<Page>
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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 811-05710
---------------------------------------------
ING VP Natural Resources Trust
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
7337 E. Doubletree Ranch Rd., Scottsdale, AZ 85258
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
CT Corporation System, 101 Federal Street, Boston, MA 02110
- -------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 1-800-992-0180
----------------------------
Date of fiscal year end: December 31
--------------------------
Date of reporting period: December 31, 2003
-------------------------
Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its
regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street,
NW, Washington, DC 20549-0609. The OMB has reviewed this collection of
information under the clearance requirements of 44 U.S.C. Section 3507.
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):
<Page>
ANNUAL REPORT
ANNUAL REPORT
December 31, 2003
ING VP NATURAL RESOURCES TRUST
[GRAPHIC]
[ING FUNDS LOGO]
<Page>
TABLE OF CONTENTS
<Table>
President's Letter 1
Market Perspective 2
Portfolio Managers' Reports 4
Index Descriptions 6
Independent Auditors' Report 7
Statement of Assets and Liabilities 8
Statement of Operations 9
Statements of Changes in Net Assets 10
Financial Highlights 11
Notes to Financial Statements 12
Portfolio of Investments 16
Shareholder Meeting Information 17
Trustee and Officer Information 18
</Table>
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<Page>
PRESIDENT'S LETTER
[PHOTO OF 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
<Page>
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
<Page>
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 6.
3
<Page>
ING VP NATURAL RESOURCES TRUST Portfolio Managers' Report
PORTFOLIO MANAGER TEAM: A team of investment professionals led by James A. Vail,
CFA, Senior Vice President and Portfolio Manager, Aeltus Investment Management,
Inc. - the Sub-Adviser.
GOAL: The ING VP Natural Resources Trust (the "Trust") seeks long-term growth
of capital through investment primarily in common stocks of companies that own
or develop natural resources and other basic commodities, or supply goods and
services to such companies. Current income will not be a factor. Total return
will consist primarily of capital appreciation.
PERFORMANCE: For the year ended December 31, 2003, the Trust, excluding any
charges, provided a total return of 30.53% compared to a 28.71% for the Standard
& Poor's ("S&P") 500 Index and a 31.49% return for the Goldman Sachs Natural
Resources Index.
PORTFOLIO SPECIFICS: During 2003, energy and material prices experienced upward
movements, reflecting an improvement in the U.S. economy, and this trend
accelerated during the final quarter. One of the major contributing factors to
the price increases was that the Chinese economy was importing commodities at a
fast pace to feed its growing internal and export industries. To cite the price
performance of a few commodities, natural gas in the United States went from
$5.00 per metric cubic foot to $7.00, copper grew exponentially from $0.70 a
pound to $1.10; and gold rose from $357 per ounce and finished the year at $416.
Approximately 30% of the Trust's assets are invested in a broad array of metals,
including aluminum, copper, nickel and steel. These sectors turned in dramatic
performances. The leading stock was United States Steel, which more than
doubled, followed by First Quantum Minerals, an African metals provider, which
went from C$4.00 to just under C$15.00 (Canadian $). Phelps Dodge began the year
at $36.00 and closed at $77.00. Other large gainers were ALCOA (+52%) and INCO
(+90%). Energy shares also turned in strong performance but only later in the
year.
MARKET OUTLOOK: We believe commodity prices, in general, will surprise on the
upside as global economic recovery gains momentum in 2004 and beyond. China,
over the long term, provides a substantial market for metals, energy, paper and
forest products, etc. This, coupled with the fact that the commodities sector
generally has been starved for capital, could lead to periodic shortages and
therefore higher commodity prices. While new projects could be announced, lead
times prevent near-term solutions. The Trust will continue to hold a broad base
of commodity producers, overweighing specific sectors as warranted. We remain
bullish on the commodity outlook.
4
<Page>
Portfolio Managers' Report ING VP NATURAL RESOURCES TRUST
[CHART]
<Table>
<Caption>
ING VP NATURAL RESOURCES TRUST S&P 500 INDEX
12/31/1993 $ 10,000 $ 10,000
12/31/1994 $ 9,462 $ 10,133
12/31/1995 $ 11,058 $ 13,933
12/31/1996 $ 14,032 $ 17,172
12/31/1997 $ 15,035 $ 22,903
12/31/1998 $ 12,085 $ 29,489
12/31/1999 $ 13,788 $ 35,722
12/31/2000 $ 16,321 $ 32,440
12/31/2001 $ 13,721 $ 28,588
12/31/2002 $ 13,433 $ 22,270
12/31/2003 $ 17,534 $ 28,664
</Table>
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS FOR THE
PERIODS ENDED DECEMBER 31, 2003
--------------------------------------------
1 YEAR 5 YEAR 10 YEAR
------ ------ -------
ING VP Natural Resources Trust 30.53% 7.72% 5.77%
S&P 500 Index(1) 28.71% -0.57% 11.10%
Goldman Sachs Natural Resources Index(2) 31.49% 5.98% N/A(3)
</Table>
Based on a $10,000 initial investment, the graph and table above illustrate the
total return of ING VP Natural Resources Trust against the S&P 500 Index and the
Goldman Sachs Natural Resources Index. The Indices are unmanaged, have no cash
in their portfolio, impose no sales charges and incur no operating expenses. An
investor cannot invest directly in an index. The Trust'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 graph and table do not reflect the deduction of taxes that a
shareholder will pay on Trust distributions or the redemption of Trust shares.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE TRUST
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.
TRUST HOLDINGS ARE SUBJECT TO CHANGE DAILY.
(1) The S&P 500 INDEX is a widely recognized unmanaged index of 500 common
stocks.
(2) The GOLDMAN SACHS NATURAL RESOURCES INDEX is a
market-capitalization-weighted index of 112 stocks designed to measure the
performance of companies in the natural resources sector, which includes
energy, precious metals, timber, and other sub-sectors.
(3) The Index commenced August 1996.
PRINCIPAL RISK FACTOR(S): Since the Trust is a non-diversified investment
company that invests primarily in securities of companies engaged in natural
resources activities, the Trust may be subject to greater risks and market
fluctuations than other portfolios that are more diversified by industry. The
Trust's investments in foreign securities may involve risks greater than those
attendant to investments in securities of U.S. issuers. This Trust should be
considered as a vehicle for diversification and not as a balanced investment
program. Risks of foreign investing are generally intensified for investments in
emerging markets. The value of convertible or debt securities may fall when
interest rates rise.
See accompanying index descriptions on page 6.
5
<Page>
INDEX DESCRIPTIONS
The GOLDMAN SACHS NATURAL RESOURCES INDEX is a market-capitalization-weighted
index of 112 stocks designed to measure the performance of companies in the
natural resources sector, which includes energy, precious metals, timber, and
other sub-sectors.
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 consists of more than
1,000 securities taken from the largest market capitalization companies based in
Europe, Australia and Asia (Australasia), 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 RUSSELL 1000 GROWTH INDEX is an index that measures the performance of those
Russell 1000 Index companies with higher price-to-book ratios and higher
forecasted growth values.
The 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.
All indices are unmanaged.
An investor cannot invest directly in an index.
6
<Page>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of
ING VP Natural Resources Trust
We have audited the accompanying statement of assets and liabilities of ING VP
Natural Resources Trust, including the portfolio of investments, as of December
31, 2003, and the related statement 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 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.
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 ING VP
Natural Resources Trust as of December 31, 2003, the results of its operations,
the changes in its 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
7
<Page>
STATEMENT OF ASSETS AND LIABILITIES as of December 31, 2003
<Table>
ASSETS:
Investments in securities at value* $ 24,075,697
Short-term investments, at amortized cost 789,000
Cash 342
Foreign currencies at value** 303
Receivable for dividends and interest 4,593
Prepaid expenses 503
------------
Total assets 24,870,438
------------
LIABILITIES:
Payable to affiliates 21,958
Payable to trustees 54,976
Other accrued expenses and liabilities 58,131
------------
Total liabilities 135,065
------------
NET ASSETS (EQUIVALENT TO $15.82 PER SHARE ON 1,563,347 SHARES OUTSTANDING) $ 24,735,373
============
NET ASSETS WERE COMPRISED OF:
Paid-in capital -- shares of beneficial interest at no par value (unlimited shares authorized) $ 19,933,836
Undistributed net investment income 249,924
Accumulated net realized loss on investments and foreign currencies (41,881)
Net unrealized appreciation of investments and foreign currencies 4,593,494
------------
NET ASSETS $ 24,735,373
============
- ----------
* Cost of securities $ 19,482,210
** Cost of foreign currencies $ 296
</Table>
See Accompanying Notes to Financial Statements
8
<Page>
STATEMENT OF OPERATIONS for the Year Ended December 31, 2003
<Table>
INVESTMENT INCOME:
Dividends net of foreign taxes* $ 207,973
Interest 7,429
------------
Total Investment Income 215,402
------------
EXPENSES:
Investment management fees 208,414
Administrative service fees 20,841
Shareholder reporting expense 14,078
Custody and accounting expense 9,565
Transfer agent fees 35,285
Professional fees 38,870
Trustees' fees 5,925
Insurance expense 395
Registration and filing fees 53
Miscellaneous expense 2,543
------------
Total expenses 335,969
------------
Net investment loss (120,567)
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain on:
Investments 1,038,572
Foreign currencies 370,491
------------
Net realized gain on investments and foreign currencies 1,409,063
------------
Net change in unrealized appreciation of investments and foreign currencies 4,436,012
------------
Net realized and unrealized gain on investments and foreign currencies 5,845,075
------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 5,724,508
============
- ----------
* Foreign taxes $ 4,194
</Table>
See Accompanying Notes to Financial Statements
9
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2003 2002
------------ ------------
FROM OPERATIONS:
Net investment loss $ (120,567) $ (94,961)
Net realized gain (loss) on investments and foreign currencies 1,409,063 (278,728)
Net change in unrealized appreciation or depreciation of investments and
foreign currencies 4,436,012 (362,262)
------------ ------------
Net increase (decrease) in net assets resulting from operations 5,724,508 (735,951)
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income -- (41,560)
------------ ------------
Total distributions -- (41,560)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 4,418,070 6,211,430
Dividends reinvested -- 41,560
Cost of shares redeemed (6,643,754) (7,979,545)
------------ ------------
Net decrease in net assets resulting from capital share transactions (2,225,684) (1,726,555)
------------ ------------
Net increase (decrease) in net assets 3,498,824 (2,504,066)
NET ASSETS:
Beginning of year 21,236,549 23,740,615
------------ ------------
End of year $ 24,735,373 $ 21,236,549
============ ============
Undistributed net investment income at end of year $ 249,924 $ --
============ ============
</Table>
See Accompanying Notes to Financial Statements
10
<Page>
ING VP NATURAL RESOURCES TRUST FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
2003 2002 2001 2000(2) 1999
- -----------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 12.12 12.40 14.75 12.51 11.03
Income (loss) from investment operations:
Net investment income (loss) $ (0.08) (0.05) 0.03 (0.07) 0.06
Net realized and unrealized gain (loss)
on investments $ 3.78 (0.21) (2.38) 2.36 1.50
Total income (loss) from investment operations $ 3.70 (0.26) (2.35) 2.29 1.56
Less distributions from:
Net investment income $ -- 0.02 -- 0.05 0.08
Total distributions $ -- 0.02 -- 0.05 0.08
Net asset value, end of year $ 15.82 12.12 12.40 14.75 12.51
TOTAL RETURN(1) % 30.53 (2.10) (15.93) 18.37 14.09
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of year (000s) $ 24,735 21,237 23,741 32,291 31,737
Ratio to average net assets:
Expenses % 1.61 1.64 1.35 1.66 1.33
Net investment income (loss) % (0.58) (0.41) 0.17 (0.53) 0.34
Portfolio turnover rate % 121 80 85 72 41
</Table>
(1) Total return is calculated assuming reinvestment of all dividend and capital
gain distributions at net asset value and does not reflect the effect of
insurance contract charges.
(2) Effective July 26, 2000, ING Investments, LLC, became the Adviser to the
Fund.
See Accompanying Notes to Financial Statements
11
<Page>
NOTES TO FINANCIAL STATEMENTS as of December 31, 2003
NOTE 1 -- ORGANIZATION
ORGANIZATION. ING VP Natural Resources Trust (the "Trust") is an open-end,
non-diversified management investment company registered under the Investment
Company Act of 1940, as amended. The Trust was organized on November 15, 1988
and commenced operation in 1991.
The Trust's Investment objective is to seek long-term growth of capital through
investment primarily in common stock of companies which own or develop natural
resources and other basic commodities, or supply goods and services to such
companies.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies are consistently followed by the
Trust in the preparation of its financial statements:
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. 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 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 Trust's 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 Trust 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 Trust'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 Trust
occurs after the time at which the foreign market for such security(ies)
closes but before the time that the Trust'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 Trust 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 Trust
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
Trust could obtain if it were to sell the security at the time of the close
of the NYSE.
Investments in securities maturing in less than 60 days are valued at
amortized cost, which, 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.
12
<Page>
NOTES TO FINANCIAL STATEMENTS as of December 31, 2003 (Continued)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. FEDERAL INCOME TAXES. It is the policy of the Trust to comply with
subchapter M of the Internal Revenue Code and related excise tax provisons
applicable to regulated investment companies and to distribute substantially
all of its net investment income and any net realized capital gains to its
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.
D. DISTRIBUTIONS TO SHAREHOLDERS. Dividends from net investment income and net
realized gains, if any are declared and paid annually by the Trust.
Distributions are determined annually in accordance with federal tax
principles which may differ from accounting principles generally accepted in
the United States of America for investment companies. The Trust may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. Distributions are recorded on the
ex-dividend date.
E. USE OF ESTIMATES. Management of the Trust has made certain estimates and
assumptions relating to the reporting of assets, liabilities, income, and
expenses to prepare these financial statements in conformity with accounting
principles generally accepted in the United States of America. Actual
results could differ from these estimates.
F. FOREIGN CURRENCY TRANSLATION. The books and records of the Trust 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 Trust does 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 Trust'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 period
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 revaluation 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.
G. FORWARD FOREIGN CURRENCY CONTRACTS. The Trust may enter into forward foreign
currency contracts primarily to hedge against foreign currency exchange rate
risks on their non-U.S. dollar denominated investment securities. When
entering into a currency forward contract, the Trust agrees to receive or
deliver a fixed quantity of foreign currency for an agreed-upon price on an
agreed future date. These contracts are valued daily and the Trust's net
equity therein, representing unrealized gain or loss on the contracts as
measured by the difference between the forward foreign exchange rates at the
dates of entry into the contracts and the forward rates at the reporting
date, is included in the statement of assets and liabilities. Realized and
unrealized gains and losses are included in the statement of operations.
These instruments involve market and/or credit risk in excess of the amount
recognized in the statement of assets and
13
<Page>
NOTES TO FINANCIAL STATEMENTS as of December 31, 2003 (Continued)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
liabilities. Risks arise from the possible inability of counterparties to
meet the terms of their contracts and from movement in currency and
securities values and interest rates. At December 31, 2003, the Trust did
not have any open forward foreign currency contracts.
NOTE 3 -- INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES
The Trust pays an investment advisory fee to ING Investments, LLC (the
"Investment Adviser" or the "Adviser") at an annual rate of 1.00% of the Trust's
average daily net assets. The Investment Adviser voluntarily agreed to reimburse
the Trust if total annual expenses (including management fees, but excluding
interest, taxes, brokerage commission and extraordinary expenses) exceed 2.50%
of the Trust's average net assets. No reimbursement was required for the period
ended December 31, 2003.
At a special meeting held on July 22, 2003, Shareholders approved a Sub-Advisory
Agreement between ING Investments, LLC and ING Aeltus Investment Management,
Inc., with no change in the Adviser, the portfolio manager(s), or the overall
management fee paid by each Fund.
ING Funds Services, LLC (the "Administrator") serves as Administrator to the
Trust. The Trust pays the Administrator a fee calculated at an annual rate of
0.10% of the Trust's average daily net assets.
NOTE 4 -- OTHER TRANSACTIONS WITH AFFILIATED AND RELATED PARTIES
At December 31, 2003, the Trust had the following amounts recorded in payable to
affiliates on the accompanying Statements of Assets and Liabilities:
<Table>
<Caption>
ACCRUED
INVESTMENT ACCRUED
MANAGEMENT ADMINISTRATIVE
FEES FEES TOTAL
---------- -------------- -----
$ 19,962 $ 1,996 $ 21,958
</Table>
The Trust has adopted a Retirement Policy covering all independent trustees of
the Trust who will have served as an independent trustee for at least five years
at the time of retirement. Benefits under this plan are based on an annual rate
as defined in the plan agreement.
NOTE 5 -- INVESTMENT TRANSACTIONS
The cost of purchases and proceeds from sales of investments for the year ended
December 31, 2003, excluding short-term securities, were $24,525,046 and
$25,665,203, respectively.
NOTE 6 -- CONCENTRATION OF INVESTMENT RISKS
The Trust may invest in foreign securities and has a policy of investing in the
securities of companies that own or develop natural resources and other basic
commodities, or supply goods and services to such companies. There are certain
risks involved in investing in foreign securities or concentrating in specific
industries such as natural resources that are in addition to the usual risks
inherent in domestic investments. These risks include those resulting from
future adverse political and economic developments, as well as the possible
imposition of foreign exchange or other foreign governmental restrictions or
laws, all of which could affect the market and/or credit risk of the
investments.
NOTE 7 -- LINE OF CREDIT
The Trust, in addition to certain other funds managed by the Adviser, have
entered into an unsecured committed revolving line of credit agreement (the
"Credit Agreement") with The Bank of New York for an aggregate amount of
$125,000,000. The proceeds may be used to: (1) temporarily finance the purchase
and sale of securities; (2) finance the redemption of shares of an investor in
the funds; and (3) enable the funds to meet other emergency expenses as defined
in the Credit agreement. The funds to which the line of credit is available pay
a commitment fee equal to 0.09% per annum on the daily unused portion of the
committed line amount payable quarterly in arrears. At December 31, 2003 the
Trust did not have any loans outstanding.
NOTE 8 -- CAPITAL SHARE TRANSACTIONS
Transactions in capital shares and dollars were as follows:
<Table>
<Caption>
YEAR ENDED YEAR ENDED
DECEMBER 31, 2003 DECEMBER 31, 2002
----------------------- -----------------------
SHARES DOLLARS SHARES DOLLARS
--------- ------------ --------- ------------
Shares sold 352,152 $ 4,418,070 503,557 $ 6,211,430
Dividends
reinvested -- -- 3,247 41,560
Shares
redeemed (540,397) (6,643,754) (670,496) (7,979,545)
--------- ------------ --------- -----------
Net decrease (188,245) $ (2,225,684) (163,692) $ (1,726,555)
========= ============ ========= ============
</Table>
14
<Page>
NOTES TO FINANCIAL STATEMENTS as of December 31, 2003 (Continued)
NOTE 9 -- 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
INCOME ON GAINS
INVESTMENTS (LOSSES)
-------------- ------------
$ 370,491 $ (370,491)
</Table>
There were no distributions to shareholders during the year ended December 31,
2003. The tax composition of dividends and distributions to shareholders was
ordinary income in the amount of $41,560 for the year ended December 31, 2002.
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 CAPITAL
ORDINARY APPRECIATION/ LOSS EXPIRATION
INCOME (DEPRECIATION) CARRYFORWARDS DATES
------------- -------------- ------------- ----------
$ 249,931 $ 4,593,487 $ (41,881) 2010
</Table>
NOTE 10 -- 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 Trust 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.
15
<Page>
ING
VP Natural
Resources
Trust PORTFOLIO OF INVESTMENTS as of December 31, 2003
<Table>
<Caption>
SHARES VALUE
- -----------------------------------------------------------------------------
COMMON STOCK: 97.3%
COAL: 1.7%
10,000 Peabody Energy Corp. $ 417,100
----------------
417,100
----------------
FOREST PRODUCTS & PAPER: 2.6%
10,000 Weyerhaeuser Co. 640,000
----------------
640,000
----------------
IRON/STEEL: 3.5%
25,000 United States Steel Corp. 875,500
----------------
875,500
----------------
MINING: 35.7%
15,000 Alcan, Inc. 704,250
20,000 Alcoa, Inc. 760,000
50,000 Barrick Gold Corp. 1,135,500
150,000 @ First Quantum Minerals Ltd. 1,633,198
25,000 Freeport-McMoRan Copper &
Gold, Inc. 1,053,250
15,000 @ Inco Ltd. 597,300
546,666 @ Minara Resources Ltd. 1,223,298
25,000 Newmont Mining Corp. 1,215,250
250,000 @ Northgate Exploration Ltd. 516,541
----------------
8,838,587
----------------
OIL AND GAS: 38.2%
20,000 Anadarko Petroleum Corp. 1,020,200
13,000 Burlington Resources, Inc. 719,940
74,900 Chesapeake Energy Corp. 1,017,142
30,000 Ensco Intl., Inc. 815,100
18,000 Murphy Oil Corp. 1,175,580
10,400 @,@@ Nabors Industries Ltd. 431,600
16,500 Noble Energy, Inc. 733,095
25,500 @ Pioneer Natural Resources Co. 814,215
26,200 @ Pride Intl., Inc. 488,368
25,000 @ Rowan Cos., Inc. 579,250
14,000 @ Spinnaker Exploration Co. 451,780
50,000 @ Transocean, Inc. 1,200,500
----------------
9,446,770
----------------
OIL AND GAS SERVICES: 15.6%
24,000 Baker Hughes, Inc. 771,840
24,000 @ Cooper Cameron Corp. 1,118,400
50,000 @ Varco Intl., Inc. 1,031,500
26,000 @ Weatherford Intl. Ltd. 936,000
----------------
3,857,740
----------------
Total Common Stock
(Cost $19,482,210) 24,075,697
----------------
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 3.2%
REPURCHASE AGREEMENT: 3.2%
$ 789,000 Goldman Sachs Repurchase
Agreement
dated 12/31/03, 0.990%,
due 01/02/04, $789,043
to be received upon
repurchase
(Collateralized by
$789,448 Federal
National Mortgage
Association, 2.500%,
Market Value $803,724,
due 12/04/06) $ 789,000
----------------
Total Short-term Investments
(Cost $789,000) 789,000
----------------
TOTAL INVESTMENTS
IN SECURITIES (COST
$20,271,210)* 100.5% $ 24,864,697
OTHER ASSETS AND
LIABILITIES-NET (0.5) (129,324)
----- ----------------
NET ASSETS 100.0% $ 24,735,373
===== ================
</Table>
@ Non-income producing security
@@ Foreign Issuer
* Cost for federal income tax purposes is the same as for financial statement
purposes.
<Table>
Gross Unrealized Appreciation $ 5,074,277
Gross Unrealized Depreciation (480,790)
----------------
Net Unrealized Appreciation $ 4,593,487
================
</Table>
See Accompanying Notes to Financial Statements
16
<Page>
SHAREHOLDER MEETING INFORMATION (Unaudited)
A special meeting of shareholders of the ING Retail Funds (formerly Pilgrim
Retail Funds) and Variable Products was held July 22, 2003, at the offices of
ING Funds, 7337 East Doubletree Ranch Road, Scottsdale, AZ 85258.
A brief description of each matter voted upon as well as the results are
outlined below:
1. To approve a Sub-Advisory Agreement between ING Investments, LLC and ING
Aeltus Investment Management, Inc., with no change in the Adviser, the
portfolio manager(s), or the overall management fee paid by the Fund.
2. To transact such other business, not currently contemplated, that may
properly come before the Special Meeting or any adjournment(s) thereof in the
discretion of the proxies or their substitutes.
<Table>
<Caption>
SHARES VOTED
AGAINST OR SHARES BROKER TOTAL SHARES
PROPOSAL SHARES VOTED FOR WITHHELD ABSTAINED NON-VOTE VOTED
-------- ---------------- ------------ --------- -------- ------------
ING VP Natural Resources Trust 1 1,302,173 184,125 63,737 -- 1,550,035
ING VP Natural Resources Trust 2 1,207,203 206,635 136,197 -- 1,550,035
</Table>
17
<Page>
TRUSTEE AND OFFICER INFORMATION (Unaudited)
The business and affairs of the Trusts are managed under the direction of the
Trusts' Board of Trustees. A Trustee who is not an interested person of the
Trusts, as defined in the 1940 Act, is an independent trustee ("Independent
Trustee"). The Trustees and Officers of the Trust are listed below. The
Statement of Additional Information includes additional information about
trustees of the Registrant and is available, without charge, upon request at
1-800-992-0180.
<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 TRUST SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE
------------- ----------- ---------- --------------- ------------- -------------
INDEPENDENT TRUSTEES
Paul S. Doherty(2) Trustee July Mr. Doherty is President 116 --
7337 E. Doubletree Ranch Rd. 2000 - and Partner, Doherty,
Scottsdale, AZ 85258 Present Wallace, Pillsbury and
Born: 1934 Murphy, P.C., Attorneys
(1996 - Present); and
Trustee of each of the
funds managed by Northstar
Investment Management
Corporation (1993 - 1999).
J. Michael Earley(3) Trustee February President and Chief 116 --
7337 E. Doubletree Ranch Rd. 2002 - Executive Officer, Bankers
Scottsdale, AZ 85258 Present Trust Company, N.A. (1992
Born: 1945 Present).
R. Barbara Gitenstein(2) Trustee February President, College of 116 --
7337 E. Doubletree Ranch Rd. 2002 - New Jersey (1999 -
Scottsdale, AZ 85258 Present Present).
Born: 1948
Walter H. May(2) Trustee July Retired. Formerly, 116 Best Prep Charity (1991 -
7337 E. Doubletree Ranch Rd. 2000 - Managing Director and Present).
Scottsdale, AZ 85258 Present Director of Marketing,
Born: 1936 Piper Jaffray, Inc.;
Trustee of each of the
funds managed by Northstar
Investment Management
Corporation (1996 - 1999).
Jock Patton(2) Trustee July Private Investor (June 116 Director, Hypercom, Inc.
7337 E. Doubletree Ranch Rd. 2000 - 1997 - Present). Formerly (January 1999 - Present);
Scottsdale, AZ 85258 Present Director and Chief JDA Software Group, Inc.
Born: 1945 Executive Officer, Rainbow (January 1999 - Present);
Multimedia Group, Inc. Buick of Scottsdale, Inc.;
(January 1999 - December and National Airlines, Inc.
2001).
</Table>
18
<Page>
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
<Table>
<Caption>
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH TIME DURING THE OVERSEEN HELD BY
AND AGE TRUST SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE
------------- ----------- ---------- --------------- ------------- -------------
David W.C. Putnam(3) Trustee July President and Director, 116 Anchor International Bond
7337 E. Doubletree Ranch Rd. 2000 - F.L. Putnam Securities (December 2000 - Present);
Scottsdale, AZ 85258 Present Company, Inc. and its Progressive Capital
Born: 1939 affiliates; President, Accumulation Trust (August
Secretary and Trustee, The 1998 - Present); Principled
Principled Equity Market Equity Market Fund
Fund. Formerly, Trustee, (November 1996 - Present),
Trust Realty Trust Mercy Endowment Foundation
(December Corp.; Anchor (1995 - Present); Director,
Investment Trust; Bow F.L. Putnam Investment
2000 - Present); Ridge Management Company
Mining Company and each (December 2001 - Present);
of the F.L. Putnam funds Asian American Bank and
managed by Northstar Trust Company (June 1992 -
Investment Foundation Present); and Notre Dame
Management Corporation Health Care Center (1991 -
(1994 - 1999). Present) F.L. Putnam
Securities Company, Inc.
(June 1978 - Present); and
an Honorary Trustee, Mercy
Hospital (1973 - Present).
Blaine E. Rieke(3) Trustee February General Partner, 116 Morgan Chase Trust Co.
7337 E. Doubletree Ranch Rd. 2001 - Huntington Partners (January 1998 - Present).
Scottsdale, AZ 85258 Present (January 1997 - Present).
Born: 1933 Chairman of the Board and
Trustee of each of the
funds managed by ING
Investment Management Co.
LLC (November 1998 -
February 2001).
Roger B. Vincent(3) Trustee February President, Springwell 116 Director, AmeriGas
7337 E. Doubletree Ranch Rd. 2002 - Corporation (1989 - Propane, Inc. (1998 -
Scottsdale, AZ 85258 Present Present). Formerly, Present).
Born: 1945 Director Tatham
Offshore, Inc. (1996 -
2000).
Richard A. Wedemeyer(2) Trustee February Retired. Mr. Wedemeyer 116 Touchstone Consulting
7337 E. Doubletree Ranch Rd. 2001 - was formerly Vice Group (1997 - Present).
Scottsdale, AZ 85258 Present President -- Finance
Born: 1936 and Administration,
Channel Corporation
(June 1996 - April 2002).
Trustee, First Choice
Funds (1997 - 2001); and
of each of the funds
managed by ING Investment
Management Co. LLC (1998 -
2001).
</Table>
19
<Page>
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
<Table>
<Caption>
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH TIME DURING THE OVERSEEN HELD BY
AND AGE TRUST SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE
------------- ----------- ---------- --------------- ------------- -------------
TRUSTEES WHO ARE "INTERESTED PERSONS"
Thomas J. McInerney(4) Trustee February Chief Executive Officer, 170 Director, Hemisphere Inc.
7337 E. Doubletree Ranch Rd. 2001 - ING U.S. Financial (May 2003 - Present);
Scottsdale, AZ 85258 Present Services (September 2001 - Equitable Life Insurance
Born: 1956 Present); General Manager Co., Golden American Life
and Chief Executive Insurance Co., Life
Officer, ING U.S. Worksite Insurance Company of
Financial Services Georgia, Midwestern United
(December 2000 - Present); Life Insurance Co.,
Member ING Americas ReliaStar Life Insurance
Executive Committee (2001 Co., Security Life of
- Present); President, Denver, Security
Chief Executive Officer Connecticut Life Insurance
and Director of Northern Co., Southland Life
Life Insurance Company Insurance Co., USG Annuity
(March 2001 - October and Life Company, and
2002), ING Aeltus Holding United Life and Annuity
Company, Inc. (2000 - Insurance Co. Inc (March
Present), ING Retail 2001 - Present); Director,
Holding Company (1998 - Ameribest Life Insurance
Present), ING Life Co., (March 2001 to
Insurance and Annuity January 2003); Director,
Company (September 1997 - First Columbine Life
November 2002) and ING Insurance Co. (March 2001
Retirement Holdings, Inc. to December 2002); Member
(1997 - Present). of the Board, National
Formerly, General Manager Commission on Retirement
and Chief Executive Policy, Governor's Council
Officer, ING Worksite on Economic
Division (December 2000 - Competitiveness and
October 2001), President Technology of Connecticut,
ING-SCI, Inc. (August 1997 Connecticut Business and
- December 2000); Industry Association,
President, Aetna Financial Bushnell; Connecticut
Services (August 1997 - Forum; Metro Hartford
December 2000). Chamber of Commerce; and
is Chairman, Concerned
Citizens for Effective
Government.
</Table>
20
<Page>
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
<Table>
<Caption>
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH TIME DURING THE OVERSEEN HELD BY
AND AGE TRUST SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE
------------- ----------- ---------- --------------- ------------- -------------
John G. Turner(5) Trustee July Chairman, Hillcrest 116 Hormel Foods Corporation
7337 E. Doubletree Ranch Rd. 2000 - Capital Partners (May 2002 (March 2000 - Present);
Scottsdale, AZ 85258 Present - Present); President, Shopko Stores, Inc.
Born: 1939 Turner Investment Company (August 1999 - Present);
(January 2002 - Present). and M.A. Mortenson
Mr. Turner was formerly Company (March 2002 -
Vice Chairman of ING Present).
Americas (2000 - 2002);
Chairman and Chief
Executive Officer of
ReliaStar Financial Corp.
and ReliaStar Life
Insurance Company (1993 -
2000); Chairman of
ReliaStar United Services
Life Insurance Company
(1995 - 1998); Chairman of
ReliaStar Life Insurance
Company of New York (1995
- 2001); Chairman of
Northern Life Insurance
Company (1992 - 2001);
Chairman and Trustee of
the Northstar affiliated
investment companies (1993
- 2001) and Director,
Northstar Investment
Management Corporation and
its affiliates (1993 -
1999).
</Table>
- ----------
(1) Trustees serve until their successors are duly elected and qualified,
subject to the Board's retirement policy.
(2) Valuation Committee member.
(3) Audit Committee member.
(4) Mr. McInerney is an "interested person," as defined under the 1940 Act,
because of his affiliation with ING U.S. Financial Services and ING U.S.
Worksite Financial Services, both affiliates of ING Investments, LLC.
(5) Mr. Turner is an "interested person," as defined under the 1940 Act,
because of his affiliation with ING Americas, an affiliate of ING
Investments, LLC.
21
<Page>
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
<Table>
<Caption>
PRINCIPAL
TERM OF OFFICE OCCUPATION(S)
NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE
AND AGE HELD WITH TRUST TIME SERVED(1) PAST FIVE YEARS
------------- --------------- -------------- ---------------
OFFICERS:
James M. Hennessy President and Chief February 2001 - President and Chief Executive Officer of ING
7337 E. Doubletree Ranch Rd. Executive Officer Present Capital Corporation, LLC, ING Funds Services, LLC,
Scottsdale, AZ 85258 ING Advisors, Inc., ING Investments, LLC,
Born: 1949 Chief Operating July 2000 - Present Lexington Funds Distributor, Inc., Express America
Officer T.C. Inc. and EAMC Liquidation Corp. (since
December 2001); Executive Vice President and Chief
Senior Executive July 2000 - Operating Officer of ING Funds Distributor, LLC
Vice President February 2001 (since June 2000). Formerly, Executive Vice
President and Chief Operating Officer of ING
Secretary July 2000 - Quantitative Management, Inc. (October 2001 to
February 2001 September 2002); Senior Executive Vice President
(June 2000 to December 2000) and Secretary (April
1995 to December 2000) of ING Capital Corporation,
LLC, ING Funds Services, LLC, ING Investments,
LLC, ING Advisors, Inc., Express America T.C.
Inc., and EAMC Liquidation Corp.; and Executive
Vice President, ING Capital Corporation, LLC and
its affiliates (May 1998 to June 2000) and Senior
Vice President, ING Capital Corporation, LLC and
its affiliates (April 1995 to April 1998).
Stanley D. Vyner Executive Vice July 2000 - Present Executive Vice President of ING Advisors, Inc. and
7337 E. Doubletree Ranch Rd. President ING Investments, LLC (July 2000 to present) and
Scottsdale, Arizona 85258 Chief Investment Officer of the International
Born: 1950 Portfolios, ING Investments, LLC (July 1996 to
present). Formerly, President and Chief Executive
Officer of ING Investments, LLC (August 1996 to
August 2002).
Michael J. Roland Executive Vice February 2002 - Executive Vice President, Chief Financial Officer
7337 E. Doubletree Ranch Rd. President and Present and Treasurer of ING Funds Services, LLC, ING
Scottsdale, AZ 85258 Assistant Secretary Funds Distributor, LLC, ING Advisors, Inc., ING
Born: 1958 Investments, LLC (December 2001 to present),
Principal Financial July 2000 - Present Lexington Funds Distributor, Inc., Express America
Officer T.C. Inc. and EAMC Liquidation Corp. (since
December 2001). Formerly, Executive Vice
Senior Vice July 2000 - February President, Chief Financial Officer and Treasurer
President 2002 of ING Quantitative Management, Inc. (December
2001 to October 2002); Senior Vice President, ING
Funds Services, LLC, ING Investments, LLC, and ING
Funds Distributor, LLC (June 1998 to December
2001) and Chief Financial Officer of Endeavor
Group (April 1997 to June 1998).
</Table>
22
<Page>
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
<Table>
<Caption>
PRINCIPAL
TERM OF OFFICE OCCUPATION(S)
NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE
AND AGE HELD WITH TRUST TIME SERVED(1) PAST FIVE YEARS
------------- --------------- -------------- ---------------
Robert S. Naka Senior Vice July 2000 - Present Senior Vice President and Assistant Secretary of
7337 E. Doubletree Ranch Rd. President and ING Funds Services, LLC, ING Funds Distributor,
Scottsdale, AZ 85258 LLC, ING Advisors, Inc., ING Investments, LLC
Born: 1963 Assistant Secretary July 2000 - Present (October 2001 to present) and Lexington Funds
Distributor, Inc. (since December 2001). Formerly,
Senior Vice President and Assistant Secretary for
ING Quantitative Management, Inc. (October 2001 to
October 2002); Vice President, ING Investments,
LLC (April 1997 to October 1999), ING Funds
Services, LLC (February 1997 to August 1999) and
Assistant Vice President, ING Funds Services, LLC
(August 1995 to February 1997).
Kimberly A. Anderson Senior Vice November 2003 - Vice President and Assistant Secretary of ING
7337 E. Doubletree Ranch Rd. President Present Funds Services, LLC, ING Funds Distributor, LLC,
Scottsdale, AZ 85258 ING Advisors, Inc., ING Investments, LLC (since
Born: 1964 Vice President February 2001 - October 2001) and Lexington Funds Distributor,
November 2003 Inc. (since December 2001). Formerly, Vice
President for ING Quantitative Management, Inc.
Secretary February 2001 - (October 2001 to October 2002); Assistant Vice
August 2003 President of ING Funds Services, LLC (November
1999 to January 2001) and has held various other
Assistant Vice July 2000 - positions with ING Funds Services, LLC for more
President and February 2001 than the last five years.
Assistant Secretary
Robyn L. Ichilov Vice President and July 2000 - Present Vice President of ING Funds Services, LLC (since
7337 E. Doubletree Ranch Rd Treasurer October 2001) and ING Investments, LLC (since
Scottsdale, AZ 85258 August 1997); Accounting Manager, ING Investments,
Born: 1967 LLC (since November 1995).
J. David Greenwald Vice President August 2003 - Vice President of Mutual Fund Compliance of ING
7337 E. Doubletree Ranch Rd. Present Funds Services, LLC (May 2003 - Present). Formerly
Scottsdale, Arizona 85258 Assistant Treasurer and Director of Mutual Fund
Born: 1957 Compliance and Operations of American Skandia, A
Prudential Financial Company (October 1996 - May
2003).
Lauren D. Bensinger Vice President February 2003 - Vice President and Chief Compliance Officer, ING
7337 E. Doubletree Ranch Rd. Present Funds Distributor, LLC. (July 1995 to Present);
Scottsdale, Arizona 85258 Vice President (February 1996 to Present) and
Born: 1954 Chief Compliance Officer (October 2001 to Present)
ING Investments, LLC; Vice President and Chief
Compliance Officer, ING Advisors, Inc. (July 2000
to Present), Formerly Vice President and Chief
Compliance Officer ING Quantitative Management,
Inc. (July 2000 to September 2002), and Vice
President, ING Fund Services, LLC (July 1995 to
Present).
</Table>
23
<Page>
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
<Table>
<Caption>
PRINCIPAL
TERM OF OFFICE OCCUPATION(S)
NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE
AND AGE HELD WITH TRUST TIME SERVED(1) PAST FIVE YEARS
------------- --------------- -------------- ---------------
Todd Modic Vice President August 2003 - Vice President of Financial Reporting-Fund
7337 E. Doubletree Ranch Rd. Present Accounting of ING Funds Services, LLC (September
Scottsdale, AZ 85258 Assistant Vice 2002 to present). Formerly, Director of Financial
Born: 1967 President August 2001 - Reporting of ING Investments, LLC (March 2001 to
August 2003 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).
Huey P. Falgout, Jr. Secretary August 2003 - Counsel, ING U.S. Financial Services (November
7337 E. Doubletree Ranch Rd. Present 2002 - Present). Formerly, Associate General
Scottsdale, Arizona 85258 Counsel of AIG American General (January 1999 -
Born: 1963 November 2002) and Associate General Counsel of
Van Kampen, Inc. (April 1992 - January 1999).
Susan P. Kinens Assistant Vice February 2003 - Assistant Vice President and Assistant Secretary,
7337 E. Doubletree Ranch Rd. President and Present ING Funds Services, LLC (December 2002 - Present);
Scottsdale, AZ 85258 Assistant Secretary and has held various other positions with ING
Born: 1976 Funds Services, LLC for the last five years.
Maria M. Anderson Assistant Vice August 2001 - Assistant Vice President of ING Funds Services,
7337 E. Doubletree Ranch Rd. President Present LLC (since October 2001). Formerly, Manager of
Scottsdale, AZ 85258 Fund Accounting and Fund Compliance, ING
Born: 1958 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).
Theresa Kelety Assistant Secretary August 2003 - Counsel, ING U.S. Financial Services (April 2003 -
7337 E. Doubletree Ranch Rd. Present Present). Formerly, Senior Associate with Shearman
Scottsdale, Arizona 85258 & Sterling (February 2000 - April 2003) and
Born: 1963 Associate with Sutherland Asbill & Brennan (1996 -
February 2000).
</Table>
- ----------
(1) The officers hold office until the next annual meeting of the Trustees and
until their successors have been elected and qualified.
24
<Page>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<Page>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<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 64141-6368
CUSTODIAN
Bank of New York
100 Colonial Center Parkway, Suite 300
Lake Mary, FL 32746
LEGAL COUNSEL
Dechert LLP
1775 Eye Street, N.W.
Washington, D.C. 20006
INDEPENDENT AUDITORS
KPMG LLP
99 High Street
Boston, MA 02110
A prospectus containing more complete information regarding the Trust, 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 Trust's proxy voting record will be
available without charge on or about August 31, 2004 on the Trust's website at
www.ingfunds.com and on the SEC's website at www.sec.gov.
[ING FUNDS LOGO] VPNRTAR1203-021804
<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 David Putnam is an audit committee
financial expert, as defined in Item 3 of Form N-CSR. Mr. Putnam is
"independent" for purposes of Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(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 $15,000 for the year ended
December 31, 2003 and $20,744 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 $3,500 in the year ended December 31,
2003 and $3,950 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
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 an 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 non-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>
FUND
THE FUND(S) AFFILIATES FEE RANGE
- ---------------------------------------------- --------------- ----------------- -------------------
Services related to Fund mergers /X/ /X/ Not to exceed
$10,000 per merger
Consultations by Fund management with /X/ Not to exceed
respect to accounting or disclosure $5,000 per
treatment of transactions or events and/or occurrence during
the actual or potential effect of final or the Pre-Approval
proposed rules, standards or interpretations Period
by the SEC, 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
For Prime Rate Trust, agreed upon procedures /X/ Not to exceed
for quarterly reports to rating agencies $9,000 per quarter
</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 during the
excise tax distributions. Pre-Approval
Period
Review of IRC Sections 851(b) and 817(h) /X/ Not to exceed
diversification testing on a real-time basis $2,000 per 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
</Table>
Service
<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 the preparation of annual /X/ Not to exceed
PFIC statements and annual Form 5471(Controlled $18,000 during
Foreign Corporation) for structured finance the Pre-Approval
vehicles 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
Security counts performed pursuant to Rule /X/ Not to exceed
17f-2 of the 1940 Act (I.E., counts for $5,000 per Fund
Funds holding securities with affiliated during the
sub-custodians) 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 $344,373 for year ended December 31, 2003 and $374,718
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 NATURAL RESOURCES TRUST
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
- ------------------