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OMB APPROVAL
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-02565
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ING VP Money Market Portfolio
- -------------------------------------------------------------------------------
(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: January 1, 2004 to June 30, 2004
----------------------------------
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):
1
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SEMI-ANNUAL REPORT
SEMI-ANNUAL REPORT
JUNE 30, 2004
CLASSES I AND S
[GRAPHIC]
ING VARIABLE PRODUCT PORTFOLIOS
GLOBAL AND INTERNATIONAL EQUITY PORTFOLIOS
ING VP GLOBAL SCIENCE AND TECHNOLOGY PORTFOLIO
(FORMERLY, ING VP TECHNOLOGY PORTFOLIO)
ING VP INTERNATIONAL EQUITY PORTFOLIO
DOMESTIC EQUITY GROWTH PORTFOLIOS
ING VP GROWTH PORTFOLIO
ING VP SMALL COMPANY PORTFOLIO
DOMESTIC EQUITY VALUE PORTFOLIO
ING VP VALUE OPPORTUNITY PORTFOLIO
DOMESTIC EQUITY AND INCOME PORTFOLIOS
ING VP BALANCED PORTFOLIO
ING VP GROWTH AND INCOME PORTFOLIO
FIXED INCOME PORTFOLIOS
ING VP BOND PORTFOLIO
ING VP MONEY MARKET PORTFOLIO
[ING FUNDS LOGO]
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TABLE OF CONTENTS
<Table>
President's Letter 1
Market Perspective 2
Portfolio Managers' Reports:
Global and International Equity Portfolios 4
Domestic Equity Growth Portfolios 8
Domestic Equity Value Portfolio 12
Domestic Equity and Income Portfolios 14
Fixed Income Portfolios 18
Statements of Assets and Liabilities 21
Statements of Operations 23
Statements of Changes in Net Assets 25
Financial Highlights 30
Notes to Financial Statements 39
Portfolios of Investments 49
Director and Officer Information 82
</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,
The past year has been unpredictable for investors. Strong growth in the overall
economy coupled with questions concerning mutual fund trading practices have
challenged investors.
In general, economic activity has continued to increase, with the growth being
widespread. Personal consumption of goods and services is leading the recovery
supported by corporate purchases of equipment and software and by Government
spending on defense. Worries of possible interest rate increases, worsening
global turmoil and increasing oil prices have reduced the gains the market
realized in the first few months of 2004.
However, investors remain steadfast as nearly each of the last six months has
seen an overall increase in assets invested in mutual funds despite continuing
investigations into late trading and market timing issues at some of the largest
and most respected financial services companies in the country.
You should have received a letter from Thomas J. McInerney, the Chief Executive
Officer of ING U.S. Financial Services, which provided information about the
internal review ING management conducted regarding trading practices in ING
mutual fund products. If you did not receive a copy of the letter, please
contact Investor Services at 1-800-992-0180 and we will provide you with a copy.
I wish to thank you on behalf of everyone here at ING Funds for your continued
confidence. We look forward to helping you meet your investment goals in the
future.
Sincerely,
/s/ James M. Hennessy
James M. Hennessy
President
ING Funds
July 19, 2004
1
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MARKET PERSPECTIVE: SIX MONTHS ENDED JUNE 30, 2004
OVERVIEW
Perhaps it was inevitable that the markets should be a little neurotic after the
heady gains of 2003. But whatever the reasons, investors in 2004 alternately
cheered and fretted over the developing economic outlook, sending markets up,
down and up again before ending the first six months of 2004 with modest and
distinctly fragile gains.
At first the worry was the so-called jobless recovery, then half way through the
six-month period a very strong U.S. employment report was released. The report
generated euphoria until people realized that as the job market tightens,
inflation picks up and rising interest rates were likely not far away. Investors
took comfort from Federal Open Market Committee ("FOMC") Chairman Greenspan's
soothing advice that the rebound in interest rates would be "measured". But as
the six months ended June 30, 2004 drew to a close, attention switched nervously
to the impending U.S. earnings season and the strong possibility that the
splendid results of the last few quarters would likely not be maintained.
GLOBAL EQUITIES managed a 3.52% return, net of withholding tax on dividends, for
the six months ended June 30, 2004 according to the Morgan Stanley Capital
International ("MSCI") World Index(1) in dollars, after peaking on average in
mid February and spending much of May in negative territory.
Among CURRENCIES, the euro reached a post launch record also in mid February
before retreating and ending about 3.0% lower for the six months ended June 30,
2004. The British pound ended the six months 2.0% higher against the dollar, as
the Bank of England became the first of the major central banks to raise
interest rates. The yen lost approximately 1.5%, ironically after the Bank of
Japan stopped buying dollars to keep the yen weak, spending a staggering $144
billion in the first quarter of 2004 to do so.
FIXED INCOME MARKET
U.S. FIXED INCOME classes started 2004 as they had ended 2003. Disappointing
jobs reports, together with stubbornly high new unemployment claims, suggested
continuing weakness, and gave bond investors a solid first quarter of gains.
That all changed on the first Friday in April 2004, with the very bullish U.S.
employment report. Investment grade bonds unsurprisingly bore the brunt of fears
that a new cycle of rising interest rates from multi-decade low levels was about
to start. For the six months ended June 30, 2004, the Lehman Brothers Aggregate
Bond Index(2) of investment grade bonds returned a tiny 0.16%. The Lehman
Brothers Corporate Index(3) component and the Lehman Brothers Treasury Bond
Index(4) fell by 0.26% and 0.20%, respectively. Ten-year Treasury yields rose by
36 basis points to 4.62%, passing through rates not seen in nearly two years.
Yields on 90-day Treasury Bills rose 39 basis points to 1.3%, emphatically
breaching the 1.0% level, a rate above which they had not closed since June 9,
2003. High yield bonds did better, the Lehman Brothers U.S. Corporate High Yield
Bond Index(5) hung on to return 1.35% for the six-month period.
DOMESTIC EQUITY MARKET
The U.S. EQUITIES market rose 3.44% in the six months ended June 30, 2004, based
on the Standard & Poor's ("S&P") 500 Index(6) including dividends. This implies
a price-to-earnings (P/E) level of just over 17 times 2004 earnings. Three
strong employment reports in the second quarter of 2004 were welcomed, but all
was not in harmony. For while successive, upbeat economic statistics sang of
good economic times, there was also a steady drumbeat of evidence that inflation
was picking up. The Federal Funds rate at just 1.0% meant that real interest
rates were becoming ever more negative at the same time, while the economy was
growing at over 4.0%. With labor markets tightening and oil prices breaking
above $40 per barrel, this appears to be an increasingly unstable situation.
Meanwhile, the FOMC took almost the entire second quarter of 2004 before
increasing the Federal Funds rate to 1.25% on June 30, 2004. However, in the
week before the increase, the wind seemed to shift again. First quarter of 2004
gross domestic product ("GDP") growth was revised down to 3.9%, durable goods
orders fell, and retailers and auto companies complained of slack sales. On the
day the FOMC raised rates, the Chicago Purchasing Managers' Index(7) had its
largest monthly drop in 30 years. Perhaps Greenspan's "measured" policy was
right, but perhaps something else was wrong. The first half of 2004 ended, with
investors again nervously awaiting the employment report two days later.
2
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MARKET PERSPECTIVE: SIX MONTHS ENDED JUNE 30, 2004
INTERNATIONAL MARKETS
Most INTERNATIONAL MARKETS eked out similarly modest gains for the six months
ended June 30, 2004, but JAPAN was the star, rising 10.73% in dollars according
to the MSCI Japan Index(8). Sentiment was encouraged by first quarter GDP
growth, reported at a surprisingly strong 6.1% annualized, suggesting that the
world's second largest economy was at last emerging from its slump of more than
a decade.
EUROPEAN EX UK MARKETS gained 2.88% in dollars in the six months ended June 30,
2004, according to the MSCI Europe ex UK Index(9). Buoyant exports were about
the only good news, as domestic demand still languished under unemployment of
9.0%. Still, these markets look relatively cheap.
Finally the UK market rose 3.32% in dollars during the first six months of 2004,
based on the MSCI UK Index(10). The economy appears to be strong, but the
troubling imbalances of an over-indebted consumer and a housing price bubble led
to three interest rate increases by the Bank of England, with more likely on the
way.
- ----------
(1) The MSCI WORLD INDEX 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.
(2) The LEHMAN BROTHERS AGGREGATE BOND INDEX is 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.
(3) The LEHMAN BROTHERS CORPORATE INDEX includes all publicly issued,
fixed-rate, nonconvertible, dollar-denominated, SEC-registered, investment-grade
corporate debt.
(4) The LEHMAN BROTHERS TREASURY BOND INDEX (U.S. Dollars) is composed of all
bonds covered by the Lehman Brothers Aggregate Bond Index with maturities of 10
years or greater. Total return comprises price appreciation/depreciation and
income as a percentage of the original investment.
(5) The LEHMAN BROTHERS U.S. CORPORATE HIGH YIELD BOND INDEX is generally
representative of corporate bonds rated below investment-grade.
(6) The S&P 500 INDEX is a 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.
(7) The CHICAGO PURCHASING MANAGERS' INDEX measures manufacturing activity in
the industrial Midwest.
(8) The MSCI JAPAN INDEX is a free float-adjusted market capitalization index
that is designed to measure developed market equity performance in Japan.
(9) The 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.
(10) The MSCI UK INDEX is a free float-adjusted market capitalization index that
is designed to measure developed market equity performance in the UK.
ALL INDICES ARE UNMANAGED AND INVESTORS CANNOT INVEST DIRECTLY IN AN INDEX.
THE PERFORMANCE UPDATE ILLUSTRATES PERFORMANCE FOR A VARIABLE INVESTMENT OPTION
AVAILABLE THROUGH A VARIABLE ANNUITY CONTRACT. THE PERFORMANCE SHOWN INDICATES
PAST PERFORMANCE AND IS NOT A PROJECTION OR PREDICTION OF FUTURE RESULTS. ACTUAL
INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES AND/OR
UNITS, AT REDEMPTION, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE
PORTFOLIOS' PERFORMANCE IS SUBJECT TO CHANGE SINCE THE PERIOD'S END AND MAY BE
LOWER OR HIGHER THAN THE PERFORMANCE DATA SHOWN. FOR VARIABLE ANNUITY CONTRACTS,
PLEASE CALL (800) 366-0066 TO GET PERFORMANCE THROUGH THE MOST RECENT MONTH END.
MARKET PERSPECTIVE REFLECTS THE VIEWS OF THE CHIEF INVESTMENT RISK OFFICER ONLY
THROUGH THE END OF THE PERIOD, AND IS SUBJECT TO CHANGE BASED ON MARKET AND
OTHER CONDITIONS.
3
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ING VP GLOBAL SCIENCE AND TECHNOLOGY PORTFOLIO PORTFOLIO MANAGERS' REPORT
PORTFOLIO MANAGEMENT TEAM: Thomas P. Callan, CFA, Managing Director and Senior
Portfolio Manager, Daniel M. Rea, Vice President and Portfolio Manager,
BlackRock Advisors, Inc. -- the Sub-Adviser (*).
GOAL: The ING VP Global Science and Technology Portfolio (formerly, ING VP
Technology Portfolio, the "Portfolio") seeks long-term capital appreciation.
PERFORMANCE: During the six months ended June 30, 2004, the Portfolio's Class I
shares provided a total return of -5.43% compared to 3.44% for the Standard &
Poor's ("S&P") 500 Index(1) and 5.64% for the Pacific Stock Exchange ("PSE")
Technology Index(2).
PORTFOLIO SPECIFICS: During the period January 1, 2004 through June 30, 2004,
the Portfolio underperformed its benchmark, the PSE Technology Index. Throughout
the period, market participants became increasingly concerned about the
sustainability of the global economic recovery. The lack of confidence was
likely fueled by the increasing likelihood of tighter U.S. monetary policy, the
potential for controlled GDP deceleration in China, global terrorism concerns,
and a more contentious U.S. presidential election. These macroeconomic and
geopolitical issues resulted in a reassessment of risk and precipitated a shift
away from economically sensitive sectors including technology, industrials, and
materials. Within technology, the more cyclical sub-industries such as
semiconductor capital equipment and semiconductor devices experienced weak
performance. As for the healthcare sector, performance was driven by capital
flow into segments with greater revenue and earnings visibility as investors
favored medical devices over biotechnology.
The majority of the relative underperformance for the period can be attributed
to stock selection, particularly in the semiconductor devices and internet
software and services industries. Within the semiconductor devices industry, the
Portfolio's excessive exposure to small and mid cap stocks, which
underperformed, resulted in the negative contribution to performance from that
group. In the internet software and services industry, stock selection was also
negative due to the Portfolio's lack of exposure to Check Point Software
Technologies, Inc., which gained over 60% in the period. Other detractors from
performance include the Portfolio's underweight in the medical equipment group
and overweight in the semiconductor devices industry, as well as stock selection
in the computer peripherals and communications equipment industries.
On a positive note, the Portfolio benefited from an overweight to the internet
software and services industry, which was a strong performing group in the
benchmark during the period. Stock selection in the systems software
sub-industry also contributed positively to performance. Companies including
Adobe Systems, Inc. and Symantec Corp. appreciated notably, returning 19% and
27%, respectively, for the period January 1 through June 30, 2004, as underlying
business fundamentals continued to improve. Finally, category-dominant Internet
companies such as eBay, Inc. and Yahoo!, Inc., which returned 42% and 62%,
respectively for the same period, benefited from increasing on-line traffic and
transaction volumes, as well as an acceleration in online advertising.
MARKET OUTLOOK: For the past several quarters, global economic data have pointed
to a broad-based industrial recovery. In the United States, accommodative
monetary policy and stimulative fiscal policy have produced a dramatic
re-acceleration in GDP. Furthermore, corporations appear to have successfully
realigned their cost structures and improved their balance sheets, which has
generally led to improved profitability. Although increasing inflationary
pressures have led to monetary tightening, we don't anticipate substantial
increases in the Fed Funds rate over the intermediate term. Furthermore, a low
nominal interest rate environment is still supportive of additional capital
investment and we anticipate greater enterprise spending in the next several
quarters.
In addition, we believe many IT companies have sufficient operating leverage to
drive earnings growth and can outperform throughout this portion of the economic
cycle. However, unlike much of 2003 where multiple expansion was a major
contributor to returns, we believe the market will begin to reward higher
quality companies with consistent top-line growth and the ability to expand
margins. We would characterize the recent pullback as a mid-cycle correction and
view it as an attractive opportunity to increase our exposure to selective
segments of the market. In our view, many of the factors that drove recent
weakness were macro in nature and have not directly impacted the investment
dynamics within the technology sector.
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(*) Effective January 1, 2004, BlackRock Advisors, Inc. ("BlackRock") began
acting as sub-adviser to ING VP Technology Portfolio under an interim
sub-advisory agreement. On March 23, 2004, the Portfolio's shareholders approved
the change in sub-adviser of ING VP Technology Portfolio from AIC Asset
Management, LLC to BlackRock. In connection with the change in sub-adviser were
the following changes to the name and non-fundamental investment strategy and
policies of the Portfolio: (1) a name change to ING VP Global Science and
Technology Portfolio from ING VP Technology Portfolio; (2) strategy and policy
changes so that the Portfolio became 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; and (3) the comparative index for the
Portfolio was changed from the Goldman Sachs Technology Industry Composite Index
to the Standard & Poor's 500 Index and the Pacific Stock Exchange Technology
Index was added as a comparative index.
4
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PORTFOLIO MANAGERS' REPORT ING VP GLOBAL SCIENCE AND TECHNOLOGY PORTFOLIO
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS FOR THE
PERIODS ENDED JUNE 30, 2004
------------------------------------
SINCE INCEPTION
OF CLASS I
1 YEAR MAY 1, 2000
------ ---------------
Class I 18.45% (21.43)%
S&P 500 Index(1) 19.11% (4.19)%
PSE Technology Index(2) 31.19% (31.73)%
Goldman Sachs Technology Industry Composite Index(3) 17.10% (20.28)%
</Table>
The table above illustrates the total return of ING VP Global Science and
Technology Portfolio against the S&P 500 Index, the PSE Technology Index and the
Goldman Sachs Technology Industry Composite 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. Total returns would have been lower if such
expenses or charges were included.
The performance table does not reflect the deduction of taxes that a shareholder
will pay on portfolio distributions or the redemption of portfolio shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and operating expenses otherwise payable by the Portfolio, subject to
possible later reimbursement during a three-year period. Total returns would
have been lower had there been no waiver to the Portfolio.
THE PERFORMANCE UPDATE ILLUSTRATES PERFORMANCE FOR A VARIABLE INVESTMENT OPTION
AVAILABLE THROUGH A VARIABLE ANNUITY CONTRACT. THE PERFORMANCE SHOWN INDICATES
PAST PERFORMANCE AND IS NOT A PROJECTION OR PREDICTION OF FUTURE RESULTS. ACTUAL
INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES AND/OR
UNITS, AT REDEMPTION, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PLEASE
CALL (800) 366-0066 TO GET PERFORMANCE THROUGH THE MOST RECENT MONTH END.
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) The S&P 500 Index is an unmanaged index that measures the performance of
securities of approximately 500 large capitalization companies whose
securities are traded on major U.S. stock markets.
(2) The PSE Technology Index, an unmanaged index published by the Pacific
Exchange, is comprised of 100 listed and over-the-counter stocks from 15
different industries including computer hardware, software, semiconductors,
telecommunications, data storage and processing, electronics and
biotechnology.
(3) The Goldman Sachs Technology Industry Composite Index is a widely
recognized, unmanaged index of technology stocks.
PRINCIPAL RISK FACTOR(S): Exposure to financial and market risks that accompany
investments in equities. The Portfolio focuses its investments in science and
technology sectors. The Portfolio's focus on stocks in the science and
technology sectors makes it more susceptible to factors affecting those sectors
and more volatile than funds that invest in many different sectors. In addition,
investing in science and technology companies exposes the Portfolio to special
risks. For example, rapid advances in science and technology might cause
existing products to become obsolete, and the Portfolio's returns could suffer
to the extent it holds an affected company's shares. The Portfolio's investments
in small- and mid-sized companies may be more susceptible to price swings than
larger companies. International investing involves special risks including
currency fluctuations, lower liquidity, political and economic uncertainties,
and differences in accounting standards. The use of certain derivatives may also
have a leveraging effect, which may increase the volatility of the Portfolio. In
order to generate additional income, the Portfolio may lend portfolio securities
and may, therefore, lose the opportunity to sell the securities at a desirable
price. The Portfolio is generally expected to engage in frequent and active
trading of portfolio securities, which may result in an increase in brokerage
commissions and other transaction costs.
5
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ING VP INTERNATIONAL EQUITY PORTFOLIO PORTFOLIO MANAGERS' REPORT
PORTFOLIO MANAGEMENT TEAM: A team of investment specialists, ING Investment
Management Co. (formerly, 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.
The Portfolio will not target any given level of current income.
PERFORMANCE: For the six months ended June 30, 2004, the Portfolio's Class I
shares provided a total return of 3.71% compared to the Morgan Stanley Capital
International Europe, Australasia and Far East ("MSCI EAFE") Index(1), which
returned 4.86% for the same period.
PORTFOLIO SPECIFICS: International markets commenced the new year on a strong
note, supported by rising growth expectations and investor confidence, but ran
out of steam by mid-February. This period was reminiscent of the post-March 2003
recovery, in which speculative, generally smaller stocks led the advance. Rising
oil prices, a steadily deteriorating security situation in Iraq, concerns that
the Chinese economy was heading for a hard landing, and higher global long-term
interest rates combined to undermine sentiment, and markets have essentially
traded sideways since. This latter phase saw an increasing focus on company
fundamentals, a move that benefited the relative performance of the Portfolio in
the period mid-February 2004 through June 30, 2004; however, the Portfolio did
underperform the benchmark.
Our regional allocation strategy added some value in the review period due to
our positive allocation in the strongly performing Japanese market and being
underweight in the lesser performing Pan-European and Developed Asia/Australian
regions. The performance deficit was the result of stock selection within the
aforementioned regions. Positive selection results in Japan were offset by a
negative outcome in Developed Asia/Australia. The sector strategy result was
negative largely due to being underweight in consumer staples, which had strong
relative performance. Our focus on the energy sector and underweight exposure to
the poorly performing technology sector impacted positively on the sector
allocation result.
While stock selection proved to be successful in most of the economic sectors,
performance deficits in the consumer discretionary, health care, and information
technology sectors yielded an overall adverse stock selection outcome. In Hong
Kong, CITIC International Financial Holdings Ltd. was impacted by the suddenly
escalating China concerns. Weakness in the previously held cellular telephone
equipment manufacturer Nokia impacted the result in technology, as did a lack of
exposure to competitor L.M. Ericsson, which was gaining market share at its
cost. A lack of exposure to French oil producer Total SA also hurt performance,
as did our exposure to Japanese automaker Nissan Motor Co., Ltd., which was
previously held, and Australian media company Seven Network Ltd. On the positive
side, our accent on the recovering Japanese banks proved rewarding, especially
our holdings in The Sumitomo Trust & Banking Co. Ltd. and Bank of Yokohama Ltd.,
which was held during the period. Japanese industrial holding Itochu Corp. and
supermarket operator Ito-Yokado, which was previously held, were also material
positive contributors.
MARKET OUTLOOK: The maturing of the global economic recovery and the potential
for continued interest rate increases suggests a less pro-cyclical portfolio
stance, with a focus on stocks with steady earnings growth and sustainable and
growing dividends. Our Portfolio evolved from a modest pro-cyclical positioning
to a cyclically neutral stance in the course of the six month period. In our
view, the potential for upside earnings surprises remains strongest in Japan,
where we maintain a modest overweight position and maintain a slightly
aggressive positioning offset elsewhere. For EAFE as a whole, the upside remains
modest, with the benefit of continued, albeit reducing, earnings momentum likely
to be partly offset by the lower valuations demanded by rising interest rates. A
stronger outlook is contingent on the continued combination of high earnings
growth and stable interest rates, which, while not impossible, is deemed an
unlikely outcome. On balance, the Portfolio currently has a price/earnings
multiple approximating that of the benchmark, but we expect it to generate
higher and more visible earnings growth in both 2004 and 2005.
6
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PORTFOLIO MANAGERS' REPORT ING VP INTERNATIONAL EQUITY PORTFOLIO
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED JUNE 30, 2004
--------------------------------------------------------------
SINCE INCEPTION SINCE INCEPTION
OF CLASS I OF CLASS S
1 YEAR 5 YEAR DECEMBER 22, 1997 NOVEMBER 1, 2001
------ ------ ----------------- ----------------
Class I 28.09% (3.53)% 1.83% --
Class S 27.72% -- -- 2.13%
MSCI EAFE Index(1) 32.85% 0.40% 3.85%(2) 9.82%
</Table>
The table above illustrates the total return of ING VP International Equity
Portfolio against the MSCI EAFE Index. The Index has no cash in its portfolio,
imposes no sales charges and incurs no operating expenses. An investor cannot
invest directly in an index. The Portfolio's performance is shown without the
imposition of any expenses or charges which are, or may be, imposed under your
annuity contract. Total returns would have been lower if such expenses or
charges were included.
The performance table does not reflect the deduction of taxes that a shareholder
will pay on portfolio distributions or the redemption of portfolio shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and operating expenses otherwise payable by the Portfolio, subject to
possible later reimbursement during a three-year period. Total returns would
have been lower had there been no waiver to the Portfolio.
THE PERFORMANCE UPDATE ILLUSTRATES PERFORMANCE FOR A VARIABLE INVESTMENT OPTION
AVAILABLE THROUGH A VARIABLE ANNUITY CONTRACT. THE PERFORMANCE SHOWN INDICATES
PAST PERFORMANCE AND IS NOT A PROJECTION OR PREDICTION OF FUTURE RESULTS. ACTUAL
INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES AND/OR
UNITS, AT REDEMPTION, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PLEASE
CALL (800) 366-0066 TO GET PERFORMANCE THROUGH THE MOST RECENT MONTH END.
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) The MSCI EAFE Index is an unmanaged index that measures the performance of
securities listed on exchanges in markets in Europe, Australia and the Far
East.
(2) Since inception performance for the index is shown from January 1, 1998.
PRINCIPAL RISK FACTOR(S): Those generally attributable to stock investing. These
risks include sudden and unpredictable drops in the value of the market as a
whole and periods of lackluster or negative performance. International investing
does pose special risks, including currency 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.
Derivatives are subject to the risk of changes in the market price of the
security and the risk of loss due to changes in interest rates. The use of
certain derivatives may also have a leveraging effect, which may increase the
volatility of the Portfolio. The value of convertible securities may fall when
interest rates rise. Convertible securities with longer maturities tend to be
more sensitive to changes in interest rates, usually making them more volatile
than convertible securities with shorter maturities. In order to generate
additional income, the Portfolio may lend portfolio securities and may,
therefore, lose the opportunity to sell the securities at a desirable price.
7
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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, ING Investment Management Co. (formerly, 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 six months ended June 30, 2004, the Portfolio's Class I
shares provided a total return of 1.34% compared to the Russell 1000 Growth
Index(1), which returned 2.74% for the same period.
PORTFOLIO SPECIFICS: The market rose during the six months ended June 30, 2004;
however, economic data remained positive, but concerns about the outlook for
interest rates and sustainability of the economic expansion may have caused some
of the more cyclically sensitive sectors, such as technology and materials, to
lag the market. Energy and transportation were the strong sectors year-to-date
2004. Energy was helped by a constructive outlook for commodity prices and
margins going forward. Despite higher energy prices, demand for transportation
services may have provided an opportunity to raise prices at a faster rate than
input costs.
For the six month period, the Portfolio underperformed its benchmark. The
sectors with the greatest positive impact to the Portfolio's performance during
the period were energy, other (multi-industry), and most importantly, our
overweight in industrials. Offsetting these positive contributors were
technology, materials and consumer staples. The Portfolio was overweight several
large multi-industry companies with strong six month results. Tyco International
Ltd., Eaton Corp., and 3M Co. were significant contributors due to
stronger-than-expected international growth and product positioning. Record
energy prices and strong refining margins caused the energy sector to
outperform, as demand for energy outstripped supply. Halliburton Co., Pogo
Producing Co., and previously held Valero all benefited from these industry
trends. In health care, the Portfolio remained underexposed to pharmaceutical
companies, which benefited performance, although stock selection within the
sector was weak.
Stock selection in the technology sector was a large detractor to performance
year-to-date. Semiconductor companies were the worst performing subcategories of
technology. Company-specific shortfalls at SanDisk Corp. and VERITAS Software
Corp., which were held during the period, drove their stock prices lower. In
addition, large bellwethers, such as EMC Corp. and Intel Corp., depreciated in
the first half of the year as high expectations for robust results began to ebb.
An overweight position in materials, which was lightened by period-end,
detracted from results as concerns over high economic growth in Asia and the
outlook for interest rates began to weigh on company prospects. These growth
concerns benefited the consumer staples sector as investors rotated into
companies and industries with more stable and predictable earnings prospect. The
Portfolio's underweight exposure to the sector hurt results in the first half of
2004.
MARKET OUTLOOK: Our outlook for the market remains constructive. We believe the
prospect for strong corporate profits and the ability of companies to
successfully pass through rising input prices is the foundation for a solid
earnings outlook going forward. The risk of inflation and volatile interest
rates is higher than it was a year ago. That said, the Federal Reserve's ability
to maintain price stability during moderate growth is not our concern at this
time. We would expect rising earnings to offset any interest rate or inflation
concerns and keep equities relatively attractive. We will continue to follow our
disciplined approach of investing in companies that we believe demonstrate
improving business fundamentals.
8
<Page>
PORTFOLIO MANAGERS' REPORT ING VP GROWTH PORTFOLIO
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED JUNE 30, 2004
--------------------------------------------------------------
SINCE INCEPTION SINCE INCEPTION
OF CLASS I OF CLASS S
1 YEAR 5 YEAR DECEMBER 13, 1996 NOVEMBER 1, 2001
------ ------ ----------------- ----------------
Class I 15.88% (6.45)% 5.64% --
Class S 15.70% -- -- (0.74)%
Russell 1000 Growth Index(1) 17.88% (6.48)% 4.56%(2) 1.91%
</Table>
The table above illustrates the total return of ING VP Growth Portfolio against
the Russell 1000 Growth Index. The Index has no cash in its portfolio, imposes
no sales charges and incurs no operating expenses. An investor cannot invest
directly in an index. The Portfolio's performance is shown without the
imposition of any expenses or charges which are, or may be, imposed under your
annuity contract. Total returns would have been lower if such expenses or
charges were included.
The performance table does not reflect the deduction of taxes that a shareholder
will pay on portfolio distributions or the redemption of portfolio shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and operating expenses otherwise payable by the Portfolio, subject to
possible later reimbursement during a three-year period. Total returns would
have been lower had there been no waiver to the Portfolio.
THE PERFORMANCE UPDATE ILLUSTRATES PERFORMANCE FOR A VARIABLE INVESTMENT OPTION
AVAILABLE THROUGH A VARIABLE ANNUITY CONTRACT. THE PERFORMANCE SHOWN INDICATES
PAST PERFORMANCE AND IS NOT A PROJECTION OR PREDICTION OF FUTURE RESULTS. ACTUAL
INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES AND/OR
UNITS, AT REDEMPTION, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PLEASE
CALL (800) 366-0066 TO GET PERFORMANCE THROUGH THE MOST RECENT MONTH END.
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) The Russell 1000 Growth Index measures the performance of the 1,000 largest
companies in the Russell 3000 Index with higher price-to-book ratios and
higher forecasted growth. The Russell 3000 Index is an unmanaged index that
measures the performance of 3,000 U.S. companies based on total market
capitalization.
(2) Since inception performance for the index is shown from December 1, 1996.
PRINCIPAL RISK FACTOR(S): Exposure to financial and market risks that accompany
investments in equities. 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. Stocks of
small- and mid-sized companies tend to be less liquid and more volatile than
stocks of larger companies. Stocks of small- and mid-sized companies also can be
particularly sensitive to unexpected changes in interest rates, borrowing costs
and earnings. The Portfolio's investments in derivatives are subject to the risk
that changes in market prices of securities or interest rates may result in a
loss. The use of certain derivatives may have a leveraging effect, which may
increase the volatility of the Portfolio and may reduce its returns. The
Portfolio's investments in high yield securities are subject to greater risk
than higher quality securities, including the risks associated with greater
price volatility, principal and income risk. The Portfolio's investments in
foreign securities involves special risks including currency fluctuations, lower
liquidity, political and economic uncertainties, and differences in accounting
standards. In order to generate additional income, the Portfolio may lend
portfolio securities and may, therefore, lose the opportunity to sell the
securities at a desirable price. The Portfolio is generally expected to engage
in frequent and active trading of portfolio securities, which may result in an
increase in brokerage commissions and other transaction costs.
9
<Page>
ING VP SMALL COMPANY PORTFOLIO PORTFOLIO MANAGERS' REPORT
PORTFOLIO MANAGEMENT TEAM: A team of equity investment specialists led by
Carolie Burroughs, ING Investment Management Co. (formerly, 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 period ended June 30, 2004, the Portfolio's Class I shares
returned 2.86% compared to the Russell 2000 Index(1), which returned 6.76% for
the same period.
PORTFOLIO SPECIFICS: For the six months ended June 30, 2004, the Russell 2000
Index rose 6.76%, while the Portfolio returned 2.86%. Energy was a strong
performing sector, while telecommunications was weak. The Russell 2000 Value
Index beat the Russell 2000 Growth Index by 1.50%. Small-cap stocks outperformed
all other asset classes, as evidenced by the major equity indices. During the
six month period, the Standard & Poor's ("S&P") 500 Index(3) was up 3.44% and
the Dow Jones Industrial Average(4) gained only 0.80%, while the S&P SmallCap
600 Index(5) returned 10.05%.
The U.S. economy, the war in Iraq, corporate profits, and the Federal Reserve's
("Fed") language with respect to monetary tightening dominated the headlines and
the U.S. equities market during the period. Equities experienced strong funds
flow through mid-January 2004, as the economy and corporate profits improved and
the situation in Iraq appeared to be relatively controlled. However, flows
decelerated as company managements provided 2004 guidance below consensus
expectations, citing continued caution on the economy and their business
environments. Outflows eventually accompanied the dwindling public support of
the U.S. involvement in Iraq and the change in Fed rhetoric indicating that the
first rate increase would be much sooner than expected.
Sector rotation was prevalent in the market as investors alternated between
growth and value, fundamentals and speculation, and market risk and headline
risk. Stock selection in the telecommunications and materials sectors
contributed positively to the Portfolio's performance. Stock selection in the
health care and technology sectors contributed negatively. The large individual
positive contributors to performance during the period were Briggs & Stratton,
Eon Labs, Inc., and Louisiana-Pacific Corp. The large negative contributors were
Knight Trading Group, Inc., Lexar Media, Inc. and Alliance Gaming, which was
held during the period.
During the period, we continued to add to the materials and processing sector
and producer durables, as the outlook for the U.S. and global economy improved.
We lowered the weight in technology and shifted the mix to more defensive
industrial technology stocks. Toward the end of the period, we trimmed our
health care exposure as investors began to take their profits and move on and
trimmed our financial services exposure since this group typically underperforms
in a rising rate environment. We maintain the +/- 5% collar for all of our
sector active weights and a style neutral position to mitigate the harm caused
by market swings. On average, our cash position during the period was 7%.
MARKET OUTLOOK: We expect a choppy market for U.S. equities over the next six
months of 2004, given geopolitical issues, a rising interest rate environment,
and the U.S. presidential campaign. Despite this near-term volatility, we expect
the U.S. equities market to trend upward. We have witnessed pockets of
outperformance by stocks with better fundamentals, though it is sometimes
short-lived and not as widespread as we expected. Although a rising rate
environment will likely accompany the summer slowdown in the market, we expect
the market to broaden and to continue rewarding better quality stocks, although
price volatility in the small-cap asset class may initially mask the effect.
We expect the small-cap cycle to remain on course and for smaller capitalization
stocks to outperform large-cap stocks. First, smaller capitalization stocks
offer comparable earnings and revenue growth to large-cap stocks but generally
provide a better value on a price-to-earnings, price-to-book, and price-to-free
cash flow basis. Although rising interest rates may cause an interruption in the
cycle, this should serve to make smaller capitalization stocks even more
attractive relative to large-cap stocks. Second, access to capital for small-cap
stocks continues through strong equity and debt issuance. A rebound in
commercial lending by the banking industry will likely help to fuel their
growth, as well. Finally, merger and acquisition activity remains strong. On a
price-to-cash basis, large-cap companies tend to trump their smaller
capitalization counterparts. We expect consolidation to continue with most deals
occurring in the small-cap space.
We look forward to the new fiscal year. Whatever challenges the market presents
in the short term, we believe 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.
10
<Page>
PORTFOLIO MANAGERS' REPORT ING VP SMALL COMPANY PORTFOLIO
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED JUNE 30, 2004
--------------------------------------------------------------
SINCE INCEPTION SINCE INCEPTION
OF CLASS I OF CLASS S
1 YEAR 5 YEAR DECEMBER 27, 1996 NOVEMBER 1, 2001
------ ------ ----------------- ----------------
Class I 24.16% 7.61% 10.86% --
Class S 23.83% -- -- 7.09%
Russell 2000 Index(1) 33.37% 6.63% 8.12%(2) 14.35%
</Table>
The table above illustrates the total return of ING VP Small Company Portfolio
against the Russell 2000 Index. The Index has no cash in its portfolio, imposes
no sales charges and incurs no operating expenses. An investor cannot invest
directly in an index. The Portfolio's performance is shown without the
imposition of any expenses or charges which are, or may be, imposed under your
annuity contract. Total returns would have been lower if such expenses or
charges were included.
The performance table does not reflect the deduction of taxes that a shareholder
will pay on portfolio distributions or the redemption of portfolio shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and operating expenses otherwise payable by the Portfolio, subject to
possible later reimbursement during a three-year period. Total returns would
have been lower had there been no waiver to the Portfolio.
THE PERFORMANCE UPDATE ILLUSTRATES PERFORMANCE FOR A VARIABLE INVESTMENT OPTION
AVAILABLE THROUGH A VARIABLE ANNUITY CONTRACT. THE PERFORMANCE SHOWN INDICATES
PAST PERFORMANCE AND IS NOT A PROJECTION OR PREDICTION OF FUTURE RESULTS. ACTUAL
INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES AND/OR
UNITS, AT REDEMPTION, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PLEASE
CALL (800) 366-0066 TO GET PERFORMANCE THROUGH THE MOST RECENT MONTH END.
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) The Russell 2000 Index measures the performance of the 2,000 smallest
companies in the Russell 3000 Index. The Russell 3000 Index is an unmanaged
index that measures the performance of 3,000 U.S. companies based on total
market capitalization.
(2) Since inception performance for the index is shown from January 1, 1997.
(3) The S&P 500 Index is an unmanaged index that measures the performance of
securities of approximately 500 large, capitalization companies whose
securities are traded on major U.S. stock markets.
(4) The Dow Jones Industrial Average is an unmanaged U.S. stock index based on
the stock prices of 30 large and actively traded U.S. companies.
(5) The S&P SmallCap 600 Index is an unmanaged index that measures the
performance of the small-size company segment of the U.S. market.
PRINCIPAL RISK FACTOR(S): Exposure to financial and market risks that accompany
investments in equities. In exchange for higher growth potential, investing in
stocks of smaller companies may entail greater price volatility and less
liquidity than investing in stocks of larger companies. The Portfolio may invest
in foreign securities. International investing does pose special risks including
currency fluctuation, economical and political risks not found in domestic
investments. Risks of foreign investing are generally intensified in emerging
markets. The value of convertible securities may fall when interest rates rise.
Investments in derivatives are subject to the risk that changes in market prices
of securities or interest rates may result in a loss. The use of certain
derivatives may have a leveraging effect, which may increase the volatility of
the Portfolio and may reduce returns. The Portfolio's investments in high yield
securities are subject to greater risk than higher quality securities, including
the risks associated with greater price volatility, principal and income risk.
In order to generate additional income, the Portfolio may lend portfolio
securities and may, therefore, lose the opportunity to sell the securities at a
desirable price. The Portfolio is generally expected to engage in frequent and
active trading of portfolio securities, which may result in an increase in
brokerage commissions and other transaction costs.
11
<Page>
ING VP VALUE OPPORTUNITY PORTFOLIO PORTFOLIO MANAGERS' REPORT
PORTFOLIO MANAGEMENT TEAM: A team of equity investment specialists led by
William F. Coughlin, ING Investment Management Co. (formerly, 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 six months ended June 30, 2004, the Portfolio's Class I
shares returned 2.65% compared to the Standard & Poor's ("S&P") 500 Index(1),
which returned 3.44% over the same period.
PORTFOLIO SPECIFICS: The positive contribution from favorable sector allocation
was not able to overcome the negative impact of unfavorable stock selection
during the six months ended June 30, 2004. With regard to sector allocation, an
overweighted position in energy and underweighting the information technology
sector were key positive contributors. Within the industrials group, holdings of
General Dynamics Corp., Honeywell International, Inc., and Masco Corp. all
provided double-digit returns. On the other hand, stock selection in the
financial services and energy sectors, led on the downside by Morgan Stanley,
Merrill Lynch & Co., Inc., and Royal Dutch Petroleum, which was held during the
period, had the most important negative impact on performance. The S&P 500 Index
has more than 20% of its market capitalization in the financial services sector.
We have also invested a large percentage of the Portfolio in this interest rate
sensitive group as a risk control measure. However, as interest rates trended
higher during the second quarter, this group has been under pressure and has
been a negative factor to overall performance.
MARKET OUTLOOK: Given the favorable environment we see ahead for stocks, we
believe the Portfolio is well positioned in high quality, large-capitalization
companies with strong balance sheets, low valuations, strong management teams,
favorable operating outlooks, and catalysts in place that will, in our opinion,
lead to higher share prices.
12
<Page>
PORTFOLIO MANAGERS' REPORT ING VP VALUE OPPORTUNITY PORTFOLIO
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED JUNE 30, 2004
--------------------------------------------------------------
SINCE INCEPTION SINCE INCEPTION
OF CLASS I OF CLASS S
1 YEAR 5 YEAR DECEMBER 13, 1996 JULY 16, 2001
------ ------ ----------------- ----------------
Class I 16.56% 0.41% 9.35% --
Class S 16.22% -- -- (5.04)%
S&P 500 Index(1) 19.11% (2.17)% 7.19%(2) (0.37)%(3)
</Table>
The table above illustrates the total return of ING VP Value Opportunity
Portfolio against the S&P 500 Index. The Index has no cash in its portfolio,
imposes no sales charges and incurs no operating expenses. An investor cannot
invest directly in an index. The Portfolio's performance is shown without the
imposition of any expenses or charges which are, or may be, imposed under your
annuity contract. Total returns would have been lower if such expenses or
charges were included.
The performance table does not reflect the deduction of taxes that a shareholder
will pay on portfolio distributions or the redemption of portfolio shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and operating expenses otherwise payable by the Portfolio, subject to
possible later reimbursement during a three-year period. Total returns would
have been lower had there been no waiver to the Portfolio.
THE PERFORMANCE UPDATE ILLUSTRATES PERFORMANCE FOR A VARIABLE INVESTMENT OPTION
AVAILABLE THROUGH A VARIABLE ANNUITY CONTRACT. THE PERFORMANCE SHOWN INDICATES
PAST PERFORMANCE AND IS NOT A PROJECTION OR PREDICTION OF FUTURE RESULTS. ACTUAL
INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES AND/OR
UNITS, AT REDEMPTION, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PLEASE
CALL (800) 366-0066 TO GET PERFORMANCE THROUGH THE MOST RECENT MONTH END.
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) The S&P 500 Index is an unmanaged index that measures the performance of
securities of approximately 500 large-capitalization companies whose
securities are traded on major U.S. stock markets.
(2) Since inception performance for the index is shown from December 1, 1996.
(3) Since inception performance for the index is shown from August 1, 2001.
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. Stocks
of small- and mid-sized companies tend to be less liquid and more volatile than
stocks of larger companies. Derivatives are subject to the risk that changes in
market prices of securities or interest rates may result in a loss. The value of
convertible securities may fall when interest rates rise. In order to generate
additional income, the Portfolio may lend portfolio securities and may,
therefore, lose the opportunity to sell the securities at a desirable price. The
Portfolio is generally expected to engage in frequent and active trading of
portfolio securities, which may result in an increase in brokerage commissions
and other transaction costs. The Portfolio's investments in high yield
securities are subject to greater risk than higher quality securities, including
the risks associated with greater price volatility, principal and income risk.
The Portfolio's investments in foreign securities involves special risks
including currency fluctuations, lower liquidity, political and economic
uncertainties, and differences in accounting standards.
13
<Page>
ING VP BALANCED PORTFOLIO PORTFOLIO MANAGERS' REPORT
PORTFOLIO MANAGEMENT TEAM: Hugh T. Whelan and James B. Kauffmann, ING Investment
Management Co.(formerly, 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 six months ended June 30, 2004, the Portfolio's Class I
shares returned 2.32%, compared to 3.44% for the Standard & Poor's ("S&P") 500
Index(1) and the composite index consisting of 60% of the return of the S&P 500
Index and 40% of the return of the Lehman Brothers Aggregate Bond Index(2),
which returned 2.13% for the same period.
PORTFOLIO SPECIFICS: During the six months ended June 30, 2004, the Portfolio
underperformed the S&P 500 Index. The equity component of the Portfolio,
however, outperformed the S&P 500 Index for the period, primarily due to strong
security selection. Stock selection in the health care and financial sectors had
a strong positive impact on results, while selection among telecom and consumer
staples names detracted from performance. Sector allocation had a small negative
impact on results, notably through an overweight in technology.
Our short duration stance was a major source of the good performance of the
fixed income portion relative to the Lehman Brothers Aggregate Bond Index.
During the period, we reduced our exposure to longer-dated and lower-rated
corporates in the face of stretched valuations. As a rule, longer-dated
credit-sensitive paper underperformed. Our exposure in securitized sectors
generally proved beneficial. In the second half we were underweight the
financials sector, which also contributed positively to relative performance as
the sector fared poorly as the market prepared for Federal Reserve ("Fed")
tightening. We were also underweight in dollar-denominated issues of foreign
countries, another sector that had a negative return. Mortgages produced a small
positive excess return, and our position varied from neutral to underweight
during the period. Exposure to emerging market debt contributed to returns in
the first half of the reporting period but was a significant drag on our
performance in the second half as incremental yield was not sufficient to offset
price depreciation. Our high yield exposure was also a drag on performance.
MARKET OUTLOOK: The second quarter ended a little softer as inflation crept up
slightly, employment took a sideways move, and oil continued to be high. The
second-quarter corporate profit outlook continues to be revised upward by
analysts and likely will exceed the increased optimism as it has for the past
five quarters. Despite this potentially strong earnings season, the S&P 500
Index turned in lackluster performance. On June 30, at the much anticipated
Federal Open Market Committee meeting, the Fed Funds rate was increased to
1.25%, a 25 basis point increase that was in line with consensus expectations.
The Fed's comments pointed to a measured path of tightenings versus aggressive
tightenings going forward.
The equity component of the Portfolio is overweight in the consumer
discretionary energy and technology sectors and underweight in the health care,
consumer staples, and telecom sectors. However, our overall sector exposures are
by design quite close to those of the S&P 500 Index so that nearly all of our
relative performance is driven by individual stock selection.
Tactically, the fixed income component of the Portfolio is still short in
duration in the face of anticipated improving global economic fundamentals, but
we have reduced the magnitude of that posture following the recent rise in
rates. We are neutral home mortgages, overweight asset-backed and commercial
mortgage-backed securities, and underweight the front-end of the yield curve,
which appears most vulnerable in a tightening cycle. We are underweight
agencies. Stretched valuations in investment-grade credit and plus sectors
warrant some caution, and we have reduced the contribution to duration of these
spread sectors. Additionally, we have reduced our exposure in emerging markets,
and our high yield position has been eliminated with the exception of a few
crossover and special situation issues that tend to track the investment-grade
market. However, we are watchful for points of potential re-entry.
14
<Page>
PORTFOLIO MANAGERS' REPORT ING VP BALANCED PORTFOLIO
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED JUNE 30, 2004
--------------------------------------------------------------
SINCE INCEPTION
OF CLASS S
1 YEAR 5 YEAR 10 YEAR MAY 29, 2003
------ ------ ------- ---------------
Class I 10.97% 2.08% 9.83% --
Class S 10.78% -- -- 11.77%
S&P 500 Index(1) 19.11% (2.17)% 11.87% 18.90%(3)
Lehman Brothers Aggregate Bond Index(2) 0.32% 6.95% 7.39% 0.12%(3)
Composite Index (60% S&P 500 Index/
40% Lehman Brothers Aggregate Bond Index) 11.36% 1.78% 10.41% 11.14%(3)
</Table>
The table above illustrates the total return of ING VP Balanced Portfolio
against the S&P 500 Index, the Lehman Brothers Aggregate Bond Index and the
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. Total returns
would have been lower if such expenses or charges were included.
The performance table does not reflect the deduction of taxes that a shareholder
will pay on portfolio distributions or the redemption of portfolio shares.
THE PERFORMANCE UPDATE ILLUSTRATES PERFORMANCE FOR A VARIABLE INVESTMENT OPTION
AVAILABLE THROUGH A VARIABLE ANNUITY CONTRACT. THE PERFORMANCE SHOWN INDICATES
PAST PERFORMANCE AND IS NOT A PROJECTION OR PREDICTION OF FUTURE RESULTS. ACTUAL
INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES AND/OR
UNITS, AT REDEMPTION, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PLEASE
CALL (800) 366-0066 TO GET PERFORMANCE THROUGH THE MOST RECENT MONTH END.
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) The S&P 500 Index is an unmanaged index that measures the performance of
securities of approximately 500 large capitalization companies whose
securities are traded on major U.S. stock markets.
(2) 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.
(3) Since inception performance for the index is shown from June 1, 2003.
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 and credit risks and may experience greater volatility in
market value than investment grade corporate bonds. The Portfolio's investments
in mortgage-related securities may entail prepayment risk. 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.
Stocks of smaller companies tend to be less liquid and more volatile than stocks
of larger companies. Further, stocks of smaller companies also can be
particularly sensitive to expected changes in interest rates, borrowing costs
and earnings. The use of certain derivatives may have a leveraging effect, which
may increase the volatility of the Portfolio. In order to generate additional
income, the Portfolio may lend portfolio securities and may, therefore, lose the
opportunity to sell the securities at a desirable price. The Portfolio is
generally expected to engage in frequent and active trading of portfolio
securities, which may result in an increase in brokerage commissions and other
transaction costs. Some U.S. Government agency securities may be subject to
varying degrees of credit risk, particularly those not backed by the full faith
and credit of the U.S. Government. The value of convertible securities may fall
when interest rates rise.
15
<Page>
ING VP GROWTH AND INCOME PORTFOLIO PORTFOLIO MANAGERS' REPORT
PORTFOLIO MANAGEMENT TEAM: A team of investment professionals led by Christopher
F. Corapi, ING Investment Management Co. (formerly, 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. It is anticipated that
capital appreciation and investment income will both be major factors in
achieving total return.
PERFORMANCE: For the six months ended June 30, 2004, the Portfolio's Class I
shares returned 3.05% compared to the Standard & Poor's ("S&P") 500 Index(1),
which returned 3.44% over the same period.
PORTFOLIO SPECIFICS: For this period, positive contribution from stock selection
was virtually offset by negative impact from sector allocation. Stock selection
impact varied widely, with significant gains in the consumer discretionary,
financials, and telecom sectors being largely offset by the negative impact of
selections in consumer staples, information technology and materials.
A new portfolio management team was assigned to the Portfolio effective May 1,
2004. The Portfolio was successfully transitioned to reflect the new team's
views at both the sector and stock level. There were only minor adjustments to
the sector weightings, although a significant number of existing positions were
sold and new stocks were purchased in their place. The overall number of
holdings remained virtually unchanged.
MARKET OUTLOOK: We believe that the market is poised to generate positive
returns in 2004. Our research indicates that the underlying fundamentals of the
economy remain sound, and we anticipate continued positive earnings reports from
much of corporate America. Despite these strong undercurrents, investor
psychology has been complicated by both the rise in interest rates and
increasing geopolitical tensions. We do not believe that the recent rise in
interest rates will be so large as to offset the underlying earnings trends.
However, we do expect the mood shifts that accompany both the global political
situation and the U.S. presidential elections may continue to result in market
volatility.
16
<Page>
PORTFOLIO MANAGERS' REPORT ING VP GROWTH AND INCOME PORTFOLIO
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED JUNE 30, 2004
--------------------------------------------------------------
SINCE INCEPTION
OF CLASS S
1 YEAR 5 YEAR 10 YEAR JUNE 11, 2003
------ ------- ------- ---------------
Class I 17.95% (5.44)% 7.61% --
Class S 17.67% -- -- 14.30%
S&P 500 Index(1) 19.11% (2.17)% 11.87% 18.90%(2)
</Table>
The table above illustrates the total return of ING VP Growth and Income
Portfolio against the S&P 500 Index. The Index has no cash in its portfolio,
imposes no sales charges and incurs no operating expenses. An investor cannot
invest directly in an index. The Portfolio's performance is shown without the
imposition of any expenses or charges which are, or may be, imposed under your
annuity contract. Total returns would have been lower if such expenses or
charges were included.
The performance table does not reflect the deduction of taxes that a shareholder
will pay on portfolio distributions or the redemption of portfolio shares.
THE PERFORMANCE UPDATE ILLUSTRATES PERFORMANCE FOR A VARIABLE INVESTMENT OPTION
AVAILABLE THROUGH A VARIABLE ANNUITY CONTRACT. THE PERFORMANCE SHOWN INDICATES
PAST PERFORMANCE AND IS NOT A PROJECTION OR PREDICTION OF FUTURE RESULTS. ACTUAL
INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES AND/OR
UNITS, AT REDEMPTION, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PLEASE
CALL (800) 366-0066 TO GET PERFORMANCE THROUGH THE MOST RECENT MONTH END.
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) The S&P 500 Index is an unmanaged index that measures the performance of
securities of approximately 500 large-capitalization companies whose
securities are traded on major U.S. stock markets.
(2) Since inception performance for the index is shown from June 1, 2003.
PRINCIPAL RISK FACTOR(S): Exposure to financial and market risks that accompany
investments in equities. 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-size and
smaller companies may entail greater price volatility and less liquidity than
investing in stocks of larger companies. The value of convertible securities may
fall when interest rates rise. Although the Sub-Adviser emphasizes large-cap
stocks, to the extent the Portfolio is diversified across asset classes, it may
not perform as well as less diversified funds when large-caps stocks are in
favor. The use of certain derivatives may increase the volatility of the
Portfolio. Because the Portfolio may invest in other investment companies, you
may pay a proportionate share of the expenses of that other investment company
(including management fees, administration fees and custodial fees) in addition
to the expenses of the Portfolio. In order to generate additional income, the
Portfolio may lend portfolio securities and may, therefore, lose the opportunity
to sell the securities at a desirable price. The Portfolio is generally expected
to engage in frequent and active trading of portfolio securities, which may
result in an increase in brokerage commissions and other transaction costs. The
Portfolio's investments in high yield securities are subject to greater risk
than higher quality securities, including the risks associated with greater
price volatility, principal and income risk. The Portfolio's investments in
mortgage-related securities may entail prepayment risk.
17
<Page>
ING VP BOND PORTFOLIO PORTFOLIO MANAGERS' REPORT
PORTFOLIO MANAGEMENT: James B. Kauffmann, ING Investment Management Co.
(formerly, 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 corporate bonds and debt securities
issued by the U.S. Government, its agencies or instrumentalities.
PERFORMANCE: For the six months ended June 30, 2004, the Portfolio's Class I
shares returned 0.37% compared to the Lehman Brothers Aggregate Bond Index(1),
which returned 0.16% over the same period.
PORTFOLIO SPECIFICS: Our short duration stance was a major source of the
positive performance of the fixed income portion relative to the benchmark.
During the period, we reduced our exposure to longer-dated and lower-rated
corporates in the face of stretched valuations. As a rule, longer-dated
credit-sensitive paper underperformed. Our exposure in securitized sectors
generally proved beneficial. We were underweight in dollar-denominated issues of
foreign countries, a sector that had a negative return. Mortgages produced a
small positive excess return, and our position varied from neutral to
underweight during the period. Exposure to emerging market debt contributed to
returns in the first half of the reporting period, but was a significant drag on
our performance in the second half as incremental yield was not sufficient to
offset price depreciation. Our high yield exposure was also a drag on
performance.
MARKET OUTLOOK: In our opinion, Treasury yields do not yet fully reflect the
quickening pace of the economy and the recent rise in a number of inflation
metrics, but the bond market has begun to incorporate a cycle of less
accommodative monetary policy. Now that Dr. Greenspan has navigated the economy
past the immediate concerns of deflation, we are anxious to see if he can avoid
the effects of inflation. While the recent rise in inflation releases were
likely amplified by increases in hotel rates, apparel, medical care, and
adjustments to owners' equivalent rent, the trajectory is worrisome. One
observer drew the analogy that Federal Reserve ("Fed") tightening cycles are
like confronting a tee shot with a putter. Should inflationary expectations
become manifest in unit labor costs, the Fed may be forced into a more
aggressive stance. Many in the bond market believe that the Fed's reactive
approach will be tardy in responding to increasing inflation, and we are
cognizant of the lagged effect of monetary policy. Historically, changes in the
Fed Funds rate can take 12 to 18 months to influence economic activity, but one
may argue that today's domestic scene of high consumer indebtedness and
increased variable rate financing could indicate speedier transmission of policy
changes.
In the months ahead, employment and inflation releases and comments from Fed
officials will remain key data as bond market observers seek to divine the
timing, frequency, and magnitude of future tightenings. Tactically, the
Portfolio is still short in duration in the face of anticipated improving global
economic fundamentals, but we have reduced the magnitude of that posture
following the recent rise in rates. We are neutral home mortgages, overweight
asset-backed and commercial mortgage-backed securities, and underweight the
front-end of the yield curve, which appears most vulnerable in a tightening
cycle. We are underweight agencies. Stretched valuations in investment-grade
credit and plus sectors warrant some caution, and we have reduced the
contribution to duration of these spread sectors. Additionally, we have reduced
our exposure in emerging markets, and our high yield position has been
eliminated with the exception of a few crossover and special situation issues
that tend to track the investment grade market. However, we are watchful for
points of potential re-entry.
- ----------
* On August 6, 2004, the ING VP Bond Portfolio changed its name to ING VP
Intermediate Bond Portfolio.
18
<Page>
PORTFOLIO MANAGERS' REPORT ING VP BOND PORTFOLIO
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED JUNE 30, 2004
--------------------------------------------------------------
SINCE INCEPTION
OF CLASS S
1 YEAR 5 YEAR 10 YEAR MAY 3, 2002
------ ------ ------- ---------------
Class I 1.37% 6.71% 7.11% --
Class S 1.12% -- -- 6.33%
Lehman Brothers Aggregate Bond Index(1) 0.32% 6.95% 7.39% 5.66%(2)
</Table>
The table above illustrates 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. Total returns would have been lower if such
expenses or charges were included.
The performance table does not reflect the deduction of taxes that a shareholder
will pay on portfolio distributions or the redemption of portfolio shares.
THE PERFORMANCE UPDATE ILLUSTRATES PERFORMANCE FOR A VARIABLE INVESTMENT OPTION
AVAILABLE THROUGH A VARIABLE ANNUITY CONTRACT. THE PERFORMANCE SHOWN INDICATES
PAST PERFORMANCE AND IS NOT A PROJECTION OR PREDICTION OF FUTURE RESULTS. ACTUAL
INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES AND/OR
UNITS, AT REDEMPTION, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PLEASE
CALL (800) 366-0066 TO GET PERFORMANCE THROUGH THE MOST RECENT MONTH END.
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) 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.
(2) Since inception performance for the index is shown from May 1, 2002.
PRINCIPAL RISK FACTOR(S): The principal risks of investing in the Portfolio are
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. The use of certain derivatives may also have a
leveraging effect, which may increase the volatility of the Portfolio. In order
to generate additional income, the Portfolio may lend portfolio securities and
may, therefore, lose the opportunity to sell the securities at a desirable
price. The Portfolio is generally expected to engage in frequent and active
trading of portfolio securities, which may result in an increase in brokerage
commissions and other transaction costs. Some U.S. Government agency securities
may be subject to varying degrees of credit risk, particularly those not backed
by the full faith and credit of the U.S. Government. The value of convertible
securities may fall when interest rates rise. The Portfolio's investments in
mortgage-related securities may entail prepayment risk. Borrowers can pay off
their mortgages sooner than scheduled and if interest rates are falling, the
Portfolio will be forced to reinvest this money at lower yields. Slower than
expected principal payments on amortgage-backed or asset-backed security may
cause an increase in the security's duration, reduce the value of the security
and lock in a below-market interest rate.
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, ING Investment Management Co. (formerly, 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 first six months of 2004 yielded varying and dramatic
shifts in interest rate expectations and ended with the Federal Reserve Board's
("Fed") Federal Open Market Committee ("FOMC") raising the Federal Funds target
rate 25 basis points to 1.25% on June 30, 2004. As market participants changed
their views of the economy's strength throughout the period, the LIBOR yield
curve flattened initially and then steepened dramatically.
Specifically, the LIBOR yield curve (the difference between 1-month to 12-month
LIBOR) steepened by 76 basis points to 109 basis points. The curve reached its
flattest point of 19 basis points in mid-March, but a significant shift in Fed
Funds expectations shortly thereafter caused yield levels to rise with the
back-end of the LIBOR curve incurring the greatest change. Over the period,
12-month LIBOR increased by 100 basis points to 2.46% from 1.46%.
Throughout the first quarter of 2004, the Portfolio utilized a barbell portfolio
strategy that called for purchasing longer-dated paper (nine to thirteen months)
balanced by the purchase of short-term commercial paper and floating rate notes.
The strategy worked well and resulted in strong performance. The Portfolio's
weighted average maturity remained significantly longer than competitors' funds
early in the year.
However, in early April, as the market priced in an earlier start to the
tightening cycle beginning with the June 30, 2004 meeting, the Portfolio eased
off its barbell strategy and limited investments solely to short commercial
paper and floating rate notes. This better positioned the Portfolio to take
advantage of the higher interest rate environment. Accordingly, the Portfolio's
weighted average maturity significantly declined during the second half of the
reporting period and finished the period at 53 days compared with 45 days for
the benchmark, iMoneyNet First Tier Retail Index.
MARKET OUTLOOK: The June 30 FOMC statement clearly signaled the Fed's intent to
gradually raise the target interest rate. At the end of the period, the market
priced in a year-end Fed Funds rate of roughly 2.00% to 2.25%, or 25 basis
points per FOMC meeting. But some market observers believe inflation will
accelerate, causing the Fed to move more aggressively than the market currently
thinks it will. Given such high level of uncertainty, particularly in light of
current market levels for longer term maturities, we believe that continuing our
strategy of limiting purchases to short-term commercial paper or floating rate
notes is most appropriate.
PRINCIPAL RISK FACTOR(S): An investment in the Portfolio is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Portfolio seeks to preserve the value of your investment,
it is possible to lose money by investing in the Portfolio.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
Portfolio holdings are subject to change daily.
This report contains statements that may be "forward-looking" statements. Actual
results may differ materially from those projected in the "forward-looking"
statements.
20
<Page>
STATEMENTS OF ASSETS AND LIABILITIES as of June 30, 2004 (Unaudited)
<Table>
<Caption>
ING ING ING ING
VP GLOBAL SCIENCE VP INTERNATIONAL ING VP SMALL VP VALUE
AND TECHNOLOGY EQUITY VP GROWTH COMPANY OPPORTUNITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ---------------- -------------- -------------- --------------
ASSETS:
Investments in securities at value+* $ 85,609,579 $ 43,493,216 $ 207,510,907 $ 431,511,442 $ 235,418,724
Short-term investments at amortized cost 12,041,461 -- 39,914,157 129,809,897 10,534,791
Repurchase agreement -- 2,054,000 8,012,000 60,724,000 5,224,000
Cash 1,506,587 69,757 -- 820 170
Cash collateral for futures -- -- 448,000 1,890,000 --
Foreign currencies at value** 151 113,505 -- -- --
Receivables:
Investment securities sold 1,076,870 -- 1,819,363 10,201,453 --
Dividends and interest 19,563 99,154 119,382 300,067 352,165
Variation margin receivable -- 1,512 24,150 160,475 --
Prepaid expenses 3,474 955 2,569 10,849 2,883
----------------- ---------------- -------------- -------------- --------------
Total assets 100,257,685 45,832,099 257,850,528 634,609,003 251,532,733
----------------- ---------------- -------------- -------------- --------------
LIABILITIES:
Payable for investment securities purchased 268,200 -- 2,555,791 11,391,724 --
Payable for futures variation margin -- 6,403 -- -- --
Payable upon receipt of securities loaned 12,041,461 -- 39,914,157 129,809,897 10,534,791
Payable to affiliates 71,173 35,544 114,527 317,432 129,515
Payable to custodian -- -- 41,751 -- --
Payable for director fees 917 470 5,662 4,202 2,045
Other accrued expenses and liabilities 49,306 134,359 77,720 59,897 52,183
----------------- ---------------- -------------- -------------- --------------
Total liabilities 12,431,057 176,776 42,709,608 141,583,152 10,718,534
----------------- ---------------- -------------- -------------- --------------
NET ASSETS $ 87,826,628 $ 45,655,323 $ 215,140,920 $ 493,025,851 $ 240,814,199
================= ================ ============== ============== ==============
NET ASSETS WERE COMPRISED OF:
Paid-in capital $ 138,974,901 $ 68,689,305 $ 402,652,466 $ 443,241,791 $ 267,855,555
Undistributed net investment income
(accumulated net investment loss) (429,047) 775,662 465,757 1,626,316 4,189,074
Accumulated net realized loss on
investments, foreign currencies
and futures (50,011,537) (26,859,812) (206,564,742) (14,859,940) (41,283,030)
Net unrealized appreciation
(depreciation) on investments
foreign currencies and futures (707,689) 3,050,168 18,587,439 63,017,684 10,052,600
----------------- ---------------- -------------- -------------- --------------
NET ASSETS $ 87,826,628 $ 45,655,323 $ 215,140,920 $ 493,025,851 $ 240,814,199
================= ================ ============== ============== ==============
+ Including securities loaned at value $ 11,372,281 $ -- $ 39,180,149 $ 126,746,371 $ 10,289,939
* Cost of investments in securities $ 86,317,267 $ 40,447,433 $ 188,948,892 $ 368,949,010 $ 225,366,124
** Cost of foreign currencies $ 151 $ 113,867 $ -- $ -- $ --
CLASS I:
Net assets $ 87,826,628 $ 45,462,779 $ 214,813,231 $ 481,074,663 $ 237,820,321
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 24,026,166 5,803,948 23,741,530 26,749,796 19,185,638
Net asset value and redemption price
per share $ 3.66 $ 7.83 $ 9.05 $ 17.98 $ 12.40
CLASS S:
Net assets n/a $ 192,544 $ 327,689 $ 11,951,188 $ 2,993,878
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 n/a 24,684 36,458 664,976 242,752
Net asset value and redemption price
per share n/a $ 7.80 $ 8.99 $ 17.97 $ 12.33
</Table>
See Accompanying Notes to Financial Statements
21
<Page>
STATEMENTS OF ASSETS AND LIABILITIES as of June 30, 2004 (Unaudited)
<Table>
<Caption>
ING ING
ING VP GROWTH AND ING VP MONEY
VP BALANCED INCOME VP BOND MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------- ---------------- ---------------- ----------------
ASSETS:
Investments in securities at value+* $ 1,416,090,991 $ 3,597,567,675 $ 1,335,748,331 $ --
Short-term investments at value** 395,607,785 643,061,669 327,923,351 898,477,634
Repurchase agreement 29,936,000 113,822,000 49,253,000 261,232,000
Cash 60,599 53,188 207,088 38,472
Cash collateral for futures 361,314 2,784,000 983,356 --
Foreign currencies at value*** -- -- 180 --
Receivables:
Investment securities sold 49,024,049 24,200,817 12,998,757 --
Dividends and interest 4,986,599 3,078,688 9,564,620 1,564,964
Variation margin receivable 112,500 200,100 -- --
Prepaid expenses 16,741 46,174 16,256 17,357
---------------- ---------------- ---------------- ----------------
Total assets 1,896,196,578 4,384,814,311 1,736,694,939 1,161,330,427
---------------- ---------------- ---------------- ----------------
LIABILITIES:
Payable for investment securities purchased 158,789,902 74,967,823 237,864,525 --
Payable for futures variation margin 133,000 -- 81,125 --
Payable upon receipt of securities loaned 326,812,169 643,061,669 246,144,339 23,715,619
Payable to affiliates 636,986 1,659,210 493,730 285,211
Payable for director fees 32,616 128,654 33,048 55,385
Other accrued expenses and liabilities 163,649 573,669 219,431 252,459
---------------- ---------------- ---------------- ----------------
Total liabilities 486,568,322 720,391,025 484,836,198 24,308,674
---------------- ---------------- ---------------- ----------------
NET ASSETS $ 1,409,628,256 $ 3,664,423,286 $ 1,251,858,741 $ 1,137,021,753
================ ================ ================ ================
NET ASSETS WERE COMPRISED OF:
Paid-in capital $ 1,440,920,979 $ 6,064,019,281 $ 1,228,037,752 $ 1,137,424,580
Undistributed net investment income 42,196,236 16,765,784 24,096,536 4,855,885
Accumulated net realized gain (loss) on
investments, foreign currencies
and futures (144,139,594) (2,785,440,950) 3,961,603 (4,752,109)
Net unrealized appreciation
(depreciation) on investments
foreign currencies and futures 70,650,635 369,079,171 (4,237,150) (506,603)
---------------- ---------------- ---------------- ----------------
NET ASSETS $ 1,409,628,256 $ 3,664,423,286 $ 1,251,858,741 $ 1,137,021,753
================ ================ ================ ================
+ Including securities loaned at value $ 325,683,288 $ 659,243,749 $ 242,006,106 $ 30,296,992
* Cost of investments in securities $ 1,345,551,576 $ 3,228,921,230 $ 1,340,153,753 $ --
** Cost of short-term investments $ 395,613,399 $ 643,061,669 $ 327,929,225 $ 898,984,237
*** Cost of foreign currencies $ -- $ -- $ 161 $ --
CLASS I:
Net assets $ 1,407,343,261 $ 3,662,458,341 $ 1,086,747,283 $ 1,137,021,753
Shares authorized 2,000,000,000 unlimited unlimited unlimited
Par value $ 0.001 $ 1.000 $ 1.000 $ 1.000
Shares outstanding 110,019,482 196,139,645 82,012,624 88,526,987
Net asset value and redemption
price per share $ 12.79 $ 18.67 $ 13.25 $ 12.84
CLASS S:
Net assets $ 2,284,995 $ 1,964,945 $ 165,111,458 n/a
Shares authorized 2,000,000,000 unlimited unlimited n/a
Par value $ 0.001 $ 1.000 $ 1.000 n/a
Shares outstanding 179,085 105,414 12,489,837 n/a
Net asset value and redemption price
per share $ 12.76 $ 18.64 $ 13.22 n/a
</Table>
See Accompanying Notes to Financial Statements
22
<Page>
STATEMENTS OF OPERATIONS for the six months ended June 30, 2004 (Unaudited)
<Table>
<Caption>
ING ING ING ING
VP GLOBAL SCIENCE VP INTERNATIONAL ING VP SMALL VP VALUE
AND TECHNOLOGY EQUITY VP GROWTH COMPANY OPPORTUNITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ---------------- -------------- -------------- --------------
INVESTMENT INCOME:
Dividends, net of foreign taxes withheld* $ 76,253 $ 532,230 $ 877,274 $ 1,909,386 $ 2,974,189
Interest 966 71,940 29,730 176,284 27,204
Securities lending income 10,896 -- 10,154 81,137 2,963
----------------- ---------------- -------------- -------------- --------------
Total investment income 88,115 604,170 917,158 2,166,807 3,004,356
----------------- ---------------- -------------- -------------- --------------
EXPENSES:
Investment management fees 455,843 186,507 659,393 1,799,173 756,367
Distribution and service fees:
Class S -- 215 403 2,736 3,387
Transfer agent fees 4,487 5,204 4,691 5,027 5,000
Administrative service fees 26,390 12,068 60,443 131,937 69,332
Shareholder reporting expense 5,278 5,784 8,918 9,106 8,008
Registration fees 1,303 2,802 -- 3,159 1,371
Professional fees 13,860 15,430 15,263 18,721 15,627
Custody and accounting expense 5,132 50,271 13,286 19,528 13,468
Directors' fees 2,002 1,092 6,188 10,010 4,509
Miscellaneous expense 2,867 1,949 5,743 12,283 6,770
----------------- ---------------- -------------- -------------- --------------
Total expenses 517,162 281,322 774,328 2,011,680 883,839
Less:
Net waived and reimbursed fees -- 29,201 -- -- --
----------------- ---------------- -------------- -------------- --------------
Net expenses 517,162 252,121 774,328 2,011,680 883,839
----------------- ---------------- -------------- -------------- --------------
Net investment income (loss) (429,047) 352,049 142,830 155,127 2,120,517
----------------- ---------------- -------------- -------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS, FOREIGN
CURRENCIES AND FUTURES:
Net realized gain (loss) on:
Investments 12,743,707 4,606,960 12,728,932 29,866,473 (167,447)
Foreign currencies 545 14,038 -- -- --
Futures (32,325) 51,763 390,715 971,034 --
----------------- ---------------- -------------- -------------- --------------
Net realized gain (loss) on investments,
foreign currencies, and futures 12,711,927 4,672,761 13,119,647 30,837,507 (167,447)
----------------- ---------------- -------------- -------------- --------------
Net change in unrealized appreciation
or depreciation on:
Investments (18,332,432) (3,491,706) (10,417,437) (18,224,277) 4,477,852
Foreign currencies -- (2,029) -- -- --
Futures -- (873) (22,864) 223,925 --
----------------- ---------------- -------------- -------------- --------------
Net change in unrealized appreciation
or depreciation on investments, foreign
currencies and futures (18,332,432) (3,494,608) (10,440,301) (18,000,352) 4,477,852
----------------- ---------------- -------------- -------------- --------------
Net realized and unrealized gain (loss) on
investments, foreign currencies and futures (5,620,505) 1,178,153 2,679,346 12,837,155 4,310,405
----------------- ---------------- -------------- -------------- --------------
INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $ (6,049,552) $ 1,530,202 $ 2,822,176 $ 12,992,282 $ 6,430,922
================= ================ ============== ============== ==============
* Foreign taxes $ 2,542 $ 69,268 $ 4,549 $ 2,234 $ 64,166
</Table>
See Accompanying Notes to Financial Statements
23
<Page>
STATEMENTS OF OPERATIONS for the six months ended June 30, 2004 (Unaudited)
<Table>
<Caption>
ING ING
ING VP GROWTH AND ING VP MONEY
VP BALANCED INCOME VP BOND MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------- ---------------- ---------------- ----------------
INVESTMENT INCOME:
Dividends, net of foreign taxes withheld* $ 5,910,713 $ 27,252,473 $ 275,755 $ --
Interest 11,425,729 327,388 26,043,464 6,898,324
Securities lending income 144,476 140,463 197,442 3,480
---------------- ---------------- ---------------- ----------------
Total investment income 17,480,918 27,720,324 26,516,661 6,901,804
---------------- ---------------- ---------------- ----------------
EXPENSES:
Investment management fees 3,501,729 9,304,610 2,453,186 1,458,467
Distribution and service fees:
Class S 2,183 2,333 139,957 --
Transfer agent fees 2,537 9,265 10,951 1,869
Administrative service fees 385,182 1,023,485 337,305 320,856
Shareholder reporting expense 34,540 155,850 24,392 37,856
Registration fees 634 1,967 5,281 2,581
Professional fees 41,400 93,565 32,988 36,650
Custody and accounting expense 75,996 143,293 69,000 93,080
Directors' fees 42,224 123,542 42,042 52,234
Miscellaneous expense 35,432 91,266 54,267 37,282
---------------- ---------------- ---------------- ----------------
Total expenses 4,121,857 10,949,176 3,169,369 2,040,875
---------------- ---------------- ---------------- ----------------
Net investment income 13,359,061 16,771,148 23,347,292 4,860,929
---------------- ---------------- ---------------- ----------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS, FOREIGN CURRENCIES AND
FUTURES:
Net realized gain (loss) on:
Investments 62,021,426 373,323,913 4,442,625 (244,961)
Foreign currencies -- 40,007 -- --
Futures (44,179) 1,013,571 45,635 --
---------------- ---------------- ---------------- ----------------
Net realized gain (loss) on investments,
foreign currencies and futures 61,977,247 374,377,491 4,488,260 (244,961)
---------------- ---------------- ---------------- ----------------
Net change in unrealized appreciation or
depreciation on:
Investments (44,145,766) (277,984,949) (25,479,065) (748,257)
Foreign currencies -- 16,066 19 --
Futures 399,632 356,054 935,832 --
---------------- ---------------- ---------------- ----------------
Net change in unrealized appreciation
or depreciation on investments, foreign
currencies and futures (43,746,134) (277,612,829) (24,543,214) (748,257)
---------------- ---------------- ---------------- ----------------
Net realized and unrealized gain (loss) on
investments, foreign currencies and futures 18,231,113 96,764,662 (20,054,954) (993,218)
---------------- ---------------- ---------------- ----------------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 31,590,174 $ 113,535,810 $ 3,292,338 $ 3,867,711
================ ================ ================ ================
* Foreign taxes $ 8,976 $ 4,059 $ -- $ --
</Table>
See Accompanying Notes to Financial Statements
24
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
<Table>
<Caption>
ING VP GLOBAL SCIENCE AND ING VP INTERNATIONAL
TECHNOLOGY PORTFOLIO EQUITY PORTFOLIO
-------------------------------- --------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
2004 2003 2004 2003
-------------- -------------- -------------- --------------
FROM OPERATIONS:
Net investment income (loss) $ (429,047) $ (570,560) $ 352,049 $ 347,432
Net realized gain (loss) on investments,
foreign currencies and futures 12,711,927 (4,912,495) 4,672,761 680,469
Net change in unrealized appreciation or depreciation on
investments, foreign currencies and futures (18,332,432) 29,432,822 (3,494,608) 8,992,547
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting
from operations (6,049,552) 23,949,767 1,530,202 10,020,448
-------------- -------------- -------------- --------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class I -- -- -- (358,677)
Class S -- -- -- (496)
-------------- -------------- -------------- --------------
Total distributions -- -- -- (359,173)
-------------- -------------- -------------- --------------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 14,159,690 71,880,902 12,244,747 72,160,848
Dividends reinvested -- -- -- 359,173
-------------- -------------- -------------- --------------
14,159,690 71,880,902 12,244,747 72,520,021
Cost of shares redeemed (18,025,988) (43,653,684) (8,853,335) (70,372,573)
-------------- -------------- -------------- --------------
Net increase (decrease) in net asset resulting from
capital share transactions (3,866,298) 28,227,218 3,391,412 2,147,448
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets (9,915,850) 52,176,985 4,921,614 11,808,723
-------------- -------------- -------------- --------------
NET ASSETS:
Beginning of period 97,742,478 45,565,493 40,733,709 28,924,986
-------------- -------------- -------------- --------------
End of period $ 87,826,628 $ 97,742,478 $ 45,655,323 $ 40,733,709
============== ============== ============== ==============
Undistributed net investment income (accumulated net
investment loss) at end of period $ (429,047) $ -- $ 775,662 $ 423,613
============== ============== ============== ==============
</Table>
See Accompanying Notes to Financial Statements
25
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
<Table>
<Caption>
ING VP GROWTH PORTFOLIO ING VP SMALL COMPANY PORTFOLIO
-------------------------------- --------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
2004 2003 2004 2003
-------------- -------------- -------------- --------------
FROM OPERATIONS:
Net investment income $ 142,830 $ 265,408 $ 155,127 $ 1,659,651
Net realized gain on investments and futures 13,119,647 12,843,906 30,837,507 27,374,998
Net change in unrealized appreciation or depreciation on
investments and futures (10,440,301) 40,849,949 (18,000,352) 85,411,831
-------------- -------------- -------------- --------------
Net increase in net assets resulting from operations 2,822,176 53,959,263 12,992,282 114,446,480
-------------- -------------- -------------- --------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class I -- -- -- (922,009)
Class S -- -- -- (698)
-------------- -------------- -------------- --------------
Total distributions -- -- -- (922,707)
-------------- -------------- -------------- --------------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 3,535,212 12,590,272 44,889,614 156,127,616
Dividends reinvested -- -- -- 922,707
-------------- -------------- -------------- --------------
3,535,212 12,590,272 44,889,614 157,050,323
Cost of shares redeemed (15,838,812) (23,009,289) (29,924,639) (94,578,973)
-------------- -------------- -------------- --------------
Net increase (decrease) in net asset resulting from
capital share transactions (12,303,600) (10,419,017) 14,964,975 62,471,350
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets (9,481,424) 43,540,246 27,957,257 175,995,123
-------------- -------------- -------------- --------------
NET ASSETS:
Beginning of period 224,622,344 181,082,098 465,068,594 289,073,471
-------------- -------------- -------------- --------------
End of period $ 215,140,920 $ 224,622,344 $ 493,025,851 $ 465,068,594
============== ============== ============== ==============
Undistributed net investment income at end of period $ 465,757 $ 265,408 $ 1,626,316 $ 1,457,156
============== ============== ============== ==============
</Table>
See Accompanying Notes to Financial Statements
26
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
<Table>
<Caption>
ING VP VALUE OPPORTUNITY PORTFOLIO ING VP BALANCED PORTFOLIO
---------------------------------- --------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
2004 2003 2004 2003
-------------- -------------- -------------- --------------
FROM OPERATIONS:
Net investment income $ 2,120,517 $ 2,072,095 $ 13,359,061 $ 25,882,905
Net realized gain (loss) on investments and futures (167,447) 37,412,990 61,977,247 46,751,111
Net change in unrealized appreciation or depreciation on
investments and futures 4,477,852 12,066,267 (43,746,134) 148,117,399
-------------- -------------- -------------- --------------
Net increase in net assets resulting from operations 6,430,922 51,551,352 31,590,174 220,751,415
-------------- -------------- -------------- --------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class I -- (1,764,212) -- (25,549,004)
Class S -- (9,646) -- (288)
-------------- -------------- -------------- --------------
Total distributions -- (1,773,858) -- (25,549,292)
-------------- -------------- -------------- --------------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 8,942,740 21,198,747 56,426,115 38,550,583
Dividends reinvested -- 1,773,858 -- 25,549,292
-------------- -------------- -------------- --------------
8,942,740 22,972,605 56,426,115 64,099,875
Cost of shares redeemed (34,283,608) (25,587,631) (54,130,830) (106,333,010)
-------------- -------------- -------------- --------------
Net increase (decrease) in net asset resulting from
capital share transactions (25,340,868) (2,615,026) 2,295,285 (42,233,135)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets (18,909,946) 47,162,468 33,885,459 152,968,988
-------------- -------------- -------------- --------------
NET ASSETS:
Beginning of period 259,724,145 212,561,677 1,375,742,797 1,222,773,809
-------------- -------------- -------------- --------------
End of period $ 240,814,199 $ 259,724,145 $1,409,628,256 $1,375,742,797
============== ============== ============== ==============
Undistributed net investment income at end of period $ 4,189,074 $ 2,068,557 $ 42,196,236 $ 28,837,175
============== ============== ============== ==============
</Table>
See Accompanying Notes to Financial Statements
27
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
<Table>
<Caption>
ING VP GROWTH AND INCOME PORTFOLIO ING VP BOND PORTFOLIO
---------------------------------- -------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
2004 2003 2004 2003
-------------- -------------- -------------- --------------
FROM OPERATIONS:
Net investment income $ 16,771,148 $ 33,181,040 $ 23,347,292 $ 48,262,109
Net realized gain on investments,
foreign currencies and futures 374,377,491 89,606,751 4,488,260 39,308,980
Net change in unrealized appreciation or depreciation on
investments, foreign currencies and futures (277,612,829) 694,994,792 (24,543,214) (10,863,858)
-------------- -------------- -------------- ---------------
Net increase in net assets resulting from operations 113,535,810 817,782,583 3,292,338 76,707,231
-------------- -------------- -------------- ---------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class I (33,180,765) -- (48,490,127) (9,725,157)
Class S (15,555) -- (5,040,175) (564,795)
Net realized gains:
Class I -- -- (28,294,467) (10,936,141)
Class S -- -- (2,991,690) (736,552)
-------------- -------------- -------------- ---------------
Total distributions (33,196,320) -- (84,816,459) (21,962,645)
-------------- -------------- -------------- ---------------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 59,626,477 14,108,788 187,886,909 184,777,059
Dividends reinvested 33,178,022 -- 84,771,009 21,950,695
-------------- -------------- -------------- ---------------
92,804,499 14,108,788 272,657,918 206,727,754
Cost of shares redeemed (305,884,912) (559,975,741) (137,078,511) (319,226,990)
-------------- -------------- -------------- ---------------
Net increase (decrease) in net asset resulting from
capital share transactions (213,080,413) (545,866,953) 135,579,407 (112,499,236)
-------------- -------------- -------------- ---------------
Net increase (decrease) in net assets (132,740,923) 271,915,630 54,055,286 (57,754,650)
-------------- -------------- -------------- ---------------
NET ASSETS:
Beginning of period 3,797,164,209 3,525,248,579 1,197,803,455 1,255,558,105
-------------- -------------- -------------- ---------------
End of period $3,664,423,286 $3,797,164,209 $1,251,858,741 $ 1,197,803,455
============== ============== ============== ===============
Undistributed net investment income at end of period $ 16,765,784 $ 33,190,956 $ 24,096,536 $ 54,279,546
============== ============== ============== ===============
</Table>
See Accompanying Notes to Financial Statements
28
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
<Table>
<Caption>
ING VP MONEY MARKET PORTFOLIO
------------------------------------
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, DECEMBER 31,
2004 2003
---------------- ----------------
FROM OPERATIONS:
Net investment income $ 4,860,929 $ 12,932,100
Net realized loss on investments (244,961) (169)
Net change in unrealized appreciation or depreciation on investments (748,257) (56,131)
---------------- ----------------
Net increase in net assets resulting from operations 3,867,711 12,875,800
---------------- ----------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class I (12,932,164) (24,741,578)
---------------- ----------------
Total distributions (12,932,164) (24,741,578)
---------------- ----------------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 172,059,361 1,899,695,014
Dividends reinvested 12,932,164 24,741,578
---------------- ----------------
184,991,525 1,924,436,592
Cost of shares redeemed (276,488,945) (2,226,653,637)
---------------- ----------------
Net decrease in net asset resulting from capital share transactions (91,497,420) (302,217,045)
---------------- ----------------
Net decrease in net assets (100,561,873) (314,082,823)
---------------- ----------------
NET ASSETS:
Beginning of period 1,237,583,626 1,551,666,449
---------------- ----------------
End of period $ 1,137,021,753 $ 1,237,583,626
================ ================
Undistributed net investment income at end of period $ 4,855,885 $ 12,927,120
================ ================
</Table>
See Accompanying Notes to Financial Statements
29
<Page>
ING VP GLOBAL SCIENCE AND TECHNOLOGY PORTFOLIO (UNAUDITED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS I
-----------------------------------------------------------------
SIX MONTHS MAY 1,
ENDED YEAR ENDED DECEMBER 31, 2000(4) TO
JUNE 30, ----------------------------------- DECEMBER 31,
2004 2003 2002 2001 2000
- -------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 3.87 2.66 4.53 5.88 10.00
Income (loss) from investment operations:
Net investment loss $ (0.02) (0.02) (0.03) (0.02) (0.02)
Net realized and unrealized gain (loss) on investments $ (0.19) 1.23 (1.84) (1.33) (4.10)
Total from investment operations $ (0.21) 1.21 (1.87) (1.35) (4.12)
Net asset value, end of period $ 3.66 3.87 2.66 4.53 5.88
TOTAL RETURN(1) % (5.43) 45.49 (41.28) (22.96) (41.20)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 87,827 97,742 45,559 62,878 44,621
Ratios to average net assets:
Net expenses after expense
reimbursement/recoupment(2)(3) % 1.08 1.11 1.11 1.11 1.15
Gross expenses prior to expense
reimbursement/recoupment(2) % 1.08 1.10 1.12 1.11 1.20
Net investment loss after expense
reimbursement/recoupment(2)(3) % (0.90) (0.88) (0.89) (0.49) (0.61)
Portfolio turnover rate % 99 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
30
<Page>
ING VP INTERNATIONAL EQUITY PORTFOLIO (UNAUDITED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS I
---------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, --------------------------------------------------------
2004 2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 7.55 5.78 7.90 10.40 15.92 11.59
Income (loss) from investment operations:
Net investment income (loss) $ 0.05 0.06 0.03 0.02 (0.02) (0.01)
Net realized and unrealized gain (loss)
on investments $ 0.23 1.78 (2.13) (2.51) (3.17) 5.78
Total from investment operations $ 0.28 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 period $ 7.83 7.55 5.78 7.90 10.40 15.92
TOTAL RETURN(1) % 3.71 32.05 (26.68) (23.88) (20.33) 51.33
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 45,463 40,537 28,917 48,652 52,210 43,548
Ratios to average net assets:
Net expenses after expense reimbursement(2)(3) % 1.15 1.15 1.15 1.15 1.15 1.15
Gross expenses prior to expense reimbursement(2) % 1.28 1.38 1.46 1.26 1.34 1.62
Net investment income (loss) after expense
reimbursement(2)(3) % 1.61 1.04 0.40 0.23 (0.18) 0.13
Portfolio turnover rate % 84 85 266 229 212 169
</Table>
<Table>
<Caption>
CLASS S
---------------------------------------------------------------
SIX MONTHS NOVEMBER 1,
ENDED YEAR ENDED DECEMBER 31, 2001(4) TO
JUNE 30, ---------------------------- DECEMBER 31,
2004 2003 2002 2001
- ------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 7.53 5.78 7.90 7.38
Income (loss) from investment operations:
Net investment income $ 0.05 (0.01) 0.01 --
Net realized and unrealized gain (loss) on investments $ 0.22 1.82 (2.13) 0.52
Total from investment operations $ 0.27 1.81 (2.12) 0.52
Less distributions from:
Net investment income $ -- 0.06 -- --
Total distributions $ -- 0.06 -- --
Net asset value, end of period $ 7.80 7.53 5.78 7.90
TOTAL RETURN(1) % 3.59 31.62 (26.84) 7.05
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 193 197 8 11
Ratios to average net assets:
Net expenses after expense reimbursement(2)(3) % 1.40 1.40 1.40 1.39
Gross expenses prior to expense reimbursement(2) % 1.53 1.63 1.71 1.49
Net investment income after expense reimbursement(2)(3) % 1.22 0.79 0.15 0.01
Portfolio turnover rate % 84 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
31
<Page>
ING VP GROWTH PORTFOLIO (UNAUDITED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS I
---------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, --------------------------------------------------------
2004 2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 8.93 6.85 9.64 14.99 17.32 13.53
Income (loss) from investment operations:
Net investment income (loss) $ 0.01 0.01 (0.01) (0.01) 0.01 0.03
Net realized and unrealized gain (loss)
on investments $ 0.11 2.07 (2.78) (3.87) (2.02) 4.62
Total from investment operations $ 0.12 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 period $ 9.05 8.93 6.85 9.64 14.99 17.32
TOTAL RETURN(1) % 1.34 30.36 (28.94) (27.06) (11.95) 34.97
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 214,813 224,330 181,029 305,624 460,578 369,845
Ratios to average net assets:
Expenses(2) % 0.70 0.71 0.72 0.70 0.70 0.71
Net investment income (loss)(2) % 0.13 0.13 (0.06) (0.08) 0.06 0.20
Portfolio turnover rate % 59 162 241 216 179 138
</Table>
<Table>
<Caption>
CLASS S
---------------------------------------------------------------
SIX MONTHS NOVEMBER 1,
ENDED YEAR ENDED DECEMBER 31, 2001(3) TO
JUNE 30, ---------------------------- DECEMBER 31,
2004 2003 2002 2001
- ------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 8.88 6.83 9.63 8.96
Income (loss) from investment operations:
Net investment income (loss) $ (0.01) 0.00* (0.01) 0.00*
Net realized and unrealized gain (loss) on investments $ 0.12 2.05 (2.79) 0.67
Total from investment operations $ 0.11 2.05 (2.80) 0.67
Net asset value, end of period $ 8.99 8.88 6.83 9.63
TOTAL RETURN(1) % 1.24 30.01 (29.08) 7.48
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 328 292 53 11
Ratios to average net assets:
Expenses(2) % 0.95 0.96 0.97 0.94
Net investment loss(2) % (0.11) (0.10) (0.31) (0.32)
Portfolio turnover rate % 59 162 241 216
</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
32
<Page>
ING VP SMALL COMPANY PORTFOLIO (UNAUDITED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS I
---------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, --------------------------------------------------------
2004 2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 17.48 12.75 16.68 16.65 16.52 12.79
Income (loss) from investment operations:
Net investment income $ 0.01 0.06 0.05 0.06 0.11 0.08
Net realized and unrealized gain (loss)
on investments $ 0.49 4.71 (3.91) 0.58 1.09 3.84
Total from investment operations $ 0.50 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 period $ 17.98 17.48 12.75 16.68 16.65 16.52
TOTAL RETURN(1) % 2.86 37.47 (23.23) 4.00 6.72 30.85
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 481,075 464,228 288,890 341,332 273,617 149,416
Ratios to average net assets:
Expenses(2) % 0.84 0.85 0.87 0.86 0.87 0.88
Net investment income(2) % 0.07 0.47 0.39 0.50 0.80 0.64
Portfolio turnover rate % 54 178 371 240 330 256
</Table>
<Table>
<Caption>
CLASS S
---------------------------------------------------------------
SIX MONTHS NOVEMBER 1,
ENDED YEAR ENDED DECEMBER 31, 2001(3) TO
JUNE 30, ---------------------------- DECEMBER 31,
2004 2003 2002 2001
- ------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 17.49 12.72 16.68 14.90
Income (loss) from investment operations:
Net investment income (loss) $ (0.05) 0.01 (0.04) 0.00*
Net realized and unrealized gain (loss) on investments $ 0.53 4.79 (3.86) 1.78
Total from investment operations $ 0.48 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 $ 17.97 17.49 12.72 16.68
TOTAL RETURN(1) % 2.74 37.76 (23.45) 11.95
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 11,951 840 184 11
Ratios to average net assets:
Expenses(2) % 1.11 1.10 1.12 1.10
Net investment income(2) % (0.01) 0.22 0.14 0.29
Portfolio turnover rate % 54 178 371 240
</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.
* Amount is less than $0.01 per share.
See Accompanying Notes to Financial Statements
33
<Page>
ING VP VALUE OPPORTUNITY PORTFOLIO (UNAUDITED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS I
---------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, --------------------------------------------------------
2004 2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 12.08 9.77 13.25 15.34 16.42 14.41
Income (loss) from investment operations:
Net investment income $ 0.12 0.10 0.04 0.03 0.07 0.10
Net realized and unrealized gain (loss)
on investments $ 0.20 2.29 (3.47) (1.43) 1.49 2.71
Total from investment operations $ 0.32 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 period $ 12.40 12.08 9.77 13.25 15.34 16.42
TOTAL RETURN(1) % 2.65 24.59 (25.96) (9.62) 10.19 19.58
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 237,820 257,448 211,470 219,287 116,029 85,030
Ratios to average net assets:
Expenses(2) % 0.70 0.70 0.72 0.71 0.75 0.73
Net investment income(2) % 1.68 0.91 0.51 0.54 0.58 0.69
Portfolio turnover rate % 8 251 304 185 171 125
</Table>
<Table>
<Caption>
CLASS S
---------------------------------------------------------------
SIX MONTHS JULY 16,
ENDED YEAR ENDED DECEMBER 31, 2001(3) TO
JUNE 30, ---------------------------- DECEMBER 31,
2004 2003 2002 2001
- ------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 12.03 9.75 13.24 14.58
Income (loss) from investment operations:
Net investment income $ 0.06 0.04 0.01 0.00*
Net realized and unrealized gain (loss) on investments $ 0.24 2.31 (3.46) (1.34)
Total from investment operations $ 0.30 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 $ 12.33 12.03 9.75 13.24
TOTAL RETURN(1) % 2.49 24.21 (26.12) (9.19)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 2,994 2,277 1,092 307
Ratios to average net assets:
Expenses(2) % 0.95 0.95 0.97 0.96
Net investment income(2) % 1.46 0.64 0.26 0.29
Portfolio turnover rate % 8 251 304 185
</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.
* Amount is less than $0.01 per share.
See Accompanying Notes to Financial Statements
34
<Page>
ING VP BALANCED PORTFOLIO (UNAUDITED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS I
---------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, --------------------------------------------------------
2004 2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 12.50 10.73 12.09 13.40 15.57 15.73
Income (loss) from investment operations:
Net investment income $ 0.12 0.25 0.25 0.31 0.43 0.44
Net realized and unrealized gain (loss)
on investments $ 0.17 1.76 (1.49) (0.87) (0.49) 1.56
Total from investment operations $ 0.29 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 period $ 12.79 12.50 10.73 12.09 13.40 15.57
TOTAL RETURN(1) % 2.32 18.87 (10.31) (4.21) (0.56) 13.60
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (millions) $ 1,407 1,375 1,223 1,591 1,777 1,988
Ratios to average net assets:
Expenses(2) % 0.59 0.60 0.60 0.59 0.59 0.59
Net investment income(2) % 1.91 2.04 2.00 2.46 2.72 2.81
Portfolio turnover rate % 136 333 345 167 182 136
</Table>
<Table>
<Caption>
CLASS S
-------------------------
SIX MONTHS MAY 29,
ENDED 2003(3) TO
JUNE 30, DECEMBER 31,
2004 2003
- ------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 12.49 11.53
Income (loss) from investment operations:
Net investment income $ 0.09* 0.34
Net realized and unrealized gain on investments $ 0.18 0.85
Total from investment operations $ 0.27 1.19
Less distributions from:
Net investment income $ -- 0.23
Total distributions $ -- 0.23
Net asset value, end of period $ 12.76 12.49
TOTAL RETURN(1) % 2.16 10.51
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (millions) $ 2 1
Ratios to average net assets:
Expenses(2) % 0.84 0.83
Net investment income(2) % 1.66 3.06
Portfolio turnover rate % 136 333
</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.
* Per share data calculated using average number of shares outstanding
throughout the period.
See Accompanying Notes to Financial Statements
35
<Page>
ING VP GROWTH AND INCOME PORTFOLIO (UNAUDITED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS I
---------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, --------------------------------------------------------
2004 2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 18.28 14.50 19.54 24.12 30.69 31.87
Income (loss) from investment operations:
Net investment income $ 0.09 0.16 0.16 0.14 0.17 0.31
Net realized and unrealized gain (loss)
on investments $ 0.46 3.62 (5.04) (4.58) (3.46) 4.86
Total from investment operations $ 0.55 3.78 (4.88) (4.44) (3.29) 5.17
Less distributions from:
Net investment income $ 0.16 -- 0.16 0.14 0.16 0.34
Net realized gains on investments $ -- -- -- -- 3.12 6.01
Total distributions $ 0.16 -- 0.16 0.14 3.28 6.35
Net asset value, end of period $ 18.67 18.28 14.50 19.54 24.12 30.69
TOTAL RETURN(1): % 3.05 26.07 (24.99) (18.40) (10.97) 17.42
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (millions) $ 3,662 3,795 3,525 5,639 7,797 10,029
Ratios to average net assets:
Expenses(2) % 0.59 0.60 0.59 0.59 0.58 0.58
Net investment income(2) % 0.90 0.95 0.83 0.62 0.55 0.89
Portfolio turnover rate % 78 150 246 185 149 133
</Table>
<Table>
<Caption>
CLASS S
-------------------------
SIX MONTHS JUNE 11,
ENDED 2003(3) TO
JUNE 30, DECEMBER 31,
2004 2003
- ------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 18.26 16.32
Income (loss) from investment operations:
Net investment income $ 0.06 0.04
Net realized and unrealized gain on investments $ 0.47 1.90
Total from investment operations $ 0.53 1.94
Less distributions from:
Net investment income $ 0.15 --
Total distributions $ 0.15 --
Net asset value, end of period $ 18.64 18.26
TOTAL RETURN(1): % 2.91 11.89
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (millions) $ 2 2
Ratios to average net assets:
Expenses(2) % 0.84 0.84
Net investment income(2) % 0.66 0.57
Portfolio turnover rate % 78 150
</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
36
<Page>
ING VP BOND PORTFOLIO (UNAUDITED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS I
---------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, --------------------------------------------------------
2004 2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 14.15 13.53 12.95 12.61 12.17 13.06
Income (loss) from investment operations:
Net investment income $ 0.26 0.56 0.45 0.59 0.79 0.76
Net realized and unrealized gain (loss)
on investments $ (0.19) 0.29 0.63 0.51 0.37 (0.86)
Total from investment operations $ 0.07 0.85 1.08 1.10 1.16 (0.10)
Less distributions from:
Net investment income $ 0.61 0.11 0.43 0.65 0.72 0.75
Net realized gains on investments $ 0.36 0.12 0.07 0.11 0.04
Total distributions $ 0.97 0.23 0.50 0.76 0.72 0.79
Net asset value, end of period $ 13.25 14.15 13.53 12.95 12.61 12.17
TOTAL RETURN(1) % 0.37 6.30 8.33 8.75 9.64 (0.74)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (millions) $ 1,087 1,126 1,206 1,024 711 717
Ratios to average net assets:
Expenses(2) % 0.50 0.50 0.49 0.50 0.50 0.49
Net investment income(2) % 3.83 3.77 3.50 5.06 6.29 5.77
Portfolio turnover rate % 213 521 565 219 334 201
</Table>
<Table>
CLASS S
----------------------------------------
SIX MONTHS YEAR MAY 3,
ENDED ENDED 2002(3) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2004 2003 2002
- ------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 14.13 13.53 13.05
Income (loss) from investment operations:
Net investment income $ 0.01 0.49 0.16
Net realized and unrealized gain on investments $ 0.04 0.32 0.81
Total from investment operations $ 0.05 0.81 0.97
Less distributions from:
Net investment income $ 0.60 0.09 0.42
Net realized gains on investments $ 0.36 0.12 0.07
Total distributions $ 0.96 0.21 0.49
Net asset value, end of period $ 13.22 14.13 13.53
TOTAL RETURN(1) % 0.23 6.04 7.45
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (millions) $ 165 71 50
Ratios to average net assets:
Expenses(2) % 0.75 0.75 0.74
Net investment income(2) % 3.56 3.52 3.25
Portfolio turnover rate % 213 521 565
</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
37
<Page>
ING VP MONEY MARKET PORTFOLIO (UNAUDITED) FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<Table>
<Caption>
CLASS I
---------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, --------------------------------------------------------
2004 2003 2002 2001 2000 1999
---------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 12.94 13.03 13.33 13.61 13.42 13.39
Income (loss) from investment operations:
Net investment income $ 0.06 0.08 0.21 0.50 0.83 0.59
Net realized and unrealized gain(loss)
on investments $ (0.02) 0.03 -- 0.01 (0.02) 0.06
Total from investment operations $ 0.04 0.11 0.21 0.51 0.81 0.65
Less distributions from:
Net investment income $ 0.14 0.20 0.51 0.79 0.62 0.62
Total distributions $ 0.14 0.20 0.51 0.79 0.62 0.62
Net asset value, end of period $ 12.84 12.94 13.03 13.33 13.61 13.42
TOTAL RETURN(1) % 0.28 0.92 1.66 3.94 6.38 5.08
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (millions) $ 1,137 1,238 1,552 1,519 1,196 1,158
Ratios to average net assets:
Expenses(2) % 0.35 0.35 0.34 0.34 0.34 0.34
Net investment income(2) % 0.83 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.
(2) Annualized for periods less than one year.
See Accompanying Notes to Financial Statements
38
<Page>
NOTES TO FINANCIAL STATEMENTS as of June 30, 2004 (Unaudited)
NOTE 1 -- ORGANIZATION
Organization. The ING Variable Product Portfolios are comprised of ING Variable
Portfolios, Inc., ING VP Balanced Portfolio, Inc., ING Variable Funds, ING 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.
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 Global Science and Technology ("Global
Science and Technology", formerly, ING VP Technology Portfolio), ING VP
International Equity Portfolio ("International"), ING VP Growth Portfolio
("Growth"), ING VP Small Company Portfolio ("Small Company"), 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 business trust formed 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
formed 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 I shares (formerly, Class R). Global Science and
Technology International, Growth, Small Company, 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 and
realized gains/losses from the Portfolio pro rata based on the average daily net
assets of each class, without discrimination between share classes. 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.
ING Investments, LLC ("ING Investments"), an Arizona limited liability company,
serves as the investment adviser to the Portfolios. ING Investments has engaged
ING Investment Management Co. (formerly, Aeltus Investment Management, Inc.,
"ING IM"), a Connecticut corporation, to serve as the Sub-Adviser to each
Portfolio, with the exception of the Global Science and Technology Portfolio.
ING Funds Distributor, LLC is the principal underwriter of the Portfolios. ING
Funds Distributor, LLC, ING Investments and ING IM are indirect wholly-owned
subsidiaries of ING Groep N.V. ING Groep N.V. is a global financial institution
active in the field of insurance, banking and asset management.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies are consistently followed by the
Portfolios in the preparation of their financial statements. 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. Securities
reported by NASDAQ will be valued at the NASDAQ official closing prices.
Securities traded on an exchange or NASDAQ for which there has been no sale
and securities traded in the over-the-counter-market are valued at the mean
between the last reported bid and ask prices. All investments quoted in
foreign currencies will be valued daily in U.S. dollars on the basis of the
foreign currency exchange rates prevailing at that time. Debt securities
are valued at prices obtained from independent services or from one or more
dealers making markets in the securities and may be adjusted based on the
Portfolios' valuation procedures. U.S. Government obligations are valued by
using market quotations or independent pricing services that use prices
provided by market-makers or estimates of market values obtained from yield
data relating to instruments or securities with similar characteristics.
Securities 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.
39
<Page>
NOTES TO FINANCIAL STATEMENTS as of June 30, 2004 (Unaudited) (continued)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Securities traded on exchanges, including foreign exchanges, which close
earlier than the time that a Portfolio calculates its net asset value may
also be valued at their fair values as determined in good faith by or under
the supervision of a Portfolio's Board, in accordance with methods that are
specifically authorized by the Board. If a significant event which is
likely to impact the value of one or more foreign securities held by a
Portfolio occurs after the time at which the foreign market for such
security(ies) closes but before the time that the Portfolio's net asset
value is calculated on any business day, such event may be taken into
account in determining the fair value of such security(ies) at the time the
Portfolio calculates its net asset value. For these purposes, significant
events after the close of trading on a foreign market may include, among
others, securities trading in the U.S. and other markets, corporate
announcements, natural and other disasters, and political and other events.
Among other elements of analysis, the Board has authorized the use of one
or more research services to assist with the determination of the fair
value of foreign securities in light of significant events. Research
services use statistical analyses and 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. 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 Statements of Assets and Liabilities for
the estimated tax withholding based on the securities' current market
value. Upon disposition, realized gains or losses on such securities are
recorded net of foreign withholding tax.
Reported net realized foreign exchange gains or losses arise from sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on
the 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, 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.
D. FOREIGN CURRENCY TRANSACTIONS AND FUTURES CONTRACTS. Certain Portfolios may
enter into
40
<Page>
NOTES TO FINANCIAL STATEMENTS as of June 30, 2004 (Unaudited) (continued)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
foreign currency exchange transactions to convert to and from different
foreign currencies and to and from the U.S. dollar in connection with the
planned purchases or sales of securities. The Portfolios either enter into
these transactions on a spot basis at the spot rate prevailing in the
foreign currency exchange market or use forward foreign currency contracts
to purchase or sell foreign currencies. When the contract is fulfilled or
closed, gains or losses are realized. Until then, the gain or loss is
included in unrealized appreciation or depreciation. Risks may arise upon
entering into forward contracts from the potential inability of
counterparties to meet the terms of their forward contracts and from
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. The Portfolios record distributions to their
shareholders on the ex-dividend date. Global Science and Technology,
International, Growth, Small Company, Value Opportunity, Balanced and Money
Market Portfolios declare and pay dividends annually. Bond and Growth and
Income Portfolios declare and pay dividends semi-annually. 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.
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. 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 securities
acceptable to it whose market value is equal to at least 100% of the
carrying amount of the repurchase agreements, plus accrued interest, being
invested by the Portfolio. The underlying collateral is valued daily on a
mark-to-market basis to assure that the value, including accrued interest
is at least equal to the repurchase price. If the seller defaults, a
Portfolio might incur a loss or delay in the realization of proceeds if the
value of the security collateralizing the repurchase agreement declines,
and it might incur disposition costs in liquidating the collateral.
I. SECURITIES LENDING. Each Portfolio has the option to temporarily loan up to
30% of its total assets to brokers, dealers or other financial institutions
in exchange for a negotiated lender's fee. The borrower is required to
fully collateralize the loans with cash or U.S. Government securities.
Generally, in the event of counterparty default, the Portfolio has the
right to use collateral to offset losses incurred. There would be potential
loss to the Portfolio in the event the Portfolio is delayed or prevented
from exercising its right to dispose of the collateral. The Portfolio bears
the
41
<Page>
NOTES TO FINANCIAL STATEMENTS as of June 30, 2004 (Unaudited) (continued)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
J. ILLIQUID AND RESTRICTED SECURITIES. The Portfolios may not invest more than
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 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
42
<Page>
NOTES TO FINANCIAL STATEMENTS as of June 30, 2004 (Unaudited) (continued)
swap. For each swap contract, a capital gain or loss is recognized on each
contract's respective payment date.
NOTE 3 -- INVESTMENT TRANSACTIONS
For the six months ended June 30, 2004, the cost of purchases and proceeds from
the sales of securities, excluding short-term securities, were as follows:
<Table>
<Caption>
PURCHASES SALES
--------------- ---------------
Global Science and Technology $ 94,774,123 $ 99,122,962
International 39,243,494 35,136,137
Growth 125,794,753 142,477,939
Small Company 241,514,523 264,700,417
Value Opportunity 19,446,355 33,904,940
Balanced 883,456,289 909,481,517
Growth and Income 2,847,464,862 3,111,069,065
Bond 543,036,966 552,981,053
</Table>
U.S. Government securities not included above were as follows:
<Table>
<Caption>
PURCHASES SALES
--------------- ---------------
Balanced $ 1,044,433,062 $ 1,030,893,588
Bond 2,360,041,814 2,316,922,598
</Table>
NOTE 4 -- INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES
The Portfolios entered into Investment Management Agreements with ING
Investments (the "Investment Manager"). The Investment Management Agreements
compensate the Investment Manager with a fee, computed daily and payable
monthly, based on the average daily net assets of each Portfolio, at the
following annual rates:
<Table>
Global Science and Technology 0.95%
International 0.85%
Growth 0.60%
Small Company 0.75%
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 Investment Manager entered into Sub-Advisory Agreements with ING IM. ING IM
acts as Sub-Adviser to all Portfolios except for the Global Science and
Technology Portfolio. Subject to such policies as the Board or the Investment
Manager may determine, ING IM manages the Portfolios' assets in accordance with
the Portfolios' investment objectives, policies, and limitations.
BlackRock Advisors, Inc., ("BlackRock"), a Delaware Corporation, serves as
Sub-Adviser to the Global Science and Technology Portfolio pursuant to a
Sub-Advisory Agreement effective April 1, 2004 between the Investment Manager
and BlackRock through December 31, 2005. From January 1, 2004 to March 31, 2004,
the Global Science and Technology Portfolio was sub-advised by BlackRock under
an interim Sub-Advisory Agreement.
Pursuant to Administration Agreements, 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 Distribution Plans pursuant to
Rule 12b-1 under the 1940 Act (the "12b-1 Plans"), whereby ING Funds
Distributor, LLC (the "Distributor") is reimbursed or compensated by the
Portfolios for expenses incurred in the distribution of each Portfolio's shares
("Distribution Fees"). Pursuant to the 12b-1 Plans, the Distributor is entitled
to a payment each month to reimburse or compensate expenses incurred in the
distribution and promotion of each Portfolio's shares, including expenses
incurred in printing prospectuses and reports used for sales purposes, expenses
incurred in preparing and printing sales literature and other such distribution
related expenses, including any distribution or shareholder servicing fees
("Service Fees") paid to securities dealers who have executed a distribution
agreement with the Distributor. Under the 12b-1 Plans, Class S shares of the
Portfolios pay the Distributor a fee calculated at an annual rate of 0.25% of
average daily net assets.
NOTE 6 -- OTHER TRANSACTIONS WITH AFFILIATED AND RELATED PARTIES
At June 30, 2004, 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
----------- -------------- ----------------- -----------
Global Science and Technology $ 67,279 $ 3,894 $ -- $ 71,173
International 31,249 2,022 2,273 35,544
Growth 104,854 9,609 64 114,527
Small Company 294,392 21,583 1,457 317,432
Value Opportunity 118,088 10,821 606 129,515
Balanced 573,487 63,075 424 636,986
Growth and Income 1,494,464 164,364 382 1,659,210
Bond 406,425 55,864 31,441 493,730
Money Market 233,794 51,417 -- 285,211
</Table>
43
<Page>
NOTES TO FINANCIAL STATEMENTS as of June 30, 2004 (Unaudited) (continued)
The Portfolios have 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. Deferred fees are
invested in various funds advised by ING Investments, LLC until distribution in
accordance with the Plan.
NOTE 7 -- EXPENSE LIMITATIONS
ING Investments entered into written Expense Limitation Agreements with each of
the following Portfolios whereby the Investment Manager has agreed to limit
expenses, excluding interest, taxes, brokerage and extraordinary expenses to the
levels listed below:
<Table>
<Caption>
CLASS I CLASS S
------- -------
Global Science and Technology 1.15% 1.40%
International 1.15% 1.40%
Growth 0.80% 1.05%
Small Company 0.95% 1.20%
Value Opportunity 0.80% 1.05%
</Table>
The Investment Manager may at a later date recoup from a Portfolio management
fees waived and other expenses assured 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. Amounts payable
by the Investment Manager are reflected on the accompanying Statements of Assets
and Liabilities for each Portfolio.
As of June 30, 2004, the amounts of reimbursed fees that are subject to possible
recoupment by the Investment Manager, and the related expiration dates are as
follows:
<Table>
<Caption>
JUNE 30,
---------------------------
2005 2006 2007 TOTAL
------- --------- -------- ----------
International $ 7,643 $ 127,644 $ 56,488 $ 191,775
</Table>
The Expense Limitation Agreements are contractual and shall renew automatically
for one-year terms unless ING Investments provides written notice of the
termination of an Expense Limitation Agreement within 90 days of the end of the
then current term.
NOTE 8 -- LINE OF CREDIT
The Portfolios, in addition to certain other funds managed by the Investment
Manager, 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 Value Opportunity
Portfolio utilized the line of credit for five days during the six months ended
June 30, 2004, with an approximate average daily balance of $5,808,000 and an
approximate weighted average interest rate of 1.50%.
NOTE 9 -- CAPITAL SHARES TRANSACTIONS
Transactions in capital shares and dollars were as follows:
<Table>
<Caption>
CLASS I SHARES CLASS S SHARES
------------------------------ -----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
2004 2003 2004(1) 2003
------------- ------------- ------------- -------------
GLOBAL SCIENCE AND TECHNOLOGY (NUMBER OF SHARES)
Shares sold 3,570,055 22,057,248 -- --
Shares redeemed (4,795,050) (13,940,003) -- (2,551)
------------- ------------- ------------- -------------
Net increase (decrease) in shares outstanding (1,224,995) 8,117,245 -- (2,551)
============= ============= ============= =============
GLOBAL SCIENCE AND TECHNOLOGY ($)
Shares sold $ 14,159,690 $ 71,880,902 $ -- $ --
Shares redeemed (18,025,988) (43,644,308) -- (9,376)
------------- ------------- ------------- -------------
Net increase (decrease) $ (3,866,298) $ 28,236,594 $ -- $ (9,376)
============= ============= ============= =============
</Table>
44
<Page>
NOTES TO FINANCIAL STATEMENTS as of June 30, 2004 (Unaudited) (continued)
NOTE 9 -- CAPITAL SHARES TRANSACTIONS (CONTINUED)
<Table>
<Caption>
CLASS I SHARES CLASS S SHARES
------------------------------ -----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
2004 2003 2004 2003
------------- ------------- ------------- -------------
INTERNATIONAL (NUMBER OF SHARES)
Shares sold 1,540,168 11,733,163 44,348 27,260
Dividends reinvested -- 58,321 -- 81
Shares redeemed (1,105,169) (11,428,928) (45,811) (2,549)
------------- ------------- ------------- -------------
Net increase (decrease) in shares outstanding 434,999 362,556 (1,463) 24,792
============= ============= ============= =============
INTERNATIONAL ($)
Shares sold $ 11,904,823 $ 71,979,031 $ 339,924 $ 181,817
Dividends reinvested -- 358,677 -- 496
Shares redeemed (8,498,808) (70,356,174) (354,527) (16,399)
------------- ------------- ------------- -------------
Net increase (decrease) $ 3,406,015 $ 1,981,534 $ (14,603) $ 165,914
============= ============= ============= =============
</Table>
- ----------
(1) There was no capital share activity for Class S during the six months ended
June 30, 2004.
<Table>
<Caption>
CLASS I SHARES CLASS S SHARES
------------------------------ -----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
2004 2003 2004 2003
------------- ------------- ------------- -------------
GROWTH (NUMBER OF SHARES)
Shares sold 383,518 2,152,470 4,800 32,996
Shares redeemed (1,756,286) (3,481,590) (1,249) (7,885)
------------- ------------- ------------- -------------
Net increase (decrease) in shares outstanding (1,372,768) (1,329,120) 3,551 25,111
============= ============= ============= =============
GROWTH ($)
Shares sold $ 3,491,145 $ 12,336,815 $ 44,067 $ 253,457
Shares redeemed (15,827,526) (22,951,012) (11,286) (58,277)
------------- ------------- ------------- -------------
Net increase (decrease) $ (12,336,381) $ (10,614,197) $ 32,781 $ 195,180
============= ============= ============= =============
</Table>
<Table>
<Caption>
CLASS I SHARES CLASS S SHARES
------------------------------ -----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
2004 2003 2004 2003
------------- ------------- ------------- -------------
SMALL COMPANY (NUMBER OF SHARES)
Shares sold 1,872,544 10,395,221 624,125 40,070
Dividends reinvested -- 63,065 -- 48
Shares redeemed (1,680,285) (6,562,287) (7,194) (6,503)
------------- ------------- ------------- -------------
Net increase in shares outstanding 192,259 3,895,999 616,931 33,615
============= ============= ============= =============
SMALL COMPANY ($)
Shares sold $ 34,017,246 $ 155,510,623 $ 10,872,368 $ 616,993
Dividends reinvested -- 922,009 -- 698
Shares redeemed (29,799,135) (94,475,400) (125,504) (103,573)
------------- ------------- ------------- -------------
Net increase $ 4,218,111 $ 61,957,232 $ 10,746,864 $ 514,118
============= ============= ============= =============
</Table>
<Table>
<Caption>
CLASS I SHARES CLASS S SHARES
------------------------------ -----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
2004 2003 2004 2003
------------- ------------- ------------- -------------
VALUE OPPORTUNITY (NUMBER OF SHARES)
Shares sold 655,441 2,108,112 71,320 92,628
Dividends reinvested -- 164,266 -- 901
Shares redeemed (2,785,901) (2,598,835) (17,795) (16,336)
------------- ------------- ------------- -------------
Net increase (decrease) in shares outstanding (2,130,460) (326,457) 53,525 77,193
============= ============= ============= =============
VALUE OPPORTUNITY ($)
Shares sold $ 8,071,730 $ 20,200,109 $ 871,010 $ 998,638
Dividends reinvested -- 1,764,212 -- 9,646
Shares redeemed (34,066,102) (25,416,002) (217,506) (171,629)
------------- ------------- ------------- -------------
Net increase (decrease) $ (25,994,372) $ (3,451,681) $ 653,504 $ 836,655
============= ============= ============= =============
</Table>
45
<Page>
NOTES TO FINANCIAL STATEMENTS as of June 30, 2004 (Unaudited) (continued)
NOTE 9 -- CAPITAL SHARES TRANSACTIONS (CONTINUED)
<Table>
<Caption>
CLASS I SHARES CLASS S SHARES
------------------------------ -----------------------------
SIX MONTHS YEAR SIX MONTHS PERIOD
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
2004 2003 2004 2003(1)
------------- ------------- ------------- -------------
BALANCED (NUMBER OF SHARES)
Shares sold 4,352,581 3,154,493 88,844 101,813
Dividends reinvested -- 2,206,304 -- 25
Shares redeemed (4,257,695) (9,380,661) (8,117) (3,480)
------------- ------------- ------------- -------------
Net increase (decrease) in shares outstanding 94,886 (4,019,864) 80,727 98,358
============= ============= ============= =============
BALANCED ($)
Shares sold $ 55,302,673 $ 37,356,123 $ 1,123,442 $ 1,194,460
Dividends reinvested -- 25,549,004 -- 288
Shares redeemed (54,028,576) (106,290,993) (102,254) (42,017)
------------- ------------- ------------- -------------
Net increase (decrease) $ 1,274,097 $ (43,385,866) $ 1,021,188 $ 1,152,731
============= ============= ============= =============
</Table>
- ----------
(1) Class S commenced operations on May 29, 2003.
<Table>
<Caption>
CLASS I SHARES CLASS S SHARES
------------------------------ -----------------------------
SIX MONTHS YEAR SIX MONTHS PERIOD
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
2004 2003 2004 2003(1)
------------- ------------- ------------- -------------
GROWTH AND INCOME (NUMBER OF SHARES)
Shares sold 3,162,847 801,513 18,317 98,693
Dividends reinvested 1,799,374 -- 845 --
Shares redeemed (16,436,250) (36,272,651) (8,107) (4,334)
------------- ------------- ------------- -------------
Net increase (decrease) in shares outstanding (11,474,029) (35,471,138) 11,055 94,359
============= ============= ============= =============
GROWTH AND INCOME ($)
Shares sold $ 59,284,079 $ 12,502,845 $ 342,398 $ 1,605,943
Dividends reinvested 33,162,467 -- 15,555 --
Shares redeemed (305,733,636) (559,904,868) (151,276) (70,873)
------------- ------------- ------------- -------------
Net increase (decrease) $(213,287,090) $(547,402,023) $ 206,677 $ 1,535,070
============= ============= ============= =============
</Table>
<Table>
<Caption>
CLASS I SHARES CLASS S SHARES
------------------------------ -----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
2004 2003 2004 2003
------------- ------------- ------------- -------------
BOND (NUMBER OF SHARES)
Shares sold 5,954,528 8,501,280 7,472,462 6,385,067
Dividends reinvested 5,675,974 1,474,950 595,394 93,017
Shares redeemed (9,220,246) (19,495,518) (629,585) (5,092,213)
------------- ------------- ------------- -------------
Net increase (decrease) in shares outstanding 2,410,256 (9,519,288) 7,438,271 1,385,871
============= ============= ============= =============
BOND ($)
Shares sold $ 84,932,947 $ 103,976,909 $ 102,953,962 $ 80,800,150
Dividends reinvested 76,739,144 20,649,302 8,031,865 1,301,393
Shares redeemed (128,540,269) (256,344,288) (8,538,242) (62,882,702)
------------- ------------- ------------- -------------
Net increase (decrease) $ 33,131,822 $(131,718,077) $ 102,447,585 $ 19,218,841
============= ============= ============= =============
</Table>
<Table>
<Caption>
CLASS I SHARES
----------------------------------
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, DECEMBER 31,
2004 2003
-------------- ----------------
MONEY MARKET (NUMBER OF SHARES)
Shares sold 13,370,319 168,980,560
Dividends reinvested 1,009,615 1,928,116
Shares redeemed (21,511,895) (194,376,129)
-------------- ----------------
Net decrease in shares outstanding (7,131,961) (23,467,453)
============== ================
MONEY MARKET ($)
Shares sold $ 172,059,361 $ 1,899,695,014
Dividends reinvested 12,932,164 24,741,578
Shares redeemed (276,488,945) $ (2,226,653,637)
-------------- ----------------
Net decrease $ (91,497,420) $ (302,217,045)
============== ================
</Table>
- ----------
(1) Class S commenced operations on June 11, 2003.
46
<Page>
NOTES TO FINANCIAL STATEMENTS as of June 30, 2004 (Unaudited) (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
Market Money Market Trust, LLY, 1.175%, due 06/03/05 $ 13,500,000 05/15/03 $ 13,500,000 $ 13,499,960 1.2%
Newcastle CDO I Ltd., 1.321% due 09/24/38 13,900,000 10/23/03 13,900,000 13,900,000 1.2%
Putnam Structured Product CDO, 1.259%, due 10/15/38 13,700,000 09/23/03 13,700,000 13,700,000 1.2%
------------ ------------ ---
$ 41,100,000 $ 41,099,960 3.6%
============ ============ ===
</Table>
NOTE 11 -- SECURITIES LENDING
Under an agreement with The 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 securities
purchased with cash collateral received are reflected in the Portfolio of
Investments. 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 June 30, 2004, the Portfolios had securities on loan with the
following market values:
<Table>
<Caption>
VALUE OF
VALUE OF SECURITIES PURCHASED VALUE OF TOTAL VALUE
SECURITIES LOANED WITH CASH COLLATERAL NON-CASH COLLATERAL* OF COLLATERAL
----------------- -------------------- -------------------- -------------
Global Science and Technology $ 11,372,281 $ 12,041,461 $ -- $ 12,041,461
Growth 39,180,149 39,914,157 -- 39,914,157
Small Company 126,746,371 129,809,897 -- 129,809,897
Value Opportunity 10,289,939 10,534,791 -- 10,534,791
Balanced 325,683,288 326,812,169 6,388,103 333,200,272
Growth and Income 659,243,749 643,061,669 38,706,834 681,768,503
Bond 242,006,106 246,144,339 -- 246,144,339
Money Market 30,296,992 23,715,619 7,388,059 31,103,678
</Table>
- ----------
* Various U.S. Treasury obligations, 2.000%-8.750%, 01/15/14-11/15/27.
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 tax composition of dividends and distributions to shareholders was as
follows:
<Table>
<Caption>
SIX MONTHS ENDED LONG-TERM YEAR ENDED
JUNE 30, 2004: ORDINARY INCOME CAPITAL GAINS DECEMBER 31, 2003: ORDINARY INCOME
--------------- ------------- ---------------
Growth and Income $ 33,196,320 $ -- International $ 359,173
Bond 53,530,302 31,286,157 Small Company 922,707
Money Market 12,932,164 -- Value Opportunity 1,773,858
Balanced 25,549,292
Growth and Income --
Bond 21,962,645
Money Market 24,741,578
</Table>
Dividends paid by the Porfolios from net investment income and distributions of
net realized short-term capital gains are, for federal income tax purposes,
taxable as ordinary income to shareholders.
47
<Page>
NOTES TO FINANCIAL STATEMENTS as of June 30, 2004 (Unaudited) (continued)
NOTE 12 -- FEDERAL INCOME TAXES (CONTINUED)
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 at December 31, 2003 were as
follows:
<Table>
<Caption>
UNDISTRIBUTED UNREALIZED POST OCTOBER CAPITAL
UNDISTRIBUTED LONG-TERM APPRECIATION/ CURRENCY LOSSES LOSS EXPIRATION
ORDINARY INCOME CAPITAL GAINS (DEPRECIATION) DEFERRED CARRYFORWARDS DATES
--------------- ------------- -------------- --------------- ---------------- ----------
Global Science and
Technology $ -- $ -- $ 16,945,141 $ -- $ (5,550,749) 2008
(36,046,186) 2009
(15,534,432) 2010
(4,912,495) 2011
----------------
(62,043,862)
================
International 545,405 -- 6,033,217 -- (21,861,016) 2009
(9,221,611) 2010
----------------
(31,082,627)
================
Growth 265,408 -- 23,195,510 -- $ (150,586,967) 2009
(63,207,672) 2010
----------------
(213,794,639)
================
Small Company 1,348,855 -- 80,538,898 -- $ (45,095,976) 2010
================
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 -- $ (602,830,008) 2009
(2,401,044,421) 2010
(63,082,574) 2011
----------------
$ (3,066,957,003)
================
Bond 83,876,309 932,079 20,650,719 (91,082) -- 2012
Money Market 12,927,121 -- 241,654 -- $ (751,862) 2008
(3,715,968) 2009
(169) 2011
----------------
$ (4,467,999)
================
</Table>
NOTE 13 -- OTHER INFORMATION
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. In addition to responding to
regulatory requests, ING management initiated an internal review of trading in
ING insurance, retirement, and mutual fund products. The goal of this review has
been to identify whether there have been any instances of inappropriate trading
in those products by third parties or by ING investment professionals and other
ING personnel. Additionally, ING reviewed its controls and procedures in a
continuing effort to deter improper frequent trading in ING products. ING's
internal reviews related to mutual fund trading are continuing.
The internal review has identified several arrangements allowing third parties
to engage in frequent trading of mutual funds within our variable insurance and
mutual fund products, and identified other circumstances where frequent trading
occurred despite measures taken by ING intended to combat market timing.
In addition, the review has identified five arrangements that allowed frequent
trading in certain ING Funds. ING entities did not receive special benefits in
return for any of these arrangements, which have all been terminated. The
internal review also identified two investment professionals who engaged in
improper frequent trading in ING Funds. ING will reimburse any ING Fund or its
shareholders affected by inappropriate trading for any improper profits that
accrued to any person who engaged in improper frequent trading for which ING is
responsible.
NOTE 14 -- SUBSEQUENT EVENTS
On August 6, 2004, the ING VP Bond Portfolio changed its name to ING VP
Intermediate Bond Portfolio.
48
<Page>
ING VP GLOBAL SCIENCE AND PORTFOLIO OF INVESTMENTS
TECHNOLOGY PORTFOLIO as of June 30, 2004 (Unaudited)
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCK: 97.5%
BIOTECHNOLOGY: 6.5%
37,900 @ Arqule, Inc. $ 199,733
19,200 @ Corgentech, Inc. 309,504
32,000 @ Genentech, Inc. 1,798,400
12,700 @ Invitrogen Corp. 914,273
28,400 @,L Medimmune, Inc. 664,560
30,600 @ Nektar Therapeutics 610,776
32,200 @ Protein Design Labs, Inc. 615,986
257,500 @ ViroLogic, Inc. 630,875
------------
5,744,107
------------
COMMERCIAL SERVICES: 1.2%
37,400 @,@@ Accenture Ltd. 1,027,752
------------
1,027,752
------------
COMPUTERS: 3.8%
24,650 @ Dell, Inc. 882,963
79,500 @ EMC Corp. 906,300
39,400 Hewlett-Packard Co. 831,340
112,800 @,L Maxtor Corp. 747,864
------------
3,368,467
------------
ELECTRICAL COMPONENTS AND
EQUIPMENT: 1.1%
108,700 @,L General Cable Corp. 929,385
------------
929,385
------------
ELECTRONICS: 1.1%
104,300 @,L Sanmina-SCI Corp. 949,130
------------
949,130
------------
HEALTHCARE-PRODUCTS: 2.0%
103,900 @ Caliper Life Sciences, Inc. 483,135
8,000 @,@@ Given Imaging Ltd. 283,280
16,900 Guidant Corp. 944,372
------------
1,710,787
------------
HEALTHCARE-SERVICES: 0.6%
18,100 @ Inveresk Research Group, Inc. 558,204
------------
558,204
------------
INTERNET: 10.0%
105,610 @,L aQuantive, Inc. 1,043,427
92,300 @ Centillium Communications, Inc. 353,509
59,100 @,L Digitas, Inc. 651,873
16,000 @ eBay, Inc. 1,471,200
44,700 @ iVillage Inc 283,845
53,300 @ SonicWALL, Inc. 458,380
21,200 @ Symantec Corp. 928,136
109,800 @ TIBCO Software, Inc. 927,810
59,400 @,L Verisign, Inc. 1,182,060
40,700 @ Yahoo!, Inc. 1,478,631
------------
8,778,871
------------
MEDIA: 2.4%
106,800 @ Mediacom Communications Corp. 835,176
140,000 @,L Sirius Satellite Radio, Inc. 431,200
114,400 @ UnitedGlobalCom, Inc. 830,544
------------
2,096,920
------------
PHARMACEUTICALS: 9.5%
31,300 @,L Amylin Pharmaceuticals, Inc. 713,640
19,900 @ Andrx Corp. 555,807
39,300 @ Dendreon Corp. $ 481,425
14,000 @,L Eyetech Pharmaceuticals, Inc. 600,880
23,900 @,@@ Flamel Technologies ADR 588,657
10,600 @ Gilead Sciences, Inc. 710,200
14,700 @ Medco Health Solutions, Inc. 551,250
10,700 @ Neurocrine Biosciences, Inc. 554,795
67,100 @ NitroMed, Inc. 403,271
37,700 @ Noven Pharmaceuticals, Inc. 830,154
22,400 @ NPS Pharmaceuticals, Inc. 470,400
48,900 @ Nuvelo, Inc. 470,418
14,500 @ Onyx Pharmaceuticals, Inc. 614,220
16,100 @@,L Shire Pharmaceuticals PLC 430,514
31,900 @ Vicuron Pharmaceuticals, Inc. 400,664
------------
8,376,295
------------
SEMICONDUCTORS: 30.1%
315,500 @,L Agere Systems, Inc. 725,650
57,600 @ Altera Corp. 1,279,872
26,950 @ Analog Devices, Inc. 1,268,806
68,900 @ Applied Materials, Inc. 1,351,818
16,800 @,L ATMI, Inc. 458,808
68,900 @ August Technology Corp. 864,006
396,200 @@ Bookham Technology PLC 380,352
48,100 @,L Brooks Automation, Inc. 969,215
46,900 @,L Emulex Corp. 671,139
50,900 @ Fairchild Semiconductor Intl., Inc. 833,233
77,850 Intel Corp. 2,148,660
30,100 @ International Rectifier Corp. 1,246,742
54,100 Intersil Corp. 1,171,806
27,900 @,L Kla-Tencor Corp. 1,377,702
35,250 @,L Lam Research Corp. 944,700
35,000 Linear Technology Corp. 1,381,450
67,500 @ LTX Corp. 729,675
20,100 Maxim Integrated Products 1,053,642
71,000 @,L MEMC Electronic Materials, Inc. 701,480
30,700 @ MKS Instruments, Inc. 700,574
110,000 @ ON Semiconductor Corp. 552,200
33,700 @,L PMC - Sierra, Inc. 483,595
19,000 @,L Qlogic Corp. 505,210
105,000 @ Skyworks Solutions, Inc. 916,650
107,478 @@,L Taiwan Semiconductor Manufacturing Co. Ltd. 893,142
51,050 Texas Instruments, Inc. 1,234,389
18,300 @,L Varian Semiconductor Equipment Associates, Inc. 705,648
26,800 @ Xilinx, Inc. 892,708
------------
26,442,872
------------
SOFTWARE: 18.6%
19,600 Adobe Systems, Inc. 911,400
52,300 @,L Citrix Systems, Inc. 1,064,828
49,500 Computer Associates Intl., Inc. 1,388,970
140,400 @ Compuware Corp. 926,640
58,800 @ Digi Intl., Inc. 630,336
19,200 @ Electronic Arts, Inc. 1,047,360
16,650 @,L Intuit, Inc. 642,357
117,800 @ Lawson Software, Inc. 834,024
58,000 Microsoft Corp. 1,656,480
219,600 @ OpenTV Corp. 456,768
112,700 @ Oracle Corp. 1,344,511
75,900 @ Packeteer, Inc. 1,225,785
49,400 @ Peoplesoft, Inc. 913,900
33,800 @@ SAP AG 1,413,178
29,200 @ Seachange Intl., Inc. 492,896
</Table>
See Accompanying Notes to Financial Statements
49
<Page>
ING VP GLOBAL SCIENCE AND PORTFOLIO OF INVESTMENTS
TECHNOLOGY PORTFOLIO as of June 30, 2004 (Unaudited) (continued)
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------------
SOFTWARE (CONTINUED)
60,900 @ Siebel Systems, Inc. $ 650,412
25,500 @ Veritas Software Corp. 706,350
------------
16,306,195
------------
TELECOMMUNICATIONS: 10.6%
317,500 @ ADC Telecommunications, Inc. 901,700
58,900 @ Alamosa Holdings, Inc. 432,915
50,600 @ Avaya, Inc. 798,974
118,300 @ Cisco Systems, Inc. 2,803,710
36,400 @,L Juniper Networks, Inc. 894,348
5,300 @@ Mobile Telesystems 646,600
21,800 @ Safenet, Inc. 603,424
65,000 @,L Tekelec 1,181,050
33,678 @@ Telekomunikasi Indonesia Tbk PT 523,693
17,400 @@ Turkcell Iletisim Hizmet AS 534,180
------------
9,320,594
------------
Total Common Stock
(Cost $86,317,267) 85,609,579
------------
<Caption>
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 13.7%
SECURITIES LENDING COLLATERAL: 13.7%
$ 12,041,461 The Bank of New York Institutional
Cash Reserve Fund, 1.250% 12,041,461
------------
Total Short-Term Investments
(Cost $12,041,461) 12,041,461
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $98,358,728)* 111.2% $ 97,651,040
OTHER ASSETS AND LIABILITIES-NET (11.2) (9,824,412)
----- ------------
NET ASSETS 100.0% $ 87,826,628
===== ============
</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 June 30, 2004.
(cc) Securities purchased with cash collateral for securities
loaned.
* Cost for federal income tax purposes is $99,038,330. Net
unrealized depreciation consists of:
<Table>
Gross Unrealized Appreciation $ 7,467,498
Gross Unrealized Depreciation (8,854,788)
------------
Net Unrealized Depreciation $ (1,387,290)
============
</Table>
See Accompanying Notes to Financial Statements
50
<Page>
PORTFOLIO OF INVESTMENTS
ING VP INTERNATIONAL EQUITY PORTFOLIO as of June 30, 2004 (Unaudited)
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------------
AUSTRALIA: 2.4%
50,400 BHP Billiton Ltd. $ 439,913
63,700 Boral Ltd. 286,653
40,400 Seven Network Ltd. 144,935
14,100 St. George Bank Ltd. 216,282
------------
1,087,783
------------
AUSTRIA: 0.5%
13,500 Telekom Austria AG 206,131
------------
206,131
------------
BELGIUM: 1.9%
1,500 Electrabel 480,880
18,000 Fortis 398,574
------------
879,454
------------
DENMARK: 0.7%
11,800 Group 4 Falck A/S 303,245
------------
303,245
------------
FINLAND: 0.4%
12,200 Stora Enso OYJ 165,501
------------
165,501
------------
FRANCE: 9.8%
7,000 Aventis SA 528,451
20,300 AXA 447,033
7,900 Bouygues 264,509
10,900 @ Cap Gemini SA 437,496
18,100 Credit Agricole SA 440,427
2,200 Groupe Danone 191,914
3,400 Lafarge SA 303,213
6,000 Peugeot SA 334,116
2,800 Pinault-Printemps-Redoute 287,689
4,800 Total SA 915,114
12,400 @ Vivendi Universal SA 343,971
------------
4,493,933
------------
GERMANY: 9.2%
5,600 Altana AG 337,255
3,600 Deutsche Boerse AG 183,738
37,600 @ Deutsche Telekom AG 661,029
5,600 E.ON AG 403,343
4,900 Fresenius Medical Care AG 363,060
7,700 Metro AG 365,360
8,800 RWE AG 414,342
2,500 SAP AG 416,702
9,600 Siemens AG 690,862
20,900 Thyssenkrupp AG 357,263
------------
4,192,954
------------
GREECE: 1.1%
9,600 Alpha Bank A.E. 244,108
11,200 Public Power Corp. 267,079
------------
511,187
------------
HONG KONG: 1.4%
48,000 Cheung Kong Holdings Ltd. 353,855
744,000 CITIC Intl. Financial Holdings Ltd. 271,853
------------
625,708
------------
ITALY: 2.1%
185,700 Telecom Italia S.p.A. 577,255
80,100 Unicredito Italiano S.p.A. 395,661
------------
972,916
------------
JAPAN: 25.9%
4,650 Aiful Corp. $ 485,392
23,000 Bridgestone Corp. 432,113
40,000 Calsonic Kansei Corp. 285,204
56,000 Chiba Bank Ltd/The 342,831
17,800 Chubu Electric Power Co., Inc. 376,016
19,000 Dai Nippon Printing Co. Ltd. 303,506
48,000 Daiwa Securities Group, Inc. 344,884
76 East Japan Railway Co. 426,266
13,200 Eisai Co. Ltd. 379,856
47,000 Hitachi Ltd. 323,484
82,000 @ Itochu Corp. 368,235
19,800 JFE Holdings, Inc. 485,405
23,000 Makita Corp 344,847
54,000 Mitsui OSK Lines Ltd 284,067
136 Mizuho Financial Group, Inc. 616,963
106 Nippon Telegraph & Telephone Corp. 566,357
68,000 OJI Paper Co. Ltd. 436,237
22,000 Onward Kashiyama Co. Ltd. 352,839
13,000 Sanken Electric Co. Ltd. 169,656
17,600 Sankyo Co. Ltd. 381,469
8,500 Secom Co. Ltd. 360,675
29,000 Sharp Corp. 463,246
13,300 Sony Corp. 500,966
62,000 The Sumitomo Trust & Banking Co. Ltd. 441,498
109,000 Toshiba Corp. 438,537
8,000 Trend Micro, Inc. 354,855
6,800 Uni-Charm Corp. 339,018
34,000 UNY Co Ltd. 435,302
28,200 Yamaha Corp. 462,613
23,000 Yamaha Motor Co. Ltd. 358,127
------------
11,860,464
------------
NETHERLANDS: 2.4%
23,600 Aegon NV 284,545
12,800 ASML Holding NV 216,622
5,400 DSM NV 264,964
14,100 TPG NV 322,166
------------
1,088,297
------------
NORWAY: 1.3%
8,900 Norsk Hydro ASA 578,439
------------
578,439
------------
PORTUGAL: 1.2%
51,200 Portugal Telecom SGPS SA 552,534
------------
552,534
------------
SINGAPORE: 0.3%
19,000 DBS Group Holdings Ltd. 158,844
------------
158,844
------------
SPAIN: 4.0%
38,000 Banco Bilbao Vizcaya Argentaria SA 507,635
4,600 Banco Popular Espanol 259,793
21,300 Endesa SA 410,488
29,200 Repsol YPF SA 639,471
------------
1,817,387
------------
SWEDEN: 1.7%
14,500 Electrolux AB 278,145
172,200 @ Telefonaktiebolaget LM Ericsson 507,482
------------
785,627
------------
</Table>
See Accompanying Notes to Financial Statements
51
<Page>
ING VP INTERNATIONAL PORTFOLIO OF INVESTMENTS
EQUITY PORTFOLIO as of June 30, 2004 (Unaudited) (continued)
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------------
SWITZERLAND: 6.3%
34,190 @ ABB Ltd. $ 187,002
20,060 Clariant AG 293,116
8,360 Roche Holding AG 827,723
4,610 Swiss Reinsurance 299,444
11,490 UBS AG 809,639
2,792 @ Zurich Financial Services AG 440,848
------------
2,857,772
------------
UNITED KINGDOM: 22.7%
15,700 AstraZeneca PLC 704,396
84,500 BAE Systems PLC 335,980
195,133 BP PLC 1,723,365
30,300 British American Tobacco PLC 469,540
108,100 Dixons Group PLC 323,955
22,600 Enterprise Inns PLC 235,664
24,500 @ GlaxoSmithKline PLC 1,015,770
75,600 HSBC Holdings PLC 1,124,225
266,900 Legal & General Group PLC 459,822
37,800 Prudential PLC 325,271
47,900 Reed Elsevier PLC 465,605
21,103 Royal Bank of Scotland Group PLC 607,732
163,600 Shell Transport & Trading Co. PLC 1,200,105
92,200 Team Partners Group 904,577
45,200 WPP Group PLC 459,033
------------
10,355,040
------------
Total Common Stock
(Cost $40,447,433) 43,493,216
------------
<Caption>
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 4.5%
REPURCHASE AGREEMENT: 4.5%
$2,054,000 S Goldman Sachs Repurchase Agreement dated
06/30/04, 1.500%, due 07/01/04,
$2,054,086 to be received upon repurchase
(Collateralized by $1,995,000 Federal
National Mortgage Association, 5.500%,
Market Value plus accrued interest
$2,079,169 due 05/02/06) 2,054,000
------------
Total Short-Term Investments
(Cost $2,054,000) 2,054,000
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $42,501,433)* 99.8% $ 45,547,216
OTHER ASSETS AND LIABILITIES-NET 0.2 108,107
----- ------------
NET ASSETS 100.0% $ 45,655,323
===== ============
</Table>
@ Non-income producing security
ADR American Depositary Receipt
S Segregated securities for futures, when-issued or delayed
delivery securities held at June 30, 2004.
* Cost for federal income tax purposes is $43,011,324. Net
unrealized appreciation consists of:
<Table>
Gross Unrealized Appreciation $ 3,038,493
Gross Unrealized Depreciation (502,601)
------------
Net Unrealized Appreciation $ 2,535,892
============
</Table>
Information concerning open futures contracts at May 31, 2004 is shown below:
<Table>
<Caption>
NO. OF NOTIONAL EXPIRATION UNREALIZED
LONG CONTRACTS CONTRACTS MARKET VALUE DATE GAIN/(LOSS)
- -------------- --------- ------------ ---------- -----------
Topix Index 3 $ 327,315 Sep-04 $ 598
FTSE 100 Index 4 324,326 Sep-04 (2,181)
Dow Jones Euro
Stoxx 50 Index 17 582,641 Sep-04 (5,274)
------------ ---------
$ 1,234,282 $ (6,857)
============ =========
</Table>
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -----------------------------------------------------------------------
Advertising 1.0%
Aerospace/Defense 0.7
Agriculture 1.0
Apparel 0.8
Auto Manufacturers 0.7
Auto Parts and Equipment 1.6
Banks 15.0
Building Materials 1.3
Chemicals 1.2
Commercial Services 1.3
Computers 1.0
Cosmetics/Personal Care 0.7
Distribution/Wholesale 0.8
Diversified Financial Services 2.2
Electric 5.2
Electrical Components and Equipment 2.7
Electronics 0.8
Engineering and Construction 1.0
Food 3.2
Forest Products and Paper 1.3
Hand/Machine Tools 0.8
Healthcare-Products 0.8
Home Furnishings 2.7
Insurance 5.0
Internet 0.8
Iron/Steel 1.9
Leisure Time 0.8
Media 2.1
Mining 1.0
Miscellaneous Manufacturing 1.5
Oil and Gas 11.1
Pharmaceuticals 9.0
Real Estate 0.8
Retail 2.8
Semiconductors 0.8
Software 0.9
Telecommunications 6.7
Transportation 2.3
Repurchase Agreement 4.5
Other Assets and Liabilities, Net 0.2
-----
NET ASSETS 100.0%
=====
</Table>
See Accompanying Notes to Financial Statements
52
<Page>
PORTFOLIO OF INVESTMENTS
ING VP GROWTH PORTFOLIO as of June 30, 2004 (Unaudited)
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCK: 96.5%
AEROSPACE/DEFENSE: 0.8%
53,400 L Goodrich Corp. $ 1,726,422
------------
1,726,422
------------
APPAREL: 1.3%
37,100 Nike, Inc. 2,810,325
------------
2,810,325
------------
AUTO MANUFACTURERS: 1.0%
37,550 Paccar, Inc. 2,177,525
------------
2,177,525
------------
BIOTECHNOLOGY: 2.4%
49,572 @ Amgen, Inc. 2,705,144
33,200 @ Invitrogen Corp. 2,390,068
------------
5,095,212
------------
COMMERCIAL SERVICES: 1.5%
117,500 @,@@,L Accenture Ltd. 3,228,900
------------
3,228,900
------------
COMPUTERS: 5.7%
101,700 @ Dell, Inc. 3,642,894
251,400 @ EMC Corp. 2,865,960
47,100 International Business Machines Corp. 4,151,865
58,400 @,L Storage Technology Corp. 1,693,600
------------
12,354,319
------------
COSMETICS/PERSONAL CARE: 2.8%
62,000 Estee Lauder Cos., Inc. 3,024,360
54,000 Procter & Gamble Co. 2,939,760
------------
5,964,120
------------
DIVERSIFIED FINANCIAL SERVICES: 4.0%
49,000 L Capital One Financial Corp. 3,350,620
28,500 Goldman Sachs Group, Inc. 2,683,560
47,100 Morgan Stanley 2,485,467
------------
8,519,647
------------
ENTERTAINMENT: 0.5%
24,400 GTECH Holdings Corp. 1,129,964
------------
1,129,964
------------
HEALTHCARE-PRODUCTS: 8.8%
38,900 @@,L Alcon, Inc. 3,059,485
105,500 @ Boston Scientific Corp. 4,515,400
147,500 Johnson & Johnson 8,215,750
27,500 @ St. Jude Medical, Inc. 2,080,375
13,209 @,L Varian Medical Systems, Inc. 1,048,134
------------
18,919,144
------------
HEALTHCARE-SERVICES: 5.2%
30,500 Aetna, Inc. 2,592,500
106,257 @ DaVita Inc 3,275,903
57,300 @,L Pacificare Health Systems 2,215,218
73,700 @,L Wellchoice, Inc. 3,051,180
------------
11,134,801
------------
HOME FURNISHINGS: 1.3%
29,700 Harman Intl. Industries, Inc. 2,702,700
------------
2,702,700
------------
INTERNET: 1.1%
25,200 @,L eBay, Inc. $ 2,317,140
------------
2,317,140
------------
MACHINERY-DIVERSIFIED: 1.3%
40,100 Deere & Co. 2,812,614
------------
2,812,614
------------
MEDIA: 3.7%
193,181 @,L DIRECTV Group, Inc. 3,303,395
181,000 L Walt Disney Co. 4,613,690
------------
7,917,085
------------
MINING: 1.2%
77,300 Alcoa, Inc. 2,553,219
------------
2,553,219
------------
MISCELLANEOUS MANUFACTURING: 9.9%
65,414 3M Co. 5,887,914
52,594 L Danaher Corp. 2,726,999
29,300 Eaton Corp. 1,896,882
177,560 S General Electric Co. 5,752,944
151,200 @@ Tyco Intl. Ltd. 5,010,768
------------
21,275,507
------------
OIL AND GAS: 1.5%
14,100 Amerada Hess Corp. 1,116,579
40,800 Pogo Producing Co. 2,015,520
------------
3,132,099
------------
OIL AND GAS SERVICES: 1.9%
137,300 L Halliburton Co. 4,154,698
------------
4,154,698
------------
PHARMACEUTICALS: 12.8%
106,800 @,L Andrx Corp. 2,982,924
161,300 @ Caremark Rx, Inc. 5,313,222
90,900 @,L Gilead Sciences, Inc. 6,090,300
352,480 Pfizer, Inc. 12,083,015
67,700 L Valeant Pharmaceuticals Intl. 1,354,000
------------
27,823,461
------------
RETAIL: 6.8%
49,100 Federated Department Stores 2,410,810
129,900 Home Depot, Inc. 4,572,480
115,100 Limited Brands 2,152,370
59,700 McDonald's Corp. 1,552,200
74,300 Wal-Mart Stores, Inc. 3,920,068
------------
14,607,928
------------
SEMICONDUCTORS: 6.7%
47,600 @,L Altera Corp. 1,057,672
328,800 Intel Corp. 9,074,880
44,300 L Maxim Integrated Products 2,322,206
55,700 @,L Xilinx, Inc. 1,855,367
------------
14,310,125
------------
SOFTWARE: 5.7%
351,200 Microsoft Corp. 10,030,272
189,800 @ Oracle Corp. 2,264,314
------------
12,294,586
------------
</Table>
See Accompanying Notes to Financial Statements
53
<Page>
PORTFOLIO OF INVESTMENTS
ING VP GROWTH PORTFOLIO as of June 30, 2004 (Unaudited) (continued)
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS: 8.6%
441,900 @ Cisco Systems, Inc. $ 10,473,030
150,400 @,L Crown Castle Intl. Corp. 2,218,400
116,800 @,L Nextel Communications, Inc. 3,113,888
37,600 Qualcomm, Inc. 2,744,048
------------
18,549,366
------------
Total Common Stock
(Cost $188,948,892) 207,510,907
------------
<Caption>
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 22.2%
REPURCHASE AGREEMENT: 3.7%
$ 8,012,000 S Goldman Sachs Repurchase
Agreement dated 06/30/04,
1.500%, due 07/01/04, $8,012,325
to be received upon repurchase
(Collateralized by Federal National
Mortgage Association, 6.000%,
Market Value plus accrued
interest $8,153,101, due 12/15/05) 8,012,000
------------
Total Repurchase Agreement
(Cost $8,012,000) 8,012,000
------------
SECURITIES LENDING COLLATERAL(cc): 18.5%
39,914,157 The Bank of New York Institutional
Cash Reserve Fund, 1.250% 39,914,157
------------
Total Securities Lending Collateral
(Cost $39,914,157) 39,914,157
------------
Total Short-Term Investments
(Cost $47,926,157) 47,926,157
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $236,875,049)* 118.7% $ 255,437,064
OTHER ASSETS AND
LIABILITIES-NET (18.7) (40,296,144)
----- ------------
NET ASSETS 100.0% $ 215,140,920
===== =============
</Table>
@ Non-income producing security
@@ Foreign issuer
S Segregated securities for futures, when-issued or delayed
delivery securities held at June 30, 2004.
L Loaned security, a portion or all of the security is on loan
at June 30, 2004.
(cc) Securities purchased with cash collateral for securities
loaned.
* Cost for federal income tax purposes is $242,658,991. Net
unrealized appreciation consists of:
<Table>
Gross Unrealized Appreciation $ 15,982,266
Gross Unrealized Depreciation (3,204,193)
------------
Net Unrealized Appreciation $ 12,778,073
============
</Table>
Information concerning open futures contracts at June 30, 2004 is shown below:
<Table>
<Caption>
NO. OF NOTIONAL EXPIRATION UNREALIZED
LONG CONTRACTS CONTRACTS MARKET VALUE DATE GAIN
- -------------- --------- ------------ ---------- ----------
S&P 500 Index 21 $ 587,100 Sep-04 $ 25,423
========== ========
</Table>
See Accompanying Notes to Financial Statements
54
<Page>
PORTFOLIO OF INVESTMENTS
ING VP SMALL COMPANY PORTFOLIO as of June 30, 2004 (Unaudited)
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCK: 87.6%
AEROSPACE/DEFENSE: 2.4%
80,600 Engineered Support Systems, Inc. $ 4,715,906
116,800 @,L Teledyne Technologies, Inc. 2,338,336
134,100 @,L United Defense Industries, Inc. 4,693,500
------------
11,747,742
------------
AIRLINES: 0.9%
233,500 @,L Northwest Airlines Corp. 2,596,520
131,800 @,L Republic Airways Holdings, Inc. 1,878,150
------------
4,474,670
------------
APPAREL: 1.7%
201,200 @ Quiksilver, Inc. 4,790,572
168,800 @,L Warnaco Group, Inc. 3,590,376
------------
8,380,948
------------
BANKS: 3.5%
116,950 L Chittenden Corp. 4,110,793
167,900 L Greater Bay BanCorp. 4,852,310
167,900 Hudson United BanCorp. 6,259,311
33,627 IBERIABANK Corp. 1,990,046
------------
17,212,460
------------
BIOTECHNOLOGY: 0.8%
201,700 @ Ariad Pharmaceuticals, Inc. 1,510,733
107,500 @,L Telik, Inc. 2,566,025
------------
4,076,758
------------
COMMERCIAL SERVICES: 1.3%
93,247 L Bowne & Co., Inc. 1,477,965
20,000 @ Exponent, Inc. 537,400
160,900 Gevity HR, Inc. 4,213,971
------------
6,229,336
------------
COMPUTERS: 4.5%
159,526 Agilysys, Inc. 2,199,864
91,200 @ Brooktrout, Inc. 985,872
181,400 @ Covansys Corp. 1,873,862
167,900 @ Electronics For Imaging 4,744,854
166,800 @,L InterVoice, Inc. 1,913,196
121,200 @,L Komag, Inc. 1,693,164
303,560 @,L Lexar Media, Inc. 2,027,781
114,269 @,L Manhattan Associates, Inc. 3,528,627
150,400 MTS Systems Corp. 3,526,880
6,773 @ SI Intl., Inc. 138,101
------------
22,632,201
------------
DISTRIBUTION/WHOLESALE: 0.4%
134,600 @,L Brightpoint, Inc. 1,850,750
------------
1,850,750
------------
DIVERSIFIED FINANCIAL SERVICES: 1.1%
536,500 @,L Knight Trading Group, Inc. 5,375,730
------------
5,375,730
------------
ELECTRICAL COMPONENTS AND
EQUIPMENT: 1.5%
186,700 Ametek, Inc. 5,769,030
174,000 @ Artesyn Technologies, Inc. 1,566,000
------------
7,335,030
------------
ELECTRONICS: 3.6%
148,473 @ Benchmark Electronics, Inc. 4,320,564
208,600 @,L Checkpoint Systems, Inc. $ 3,740,198
87,950 @ Itron, Inc. 2,017,573
39,100 @,L NVE Corp. 1,562,045
55,751 @ SBS Technologies, Inc. 895,919
187,450 @ Trimble Navigation Ltd. 5,209,235
------------
17,745,534
------------
ENERGY-ALTERNATE SOURCES: 1.0%
183,600 @,L Headwaters, Inc. 4,760,748
------------
4,760,748
------------
ENGINEERING AND CONSTRUCTION: 1.7%
176,500 @ URS Corp. 4,836,100
92,200 @,L Washington Group Intl., Inc. 3,309,058
------------
8,145,158
------------
FOOD: 2.3%
83,200 L Cal-Maine Foods, Inc. 1,164,800
125,800 Corn Products Intl., Inc. 5,855,990
80,600 L Pilgrim's Pride Corp. 2,332,564
142,500 @,L Wild Oats Markets, Inc. 2,004,975
------------
11,358,329
------------
FOREST PRODUCTS AND PAPER: 2.9%
251,500 L,@ Louisiana-Pacific Corp. 5,947,975
134,300 Pope & Talbot, Inc. 2,655,111
134,300 L Potlatch Corp. 5,592,252
------------
14,195,338
------------
HEALTHCARE-PRODUCTS: 1.0%
134,100 @ Wright Medical Group, Inc. 4,773,960
------------
4,773,960
------------
HEALTHCARE-SERVICES: 3.3%
233,800 @,L Kindred Healthcare, Inc. 6,160,630
419,200 Select Medical Corp. 5,625,664
84,000 @,L Sierra Health Services 3,754,800
------------
15,541,094
------------
HOUSEHOLD PRODUCTS/WARES: 0.7%
92,700 @ Central Garden And Pet Co. 3,315,879
------------
3,315,879
------------
INSURANCE: 1.4%
167,800 L AmerUs Group Co. 6,946,920
------------
6,946,920
------------
INTERNET: 1.6%
161,000 @,L 1-800-FLOWERS.COM, Inc. 1,310,540
52,100 @,L Equinix, Inc. 1,768,274
156,350 @ Netegrity, Inc. 1,322,721
292,100 @,L Valueclick, Inc. 3,499,358
------------
7,900,893
------------
INVESTMENT COMPANIES: 0.3%
103,200 Apollo Investment Corp. 1,421,064
------------
1,421,064
------------
IRON/STEEL: 0.6%
80,600 Carpenter Technology 2,744,430
------------
2,744,430
------------
LEISURE TIME: 0.5%
168,850 @,L K2, Inc. 2,650,945
------------
2,650,945
------------
</Table>
See Accompanying Notes to Financial Statements
55
<Page>
PORTFOLIO OF INVESTMENTS
ING VP SMALL COMPANY PORTFOLIO as of June 30, 2004 (Unaudited) (continued)
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------------
LODGING: 1.0%
235,400 @ Interstate Hotels& Resorts, Inc. $ 1,268,806
419,300 @ La Quinta Corp. 3,522,120
------------
4,790,926
------------
MACHINERY-CONSTRUCTION AND
MINING: 1.4%
204,400 @,L Terex Corp. 6,976,172
------------
6,976,172
------------
MACHINERY-DIVERSIFIED: 3.1%
114,200 L Briggs & Stratton 10,089,570
42,723 L Middleby Corp. 2,333,530
147,900 Wabtec Corp. 2,668,116
------------
15,091,216
------------
MEDIA: 2.7%
161,000 @,L 4Kids Entertainment, Inc. 3,851,120
268,700 @,L Cumulus Media, Inc. 4,516,847
80,600 L Liberty Corp. 3,784,170
130,000 Sinclair Broadcast Group, Inc. 1,335,100
------------
13,487,237
------------
MISCELLANEOUS MANUFACTURING: 0.9%
126,838 @,L Ceradyne, Inc. 4,536,995
------------
4,536,995
------------
OIL AND GAS: 6.0%
234,800 @,L Denbury Resources, Inc. 4,919,060
336,500 @ KCS Energy, Inc. 4,482,180
125,100 @ Newfield Exploration Co. 6,973,075
166,800 L Patina Oil & Gas Corp. 4,982,316
149,670 @ Plains Exploration &
Production Co. 2,746,445
208,244 @,L Southwestern Energy Co. 5,970,355
------------
30,073,431
------------
OIL AND GAS SERVICES: 0.2%
32,500 @ Hydril Co. 1,023,750
------------
1,023,750
------------
PHARMACEUTICALS: 4.5%
210,400 @,L Alkermes, Inc. 2,861,440
62,300 @,L American Pharmaceutical
Partners, Inc. 1,892,674
131,500 @,L Amylin Pharmaceuticals, Inc. 2,998,200
183,400 @@,L Angiotech Pharmaceuticals, Inc. 3,695,510
156,300 L Critical Therapeutics, Inc. 1,094,100
33,400 @,L Eon Labs, Inc. 1,367,062
22,700 @,L Eyetech Pharmaceuticals, Inc. 974,284
108,400 @,L MGI Pharma, Inc. 2,927,884
80,700 @,L Nabi Biopharmaceuticals 1,147,554
45,500 @,L OSI Pharmaceuticals, Inc. 3,205,020
------------
22,163,728
------------
REAL ESTATE: 0.4%
93,700 @,L CB Richard Ellis Group Inc 1,789,670
------------
1,789,670
------------
REAL ESTATE INVESTMENT TRUST: 38.6%
106,500 Alexandria Real Estate
Equities, Inc. 6,047,070
62,550 CBL& Associates Properties, Inc. 3,440,250
114,100 Corporate Office Properties
Trust Sbi MD 2,835,385
268,400 @ Felcor Lodging Trust, Inc. $ 3,247,640
118,000 LaSalle Hotel Properties 2,879,200
216,900 @,L Meristar Hospitality Corp. 1,483,596
133,500 Newcastle Investment Corp. 3,998,325
317,350 Reckson Associates Realty Corp. 8,714,431
95,900 SL Green Realty Corp. 4,488,120
65,200 Washington Real Estate
Investment Trust 1,915,576
------------
39,049,593
------------
RETAIL: 3.1%
201,550 @,L Aeropostale, Inc. 5,423,711
335,900 Claire's Stores, Inc. 7,289,030
99,400 @,L Electronics Boutique
Holdings Corp. 2,618,196
------------
15,330,937
------------
SAVINGS AND LOANS: 1.0%
268,700 First Niagara Financial
Group, Inc. 3,224,400
33,800 WSFS Financial Corp. 1,645,046
------------
4,869,446
------------
SEMICONDUCTORS: 4.2%
436,300 @ Cirrus Logic, Inc. 2,622,163
117,600 @,L Cree, Inc. 2,737,728
247,700 @,L Cypress Semiconductor Corp. 3,514,863
235,200 @ Pericom Semiconductor Corp. 2,518,992
150,100 @,L Photronics, Inc. 2,842,894
102,700 @,L Varian Semiconductor
Equipment Associates, Inc. 3,960,112
100,600 @,L Veeco Instruments, Inc. 2,596,486
------------
20,793,238
------------
SOFTWARE: 5.7%
419,250 @ Activision, Inc. 6,666,075
187,500 @,L Aspen Technology, Inc. 1,361,250
201,100 @,L,S Avid Technology, Inc. 10,974,027
117,500 @ Progress Software Corp. 2,546,225
72,000 @,L Take-Two Interactive
Software, Inc. 2,206,080
211,850 @,L THQ, Inc. 4,851,365
------------
28,605,022
------------
TELECOMMUNICATIONS: 4.1%
500,500 @,L Adaptec, Inc. 4,234,230
134,300 @,L Anixter Intl., Inc. 4,570,229
120,700 @,L Aspect Communications Corp. 1,713,940
89,656 @ Comtech Telecommunications 2,022,639
100,600 @ Intrado, Inc. 1,618,654
65,100 @,L Plantronics, Inc. 2,740,710
456,700 @,L RF Micro Devices, Inc. 3,425,250
------------
20,325,652
------------
TRANSPORTATION: 2.4%
94,300 @ Landstar System, Inc. 4,985,641
66,700 Overseas Shipholding Group 2,943,471
167,800 @ Sirva, Inc. 3,859,400
------------
11,788,512
------------
Total Common Stock
(Cost $368,949,010) 431,511,442
------------
</Table>
See Accompanying Notes to Financial Statements
56
<Page>
PORTFOLIO OF INVESTMENTS
ING VP SMALL COMPANY PORTFOLIO as of June 30, 2004 (Unaudited) (continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 38.6%
REPURCHASE AGREEMENT: 12.3%
$ 60,724,000 Goldman Sachs Repurchase
Agreement dated 06/30/04,
1.500%, due 07/01/04,
$8,012,325 to be received
upon repurchase (Collateralized
by Federal National Mortgage
Association, 6.000%, Market
Value plus accrued interest
$8,153,101, due 12/15/05) $ 60,724,000
-------------
Total Repurchase Agreement
(Cost $60,724,000) 60,724,000
-------------
SECURITIES LENDING COLLATERAL(cc): 26.3%
129,809,897 The Bank of New York Institutional
Cash Reserve Fund, 1.250% 129,809,897
-------------
Total Securities Lending Collateral
(Cost $129,809,897) 129,809,897
-------------
Total Short-Term Investments
(Cost $190,444,375) 190,533,897
-------------
TOTAL INVESTMENTS IN SECURITIES
(COST $559,482,907)* 126.2% $ 622,045,339
OTHER ASSETS AND LIABILITIES-NET (26.2) (129,019,488)
----- -------------
NET ASSETS 100.0% $ 493,025,851
===== =============
</Table>
@ Non-income producing security
@@ Foreign issuer
S Segregated securities for futures, when-issued or delayed
delivery securities held at June 30, 2004.
L Loaned security, a portion or all of the security is on
loan at June 30, 2004.
(cc) Securities purchased with cash collateral for securities
loaned.
* Cost for federal income tax purposes is $559,730,718. Net
unrealized appreciation consists of:
<Table>
Gross Unrealized Appreciation $ 75,167,700
Gross Unrealized Depreciation (12,853,079)
-------------
Net Unrealized Appreciation $ 62,314,621
=============
</Table>
Information concerning open futures contracts at June 30, 2004 is shown below:
<Table>
<Caption>
NO. OF NOTIONAL EXPIRATION UNREALIZED
LONG CONTRACTS CONTRACTS MARKET VALUE DATE GAIN
- -------------- --------- ------------ ---------- ----------
Russell 2000 Index 35 $ 10,366,125 Sep-04 $ 455,252
============ ==========
</Table>
See Accompanying Notes to Financial Statements
57
<Page>
PORTFOLIO OF INVESTMENTS
ING VP VALUE OPPORTUNITY PORTFOLIO as of June 30, 2004 (Unaudited)
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCK: 97.7%
AEROSPACE/DEFENSE: 3.2%
77,700 General Dynamics Corp. $ 7,715,610
------------
7,715,610
------------
AGRICULTURE: 3.0%
143,200 Altria Group, Inc. 7,167,160
------------
7,167,160
------------
APPAREL: 1.8%
56,800 Nike, Inc. 4,302,600
------------
4,302,600
------------
BANKS: 6.5%
96,100 Bank of America Corp. 8,131,982
131,200 Wells Fargo & Co. 7,508,576
------------
15,640,558
------------
BUILDING MATERIALS: 1.6%
126,100 Masco Corp. 3,931,798
------------
3,931,798
------------
CHEMICALS: 4.1%
155,300 Dow Chemical Co. 6,320,710
88,700 Praxair, Inc. 3,540,017
------------
9,860,727
------------
COMPUTERS: 2.3%
266,000 Hewlett-Packard Co. 5,612,600
------------
5,612,600
------------
COSMETICS/PERSONAL CARE: 2.8%
103,900 Kimberly-Clark Corp. 6,844,932
------------
6,844,932
------------
DIVERSIFIED FINANCIAL SERVICES: 13.3%
118,500 Citigroup, Inc. 5,510,250
121,200 Fannie Mae 8,648,831
79,400 Freddie Mac 5,026,020
141,500 Merrill Lynch & Co., Inc. 7,638,170
99,200 Morgan Stanley 5,234,784
------------
32,058,055
------------
ELECTRICAL COMPONENTS AND EQUIPMENT: 2.8%
107,300 Emerson Electric Co. 6,818,915
------------
6,818,915
------------
ELECTRONICS: 2.9%
258,800 @@ Koninklijke Philips Electronics NV 7,039,360
------------
7,039,360
------------
FOOD: 4.4%
107,300 @@ Nestle SA ADR 7,153,906
51,500 @@,L Unilever NV 3,528,265
------------
10,682,171
------------
FOREST PRODUCTS AND PAPER: 2.2%
120,500 L Iternational Paper Co. 5,386,350
------------
5,386,350
------------
HEALTHCARE-PRODUCTS: 2.6%
102,300 Beckman Coulter, Inc. $ 6,240,300
------------
6,240,300
------------
HEALTHCARE-SERVICES: 2.6%
72,300 Quest Diagnostics 6,141,885
------------
6,141,885
------------
INSURANCE: 5.7%
104,700 American Intl. Group 7,463,016
172,800 Metlife, Inc. 6,194,880
------------
13,657,896
------------
MEDIA: 2.3%
65,400 Gannett Co., Inc. 5,549,190
------------
5,549,190
------------
MISCELLANEOUS MANUFACTURING: 3.5%
234,700 Honeywell Intl., Inc. 8,597,061
------------
8,597,061
------------
OIL AND GAS: 13.2%
146,600 Apache Corp. 6,384,430
175,400 @@ BP PLC ADR 9,396,178
91,400 ChevronTexaco Corp. 8,601,654
165,000 Exxon Mobil Corp. 7,327,650
------------
31,709,912
------------
OIL AND GAS SERVICES: 2.1%
166,130 L Halliburton Co. 5,027,094
------------
5,027,094
------------
PHARMACEUTICALS: 3.6%
167,200 Bristol-Myers Squibb Co. 4,096,400
97,600 Merck & Co., Inc. 4,636,000
------------
8,732,400
------------
RETAIL: 2.3%
210,300 L McDonald's Corp. 5,467,800
------------
5,467,800
------------
SAVINGS AND LOANS: 5.1%
213,400 L Sovereign Bancorp, Inc. 4,716,140
192,900 Washington Mutual, Inc. 7,453,656
------------
12,169,796
------------
TELECOMMUNICATIONS: 3.8%
177,400 SBC Communications, Inc. 4,301,950
131,600 Verizon Communications, Inc. 4,762,604
------------
9,064,554
------------
Total Common Stock
(Cost $225,366,124) 235,418,724
------------
</Table>
See Accompanying Notes to Financial Statements
58
<Page>
PORTFOLIO OF INVESTMENTS
ING VP VALUE OPPORTUNITY PORTFOLIO as of June 30, 2004 (Unaudited) (continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 6.6%
REPURCHASE AGREEMENT: 2.2%
$ 5,224,000 Goldman Sachs Repurchase Agreement
dated 06/30/04, 1.500%, due 07/01/04,
$5,224,218 to be received upon
repurchase (Collateralized by $5,070,000
Federal National Mortgage Association,
5.500%, Market Value plus accrued
interest $5,283,903, due 05/02/06) $ 5,224,000
-------------
Total Repurchase Agreement
(Cost $5,224,000) 5,224,000
-------------
SECURITIES LENDING COLLATERAL(cc): 4.4%
10,534,791 The Bank of New York Institutional
Cash Reserve Fund, 1.25% 10,534,791
-------------
Total Securities Lending Collateral
(Cost $10,534,791) 10,534,791
-------------
Total Short-Term Investments
(Cost $15,758,791) 15,758,791
-------------
TOTAL INVESTMENTS IN SECURITIES
(COST $241,124,915)* 104.3% $ 251,177,515
OTHER ASSETS AND LIABILITIES-NET (4.3) (10,363,316)
----- -------------
NET ASSETS 100.0% $ 240,814,199
===== =============
</Table>
@@ Foreign issuer
L Loaned security, a portion or all of the security is on
loan at June 30, 2004.
(cc) Securities purchased with cash collateral for securities
loaned.
* Cost for federal income tax purposes is $242,169,358. Net
unrealized appreciation consists of:
<Table>
Gross Unrealized Appreciation $ 13,820,993
Gross Unrealized Depreciation (4,812,836)
-------------
Net Unrealized Appreciation $ 9,008,157
=============
</Table>
See Accompanying Notes to Financial Statements
59
<Page>
PORTFOLIO OF INVESTMENTS
ING VP BALANCED PORTFOLIO as of June 30, 2004 (Unaudited)
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCK: 58.6%
AEROSPACE/DEFENSE: 1.1%
137,800 L Boeing Co. $ 7,040,202
47,200 General Dynamics Corp. 4,686,960
33,550 United Technologies Corp. 3,069,154
------------
14,796,316
------------
AGRICULTURE: 0.6%
127,900 Altria Group, Inc. 6,401,395
61,825 L Bunge Ltd. 2,407,466
------------
8,808,861
------------
AIRLINES: 0.1%
123,850 @,L Expressjet Holdings, Inc. 1,503,539
------------
1,503,539
------------
APPAREL: 0.8%
41,750 L Jones Apparel Group, Inc. 1,648,290
59,650 L Nike, Inc. 4,518,488
101,050 L Reebok Intl. Ltd. 3,635,779
32,300 L VF Corp. 1,573,010
------------
11,375,567
------------
AUTO MANUFACTURERS: 0.7%
353,150 L Ford Motor Co. 5,526,798
33,300 L General Motors Corp. 1,551,447
57,400 Paccar, Inc. 3,328,626
------------
10,406,871
------------
AUTO PARTS AND EQUIPMENT: 0.2%
90,425 L Cooper Tire & Rubber Co. 2,079,775
42,750 @ Dura Automotive Systems, Inc. 391,163
------------
2,470,938
------------
BANKS: 3.3%
209,500 L Bank of America Corp. 17,727,889
68,200 Bank One Corp. 3,478,200
109,475 Hibernia Corp. 2,660,243
118,500 L KeyCorp 3,541,965
118,200 US Bancorp 3,257,592
43,850 W Holding Co., Inc. 752,905
190,150 Wachovia Corp. 8,461,674
102,550 Wells Fargo & Co. 5,868,937
------------
45,749,405
------------
BEVERAGES: 1.4%
266,650 Coca-Cola Co. 13,460,492
104,350 PepsiCo, Inc. 5,622,378
------------
19,082,870
------------
BIOTECHNOLOGY: 0.7%
77,950 @,L Amgen, Inc. 4,253,731
167,950 @ Applera Corp - Celera Genomics Group 1,933,105
144,075 @,L Intermune, Inc. 2,221,636
27,925 @,L Invitrogen Corp. 2,010,321
------------
10,418,793
------------
BUILDING MATERIALS: 0.4%
129,850 Masco Corp. 4,048,723
109,175 @,L USG Corp. 1,919,297
------------
5,968,020
------------
CHEMICALS: 0.9%
56,250 Dow Chemical Co. $ 2,289,375
40,768 Engelhard Corp. 1,317,214
73,300 Georgia Gulf Corp. 2,628,538
130,400 @,L Hercules, Inc. 1,589,576
54,650 PPG Industries, Inc. 3,415,078
47,850 L Sherwin-Williams Co. 1,988,168
------------
13,227,949
------------
COMMERCIAL SERVICES: 1.0%
209,650 L Cendant Corp. 5,132,232
29,775 L Corporate Executive Board Co. 1,720,697
103,100 Paychex, Inc. 3,493,028
83,575 @ Rent-A-Center, Inc. 2,501,400
50,400 L Robert Half Intl., Inc. 1,500,408
------------
14,347,765
------------
COMPUTERS: 2.0%
312,200 @ Dell, Inc. 11,183,004
193,350 Hewlett-Packard Co. 4,079,685
102,500 International Business Machines Corp. 9,035,375
56,150 @,L PalmOne, Inc. 1,952,336
93,450 @,L Unisys Corp. 1,297,086
------------
27,547,486
------------
COSMETICS/PERSONAL CARE: 1.6%
29,350 Alberto-Culver Co. 1,471,609
166,150 L Gillette Co. 7,044,760
93,550 Kimberly-Clark Corp. 6,163,074
157,200 Procter & Gamble Co. 8,557,968
------------
23,237,411
------------
DISTRIBUTION/WHOLESALE: 0.1%
32,000 L WW Grainger, Inc. 1,840,000
------------
1,840,000
------------
DIVERSIFIED FINANCIAL SERVICES: 4.7%
67,425 @,L Affiliated Managers Group 3,396,197
77,450 American Express Co. 3,979,381
322,100 Citigroup, Inc. 14,977,649
65,800 L Countrywide Financial Corp. 4,622,450
40,025 L Doral Financial Corp. 1,380,863
103,600 @,L E*TRADE Group, Inc. 1,155,140
60,100 Fannie Mae 4,288,736
75,650 Goldman Sachs Group, Inc. 7,123,204
125,750 JP Morgan Chase & Co. 4,875,328
144,450 L Merrill Lynch & Co., Inc. 7,797,411
161,450 Morgan Stanley 8,519,716
283,425 @,L Providian Financial Corp. 4,157,845
------------
66,273,920
------------
ELECTRIC: 1.0%
180,650 @,L AES Corp. 1,793,855
97,550 L Centerpoint Energy, Inc. 1,121,825
101,850 Edison Intl. 2,604,304
42,150 L Exelon Corp. 1,403,174
53,575 L Great Plains Energy, Inc. 1,591,178
49,550 L Southern Co. 1,444,383
92,700 L TXU Corp. 3,755,276
------------
13,713,995
------------
</Table>
See Accompanying Notes to Financial Statements
60
<Page>
PORTFOLIO OF INVESTMENTS
ING VP BALANCED PORTFOLIO as of June 30, 2004 (Unaudited) (continued)
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------------
ELECTRICAL COMPONENTS AND EQUIPMENT: 0.1%
89,525 @,L Artesyn Technologies, Inc. $ 805,725
------------
805,725
------------
ELECTRONICS: 0.7%
128,275 @,L Arrow Electronics, Inc. 3,440,335
80,075 @ Benchmark Electronics, Inc. 2,330,183
87,650 @,L Itron, Inc. 2,010,691
39,250 Parker Hannifin Corp. 2,333,805
------------
10,115,014
------------
ENGINEERING AND CONSTRUCTION: 0.2%
33,575 Granite Construction, Inc. 612,072
259,625 @,L Shaw Group, Inc. 2,630,002
------------
3,242,074
------------
ENTERTAINMENT: 0.1%
35,125 GTECH Holdings Corp. 1,626,639
------------
1,626,639
------------
FOOD: 0.4%
189,050 Sara Lee Corp. 4,346,260
46,800 Supervalu, Inc. 1,432,548
------------
5,778,808
------------
FOREST PRODUCTS AND PAPER: 0.8%
83,550 Georgia-Pacific Corp. 3,089,679
29,450 L International Paper Co. 1,316,415
122,450 L Louisiana-Pacific Corp. 2,895,943
62,100 Weyerhaeuser Co. 3,919,752
------------
11,221,789
------------
GAS: 0.3%
60,400 L Oneok, Inc. 1,328,196
71,750 Sempra Energy 2,470,353
------------
3,798,549
------------
HAND/MACHINE TOOLS: 0.2%
25,000 L Black & Decker Corp. 1,553,250
28,950 L Stanley Works 1,319,541
------------
2,872,791
------------
HEALTHCARE-PRODUCTS: 2.0%
75,650 L Bausch & Lomb, Inc. 4,922,546
70,350 L Becton Dickinson and Co. 3,644,130
30,000 CR Bard, Inc. 1,699,500
184,550 Johnson & Johnson 10,279,435
73,100 Medtronic, Inc. 3,561,432
53,600 @ Zimmer Holdings, Inc. 4,727,520
------------
28,834,563
------------
HEALTHCARE-SERVICES: 2.1%
43,900 Aetna, Inc. 3,731,500
67,025 @,L Amerigroup Corp. 3,297,630
39,450 @,L Anthem, Inc. 3,533,142
90,875 @ Humana, Inc. 1,535,788
47,625 Oxford Health Plans 2,621,280
101,550 @,L Pacificare Health Systems 3,925,923
117,702 L UnitedHealth Group, Inc. 7,326,949
37,650 @ WellPoint Health Networks 4,217,176
------------
30,189,388
------------
HOME FURNISHINGS: 0.2%
28,600 L Harman Intl. Industries, Inc. $ 2,602,600
------------
2,602,600
------------
HOUSEHOLD PRODUCTS/WARES: 0.1%
24,800 Blyth, Inc. 855,352
------------
855,352
------------
INSURANCE: 3.2%
83,850 @@ ACE Ltd. 3,545,178
158,750 American Intl. Group, Inc. 11,315,699
52,750 Chubb Corp. 3,596,495
43,150 L Cigna Corp. 2,969,152
49,802 Fidelity National Financial, Inc. 1,859,607
92,850 First American Corp. 2,403,887
67,150 Hartford Financial Services Group, Inc. 4,615,891
58,400 L Landamerica Financial Group, Inc. 2,273,512
54,900 Loews Corp 3,291,804
51,100 Progressive Corp. 4,358,830
129,400 L St Paul Travelers Cos., Inc. 5,245,875
------------
45,475,930
------------
INTERNET: 0.8%
176,550 @,L Autobytel, Inc. 1,603,074
36,600 @,L eBay, Inc. 3,365,370
133,400 @,L GoRemote Internet Communications, Inc. 245,456
86,725 @,L Priceline.com, Inc. 2,335,504
86,150 @,L Symantec Corp. 3,771,647
------------
11,321,051
------------
IRON/STEEL: 0.1%
33,100 L United States Steel Corp. 1,162,472
------------
1,162,472
------------
LEISURE TIME: 0.1%
37,250 L Carnival Corp. 1,750,750
------------
1,750,750
------------
MACHINERY-CONSTRUCTION & MINING: 0.1%
45,525 @,L Terex Corp. 1,553,768
------------
1,553,768
------------
MACHINERY-DIVERSIFIED: 0.3%
42,825 L Briggs & Stratton 3,783,588
17,850 L Tecumseh Products Co. 735,242
------------
4,518,830
------------
MEDIA: 1.4%
51,750 McGraw-Hill Cos., Inc. 3,962,498
735,500 @,L Sirius Satellite Radio, Inc. 2,265,340
282,900 @ Time Warner, Inc. 4,973,381
159,775 @,L UnitedGlobalCom, Inc. 1,159,967
102,850 L Viacom, Inc. 3,673,802
127,900 Walt Disney Co. 3,260,171
------------
19,295,159
------------
METAL FABRICATE/HARDWARE: 0.3%
51,075 L Quanex Corp. 2,487,353
78,925 Worthington Industries 1,620,330
------------
4,107,683
------------
</Table>
See Accompanying Notes to Financial Statements
61
<Page>
PORTFOLIO OF INVESTMENTS
ING VP BALANCED PORTFOLIO as of June 30, 2004 (Unaudited) (continued)
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------------
MINING: 0.3%
55,150 Alcoa, Inc. $ 1,821,605
28,450 @,L Phelps Dodge Corp 2,205,159
------------
4,026,764
------------
MISCELLANEOUS MANUFACTURING: 3.1%
107,200 L 3M Co 9,649,071
657,700 General Electric Co. 21,309,479
53,550 Honeywell Intl., Inc. 1,961,537
19,950 Illinois Tool Works, Inc. 1,913,006
277,200 @@ Tyco International Ltd 9,186,408
------------
44,019,501
------------
OFFICE/BUSINESS EQUIPMENT: 0.1%
78,175 L IKON Office Solutions, Inc. 896,667
------------
896,667
------------
OIL AND GAS: 4.5%
87,600 L Burlington Resources, Inc. 3,169,368
103,000 ChevronTexaco Corp. 9,693,329
82,450 ConocoPhillips 6,290,111
49,450 Devon Energy Corp. 3,263,700
473,650 Exxon Mobil Corp. 21,034,796
80,100 @,L Giant Industries, Inc. 1,762,200
42,875 @,L Houston Exploration Co. 2,222,640
79,000 Marathon Oil Corp. 2,989,360
74,300 Occidental Petroleum Corp. 3,596,863
55,950 Pogo Producing Co. 2,763,930
20,450 L Sunoco, Inc. 1,301,029
103,350 @,L Tesoro Petroleum Corp. 2,852,460
32,250 L Valero Energy Corp. 2,378,760
------------
63,318,546
------------
PACKAGING AND CONTAINERS: 0.1%
87,050 @ Owens-Illinois, Inc. 1,458,958
------------
1,458,958
------------
PHARMACEUTICALS: 2.0%
70,950 L Eli Lilly and Co. 4,960,115
135,100 Merck & Co., Inc. 6,417,250
474,250 Pfizer, Inc. 16,257,290
------------
27,634,655
------------
PIPELINES: 0.1%
42,275 National Fuel Gas Co. 1,056,875
------------
1,056,875
------------
REAL ESTATE: 0.4%
56,675 Chelsea Property Group, Inc. 3,696,344
41,225 L LNR Property Corp. 2,236,456
------------
5,932,800
------------
RETAIL: 4.2%
78,950 Best Buy Co., Inc. 4,005,923
50,950 Federated Department Stores 2,501,645
184,700 L Gap, Inc. 4,478,974
137,450 Home Depot, Inc. 4,838,239
84,900 JC Penney Co., Inc. 3,205,824
141,600 Limited Brands 2,647,920
46,750 Lowe's Cos., Inc. 2,456,713
78,000 L McDonald's Corp. 2,028,000
39,150 Nordstrom, Inc. 1,668,182
89,250 @,L Office Depot, Inc. 1,598,468
47,100 L RadioShack Corp. 1,348,473
128,400 Staples, Inc. $ 3,763,404
100,300 @,L Starbucks Corp. 4,361,044
55,500 Target Corp. 2,357,085
171,375 @,L Toys R US, Inc. 2,730,004
262,600 Wal-Mart Stores, Inc. 13,854,775
35,200 Wendy's Intl., Inc. 1,226,368
------------
59,071,041
------------
SAVINGS AND LOANS: 0.2%
18,325 @ FirstFed Financial Corp. 762,320
126,800 Flagstar Bancorp, Inc. 2,520,784
------------
3,283,104
------------
SEMICONDUCTORS: 1.5%
27,275 @,L Advanced Micro Devices, Inc. 433,673
525,025 @,L Applied Micro Circuits Corp. 2,793,133
304,500 @,L Cirrus Logic, Inc. 1,830,045
394,250 Intel Corp. 10,881,300
274,250 @,L LSI Logic Corp. 2,089,785
114,300 Texas Instruments, Inc. 2,763,774
------------
20,791,710
------------
SOFTWARE: 3.4%
229,800 @ Activision, Inc. 3,653,820
33,200 Autodesk, Inc. 1,421,292
25,600 @,L Avid Technology, Inc. 1,396,992
195,500 @ BMC Software, Inc. 3,616,750
122,600 @,L Compuware Corp. 809,160
20,300 @ D&B Corp. 1,094,373
59,350 First Data Corp. 2,642,262
77,600 L IMS Health, Inc. 1,818,944
970,250 L Microsoft Corp. 27,710,339
325,650 @ Oracle Corp. 3,885,005
------------
48,048,937
------------
TELECOMMUNICATIONS: 3.5%
159,775 @,L Adaptec, Inc. 1,351,697
88,800 Alltel Corp. 4,495,056
317,200 Bellsouth Corp. 8,316,983
418,350 @ Cisco Systems, Inc. 9,914,894
387,850 L Motorola, Inc. 7,078,262
50,550 Qualcomm, Inc. 3,689,139
65,125 @ Safenet, Inc. 1,802,660
46,950 L Scientific-Atlanta, Inc. 1,619,775
157,625 @ Sycamore Networks, Inc. 666,754
221,800 @,L Tellabs, Inc. 1,938,532
186,850 Verizon Communications, Inc. 6,762,102
248,100 @,L Zhone Technologies, Inc. 967,590
------------
48,603,444
------------
TOYS/GAMES/HOBBIES: 0.1%
57,200 L Hasbro, Inc. 1,086,800
------------
1,086,800
------------
TRANSPORTATION: 1.0%
40,550 L CH Robinson Worldwide, Inc. 1,858,812
64,350 FedEx Corp. 5,256,751
68,650 L United Parcel Service, Inc. 5,160,421
52,200 @,L Yellow Roadway Corp. 2,080,692
------------
14,356,676
------------
Total Common Stock
(Cost $754,104,457) 825,485,119
------------
</Table>
See Accompanying Notes to Financial Statements
62
<Page>
PORTFOLIO OF INVESTMENTS
ING VP BALANCED PORTFOLIO as of June 30, 2004 (Unaudited) (continued)
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------------------------------------------------------------
PREFERRED STOCK: 0.2%
BANKS: 0.2%
272 #,XX DG Funding Trust $ 2,924,000
----------------
Total Preferred Stock
(Cost $2,957,509) 2,924,000
----------------
WARRANTS: 0.0%
DISTRIBUTION/WHOLESALE: 0.0%
2,978 Timco Aviation Services --
----------------
SOVEREIGN: 0.0%
250 @@ Central Bank of Nigeria --
----------------
Total Warrants (Cost $210) --
----------------
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
CORPORATE BONDS: 10.3%
AIRLINES: 0.1%
$ 421,000 # American Airlines, Inc.,
7.250%, due 02/05/09 402,581
1,930,000 American Airlines, Inc.,
7.324%, due 10/15/09 1,589,117
----------------
1,991,698
----------------
AUTO MANUFACTURERS: 0.0%
421,000 L Ford Motor Co., 6.625%,
due 10/01/28 369,706
----------------
369,706
----------------
BANKS: 2.5%
580,000 @@ Australia & New Zealand
Banking Group Ltd.,
1.494%, due 10/29/49 493,972
940,000 #,@@ Banco Bradesco SA, 8.750%,
due 10/24/13 947,050
2,188,000 @@ Banco Santander Chile SA,
7.375%, due 07/18/12 2,411,611
590,000 @@ Bank of Ireland, 1.800%,
due 12/29/49 497,888
475,000 # Bank of New York
Institutional Capital Trust A,
7.780%, due 12/01/26 508,739
163,000 # BankAmerica Institutional
Capital B, 7.700%,
due 12/31/26 174,687
320,000 Barnett Capital I, 8.060%,
due 12/01/26 350,767
200,000 Barnett Capital II, 7.950%,
due 12/01/26 219,887
310,000 BNY Capital I, 7.970%,
due 12/31/26 337,155
929,000 L,@@,# Danske Bank A/S,
5.914%, due 12/29/49 943,389
2,710,000 # Dresdner Funding Trust I,
8.151%, due 06/30/31 3,027,505
112,000 FBS Capital I, 8.090%,
due 11/15/26 123,795
448,000 First Union Capital I,
7.935%, due 01/15/27 490,317
587,000 First Union Institutional
Capital II, 7.850%,
due 01/01/27 631,308
$ 335,000 Fleet Capital Trust II,
7.920%, due 12/11/26 $ 358,152
1,016,000 L,@@,# HBOS Capital Funding LP,
6.071%, due 06/30/49 1,021,950
320,000 @@ Hongkong & Shanghai
Banking Corp. Ltd.,
1.313%, due 07/29/49 271,779
1,890,000 @@ HSBC Bank PLC,
1.975%, due 06/29/49 1,599,985
1,020,000 @@ HSBC Bank PLC, 2.125%,
due 06/29/49 864,450
1,350,000 @@ Lloyds TSB Bank PLC, 1.270%,
due 08/29/49 1,162,910
1,210,000 @@ Lloyds TSB Bank PLC, 2.188%,
due 06/29/49 1,057,121
1,439,000 M&T Bank Corp., 3.850%,
due 04/01/13 1,412,707
1,770,000 Mellon Capital I, 7.720%,
due 12/01/26 1,919,448
500,000 @@ National Westminster
Bank PLC, 1.375%,
due 08/29/49 431,537
1,510,000 @@ National Westminster
Bank PLC, 1.438%,
due 11/29/49 1,277,093
250,000 NB Capital Trust, 7.830%,
due 12/15/26 271,830
925,000 NB Capital Trust IV, 8.250%,
due 04/15/27 1,028,441
737,000 #,@@ Northern Rock PLC, 5.600%,
due 04/30/49 717,414
1,211,000 # Rabobank Capital Funding II,
5.260%, due 12/29/49 1,174,017
630,000 @@ Royal Bank of Canada,
1.750%, due 06/29/85 541,550
280,000 @@ Royal Bank of Scotland Group
PLC, 2.063%, due 12/29/49 241,653
390,000 @@ Societe Generale, 1.688%,
due 11/29/49 326,103
870,000 @@ Standard Chartered PLC,
1.315%, due 01/29/49 682,231
790,000 @@ Standard Chartered PLC,
1.375%, due 07/29/49 619,623
2,060,000 @@ Standard Chartered PLC,
1.800%, due 11/29/49 1,626,840
1,980,000 @@ Standard Chartered PLC,
2.070%, due 12/29/49 1,559,250
180,000 # Wells Fargo Capital A,
7.730%, due 12/01/26 196,049
690,000 @@ Westpac Banking Corp.,
1.338%, due 09/29/49 582,688
2,138,000 L,# Westpac Capital Trust IV,
5.256%, due 12/29/49 1,973,802
----------------
34,076,693
----------------
BEVERAGES: 0.3%
1,915,000 #,@@ Cia Brasileira de Bebidas,
8.750%, due 09/15/13 2,029,900
201,000 L,@@ Cia Brasileira de Bebidas,
10.500%, due 12/15/11 231,150
1,624,000 # Miller Brewing Co., 4.250%,
due 08/15/08 1,617,585
----------------
3,878,635
----------------
</Table>
See Accompanying Notes to Financial Statements
63
<Page>
PORTFOLIO OF INVESTMENTS
ING VP BALANCED PORTFOLIO as of June 30, 2004 (Unaudited) (continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
CHEMICALS: 0.1%
$ 386,000 Dow Chemical Co., 5.750%,
due 11/15/09 $ 403,276
365,000 @,#,@@ Sociedad Quimica y Minera
de Chile SA, 7.700%,
due 09/15/06 390,753
----------------
794,029
----------------
DISTRIBUTION/WHOLESALE: 0.0%
2,985 X Timco Aviation Services,
8.000%, due 01/02/07 --
----------------
--
----------------
DIVERSIFIED FINANCIAL SERVICES: 1.6%
812,000 #,@@ Arcel Finance Ltd., 6.361%,
due 05/01/12 807,213
480,000 #,@@ Arcel Finance Ltd., 7.048%,
due 09/01/11 477,600
1,372,000 L Boeing Capital Corp., 7.375%,
due 09/27/10 1,553,335
2,061,000 #,@@ Brazilian Merchant Voucher
Receivables Ltd., 5.911%,
due 06/15/11 2,004,323
930,000 CitiCorp Capital I, 7.933%,
due 02/15/27 1,017,692
212,000 Citigroup Capital II, 7.750%,
due 12/01/36 228,536
195,000 # Corestates Capital Trust I,
8.000%, due 12/15/26 213,631
360,000 # Farmers Exchange Capital,
7.050%, due 07/15/28 346,486
1,760,000 # Farmers Exchange Capital,
7.200%, due 07/15/48 1,706,352
520,000 @@ Financiere CSFB NV, 1.250%,
due 03/29/49 416,638
858,000 L Ford Motor Credit Co, 7.000%,
due 10/01/13 867,583
853,000 L General Motors
Acceptance Corp, 6.875%,
due 08/28/12 869,064
577,000 General Motors
Acceptance Corp, 8.000%,
due 11/01/31 592,847
1,140,000 General Motors Acceptance
Corp., 7.750%, due 01/19/10 1,238,952
7,652 # Hollinger Participation Trust,
12.125%, due 11/15/10 8,953
232,000 JPM Capital Trust I, 7.540%,
due 01/15/27 246,391
2,343,000 XX,# Mangrove Bay Pass-Through
Trust, 6.102%, due 07/15/33 2,319,147
621,000 # Mizuho JGB Investment LLC,
9.870%, due 12/29/49 703,056
416,000 # Mizuho Preferred Capital
Co LLC, 8.790%,
due 12/29/49 457,600
1,163,000 #,@@ PF Export Receivables
Master Trust, 3.748%,
due 06/01/13 1,109,322
1,548,465 #,@@ PF Export Receivables
Master Trust, 6.436%,
due 06/01/15 1,527,925
$ 645,000 L,# SB Treasury Co LLC, 9.400%,
due 12/29/49 $ 728,850
2,235,000 #,L Tokai Preferred Capital Co.
LLC, 9.980%, due 12/29/49 2,517,905
15,000 Universal City Development
Partners, 11.750%,
due 04/01/10 17,438
510,000 #,L Wachovia Capital Trust V,
7.965%, due 06/01/27 560,185
----------------
22,537,024
----------------
ELECTRIC: 1.7%
1,022,000 @@,#,L AES Gener SA, 7.500%,
due 03/25/14 970,900
934,951 # Allegheny Energy Supply
Statutory Trust 2001,
10.250%, due 11/15/07 1,012,084
97,807 # Allegheny Energy Supply
Statutory Trust 2001,
13.000%, due 11/15/07 100,252
680,000 L Consumers Energy Co.,
4.250%, due 04/15/08 674,491
963,000 L Consumers Energy Co.,
4.800%, due 02/17/09 964,768
1,344,000 DTE Energy Co, 2.324%,
due 06/01/07 1,343,445
2,549,000 @@,L Empresa Nacional de
Electricidad SA/Chile,
7.750%, due 07/15/08 2,722,375
3,331,000 Enserch Capital I, 2.460%,
due 07/01/28 3,117,180
1,523,000 Enterprise Capital Trust II,
2.806%, due 06/30/28 1,441,087
1,007,000 L FirstEnergy Corp., 6.450%,
due 11/15/11 1,045,540
1,459,000 # Monongahela Power Co,
6.700%, due 06/15/14 1,480,218
2,103,000 Ohio Power Co., 6.375%,
due 07/15/33 2,064,679
3,801,000 # PG&E Corp., 6.875%,
due 07/15/08 3,991,051
268,029 # Power Contract Financing
LLC, 5.200%,
due 02/01/06 269,781
2,112,000 #,L Power Contract Financing
LLC, 6.256%, due 02/01/10 2,153,199
331,905 PPL Montana LLC, 8.903%,
due 07/02/20 361,984
538,000 # Tenaska Virginia Partners LP,
6.119%, due 03/30/24 533,164
----------------
24,246,198
----------------
FOOD: 0.4%
739,000 Kroger Co., 7.250%,
due 06/01/09 821,815
1,308,000 Safeway, Inc., 4.800%,
due 07/16/07 1,337,948
881,000 Supervalu, Inc., 7.875%,
due 08/01/09 996,132
1,743,000 Tyson Foods, Inc., 7.250%,
due 10/01/06 1,878,287
----------------
5,034,182
----------------
</Table>
See Accompanying Notes to Financial Statements
64
<Page>
PORTFOLIO OF INVESTMENTS
ING VP BALANCED PORTFOLIO as of June 30, 2004 (Unaudited) (continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
GAS: 0.1%
$ 1,604,000 # Williams Gas Pipelines
Central, Inc., 7.375%,
due 11/15/06 $ 1,722,295
----------------
1,722,295
----------------
HOME BUILDERS: 0.0%
50,000 Technical Olympic USA,
Inc., 9.000%, due 07/01/10 51,500
----------------
51,500
----------------
INSURANCE: 0.3%
1,459,000 # Farmers Insurance Exchange,
8.625%, due 05/01/24 1,638,286
1,105,000 # Monumental Global
Funding II, 3.850%,
due 03/03/08 1,103,396
758,000 # Zurich Capital Trust I,
8.376%, due 06/01/37 839,696
----------------
3,581,378
----------------
LODGING: 0.0%
621,000 Caesars Entertainment,
Inc., 9.375%, due 02/15/07 676,114
----------------
676,114
----------------
MEDIA: 0.0%
540,000 L Time Warner, Inc., 6.875%,
due 05/01/12 584,409
----------------
584,409
----------------
MINING: 0.2%
578,000 @@,# Corp Nacional del Cobre
de Chile - CODELCO,
6.375%, due 11/30/12 612,935
204,000 @@ Vale Overseas Ltd., 8.250%,
due 01/17/34 178,500
1,623,000 @@ Vale Overseas Ltd., 8.625%,
due 03/08/07 1,744,725
----------------
2,536,160
----------------
MISCELLANEOUS MANUFACTURING: 0.2%
2,667,000 @@,#,L Bombardier, Inc., 6.300%,
due 05/01/14 2,269,148
----------------
2,269,148
----------------
MULTI-NATIONAL: 0.2%
1,655,000 @@ Corp. Andina de Fomento
CAF, 5.200%, due 05/21/13 1,594,859
1,628,000 @@ Corp. Andina de Fomento
CAF, 6.875%, due 03/15/12 1,753,262
----------------
3,348,121
----------------
OIL AND GAS: 0.8%
985,000 L Amerada Hess Corp., 6.650%,
due 08/15/11 1,043,809
1,372,000 Amerada Hess Corp., 7.875%,
due 10/01/29 1,486,406
1,326,000 @@,# Empresa Nacional de Petroleo
ENAP, 4.875%, due 03/15/14 1,237,137
20,000 Energy Partners Ltd., 8.750%,
due 08/01/10 21,000
2,955,000 @@ Husky Oil Co., 8.900%,
due 08/15/28 3,348,925
$ 3,023,000 L,# Pemex Project Funding
Master Trust, 2.820%,
due 06/15/10 $ 3,044,161
606,000 L Pemex Project Funding
Master Trust, 7.375%,
due 12/15/14 621,150
851,000 Valero Energy Corp., 8.750%,
due 06/15/30 1,064,826
----------------
11,867,414
----------------
PACKAGING AND CONTAINERS: 0.2%
541,000 # Sealed Air Corp., 5.375%,
due 04/15/08 559,944
1,677,000 # Sealed Air Corp., 6.950%,
due 05/15/09 1,832,600
----------------
2,392,544
----------------
REAL ESTATE: 0.2%
1,409,000 EOP Operating LP, 7.750%,
due 11/15/07 1,564,841
360,000 Liberty Property LP, 6.375%,
due 08/15/12 378,645
1,116,000 Liberty Property LP, 7.750%,
due 04/15/09 1,268,787
----------------
3,212,273
----------------
REAL ESTATE INVESTMENT TRUSTS: 0.4%
1,120,000 # iStar Financial, Inc., 5.700%,
due 03/01/14 1,056,873
2,096,000 # iStar Financial, Inc., 5.125%,
due 04/01/11 2,003,869
1,011,000 Simon Property Group LP,
4.875%, due 03/18/10 1,001,944
1,946,000 Simon Property Group LP,
6.375%, due 11/15/07 2,084,522
----------------
6,147,208
----------------
RETAIL: 0.0%
40,000 L Dollar General Corp., 8.625%,
due 06/15/10 44,650
----------------
44,650
----------------
SAVINGS AND LOANS: 0.3%
1,177,000 Great Western Financial,
8.206%, due 02/01/27 1,281,729
1,704,000 Sovereign Bancorp, Inc.,
10.500%, due 11/15/06 1,953,271
1,632,000 L Washington Mutual, Inc.,
4.375%, due 01/15/08 1,643,710
----------------
4,878,710
----------------
TELECOMMUNICATIONS: 0.6%
710,000 @@,# Brasil Telecom SA, 9.375%,
due 02/18/14 692,250
1,309,000 @@,L Cia de Telecomunicaciones
de Chile SA, 7.625%,
due 07/15/06 1,411,844
1,906,000 L Sprint Capital Corp., 4.780%,
due 08/17/06 1,943,859
594,000 L Sprint Capital Corp., 8.750%,
due 03/15/32 694,161
1,185,000 L Sprint Capital Corp., 6.875%,
due 11/15/28 1,142,360
</Table>
See Accompanying Notes to Financial Statements
65
<Page>
PORTFOLIO OF INVESTMENTS
ING VP BALANCED PORTFOLIO as of June 30, 2004 (Unaudited) (continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS (CONTINUED)
$ 1,336,000 Verizon Florida Inc.,
6.125%, due 01/15/13 $ 1,375,528
950,000 Verizon Virginia, Inc.,
4.625%, due 03/15/13 888,610
--------------
8,148,612
--------------
TRANSPORTATION: 0.1%
830,000 @@,# MISC Capital Ltd, 5.000%,
due 07/01/09 832,207
--------------
832,207
--------------
Total Corporate Bonds
(Cost $145,731,456) 145,220,908
--------------
COLLATERALIZED MORTGAGE OBLIGATIONS AND
ASSET-BACKED SECURITIES: 10.5%
AUTOMOBILE ASSET BACKED SECURITIES: 0.2%
300,000 Capital Auto Receivables
Asset Trust, 2.750%,
due 04/16/07 299,641
500,000 Household Automotive Trust,
2.310%, due 04/17/08 495,651
1,590,000 Nissan Auto Receivables
Owner Trust, 2.610%,
due 07/15/08 1,573,263
----------------
2,368,555
----------------
COMMERCIAL MORTGAGE-BACKED SECURITIES: 1.4%
877,000 Bear Stearns Commercial
Mortgage Securities,
1.400%, due 06/25/34 876,452
1,412,000 Bear Stearns Commercial
Mortgage Securities,
4.170%, due 01/12/41 1,398,832
2,060,000 Chase Manhattan Bank-First
Union National Bank,
7.439%, due 08/15/31 2,321,385
1,311,578 CS First Boston Mortgage
Securities Corp., 3.727%,
due 03/15/35 1,270,581
3,120,000 JP Morgan Chase Commercial
Mortgage Securities Corp.,
6.244%, due 04/15/35 3,328,850
3,150,000 LB-UBS Commercial Mortgage
Trust, 6.226%, due 03/15/26 3,382,748
3,000,000 LB-UBS Commercial Mortgage
Trust, 7.370%, due 08/15/26 3,391,219
3,120,000 Mortgage Capital Funding,
Inc., 6.663%, due 03/18/30 3,363,898
198,842 Prudential Commercial
Mortgage Trust, 3.669%,
due 02/11/36 192,229
----------------
19,526,194
----------------
CREDIT CARD ASSET BACKED SECURITIES: 0.1%
775,000 Citibank Credit Card Issuance
Trust, 5.650%, due 06/16/08 812,695
1,270,000 Fleet Credit Card Master
Trust II, 2.400%,
due 07/15/08 1,262,692
----------------
2,075,387
----------------
HOME EQUITY ASSET BACKED
SECURITIES: 1.6%
$ 916,313 Argent Securities, Inc.,
1.620%, due 03/25/34 $ 917,169
1,051,715 Asset Backed Funding
Certificates, 1.580%,
due 11/25/33 1,052,081
3,103,862 XX Bayview Financial
Acquisition Trust,
1.820%, due 12/28/34 3,109,681
240,000 Equity One ABS, Inc.,
2.976%, due 09/25/33 240,316
2,485,849 Merrill Lynch Mortgage
Investors, Inc., 1.660%,
due 07/25/34 2,493,193
2,906,000 New Century Home Equity
Loan Trust, 1.570%,
due 04/25/34 2,906,000
800,073 Residential Asset Mortgage
Products, Inc., 1.610%,
due 06/25/33 799,652
524,000 Residential Asset Securities
Corp., 1.580%,
due 02/25/34 524,305
6,743,483 Residential Asset Securities
Corp., 1.610%,
due 12/25/33 6,760,936
940,000 Residential Funding
Mortgage
Securities II, 3.450%,
due 01/25/16 942,478
2,625,000 Saxon Asset Securities
Trust, 3.960%, due 06/25/33 2,571,209
----------------
22,317,020
----------------
OTHER ASSET-BACKED SECURITIES: 0.6%
904,122 XX Amortizing Residential
Collateral Trust, 1.550%,
due 05/25/32 904,051
941,000 Chase Funding Mortgage
Loan Asset-Backed
Certificates, 1.600%,
due 07/25/33 942,404
5,290,000 PP&L Transition Bond Co.
LLC, 7.050%, due 06/25/09 5,734,197
1,190,000 Residential Asset Mortgage
Products, Inc., 2.140%,
due 02/25/30 1,177,897
----------------
8,758,549
----------------
WHOLE LOAN COLLATERALLIZED
MORTGAGE: 5.7%
330,865 Bank of America Alternative
Loan Trust, 1.750%,
due 12/25/33 330,115
5,851,602 Bank of America Mortgage
Securities, 1.750%,
due 12/25/33 5,859,785
1,789,330 Bank of America
Mortgage Securities,
4.413%, due 03/25/33 1,792,006
2,441,848 Bank of America
Mortgage Securities,
5.000%, due 06/25/33 2,463,858
</Table>
See Accompanying Notes to Financial Statements
66
<Page>
PORTFOLIO OF INVESTMENTS
ING VP BALANCED PORTFOLIO as of June 30, 2004 (Unaudited) (continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
WHOLE LOAN COLLATERALLIZED
MORTGAGE (CONTINUED)
$ 2,116,247 CitiCorp. Mortgage Securities,
Inc., 1.800%, due 10/25/33 $ 2,116,995
1,293,767 Countrywide Alternative
Loan Trust, 1.700%,
due 07/25/18 1,296,658
5,530,000 CS First Boston Mortgage
Securities Corp., 4.187%,
due 10/25/33 5,569,551
7,025,788 XX First Horizon Alternative
Mortgage Securities,
4.875%, due 06/25/34 7,073,976
5,679,000 First Horizon Asset
Securities, Inc., 1.750%,
due 10/25/32 5,679,000
2,707,741 GMAC Mortgage Corp
Loan Trust, 5.250%,
due 04/25/34 2,744,965
4,000,000 GMAC Mortgage Corp.
Loan Trust, 5.500%,
due 01/25/34 4,030,823
572,283 GSR Mortgage Loan Trust,
6.500%, due 01/25/34 594,728
1,773,882 MASTR Alternative Loans
Trust, 6.500%,
due 05/25/33 1,817,534
1,756,030 MASTR Asset Securitization
Trust, 1.750%, due 11/25/33 1,753,598
845,351 MASTR Asset Securitization
Trust, 8.000%, due 06/25/33 893,452
5,156,227 MLCC Mortgage Investors,
Inc., 1.620%, due 01/25/29 5,163,085
401,671 Prime Mortgage Trust,
1.700%, due 02/25/34 401,693
2,721,952 Residential Accredit Loans,
Inc., 1.750%, due 03/25/18 2,730,035
706,001 Residential Funding Mtg Sec I,
1.600%, due 12/25/33 706,506
9,221,609 Sequoia Mortgage Trust,
1.600%, due 01/20/34 9,201,013
4,600,000 Structured Asset Securities
Corp., 6.000%,
due 03/25/34 4,710,570
3,036,000 Thornburg Mortgage
Securities Trust, 1.610%,
due 05/25/44 3,036,000
4,631,863 Washington Mutual, 1.900%,
due 01/25/34 4,572,000
3,581,617 Washington Mutual, 5.000%,
due 06/25/18 3,565,710
611,893 Wells Fargo Mortgage
Backed Securities Trust,
1.800%, due 02/25/34 611,771
2,225,000 Wells Fargo Mortgage
Backed Securities Trust,
4.500%, due 08/25/18 2,066,984
----------------
80,782,411
----------------
WHOLE LOAN COLLATERALIZED PLANNED
AMORTIZATION CLASS: 0.8%
3,095,605 GSR Mortgage Loan Trust,
1.700%, due 10/25/32 3,096,667
$ 888,173 MASTR Alternative Loans
Trust, 1.700%,
due 11/25/33 $ 889,534
2,609,765 MASTR Alternative Loans
Trust, 8.500%,
due 05/25/33 2,678,303
3,138,000 Residential Funding
Securities Corp., 4.750%,
due 02/25/33 3,176,079
885,183 Residential Funding
Securities Corp., 8.500%,
due 05/25/33 942,060
739,796 Washington Mutual,
1.700%, due 03/25/34 740,012
----------------
11,522,655
----------------
WHOLE LOAN COLLATERALIZED
SUPPORT CMO: 0.1%
1,231,039 Bank of America Mortgage
Securities, 5.500%,
due 11/25/33 1,217,463
----------------
1,217,463
----------------
Total Collateralized
Mortgage Obligations and
Asset-Backed Securities
(Cost $148,630,608) 148,568,234
----------------
U.S. GOVERNMENT AGENCY OBLIGATIONS: 14.0%
AGENCY COLLATERAL CMO: 0.9%
9,037,470 1.890%, due 04/15/32 9,136,778
3,209,735 6.000%, due 01/15/29 3,269,185
----------------
12,405,963
----------------
AGENCY COLLATERAL PAC CMO: 0.4%
3,441,000 6.000%, due 01/15/28 3,581,384
2,276,000 6.000%, due 01/15/29 2,325,903
----------------
5,907,287
----------------
FEDERAL HOME LOAN
MORTGAGE CORPORATION: 2.9%
11,120,000 L 2.700%, due 03/16/07 10,938,665
5,330,000 2.750%, due 02/09/07 5,258,733
561 5.500%, due 05/01/23 569
6,800,000 5.500%, due 07/15/34 6,770,250
3,661,946 6.000%, due 01/15/29 3,697,946
9,930,000 6.000%, due 07/15/33 10,141,013
859,685 6.500%, due 11/01/28 898,680
2,490,000 6.500%, due 08/15/34 2,585,711
----------------
40,291,567
----------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION: 9.0%
240,000 2.859%, due 12/26/29 238,594
5,345,000 L 2.875%, due 05/19/08 5,150,298
8,382,000 4.500%, due 07/01/17 8,190,790
2,403,000 4.750%, due 12/25/42 2,409,572
11,393,000 5.000%, due 07/01/18 11,407,240
3,103,000 5.000%, due 08/15/19 3,096,211
34,534,000 5.000%, due 07/15/34 33,357,702
2,705,000 L 5.250%, due 08/01/12 2,707,429
109,980 5.500%, due 07/15/19 112,489
4,075,000 5.500%, due 08/15/19 4,152,678
8,115,000 5.500%, due 07/15/34 8,076,957
</Table>
See Accompanying Notes to Financial Statements
67
<Page>
PORTFOLIO OF INVESTMENTS
ING VP BALANCED PORTFOLIO as of June 30, 2004 (Unaudited) (continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (CONTINUED)
$ 187,511 6.000%, due 06/01/16 $ 195,720
823,672 6.000%, due 07/01/16 859,729
168,593 6.000%, due 07/01/16 175,974
127,305 6.000%, due 08/01/16 132,878
191,516 6.000%, due 08/01/16 199,899
138,433 6.000%, due 10/01/16 144,493
4,807 6.000%, due 10/01/16 5,017
135,905 6.000%, due 10/01/16 141,854
1,128,607 6.000%, due 03/01/17 1,177,524
217,702 6.000%, due 04/01/17 227,137
179,892 6.000%, due 04/01/17 187,689
129,483 6.000%, due 04/01/17 135,096
597,910 6.000%, due 06/01/17 623,826
154,264 6.000%, due 09/01/17 160,950
118,129 6.000%, due 10/01/17 123,249
654,309 6.000%, due 11/01/17 682,951
659,713 6.000%, due 12/01/17 688,307
691,195 6.000%, due 12/01/18 721,191
3,844,223 6.000%, due 07/25/29 3,900,682
1,633,458 6.000%, due 07/25/29 1,657,975
2,316,472 6.000%, due 04/25/31 2,347,629
5,605,000 6.000%, due 08/01/33 5,699,584
3,675,000 6.000%, due 07/15/34 3,751,947
4,923,750 6.500%, due 04/01/30 5,139,455
5,182,000 6.500%, due 07/15/33 5,395,758
2,320,000 L 6.625%, due 11/15/10 2,579,274
16,734 7.000%, due 06/01/29 17,721
158,764 7.000%, due 06/01/29 168,123
71,032 7.000%, due 06/01/29 75,308
1,637 7.000%, due 08/01/29 1,733
14,991 7.000%, due 10/01/29 15,875
448,387 7.000%, due 11/01/29 474,821
1,014 7.000%, due 01/01/30 1,074
277,269 7.000%, due 01/01/30 293,615
430,225 7.000%, due 03/01/30 455,589
308,613 7.000%, due 01/01/31 326,713
2,265,437 7.000%, due 06/01/31 2,400,429
16,692 7.000%, due 08/01/31 17,671
587,694 7.000%, due 08/01/31 621,667
74,047 7.000%, due 10/01/31 78,327
64,431 7.000%, due 01/01/32 68,155
64,930 7.000%, due 01/01/32 68,683
17,309 7.000%, due 04/01/32 18,274
41,000 7.000%, due 05/01/32 43,285
73,945 7.000%, due 07/01/32 78,065
2,591,000 7.000%, due 07/15/33 2,732,697
154,585 7.500%, due 10/01/30 165,766
217,097 7.500%, due 10/01/30 232,800
74,975 7.500%, due 11/01/30 80,398
190,653 7.500%, due 11/01/30 204,443
1,314,791 7.500%, due 06/25/32 1,409,699
1,678,085 7.500%, due 01/25/48 1,790,364
----------------
127,797,043
----------------
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION: 0.8%
90,060 4.000%, due 12/20/29 91,220
339,936 4.375%, due 04/20/28 340,913
443,464 6.500%, due 10/15/31 464,149
1,171,877 7.000%, due 09/15/24 1,251,834
1,217,927 7.000%, due 10/15/24 1,301,031
523,377 7.000%, due 10/15/24 559,089
$ 313,674 7.000%, due 11/15/24 $ 335,105
3,058,125 7.500%, due 12/15/23 3,317,198
2,521,426 8.000%, due 12/15/17 2,777,792
195,280 8.000%, due 07/15/24 215,529
----------------
10,653,860
----------------
Total U.S. Government
Agency Obligations
(Cost $196,329,374) 197,055,720
----------------
U.S. TREASURY OBLIGATIONS: 6.2%
U.S. TREASURY BONDS: 4.4%
10,287,000 L,S 4.000%, due 02/15/14 9,807,214
11,429,000 W,L,S 4.750%, due 05/15/14 11,551,782
6,104,000 L 5.290%, due 05/15/16 3,310,712
12,583,000 L 5.375%, due 02/15/31 12,694,586
5,186,000 L 5.500%, due 08/15/28 5,255,487
5,010,000 L 6.250%, due 08/15/23 5,549,362
5,019,000 L,S 10.375%, due 11/15/12 6,130,242
5,173,000 L 13.250%, due 05/15/14 7,327,477
----------------
61,626,862
----------------
U.S. TREASURY NOTES: 1.8%
12,500,000 L,S 1.625%, due 01/31/05 12,496,587
5,653,000 L,S 2.500%, due 05/31/06 5,635,781
4,927,000 L,S 3.125%, due 05/15/07 4,928,542
2,145,000 L,S 4.000%, due 06/15/09 2,164,022
----------------
25,224,932
----------------
Total U.S. Treasury Obligations
(Cost $87,502,562) 86,851,794
----------------
OTHER BONDS: 0.7%
SOVEREIGN: 0.7%
518,588 @@ Brazilian Government Intl.
Bond, 2.188%,
due 04/15/12 436,708
606,000 @@ Brazilian Government Intl.
Bond, 10.000%,
due 08/07/11 590,850
1,078,000 @@ Colombia Government Intl.
Bond, 10.000%,
due 01/23/12 1,121,120
989,000 @@ Dominican Republic Intl.
Bond, 9.040%,
due 01/23/13 613,180
455,000 @@ Ecuador Government Intl.
Bond, 7.000%,
due 08/15/30 322,481
106,000 @@ Panama Government
International Bond,
9.375%, due 07/23/12 116,335
304,000 @@ Panama Government Intl.
Bond, 9.375%,
due 01/16/23 311,600
1,059,000 @@ Peru Government Intl.
Bond, 4.500%,
due 03/07/17 860,069
276,000 @@,L Philippine Government Intl.
Bond, 9.875%,
due 01/15/19 276,000
2,206,000 @@ Russia Government Intl.
Bond, 5.000%,
due 03/31/30 2,019,593
</Table>
See Accompanying Notes to Financial Statements
68
<Page>
PORTFOLIO OF INVESTMENTS
ING VP BALANCED PORTFOLIO as of June 30, 2004 (Unaudited) (continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
SOVEREIGN (CONTINUED)
$ 979,000 @@,L Turkey Government Intl.
Bond, 12.375%,
due 06/15/09 $ 1,124,626
464,000 #,@@ Ukraine Government Intl.
Bond, 7.650%,
due 06/11/13 444,280
823,729 @@,XX Uruguay Government Intl.
Bond, 10.500%,
due 10/20/06 906,036
853,000 @@,L Venezuela Government Intl.
Bond, 10.750%,
due 09/19/13 842,338
----------------
Total Other Bonds
(Cost $10,295,400) 9,985,216
----------------
Total Long-Term Investments
(Cost $1,345,551,576) 1,416,090,991
----------------
SHORT-TERM INVESTMENTS: 31.9%
COMMERCIAL PAPER: 4.9%
3,000,000 Concord Minutemen Cap.,
1.160%, due 07/07/05 2,999,955
4,000,000 S DaimlerChrystler Holdings
Corp., 1.450%, due 07/14/04 3,997,744
6,300,000 S DaimlerChrystler Holdings
Corp., 1.250%,
due 07/07/04 6,298,469
4,315,000 S Ford Motor Credit Co.,
1.410%, due 07/19/04 4,311,789
6,000,000 S General Motors Corp.,
1.270%, due 07/01/04 5,999,788
6,000,000 S General Motors Corp.,
1.280%, due 07/06/04 5,998,720
9,600,000 S Hertz Corp., 1.520%,
due 07/08/04 9,596,753
10,000,000 S Kraft Foods, 1.180%,
due 07/01/04 9,999,673
6,000,000 Royal Bank of Scotland,
1.400%, due 10/21/04 5,996,700
8,000,000 S St. Germain Holdings Ltd.,
1.230%, due 07/06/04 7,998,360
2,550,000 S St. Germain Holdings Ltd.,
1.230%, due 07/13/04 2,548,867
3,049,000 S Thunder Bay Funding Corp.,
1.190%, due 07/02/04 3,048,798
----------------
Total Commercial Paper
(Cost $68,801,230) 68,795,616
----------------
REPURCHASE AGREEMENT: 2.1%
29,936,000 S Goldman Sachs Repurchase
Agreement dated, 1.500%,
due 07/01/04, $29,937,247
to be received upon repurchase
(Collateralized by $30,065,000
Federal National Mortgage
Association, 5.250%,
Market Value plus accrued
interest $30,539,701
due 08/01/12) 29,936,000
----------------
Total Repurchase Agreement
(Cost $29,936,000) 29,936,000
----------------
SECURITIES LENDING COLLATERAL(cc): 24.9%
$ 326,812,169 The Bank of New York Institutional
Cash Reserve Fund, 1.250% $ 326,812,169
----------------
Total Securities Lending Collateral
(Cost $326,812,169) 326,812,169
----------------
Total Short-Term Investments
(Cost $425,549,399) 425,543,785
----------------
TOTAL INVESTMENTS IN
SECURITIES
(COST $1,771,100,975)* 130.6% $ 1,841,634,776
OTHER ASSETS AND
LIABILITIES-NET (30.6) (432,006,520)
----- ----------------
NET ASSETS 100.0% $ 1,409,628,256
===== ================
</Table>
@ Non-income producing security
@@ Foreign issuer
# Securities with purchases pursuant to Rule 144A, under the Securities Act
of 1933 and may not be resold subject to that rule except to qualified
institutional buyers. These securities have been determined to be liquid
under the guidelines established by the Funds' Board of Directors/Trustees.
L Loaned security, a portion or all of the security is on loan at June 30,
2004.
S Segregated securities for futures, when-issued or delayed delivery
securities held at June 30, 2004.
W When-issued or delayed delivery security.
X Fair value determined by ING Funds Valuation Committee appointed by the
Funds' Board of Directors/Trustees.
XX Value of securities obtained from one or more dealers making markets in the
securities in accordance with the Fund's valuation procedures.
(cc) Securities purchased with cash collateral for securities loaned.
* Cost for federal income tax purposes is $1,797,761,098. Net unrealized
appreciation consists of:
<Table>
Gross Unrealized Appreciation $ 63,450,963
Gross Unrealized Depreciation (19,577,285)
--------------
Net Unrealized Appreciation $ 43,873,678
==============
</Table>
Information concerning open futures contracts at June 30, 2004 is shown below:
<Table>
<Caption>
NO. OF NOTIONAL EXPIRATION UNREALIZED
SHORT CONTRACTS CONTRACTS MARKET VALUE DATE GAIN/(LOSS)
- --------------- --------- ------------ ---------- -----------
U.S. 2 Year
Treasury Note 116 $(24,423,438) Sep-04 $ (27,128)
U.S. 5 Year
Treasury Note 150 (16,303,125) Sep-04 (122,625)
------------ -----------
$(40,726,563) $ (149,753)
============ ===========
LONG CONTRACTS
- --------------
U.S. Long Bond 120 $ 12,765,000 Sep-04 $ 266,588
============ ===========
</Table>
See Accompanying Notes to Financial Statements
69
<Page>
PORTFOLIO OF INVESTMENTS
ING VP GROWTH AND INCOME PORTFOLIO as of June 30, 2004 (Unaudited)
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------------------------------------------------------------
COMMON STOCK: 98.2%
AEROSPACE/DEFENSE: 5.6%
1,386,400 L Boeing Co. $ 70,831,176
1,413,600 L Northrop Grumman Corp. 75,910,320
650,300 United Technologies Corp. 59,489,444
----------------
206,230,940
----------------
AGRICULTURE: 2.0%
1,486,500 Altria Group, Inc. 74,399,325
----------------
74,399,325
----------------
APPAREL: 1.0%
963,500 Jones Apparel Group, Inc. 38,038,980
----------------
38,038,980
----------------
BANKS: 6.4%
1,375,000 L Bank of America Corp. 116,352,500
162,709 City National Corp. 10,689,981
1,254,700 Mellon Financial Corp. 36,800,351
1,218,200 Wells Fargo & Co. 69,717,586
----------------
233,560,418
----------------
BEVERAGES: 1.2%
900,000 Coca-Cola Co. 45,432,000
----------------
45,432,000
----------------
BIOTECHNOLOGY: 1.2%
785,000 @,L Amgen, Inc. 42,837,450
----------------
42,837,450
----------------
BUILDING MATERIALS: 0.7%
600,000 @,L American Standard Cos., Inc. 24,186,000
----------------
24,186,000
----------------
COMPUTERS: 2.1%
3,566,400 L Hewlett-Packard Co. 75,251,040
----------------
75,251,040
----------------
DIVERSIFIED FINANCIAL SERVICES: 12.9%
331,400 Bear Stearns Cos., Inc. 27,940,334
526,400 L Capital One Financial Corp. 35,995,232
2,859,700 L Citigroup, Inc. 132,976,050
760,500 L Countrywide Financial Corp. 53,425,125
2,413,000 @,L E*Trade Financial Corp. 26,904,950
509,800 Fannie Mae 36,379,328
721,000 Franklin Resources, Inc. 36,107,680
1,078,000 JP Morgan Chase & Co. 41,794,060
599,800 Lehman Brothers Holdings, Inc. 45,134,950
673,100 @ Morgan Stanley 35,519,487
----------------
472,177,196
----------------
ELECTRIC: 0.8%
2,193,200 @,L Calpine Corp. 9,474,624
700,000 Edison Intl. 17,899,000
----------------
27,373,624
----------------
ELECTRONICS: 0.8%
975,000 @,L Agilent Technologies, Inc. 28,548,000
----------------
28,548,000
----------------
ENGINEERING AND CONSTRUCTION: 0.6%
575,082 @ Jacobs Engineering Group, Inc. 22,646,729
----------------
22,646,729
----------------
ENTERTAINMENT: 2.1%
1,950,000 International Game Technology $ 75,270,000
----------------
75,270,000
----------------
FOOD: 1.0%
2,198,000 Archer-Daniels-Midland Co. 36,882,440
----------------
36,882,440
----------------
HEALTHCARE-PRODUCTS: 3.4%
314,200 Guidant Corp. 17,557,496
1,950,100 L Johnson & Johnson 108,620,570
----------------
126,178,066
----------------
HEALTHCARE-SERVICES: 1.9%
500,000 Aetna, Inc. 42,500,000
1,236,400 L Health Management
Associates, Inc. 27,720,088
----------------
70,220,088
----------------
INSURANCE: 1.5%
816,600 L Hartford Financial Services
Group, Inc. 56,133,084
----------------
56,133,084
----------------
INTERNET: 2.2%
880,200 @,L eBay, Inc. 80,934,390
----------------
80,934,390
----------------
LODGING: 1.1%
2,726,200 @,L Caesars Entertainment, Inc. 40,893,000
----------------
40,893,000
----------------
MEDIA: 2.5%
2,662,800 @,L Time Warner, Inc. 46,812,024
1,204,300 L Viacom, Inc. 43,017,596
----------------
89,829,620
----------------
MISCELLANEOUS MANUFACTURING: 7.7%
1,390,000 L Danaher Corp. 72,071,500
2,425,300 General Electric Co. 78,579,720
555,000 ITT Industries, Inc. 46,065,000
2,524,200 @@ Tyco Intl. Ltd. 83,651,988
----------------
280,368,208
----------------
OIL AND GAS: 8.1%
660,000 L Burlington Resources, Inc. 23,878,800
900,000 L ChevronTexaco Corp. 84,699,000
2,618,500 Exxon Mobil Corp. 116,287,585
1,410,000 @@,L Royal Dutch Petroleum Co. ADR 72,854,700
----------------
297,720,085
----------------
OIL AND GAS SERVICES: 0.7%
894,000 L Halliburton Co. 27,052,440
----------------
27,052,440
----------------
PHARMACEUTICALS: 5.1%
1,600,000 Bristol-Myers Squibb Co. 39,200,000
3,555,200 Pfizer, Inc. 121,872,256
408,000 @@,L Teva Pharmaceutical
Industries ADR 27,454,320
----------------
188,526,576
----------------
</Table>
See Accompanying Notes to Financial Statements
70
<Page>
PORTFOLIO OF INVESTMENTS
ING VP GROWTH AND INCOME PORTFOLIO as of June 30, 2004 (Unaudited) (continued)
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------------------------------------------------------------
RETAIL: 5.6%
750,000 L CVS Corp. $ 31,515,000
3,360,000 L Gap, Inc. 81,480,000
500,000 Limited Brands 9,350,000
220,282 L RadioShack Corp. 6,306,674
1,425,000 L Wal-Mart Stores, Inc. 75,183,000
----------------
203,834,674
----------------
SEMICONDUCTORS: 4.9%
1,442,800 @ Applied Materials, Inc. 28,307,736
2,566,900 Intel Corp. 70,846,440
596,100 @,L Kla-Tencor Corp. 29,435,418
2,250,000 @,L LSI Logic Corp. 17,145,000
1,417,800 Texas Instruments, Inc. 34,282,404
----------------
180,016,998
----------------
SOFTWARE: 7.5%
725,800 @,L Electronic Arts, Inc. 39,592,390
6,886,600 L,S Microsoft Corp. 196,681,296
272,100 @,L Pixar, Inc. 18,913,671
1,700,000 @,L Siebel Systems, Inc. 18,156,000
----------------
273,343,357
----------------
TELECOMMUNICATIONS: 7.6%
4,950,000 @ Cisco Systems, Inc. 117,315,000
8,300,000 @,L JDS Uniphase Corp. 31,457,000
1,969,000 Motorola, Inc. 35,934,250
1,559,700 @,L Nextel Communications, Inc. 41,581,602
1,510,000 L Scientific-Atlanta, Inc. 52,095,000
----------------
278,382,852
----------------
Total Common Stock
(Cost $3,227,963,988) 3,596,267,580
----------------
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
CORPORATE BONDS: 0.0%
OIL AND GAS: 0.0%
$ 532,000 L,S Devon Energy Corp., 4.90%,
due 08/15/08 551,285
727,000 S Devon Energy Corp., 4.95%,
due 08/15/08 748,810
----------------
Total Corporate Bonds
(Cost $957,242) 1,300,095
----------------
Total Long-Term Investments
(Cost $3,228,921,230) 3,597,567,675
----------------
SHORT-TERM INVESTMENTS: 20.6%
REPURCHASE AGREEMENT: 3.1%
113,822,000 Goldman Sachs Repurchase
Agreement dated 06/30/04,
1.500%, due 07/01/04,
$113,826,743 to be
received upon repurchase
(Collateralized by $110,985,000
Various U.S. Government
Agencies, 4.750%-6.250%,
Market Value plus accrued
interest $116,831,216,
due 01/02/07-08/01/12) 113,822,000
----------------
Total Repurchase Agreement
(Cost $113,822,000) 113,822,000
----------------
SECURITIES LENDING COLLATERAL: 17.5%
$ 21,013,568 Allstate Financial, 1.400%,
due 11/15/04 $ 21,013,568
622,048,101 The Bank of New York Institutional
Cash Reserve Fund, 1.250% 622,048,101
----------------
Total Securities Lending Collateral
(Cost $643,061,669) 643,061,669
----------------
Total Short-Term Investments
(Cost $756,883,669) 756,883,669
----------------
TOTAL INVESTMENTS IN
SECURITIES (COST
$3,985,804,899)* 118.8% $ 4,354,451,344
OTHER ASSETS AND
LIABILITIES-NET (18.8) (690,028,058)
----- ----------------
NET ASSETS 100.0% $ 3,664,423,286
===== ================
</Table>
@ Non-income producing security
@@ Foreign issuer
S Segregated securities for futures, when-issued or delayed delivery
securities held at June 30, 2004.
L Loaned security, a portion or all of the security is on loan at June 30,
2004.
* Cost for federal income tax purposes is $4,075,187,197. Net unrealized
appreciation consists of:
<Table>
Gross Unrealized Appreciation $ 334,891,770
Gross Unrealized Depreciation (55,627,623)
--------------
Net Unrealized Appreciation $ 279,264,147
==============
</Table>
Information concerning open futures contracts at June 30, 2004 is shown below:
<Table>
<Caption>
NO. OF NOTIONAL EXPIRATION UNREALIZED
LONG CONTRACTS CONTRACTS MARKET VALUE DATE GAIN
- -------------- --------- ------------ ---------- ----------
S&P 500 Index 174 $ 49,607,400 Sep-04 $ 416,660
============ =========
</Table>
See Accompanying Notes to Financial Statements
71
<Page>
PORTFOLIO OF INVESTMENTS
ING VP BOND PORTFOLIO as of June 30, 2004 (Unaudited)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
CORPORATE BONDS: 26.1%
AIRLINES: 0.4%
$ 1,065,000 # American Airlines, Inc.,
7.250%, due 02/05/09 $ 1,018,406
4,447,000 American Airlines, Inc.,
7.324%, due 10/15/09 3,661,556
----------------
4,679,962
----------------
AUTO MANUFACTURERS: 0.1%
951,000 L Ford Motor Co., 6.625%,
due 10/01/28 835,132
----------------
835,132
----------------
BANKS: 6.5%
1,410,000 @@ Australia & New Zealand
Banking Group Ltd., 1.494%,
due 10/29/49 1,200,862
2,242,000 #,@@,L Banco Bradesco SA, 8.750%,
due 10/24/13 2,258,815
5,031,000 @@ Banco Santander Chile SA,
7.375%, due 07/18/12 5,545,163
1,370,000 @@ Bank of Ireland, 1.800%,
due 12/29/49 1,156,113
569,000 # BankAmerica Institutional
Capital B, 7.700%,
due 12/31/26 609,796
777,000 Barnett Capital I, 8.060%,
due 12/01/26 851,706
695,000 Barnett Capital II, 7.950%,
due 12/01/26 764,107
810,000 BNY Capital I, 7.970%,
due 12/31/26 880,953
2,136,000 #,L Danske Bank A/S, 5.914%,
due 12/29/49 2,169,085
6,412,000 # Dresdner Funding Trust I,
8.151%, due 06/30/31 7,163,235
289,000 FBS Capital I, 8.090%,
due 11/15/26 319,434
1,180,000 First Union Capital I, 7.935%,
due 01/15/27 1,291,460
1,560,000 First Union Institutional
Capital II, 7.850%,
due 01/01/27 1,677,752
885,000 Fleet Capital Trust II, 7.920%,
due 12/11/26 946,161
2,312,000 #,@@,L HBOS Capital Funding LP,
6.071%, due 06/30/49 2,325,539
735,000 @@ Hongkong & Shanghai Banking
Corp. Ltd., 1.313%,
due 07/29/49 624,243
4,450,000 @@ HSBC Bank PLC, 1.975%,
due 06/29/49 3,767,161
2,300,000 @@ HSBC Bank PLC, 2.125%,
due 06/29/49 1,949,250
3,180,000 @@ Lloyds TSB Bank PLC, 1.270%,
due 08/29/49 2,739,300
2,850,000 @@ Lloyds TSB Bank PLC, 2.188%,
due 06/29/49 2,489,914
3,363,000 M&T Bank Corp., 3.850%,
due 04/01/13 3,301,551
4,770,000 Mellon Capital I, 7.720%,
due 12/01/26 5,172,750
1,190,000 @@ National Westminster Bank PLC,
1.375%, due 08/29/49 1,027,057
$ 3,560,000 @@ National Westminster Bank PLC,
1.438%, due 11/29/49 $ 3,010,895
500,000 NB Capital Trust, 7.830%,
due 12/15/26 543,660
2,415,000 NB Capital Trust IV, 8.250%,
due 04/15/27 2,685,065
1,792,000 #,@@ Northern Rock PLC, 5.600%,
due 04/30/49 1,744,378
2,773,000 # Rabobank Capital Funding II,
5.260%, due 12/29/49 2,688,315
1,520,000 @@ Royal Bank of Canada,
1.750%, due 06/29/85 1,306,597
650,000 @@ Royal Bank of Scotland Group
PLC, 2.063%, due 12/29/49 560,981
890,000 @@ Societe Generale, 1.688%,
due 11/29/49 744,183
2,510,000 @@ Standard Chartered PLC,
1.315%, due 01/29/49 1,968,274
1,850,000 @@ Standard Chartered PLC,
1.375%, due 07/29/49 1,451,016
4,710,000 @@ Standard Chartered PLC,
1.800%, due 11/29/49 3,719,619
4,240,000 @@ Standard Chartered PLC,
2.070%, due 12/29/49 3,339,000
470,000 # Wells Fargo Capital A,
7.730%, due 12/01/26 511,906
1,620,000 @@ Westpac Banking Corp.,
1.338%, due 09/29/49 1,368,050
5,028,000 #,L Westpac Capital Trust IV,
5.256%, due 12/29/49 4,641,850
----------------
80,515,196
----------------
BEVERAGES: 0.7%
4,358,000 #,@@ Cia Brasileira de Bebidas,
8.750%, due 09/15/13 4,619,480
482,000 @@ Cia Brasileira de Bebidas,
10.500%, due 12/15/11 554,300
3,762,000 # Miller Brewing Co., 4.250%,
due 08/15/08 3,747,140
----------------
8,920,920
----------------
CHEMICALS: 0.1%
901,000 Dow Chemical Co., 5.750%,
due 11/15/09 941,324
874,000 # Sociedad Quimica y Minera de
Chile SA, 7.700%,
due 09/15/06 935,667
----------------
1,876,991
----------------
DIVERSIFIED FINANCIAL SERVICES: 4.3%
1,918,000 # Arcel Finance Ltd., 6.361%,
due 05/01/12 1,906,693
1,127,000 # Arcel Finance Ltd., 7.048%,
due 09/01/11 1,121,365
3,163,000 L Boeing Capital Corp., 7.375%,
due 09/27/10 3,581,047
4,840,000 #,@@ Brazilian Merchant Voucher
Receivables Ltd., 5.911%,
due 06/15/11 4,706,900
444,000 CitiCorp Capital I, 7.933%,
due 02/15/27 485,866
487,000 Citigroup Capital II, 7.750%,
due 12/01/36 524,987
</Table>
See Accompanying Notes to Financial Statements
72
<Page>
PORTFOLIO OF INVESTMENTS
ING VP BOND PORTFOLIO as of June 30, 2004 (Unaudited) (continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (CONTINUED)
$ 1,119,000 # Corestates Capital Trust I,
8.000%, due 12/15/26 $ 1,225,916
708,000 # Farmers Exchange Capital,
7.050%, due 07/15/28 681,422
4,087,000 # Farmers Exchange Capital,
7.200%, due 07/15/48 3,962,420
1,225,000 @@ Financiere CSFB NV, 1.250%,
due 03/29/49 981,502
2,053,000 L Ford Motor Credit Co, 7.000%,
due 10/01/13 2,075,930
2,043,000 L General Motors Acceptance
Corp, 6.875%, due 08/28/12 2,081,474
1,382,000 General Motors Acceptance
Corp, 8.000%, due 11/01/31 1,419,957
2,735,000 General Motors Acceptance
Corp., 7.750%, due 01/19/10 2,972,398
20,089 # Hollinger Participation Trust,
12.125%, due 11/15/10 23,504
600,000 JPM Capital Trust I, 7.540%,
due 01/15/27 637,218
5,426,000 XX,# Mangrove Bay Pass-Through
Trust, 6.102%, due 07/15/33 5,370,763
1,231,000 L,S Merrill Lynch & Co., Inc., 6.150%,
due 01/26/06 1,297,542
1,480,000 # Mizuho JGB Investment LLC,
9.870%, due 12/29/49 1,675,560
985,000 #,L Mizuho Preferred Capital Co
LLC, 8.790%, due 12/29/49 1,083,500
2,801,000 #,@@ PF Export Receivables Master
Trust, 3.748%, due 06/01/13 2,671,720
3,716,676 #,@@ PF Export Receivables Master
Trust, 6.436%, due 06/01/15 3,667,375
1,530,000 #,L SB Treasury Co LLC, 9.400%,
due 12/29/49 1,728,900
5,257,000 # Tokai Preferred Capital Co. LLC,
9.980%, due 12/29/49 5,922,430
50,000 Universal City Development
Partners, 11.750%,
due 04/01/10 58,125
1,340,000 # Wachovia Capital Trust V,
7.965%, due 06/01/27 1,471,857
----------------
53,336,371
----------------
ELECTRIC: 4.6%
2,405,000 #,L AES Gener SA, 7.500%,
due 03/25/14 2,284,750
2,291,484 # Allegheny Energy Supply
Statutory Trust 2001,
10.250%, due 11/15/07 2,480,531
241,216 # Allegheny Energy Supply
Statutory Trust 2001,
13.000%, due 11/15/07 247,246
1,700,000 L Consumers Energy Co.,
4.250%, due 04/15/08 1,686,227
2,287,000 L Consumers Energy Co.,
4.800%, due 02/17/09 2,291,199
3,047,000 DTE Energy Co., 2.324%,
due 06/01/07 3,045,742
5,863,000 @@,L Empresa Nacional de
Electricidad SA/Chile,
7.750%, due 07/15/08 6,261,784
7,810,000 Enserch Capital I, 2.460%,
due 07/01/28 7,308,668
$ 3,494,000 Enterprise Capital Trust II,
2.806%, due 06/30/28 $ 3,306,079
2,330,000 L FirstEnergy Corp., 6.450%,
due 11/15/11 2,419,174
3,337,000 # Monongahela Power Co.,
6.700%, due 06/15/14 3,385,530
4,868,000 Ohio Power Co., 6.375%,
due 07/15/33 4,779,295
9,040,000 # PG&E Corp., 6.875%,
due 07/15/08 9,492,000
624,237 #,L,S Power Contract Financing LLC,
5.200%, due 02/01/06 628,317
4,900,000 #,L Power Contract Financing LLC,
6.256%, due 02/01/10 4,995,584
747,660 PPL Montana LLC, 8.903%,
due 07/02/20 815,417
1,273,000 # Tenaska Virginia Partners LP,
6.119%, due 03/30/24 1,261,558
----------------
56,689,101
----------------
FOOD: 0.9%
1,728,000 Kroger Co., 7.250%,
due 06/01/09 1,921,645
3,042,000 Safeway, Inc., 4.800%,
due 07/16/07 3,111,650
2,073,000 L Supervalu, Inc., 7.875%,
due 08/01/09 2,343,906
4,036,000 Tyson Foods, Inc., 7.250%,
due 10/01/06 4,349,266
----------------
11,726,467
----------------
GAS: 0.3%
3,728,000 # Williams Gas Pipelines Central,
Inc., 7.375%, due 11/15/06 4,002,940
----------------
4,002,940
----------------
HOME BUILDERS: 0.0%
117,000 Technical Olympic USA, Inc.,
9.000%, due 07/01/10 120,510
----------------
120,510
----------------
INSURANCE: 0.7%
3,353,000 # Farmers Insurance Exchange,
8.625%, due 05/01/24 3,765,027
2,582,000 # Monumental Global Funding II,
3.850%, due 03/03/08 2,578,251
1,727,000 # Zurich Capital Trust I, 8.376%,
due 06/01/37 1,913,134
----------------
8,256,412
----------------
LODGING: 0.1%
1,494,000 Caesars Entertainment, Inc.,
9.375%, due 02/15/07 1,626,593
----------------
1,626,593
----------------
MEDIA: 0.1%
1,218,000 L Time Warner, Inc., 6.875%,
due 05/01/12 1,318,166
----------------
1,318,166
----------------
MINING: 0.5%
1,350,000 #,@@ Corp Nacional del Cobre de
Chile - CODELCO, 6.375%,
due 11/30/12 1,431,595
</Table>
See Accompanying Notes to Financial Statements
73
<Page>
PORTFOLIO OF INVESTMENTS
ING VP BOND PORTFOLIO as of June 30, 2004 (Unaudited) (continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
MINING (CONTINUED)
$ 474,000 L Vale Overseas Ltd., 8.250%,
due 01/17/34 $ 414,750
3,763,000 L Vale Overseas Ltd., 8.625%,
due 03/08/07 4,045,225
----------------
5,891,570
----------------
MISCELLANEOUS MANUFACTURING: 0.4%
6,078,000 #,L Bombardier, Inc., 6.300%,
due 05/01/14 5,171,308
----------------
5,171,308
----------------
MULTI-NATIONAL: 0.6%
4,113,000 @@ Corp. Andina de Fomento CAF,
5.200%, due 05/21/13 3,963,538
3,588,000 @@ Corp. Andina de Fomento CAF,
6.875%, due 03/15/12 3,864,068
----------------
7,827,606
----------------
OIL AND GAS: 2.2%
2,328,000 Amerada Hess Corp., 6.650%,
due 08/15/11 2,466,993
3,271,000 Amerada Hess Corp., 7.875%,
due 10/01/29 3,543,756
3,125,000 #,@@ Empresa Nacional de Petroleo
ENAP, 4.875%, due 03/15/14 2,915,575
50,000 Energy Partners Ltd., 8.750%,
due 08/01/10 52,500
7,101,000 @@ Husky Oil Co., 8.900%,
due 08/15/28 8,047,620
6,943,000 #,L Pemex Project Funding Master
Trust, 2.820%, due 06/15/10 6,991,601
1,416,000 Pemex Project Funding Master
Trust, 7.375%, due 12/15/14 1,451,400
1,947,000 Valero Energy Corp., 8.750%,
due 06/15/30 2,436,211
----------------
27,905,656
----------------
PACKAGING AND CONTAINERS: 0.4%
1,357,000 # Sealed Air Corp., 5.375%,
due 04/15/08 1,404,517
3,796,000 # Sealed Air Corp., 6.950%,
due 05/15/09 4,148,212
----------------
5,552,729
----------------
REAL ESTATE: 0.6%
3,262,000 EOP Operating LP, 7.750%,
due 11/15/07 3,622,791
548,000 Liberty Property LP, 6.375%,
due 08/15/12 576,381
2,884,000 Liberty Property LP, 7.750%,
due 04/15/09 3,278,837
----------------
7,478,009
----------------
RETAIL: 0.0%
115,000 L Dollar General Corp., 8.625%,
due 06/15/10 128,369
----------------
128,369
----------------
SAVINGS AND LOANS: 0.9%
2,843,000 L Great Western Financial,
8.206%, due 02/01/27 3,095,970
3,909,000 Sovereign Bancorp, Inc.,
10.500%, due 11/15/06 4,480,832
$ 3,779,000 L Washington Mutual, Inc.,
4.375%, due 01/15/08 $ 3,806,114
----------------
11,382,916
----------------
TELECOMMUNICATIONS: 1.5%
1,720,000 # Brasil Telecom SA, 9.375%,
due 02/18/14 1,677,000
3,063,000 S Cia de Telecomunicaciones
de Chile SA, 7.625%,
due 07/15/06 3,303,651
4,543,000 L,S Sprint Capital Corp., 4.780%,
due 08/17/06 4,633,238
1,425,000 L Sprint Capital Corp., 8.750%,
due 03/15/32 1,665,285
2,695,000 L Sprint Capital Corp., 6.875%,
due 11/15/28 2,598,026
3,220,000 Verizon Florida, Inc., 6.125%,
due 01/15/13 3,315,270
2,080,000 Verizon Virginia, Inc., 4.625%,
due 03/15/13 1,945,588
----------------
19,138,058
----------------
TRANSPORTATION: 0.2%
1,910,000 # MISC Capital Ltd., 5.000%,
due 07/01/09 1,915,079
----------------
1,915,079
----------------
Total Corporate Bonds
(Cost $327,320,764) 326,296,061
----------------
COLLATERALIZED MORTGAGE OBLIGATIONS AND
ASSET-BACKED SECURITIES: 28.2%
AGENCY COLLATERAL CMO: 0.3%
4,145,247 Vendee Mortgage Trust,
5.840%, due 09/15/23 4,106,924
----------------
4,106,924
----------------
AUTOMOBILE ASSET BACKED SECURITIES: 1.1%
9,200,000 Capital Auto Receivables Asset
Trust, 2.750%, due 04/16/07 9,188,998
4,320,000 Nissan Auto Receivables
Owner Trust, 2.610%,
due 07/15/08 4,274,525
----------------
13,463,523
----------------
COMMERCIAL MORTGAGE-BACKED
SECURITIES: 4.3%
5,078,000 Bear Stearns Commercial
Mortgage Securities, 1.400%,
due 06/25/34 5,074,826
3,372,000 Bear Stearns Commercial
Mortgage Securities, 4.170%,
due 01/12/41 3,340,553
6,167,579 Chase Manhattan Bank-First
Union National Bank,
7.439%, due 08/15/31 6,950,158
3,639,033 CS First Boston Mortgage
Securities Corp., 3.727%,
due 03/15/35 3,525,285
9,380,000 JP Morgan Chase Commercial
Mortgage Securities Corp.,
6.244%, due 04/15/35 10,007,888
5,220,000 LB-UBS Commercial Mortgage
Trust, 6.226%, due 03/15/26 5,605,697
</Table>
See Accompanying Notes to Financial Statements
74
<Page>
PORTFOLIO OF INVESTMENTS
ING VP BOND PORTFOLIO As of June 30, 2004 (Unaudited) (continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
COMMERCIAL MORTGAGE-BACKED
SECURITIES (CONTINUED)
$ 4,500,000 L LB-UBS Commercial Mortgage
Trust, 7.370%, due 08/15/26 $ 5,086,829
9,380,000 Mortgage Capital Funding, Inc.,
6.663%, due 03/18/30 10,113,257
4,336,658 Prudential Commercial
Mortgage Trust, 3.669%,
due 02/11/36 4,192,416
----------------
53,896,909
----------------
CREDIT CARD ASSET BACKED SECURITIES: 1.0%
8,800,000 Citibank Credit Card Issuance
Trust, 5.650%, due 06/16/08 9,228,022
3,460,000 Fleet Credit Card Master Trust II,
2.400%, due 07/15/08 3,440,090
----------------
12,668,112
----------------
HOME EQUITY ASSET BACKED SECURITIES: 3.8%
2,748,940 Argent Securities, Inc., 1.620%,
due 03/25/34 2,751,506
2,377,792 Asset Backed Funding
Certificates, 1.580%,
due 11/25/33 2,378,619
7,164,525 Bayview Financial Acquisition
Trust, 1.820%, due 12/28/34 7,177,958
3,766,167 Centex Home Equity, 1.580%,
due 01/25/34 3,769,209
695,000 Equity One ABS, Inc., 2.976%,
due 09/25/33 695,914
5,689,154 Merrill Lynch Mortgage
Investors, Inc., 1.660%,
due 07/25/34 5,705,962
3,542,000 New Century Home Equity Loan
Trust, 1.570%, due 04/25/34 3,542,000
1,831,636 Residential Asset Mortgage
Products, Inc., 1.610%,
due 06/25/33 1,830,671
2,373,000 Residential Asset Securities
Corp., 1.580%, due 02/25/34 2,374,379
7,347,025 Residential Asset Securities
Corp., 1.610%, due 12/25/33 7,366,042
2,602,000 Residential Funding Mortgage
Securities II, 3.450%,
due 01/25/16 2,608,860
7,465,000 Saxon Asset Securities Trust,
3.960%, due 06/25/33 7,312,029
----------------
47,513,149
----------------
OTHER ASSET-BACKED SECURITIES: 0.7%
856,489 Ameriquest Mortgage
Securities, Inc., 1.600%,
due 02/25/34 857,688
2,069,714 Amortizing Residential
Collateral Trust, 1.550%,
due 05/25/32 2,069,552
2,154,000 Chase Funding Mortgage Loan
Asset-Backed Certificates,
1.600%, due 07/25/33 2,157,214
3,256,000 Residential Asset Mortgage
Products, Inc., 2.140%,
due 02/25/30 3,222,884
----------------
8,307,338
----------------
WHOLE LOAN COLLATERALIZED MORTGAGE: 14.4%
$ 3,643,985 Bank of America Alternative
Loan Trust, 1.750%,
due 12/25/33 $ 3,635,725
1,195,797 Bank of America Alternative
Loan Trust, 5.500%,
due 02/25/33 1,218,073
6,123,702 Bank of America Mortgage
Securities, 1.750%,
due 12/25/33 6,132,265
2,182,982 Bank of America Mortgage
Securities, 4.413%,
due 03/25/33 2,186,248
5,548,405 Bank of America Mortgage
Securities, 5.000%,
due 06/25/33 5,598,417
3,297,076 Bear Stearns Asset Backed
Securities, Inc., 5.625%,
due 11/25/32 3,360,642
4,892,072 CitiCorp. Mortgage Securities,
Inc., 1.800%, due 10/25/33 4,893,801
2,949,183 Countrywide Alternative Loan
Trust, 1.700%, due 07/25/18 2,955,773
7,810,000 CS First Boston Mortgage
Securities Corp., 4.187%,
due 10/25/33 7,865,858
10,317,016 First Horizon Alternative
Mortgage Securities, 4.875%,
due 06/25/34 10,387,778
6,523,574 GMAC Mortgage Corp. Loan
Trust, 5.250%, due 04/25/34 6,613,254
9,269,000 GMAC Mortgage Corp. Loan
Trust, 5.500%, due 01/25/34 9,340,424
6,928,715 GSR Mortgage Loan Trust,
6.500%, due 01/25/34 7,200,458
5,225,482 MASTR Alternative Loans Trust,
6.500%, due 05/25/33 5,354,071
4,058,008 MASTR Asset Securitization
Trust, 1.750%, due 11/25/33 4,052,388
2,169,461 MASTR Asset Securitization
Trust, 8.000%, due 06/25/33 2,292,906
11,905,434 MLCC Mortgage Investors, Inc.,
1.620%, due 01/25/29 11,921,268
3,531,036 Prime Mortgage Trust, 1.700%,
due 02/25/34 3,531,231
6,290,157 Residential Accredit Loans, Inc.,
1.750%, due 03/25/18 6,308,836
1,765,002 Residential Funding Mtg Sec I,
1.600%, due 12/25/33 1,766,266
2,342,860 Residential Funding Mtg Sec I,
1.750%, due 05/25/33 2,340,056
9,221,609 Sequoia Mortgage Trust,
1.600%, due 01/20/34 9,201,012
9,947,295 Structured Asset Mortgage
Investments, Inc., 1.580%,
due 07/19/34 9,936,019
4,351,909 Structured Asset Securities
Corp., 5.500%, due 07/25/33 4,309,427
11,900,000 Structured Asset Securities
Corp., 6.000%, due 03/25/34 12,186,039
4,588,000 Thornburg Mortgage Securities
Trust, 1.610%, due 05/25/44 4,588,000
6,564,012 Thornburg Mortgage Securities
Trust, 1.650%, due 12/25/33 6,565,561
</Table>
See Accompanying Notes to Financial Statements
75
<Page>
PORTFOLIO OF INVESTMENTS
ING VP BOND PORTFOLIO as of June 30, 2004 (Unaudited) (continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
WHOLE LOAN COLLATERALIZED
MORTGAGE (CONTINUED)
$ 6,871,013 Washington Mutual, 1.900%,
due 01/25/34 $ 6,782,211
3,195,040 Washington Mutual, 5.000%,
due 06/25/18 3,180,850
1,223,786 Wells Fargo Mortgage Backed
Securities Trust, 1.800%,
due 02/25/34 1,223,543
5,950,000 Wells Fargo Mortgage Backed
Securities Trust, 4.500%,
due 08/25/18 5,527,439
9,021,964 Wells Fargo Mortgage Backed
Securities Trust, 5.000%,
due 12/25/33 8,867,989
----------------
181,323,828
----------------
WHOLE LOAN COLLATERALIZED PLANNED
AMORTIZATION CLASS: 2.3%
7,146,204 GSR Mortgage Loan Trust,
1.700%, due 10/25/32 7,148,655
3,330,649 MASTR Alternative Loans Trust,
1.700%, due 11/25/33 3,335,754
6,697,182 MASTR Alternative Loans Trust,
8.500%, due 05/25/33 6,873,065
7,610,000 Residential Funding Securities
Corp., 4.750%, due 02/25/33 7,702,345
2,270,522 Residential Funding Securities
Corp., 8.500%, due 05/25/33 2,416,414
1,479,592 Washington Mutual, 1.700%,
due 03/25/34 1,480,024
----------------
28,956,257
----------------
WL COLLATERALIZED SUPPORT CMO: 0.3%
3,226,514 Bank of America Mortgage
Securities, 5.500%,
due 11/25/33 3,190,932
----------------
3,190,932
----------------
Total Collateralized Mortgage
Obligations and Asset-Backed
(Cost $355,626,761) 353,426,972
----------------
U.S. GOVERNMENT AGENCY OBLIGATIONS: 34.6%
AGENCY COLLATERAL CMO: 2.3%
20,687,932 1.890%, due 04/15/32 20,915,259
7,571,434 6.000%, due 01/15/29 7,711,671
----------------
28,626,930
----------------
AGENCY COLLATERAL PAC CMO: 1.1%
7,875,000 6.000%, due 01/15/28 8,196,280
5,136,000 6.000%, due 01/15/29 5,248,610
614,529 10.000%, due 02/25/19 694,461
----------------
14,139,351
----------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION: 7.7%
25,560,000 2.700%, due 03/16/07 25,143,193
12,325,000 2.750%, due 02/09/07 12,160,202
4,563,103 4.500%, due 04/01/14 4,478,054
4,275,000 5.500%, due 07/15/34 4,256,297
8,394,266 6.000%, due 01/15/29 8,476,788
35,130,000 6.000%, due 07/15/33 35,876,513
4,000,000 6.500%, due 07/15/34 4,168,752
$ 1,198,518 7.500%, due 11/01/28 $ 1,294,204
----------------
95,854,003
----------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION: 21.7%
695,000 2.859%, due 12/26/29 690,930
12,455,000 L 2.875%, due 05/19/08 12,001,302
20,090,000 4.500%, due 07/01/17 19,631,707
6,167,000 4.750%, due 12/25/42 6,183,866
32,826,000 5.000%, due 07/01/18 32,867,034
72,167,000 5.000%, due 07/15/34 69,708,849
6,140,000 L 5.250%, due 08/01/12 6,145,514
44,221 5.500%, due 11/01/16 45,397
246,504 5.500%, due 12/01/16 253,063
26,101 5.500%, due 04/01/17 26,780
81,713 5.500%, due 02/01/18 83,837
20,771 5.500%, due 06/01/18 21,303
122,374 5.500%, due 10/01/18 125,555
2,861,270 5.500%, due 07/15/19 2,926,541
6,975,000 5.500%, due 08/15/19 7,107,957
12,327,000 5.500%, due 07/15/34 12,269,211
315,669 6.000%, due 06/01/16 329,487
32,642 6.000%, due 08/01/16 34,071
11,034 6.000%, due 08/01/16 11,517
268,058 6.000%, due 10/01/16 279,792
372,028 6.000%, due 10/01/16 388,313
281,755 6.000%, due 01/01/17 294,089
422,008 6.000%, due 01/01/17 440,299
256,841 6.000%, due 02/01/17 267,974
17,848 6.000%, due 02/01/17 18,622
6,007 6.000%, due 02/01/17 6,268
272,590 6.000%, due 04/01/17 284,405
453,570 6.000%, due 04/01/17 473,229
399,193 6.000%, due 04/01/17 416,495
405,715 6.000%, due 04/01/17 423,300
260,122 6.000%, due 05/01/17 271,397
277,638 6.000%, due 05/01/17 289,672
268,447 6.000%, due 05/01/17 280,082
365,668 6.000%, due 05/01/17 381,517
126,741 6.000%, due 06/01/17 132,234
290,553 6.000%, due 06/01/17 303,147
481,697 6.000%, due 07/01/17 502,575
425,611 6.000%, due 07/01/17 444,058
323,364 6.000%, due 08/01/17 337,380
393,622 6.000%, due 08/01/17 410,683
258,392 6.000%, due 08/01/17 269,591
241,575 6.000%, due 08/01/17 252,230
910,610 6.000%, due 09/01/17 950,078
3,175,141 6.000%, due 09/01/17 3,312,761
20,637 6.000%, due 10/01/17 21,532
1,014,891 6.000%, due 11/01/17 1,059,318
22,387 6.000%, due 02/01/18 23,357
925,336 6.000%, due 04/01/18 965,547
278,077 6.000%, due 09/01/18 290,145
246,383 6.000%, due 11/01/18 257,075
394,509 6.000%, due 12/01/18 411,778
1,349,290 6.000%, due 07/01/29 1,384,709
8,836,317 6.000%, due 07/25/29 8,966,094
3,756,548 6.000%, due 07/25/29 3,812,933
5,262,170 6.000%, due 04/25/31 5,332,946
12,630,000 6.000%, due 07/15/34 12,894,447
5,923,436 6.500%, due 08/01/29 6,182,936
470,799 6.500%, due 01/01/32 491,123
534,744 6.500%, due 09/01/32 557,364
</Table>
See Accompanying Notes to Financial Statements
76
<Page>
PORTFOLIO OF INVESTMENTS
ING VP BOND PORTFOLIO as of June 30, 2004 (Unaudited) (continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (CONTINUED)
$ 861,785 6.500%, due 10/01/32 $ 898,238
372,045 6.500%, due 10/01/32 387,783
15,090,000 6.500%, due 07/15/33 15,712,463
5,560,000 L 6.625%, due 11/15/10 6,181,363
49,300 7.000%, due 08/01/25 52,341
51,907 7.000%, due 10/01/25 55,108
15,141 7.000%, due 11/01/25 16,075
47,092 7.000%, due 12/01/25 49,996
43,480 7.000%, due 12/01/25 46,161
80,983 7.000%, due 12/01/25 85,978
69,849 7.000%, due 02/01/26 74,157
148,508 7.000%, due 02/01/26 157,668
49,923 7.000%, due 03/01/26 52,958
133,592 7.000%, due 03/01/26 141,712
100,241 7.000%, due 03/01/26 106,423
47,753 7.000%, due 03/01/26 50,655
67,868 7.000%, due 03/01/26 72,054
404,580 7.000%, due 01/01/30 428,432
5,011,746 7.000%, due 06/01/31 5,310,384
7,545,000 7.000%, due 07/15/33 7,957,621
270,179 7.500%, due 10/01/30 289,722
178,613 7.500%, due 11/01/30 191,533
336,115 7.500%, due 11/01/30 360,426
3,255,173 7.500%, due 06/25/32 3,490,147
4,154,408 7.500%, due 01/25/48 4,432,376
----------------
271,147,190
----------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION: 1.8%
253,095 4.000%, due 12/20/29 256,357
362,737 4.375%, due 04/20/28 363,780
7,784,726 6.500%, due 10/15/31 8,147,824
263,884 7.000%, due 04/15/26 281,481
237,788 7.000%, due 04/15/26 253,645
367,098 7.000%, due 04/15/26 391,579
230,877 7.000%, due 04/15/26 246,273
657,271 7.000%, due 05/15/32 698,640
72,750 7.500%, due 04/15/22 78,912
14,725 7.500%, due 05/15/22 15,972
6,773 7.500%, due 06/15/22 7,347
6,749 7.500%, due 06/15/22 7,321
9,209 7.500%, due 08/15/22 9,989
7,837 7.500%, due 06/15/24 8,486
7,736 7.500%, due 06/15/24 8,377
45,087 7.500%, due 01/15/26 48,721
3,687 7.500%, due 07/15/26 3,984
68,340 7.500%, due 03/15/29 73,789
159,819 7.500%, due 04/15/29 172,562
237,448 7.500%, due 08/15/29 256,380
2,016 7.500%, due 08/15/29 2,176
82,155 7.500%, due 09/15/29 88,706
72,208 7.500%, due 10/15/29 77,965
113,371 7.500%, due 12/15/29 122,409
87,451 7.500%, due 01/15/30 94,389
1,764 7.500%, due 02/15/30 1,904
271,542 7.500%, due 02/15/30 293,085
156,823 7.500%, due 05/15/30 169,265
31,231 7.500%, due 06/15/30 33,709
19,490 7.500%, due 06/15/30 21,037
3,279 7.500%, due 07/15/30 3,539
94,402 7.500%, due 07/15/30 101,891
4,670 7.500%, due 07/15/30 5,040
44,217 7.500%, due 08/15/30 47,725
$ 2,294 7.500%, due 08/15/30 $ 2,476
2,593 7.500%, due 08/15/30 2,799
141,409 7.500%, due 10/15/30 152,628
2,895 7.500%, due 11/15/30 3,121
2,389 7.500%, due 11/15/30 2,578
3,913 7.500%, due 11/15/30 4,223
2,489 7.500%, due 11/15/30 2,687
4,561 7.500%, due 12/15/30 4,922
40,108 7.500%, due 12/15/30 43,290
471 7.500%, due 01/15/31 508
3,008 7.500%, due 01/15/31 3,243
2,138 7.500%, due 01/15/31 2,305
645 7.500%, due 02/15/31 695
2,226 7.500%, due 02/15/31 2,403
45,288 7.500%, due 02/15/31 48,825
2,774 7.500%, due 02/15/31 2,991
5,562 7.500%, due 02/15/31 5,997
4,866 7.500%, due 03/15/31 5,246
62,031 7.500%, due 03/15/31 66,875
51,690 7.500%, due 04/15/31 55,726
14,375 7.500%, due 09/15/31 15,497
1,582,404 7.500%, due 12/15/31 1,707,600
233,611 7.500%, due 01/15/32 252,160
153,280 7.500%, due 02/15/32 165,257
200,387 7.500%, due 03/15/32 216,297
44,870 7.500%, due 03/15/32 48,376
8,860 7.500%, due 04/15/32 9,552
103,915 7.500%, due 05/15/32 112,035
204,027 7.500%, due 06/15/32 219,970
38,524 7.500%, due 06/15/32 41,534
110,505 7.500%, due 07/15/32 119,140
499,558 7.500%, due 08/15/32 538,594
1,740,221 7.500%, due 09/15/32 1,876,206
4,242,980 8.000%, due 12/15/17 4,674,383
----------------
22,804,398
----------------
Total U.S. Government
Agency Obligations
(Cost $431,319,567) 432,571,872
----------------
U.S. TREASURY OBLIGATIONS: 14.3%
U.S. TREASURY BONDS: 11.3%
24,123,000 L,S 4.000%, due 02/15/14 22,997,903
26,265,000 L,S 4.750%, due 05/15/14 26,547,165
13,879,000 L,S 5.290%, due 05/15/16 7,527,748
22,285,000 L,S 5.375%, due 02/15/31 22,482,623
6,855,000 L,S 5.500%, due 08/15/28 6,946,850
20,180,000 L,S 6.250%, due 08/15/23 22,352,518
11,955,000 L,S 10.375%, due 11/15/12 14,601,921
12,394,000 L,S 13.250%, due 05/15/14 17,555,915
----------------
141,012,643
----------------
U.S. TREASURY NOTES: 3.0%
2,000,000 L,S 1.625%, due 01/31/05 1,999,454
9,378,000 L,S 2.500%, due 05/31/06 9,349,435
16,489,000 L,S 3.125%, due 05/15/07 16,494,161
10,028,000 L,S 4.000%, due 06/15/09 10,116,928
----------------
37,959,978
----------------
Total U.S. Treasury Obligations
(Cost $180,635,764) 178,972,621
----------------
</Table>
See Accompanying Notes to Financial Statements
77
<Page>
PORTFOLIO OF INVESTMENTS
ING VP BOND PORTFOLIO as of June 30, 2004 (Unaudited) (continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
OTHER BONDS: 1.9%
SOVEREIGN: 1.9%
$ 1,182,118 @@ Brazilian Government Intl.
Bond, 2.188%, due 04/15/12 995,472
1,474,000 @@ Brazilian Government Intl.
Bond, 10.000%, due 08/07/11 1,437,150
2,615,000 @@ Colombia Government Intl.
Bond, 10.000%, due 01/23/12 2,719,600
2,322,000 @@ Dominican Republic Intl. Bond,
9.040%, due 01/23/13 1,439,640
1,096,000 @@ Ecuador Government Intl. Bond,
7.000%, due 08/15/30 776,790
260,000 @@ Panama Government
Intl. Bond, 9.375%,
due 07/23/12 285,350
722,000 @@ Panama Government Intl. Bond,
9.375%, due 01/16/23 740,050
2,423,000 @@ Peru Government Intl. Bond,
4.500%, due 03/07/17 1,967,844
658,000 @@,L Philippine Government Intl.
Bond, 9.875%, due 01/15/19 658,000
5,260,000 @@ Russia Government Intl. Bond,
5.000%, due 03/31/30 4,815,529
2,244,000 @@ Turkey Government Intl. Bond,
12.375%, due 06/15/09 2,577,795
1,107,000 #,@@,XX Ukraine Government Intl.
Bond, 7.650%, due 06/11/13 1,059,953
1,918,644 @@ Uruguay Government Intl. Bond,
10.500%, due 10/20/06 2,110,355
1,953,000 @@,L Venezuela Government Intl.
Bond, 10.750%, due 09/19/13 1,928,588
----------------
Total Other Bonds
(Cost $24,253,417) 23,512,116
----------------
<Caption>
SHARES VALUE
- ---------------------------------------------------------------------------------------------------
COMMON STOCK: 1.1%
REAL ESTATE INVESTMENT TRUSTS: 1.1%
2,546,000 # iStar Financial, Inc., 5.700%,
due 03/01/14 2,402,500
4,766,000 # iStar Financial, Inc., 5.125%,
due 04/01/11 4,556,506
2,478,000 Simon Property Group LP,
4.875%, due 03/18/10 2,455,805
4,564,000 L Simon Property Group LP,
6.375%, due 11/15/07 4,888,878
----------------
14,303,689
----------------
Total Common Stock
(Cost $14,255,526) 14,303,689
----------------
PREFERRED STOCK: 0.5%
BANKS: 0.5%
620 #,XX DG Funding Trust 6,665,000
Total Preferred Stock ----------------
(Cost $6,741,324) 6,665,000
----------------
WARRANTS: 0.0%
SOVEREIGN: 0.0%
750 XX Central Bank of Nigeria --
----------------
Total Warrants (Cost $630) --
----------------
Total Long-Term Investments
(Cost $1,340,153,753) 1,335,748,331
----------------
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 30.1%
COMMERCIAL PAPER: 6.6%
$ 3,000,000 S Concord Minutemen Cap.,
1.160%, due 07/07/05 $ 2,999,955
----------------
8,300,000 S DaimlerChrystler Holdings Corp.,
1.450%, due 07/14/04 8,295,320
4,000,000 S Ford Motor Credit Co., 5.280%,
due 07/19/04 3,997,023
5,500,000 S Ford Motor Credit Corp., 1.350%,
due 07/06/04 5,498,763
11,000,000 S General Motors Corp., 1.270%,
due 07/01/04 10,999,611
3,600,000 S Hertz Corp., 5.300%, due 07/08/04 3,598,782
6,000,000 S Jupiter Securities Corp., 1.170%,
due 07/09/04 5,998,110
7,400,000 S Kraft Foods, 1.180%, due 07/01/04 7,399,758
5,000,000 S Kraft Foods, 1.270%, due 07/08/04 4,998,589
6,000,000 S Royal Bank of Scotland, 1.400%,
due 10/21/04 5,996,700
10,000,000 S St. Germain Holdings Ltd., 1.230%,
due 07/06/04 9,997,950
2,000,000 S St. Germain Holdings Ltd., 1.230%,
due 07/13/04 1,999,112
10,000,000 S Thunder Bay Funding Corp., 1.190%,
due 07/02/04 9,999,339
----------------
Total Commercial Paper
(Cost $81,784,886) 81,779,012
----------------
REPURCHASE AGREEMENT: 3.9%
49,253,000 S Goldman Sachs Repurchase Agreement dated,
1.500%, due 07/01/04, $49,255,052 to be
received upon repurchase (Collateralized
by $49,460,000 Federal National Mortgage
Association, 5.250%, Market Value plus
accrued interest $50,240,932 due
08/01/12), 1.500%, due 07/01/04 49,253,000
----------------
Total Repurchase Agreement
(Cost $49,253,000) 49,253,000
----------------
SECURITIES LENDING COLLATERAL(cc): 19.6%
2,001,292 Allstate Financial, 1.400%,
due 11/15/04 2,001,292
4,004,099 Nationwide Global Funding,
1.500%, due 11/15/04 4,004,099
240,138,948 The Bank of New York Institutional
Cash Reserve Fund, 1.250% 240,138,948
----------------
Total Securities Lending Collateral
(Cost $246,114,339) 246,144,339
----------------
Total Short-Term Investments
(Cost $377,152,226) 377,176,351
----------------
TOTAL INVESTMENTS IN
SECURITIES (COST $1,717,305,978)* 136.8% $ 1,712,894,682
OTHER ASSETS AND
LIABILITIES-NET (36.8) (461,035,941)
----- ----------------
NET ASSETS 100.0% $ 1,251,858,741
===== ================
</Table>
See Accompanying Notes to Financial Statements
78
<Page>
PORTFOLIO OF INVESTMENTS
ING VP BOND PORTFOLIO as of June 30, 2004 (Unaudited) (continued)
# Securities with purchases pursuant to Rule 144A, under the Securities Act
of 1933 and may not be resold subject to that rule except to qualified
institutional buyers. These securities have been determined to be liquid
under the guidelines established by the Funds' Board of Directors/Trustees.
L Loaned security, a portion or all of the security is on loan at June 30,
2004.
@@ Foreign issuer
XX Value of securities obtained from one or more dealers making markets in the
securities in accordance with the Fund's valuation procedures.
S Segregated securities for futures, when-issued or delayed delivery
securities held at June 30, 2004.
## Restricted securities
(cc) Securities purchased with cash collateral for securities loaned.
* Cost for federal income tax purposes is $1,717,723,028. Net unrealized
depreciation consists of:
<Table>
Gross Unrealized Appreciation $ 10,264,474
Gross Unrealized Depreciation (15,092,820)
--------------
Net Unrealized Depreciation $ (4,828,346)
==============
</Table>
Information concerning open futures contracts at June 30, 2004 is shown below:
<Table>
<Caption>
NO. OF NOTIONAL EXPIRATION UNREALIZED
SHORT CONTRACTS CONTRACTS MARKET VALUE DATE GAIN/(LOSS)
- --------------- --------- ------------ ---- -----------
U.S. 2 Year
Treasury Note 231 $ (48,636,329) Sep-04 $ (54,267)
U.S. 5 Year
Treasury Note 400 (43,475,000) Sep-04 (327,000)
------------- -----------
$ (92,111,329) $ (381,267)
============= ===========
LONG CONTRACTS
U.S. Long Bond 250 $ 26,593,750 Sep-04 $ 555,391
============= ===========
</Table>
See Accompanying Notes to Financial Statements
79
<Page>
PORTFOLIO OF INVESTMENTS
ING VP MONEY MARKET PORTFOLIO(1) as of June 30, 2004 (Unaudited)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
CORPORATE NOTES: 26.2%
$ 11,400,000 ABN Amro Bank NV/Chicago,
1.189%, due 03/18/05 $ 11,398,378
12,900,000 # American Honda Finance,
1.491%, due 09/16/04 12,900,039
9,500,000 # Bank of New York Co., Inc.,
1.340%, due 07/28/05 9,500,000
18,100,000 Bank One Delaware NA,
1.400%, due 08/06/04 18,102,394
9,500,000 # Concord Minutemen Cap,
1.160%, due 07/07/05 9,499,858
9,500,000 First Union, 1.891%,
due 03/31/05 9,526,980
3,750,000 Fleet National Bank, 1.280%,
due 11/22/04 3,750,934
11,500,000 Fleet National Bank, 1.800%,
due 09/21/04 11,501,633
16,000,000 L General Electric Capital Corp.,
1.250%, due 07/08/05 16,020,000
16,007,000 L General Electric Capital Corp.,
1.645%, due 03/15/05 16,027,008
7,800,000 HBOS Treasury Services PLC,
1.100%, due 08/01/05 7,804,282
14,000,000 # HBOS Treasury Services PLC,
1.315%, due 08/23/04 14,002,144
19,500,000 # HBOS Treasury Services PLC,
1.579%, due 07/22/05 19,500,585
5,700,000 HSBC Bank USA, 1.555%,
due 04/22/05 5,672,583
23,900,000 KeyBank National Association,
1.199%, due 08/03/04 23,898,679
3,800,000 PNC Bank NA, 1.460%,
due 05/18/05 3,804,750
11,500,000 Royal Bank of Canada/
New York, 1.270%,
due 03/30/05 11,498,656
9,900,000 Toyota Motor Credit Corp.,
1.170%, due 02/07/05 9,900,000
9,600,000 Toyota Motor Credit Corp.,
4.100%, due 09/08/04 9,636,000
9,800,000 Wachovia Bank NA/Charlotte,
1.449%, due 07/30/04 9,800,000
31,200,000 Wal-Mart Stores, 1.238%,
due 02/22/05 31,200,000
14,100,000 Washington Mutual Bank,
1.160%, due 07/29/04 14,099,182
10,800,000 Wells Fargo/Old, 1.134%,
due 08/02/05 10,786,500
7,800,000 Westpac Bank, 1.408%,
due 07/11/05 7,799,072
----------------
Total Corporate Notes
(Cost $297,692,655) 297,629,657
----------------
COMMERCIAL PAPER: 28.7%
11,364,000 # Barton Capital Corp., 1.050%,
due 07/01/04 11,363,669
11,600,000 Blue Ridge Asset Funding,
1.070%, due 07/02/04 11,599,310
10,000,000 # Concord Minutemen Cap,
1.210%, due 07/11/05 9,999,730
9,000,000 # Concord Minutemen Cap,
1.210%, due 07/12/05 8,999,640
26,000,000 # Concord Minutemen Cap,
1.270%, due 07/15/05 25,998,804
$ 11,900,000 Crown Point Capital Co.,
1.600%, due 10/06/04 $ 11,848,354
11,500,000 Edison Asset Securitization,
1.050%, due 07/07/04 11,497,704
11,500,000 Galaxy Funding 1.040%,
due 07/08/04 11,497,345
10,300,000 Goldman Sachs Group, 1.180%,
due 07/12/04 10,300,036
12,300,000 Goldman Sachs Group, 1.280%,
due 10/27/04 12,284,625
11,600,000 Household Financial, 1.100%,
due 07/01/04 11,599,646
11,600,000 HSBC USA, Inc., 1.180%,
due 08/10/04 11,584,484
22,800,000 Jupiter Securities Corp., 1.160%,
due 07/09/04 22,793,388
11,500,000 Lasalle Bank, 1.160%,
due 12/17/04 11,461,705
12,000,000 Lasalle Bank Note, 1.210%,
due 11/05/04 11,985,000
31,400,000 Money Market Trust Series A,
1.645%, due 07/08/05 31,400,000
13,500,000 Royal Bank of Scotland,
1.400%, due 10/21/04 13,492,575
20,000,000 # St. Germain Holdings, 1.500%,
due 07/01/04 19,999,167
19,588,000 # St. Germain Holdings, 1.170%,
due 07/08/04 19,582,911
11,500,000 # St. Germain Holdings, 1.230%,
due 07/13/04 11,494,892
11,300,000 # Tulip Funding Corp., 1.210%,
due 07/12/04 11,295,442
24,600,000 # Verizon Global Funding,
1.630%, due 07/13/05 24,599,016
----------------
Total Commercial Paper
(Cost $326,775,368) 326,677,443
----------------
U.S. GOVERNMENT AGENCY OBLIGATIONS: 11.3%
FEDERAL HOME LOAN BANK: 7.0%
11,600,000 1.240%, due 03/01/05 11,600,000
12,100,000 1.400%, due 02/25/05 12,065,999
11,700,000 1.425%, due 04/04/05 11,653,727
7,900,000 1.470%, due 02/28/05 7,880,613
12,700,000 1.500%, due 12/07/04 12,700,000
7,900,000 1.500%, due 03/01/05 7,881,767
7,800,000 L 1.510%, due 12/08/04 7,800,000
7,200,000 1.600%, due 05/16/05 7,164,000
----------------
78,746,106
----------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION: 1.0%
11,900,000 1.219%, due 02/14/05 11,900,000
----------------
11,900,000
----------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION: 3.3%
13,300,000 L 1.400%, due 02/25/05 13,262,627
11,500,000 1.550%, due 05/04/05 11,450,389
5,400,000 1.610%, due 05/13/05 5,379,750
8,000,000 1.630%, due 01/03/05 7,990,000
----------------
38,082,766
----------------
Total U.S. Government
Agency Obligations
(Cost $129,000,000) 128,728,872
----------------
</Table>
See Accompanying Notes to Financial Statements
80
<Page>
PORTFOLIO OF INVESTMENTS
ING VP MONEY MARKET PORTFOLIO(1) as of June 30, 2004 (Unaudited) (continued)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT: 4.1%
$ 11,700,000 Dexia Bank, 1.508%,
due 12/07/04 $ 11,685,609
11,700,000 UBS AG Stanford, 1.195%,
due 12/06/04 11,670,282
11,000,000 Washington Mutual Bank,
1.120%, due 07/14/04 10,999,957
12,200,000 Washington Mutual Bank,
1.300%, due 12/27/04 12,171,940
----------------
Total Certificates Of Deposit
(Cost $46,600,595) 46,527,788
----------------
COLLATERALIZED MORTGAGE OBLIGATIONS: 5.4%
11,000,000 #,XX Blue Heron Funding Ltd.,
1.310%, due 05/18/05 10,999,450
11,500,000 XX Blue Ridge Asset Funding,
1.310%, due 03/18/05 11,499,425
11,600,000 XX Blue Ridge Asset Funding,
1.330%, due 02/23/05 11,599,420
13,900,000 #,I,XX Newcastle CDO I Ltd.,
1.321%, due 09/24/38 13,900,000
13,700,000 #,I,XX Putnam Structured
Product CDO, 1.259%,
due 10/15/38 13,700,000
----------------
Total Collateralized Mortgage
Obligations
(Cost $61,700,000) 61,698,295
----------------
INVESTMENT COMPANY: 1.2%
13,500,000 #,I,XX Money Market Trust LLY,
1.175%, due 06/03/05 13,499,960
----------------
Total Investment Company
(Cost $13,500,000) 13,499,960
----------------
REPURCHASE AGREEMENT: 23.0%
261,232,000 Goldman Sachs Repurchase Agreement dated 06/30/04,
1.500% due 07/01/04, $261,242,885 to be received upon
repurchase (Collateralized by $265,947,000 various
U.S. Government Agency Obligations, 2.500%-7.125%,
Market Value plus accrued interest $266,457,599,
1.500%, due 07/01/04 261,232,000
----------------
Total Repurchase Agreement
(Cost $261,232,000) 261,232,000
----------------
SECURITIES LENDING COLLATERAL(cc): 2.7%
23,715,619 The Bank of New York Institutional
Cash Reserve Fund, 1.250% 23,715,619
----------------
Total Securities Lending Collateral
(Cost $23,715,619) 23,715,619
----------------
TOTAL INVESTMENTS IN SECURITIES (COST
$1,160,216,237)* 102.0% $ 1,159,709,634
OTHER ASSETS AND
LIABILITIES-NET (2.0) (22,687,881)
----- ----------------
NET ASSETS 100.0% $ 1,137,021,753
===== ================
</Table>
(1) All securities with a maturity date greater than one year have either a
variable rate, a demand feature, are prerefunded, or an optional or
mandatory put resulting in an effective maturity of one year or less. Rate
shown reflects current rate.
# Securities with purchases pursuant to Rule 144A, under the Securities Act
of 1933 and may not be resold subject to that rule except to qualified
institutional buyers. These securities have been determined to be liquid
under the guidelines established by the Funds' Board of Directors/Trustees.
I Illiquid security
L Loaned security, a portion or all of the security is on loan at June 30,
2004.
X Fair value determined by ING Funds Valuation Committee appointed by the
Funds' Board of Directors/Trustees.
XX Value of securities obtained from one or more dealers making markets in the
securities in accordance with the Fund's valuation procedures.
(cc) Securities purchased with cash collateral for securities loaned.
* Cost for federal income tax purposes is the same as for financial statement
purposes. Net unrealized depreciation consists of:
<Table>
Gross Unrealized Appreciation $ 25,408
Gross Unrealized Depreciation (532,011)
--------------
Net Unrealized Depreciation $ (506,603)
==============
</Table>
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- --------------------------------------------------------------
Consumer Banks - Central U.S. 2.6%
Consumer Banks - Eastern U.S. 2.4
Consumer Banks - Southern U.S. 4.2
Diversified Financial Services 3.8
Fiduciary Banks 0.8
Finance - Auto Loans 2.9
Finance - Consumer Loans 1.4
Finance - Investment Banker/Broker 2.0
Finance - Other Services 2.0
Money Center Banks 8.4
Other ABS 6.2
S&L/Thrifts - Western U.S. 3.3
Sovereign Agency 12.7
Special Purpose Entity 20.0
Super-Regional Banks - U.S. 2.0
Telecom Services 2.2
Repurchase Agreement 23.0
Securities Lending Collateral 2.7
Other Assets and Liabilities, Net (2.6)
-----
NET ASSETS 100.0%
=====
</Table>
See Accompanying Notes to Financial Statements
81
<Page>
DIRECTOR AND OFFICER INFORMATION (Unaudited)
The business and affairs of the Funds are managed under the direction of the
Fund's Board of Directors. A director who is not an interested person of the
Funds, as defined in the 1940 Act, is an independent director ("Non-Interested
Director"). The Directors of the Funds are listed 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 THE COMPANY SERVED(1) PAST FIVE YEARS BY DIRECTOR DIRECTOR
------- ----------- --------- --------------- ----------- --------
NON-INTERESTED DIRECTORS:
Albert E. DePrince, Jr. Director June 1998 - Director, Business and 53 Director, International
7337 E. Doubletree Ranch Rd. present Economic Research Center Atlantic Economic Society
Scottsdale, Arizona 85258 (August 1999 - present) and (October 2002 - Present);
Born: 1941 Professor of Economics and Academy of Economics and
Finance, Middle Tennessee Finance (February 2001 -
State University (1991 to Present).
present).
Maria T. Fighetti Director April Retired. Formerly, Attorney, 53 None
7337 E. Doubletree Ranch Rd. 1994 - New York City Department of
Scottsdale, Arizona 85258 present Mental Health (June 1973
Born: 1943 - October 2002) and Associate
Commissioner (1995 - 2002).
Sidney Koch Director April Financial Adviser, 53 Director, Northwest
7337 E. Doubletree Ranch Rd. 1994 - Self-Employed (January 1993 - Center for the Arts,
Scottsdale, Arizona 85258 present present). Torrington, CT.
Born: 1935
Corine T. Norgaard Director June 1991 - Retired. Formerly, Dean, 53 Director/Trustee, Mass
7337 E. Doubletree Ranch Rd. present Barney School of Business, Mutual Corporate and
Scottsdale, Arizona 85258 University of Hartford Participation Investors
Born: 1937 (August 1996 - June 2004). (April 1997 - Present)
Director, Advest Trust
Company (1998 - Present);
Director, Connecticut
Health Foundation (2002 -
Present).
Edward T. O'Dell Director June 2002 - Retired. Formerly, 53 None
7337 E. Doubletree Ranch Rd. present Partner/Chairman of Financial
Scottsdale, Arizona 85258 Service Group, Goodwin Procter
Born: 1935 LLP (June 1966 - September
2000);
Joseph E. Obermeyer(2) Director January President, Obermeyer & 53 None
7337 E. Doubletree Ranch Rd. 2003 - Associates, Inc. (Consulting
Scottsdale, Arizona 85258 present firm) (Novemeber 1999 -
Born: 1957 present) and Senior Manager,
Arthur Andersen LLP (1995 -
October 1999).
</Table>
82
<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 THE COMPANY SERVED(1) PAST FIVE YEARS BY DIRECTOR DIRECTOR
------- ----------- --------- --------------- ----------- --------
DIRECTORS WHO ARE "INTERESTED PERSONS"
J. Scott Fox(3) Director December Vice Chairman and Chief 53 Director of IPC Financial
Aeltus Investment 1997 - Operating Officer, ING Network, Inc. (January
Management, Inc. present Investment Management 2001 - present);
10 State House Square (September 2002 - present); Director, Metro Hartford
Hartford, Connecticut President and Chief Executive Chamber of Commmerce and
Born: 1955 Officer (April 2001 - The Greater Hartford Arts
present), Managing Director Council.
and Chief Operating Officer
(April 1994 - April 2001),
Aeltus Investment Management,
Inc.
Thomas J. McInerney(4) Director March Chief Executive Officer, ING 171 Director, Equitable Life
7337 E. Doubletree Ranch Rd. 2002 - U.S. Financial Services Insurance Co., Golden
Scottsdale, Arizona 85258 present (September 2001 - present); American Life Insurance
Born: 1956 Member, ING Americas Co., Life Insurance
Executive Committee (2001 - Company of Georgia,
present); ING Aeltus Holding Midwestern United Life
Company, Inc. (2000 - Insurance Co., ReliaStar
present), ING Retail Holding Life Insurance Co.,
Company (1998 - present), and Security Life of Denver,
ING Retirement Holdings, Inc. Security Connecticut Life
(1997 - present). Formerly, Insurance Co., Southland
President, ING Life Insurance Life Insurance Co., USG
Annuity Company (September Annuity and Life Company,
1997 - November 2002); and United Life and
President, Chief Executive Annuity Insurance Co.,
Officer and Director of Inc. (March 2001 -
Northern Life Insurance Present); Member of the
Company (March 2001 - October Board, Bushnell
2002); General Manager and Performing Arts Center;
Chief Executive Officer, ING St. Francis Hospital;
Worksite Division (December National Conference for
2000 - October 2001), Community Justice; and
President, ING-SCI, Inc. Metro Atlanta Chamber of
(August 1997 - December Commerce.
2000); President, Aetna
Financial Services (August
1997 - December 2000).
</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 affiliation with ING Groep N.V., the parent corporation of
the Investment Manager, ING Investments, LLC and the Distributor, ING Funds
Distributor, LLC.
83
<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 THE COMPANY TIME SERVED(1) PAST FIVE YEARS
------- --------------------- -------------- ---------------
James M. Hennessy President, Chief March 2002 - present President and Chief Executive
7337 E. Doubletree Ranch Rd. Executive Officer and Officer, ING Investments, LLC
Scottsdale, Arizona 85258 Chief Operating (December 2001 - Present).
Born: 1949 Officer Formerly, Senior Executive Vice
President and Chief Operating
Officer, ING Investments, LLC (April
1995 - December 2000); and
Executive Vice President, ING
Investments, LLC (May 1998 - June
2000).
Stanley D. Vyner Executive Vice March 2002 - present Executive Vice President, ING
7337 E. Doubletree Ranch Rd. President Investments, LLC and certain of its
Scottsdale, Arizona 85258 affiliates (July 2000 - Present) and
Born: 1950 Chief Investment Risk Officer (June
2003 - Present); Formerly, Chief
Investment Officer the
International Portfolios, ING
Investments, LLC (July 1996 - June
2003); and President and Chief
Executive Officer, ING Investments,
LLC (August 1996 - August 2000).
Michael J. Roland Executive Vice April 2002 - present Executive Vice President, Chief
7337 E. Doubletree Ranch Rd. President and Financial Officer and Treasurer,
Scottsdale, Arizona 85258 Assistant Secretary ING Investments, LLC (December
Born: 1958 2001 - Present). Formerly, Senior
Principal Financial March 2002 - present Vice President, ING Investments,
Officer LLC (June 1998 - December 2001).
Robert S. Naka Senior Vice President March 2002 - present Senior Vice President and Assistant
7337 E. Doubletree Ranch Rd. and Assistant Secretary, ING Funds Services, LLC
Scottsdale, Arizona 85258 Secretary (October 2001 - Present).
Born: 1963 Formerly, Senior Vice President
and Assistant Secretary, ING Funds
Services, LLC (February 1997 -
August 1999).
Kimberly A. Anderson Senior Vice President December 2003 - present Senior Vice President, ING
7337 E. Doubletree Ranch Rd. Investments, LLC (October 2003 -
Scottsdale, Arizona 85258 Present). Formerly, Vice President
Born: 1964 and Assistant Secretary, ING
Investments, LLC (October 2001 -
October 2003); Assistant Vice
President, ING Funds Services, LLC
(November 1999 - 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 March 2002 - present Vice President, ING Funds Services,
7337 E. Doubletree Ranch Rd. Treasurer LLC (October 2001 - Present) and
Scottsdale, Arizona 85258 ING Investments, LLC (August
Born: 1967 1997 - Present).
Lauren D. Bensinger Vice President March 2003 - present Vice President and Chief
7337 E. Doubletree Ranch Rd. Compliance Officer, ING Funds
Scottsdale, Arizona 85258 Distributor, LLC (July 1995 -
Born: 1954 Present); Vice President (February
1996 - Present) and Chief
Compliance Officer (October 2001 -
Present), ING Investments, LLC.
Theresa Kelety Secretary September 2003 - present Counsel, ING U.S. Financial Services
7337 E. Doubletree Ranch Rd. (April 2003 - Present). Formerly,
Scottsdale, Arizona 85258 Senior Associate with Shearman &
Born: 1963 Sterling (February 2000 - April
2003); and Associate with
Sutherland Asbill & Brennan (1996 -
February 2000).
</Table>
84
<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 THE COMPANY TIME SERVED(1) PAST FIVE YEARS
------- --------------------- -------------- ---------------
Todd Modic Vice President September 2003 - present Vice President of Financial
7337 E. Doubletree Ranch Rd. Reporting - Fund Accounting of
Scottsdale, Arizona 85258 ING Funds Services, LLC
Born: 1967 (September 2002 - Present).
Formerly, Director of Financial
Reporting, ING Investments, LLC
(March 2001 - September 2002);
Director of Financial Reporting,
Axient Communications, Inc. (May
2000 - January 2001); and Director
of Finance, Rural/Metro Corporation
(March 1995 - May 2000).
Susan P. Kinens Assistant Vice March 2003 - present Assistant Vice President and
7337 E. Doubletree Ranch Rd. President and Assistant Secretary, ING Funds
Scottsdale, Arizona 85258 Assistant Secretary Services, LLC (December 2002 -
Born: 1976 Present); and has held various
other positions with ING Funds
Services, LLC for more than the
last five years.
Huey P. Falgout, Jr. Assistant Secretary September 2003 - present Chief Counsel, ING U.S. Financial
7337 E. Doubletree Ranch Rd. Services (September 2003 -
Scottsdale, Arizona 85258 Present). Formerly, Counsel, ING
Born: 1963 U.S. Financial Services (November
2002 - September 2003); and
Associate General Counsel of AIG
American General (January 1999 -
November 2002).
Maria M. Anderson Assistant Vice April 2002 - present Assistant Vice President of ING
7337 E. Doubletree Ranch Rd. President Funds Services, LLC (October 2001 -
Scottsdale, Arizona 85258 Present). Formerly, Manager of
Born: 1958 Fund Accounting and Fund
Compliance, ING Investments, LLC
(September 1999 - November
2001); and Section Manager of
Fund Accounting, Stein Roe Mutual
Funds (July 1998 - August 1999).
</Table>
- ----------
(1) The officers hold office until the next annual meeting of the Trustees and
until their successors have been elected and qualified.
85
<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
The 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 REGISTERED PUBLIC ACCOUNTING FIRM
KPMG LLP
99 High Street
Boston, MA 02110
BEFORE INVESTING, CAREFULLY CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES
AND EXPENSES OF THE VARIABLE ANNUITY CONTRACT AND THE UNDERLYING VARIABLE
INVESTMENT OPTIONS. THIS AND OTHER INFORMATION IS CONTAINED IN THE PROSPECTUS
FOR THE VARIABLE ANNUITY CONTRACT AND THE UNDERLYING VARIABLE INVESTMENT
OPTIONS. OBTAIN THESE PROSPECTUSES FROM YOUR AGENT/REGISTERED REPRESENTATIVE AND
READ THEM CAREFULLY BEFORE INVESTING. 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.
<Page>
[ING FUNDS LOGO]
PRESORTED
STANDARD
U.S. POSTAGE
PAID
BOSTON MA
PERMIT NO. 57842
VPSAR-CAPAPP (0604-081804)
<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 11(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.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Schedule is included as part of the report to shareholders filed under Item 1 of
this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's Board during the period covered by the
N-CSR filing. The Board has a Nominating Committee for the purpose of
considering and presenting to the Board candidates it proposes for nomination to
fill Independent Trustee vacancies on the Board. The Committee currently
consists of all Independent Trustees of the Board (6 individuals). Currently,
there is no written charter for the Nominating Committee and neither the
Committee nor the Board has adopted a formal policy regarding the consideration
of nominees recommended by shareholders. It is anticipated that these matters
will be considered by the Committee and the Board during the upcoming year and
that a formal charter containing policies with respect to the consideration of
nominees recommended by shareholders will be approved by the Board.
ITEM 10. 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
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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
that occurred during the second fiscal quarter of the period covered by
this report that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
ITEM 11. 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
(3) Not applicable.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): ING VP MONEY MARKET PORTFOLIO
By /s/ James M. Hennessy
---------------------------------------------
James M. Hennessy
President and Chief Executive Officer
Date: August 30, 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: August 30, 2004
------------------------------------------
By /s/ Michael J. Roland
---------------------------------------------
Michael J. Roland
Executive Vice President and Chief Financial Officer
Date: August 30, 2004
------------------------------------------
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