 2001) and Chief
Financial Officer of Endeavor
Group (April 1997 to June 1998).
</Table>
88
<Page>
DIRECTOR 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 COMPANY SERVICE(1) LAST FIVE YEARS
------------- ----------------- -------------- ---------------
OFFICERS:
Robert S. Naka Senior Vice President February, 2002 - Senior Vice President and Assistant
7337 E. Doubletree Ranch Rd. and Assistant Present Secretary of ING Funds Services,
Scottsdale, AZ 85258 Secretary LLC, ING Funds Distributor, LLC,
Born: 1963 ING Advisors, Inc., ING Capital
Corporation, LLC ING Investments, LLC,
(October 2001 to present) and
Lexington Funds Distributor, Inc.
(December 2001 to present). Formerly,
Senior Vice President and Assistant
Secretary, ING Quantitative
Management, Inc. (October 2001 -
September 2002). Formerly, Vice
President, ING Investments, LLC (April
1997 to October 1999), ING Funds
Services, LLC (February 1997 to August
1999) and Assistant Vice President,
ING Funds Services, LLC (August 1995
to February 1997).
Kimberly A. Anderson Senior Vice President December 2003 - Vice President and Secretary of ING
7337 E. Doubletree Ranch Rd. Present Funds Services, LLC, ING Funds
Scottsdale, AZ 85258 Distributor, LLC, ING Advisors, Inc.,
Born: 1964 Vice President February 2002 - ING Investments, LLC (October 2001
December 2003 to present) and Lexington Funds
Distributor, Inc. (December 2001 to
Secretary February 2002 - present). Formerly, Vice President,
September 2003 ING Quantitative Management, Inc.
(October 2001 - September 2002).
Formerly, Assistant Vice President of
ING Funds Services, LLC (November 1999
to January 2001) and has held various
other positions with ING Funds
Services, LLC for more than the last
five years.
Robyn L. Ichilov Vice President and February 2002 - Vice President of ING Funds
7337 E. Doubletree Ranch Rd. Treasurer Present Services, LLC (October 2001 to
Scottsdale, AZ 85258 present) and ING Investments, LLC
Born: 1967 (August 1997 to present);
Accounting Manager, ING Investments,
LLC (November 1995 to present).
J. David Greenwald Vice President September 2003 - Vice President of Mutual Fund
7337 E. Doubletree Ranch Rd. Present Compliance of ING Funds Services,
Scottsdale, AZ 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 March 2003 - Present Vice President and Chief
7337 E. Doubletree Ranch Rd. Compliance Officer, ING Funds
Scottsdale, AZ 85258 Distributor, LLC. (July 1995 -
Born: 1954 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).
</Table>
89
<Page>
DIRECTOR 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 COMPANY SERVICE(1) LAST FIVE YEARS
------------- ----------------- -------------- ---------------
OFFICERS:
Todd Modic Vice President September 2003 - Vice President of Financial
7337 E. Doubletree Ranch Rd. Present Reporting -- Fund Accounting of
Scottsdale, AZ 85258 ING Funds Services, LLC
Born: 1967 Assistant Vice April 2002 to (September 2002 to present).
President September 2003 Formerly, Director of Financial
Reporting of ING Funds Services,
LLC (March 2001 to
September 2002). Director of
Financial Reporting, Axient
Communications, Inc. (May 2000 to
January 2001) and Director of
Finance, Rural/Metro Corporation
(March 1995 to May 2000).
Theresa Kelety Secretary September 2003 - Counsel, ING U.S. Financial Services
7337 E. Doubletree Ranch Rd. Present (April 2003 - Present). Formerly,
Scottsdale, AZ 85258 Senior Associate with Shearman &
Born: 1963 Sterling (February 2000 -
April 2003) and Associate with
Sutherland Asbill & Brennan (1996 -
February 2000).
Susan P. Kinens Assistant Vice March 2003 to Assistant Vice President and
7337 E. Doubletree Ranch Rd. President and Present Assistant Secretary, ING Funds
Scottsdale, AZ 85258 Assistant Secretary Services, LLC (December 2002 -
Born: 1976 Present); and has held various
other positions with ING Funds
Services, LLC for the last five years.
Maria M. Anderson Assistant Vice April 2002 to Present Assistant Vice President of ING
7337 E. Doubletree Ranch Rd. President Funds Services, LLC (October 2001
Scottsdale, AZ 85258 to present). Formerly, Manager of
Born: 1958 Fund Accounting and Fund
Compliance, ING Investments, LLC
(September 1999 to November 2001);
Section Manager of Fund Accounting,
Stein Roe Mutual Funds (July 1998 to
August 1999); and Financial Reporting
Analyst, Stein Roe Mutual Funds
(August 1997 to July 1998).
Huey P. Falgout, Jr. Assistant Secretary September 2003 - Counsel, ING U.S. Financial Services
7337 E. Doubletree Ranch Rd. Present (November 2002 - Present).
Scottsdale, AZ 85258 Formerly, Associate General
Born: 1963 Counsel of AIG American General
(January 1999 - November 2002) and
Associate General Counsel of Van
Kampen, Inc. (April 1992 - January
1999).
</Table>
- ----------
(1) The officers hold office until the next annual meeting of the Directors and
until their successors are duly elected and qualified.
90
<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
1-800-334-3444
TRANSFER AGENT
DST Systems, Inc.
P.O. Box 419368
Kansas City, Missouri 64141
CUSTODIAN
Bank of New York
100 Colonial Center Parkway, Suite 300
Lake Mary, FL 32746
LEGAL COUNSEL
Goodwin Procter LLP
Exchange Place
53 State Street
Boston, MA 02109
INDEPENDENT AUDITORS
KPMG LLP
99 High Street
Boston, MA 02110
A prospectus containing more complete information regarding the Portfolios,
including charges and expenses, may be obtained by calling ING Variable
Annuities' Customer Service Desk at 1-800-366-0066. Please read the prospectus
carefully before you invest or send money. The Portfolios' proxy voting record
will be available without charge on or about August 31, 2004 on the Portfolios'
website at www.ingfunds.com and on the SEC's website at www.sec.gov.
[ING FUNDS LOGO] AVPAR1203-021804
<Page>
ITEM 2. CODE OF ETHICS.
As of the end of the period covered by this report, Registrant had adopted a
code of ethics, as defined in Item 2 of Form N-CSR, that applies to the
Registrant's principal executive officer and principal financial officer. There
were no amendments to the Code during the period covered by the report. The
Registrant did not grant any waivers, including implicit waivers, from any
provisions of the Code during the period covered by this report. The code of
ethics is filed herewith pursuant to Item 10(a)(1), Exhibit 99.CODE ETH.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Trustees has determined that Corine Norgaard and Joseph Obermeyer
are each audit committee financial experts, as defined in Item 3 of Form N-CSR.
Ms. Norgaard and Mr. Obermeyer are both "independent" for purposes of Item 3 of
Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) AUDIT FEES: The aggregate fees billed for each of the last two fiscal
years for professional services rendered by KPMG LLP ("KPMG"), the
principal accountant, for the audit of the registrant's annual
financial statements and for services that are normally provided by
the accountant in connection with statutory and regulatory filings or
engagements for those fiscal years were $17,055, for the year ended
December 31, 2003 and $25,300 for the year ended December 31, 2002.
(b) AUDIT-RELATED FEES: The aggregate fees billed in each of the last two
fiscal years for assurance and related services by KPMG that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of this
Item.
None
(c) TAX FEES: The aggregate fees billed in each of the last two fiscal years
for professional services rendered by KPMG for tax compliance, tax
advice, and tax planning were $3,000 in the year ended December 31, 2003
and $3,050 in the year ended December 31, 2002. Such services included
review of excise distribution calculations (if applicable), preparation
of the Funds' federal, state and excise tax returns, tax services
related to mergers and routine consulting.
(d) ALL OTHER FEES: The aggregate fees billed in each of the last two fiscal
years for products and services provided by KPMG, other than the
services reported in paragraphs (a) through (c) of this Item.
None
(e) (1) AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
MODEL AUDIT AND NON-AUDIT SERVICES
PRE-APPROVAL POLICY
JUNE 25, 2003
I. STATEMENT OF PRINCIPLES
Under the Sarbanes-Oxley Act of 2002 (the "Act"), the Audit Committee of the
Board of Directors or Trustees (the "Committee") of the ING Funds (each a
"Fund," collectively, the "Funds") set out under Paragraph I on EXHIBIT A to
this Audit and Non-Audit Services Pre-Approval Policy ("Policy") is responsible
for the oversight of the work of the Funds' independent auditors. As part of its
responsibilities, the Committee must pre-approve the audit and non-audit
services performed by the auditors in order to assure that the provision of
these services does not impair the auditors' independence from the Funds. The
Committee has adopted, and the Board has ratified, this Policy, which sets out
the procedures and conditions under which the services of the independent
auditors may be pre-approved.
Under Securities and Exchange Commission ("SEC") rules promulgated in accordance
with the Act, the Funds' may establish two different approaches to pre-approving
audit and non-audit services. The Committee may approve services without
consideration of specific case-by-case services ("general pre-approval") or it
may pre-approve specific services ("specific pre-approval"). The Committee
believes that the combination of these approaches contemplated in this Policy
results in an effective and efficient method for pre-approving audit and
non-audit services to be performed by the Funds' independent auditors. Under
this Policy, services that are not of a type that may receive general
pre-approval require specific pre-approval by the Committee. Any proposed
services that exceed pre-approved cost levels or budgeted amounts will also
require the Committee's specific pre-approval.
For both types of approval, the Committee considers whether the subject services
are consistent with the SEC's rules on auditor independence and that such
services are compatible with maintaining the auditors' independence. The
Committee also considers whether a particular audit firm is in the best position
to provide effective and efficient services to the Funds. Reasons that the
auditors are in the best position include the auditors' familiarity with the
Funds' business, personnel, culture, accounting systems, risk profile, and other
factors, and whether the services will enhance the Funds' ability to manage and
control risk or improve audit quality. Such factors will be considered as a
whole, with no one factor being determinative.
The appendices attached to this Policy describe the audit, audit-related,
tax-related, and other services that have the Committee's general
pre-approval. For any service that has been approved through general
pre-approval, the general pre-approval will remain in place for a period 12
months from the date of pre-approval, unless the Committee determines that a
different period is appropriate. The Committee will annually review and
pre-approve the services that may be provided by the independent auditors
without specific pre-approval. The Committee will revise the list of services
subject to general pre-approval as appropriate. This Policy does not serve as
a delegation to Fund management of the Committee's duty to pre-approve
services performed by the Funds' independent auditors.
II. AUDIT SERVICES
The annual audit services engagement terms and fees are subject to the
Committee's specific pre-approval. Audit services are those services that are
normally provided by auditors in connection with statutory and regulatory
filings or engagements or those that generally only independent auditors can
reasonably provide. They include the Funds' annual financial statement audit and
procedures that the independent auditors must perform in order to form an
opinion on the Funds' financial statements (E.G., information systems and
procedural reviews and testing). The Committee will monitor the audit services
engagement and approve any changes in terms, conditions or fees deemed by the
Committee to be necessary or appropriate.
The Committee may grant general pre-approval to other audit services, such as
statutory audits and services associated with SEC registration statements,
periodic reports and other documents filed with the SEC or issued in connection
with securities offerings.
The Committee has pre-approved the audit services listed on Appendix A. The
Committee must specifically approve all audit services not listed on Appendix A.
III. AUDIT-RELATED SERVICES
Audit-related services are assurance and related services that are reasonably
related to the performance of the audit or the review of the Funds' financial
statements or are traditionally performed by the independent auditors. The
Committee believes that the provision of audit-related services will not impair
the independent auditors' independence, and therefore may grant pre-approval to
audit-related services. Audit-related services include accounting consultations
related to accounting, financial reporting or disclosure matters not classified
as "audit services;" assistance with understanding and implementing new
accounting and financial reporting guidance from rulemaking authorities;
agreed-upon or expanded audit procedures relating to accounting and/or billing
records required to respond to or comply with financial, accounting or
regulatory reporting matters; and assistance with internal control reporting
requirements under Form N-SAR or Form N-CSR.
The Committee has pre-approved the audit-related services listed on Appendix B.
The Committee must specifically approve all audit-related services not listed on
Appendix B.
IV. TAX SERVICES
The Committee believes the independent auditors can provide tax services to the
Funds, including tax compliance, tax planning, and tax advice, without
compromising the auditors' independence. Therefore, the Committee may grant
general pre-approval with respect to tax services historically provided by the
Funds' independent auditors that do not, in the Committee's view, impair auditor
independence and that are consistent with the SEC's rules on auditor
independence.
The Committee will not grant pre-approval if the independent auditors initially
recommends a transaction the sole business purpose of which is tax avoidance and
the tax treatment of which may not be supported in the Internal Revenue Code and
related regulations. The Committee may consult outside counsel to determine that
tax planning and reporting positions are consistent with this Policy.
The Committee has pre-approved the tax-related services listed on Appendix C.
The Committee must specifically approve all tax-related services not listed on
Appendix C.
V. OTHER SERVICES
The Committee believes it may grant approval of non-audit services that are
permissible services for independent auditors to a Fund. The Committee has
determined to grant general pre-approval to other services that it believes are
routine and recurring, do not impair auditor independence, and are consistent
with SEC rules on auditor independence.
The Committee has pre-approved the non-audit services listed on Appendix D. The
Committee must specifically approve all non-audit services not listed on
Appendix D.
A list of the SEC's prohibited non-audit services is attached to this Policy as
Appendix E. The SEC's rules and relevant guidance should be consulted to
determine the precise definitions of these impermissible services and the
applicability of exceptions to certain of the SEC's prohibitions.
VI. PRE-APPROVAL OF FEE LEVELS AND BUDGETED AMOUNTS
The Committee will annually establish pre-approval fee levels or budgeted
amounts for audit, audit-related, tax and non-audit services to be provided to
the Funds by the independent auditors. Any proposed services exceeding these
levels or amounts require the Committee's specific pre-approval. The Committee
considers fees for audit and non-audit services when deciding whether to
pre-approve services. The Committee may determine, for a pre-approval period
of 12 months, the appropriate ratio between the total amount of fees for the
Fund's audit, audit-related, and tax services (including fees for services
provided to Fund affiliates that are subject to pre-approval), and the total
amount of fees for certain permissible non-audit services for the Fund
classified as other services (including any such services provided to Fund
affiliates that are subject to pre-approval).
VII. PROCEDURES
Requests or applications for services to be provided by the independent auditors
will be submitted to management. If management determines that the services do
not fall within those services generally pre-approved by the Committee and set
out in the appendices to these procedures, management will submit the services
to the Committee or its delagee. Any such submission will include a detailed
description of the services to be rendered. Notwithstanding this paragraph, the
Committee will, on annual basis, receive from the independent auditors a list of
services provided by the auditors during the prior 12-month period.
VIII. DELEGATION
The Committee may delegate pre-approval authority to one or more of the
Committee's members. Any member or members to whom such pre-approval authority
is delegated must report any pre-approval decisions, including any pre-approved
services, to the Committee at its next scheduled meeting. The Committee will
identify any member to whom pre-approval authority is delegated in writing. The
member will retain such authority for a period of 12 months from the date of
pre-approval unless the Committee determines that a different period is
appropriate. The period of delegated authority may be terminated by the
Committee or at the option of the member.
IX. ADDITIONAL REQUIREMENTS
The Committee will take any measures the Committee deems necessary or
appropriate to oversee the work of the independent auditors and to assure the
auditors' independence from the Funds. This may include reviewing a formal
written statement from the independent auditors delineating all relationships
between the auditors and the Funds, consistent with Independence Standards Board
No. 1, and discussing with the auditors their methods and procedures for
ensuring independence.
Appendix A
Pre-Approved Audit Services for the Pre-Approval Period June 1, 2003 through May
31, 2004
Service
<Table>
<Caption>
THE FUND(S) FEE RANGE
- ------------------------------------------------------------------------------------------------------
Statutory audits or financial audits (including tax services /X/ As presented to
associated with audit services) Audit Committee
Services associated with SEC registration statements, periodic /X/ Not to exceed
reports and other documents filed with the SEC or other $8,500 per filing
documents issued in connection with securities offerings
(E.G., consents), and assistance in responding to SEC comment
letters.
Consultations by Fund management with respect to accounting or /X/ Not to exceed
disclosure treatment of transactions or events and/or the $8,000 during
actual or potential effect of final or proposed rules, the Pre-Approval
standards or interpretations by the SEC, Financial Accounting Period
Standards Board, or other regulatory or standard setting
bodies.
</Table>
Appendix B
Pre-Approved Audit-Related Services for the Pre-Approval Period June 1, 2003
through May 31, 2004
Service
<Table>
<Caption>
THE
FUND(S) FUND AFFILIATES FEE RANGE
- ---------------------------------------------------------------------------------------------------------
Services related to Fund mergers /X/ /X/ Not to exceed
$10,000 per merger
Consultations by Fund management with respect /X/ Not to exceed
to accounting or disclosure treatment of $5,000 per
transactions or events and/or the actual or occurrence during
potential effect of final or proposed rules, the Pre-Approval
standards or interpretations by the SEC, Period
Financial Accounting Standards Board, or
other regulatory or standard setting bodies.
[NOTE: Under SEC rules some consultations
may be "audit" services and others may be
"audit-related" services.]
Review of the Funds' semi-annual financial /X/ Not to exceed
statements $5,000 for each
set of financial
statements
Reports to regulatory or government agencies /X/ Up to $5,000 per
related to the annual engagement occurrence during
the Pre-Approval
Period
Regulatory compliance assistance /X/ /X/ Not to exceed
$5,000 per quarter
Training courses /X/ Not to exceed
$2,000 per course
SAS 70 Internal Control Review for Investment /X/ Not to exceed
Advisers/Affiliated Sub-Advisers $150,000 during
the Pre-Approval
Period
</Table>
Appendix C
Pre-Approved Tax Services for the Pre-Approval Period June 1, 2003 through May
31, 2004
Service
<Table>
<Caption>
FUND
THE FUND(S) AFFILIATES FEE RANGE
- --------------------------------------------------------------------------------------------------------
Preparation of federal and state income tax /X/ Not to exceed
returns and federal excise tax returns for the $6,000 per Fund
Funds including assistance and review with excise during the
tax distributions. Pre-Approval
Period
Review of IRC Sections 851(b) and 817(h) /X/ $750 per retail
diversification testing on a real-time basis Fund and $1,000
per insurance
dedicated Fund
during the
Pre-Approval
Period
Review of year-end reporting for 1099's /X/ Not to exceed
$800 per Fund
during the
Pre-Approval
Period
Tax assistance and advice regarding statutory, /X/ /X/ Not to exceed
regulatory or administrative developments $5,000 for the
Funds or for the
Funds' investment
adviser during
the Pre-Approval
Period
International tax services (e.g., Taiwan and /X/ Not to exceed
India) $5,000 per Fund
during the
Pre-Approval
Period
Tax training courses /X/ Not to exceed
$2,000 per course
during the
Pre-Approval
Period
Loan Staff Services /X/ /X/ Not to exceed
$15,000 during
the Pre-Approval
Period
</Table>
<Table>
<Caption>
FUND
THE FUND(S) AFFILIATES FEE RANGE
- ---------------------------------------------------------------------------------------------------------
Tax services associated with Fund mergers /X/ Not to exceed
$8,000 per merger
during the
Pre-Approval
Period
Tax services related to CLOs and CBOs /X/ Not to exceed
$15,000 per
quarter
</Table>
Appendix D
Pre-Approved Other Services for the Pre-Approval Period June 1, 2003 through May
31, 2004
Service
<Table>
<Caption>
THE FUND(S) FUND AFFILIATES FEE RANGE
- --------------------------------------------------------------------------------------------------------
Agreed-upon procedures for Class B share /X/ Not to exceed
12b-1 programs $25,000 during
the
Pre-Approval
Period
AIMR assistance, and/or verification of /X/ Not to exceed
composites $25,000 during
the
Pre-Approval
Period
</Table>
Appendix E
Prohibited Non-Audit Services
Dated: 200X
- Bookkeeping or other services related to the accounting records or
financial statements of the Funds
- Financial information systems design and implementation
- Appraisal or valuation services, fairness opinions, or
contribution-in-kind reports
- Actuarial services
- Internal audit outsourcing services
- Management functions
- Human resources
- Broker-dealer, investment adviser, or investment banking services
- Legal services
- Expert services unrelated to the audit
- Any other service that the Public Company Accounting Oversight Board
determines, by regulation, is impermissible
(e) (2) PERCENTAGE OF SERVICES REFERRED TO IN 4(b) - (4)(d) THAT WERE APPROVED
BY THE AUDIT COMMITTEE
100% of the services were approved by the audit committee.
<Page>
(f) PERCENTAGE OF HOURS EXPENDED ATTRIBUTABLE TO WORK PERFORMED BY OTHER
THAN FULL TIME EMPLOYEES OF KPMG IF GREATER THAN 50%.
Not applicable.
(g) NON-AUDIT FEES: The non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the
registrant's investment adviser, and any entity controlling, controlled
by, or under common control with the adviser that provides ongoing
services to the registrant for each of the last two fiscal years of the
registrant were $343,873 for the year ended December 31, 2003 and
$373,818 for the year ended December 31, 2002.
(h) PRINCIPAL ACCOUNTANTS INDEPENDENCE: The Registrant's Audit Committee has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser and any entity
controlling, controlled by, or under common control with the investment
adviser that provides ongoing services to the registrant that were not
pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X is
compatible with maintaining KPMG's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. RESERVED.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. RESERVED.
ITEM 9. CONTROLS AND PROCEDURES.
(a) Based on our evaluation conducted within 90 days of the filing date,
hereof, the design and operation of the registrant's disclosure controls
and procedures are effective to ensure that material information
relating to the registrant is made known to the certifying officers by
others within the appropriate entities, particularly during the period
in which Forms N-CSR are being prepared, and the registrant's disclosure
controls and procedures allow timely preparation and review of the
information for the registrant's Form N-CSR and the officer
certifications of such Form N-CSR.
(b) There were no significant changes in the registrant's internal controls
or in other factors that could significantly affect these controls
subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
ITEM 10. EXHIBITS.
(a)(1) Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached
hereto as EX-99.CODE ETH.
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2
under the Act (17 CFR 270.30a-2) is attached hereto as EX-99.CERT.
(b) The officer certifications required by Section 906 of the Sarbanes-Oxley
Act of 2002 are attached hereto as EX-99.906CERT
<Page>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): ING VP Money Market Portfolio
-----------------------------
By /s/ James M. Hennessy
----------------------------------------------
James M. Hennessy
President and Chief Executive Officer
Date March 5, 2004
-----------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ James M. Hennessy
-----------------------------------------------
James M. Hennessy
President and Chief Executive Officer
Date March 5, 2004
-------------------------------------------
By /s/ Michael J. Roland
----------------------------------------------
Michael J. Roland
Executive Vice President and Chief Financial Officer
Date March 5, 2004
---------------------------------------------