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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:  811-5410

 

ING Prime Rate Trust

(Exact name of registrant as specified in charter)

 

7337 E. Doubletree Ranch Rd., Scottsdale, AZ

 

85258

(Address of principal executive offices)

 

(Zip code)

 

CT Corporation System, 101 Federal Street, Boston, MA 02110

(Name and address of agent for service)

 

Registrant’s telephone number, including area code: 1-800-992-0180

 

Date of fiscal year end:

February 28

 

 

Date of reporting period:

August 31, 2010

 

 

 



 

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):

 



Funds

Semi-Annual Report

August 31, 2010

ING Prime Rate Trust

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This report is submitted for general information to shareholders of the ING Funds. It is not authorized for distribution to prospective shareholders unless accompanied or preceded by a prospectus which includes details regarding the fund's investment objectives, risks, charges, expenses and other information. This information should be read carefully.




ING Prime Rate Trust

SEMI-ANNUAL REPORT

August 31, 2010

Table of Contents

Portfolio Managers' Report     2    
Statement of Assets and Liabilities     7    
Statement of Operations     8    
Statements of Changes in Net Assets     9    
Statement of Cash Flows     10    
Financial Highlights     11    
Notes to Financial Statements     13    
Portfolio of Investments     23    
Shareholder Meeting Information     51    
Additional Information     52    

 

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ING Prime Rate Trust

PORTFOLIO MANAGERS' REPORT

Dear Shareholders:

ING Prime Rate Trust (the "Trust") is a diversified, closed-end management investment company that seeks to provide investors with as high a level of current income as is consistent with the preservation of capital. The Trust seeks to achieve this objective by investing, under normal circumstances, at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in U.S. dollar denominated floating rate secured senior loans.

PORTFOLIO CHARACTERISTICS
AS OF AUGUST 31, 2010
 
Net Assets   $ 838,533,372    
Total Assets   $ 1,114,771,221    
Assets Invested in Senior Loans   $ 1,061,967,768    
Senior Loans Represented     487    
Average Amount Outstanding per Loan   $ 2,180,632    
Industries Represented     36    
Average Loan Amount per Industry   $ 29,499,105    
Portfolio Turnover Rate (YTD)     28 %  
Weighted Average Days to Interest Rate Reset     38    
Average Loan Final Maturity     49 months    
Total Leverage as a Percentage of Total Assets
(including preferred shares)
    23.05 %  

 

PERFORMANCE SUMMARY

The Trust declared $0.08 of dividends during the second fiscal quarter and $0.16 during the six months ended August 31, 2010. Based on the average month-end net asset value ("NAV") per share of $5.68 for the second fiscal quarter and $5.75 for the six month period, this resulted in an annualized distribution rate(1) of 5.77% for the second fiscal quarter and 5.60% for the six month period. The Trust's total net return for the second fiscal quarter, based on NAV, was 1.67% versus a total gross return on the S&P/LSTA Leveraged Loan Index (the "Index")(2) of 1.43% for the same quarter. For the six months ended August 31, 2010, the Trust's total return, based on NAV, was 2.66%, versus 2.88% gross return for the Index. The total market value return (based on full reinvestment of dividends) for the Trust's common shares during the second fiscal quarter was 3.37% and for the six months ended August 31, 2010 was (4.78)%.

MARKET REVIEW

After a pullback starting in late April and lasting through June effectively ended a streak of 16 consecutive monthly gains, the U.S. loan market improved moderately in July and August, resulting in a respectable Index return for the six month period ended August 31, 2010. Consistent with the experience in most financial markets, the softness early in the period was

(1)  The distribution rate is calculated by annualizing dividends and distributions declared during the period and dividing the resulting annualized dividend by the Trust's average net asset value (in the case of NAV) or the average month-end NYSE Composite closing price (in the case of market). The distribution rate is based solely on the actual dividends and distributions, which are made at the discretion of management. The distribution rate may or may not include all investment income and ordinarily will not include capital gains or losses, if any.

(2)  The Index is an unmanaged total return index that captures accrued interest, repayments, and market value changes. It represents a broad cross section of leveraged loans syndicated in the United States, including dollar-denominated loans to overseas issuers. Standard & Poor's ("S&P") and the Loan Syndications and Trading Association ("LSTA") conceived the Index to establish a performance benchmark for the syndicated leveraged loan industry. An investor cannot invest directly in an index.


2



ING Prime Rate Trust

PORTFOLIO MANAGERS' REPORT (continued)

directly attributable to investor fears over the fiscal condition of the weaker European Union nations, and the potential impact of that destabilization on euro zone growth. Moving into the summer months, solid underlying fundamental loan market performance (i.e., generally improving earnings and declining default rates), together with a relatively healthy supply/demand balance, was able to offset sporadic negative headlines regarding the state of the recovery here at home. The volume of new loan transactions coming to market during the late summer months, while up nicely from the year earlier period, was moderate in absolute terms, and easily absorbed by investors seeking incremental yield and protection from the eventual rise in short-term interest rates.

TOP TEN SENIOR LOAN ISSUERS
AS OF AUGUST 31, 2010
AS A PERCENTAGE OF:
 
    TOTAL
ASSETS
  NET
ASSETS
 
CHS/Community Health
Systems, Inc.
    3.3 %     4.4 %  
Cequel Communications, LLC     2.4 %     3.2 %  
CSC Holdings, Inc.     1.7 %     2.3 %  
PBL Media Finance Pty., Ltd.     1.7 %     2.2 %  
Univision Communications, Inc.     1.6 %     2.1 %  
Texas Competitive Electric
Holdings Company, LLC
    1.6 %     2.1 %  
Ford Motor Company     1.5 %     2.0 %  
HCA, Inc.     1.5 %     2.0 %  
Charter Communications
Operating, LLC
    1.3 %     1.8 %  
HDC Mezz 1 Partners, L.P.     1.2 %     1.6 %  

 

PORTFOLIO REVIEW

The use of leverage for investment purposes was beneficial to returns, as loan prices moved generally higher save for May and June. The Trust's quality bias relative to the Index proved to be a hindrance to relative performance during the period as a whole, as the riskiest part of the market, i.e., those loans rated CCC+ and below, posted a six-month return of 6.5%, versus 1.99% and 2.16% for those rated BB and B, respectively. We note that, at August-end, loans rated CCC+ and below accounted for approximately 2.4% of the Trust's portfolio, as compared to 14.8% for the Index. Gains on restructured loan assets, a relatively small portion of Trust assets, also proved beneficial later in the period. One such restructuring, LyondellBasell Industries N.V., in which the Trust received a combination of new debt and stock upon exit of bankruptcy, has performed well in recent months, allowing us to monetize portions of the Fund's equity position at attractive prices.

We believe the Trust remained well diversified as of August 31, 2010; the average issuer and sector exposure stood at 0.3% and 2.6%, respectively. There was no major shift in sector allocation or top holdings during the period, as healthcare, cable television and printing/publishing remained the top three industry weightings.

TOP TEN INDUSTRY SECTORS
AS OF AUGUST 31, 2010
AS A PERCENTAGE OF:
 
    TOTAL
ASSETS
  NET
ASSETS
 
Healthcare, Education
and Childcare
    13.0 %     17.2 %  
North American Cable     8.8 %     11.7 %  
Printing & Publishing     6.7 %     8.8 %  
Data and Internet Services     5.6 %     7.5 %  
Retail Stores     5.5 %     7.3 %  
Chemicals, Plastics & Rubber     5.2 %     7.0 %  
Utilities     4.6 %     6.2 %  
Radio and TV Broadcasting     3.7 %     4.9 %  
Containers, Packaging & Glass     3.6 %     4.8 %  
Diversified / Conglomerate
Service
    3.6 %     4.8 %  

 


3



ING Prime Rate Trust

PORTFOLIO MANAGERS' REPORT (continued)

Ratings Distribution
as of August 31, 2010
(Unaudited)
 
Baa     3.0 %  
Ba     43.7 %  
B     41.3 %  
Caa and below     3.0 %  
Not rated*     9.0 %  

 

Ratings distribution shows the percentage of the Trust's loan commitments (excluding cash and foreign cash) that are rated in each ratings category, based upon the categories provided by Moody's Investors Service, Inc. Ratings distribution is based on Moody's senior secured facility ratings. Loans rated below Baa by Moody's are considered to be below investment grade. Ratings can change from time to time, and current ratings may not fully reflect the actual credit condition or risks posed by a loan.

*  Not rated includes loans to non-U.S. borrowers (which are typically unrated) and loans for which the rating has been withdrawn.

OUTLOOK

As we move into the final months of 2010, the loan market's technical positioning appears relatively solid, even in the face of a rising tide of attractively-priced new issues. Investor demand continues to be reasonably healthy despite the current low rate environment — perhaps an indication of a growing concern about the effect on asset values when the shift in monetary policy eventually comes. Issuer-level creditworthiness has generally improved, although much of the low hanging fruit has been collected (e.g., pretax earnings and profit margin improvement). From a macroeconomic perspective, we believe global headwinds remain both strong and unpredictable. In particular, the U.S. economy is growing at a sub-par pace and remains vulnerable to potential shocks, and uncertainties over sovereign debt risk in Europe continue to rear up with some regularity. We therefore continue to focus on credit fundamentals consistent with the Trust's relatively conservative and value-driven strategy.

   
Jeffrey A. Bakalar
Senior Vice President
Senior Portfolio Manager
ING Investment Management Co.
  Daniel A. Norman
Senior Vice President
Senior Portfolio Manager
ING Investment Management Co.
 
   

 

ING Prime Rate Trust
October 8, 2010


4



ING Prime Rate Trust

PORTFOLIO MANAGERS' REPORT (continued)

    Average Annual Total Returns for the
Years Ended August 31, 2010
 
    1 Year   3 Years   5 Years   10 Years  
Based on Net Asset Value (NAV)     15.69 %     0.58 %     2.28 %     3.22 %  
Based on Market Value     24.77 %     1.64 %     2.84 %     2.77 %  
S&P/LSTA Leveraged Loan Index     12.76 %     4.84 %     4.61 %     4.87 %  
Credit-Suisse Leveraged Loan Index     12.53 %     3.25 %     3.81 %     4.45 %  

 

The table above illustrates the total return of the Trust against the Indices indicated. An index has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index.

Total returns based on NAV reflect that ING Investments, LLC (the Trust's "Investment Adviser") may have waived or recouped fees and expenses otherwise payable by the Trust.

Performance data represents past performance and is no guarantee of future results. Investment return and principal value of an investment in the Trust will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Trust's future performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 992-0180 to get performance through the most recent month end.

Calculation of total return assumes a hypothetical initial investment at the net asset value (in the case of NAV) or the New York Stock Exchange ("NYSE") Composite closing price (in the case of Market Value) on the last business day before the first day of the stated period, with all dividends and distributions reinvested at the actual reinvestment price.

Senior loans are subject to credit risks and the potential for non-payment of scheduled principal or interest payments, which may result in a reduction of the Trust's NAV.

This report contains statements that may be "forward-looking" statements. Actual results could 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 of the report as stated on the cover. The portfolio managers' views are subject to change at any time based on market and other conditions.

INDEX DESCRIPTIONS

The S&P/LSTA Leveraged Loan Index is an unmanaged total return index that captures accrued interest, repayments, and market value changes. It represents a broad cross section of leveraged loans syndicated in the United States, including dollar-denominated loans to overseas issuers. Standard & Poor's and the Loan Syndications & Trading Association ("LSTA") conceived the Index to establish a performance benchmark for the syndicated leveraged loan industry. An investor cannot invest directly in an index.

The Credit-Suisse Leveraged Loan Index is an unmanaged index of below investment grade loans designed to mirror the investable universe of the U.S. dollar-denominated leveraged loan market. An investor cannot invest directly in an index.


5



ING Prime Rate Trust

PORTFOLIO MANAGERS' REPORT (continued)

YIELDS AND DISTRIBUTION RATES  
    Prime Rate   NAV 30-day
SEC Yield(A) 
  Mkt. 30-Day
SEC Yield(A) 
  Annualized Dist.
Rate @ NAV(B) 
  Annualized Dist.
Rate @ Mkt.(B) 
 
August 31, 2010     3.25 %     4.89 %     5.08 %     5.78 %     6.00 %  
May 31, 2010     3.25 %     4.91 %     5.19 %     5.47 %     5.78 %  
February 28, 2010     3.25 %     4.20 %     4.04 %     5.24 %     5.05 %  
November 30, 2009     3.25 %     5.40 %     5.72 %     6.18 %     6.54 %  

 

(A)  Yield is calculated by dividing the Trust's net investment income per share for the most recent thirty days by the net asset value (in the case of NAV) or the NYSE Composite closing price (in the case of Market) at quarter-end. Yield calculations do not include any commissions or sales charges, and are compounded for six months and annualized for a twelve-month period to derive the Trust's yield consistent with the U.S. Securities and Exchange Commission ("SEC") standardized yield formula.

(B)  The distribution rate is calculated by annualizing the last monthly dividend of each quarter and dividing the resulting annualized dividend amount by the Trust's net asset value (in the case of NAV) or the NYSE Composite closing price (in case of Market) at quarter-end.

Risk is inherent in all investing. The following are the principal risks associated with investing in the Trust. This is not, and is not intended to be, a description of all risks of investing in the Trust. A more detailed description of the risks of investing in the Trust is contained in the Trust's current prospectus.

Credit Risk: The Trust invests a substantial portion of its assets in below investment grade senior loans and other below investment grade assets. Below investment grade loans involve a greater risk that borrowers may not make timely payment of the interest and principal due on their loans. They also involve a greater risk that the value of such loans could decline significantly. If borrowers do not make timely payments of the interest due on their loans, the yield on the Trust's common shares will decrease. If borrowers do not make timely payment of the principal due on their loans, or if the value of such loans decreases, the value of the Trust's NAV will decrease.

Interest Rate Risk: Changes in short-term market interest rates will directly affect the yield on the Trust's common shares. If short-term market interest rates fall, the yield on the Trust's common shares will also fall. To the extent that the interest rate spreads on loans in the Trust experience a general decline, the yield on the Trust will fall and the value of the Trust's assets may decrease, which will cause the Trust's value to decrease. Conversely, when short-term market interest rates rise, because of the lag between changes in such short-term rates and the resetting of the floating rates on assets in the Trust's portfolio, the impact of rising rates will be delayed to the extent of such lag.

Leverage Risk: The Trust borrows money for investment purposes. Borrowing increases both investment opportunity and investment risk. In the event of a general market decline in the value of assets such as those in which the Trust invests, the effect of that decline will be magnified in the Trust because of the additional assets purchased with the proceeds of the borrowings. The Trust also faces the risk that it might have to sell assets at relatively less advantageous times if it were forced to de-leverage if a source of leverage becomes unavailable.


6




ING Prime Rate Trust

STATEMENT OF ASSETS AND LIABILITIES as of August 31, 2010 (Unaudited)

ASSETS:  
Investments in securities at value (Cost $1,163,084,936)   $ 1,088,923,215    
Cash     1,747,488    
Foreign currencies at value (Cost $554,945)     554,911    
Receivables:  
Investment securities sold     18,214,076    
Interest     4,979,418    
Other     23,929    
Unrealized appreciation on forward foreign currency contracts     325,443    
Prepaid expenses     2,741    
Total assets     1,114,771,221    
LIABILITIES:  
Notes payable     107,000,000    
Payable for investment securities purchased     16,028,080    
Deferred arrangement fees on senior loans     140,144    
Dividends payable — preferred shares     5,229    
Payable to affilates     994,431    
Payable to custodian     95,750    
Accrued trustees fees     12,407    
Unrealized depreciation on forward foreign currency contracts     317,698    
Unrealized depreciation on unfunded commitments     1,529,148    
Other accrued expenses     114,962    
Total liabilities     126,237,849    
Preferred shares, $25,000 stated value per share at
liquidation value (6,000 shares outstanding)
    150,000,000    
NET ASSETS   $ 838,533,372    
Net assets value per common share outstanding (net assets divided by
146,953,833 shares of beneficial interest authorized and outstanding,  
no par value)
  $ 5.71    
NET ASSETS WERE COMPRISED OF:  
Paid-in capital   $ 1,274,477,658    
Undistributed net investment income     3,444,695    
Accumulated net realized loss     (363,667,448 )  
Net unrealized depreciation     (75,721,533 )  
NET ASSETS   $ 838,533,372    

 

See Accompanying Notes to Financial Statements
7



ING Prime Rate Trust

STATEMENT OF OPERATIONS for the Six Months Ended August 31, 2010 (Unaudited)

INVESTMENT INCOME:  
Interest   $ 27,108,440    
Amendment fees earned     342,028    
Other     1,106,974    
Total investment income     28,557,442    
EXPENSES:  
Investment management fees     4,529,973    
Administration fees     1,415,616    
Transfer agent fees     35,871    
Interest expense     1,376,007    
Custody and accounting expense     274,635    
Professional fees     107,824    
Preferred shares — dividend disbursing agent fees     187,248    
Postage expense     153,165    
Trustees fees     9,766    
Miscellaneous expense     158,618    
Total expenses     8,248,723    
Net investment income     20,308,719    
REALIZED AND UNREALIZED GAIN (LOSS):  
Net realized gain (loss) on:  
Investments     (2,410,248 )  
Forward foreign currency contracts     6,061,357    
Foreign currency related transactions     481,177    
Net realized gain     4,132,286    
Net change in unrealized appreciation or depreciation on:  
Investments     (2,052,829 )  
Forward foreign currency contracts     (1,374,725 )  
Foreign currency related transactions     9,885    
Unfunded commitments     (40,569 )  
Net change in unrealized appreciation or depreciation     (3,458,238 )  
Net realized and unrealized gain     674,048    
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS:  
From net investment income     (247,954 )  
Increase in net assets resulting from operations   $ 20,734,813    

 

See Accompanying Notes to Financial Statements
8



ING Prime Rate Trust

STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)

    Six Months
Ended
August 31,
2010
  Year
Ended
February 28,
2010
 
FROM OPERATIONS:  
Net investment income   $ 20,308,719     $ 40,578,441    
Net realized gain (loss)     4,132,286       (79,461,767 )  
Net change in unrealized appreciation or depreciation     (3,458,238 )     362,783,607    
Distributions to preferred shareholders from net
investment income
    (247,954 )     (534,821 )  
Increase in net assets resulting from operations     20,734,813       323,365,460    
FROM DISTRIBUTIONS TO COMMON SHAREHOLDERS:  
From net investment income     (23,394,644 )     (45,727,025 )  
Decrease in net assets from distributions to
common shareholders
    (23,394,644 )     (45,727,025 )  
CAPITAL SHARE TRANSACTIONS:  
Reinvestment of distributions from common shares     392,395       193,985    
Proceeds from shares sold     10,016,035       112,650    
Net increase from capital share transactions     10,408,430       306,635    
Net increase in net assets     7,748,599       277,945,070    
NET ASSETS:  
Beginning of period     830,784,773       552,839,703    
End of period (including undistributed net investment
income of $3,444,695 and $6,778,574 respectively)
  $ 838,533,372     $ 830,784,773    

 

See Accompanying Notes to Financial Statements
9



ING Prime Rate Trust

STATEMENT OF CASH FLOWS for the Six Months Ended August 31, 2010 (Unaudited)

INCREASE (DECREASE) IN CASH
Cash Flows From Operating Activities:
 
Interest received   $ 21,208,379    
Dividends paid to preferred shareholders     (247,973 )  
Arrangement fee paid     (101,474 )  
Other income received     1,463,031    
Interest paid     (1,376,007 )  
Other operating expenses paid     (7,223,417 )  
Purchases of securities     (320,459,642 )  
Proceeds on sale of securities     345,611,740    
Net cash provided by operating activities     38,874,637    
Cash Flows From Financing Activities:  
Dividends paid to common shareholders     (23,002,249 )  
Redemption of preferred shares     (50,000,000 )  
Proceeds from shares sold     10,016,035    
Net increase of notes payable     24,000,000    
Net cash flows used in financing activities     (38,986,214 )  
Net decrease     (111,577 )  
Cash at beginning of period     1,859,065    
Cash at end of period   $ 1,747,488    
Reconciliation of Net Increase In Net Assets Resulting From
Operations To Net Cash Provided by Operating Activities:
 
Net increase in net assets resulting from operations   $ 20,734,813    
Adjustments to reconcile net increase in net assets resulting
from operations to net cash provided by operating activities:
         
Change in unrealized appreciation or depreciation on investments     2,052,829    
Change in unrealized appreciation or depreciation on foreign currencies     42    
Change in unrealized appreciation or depreciation on forward foreign
currency contracts
    1,374,725    
Change in unrealized depreciation on unfunded commitments     40,569    
Change in unrealized appreciation or depreciation on other assets and liablilities     (9,927 )  
Net accretion of discounts on investments     (5,365,123 )  
Net amortization of premiums on investments     115,851    
Net realized gain on sale of investments and foreign currency
related transactions
    (4,132,286 )  
Purchases of securities     (320,459,642 )  
Proceeds on sale of securities     345,611,740    
Decrease in other assets     4,102    
Increase in interest receivable     (650,789 )  
Decrease in prepaid expenses     6,208    
Decrease in deferred arrangement fees on senior loans     (101,474 )  
Decrease in dividends payable — preferred shares     (19 )  
Increase in payable to affiliates     98,007    
Decrease in accrued trustees fees     (5,221 )  
Decrease in other accrued expenses     (439,768 )  
Total adjustments     18,139,824    
Net cash provided by operating activities   $ 38,874,637    
Non Cash Financing Activities  
Reinvestment of dividends   $ 392,395    

 

See Accompanying Notes to Financial Statements
10




FINANCIAL HIGHLIGHTS (UNAUDITED)

Selected data for a share of beneficial interest outstanding throughout each year or period.

        Per Share Operating Performance      
    Net asset value, beginning of year or period   Net investment income (loss)   Net realized and unrealized gain (loss)   Distribution to Preferred Shareholders   Change in net asset value from Share offerings   Total from investment operations   Distribution to Common Shareholders from net investment income   Total distributions   Net asset value, end of year or period   Closing market price, end of year or period  
Year or period ended   ($)   ($)   ($)   ($)   ($)   ($)   ($)   ($)   ($)   ($)  
ING Prime Rate Trust      
  08-31-10       5.72       0.14       0.01       (0.00 )*           0.15       (0.16 )     (0.16 )     5.71       5.50    
  02-28-10       3.81       0.28       1.95       (0.00 )*           2.23       (0.32 )     (0.32 )     5.72       5.94    
  02-28-09       6.11       0.46       (2.29 )     (0.06 )           (1.89 )     (0.41 )     (0.47 )     3.81       3.50    
  02-29-08       7.65       0.75       (1.57 )     (0.16 )           (0.98 )     (0.56 )     (0.72 )     6.11       5.64    
  02-28-07       7.59       0.71       0.06       (0.16 )           0.61       (0.55 )     (0.71 )     7.65       7.40    
  02-28-06       7.47       0.57       0.12       (0.11 )           0.58       (0.46 )     (0.57 )     7.59       7.02    
  02-28-05       7.34       0.45       0.16       (0.05 )           0.56       (0.43 )     (0.48 )     7.47       7.56    
  02-29-04       6.73       0.46       0.61       (0.04 )           1.03       (0.42 )     (0.46 )     7.34       7.84    
  02-28-03       7.20       0.50       (0.47 )     (0.05 )           (0.02 )     (0.45 )     (0.50 )     6.73       6.46    
  02-28-02       8.09       0.74       (0.89 )     (0.11 )           (0.26 )     (0.63 )     (0.74 )     7.20       6.77    
  02-28-01                             8.95       0.88       (0.78 )     (0.06 )     (0.04 )           (0.86 )     (0.92 )     8.09       8.12    

 

    Total Investment
Return(1) 
  Ratios to average
net assets
  Supplemental
data
 
    Total Investment Return at net asset value(2)    Total Investment Return at closing market price(3)    Expenses (before interest and other fees related to revolving credit facility)(4)    Expenses, prior to fee waivers and/or recoupments, if any(4)    Expenses, net of fee waivers and/or recoupments, if any(4)    Net investment income (loss)(4)    Net assets, end of year or period   Portfolio Turnover  
Year or period ended   (%)   (%)   (%)   (%)   (%)   (%)   ($000's)   (%)  
ING Prime Rate Trust  
  08-31-10       2.66       (4.78 )     1.63       1.94       1.94       4.78       838,533       28    
  02-28-10       60.70       81.66       1.77 (6)      1.99 (6)      1.93       5.56       830,785       38    
  02-28-09       (31.93 )(5)      (32.03 )(5)      1.95       3.01       3.01       7.86       552,840       10    
  02-29-08       (13.28 )     (17.25 )     2.20       4.36       4.36       10.35       886,976       60    
  02-28-07       8.85       13.84       2.21       4.62       4.62       9.42       1,109,539       60    
  02-28-06       8.53       (0.82 )     2.33       4.27       4.27       7.71       1,100,671       81    
  02-28-05       7.70       2.04       2.29       3.18       3.17       6.04       1,082,748       93    
  02-29-04       15.72       28.77       2.11       2.40       2.40       6.68       1,010,325       87    
  02-28-03       0.44       2.53       2.19       2.68       2.68       7.33       922,383       48    
  02-28-02       (3.02 )     (9.20 )     2.25       3.64       3.64       9.79       985,982       53    
  02-28-01                             0.19       9.10       1.81       4.45       4.45       10.39       1,107,432       46    

 

(1)  Total investment return calculations are attributable to common shares.

(2)  Total investment return at net asset value has been calculated assuming a purchase at net asset value at the beginning of each period and a sale at net asset value at the end of each period and assumes reinvestment of dividends and capital gain distributions, if any, in accordance with the provisions of the dividend reinvestment plan. Total investment return at net asset value is not annualized for periods less than one year.

(3)  Total investment return at market value has been calculated assuming a purchase at market value at the beginning of each period and a sale at market value at the end of each period and assumes reinvestment of dividends and capital gain distributions, if any, in accordance with the provisions of the dividend reinvestment plan. Total investment return at market value is not annualized for periods less than one year.

(4)  Annualized for periods less than one year.

(5)  There was no impact on total return due to payments by affiliates.

(6)  Includes excise tax fully reimbursed by the Investment Adviser.

*  Amount is more than $(0.005).

See Accompanying Notes to Financial Statements
11



FINANCIAL HIGHLIGHTS (UNAUDITED) (CONTINUED)

Selected data for a share of beneficial interest outstanding throughout each year or period.

    Ratios to average net assets
including Preferred Shares(a) 
  Ratios to average net assets
plus borrowings
 
    Expenses (before interest and other fees related to revolving credit facility)(4)    Expenses, prior to fee waivers and/or recoupments, if any(4)    Expenses, net of fee waivers and/or recoupments, if any(4)    Net investment income (loss)(4)    Expenses (before interest and other fees related to revolving credit facility)(4)    Expenses, prior to fee waivers and/or recoupments, if any(4)    Expenses, net of fee waivers and/or recoupments, if any(4)    Net investment income (loss)(4)   
Year or period ended   (%)   (%)   (%)   (%)   (%)   (%)   (%)   (%)  
ING Prime Rate Trust      
  08-31-10       1.35       1.61       1.61       3.97       1.43       1.73       1.73       4.25    
  02-28-10       1.36 (6)      1.52 (6)      1.48       4.26       1.67 (6)      1.87 (6)      1.81       5.23    
  02-28-09       1.54       2.38       2.38       6.22       1.54       2.37       2.37       6.21    
  02-29-08       1.54       3.05       3.05       7.23       1.60       3.17       3.17       7.53    
  02-28-07       1.57       3.27       3.27       6.68       1.56       3.25       3.25       6.63    
  02-28-06       1.64       3.02       3.02       5.44       1.58       2.90       2.90       5.24    
  02-28-05       1.60       2.22       2.21       4.21       1.63       2.27       2.26       4.32    
  02-29-04       1.45       1.65       1.65       4.57       1.84       2.09       2.09       5.82    
  02-28-03       1.49       1.81       1.81       4.97       1.82       2.23       2.23       6.10    
  02-28-02       1.57       2.54       2.54       6.83       1.66       2.70       2.70       7.24    
  02-28-01                             1.62       3.97       3.97       9.28       1.31       3.21       3.21       7.50    

 

    Supplemental data  
    Preferred Shares — Aggregate amount outstanding   Liquidation and market value per share of Preferred Shares   Asset coverage inclusive of Preferred Shares and debt per share(b)    Borrowings at end of period   Asset coverage per $1,000 of debt(b)    Average borrowings   Common shares outstanding at end of year or period  
Year or period ended   ($000's)   ($)   ($)   ($000's)   ($)   ($000's)   (000's)  
ING Prime Rate Trust  
  08-31-10       150,000       25,000       106,575       107,000       10,239       107,690       146,954    
  02-28-10       200,000       25,000       98,400       83,000       13,419       46,416       145,210    
  02-28-09       225,000       25,000       70,175       81,000       10,603       227,891       145,178    
  02-29-08       450,000       25,000       53,125       338,000       4,956       391,475       145,094    
  02-28-07       450,000       25,000       62,925       281,000       6,550       459,982       145,033    
  02-28-06       450,000       25,000       55,050       465,000       4,335       509,178       145,033    
  02-28-05       450,000       25,000       53,600       496,000       4,090       414,889       145,033    
  02-29-04       450,000       25,000       62,425       225,000       7,490       143,194       137,638    
  02-28-03       450,000       25,000       62,375       167,000       9,218       190,671       136,973    
  02-28-02       450,000       25,000       58,675       282,000       6,092       365,126       136,973    
  02-28-01                             450,000       25,000       53,825       510,000       4,054       450,197       136,847    

 

(a)  Ratios do not reflect the effect of dividend payments to Preferred Shareholders; income ratios reflect income earned on assets attributable to Preferred Shareholders; ratios do not reflect any add-back for the borrowings.

(b)  Asset coverage ratios, for periods prior to fiscal 2009, represented the coverage available for both the borrowings and preferred shares expressed in relation to each $1,000 of borrowings and preferred shares liquidation value outstanding. The Asset coverage ratio per $1,000 of debt for periods subsequent to fiscal 2008, is presented to represent the coverage available to each $1,000 of borrowings before consideration of any preferred shares liquidation price, while the Asset coverage inclusive of Preferred Shares, presents the coverage available to both borrowings and preferred shares, expressed in relation to the per share liquidation price of the preferred shares.

See Accompanying Notes to Financial Statements
12




ING Prime Rate Trust

NOTES TO FINANCIAL STATEMENTS as of August 31, 2010 (Unaudited)

NOTE 1 — ORGANIZATION

ING Prime Rate Trust (the "Trust"), a Massachusetts business trust, is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as a diversified, closed-end, management investment company. The Trust invests primarily in senior loans, which generally are not registered under the Securities Act of 1933, as amended (the "1933 Act"), and which contain certain restrictions on resale and cannot be sold publicly. These loans bear interest (unless otherwise noted) at rates that float periodically at a margin above the London Inter-Bank Offered Rate ("LIBOR") and other short-term rates.

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of the significant accounting policies consistently followed by the Trust in the preparation of its financial statements. The policies are in conformity with U.S. generally accepted accounting principles for investment companies.

A.  Senior Loan and Other Security Valuation. Senior loans held by the Trust are normally valued at the average of the means of one or more bid and ask quotations obtained from an independent pricing service or other sources determined by the Trust's Board to be independent and believed to be reliable. Loans for which reliable market value quotations are not readily available may be valued with reference to another loan or a group of loans for which reliable quotations are readily available and whose characteristics are comparable to the loan being valued. Under this approach, the comparable loan or loans serve as a proxy for changes in value of the loan being valued.

The Trust has engaged independent pricing services to provide market value quotations from dealers in loans and, when such quotations are not readily available, to calculate values under the proxy procedure described above. As of August 31, 2010, 98.4% of total loans were valued based on these procedures. It is expected that most of the loans held by the Trust will continue to be valued with reference to quotations from the independent pricing service (level 2) or with reference to the proxy procedure described above.

Prices from a pricing source may not be available for all loans and the Investment Adviser or ING Investment Management Co. ("ING IM" or the "Sub-Adviser"), may believe that the price for a loan derived from market quotations or the proxy procedure described above is not reliable or accurate. Among other reasons, this may be the result of information about a particular loan or borrower known to the Investment Adviser or the Sub-Adviser that the Investment Adviser or the Sub-Adviser believes may not be known to the pricing service or reflected in a price quote. In this event, the loan is valued at fair value, as defined by the 1940 Act, as determined in good faith under procedures established by the Board and in accordance with the provisions of the 1940 Act. Under these procedures, fair value is determined by the Investment Adviser or Sub-Adviser and monitored by the Board through its Compliance Committee.

In fair valuing a loan, consideration is given to several factors, which may include, among others, the following: (i) the characteristics of and fundamental analytical data relating to the loan, including the cost, size, current interest rate, period until the next interest rate reset, maturity and base lending rate of the loan, the terms and conditions of the loan and any related agreements, and the position of the loan in the borrower's debt structure; (ii) the nature, adequacy and value of the collateral, including the Trust's rights, remedies and interests with respect to the collateral; (iii) the creditworthiness of the borrower and the cash flow coverage of outstanding principal and interest, based on an evaluation of its financial condition, financial statements and information about the borrower's business, cash flows, capital structure and future prospects; (iv) information relating to the market for the loan, including price quotations


13



ING Prime Rate Trust

NOTES TO FINANCIAL STATEMENTS as of August 31, 2010 (Unaudited) (continued)

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (continued)

for, and trading in, the loan and interests in similar loans; (v) the reputation and financial condition of the agent for the loan and any intermediate participants in the loan; (vi) the borrower's management; and (vii) the general economic and market conditions affecting the fair value of the loan. Securities for which the primary market is a national securities exchange are valued at the last reported sale price. Securities reported by NASDAQ will be valued at the NASDAQ Official Closing Price. Securities traded in the over-the-counter market and listed securities for which no sale was reported on a valuation date are valued at the mean between the last reported bid and ask price on such exchange. Securities, other than senior loans, for which reliable market value quotations are not readily available, and all other assets, will be valued at their respective fair values as determined in good faith by, and under procedures established by, the Board. Investments in securities of sufficient credit quality maturing in 60 days or less from the date of acquisition are valued at amortized cost which approximates fair value.

Fair value is defined as the price that the Trust would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. Each investment asset or liability of the Trust is assigned a level at measurement date based on the significance and source of the inputs to its valuation. Quoted prices in active markets for identical securities are classified as "Level 1", inputs other than quoted prices for an asset or liability that are observable are classified as "Level 2" and unobservable inputs, including the sub-adviser's judgment about the assumptions that a market participant would use in pricing an asset or liability are classified as "Level 3". The inputs used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Short-term securities of sufficient credit quality which are valued at amortized cost, which approximates fair value, are generally considered to be Level 2 securities under applicable accounting rules. A table summarizing the Trust's investments under these levels of classification is included following the Portfolio of Investments.

For the period ended August 31, 2010, there have been no significant changes to the fair valuation methodologies.

B.  Security Transactions and Revenue Recognition. Revolver and delayed draw loans are booked on a settlement date basis. Security transactions and senior loans are accounted for on trade date (date the order to buy or sell is executed). Realized gains or losses are reported on the basis of identified cost of securities sold. Dividend income is recognized on the ex-dividend date. Interest income is recorded on an accrual basis at the then-current interest rate of the loan. The accrual of interest on loans is partially or fully discontinued when, in the opinion of management, there is an indication that the borrower may be unable to meet payments as they become due. If determined to be uncollectable, accrued interest is also written off. Cash collections on non-accrual senior loans are generally applied as a reduction to the recorded investment of the loan. Senior loans are generally returned to accrual status only after all past due amounts have been received and the borrower has demonstrated sustained performance. For all loans, except revolving credit facilities, fees received are treated as discounts and are accreted whereas premiums are amortized. Fees associated with revolving credit facilities are deferred and recognized over the shorter of four years or the actual term of the loan.

C.  Foreign Currency Translation. The books and records of the Trust are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S. dollars on the following basis:

(1)  Market value of investment securities, other assets and liabilities — at the exchange rates prevailing at the end of the day.

(2)  Purchases and sales of investment securities, income and expenses — at the rates of exchange prevailing on the respective dates of such transactions.


14



ING Prime Rate Trust

NOTES TO FINANCIAL STATEMENTS as of August 31, 2010 (Unaudited) (continued)

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (continued)

Although the net assets and the market values are presented at the foreign exchange rates at the end of the day, the Trust does not isolate the portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gains or losses from investments. For securities, which are subject to foreign withholding tax upon disposition, liabilities are recorded on the Statement of Assets and Liabilities for the estimated tax withholding based on the securities current market value. Upon disposition, realized gains or losses on such securities are recorded net of foreign withholding tax.

Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Trust's books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at 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 the U.S. government. 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.  Forward Foreign Currency Contracts. The Trust may enter into forward foreign currency contracts primarily to hedge against foreign currency exchange rate risks on its non-U.S. dollar denominated investment securities. A forward foreign currency contract is an agreement between two parties to buy and sell a currency at a set price on a future date. The market value of a foreign currency contract fluctuates with changes in foreign currency exchange rates. Forward foreign currency contracts are marked to market daily and the change in value is recorded by the Trust as an unrealized gain or loss and is reported in the Statement of Assets and Liabilities. Realized gains or losses 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 are recorded upon delivery or receipt of the currency and are included in the Statement of Operations. These instruments may involve market risk in excess of the amount recognized in the Statement of Assets and Liabilities. In addition, the Trust could be exposed to risk if the counterparties are unable to meet the terms of the contracts or if the value of the currency changes unfavorably to the U.S. dollar. Open forward foreign currency contracts are presented following the Portfolio of Investments. For the period ended August 31, 2010, the Trust had an average quarterly contract amount on forward foreign currency contracts to sell of $111,894,204.

E.  Federal Income Taxes. It is the policy of the Trust to comply with the requirements of subchapter M of the Internal Revenue Code that are applicable to regulated investment companies and to distribute substantially all of its net investment income and any net realized capital gains to its shareholders. Therefore, a federal income tax or excise tax provision is not required. Management has considered the sustainability of the Trust's tax positions taken on federal income tax returns for all open tax years in making this determination. No capital gain distributions shall be made until the capital loss carryforwards have been fully utilized or expire.

F.  Distributions to Common Shareholders. The Trust declares and pays dividends monthly from net investment income. Distributions from capital gains, if any, are declared and paid annually. The Trust may make additional distributions to comply with the distribution requirements of the Internal Revenue Code. The character and amounts of income and gains to be distributed are


15



ING Prime Rate Trust

NOTES TO FINANCIAL STATEMENTS as of August 31, 2010 (Unaudited) (continued)

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (continued)

determined in accordance with federal income tax regulations, which may differ from U.S. generally accepted accounting principles for investment companies. The Trust records distributions to its shareholders on the ex-dividend date.

G.  Dividend Reinvestments. Pursuant to the Trust's Shareholder Investment Program (the "Program"), PNC Global Investment Servicing (U.S.) Inc. ("PNC"), the Program administrator, purchases, from time to time, shares of beneficial interest of the Trust on the open market to satisfy dividend reinvestments. Such shares are purchased on the open market only when the closing sale or bid price plus commission is less than the NAV per share of the Trust's common shares on the valuation date. If the market price plus commissions is equal to or exceeds NAV, new shares are issued by the Trust at the greater of (i) NAV or (ii) the market price of the shares during the pricing period, minus a discount of 5%.

H.  Use of Estimates. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

I.  Share Offerings. The Trust issues shares under various shelf registration statements, whereby the net proceeds received by the Trust from share sales may not be less than the greater of (i) the NAV per share or (ii) 94% of the average daily market price over the relevant pricing period.

NOTE 3 — INVESTMENTS

For the period ended August 31, 2010, the cost of purchases and the proceeds from principal repayment and sales of investments, excluding short-term notes, totaled $311,605,946 and $336,243,668, respectively. At August 31, 2010, the Trust held senior loans valued at $1,061,967,768 representing 97.5% of its total investments. The fair value of these assets is established as set forth in Note 2.

The senior loans acquired by the Trust typically take the form of a direct lending relationship with the borrower, and are typically acquired through an assignment of another lender's interest in a loan. The lead lender in a typical corporate loan syndicate administers the loan and monitors the collateral securing the loan.

Common and preferred shares, and stock purchase warrants held in the portfolio were acquired in conjunction with loans held by the Trust. Certain of these stocks and warrants are restricted and may not be publicly sold without registration under the 1933 Act, or without an exemption under the 1933 Act. In some cases, these restrictions expire after a designated period of time after issuance of the shares or warrants.


16



ING Prime Rate Trust

NOTES TO FINANCIAL STATEMENTS as of August 31, 2010 (Unaudited) (continued)

NOTE 3 — INVESTMENTS (continued)

Dates of acquisition and cost or assigned basis of restricted securities are as follows:

    Date of
Acquisition
  Cost or
Assigned Basis
 
Allied Digital Technologies Corporation
(Residual Interest in Bankruptcy Estate)
  06/05/02   $ 100    
Ascend Media (Residual Interest)   01/05/10        
Block Vision Holdings Corporation (719 Common Shares)   09/17/02        
Boston Chicken, Inc. (Residual Interest in Boston
Chicken Plan Trust)
  12/26/00     9,793    
Cedar Chemical (Liquidation Interest)   12/31/02        
Enterprise Profit Solutions (Liquidation Interest)   10/21/02        
Euro United Corporation (Residual Interest in
Bankruptcy Estate)
  06/21/02     100    
Ferretti SPA (Warrants for 0.111% Participation Interest)   09/30/09        
Gainey Corporation (Residual Interest)   12/31/09        
Grand Union Company (Residual Interest in
Bankruptcy Estate)
  07/01/02     2,576    
Kevco Inc. (Residual Interest in Bankruptcy Estate)   06/05/02     25    
Lincoln Paper & Tissue (Warrants for 291 Common Shares,
Expires August 14, 2015)
  08/25/05        
Lincoln Pulp and Eastern Fine (Residual Interest in
Bankruptcy Estate)
  06/08/04        
Safelite Realty Corporation (57,804 Common Shares)   10/12/00        
Supermedia, Inc. (39,592 Common Shares)   01/05/10        
Transtar Metals (Residual Interest in Bankruptcy Estate)   01/09/03     40,230    
US Office Products Company (Residual Interest in
Bankruptcy Estate)
  02/11/04        
Total Restricted Securities excluding senior loans (fair value
$599,862 was 0.07% of net assets at August 31, 2010)
    $ 52,823    

 

NOTE 4 — MANAGEMENT AND ADMINISTRATION AGREEMENTS

The Trust has entered into an investment management agreement ("Investment Advisory Agreement") with the Investment Adviser, an Arizona limited liability company, to provide advisory and management services. The Investment Advisory Agreement compensates the Investment Adviser with a fee, computed daily and payable monthly, at an annual rate of 0.80% of the Trust's Managed Assets. For purposes of the Investment Advisory Agreement, "Managed Assets" shall mean the Trust's average daily gross asset value, minus the sum of the Trust's accrued and unpaid dividends on any outstanding preferred shares and accrued liabilities (other than liabilities for the principal amount of any borrowings incurred, commercial paper or notes issued by the Trust and the liquidation preference of any outstanding preferred shares).

The Investment Adviser entered into a Sub-Advisory agreement with ING IM, a Connecticut corporation. Subject to such policies as the Board or the Investment Adviser may determine, ING IM manages the Trust's assets in accordance with the Trust's investment objectives, policies, and limitations.

The Trust has also entered into an administration agreement with ING Funds Services, LLC (the "Administrator") to provide administrative services and also to furnish facilities. The Administrator is compensated with a fee, computed daily and payable monthly, at an annual rate of 0.25% of the Trust's Managed Assets.


17



ING Prime Rate Trust

NOTES TO FINANCIAL STATEMENTS as of August 31, 2010 (Unaudited) (continued)

NOTE 4 — MANAGEMENT AND ADMINISTRATION AGREEMENTS (continued)

The Investment Adviser, ING IM and the Administrator are indirect, wholly-owned subsidiaries of ING Groep N.V. ("ING Groep"). ING Groep is a global financial institution of Dutch origin offering banking, investments, life insurance, and retirement services.

ING Groep has adopted a formal restructuring plan that was approved by the European Commission in November 2009 under which the ING life insurance businesses, including the retirement services and investment management businesses, which include the Investment Adviser and its affiliates, would be divested by ING Groep by the end of 2013. While there can be no assurance that it will be carried out, the restructuring plan presents certain risks, including uncertainty about the effect on the businesses of the ING entities that service the Trust and potential termination of the Trust's existing advisory agreement, which may trigger the need for shareholder approval of new agreements.

NOTE 5 — TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

At August 31, 2010, the Trust had the following amounts recorded in payables to affiliates on the accompanying Statement of Assets and Liabilities:

Accrued Investment
Management Fees
  Accrued
Administrative Fees
  Total  
$ 757,662     $ 236,769     $ 994,431    

 

The Trust has adopted a Retirement Policy ("Policy") covering independent trustees of the Trust who were trustees on or before May 9, 2007, and who will have served as an independent trustee for at least five years as of the date of their retirement (as that term is defined in the Policy). Benefits under the Policy are based on an annual rate as defined in the Policy.

The Trust has adopted a Deferred Compensation Plan (the "Plan"), which allows eligible non-affiliated trustees as described in the Plan to defer the receipt of all or a portion of the trustees fees payable. Amounts deferred are treated as though invested in various "notional" funds advised by ING Investments until distribution in accordance with the Plan.

NOTE 6 — COMMITMENTS

The Trust has entered into a $275 million 364-day revolving credit agreement which matures August 17, 2011, collateralized by assets of the Trust. Borrowing rates under this agreement are based on a fixed spread over LIBOR, and a commitment fee is charged on the unused portion. Prepaid arrangement fees are amortized over the term of the agreement. The amount of borrowings outstanding at August 31, 2010, was $107 million. Weighted average interest rate on outstanding borrowings was 1.69%, excluding fees related to the unused portion of the facilities, and other fees. The amount of borrowings represented 9.60% of total assets at August 31, 2010. Average borrowings for the period ended August 31, 2010 were $107,690,217 and the average annualized interest rate was 2.53% excluding other fees related to the unused portion of the facilities, and other fees.

As of August 31, 2010, the Trust had unfunded loan commitments pursuant to the terms of the following loan agreements:

Calpine Corporation   $ 2,100,000    
Cengage Learning, Inc.     2,622,222    
Coleto Creek Power     5,000,000    
    $ 9,722,222    

 

The unrealized depreciation on these commitments of $1,529,148 as of August 31, 2010 is reported as such on the Statement of Assets and Liabilities.


18



ING Prime Rate Trust

NOTES TO FINANCIAL STATEMENTS as of August 31, 2010 (Unaudited) (continued)

NOTE 7 — RIGHTS AND OTHER OFFERINGS

As of August 31, 2010, outstanding share offerings pursuant to shelf registrations were as follows:

Registration
Date
  Shares
Registered
  Shares
Remaining
 
  8/17/09       25,000,000       24,980,237    
  8/17/09       5,000,000       5,000,000    

 

On November 2, 2000, the Trust issued 3,600 shares each of Series M, Series W and Series F Auction Rate Cumulative Preferred Shares, $0.01 Par Value, $25,000 liquidation preference, for a total issuance of $270 million. Also, on November 16, 2000, the Trust issued 3,600 shares of Series T and Series Th Auction Rate Cumulative Preferred Shares, $0.01 Par Value, $25,000 liquidation preference, for a total issuance of $180 million. The Trust used the net proceeds of the offering to partially pay down the then existing indebtedness and to purchase additional senior loans. Historically, Preferred Shares paid dividends based on a rate set at auctions, normally held every 7 days. In most instances dividends are also payable every 7 days, on the first business day following the end of the rate period. Preferred shares have no stated conversion, redemption or liquidation date, but may be redeemed at the election of the Trust. Such shares may only be redeemed by the Preferred Shareholders if the Trust fails to meet certain credit quality thresholds within its portfolio.

Since early February 2008, the Trust has not received sufficient hold orders or any purchase requests for its preferred shares during their weekly auctions that equaled the full amount of such shares. As a result, under the terms of the preferred shares, the amounts sold, if any, by each selling shareholder are reduced pro rata or to zero. In addition, the dividend rate on such preferred shares, which is normally set by means of a Dutch auction procedure, automatically reset to the maximum rate permitted under the preferred shares program. That maximum rate is 150% of the applicable commercial paper base rate on the day of the auction. While it is possible that the dividend rate for the preferred shares will be set by means of an auction at some future time, there is no current expectation that this will be the case.

On June 9, 2008, the Trust announced the approval by the Board of a partial redemption of its outstanding preferred shares. The Trust subsequently redeemed approximately $225 million of the $450 million of its outstanding preferred shares. Additionally, on November 12, 2009, the Board approved a redemption of up to $100 million preferred shares to be redeemed on a quarterly basis in the amount of up to $25 million per quarter beginning January 2010 through December 2010.

As of August 31, 2010, pursuant to the November 2009 announcement, the first three redemptions of $25 million each occurred. The preferred shares were redeemed using proceeds available through the Trust's existing bank loan facility and with cash held by the Trust. Redemption costs and the ongoing costs of obtaining leverage through a bank loan facility may reduce returns to common shares and may be higher or lower than the costs of leverage obtained through the preferred shares. The Trust will continue to monitor the situation and evaluate potential options to restore liquidity to and/or provide additional refinancing options for this market in the context of regulatory guidelines, as well as the economic and tax implications for both its common and preferred shareholders. There can be no assurance that any means for liquidity will be identified, and if they are, it is possible that the Trust's leverage or its benefits from leverage will diminish.

NOTE 8 — CUSTODIAL AGREEMENT

State Street Bank and Trust Company ("SSB") serves as the Trust's custodian and recordkeeper. Custody fees paid to SSB are reduced by earnings credits based on the cash balances held by SSB for the Trust. There were no earnings credits for the period ended August 31, 2010.


19



ING Prime Rate Trust

NOTES TO FINANCIAL STATEMENTS as of August 31, 2010 (Unaudited) (continued)

NOTE 9 — SUBORDINATED LOANS AND UNSECURED LOANS

The Trust may invest in subordinated loans and in unsecured loans. The primary risk arising from investing in subordinated loans or in unsecured loans is the potential loss in the event of default by the issuer of the loans. The Trust may acquire a subordinated loan only if, at the time of acquisition, it acquires or holds a senior loan from the same borrower. The Trust will acquire unsecured loans only where the Investment Adviser believes, at the time of acquisition, that the Trust would have the right to payment upon default that is not subordinate to any other creditor. Subject to the aggregate 20% limit on other investments, the Trust may invest up to 20% of its total assets in unsecured floating rate loans, notes and other debt instruments and 5% of its total assets in floating rate subordinated loans. As of August 31, 2010, the Trust held 1.0% of its total assets in subordinated loans and unsecured loans.

NOTE 10 — CAPITAL SHARES

Transactions in capital shares and dollars were as follows:

    Prime Rate Trust  
    Six Months
Ended
August 31,
2010
  Year Ended
February 28,
2010
 
Number of Shares  
Reinvestment of distributions from common shares     66,580       34,032    
Proceeds from shares sold     1,677,409       19,763    
Net increase in shares outstanding     1,743,989       53,795    
Dollar Amount ($)  
Reinvestment of distributions from common shares   $ 392,395     $ 193,985    
Proceeds from shares sold     10,016,035       112,650    
Net increase   $ 10,408,430     $ 306,635    

 

NOTE 11 — 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 U.S. generally accepted accounting principles 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 return of capital.

Dividends paid by the Trust from net investment income and distributions of net realized short-term capital gains are, for federal income tax purposes, taxable as ordinary income to shareholders.

The tax composition of dividends and distributions to shareholders was as follows:

Six Months Ended August 31, 2010   Year Ended February 28, 2010  
Ordinary Income   Ordinary Income  
$ 23,642,598     $ 46,261,846    

 


20



ING Prime Rate Trust

NOTES TO FINANCIAL STATEMENTS as of August 31, 2010 (Unaudited) (continued)

NOTE 11 — 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 as of February 28, 2010 were:

Undistributed
Ordinary
Income
  Unrealized
Depreciation
  Post-October
Capital Losses
Deferred
  Capital
Loss
Carryforwards
  Expiration
Dates
 
$ 8,166,292     $ (74,816,431 )   $ (21,497,833 )   $ (97,064,717 )     2011    
              (57,686,392 )     2012    
              (22,421,058 )     2013    
              (560,828 )     2014    
              (41,585,301 )     2017    
              (125,812,939 )     2018    
            $ (345,131,235 )        

 

The Trust's major tax jurisdictions are federal and Arizona. The earliest tax year that remains subject to examination by these jurisdictions is 2005.

As of August 31, 2010, no provision for income tax is required in the Trust's financial statements as a result of tax positions taken on federal and state income tax returns for open tax years. The Trust's federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state department of revenue.

NOTE 12 — SUBSEQUENT EVENTS

Subsequent to August 31, 2010, the Trust paid to Common Shareholders the following dividends from net investment income:

Per Share
Amount
  Declaration
Date
  Record Date   Payable Date  
$ 0.028       8/31/10       9/10/10       9/22/10    
$ 0.027       9/30/10       10/12/10       10/22/10    

 

Subsequent to August 31, 2010, the Trust paid to Preferred Shareholders the following dividends from net investment income:

Preferred
Shares
  Total Per
Share Amount
  Auction Dates   Record Dates   Payable Dates   Average
Rate
 
Series M   $ 10.36     09/03/10 — 10/18/10   09/13/10 — 10/25/10   09/14/10 — 10/26/10     0.30 %  
Series T   $ 8.91     09/07/10 — 10/19/10   09/14/10 — 10/26/10   09/15/10 — 10/27/10     0.26 %  
Series W   $ 10.30     09/01/10 — 10/20/10   09/08/10 — 10/27/10   09/09/10 — 10/28/10     0.28 %  
Series Th   $ 11.67     09/02/10 — 10/21/10   09/09/10 — 10/28/10   09/10/10 — 10/29/10     0.30 %  
Series F   $ 9.38     09/03/10 — 10/15/10   09/10/10 — 10/22/10   09/13/10 — 10/25/10     0.29 %  

 

Subsequent to August 31, 2010, the fourth quarterly redemption of preferred shares took place and is itemized below:

Preferred
Shares
  Total Shares
Redeemed
  Total Liquidation
Preference
  Redemption
Date
 
Series F     200     $ 5,000,000     10/12/10  
Series M     200     $ 5,000,000     10/12/10  
Series T     200     $ 5,000,000     10/13/10  
Series W     200     $ 5,000,000     10/1410  
Series Th     200     $ 5,000,000     10/15/10  
Totals     1,000     $ 25,000,000      

 


21



ING Prime Rate Trust

NOTES TO FINANCIAL STATEMENTS as of August 31, 2010 (Unaudited) (continued)

Subsequent to August 31, 2010, the Board of Trustees approved a continuance of the redemption of the ARPS through a series of periodic redemptions of up to $25 million each, the next of which is expected to occur in January 2011, subject to satisfying the notice and other requirements that apply to ARPS redemptions. Upon completion of such notice and other requirements, the Trust will issue a formal redemption notice to the paying agent and record holders. The amount and timing of redemptions of ARPS will be at the discretion of the Trust's management, subject to market conditions and investment considerations.

The Trust has evaluated events occurring after the Statement of Assets and Liabilities date (subsequent events) to determine whether any subsequent events necessitated adjustment to or disclosure in the financial statements. Other than the above, no such subsequent events were identified.


22




ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited)

Senior Loans*: 126.7%           Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
Aerospace & Defense: 2.1%      
          Delta Airlines, Inc.   Ba2   BB-        
$ 496,250       Term Loan, 8.750%, maturing
September 27, 2013
      $ 502,143    
          Delta Airlines, Inc.   B2   B        
  6,332,827       Term Loan, 3.529%, maturing April 30, 2014         5,857,865    
          Forgings International, Ltd.   NR   NR        
  1,500,000       Term Loan, 5.033%, maturing
December 18, 2015
        1,325,625    
  1,500,000       Term Loan, 5.533%, maturing
December 20, 2016
        1,325,625    
          McKechnie Aerospace DE, Inc.   B1   B+        
  1,906,062       Term Loan, 2.270%, maturing
May 11, 2014
        1,813,141    
          Transdigm, Inc.   Ba2   BB-        
  1,500,000       Term Loan, 2.538%, maturing
June 23, 2013
        1,463,840    
          Triumph Group, Inc.   Baa3   BB+        
  800,000       Term Loan, 4.500%, maturing June 16, 2016         804,500    
          United Airlines, Inc.   B1   B+        
  4,016,895       Term Loan, 2.313%, maturing
February 03, 2014
        3,656,632    
          Wesco Aircraft Hardware Corporation   Ba3   BB-        
  1,294,914       Term Loan, 2.520%, maturing
September 30, 2013
        1,258,495    
      18,007,866    
Automobile: 3.9%      
          Avis Budget Car Rental, LLC   Ba2   BB        
  3,201,014       Term Loan, 5.750%, maturing
April 19, 2014
        3,183,008    
          Dollar Thrifty Automotive Group, Inc.   B2   B-        
  3,330,171       Term Loan, 2.760%, maturing
June 15, 2014
        3,302,420    
          Ford Motor Company   Ba1   BB        
  13,485,394       Term Loan, 3.030%, maturing
December 16, 2013
        13,019,892    
  3,984,950       Term Loan, 3.030%, maturing
December 16, 2013
        3,836,435    
          KAR Holdings, Inc.   Ba3   B+        
  5,687,496       Term Loan, 3.020%, maturing
October 18, 2013
        5,495,543    
          Oshkosh Truck Corporation   Ba2   BB+        
  1,324,834       Term Loan, 6.534%, maturing
December 06, 2013
        1,336,841    
          Speedy 1, Ltd.   NR   NR        
EUR 933,055         Term Loan, 4.630%, maturing
August 31, 2013
        1,120,614    
          TRW Automotive, Inc.   Ba1   BBB-        
$ 1,836,125       Term Loan, 4.083%, maturing May 30, 2015         1,833,830    
      33,128,583    

 

See Accompanying Notes to Financial Statements
23



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

            Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
Beverage, Food & Tobacco: 3.5%      
        ARAMARK Corporation   Ba3   BB        
$ 1,907,788       Term Loan, 2.408%, maturing
January 26, 2014
      $ 1,755,165    
  632,780       Term Loan, 2.073%, maturing
January 27, 2014
        599,856    
  3,501,625       Term Loan, 2.408%, maturing
January 27, 2014
        3,323,263    
  456,754       Term Loan, 3.598%, maturing July 26, 2016         444,536    
  6,945,247       Term Loan, 3.783%, maturing July 26, 2016         6,759,462    
          Bolthouse Farms, Inc.   B1   B        
  997,500       Term Loan, 5.500%, maturing
February 11, 2016
        996,872    
          Iglo Birds Eye   NR   BB-        
EUR 1,125,000       (5 )   Term Loan, maturing May 21, 2016         1,417,187    
          Michael Foods, Inc.   B1   BB-        
$ 1,000,000       Term Loan, 6.250%, maturing June 29, 2016         1,004,286    
          Pinnacle Foods Holding Corporation   Ba3   B+        
  7,423,092       Term Loan, 2.812%, maturing April 02, 2014         7,065,855    
          United Biscuits Holdco, Ltd.   NR   NR        
GBP 2,976,692       Term Loan, 3.066%, maturing
December 15, 2014
        4,346,015    
          Van Houtte, Inc.   Ba3   BB-        
$ 1,247,166       Term Loan, 3.033%, maturing July 19, 2014         1,213,389    
  170,068       Term Loan, 3.033%, maturing July 19, 2014         165,462    
      29,091,348    
Buildings & Real Estate: 1.2%      
          Capital Automotive, L.P.   Ba3   B        
  3,969,458       Term Loan, 2.820%, maturing
December 14, 2012
        3,795,794    
          Contech Construction Products, Inc.   B1   B        
  1,001,485       Term Loan, 2.270%, maturing
January 31, 2013
        841,999    
          Custom Building Products, Inc.   B1   B+        
  1,051,525       Term Loan, 5.750%, maturing
March 19, 2015
        1,050,211    
          Goodman Global, Inc.   Ba3   BB        
  1,922,577       Term Loan, 6.250%, maturing
February 13, 2014
        1,936,596    
          John Maneely Company   B3   B        
  2,286,549       Term Loan, 3.775%, maturing
December 09, 2013
        2,184,608    
          KCPC Acquisition, Inc.   Ba3   CCC        
  520,902       Term Loan, 2.563%, maturing May 22, 2014         444,721    
  189,655       Term Loan, 2.688%, maturing May 22, 2014         161,918    
      10,415,847    

 

See Accompanying Notes to Financial Statements
24



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

            Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
Cargo Transport: 1.0%      
          Baker Tanks, Inc.   B2   B        
$ 1,697,581         Term Loan, 4.913%, maturing May 08, 2014       $ 1,615,672    
          Ceva Group, PLC   B1   B-        
  992,327       Term Loan, 3.260%, maturing
November 04, 2013
        883,171    
  1,856,938       Term Loan, 3.260%, maturing
November 04, 2013
        1,652,675    
  723,070       Term Loan, 3.533%, maturing
November 04, 2013
        643,533    
          Dockwise Transport, N.V.   NR   NR        
  725,864       Term Loan, 2.283%, maturing
January 11, 2015
        663,258    
  594,840       Term Loan, 2.283%, maturing
January 11, 2015
        543,535    
  594,840       Term Loan, 3.158%, maturing
January 11, 2016
        543,535    
  609,882       Term Loan, 3.158%, maturing
January 11, 2016
        557,280    
          Inmar, Inc.   B1   B        
  745,328       Term Loan, 2.520%, maturing April 29, 2013         722,968    
          US Shipping Partners, L.P.   B3   B-        
  1,165,560       Term Loan, 9.200%, maturing
November 12, 2013
        981,984    
      8,807,611    
Cellular: 0.2%      
          NTELOS, Inc.   Ba3   BB        
  992,500       Term Loan, 5.750%, maturing
August 07, 2015
        997,085    
  500,000       (5 )   Term Loan, maturing August 07, 2015         501,250    
      1,498,335    
Chemicals, Plastics & Rubber: 6.3%      
          AZ Chem US, Inc.   B1   BB-        
EUR 635,473       Term Loan, 3.139%, maturing
February 26, 2013
        748,459    
          Brenntag Holding GmbH & Co. KG   Ba2   BBB-        
$ 3,542,098       Term Loan, 4.029%, maturing
January 20, 2014
        3,515,533    
  695,099       Term Loan, 4.037%, maturing
January 20, 2014
        682,934    
          Celanese U.S. Holdings, LLC   Ba2   BB+        
  3,200,000       Term Loan, 1.812%, maturing April 02, 2014         3,062,000    
          Chemtura Corporation   Ba1   NR        
  765,000       (5 )   Term Loan, maturing August 11, 2016         769,781    
          Chemtura Corporation   NR   NR        
  1,250,000       Term Loan, 6.000%, maturing
February 11, 2011
        1,249,219    
          Cristal Inorganic Chemicals, Inc.   B1   B        
  2,568,512       Term Loan, 2.783%, maturing May 15, 2014         2,393,532    

 

See Accompanying Notes to Financial Statements
25



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

            Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
Chemicals, Plastics & Rubber: (continued)      
          GenTek Holding, LLC   B1   B+        
$ 301,731       Term Loan, 7.000%, maturing
October 29, 2014
      $ 302,598    
          Hexion Specialty Chemicals, Inc.   Ba3   B-        
  1,140,000       Term Loan, 2.499%, maturing May 05, 2013         1,040,250    
  1,176,927       Term Loan, 4.187%, maturing May 05, 2015         1,126,907    
  2,955,935       Term Loan, 4.313%, maturing May 05, 2015         2,834,741    
  970,000       Term Loan, 4.313%, maturing May 05, 2015         916,650    
  1,311,211       Term Loan, 4.313%, maturing May 05, 2015         1,257,451    
          Huntsman International, LLC   Ba2   B+        
  5,606,098       Term Loan, 2.602%, maturing June 30, 2016         5,354,698    
          Ineos US Finance, LLC   B2   B        
  282,828       Term Loan, 7.001%, maturing
December 14, 2012
        283,429    
EUR 865,735       Term Loan, 7.501%, maturing
December 16, 2013
        1,082,704    
$ 1,864,962       Term Loan, 7.501%, maturing
December 16, 2013
        1,855,637    
EUR 989,691       Term Loan, 8.001%, maturing
December 16, 2014
        1,237,726    
$ 2,171,244       Term Loan, 8.001%, maturing
December 16, 2014
        2,160,388    
          ISP Chemco, Inc.   Ba3   BB        
  3,395,000       Term Loan, 1.813%, maturing June 04, 2014         3,223,834    
          JohnsonDiversey, Inc.   Ba2   BB-        
  1,990,000       Term Loan, 5.500%, maturing
November 24, 2015
        2,001,194    
          Kraton Polymers, LLC   Ba3   BB        
  1,353,618       Term Loan, 2.313%, maturing May 13, 2013         1,295,413    
          Lyondell Chemical Company   Ba3   BB        
  750,000       Term Loan, 5.500%, maturing April 08, 2016         757,083    
          MacDermid, Inc.   B2   B+        
EUR 1,639,846       Term Loan, 2.828%, maturing April 11, 2014         1,921,024    
$ 2,408,969       Term Loan, 2.260%, maturing April 12, 2014         2,230,303    
          Polypore, Inc.   Ba2   BB-        
  3,159,728       Term Loan, 2.270%, maturing July 03, 2014         3,051,112    
          Rockwood Specialties Group, Inc.   Ba2   BB+        
  1,500,473       Term Loan, 6.000%, maturing May 15, 2014         1,504,037    
          Solutia, Inc.   Ba3   BB-        
  1,296,750       Term Loan, 4.750%, maturing March 17, 2017         1,300,600    
          Styron, Inc.   B2   B+        
  3,450,000       Term Loan, 7.500%, maturing June 17, 2016         3,487,736    
      52,646,973    
Containers, Packaging & Glass: 4.8%      
          Berry Plastics Corporation   B1   B        
  4,784,644       Term Loan, 2.376%, maturing April 03, 2015         4,381,537    
          Bway Holding Corporation   Ba3   B+        
  914,286       Term Loan, 5.501%, maturing June 16, 2017         916,571    

 

See Accompanying Notes to Financial Statements
26



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

            Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
Containers, Packaging & Glass: (continued)    
$ 85,714       Term Loan, 5.501%, maturing June 16, 2017       $ 85,929    
          Graham Packaging Company, L.P.   B1   B+        
  7,729,739       Term Loan, 6.750%, maturing April 05, 2014         7,800,821    
          Graphic Packaging International, Inc.   Ba3   BB+        
  4,375,408       Term Loan, 2.521%, maturing May 16, 2014         4,251,440    
          KLEOPATRA LUX 2 S.À. R.L   NR   NR        
  2,917,598       Term Loan, 3.242%, maturing
January 03, 2016
        2,403,371    
          OI European Group, B.V.   Baa2   BBB        
EUR 647,541       Term Loan, 2.150%, maturing June 14, 2013         801,626    
          Pro Mach, Inc.   B1   B        
$ 2,304,737       Term Loan, 2.520%, maturing
December 14, 2011
        1,959,026    
          Reynolds Group Holdings, Ltd.   B1   BB-        
  3,000,000       Term Loan, 5.750%, maturing May 05, 2016         2,988,126    
  1,490,625       Term Loan, 6.250%, maturing May 05, 2016         1,488,389    
          Smurfit-Stone Container Corporation   B2   BB+        
  3,895,000       Term Loan, 6.750%, maturing
February 22, 2016
        3,918,300    
          Xerium Technologies, Inc.   Ba3   BB-        
  3,750,000       (5 )   Term Loan, 6.500%, maturing
November 25, 2014
        3,773,438    
          Xerium Technologies, Inc.   B3   B+        
  5,445,686       Term Loan, 8.250%, maturing May 25, 2015         5,217,648    
      39,986,222    
Data and Internet Services: 7.5%      
          Activant Solutions, Inc.   B1   B        
  86,171       Term Loan, 3.062%, maturing May 01, 2013         81,647    
  2,626,118       Term Loan, 2.563%, maturing May 02, 2013         2,488,247    
          Amadeus IT Group, S.A.   NR   NR        
EUR 1,268,581       Term Loan, 4.147%, maturing July 01, 2013         1,560,003    
EUR 1,268,581       Term Loan, 4.647%, maturing July 01, 2014         1,560,003    
          Aspect Software, Inc.   Ba3   B+        
$ 1,246,875       Term Loan, 6.250%, maturing April 19, 2016         1,226,093    
          Audatex North America, Inc.   Ba2   BB        
  1,063,219       Term Loan, 2.313%, maturing May 16, 2014         1,022,905    
          AutoTrader.com, Inc.   Ba3   BB+        
  1,350,000       Term Loan, 6.000%, maturing June 14, 2016         1,354,219    
          Carlson Wagonlit Holdings, B.V.   B2   B-        
  3,649,879       Term Loan, 4.225%, maturing
August 03, 2012
        3,390,737    
          Dealer Computer Services, Inc.   Ba3   BB-        
  5,245,879       Term Loan, 5.250%, maturing April 21, 2017         5,207,605    
          First Data Corporation   B1   B+        
  3,447,996       Term Loan, 3.014%, maturing
September 24, 2014
        2,953,857    
  2,869,521       Term Loan, 3.014%, maturing
September 24, 2014
        2,455,056    

 

See Accompanying Notes to Financial Statements
27



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

            Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
Data and Internet Services: (continued)      
$ 7,779,138       Term Loan, 3.014%, maturing
September 24, 2014
      $ 6,657,487    
          Information Solutions Company   Ba2   BB+        
  625,000       Term Loan, 4.750%, maturing April 12, 2016         628,516    
          Orbitz Worldwide, Inc.   B2   B+        
  3,159,183       Term Loan, 3.326%, maturing July 25, 2014         2,969,067    
          Sabre, Inc.   B1   B        
  11,849,782       Term Loan, 2.338%, maturing
September 30, 2014
        10,689,712    
          SAVVIS Communications Corporation   B1   B        
  2,000,000       Term Loan, 6.755%, maturing July 30, 2016         1,980,500    
          Sungard Data Systems, Inc.   Ba3   BB        
  247,806       Term Loan, 2.043%, maturing
February 28, 2014
        237,274    
  1,471,288       Term Loan, 6.750%, maturing
February 28, 2014
        1,477,593    
  6,704,885       Term Loan, 4.038%, maturing
February 26, 2016
        6,554,957    
          Trans Union, LLC   Ba3   BB-        
  3,420,000       Term Loan, 6.750%, maturing June 15, 2017         3,460,612    
          Transaction Network Services, Inc.   Ba3   BB        
  1,384,615       Term Loan, 6.000%, maturing
November 18, 2015
        1,390,385    
          Transfirst Holdings, Inc.   B2   B        
  1,994,859       Term Loan, 3.010%, maturing June 15, 2014         1,820,308    
          Travelport, Inc.   Ba3   B        
  598,833       Term Loan, 2.760%, maturing
August 23, 2013
        568,158    
  970,000       Term Loan, 2.761%, maturing
August 23, 2013
        924,572    
  136,295       Term Loan, 3.033%, maturing
August 23, 2013
        129,313    
      62,788,826    
Diversified / Conglomerate Manufacturing: 2.4%      
          Brand Services, Inc.   B1   B        
  2,633,981       Term Loan, 2.813%, maturing
February 07, 2014
        2,419,970    
  1,152,204       Term Loan, 3.580%, maturing
February 07, 2014
        1,070,109    
          Dresser, Inc.   B2   B+        
  4,813,677       Term Loan, 2.612%, maturing May 04, 2014         4,579,010    
          Edwards (Cayman Islands II), Ltd.   B3   B        
  1,160,199       Term Loan, 2.260%, maturing May 31, 2014         1,052,881    
          EPD, Inc.   NR   NR        
  176,322       Term Loan, 2.770%, maturing July 31, 2014         153,180    
  1,231,085       Term Loan, 2.770%, maturing July 31, 2014         1,069,505    
          Ferretti, S.P.A.   NR   NR        
EUR 385,205       (3 )   Term Loan, 3.627%, maturing
January 31, 2015
        187,820    

 

See Accompanying Notes to Financial Statements
28



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

            Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
Diversified / Conglomerate Manufacturing: (continued)      
EUR 385,868       (3 )   Term Loan, 4.127%, maturing
January 31, 2016
      $ 188,142    
EUR 65,586       (3 )   Term Loan, 6.627%, maturing
January 31, 2017
        32,810    
                Flextronics International, Ltd.   Ba1   BB+        
$ 81,513       (5 )   Term Loan, maturing October 01, 2014         76,690    
                Manitowoc Company, Inc.   B1   BB        
  1,000,000           Term Loan, 5.563%, maturing
November 06, 2013
        989,500    
  766,239           Term Loan, 8.000%, maturing
November 06, 2014
        767,567    
                Rexnord Corporation / RBS Global, Inc.   Ba3   BB-        
  946,418           Term Loan, 2.563%, maturing July 19, 2013         908,266    
  1,000,000           Term Loan, 2.813%, maturing July 19, 2013         959,688    
                Sensata Technologies, B.V.   B1   BB        
  5,021,691           Term Loan, 2.231%, maturing April 26, 2013         4,758,052    
                Sensus Metering Systems, Inc.   Ba2   NR        
  698,773           Term Loan, 2.473%, maturing
December 17, 2010
        681,303    
      19,894,493    
Diversified / Conglomerate Service: 4.1%      
                Affinion Group, Inc.   Ba2   BB-        
  2,493,750           Term Loan, 5.000%, maturing
October 10, 2016
        2,408,808    
                AlixPartners, LLP   Ba3   BB        
  2,578,769           Term Loan, 2.527%, maturing
October 12, 2013
        2,498,183    
                Brickman Group Holdings, Inc.   B1   BB        
  1,925,909           Term Loan, 2.533%, maturing
January 23, 2014
        1,829,614    
                Brock Holdings, Inc.   B3   B        
  1,527,842           Term Loan, 3.073%, maturing
February 26, 2014
        1,394,156    
                Catalina Marketing Corporation   Ba2   BB-        
  4,219,205           Term Loan, 3.012%, maturing
October 01, 2014
        4,045,162    
              Coach America Holdings, Inc.   B2   B        
  1,251,656           Term Loan, 3.230%, maturing April 18, 2014         998,196    
  269,883           Term Loan, 3.283%, maturing April 20, 2014         215,232    
              Fidelity National Information Services, Inc.   Ba1   BBB-        
  3,300,000           Term Loan, 5.250%, maturing July 18, 2016         3,322,981    
                Intergraph Corporation   B1   BB-        
  2,384,107           Term Loan, 4.549%, maturing May 29, 2014         2,379,637    
              ISS Holding A/S   NR   NR        
EUR 240,402           Term Loan, 2.720%, maturing
December 31, 2013
        290,539    
EUR 42,895           Term Loan, 2.720%, maturing
December 31, 2013
        51,841    

 

See Accompanying Notes to Financial Statements
29



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

            Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
Diversified / Conglomerate Service: (continued)      
EUR 32,118       Term Loan, 2.720%, maturing
December 31, 2013
      $ 38,816    
EUR 227,055       Term Loan, 2.720%, maturing
December 31, 2013
        274,409    
EUR 424,609       Term Loan, 2.720%, maturing
December 31, 2013
        513,163    
EUR 3,032,921       Term Loan, 2.720%, maturing
December 31, 2013
        3,665,453    
          ISTA International GmbH   NR   NR        
EUR 377,847       Term Loan, 3.036%, maturing May 14, 2015         422,758    
EUR 1,617,426       Term Loan, 3.036%, maturing May 14, 2015         1,809,673    
          Valleycrest Companies, LLC   B2   B        
$ 1,669,420       Term Loan, 2.540%, maturing
March 12, 2014
        1,548,387    
          Vertafore, Inc.   B1   B+        
  750,000       Term Loan, 6.750%, maturing July 29, 2016         748,031    
          West Corporation   B1   BB-        
  4,113,976       Term Loan, 2.641%, maturing
October 24, 2013
        3,943,538    
  2,107,827       Term Loan, 4.141%, maturing July 15, 2016         2,067,867    
      34,466,444    
Diversified Natural Resources, Precious Metals & Minerals: 1.2%      
          Georgia Pacific, LLC   Ba1   BBB        
  5,953,762       Term Loan, 2.502%, maturing
December 21, 2012
        5,886,783    
  3,818,032       Term Loan, 3.786%, maturing
December 23, 2014
        3,807,593    
      9,694,376    
Ecological: 0.1%      
          Synagro Technologies, Inc.   B3   CCC+        
  873,000       Term Loan, 2.280%, maturing April 02, 2014         742,777    
          Synagro Technologies, Inc.   Caa3   CCC-        
  485,000       Term Loan, 5.030%, maturing
October 02, 2014
        381,635    
      1,124,412    
Electronics: 2.0%      
          Aeroflex, Inc.   Ba3   BB-        
  987,668       Term Loan, 3.625%, maturing
August 15, 2014
        933,346    
          Brocade Communications Systems, Inc.   Ba2   BBB-        
  718,069       Term Loan, 7.000%, maturing
October 07, 2013
        722,706    
          FCI International, S.A.S.   B2   NR        
  343,834       Term Loan, 3.030%, maturing
September 30, 2012
        321,055    
  314,400       Term Loan, 3.030%, maturing
September 30, 2012
        293,571    

 

See Accompanying Notes to Financial Statements
30



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

            Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
Electronics: (continued)  
              Freescale Semiconductor, Inc.   B2   B-        
$ 5,328,967           Term Loan, 4.562%, maturing
December 01, 2016
      $ 4,786,078    
              Infor Enterprise Solutions Holdings, Inc.   B1   B+        
  485,000           Term Loan, 5.020%, maturing July 28, 2015         434,075    
EUR 723,750           Term Loan, 5.584%, maturing July 28, 2015         820,351    
$ 605,857           Term Loan, 6.020%, maturing July 28, 2015         542,242    
  1,161,226           Term Loan, 6.020%, maturing July 28, 2015         1,042,200    
              Infor Enterprise Solutions Holdings, Inc.   Caa2   CCC+        
EUR 500,000           Term Loan, 6.890%, maturing
March 02, 2014
        408,430    
              Intersil Corporation   Ba2   BB+        
$ 500,000           Term Loan, 4.750%, maturing April 27, 2016         501,313    
                Kronos, Inc.   Ba3   B+        
  3,106,269           Term Loan, 2.533%, maturing June 11, 2014         2,931,541    
              Redprairie Corporation   B2   B+        
  997,500           Term Loan, 6.000%, maturing
March 24, 2016
        996,253    
              Spansion, LLC   NR   BB-        
  1,870,313           Term Loan, 7.500%, maturing
January 08, 2015
        1,858,234    
      16,591,395    
Finance: 2.9%      
              Interactive Data Corporation   Ba3   B+        
  5,000,000           Term Loan, 6.750%, maturing
January 27, 2017
        5,043,750    
                LPL Holdings, Inc.   Ba3   B+        
  1,751,055           Term Loan, 2.608%, maturing June 28, 2013         1,709,467    
  5,511,820           Term Loan, 4.250%, maturing June 25, 2015         5,360,246    
  1,995,000           Term Loan, 5.250%, maturing June 28, 2017         1,985,025    
                MSCI, Inc.   Ba2   BB+        
  5,486,250           Term Loan, 4.750%, maturing June 01, 2016         5,514,822    
                Nuveen Investments, Inc.   B3   B        
  4,893,540           Term Loan, 3.511%, maturing
November 13, 2014
        4,339,195    
      23,952,505    
Gaming: 3.7%      
              Cannery Casino Resorts, LLC   B3   B        
  481,740           Term Loan, 4.516%, maturing May 17, 2013         437,982    
  398,340           Term Loan, 4.545%, maturing May 20, 2013         362,158    
          (2 )   Fontainebleau Las Vegas, LLC   NR   NR        
  535,170       (3 )   Term Loan, 6.000%, maturing June 06, 2014         113,724    
  1,070,339       (3 )   Term Loan, 6.000%, maturing June 06, 2014         227,447    
              Golden Nugget, Inc.   Caa3   CC        
  1,220,504           Term Loan, 3.283%, maturing June 30, 2014         995,093    
  2,142,896           Term Loan, 3.320%, maturing June 30, 2014         1,747,131    
          (2 )   Green Valley Ranch Gaming, LLC   C   NR        
  750,000       (3 )   Term Loan, 3.507%, maturing
August 16, 2014
        33,750    

 

See Accompanying Notes to Financial Statements
31



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

            Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
Gaming: (continued)      
              Harrahs Operating Company, Inc.   Caa1   B        
$ 2,415,817           Term Loan, 3.498%, maturing
January 28, 2015
      $ 2,075,641    
  2,249,697           Term Loan, 3.498%, maturing
January 28, 2015
        1,937,169    
  4,176,826           Term Loan, 3.498%, maturing
January 28, 2015
        3,582,489    
  1,547,778           Term Loan, 9.500%, maturing
October 31, 2016
        1,584,859    
              Isle of Capri Casinos, Inc.   B1   B+        
  842,437           Term Loan, 5.000%, maturing
November 25, 2013
        804,001    
  1,192,604           Term Loan, 5.000%, maturing
November 25, 2013
        1,138,192    
  2,981,511           Term Loan, 5.000%, maturing
November 25, 2013
        2,845,479    
              Las Vegas Sands, LLC   NR   B        
  1,028,742           Term Loan, 3.010%, maturing
November 23, 2016
        934,869    
  4,072,979           Term Loan, 3.010%, maturing
November 23, 2016
        3,707,140    
          (2 )   New World Gaming Partners, Ltd.   Caa3   D        
  620,577       (3 )   Term Loan, 3.046%, maturing
September 30, 2014
        605,062    
  3,063,903       (3 )   Term Loan, 3.048%, maturing
September 30, 2014
        2,987,305    
              Seminole Tribe of Florida   Ba1   BBB        
  16,357           Term Loan, 2.063%, maturing
March 05, 2014
        15,315    
              VML US Finance, LLC   B2   B        
  871,110           Term Loan, 5.040%, maturing May 25, 2012         858,899    
  2,130,738           Term Loan, 5.040%, maturing May 27, 2013         2,091,008    
  1,602,478           Term Loan, 5.040%, maturing May 27, 2013         1,580,015    
      30,664,728    
Healthcare, Education and Childcare: 17.2%      
                AGA Medical Corporation   B2   BB-        
  1,632,209           Term Loan, 2.558%, maturing April 26, 2013         1,493,471    
              Bausch & Lomb, Inc.   B1   BB-        
  382,422           Term Loan, 3.510%, maturing April 24, 2015         367,343    
  1,578,947           Term Loan, 3.589%, maturing April 24, 2015         1,516,686    
              Biomet, Inc.   B1   BB-        
  5,933,907           Term Loan, 3.497%, maturing
March 25, 2015
        5,747,796    
                Bright Horizons Family Solutions, Inc.   Ba2   BB-        
  461,176           Term Loan, 7.500%, maturing May 28, 2015         462,082    
              Catalent Pharma Solutions, Inc.   Ba3   BB-        
  6,380,444           Term Loan, 2.510%, maturing April 10, 2014         5,767,922    

 

See Accompanying Notes to Financial Statements
32



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

            Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
Healthcare, Education and Childcare: (continued)      
            CHG Medical Staffing, Inc.   Ba3   B+        
$ 1,798,500       Term Loan, 2.762%, maturing
December 30, 2013
      $ 1,753,537    
  400,000       Term Loan, 2.900%, maturing
December 30, 2013
        390,000    
          CHS/Community Health Systems, Inc.   Ba3   BB        
  1,922,625       Term Loan, 2.549%, maturing July 25, 2014         1,816,548    
  37,509,170       Term Loan, 2.549%, maturing July 25, 2014         35,439,677    
          Concentra Operating Corporation   Ba3   B+        
  1,888,055       Term Loan, 2.790%, maturing June 25, 2014         1,777,919    
            CRC Health Corporation   B1   B+        
  902,331       Term Loan, 2.783%, maturing
February 06, 2013
        825,633    
  944,252       Term Loan, 2.783%, maturing
February 06, 2013
        863,991    
          Education Management Corporation   B1   BB        
  1,092,515       Term Loan, 2.313%, maturing June 03, 2013         1,003,749    
          Emdeon Business Services, LLC   Ba3   BB        
  2,260,182       Term Loan, 2.383%, maturing
November 16, 2013
        2,195,202    
          EMSC, L.P.   Baa3   BB+        
  1,987,500       Term Loan, 3.286%, maturing April 08, 2015         1,992,469    
          Gambro Holding AB   NR   NR        
  1,670,984       Term Loan, 2.852%, maturing June 05, 2014         1,487,176    
SEK 2,111,070       Term Loan, 3.340%, maturing June 05, 2014         254,007    
SEK 2,146,343       Term Loan, 3.340%, maturing June 05, 2014         258,251    
$ 1,670,984       Term Loan, 3.352%, maturing June 05, 2015         1,487,176    
SEK 2,146,343       Term Loan, 3.840%, maturing June 05, 2015         258,251    
SEK 2,111,070       Term Loan, 3.840%, maturing June 05, 2015         254,007    
          Harlan Sprague Dawley, Inc.   B3   BB-        
$ 2,440,000       Term Loan, 3.770%, maturing July 11, 2014         2,212,267    
          Harrington Holdings, Inc.   B1   BB-        
  2,386,500       Term Loan, 2.510%, maturing
December 28, 2013
        2,350,702    
          HCA, Inc.   Ba3   BB        
  5,009,376       Term Loan, 2.783%, maturing
November 18, 2013
        4,833,181    
  12,013,480       Term Loan, 3.783%, maturing
March 31, 2017
        11,655,886    
          Health Management Associates, Inc.   B1   BB-        
  3,589,778       Term Loan, 2.283%, maturing
February 28, 2014
        3,369,904    
          Iasis Healthcare, LLC   Ba2   B+        
  3,604,328       Term Loan, 2.260%, maturing
March 14, 2014
        3,420,356    
  1,247,459       Term Loan, 2.260%, maturing
March 14, 2014
        1,183,786    
  339,445       Term Loan, 3.159%, maturing
March 14, 2014
        322,119    

 

See Accompanying Notes to Financial Statements
33



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

            Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
Healthcare, Education and Childcare: (continued)      
          IM US Holdings, LLC   B2   B-        
$ 1,000,000       Term Loan, 4.510%, maturing June 26, 2015       $ 969,375    
            IM US Holdings, LLC   Ba2   BB        
  4,380,192       Term Loan, 2.391%, maturing June 26, 2014         4,220,315    
            IMS Health, Inc.   Ba3   BB        
EUR 989,818       Term Loan, 5.500%, maturing
January 31, 2016
        1,248,070    
$ 1,980,480       Term Loan, 5.250%, maturing
February 26, 2016
        1,988,319    
            inVentiv Health, Inc.   Ba3   BB-        
  2,140,000       Term Loan, 6.500%, maturing
August 04, 2016
        2,140,000    
            Molnlycke Health Care Group   NR   NR        
EUR 200,000       Term Loan, 2.625%, maturing
March 30, 2015
        239,232    
GBP 250,000       Term Loan, 2.573%, maturing
March 31, 2015
        358,432    
EUR 170,016       Term Loan, 2.875%, maturing
March 30, 2016
        203,367    
GBP 203,835       Term Loan, 2.823%, maturing
March 31, 2016
        292,244    
            National Mentor, Inc.   Ba3   B        
$ 68,040       Term Loan, 2.300%, maturing June 29, 2013         59,592    
  2,105,519       Term Loan, 2.540%, maturing June 29, 2013         1,844,083    
            Nyco Holdings 3 ApS   NR   NR        
EUR 81,310       Term Loan, 4.469%, maturing
December 29, 2014
        95,947    
EUR 1,317,855       Term Loan, 4.469%, maturing
December 29, 2014
        1,555,088    
EUR 51,795       Term Loan, 4.469%, maturing
December 29, 2014
        61,119    
EUR 366,234       Term Loan, 4.469%, maturing
December 29, 2014
        432,162    
EUR 504,944       Term Loan, 4.469%, maturing
December 29, 2014
        595,841    
EUR 504,819       Term Loan, 5.219%, maturing
December 29, 2015
        595,694    
EUR 1,317,531       Term Loan, 5.219%, maturing
December 29, 2015
        1,554,706    
EUR 81,290       Term Loan, 5.219%, maturing
December 29, 2015
        95,923    
EUR 51,782       Term Loan, 5.219%, maturing
December 29, 2015
        61,104    
EUR 366,144       Term Loan, 5.291%, maturing
December 29, 2015
        432,056    
            Quintiles Transnational Corporation   Ba2   BB        
$ 2,893,040       Term Loan, 2.441%, maturing
March 29, 2013
        2,817,097    

 

See Accompanying Notes to Financial Statements
34



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

            Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
Healthcare, Education and Childcare: (continued)      
                Renal Advantage, Inc.   Ba3   B        
$ 3,200,000           Term Loan, 6.000%, maturing June 03, 2016       $ 3,210,000    
                Rural/Metro Operating Company, LLC   Ba3   BB        
  746,250           Term Loan, 7.000%, maturing
December 09, 2014
        750,914    
                Skilled Healthcare Group, Inc.   B1   CCC+        
  1,246,875           Term Loan, 5.250%, maturing April 08, 2016         1,174,400    
                Sterigenics International, Inc.   B3   B+        
  1,685,707           Term Loan, 2.790%, maturing
November 21, 2013
        1,588,779    
                Sun Healthcare Group, Inc.   Ba2   B+        
  139,655           Term Loan, 2.533%, maturing April 21, 2014         136,513    
  235,545           Term Loan, 3.645%, maturing April 21, 2014         230,246    
                Surgical Care Affiliates, LLC   Ba3   B        
  2,910,000           Term Loan, 2.534%, maturing
December 29, 2014
        2,720,850    
                Team Health, Inc.   B1   BB        
  990,258           Term Loan, 2.391%, maturing
November 23, 2012
        949,409    
                United Surgical Partners International, Inc.   Ba3   B        
  1,622,903           Term Loan, 2.380%, maturing April 19, 2014         1,524,177    
  306,621           Term Loan, 2.270%, maturing April 21, 2014         287,968    
                Universal Health Services, Inc.   Ba2   BB+        
  3,125,000       (5 )   Term Loan, maturing July 28, 2016         3,124,247    
                Vanguard Health Holdings Company II, LLC   Ba2   BB-        
  2,244,375           Term Loan, 5.000%, maturing
January 29, 2016
        2,223,603    
                VWR International, Inc.   B1   B+        
EUR 2,450,636           Term Loan, 3.128%, maturing June 29, 2014         2,839,800    
$ 1,470,382           Term Loan, 2.760%, maturing June 30, 2014         1,375,726    
                Warner Chilcott Company, LLC   Ba3   BB        
  1,110,462           Term Loan, 6.000%, maturing
October 30, 2014
        1,111,029    
  523,236           Term Loan, 6.250%, maturing April 30, 2015         523,589    
  871,282           Term Loan, 6.250%, maturing April 30, 2015         871,870    
  943,627       (5 )   Term Loan, maturing February 20, 2016         948,739    
  306,373       (5 )   Term Loan, maturing February 20, 2016         308,160    
      144,520,879    
Home & Office Furnishings: 0.9%      
                Global Garden Products Italy, S.P.A.   NR   NR        
EUR 745,552       (3 )   Term Loan, 3.206%, maturing
August 31, 2016
        830,900    
EUR 745,552       (3 )   Term Loan, 3.206%, maturing
August 31, 2017
        830,900    
                Hilding Anders AB   NR   NR        
SEK 25,364,613           Term Loan, 3.008%, maturing
March 31, 2015
        2,730,429    
EUR 324,872           Term Loan, 3.910%, maturing April 25, 2015         327,090    

 

See Accompanying Notes to Financial Statements
35



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

            Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
Home & Office Furnishings: (continued)      
            National Bedding Company   B1   BB-        
$ 1,141,265       Term Loan, 2.375%, maturing
February 28, 2013
      $ 1,095,615    
            Springs Window Fashions, LLC   B2   B+        
  2,087,470       Term Loan, 3.313%, maturing
December 31, 2012
        1,988,315    
      7,803,249    
Insurance: 2.0%      
            AmWINS Group, Inc.   B2   B-        
  1,898,650       Term Loan, 2.901%, maturing June 08, 2013         1,763,371    
            Applied Systems, Inc.   B1   B-        
  1,186,574       Term Loan, 2.760%, maturing
September 26, 2013
        1,100,547    
            C.G. JCF Corporation   B2   B        
  1,818,076       Term Loan, 3.270%, maturing
August 01, 2014
        1,695,356    
            Conseco, Inc.   B2   B-        
  2,283,764       Term Loan, 7.500%, maturing
October 10, 2013
        2,238,803    
            Crawford & Company International, Inc.   B1   BB-        
  741,088       Term Loan, 5.250%, maturing
October 30, 2013
        726,267    
            HMSC Corporation   B3   B-        
  2,486,845       Term Loan, 2.510%, maturing April 03, 2014         1,989,476    
            Hub International, Ltd.   B2   B        
  446,406       Term Loan, 3.033%, maturing June 13, 2014         415,716    
  1,985,974       Term Loan, 3.033%, maturing June 13, 2014         1,849,438    
  992,500       Term Loan, 6.750%, maturing June 13, 2014         978,853    
            Sedgwick Holdings, Inc.   B1   B+        
  1,396,500       Term Loan, 5.500%, maturing May 27, 2016         1,393,009    
            USI Holdings Corporation   B2   B-        
  595,500       Term Loan, 7.000%, maturing April 15, 2014         579,124    
  2,237,139       Term Loan, 3.290%, maturing May 05, 2014         2,060,964    
      16,790,924    
Leisure, Amusement, Entertainment: 3.4%      
            24 Hour Fitness Worldwide, Inc.   Ba2   B+        
  2,250,000       Term Loan, 6.750%, maturing April 22, 2016         2,105,156    
            Alpha D2, Ltd.   NR   NR        
  1,221,225       Term Loan, 2.424%, maturing
December 31, 2013
        1,121,861    
  824,903       Term Loan, 2.424%, maturing
December 31, 2013
        757,785    
            AMF Bowling Worldwide, Inc.   B1   B        
  2,881,995       Term Loan, 2.793%, maturing June 08, 2013         2,516,941    
            Cedar Fair, L.P.   Ba2   BB-        
  3,125,000       Term Loan, 5.500%, maturing
December 15, 2016
        3,143,800    
            HIT Entertainment, Inc.   B1   CCC+        
  1,930,756       Term Loan, 5.685%, maturing June 01, 2012         1,810,566    

 

See Accompanying Notes to Financial Statements
36



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

            Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
Leisure, Amusement, Entertainment: (continued)      
                Live Nation Entertainment, Inc.   Ba2   BB-        
$ 997,500           Term Loan, 4.500%, maturing
November 07, 2016
      $ 980,460    
                Metro-Goldwyn-Mayer, Inc.   Ba3   B+        
  15,743,161       (3 )   Term Loan, 20.500%, maturing
April 09, 2012
        6,752,069    
  5,691,110       (3 )   Term Loan, 20.500%, maturing
April 09, 2012
        2,440,854    
                NEP II, Inc.   B1   B        
  4,205,581           Term Loan, 2.314%, maturing
February 16, 2014
        3,990,045    
                Regal Cinemas Corporation   Ba3   BB-        
  2,963,101           Term Loan, 4.033%, maturing
November 21, 2016
        2,934,087    
      28,553,624    
Lodging: 1.7%      
                Audio Visual Services Corporation   NR   NR        
  972,500           Term Loan, 2.790%, maturing
February 28, 2014
        739,100    
                HDC Mezz 1 Partners, L.P.   B1   B+        
  16,400,000           Term Loan, 2.026%, maturing
January 15, 2011
        13,776,000    
      14,515,100    
Machinery: 0.8%      
                Bucyrus International, Inc.   Ba2   BB        
  2,992,626           Term Loan, 4.500%, maturing
February 19, 2016
        3,012,827    
                Kion Group GmbH   NR   NR        
  506,341           Term Loan, 2.510%, maturing
December 23, 2014
        397,196    
EUR 1,252,951           Term Loan, 4.390%, maturing
December 23, 2014
        1,275,209    
$ 506,341           Term Loan, 2.760%, maturing
December 23, 2015
        397,196    
EUR 1,158,821           Term Loan, 4.640%, maturing
December 23, 2015
        1,179,407    
                NACCO Materials Handling Group, Inc.   NR   NR        
$ 992,248           Term Loan, 2.201%, maturing
March 22, 2013
        895,504    
      7,157,339    
Mining, Steel, Iron & Nonprecious Metals: 1.4%      
              Fairmount Minerals, Ltd.   B1   BB        
  2,100,000       (5 )   Term Loan, 6.750%, maturing
August 05, 2016
        2,104,813    
                Noranda Aluminum Acquisition Corporation   Ba3   B+        
  1,617,464           Term Loan, 2.047%, maturing May 18, 2014         1,524,460    
                Novelis Corporation   Ba1   BB-        
  2,207,372           Term Loan, 2.270%, maturing July 06, 2014         2,118,770    
  2,667,656           Term Loan, 2.395%, maturing July 06, 2014         2,560,579    

 

See Accompanying Notes to Financial Statements
37



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

            Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
Mining, Steel, Iron & Nonprecious Metals: (continued)      
                Oxbow Carbon, LLC   B1   BB+        
$ 3,386,930           Term Loan, 2.533%, maturing May 08, 2014           $ 3,194,299    
      11,502,921    
Non-North American Cable: 2.8%      
                Casema Bidco / Serpering Investments, B.V.   NR   NR        
EUR 445,242       (5 )   Term Loan, 3.375%, maturing
September 15, 2014
        549,887    
EUR 342,012       (5 )   Term Loan, 3.375%, maturing
September 15, 2014
        422,396    
EUR 227,032       (5 )   Term Loan, 3.375%, maturing
September 15, 2014
        280,391    
EUR 111,034       (5 )   Term Loan, 4.125%, maturing
September 14, 2015
        137,131    
EUR 870,558             Term Loan, 4.125%, maturing
September 14, 2015
        1,075,167    
                Numericable / YPSO France SAS   NR   NR        
EUR 257,167           Term Loan, 4.390%, maturing June 16, 2014         248,971    
EUR 419,588           Term Loan, 4.390%, maturing June 16, 2014         406,216    
EUR 302,742           Term Loan, 4.390%, maturing June 16, 2014         293,093    
EUR 438,239           Term Loan, 4.890%, maturing
December 31, 2015
        423,986    
EUR 233,327           Term Loan, 4.890%, maturing
December 31, 2015
        225,739    
                UPC Broadband Holding, B.V.   Ba3   B+        
$ 1,055,136           Term Loan, 4.251%, maturing
December 30, 2016
        1,017,152    
EUR 4,268,168           Term Loan, 4.395%, maturing
December 31, 2016
        5,032,348    
$ 1,944,864           Term Loan, 4.251%, maturing
December 29, 2017
        1,866,462    
EUR 3,078,704           Term Loan, 4.645%, maturing
December 31, 2017
        3,639,590    
                Virgin Media Investment Holdings, Ltd.   Ba1   BB+        
GBP 5,000,000           Term Loan, 4.778%, maturing
December 31, 2015
        7,484,306    
      23,102,835    
North American Cable: 11.7%      
                Atlantic Broadband Finance, LLC   Ba3   BB-        
$ 1,849,614           Term Loan, 6.750%, maturing May 31, 2013         1,853,082    
  68,783           Term Loan, 2.790%, maturing
September 01, 2011
        67,992    
                Block Communications, Inc.   Ba1   BB        
  955,000           Term Loan, 2.260%, maturing
December 22, 2011
        904,863    
                Bresnan Communications, LLC   B1   BB-        
  1,234,375           Term Loan, 2.270%, maturing June 30, 2013         1,227,624    
  1,715,625           Term Loan, 2.309%, maturing
March 29, 2014
        1,706,242    

 

See Accompanying Notes to Financial Statements
38



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

            Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
North American Cable: (continued)      
            Cequel Communications, LLC   Ba3   BB-        
$ 27,948,418       Term Loan, 2.295%, maturing
November 05, 2013
      $ 26,956,557    
            Charter Communications Operating, LLC   Ba2   BB+        
  1,710,811       Term Loan, 2.260%, maturing
March 06, 2014
        1,624,415    
  13,888,383       Term Loan, 3.790%, maturing
September 06, 2016
        13,317,973    
            CSC Holdings, Inc.   Baa3   BBB-        
  19,726,616       Term Loan, 2.017%, maturing
March 29, 2016
        19,212,323    
            Insight Midwest Holdings, LLC   Ba3   B+        
  8,276,372       Term Loan, 2.132%, maturing April 07, 2014         7,917,732    
            Knology, Inc.   B1   B+        
  1,876,316       Term Loan, 4.033%, maturing June 30, 2014         1,824,718    
            Mediacom Broadband, LLC   Ba3   BB-        
  8,107,945       Term Loan, 2.010%, maturing
January 31, 2015
        7,550,524    
            Mediacom LLC Group   Ba3   BB-        
  4,000,000       Term Loan, 4.500%, maturing
October 23, 2017
        3,780,000    
  3,573,000       Term Loan, 5.500%, maturing
March 31, 2017
        3,517,150    
            San Juan Cable, LLC   B1   BB-        
  1,673,120       Term Loan, 2.050%, maturing
October 31, 2012
        1,593,647    
            Wideopenwest Finance, LLC   B1   B-        
  5,702,357       Term Loan, 2.793%, maturing June 18, 2014         5,271,117    
      98,325,959    
Oil & Gas: 1.1%      
            Alon USA Energy, Inc.   B1   B+        
  213,333       Term Loan, 2.510%, maturing June 22, 2013         158,933    
  1,706,667       Term Loan, 2.594%, maturing June 22, 2013         1,271,466    
            CGGVeritas Services, Inc.   Ba1   BB        
  1,972,703       Term Loan, 5.500%, maturing
January 12, 2016
        1,950,510    
            Hercules Offshore, LLC   B2   B-        
  2,160,391       Term Loan, 6.000%, maturing July 11, 2013         1,914,647    
            MEG Energy Corporation   B1   BB+        
  3,435,698       Term Loan, 6.000%, maturing April 03, 2016         3,438,560    
            Targa Resources, Inc.   B1   B+        
  298,638       Term Loan, 5.750%, maturing July 05, 2016         298,862    
      9,032,978    
Other Broadcasting and Entertainment: 1.3%      
            Nielson Finance, LLC   Ba3   B+        
  170,706       Term Loan, 2.295%, maturing
August 09, 2013
        163,603    
  2,750,433       Term Loan, 4.045%, maturing May 02, 2016         2,646,434    
  5,941,349       Term Loan, 4.045%, maturing May 02, 2016         5,760,988    

 

See Accompanying Notes to Financial Statements
39



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

            Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
Other Broadcasting and Entertainment: (continued)      
            TWCC Holding Corporation   Ba2   BB        
$ 1,984,297       Term Loan, 5.000%, maturing
September 14, 2015
      $ 1,988,513    
      10,559,538    
Other Telecommunications: 2.0%      
            Asurion Corporation   Ba3   B+        
  5,210,625       Term Loan, 3.311%, maturing July 03, 2014         4,988,449    
            BCM Ireland Holdings, Ltd.   B1   B+        
EUR 1,679,980       Term Loan, 2.500%, maturing
September 30, 2014
        1,783,645    
EUR 1,680,261       Term Loan, 2.750%, maturing
September 30, 2015
        1,783,944    
            Consolidated Communications, Inc.   B1   B+        
$ 1,000,000       Term Loan, 2.770%, maturing
December 31, 2014
        951,875    
          (2 )   Hawaiian Telcom Communications, Inc.   NR   NR        
  1,905,829       Term Loan, 4.750%, maturing June 01, 2014         1,515,134    
            Kentucky Data Link, Inc.   B1   B-        
  2,500,065       Term Loan, 2.510%, maturing
February 26, 2014
        2,468,814    
            U.S. Telepacific Corporation   B1   CCC+        
  3,092,250       Term Loan, 9.250%, maturing
August 17, 2015
        3,110,612    
      16,602,473    
Personal & Nondurable Consumer Products: 2.2%      
            Advantage Sales & Marketing, Inc.   Ba3   B+        
  1,995,000       Term Loan, 5.000%, maturing May 05, 2016         1,985,336    
            Bushnell, Inc.   B2   B-        
  1,659,702       Term Loan, 4.783%, maturing
August 24, 2013
        1,529,001    
            Fender Musical Instruments Corporation   B2   B        
  1,009,053       Term Loan, 2.550%, maturing June 09, 2014         852,650    
  1,997,505       Term Loan, 2.790%, maturing June 09, 2014         1,687,892    
            Hillman Group, Inc.   Ba3   B+        
  900,000       Term Loan, 5.500%, maturing May 27, 2016         902,812    
            Huish Detergents, Inc.   Ba2   BB        
  1,636,722       Term Loan, 2.020%, maturing April 26, 2014         1,556,522    
            Information Resources, Inc.   Ba3   B        
  267,268       Term Loan, 3.339%, maturing May 16, 2014         255,909    
            Jarden Corporation   Ba1   BB+        
  3,631,508       Term Loan, 3.783%, maturing
January 26, 2015
        3,617,890    
            KIK Custom Products, Inc.   B3   CCC+        
  288,991       Term Loan, 2.520%, maturing June 02, 2014         240,946    
  1,685,780       Term Loan, 2.520%, maturing June 02, 2014         1,405,519    
            Spectrum Brands, Inc.   B2   B        
  2,400,000       Term Loan, 8.000%, maturing
June 16, 2016
        2,430,751    

 

See Accompanying Notes to Financial Statements
40



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

            Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
Personal & Nondurable Consumer Products: (continued)      
            Yankee Candle Company, Inc.   Ba3   BB-        
$ 2,087,261       Term Loan, 2.270%, maturing
February 06, 2014
      $ 1,994,520    
      18,459,748    
Personal, Food & Miscellaneous: 2.1%      
            Acosta, Inc.   B1   B        
  4,712,742       Term Loan, 2.520%, maturing July 28, 2013         4,506,560    
            Culligan International Company   B3   B-        
  467,500       Term Loan, 2.520%, maturing
November 24, 2012
        375,850    
            Dennys, Inc.   Ba2   BB        
  450,000       Term Loan, 2.240%, maturing
March 31, 2012
        447,750    
  325,000       Term Loan, 2.341%, maturing
March 31, 2012
        323,375    
            N.E.W. Customer Services Companies, Inc.   Ba3   B+        
  2,691,071       Term Loan, 6.000%, maturing
March 05, 2016
        2,655,751    
            OSI Restaurant Partners, Inc.   B3   B+        
  505,264       Term Loan, 2.802%, maturing June 14, 2013         448,500    
  5,321,788       Term Loan, 2.875%, maturing June 14, 2014         4,723,917    
            Seminole Hard Rock Entertainment, Inc.   B2   BB        
  750,000       Floating Rate Note, 2.571%, maturing
March 15, 2014
        654,375    
            Wendys/Arbys Restaurants, LLC   Ba2   BB        
  1,500,000       Term Loan, 5.000%, maturing May 24, 2017         1,505,063    
            Whitelabel IV, S.A.   Ba3   B+        
EUR 583,833       (5 )   Term Loan, maturing July 14, 2017         733,850    
EUR 966,167       (5 )   Term Loan, maturing July 14, 2017         1,214,425    
      17,589,416    
Printing & Publishing: 8.8%      
            American Achievement Corporation   B1   B+        
$ 148,305       Term Loan, 6.250%, maturing
March 25, 2011
        141,632    
            Black Press, Ltd.   B1   B-        
  772,942       Term Loan, 2.297%, maturing
August 02, 2013
        674,392    
  1,269,774       Term Loan, 2.299%, maturing
August 02, 2013
        1,107,878    
            Caribe Information Investments, Inc.   B2   CCC-        
  1,836,411       Term Loan, 2.734%, maturing
March 31, 2013
        1,404,855    
            Cengage Learning, Inc.   B2   B+        
  711,111       Revolver, 0.904%, maturing July 05, 2013         577,778    
  6,993,957       Term Loan, 3.030%, maturing July 03, 2014         6,225,419    
            Cenveo Corporation   Ba2   BB        
  15,677       Term Loan, 5.039%, maturing June 21, 2013         15,388    
  970,043       Term Loan, 5.039%, maturing June 21, 2013         952,158    

 

See Accompanying Notes to Financial Statements
41



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

            Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
Printing & Publishing: (continued)      
            CW Acquisition Limited Partnership   Ba3   BB        
$ 1,961,667       Term Loan, 9.000%, maturing July 13, 2016       $ 1,965,345    
            Dex Media East, LLC   B1   B+        
  4,046,620       Term Loan, 2.907%, maturing
October 24, 2014
        3,123,991    
            Dex Media West, LLC   Ba3   B+        
  2,253,903       Term Loan, 7.000%, maturing
October 24, 2014
        1,959,955    
            Flint Group Holdings S.A.R.L.   NR   NR        
  353,279       Term Loan, 2.639%, maturing
December 31, 2014
        322,661    
  841,151       Term Loan, 2.639%, maturing
December 31, 2014
        768,251    
  2,333,333       Term Loan, 2.639%, maturing May 29, 2015         2,131,110    
EUR 666,667       Term Loan, 2.970%, maturing May 29, 2015         792,797    
$ 1,277,104       Term Loan, 2.639%, maturing
December 31, 2015
        1,166,422    
            Hanley Wood, LLC   Caa1   CCC        
  2,661,102       Term Loan, 2.623%, maturing
March 08, 2014
        1,197,496    
            Intermedia Outdoor, Inc.   NR   NR        
  1,582,388       Term Loan, 3.283%, maturing
January 31, 2013
        1,312,393    
            Mediannuaire Holding   NR   NR        
EUR 1,487,172       Term Loan, 2.968%, maturing
October 10, 2014
        1,339,803    
EUR 1,486,320       Term Loan, 3.468%, maturing
October 09, 2015
        1,336,468    
            Merrill Communications, LLC   B2   CCC+        
$ 3,761,595       Term Loan, 8.500%, maturing
December 24, 2012
        3,554,707    
            Nelson Canada, Ltd.   B1   B        
  2,892,564       Term Loan, 3.033%, maturing July 05, 2014         2,545,456    
            PagesJaunes Groupe, S.A.   NR   NR        
EUR 800,000       Term Loan, 2.218%, maturing
November 22, 2013
        872,929    
            PBL Media Finance Pty., Ltd.   B1   NR        
AUD 24,331,191         Term Loan, 7.128%, maturing
February 05, 2013
        18,519,378    
            Penton Media, Inc.   Caa1   CCC+        
$ 1,650,381       Term Loan, 5.000%, maturing
August 01, 2014
        1,151,141    
            Quad/Graphics, Inc.   Ba2   BB+        
  1,800,000       Term Loan, 5.500%, maturing April 14, 2016         1,725,300    
            R.H. Donnelley Corporation   B1   B        
  3,903,816       Term Loan, 9.000%, maturing
October 24, 2014
        3,365,089    
            Source Media, Inc.   B2   B        
  2,700,641       Term Loan, 6.040%, maturing
November 08, 2011
        2,585,864    

 

See Accompanying Notes to Financial Statements
42



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

            Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
Printing & Publishing: (continued)      
                Springer Science + Business Media, S.A.   B1   B+        
$ 2,000,000           Term Loan, 6.751%, maturing June 17, 2016       $ 1,991,666    
                SuperMedia, Inc.   B3   B-        
  8,054,271           Term Loan, 11.000%, maturing
December 31, 2015
        6,453,484    
                FM Mergerco, Inc.   Caa2   CCC        
  998,010           Term Loan, 9.000%, maturing June 14, 2016         973,060    
          (2 )   Tribune Company   NR   NR        
  1,491,225       (3 )   Term Loan, 5.250%, maturing June 04, 2014         946,661    
                Yell Group, PLC   NR   NR        
  1,690,294           Term Loan, 4.010%, maturing July 31, 2014         1,011,359    
      74,212,286    
Radio and TV Broadcasting: 4.9%      
                Citadel Broadcasting Corporation   Ba2   BB+        
  1,684,277           Term Loan, 11.000%, maturing
June 03, 2015
        1,775,017    
                CMP KC, LLC   NR   NR        
  1,338,663       (3 )   Term Loan, 3.510%, maturing May 03, 2011         113,786    
                CMP Susquehanna Corporation   Caa1   B-        
  3,537,138           Term Loan, 2.313%, maturing May 05, 2013         3,175,466    
                Cumulus Media, Inc.   Caa1   B-        
  4,534,315           Term Loan, 4.012%, maturing June 11, 2014         4,112,057    
                CW Media Holdings, Inc.   Ba2   BB+        
  2,499,431           Term Loan, 3.533%, maturing
February 16, 2015
        2,465,064    
                FoxCo Acquisition, LLC   B2   B        
  1,084,969           Term Loan, 7.500%, maturing July 14, 2015         1,049,369    
                Local TV Finance, LLC   B2   B-        
  1,813,000           Term Loan, 2.270%, maturing May 07, 2013         1,622,635    
                Nexstar Broadcasting, Inc.   Ba3   BB-        
  585,000           Term Loan, 5.000%, maturing
September 30, 2016
        582,075    
  915,000           Term Loan, 5.006%, maturing
September 30, 2016
        910,425    
                ProSiebenSat.1 Media AG   NR   NR        
EUR 64,386           Term Loan, 2.390%, maturing July 02, 2014         72,504    
EUR 1,186,386           Term Loan, 2.390%, maturing July 02, 2014         1,335,972    
EUR 220,233           Term Loan, 2.390%, maturing
March 02, 2015
        248,001    
EUR 798,662           Term Loan, 2.765%, maturing June 26, 2015         909,477    
EUR 35,934           Term Loan, 2.765%, maturing July 03, 2015         40,919    
                Regent Broadcasting, LLC   NR   NR        
$ 1,455,879           Term Loan, 5.250%, maturing April 27, 2014         1,426,762    
                Sinclair Television Group, Inc.   Ba1   BB        
  1,145,455           Term Loan, 5.500%, maturing
October 29, 2015
        1,149,988    
                Spanish Broadcasting Systems, Inc.   Caa3   B-        
  1,959,398           Term Loan, 2.290%, maturing June 11, 2012         1,817,341    

 

See Accompanying Notes to Financial Statements
43



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

            Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
Radio and TV Broadcasting: (continued)      
            Univision Communications, Inc.   B2   B-        
$ 20,734,822       Term Loan, 2.510%, maturing
September 29, 2014
      $ 17,892,866    
      40,699,724    
Retail Stores: 7.3%      
            Amscan Holdings, Inc.   B1   B        
  1,529,009       Term Loan, 2.788%, maturing May 25, 2013         1,448,099    
            CBR FASHION GmbH   NR   NR        
EUR 315,634       Term Loan, 2.750%, maturing April 20, 2015         370,754    
EUR 288,085       Term Loan, 3.000%, maturing April 19, 2016         338,394    
            Claires Stores, Inc.   Caa2   B-        
$ 4,444,417       Term Loan, 3.074%, maturing May 29, 2014         3,820,336    
            Dollar General Corporation   Ba3   BBB-        
  7,256,413       Term Loan, 3.111%, maturing July 07, 2014         7,079,523    
            General Nutrition Centers, Inc.   B1   B+        
  2,458,318       Term Loan, 2.688%, maturing
September 16, 2013
        2,343,596    
            Guitar Center, Inc.   B3   B-        
  4,782,785       Term Loan, 3.770%, maturing
October 09, 2014
        4,229,349    
            Harbor Freight Tools USA, Inc.   B1   B+        
  3,334,029       Term Loan, 5.016%, maturing
February 24, 2016
        3,331,945    
            Michaels Stores, Inc.   B2   B        
  1,842,617       Term Loan, 2.702%, maturing
October 31, 2013
        1,744,089    
  2,479,746       Term Loan, 4.952%, maturing July 31, 2016         2,399,921    
            Missouri Bidco, Ltd.   Ba1   BB        
GBP 666,666       Term Loan, 5.574%, maturing
August 31, 2016
        1,020,220    
            Neiman Marcus Group, Inc.   B2   BB-        
$ 6,798,189         Term Loan, 2.456%, maturing April 05, 2013         6,469,021    
            Petco Animal Supplies, Inc.   B1   B+        
  4,945,625       Term Loan, 2.632%, maturing
October 25, 2013
        4,765,832    
            Pets at Home Group, Ltd.   NR   BB-        
GBP 2,500,000       Term Loan, 5.730%, maturing
January 24, 2017
        3,843,081    
            Pilot Travel Centers, LLC   Ba2   BBB-        
$ 1,164,666       Term Loan, 5.250%, maturing June 30, 2016         1,169,762    
            Rite Aid Corporation   B3   B+        
  5,871,739       Term Loan, 2.030%, maturing June 04, 2014         5,263,803    
  1,381,565       Term Loan, 6.000%, maturing June 04, 2014         1,341,154    
            Sally Holding, LLC   B1   BB+        
  2,335,454       Term Loan, 2.510%, maturing
November 15, 2013
        2,270,811    
            Savers, Inc.   Ba3   B+        
  1,496,250       Term Loan, 5.750%, maturing
March 11, 2016
        1,503,731    

 

See Accompanying Notes to Financial Statements
44



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

            Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
Retail Stores: (continued)      
            Toys "R" Us, Inc.   B1   BB-        
$ 2,845,000       (5 )   Term Loan, maturing August 17, 2016       $ 2,844,326    
            Vivarte, S.A.S.   NR   NR        
EUR 1,924,280       Term Loan, 2.649%, maturing
March 09, 2015
        1,945,947    
EUR 1,924,280       Term Loan, 3.149%, maturing
March 08, 2016
        1,945,947    
      61,489,641    
Satellite: 0.5%      
            Intelsat Corporation   B1   BB-        
$ 1,363,218       Term Loan, 3.033%, maturing
January 03, 2014
        1,293,448    
  1,362,799       Term Loan, 3.033%, maturing
January 03, 2014
        1,293,049    
  1,362,799       Term Loan, 3.033%, maturing
January 03, 2014
        1,293,049    
      3,879,546    
Telecommunications Equipment: 1.3%      
            CommScope, Inc.   Ba2   BB        
  648,289       Term Loan, 3.025%, maturing
December 26, 2014
        638,888    
            Macquarie UK Broadcast Ventures, Ltd.   NR   NR        
GBP 4,383,255       Term Loan, 2.321%, maturing
December 01, 2014
        5,542,252    
            Sorenson Communications, Inc.   Ba2   CCC+        
$ 1,432,625       Term Loan, 6.000%, maturing
August 16, 2013
        1,284,886    
            TDF, S.A.   NR   NR        
EUR 1,500,000       Term Loan, 2.625%, maturing
January 30, 2015
        1,589,112    
EUR 1,500,000       Term Loan, 2.875%, maturing
January 29, 2016
        1,589,112    
      10,644,250    
Textiles & Leather: 0.2%      
            Phillips-Van Heusen Corporation   Ba2   BBB        
$ 1,135,571       Term Loan, 4.750%, maturing May 06, 2016         1,144,287    
EUR 709,732       Term Loan, 5.000%, maturing May 06, 2016         895,469    
      2,039,756    
Utilities: 6.2%      
            Calpine Corporation   B1   B+        
$ 7,068,125         Term Loan, 3.415%, maturing
March 29, 2014
        6,771,165    
            Coleto Creek WLE, L.P.   B1   B+        
  2,245,301       Term Loan, 3.223%, maturing June 28, 2013         2,028,629    
  437,602       Term Loan, 3.283%, maturing June 28, 2013         395,374    
            FirstLight Power Resources, Inc.   B1   B+        
  2,019,865       Term Loan, 3.063%, maturing
November 01, 2013
        1,883,525    

 

See Accompanying Notes to Financial Statements
45



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

            Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
Utilities: (continued)      
$ 90,682       Term Loan, 3.063%, maturing
November 01, 2013
      $ 84,561    
            FirstLight Power Resources, Inc.   B3   CCC+        
  610,514       Term Loan, 5.063%, maturing May 01, 2014         547,936    
            Great Point Power, LLC   Ba1   BB+        
  997,500       Term Loan, 5.500%, maturing
March 10, 2017
        996,253    
            MACH Gen, LLC   Ba3   BB-        
  444,571       Term Loan, 2.533%, maturing
February 22, 2013
        417,897    
            New Development Holdings, LLC   Ba3   BB-        
  4,412,500       Term Loan, 7.000%, maturing July 03, 2017         4,485,386    
            NRG Energy, Inc.   Baa3   BB+        
  2,892       Term Loan, 1.933%, maturing
February 01, 2013
        2,834    
  473,796       Term Loan, 2.033%, maturing
February 01, 2013
        464,321    
  7,554,620       Term Loan, 3.783%, maturing
August 31, 2015
        7,409,193    
  1,781,736       Term Loan, 3.783%, maturing
August 31, 2015
        1,758,344    
            Texas Competitive Electric Holdings
Company, LLC
  B1   B+        
  7,947,462       Term Loan, 3.796%, maturing
October 10, 2014
        6,012,478    
  2,930,917       Term Loan, 3.796%, maturing
October 10, 2014
        2,232,260    
  6,371,697       Term Loan, 3.796%, maturing
October 10, 2014
        4,828,153    
  5,835,000       Term Loan, 3.941%, maturing
October 10, 2014
        4,444,082    
            TPF Generation Holdings, LLC   Ba3   BB        
  1,431,519       Term Loan, 2.533%, maturing
December 13, 2013
        1,350,996    
  1,922,535       Term Loan, 2.533%, maturing
December 15, 2013
        1,814,392    
            TPF Generation Holdings, LLC   B3   B+        
  1,500,000       Term Loan, 4.783%, maturing
December 15, 2014
        1,364,250    
            Viridian Group, PLC   NR   NR        
GBP 1,080,000       Term Loan, 5.069%, maturing
October 24, 2012
        1,335,207    
EUR 1,072,386       Term Loan, 5.138%, maturing
October 24, 2012
        1,098,382    
      51,725,618    
    Total Senior Loans
(Cost $1,135,844,078)
        1,061,967,768    

 

See Accompanying Notes to Financial Statements
46



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

            Bank Loan
Ratings†
(Unaudited)
  Fair  
Principal Amount       Borrower/Tranche Description   Moody's   S&P   Value  
Other Corporate Debt: 1.4%      
Diversified / Conglomerate Manufacturing: 0.7%      
            Flextronics International, Ltd.   Ba1   BB+        
$ 2,401,686       Unsecured Term Loan, 2.526%, maturing
October 01, 2014
      $ 2,259,585    
  3,364,178       Unsecured Term Loan, 2.559%, maturing
October 01, 2014
        3,165,130    
      5,424,715    
Cargo Transport: 0.0%      
            US Shipping Partners, L.P.   Caa3   CCC-        
  297,646       Subordinated Term Loan, 2.500%, maturing
August 07, 2013
        90,038    
      90,038    
Chemicals, Plastics & Rubber: 0.7%      
            Lyondell Chemical Company   B3   B        
  5,269,044       Fixed Rate Note, 11.000%, maturing
May 01, 2018
        5,749,844    
      5,749,844    
Radio and TV Broadcasting: 0.0%      
            Regent Broadcasting, LLC   NR   NR        
  392,280       Subordinated Term Loan, 12.000%,
maturing October 27, 2014
        353,052    
      353,052    
    Total Other Corporate Debt
(Cost $11,937,204)
        11,617,649    
Equities and Other Assets: 1.8%      

 

    Description   Market
Value
 
  (1 ), (@), (R)   Allied Digital Technologies Corporation (Residual            
        Interest in Bankruptcy Estate)       $    
  (@), (R)     Ascend Media (Residual Interest)          
  (@), (R)     Block Vision Holdings Corporation (719 Common Shares)          
  (2 ), (@), (R)   Boston Chicken, Inc. (Residual Interest in Boston
Chicken Plan Trust)
 
       
  (2 ), (@), (R)   Cedar Chemical (Liquidation Interest)          
  (@)     Citadel (77,330 Class A Shares)       1,309,752    
  (@)     Citadel (63,587 Class B Shares)       1,076,976    
  (2 ), (@), (R)   Enterprise Profit Solutions (Liquidation Interest)          
  (4 ), (@), (R)   Euro United Corporation (Residual Interest in
Bankruptcy Estate)
 
       
  (@)     Faith Media Holdings, Inc. (7,725 Class A-1 Shares)       397,817    
  (2 ), (@), (R)   Ferretti SPA (Warrants for 0.111% Participation Interest)          
  (2 ), (@), (R)   Gainey Corporation (Residual Interest)          
  (@)     Global Garden (14,911 Class A1 Shares)          
  (@)     Global Garden (138,579 Class A3 Shares)          

 

See Accompanying Notes to Financial Statements
47



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

    Description       Market
Value
 
  (@)     Glodyne Technoserve, Ltd. (55,483 Common Shares)         $ 542,976    
  (@)     Glodyne Technoserve, Ltd. (Escrow Account)           285,001    
  (2 ), (@), (R)   Grand Union Company (Residual Interest in Bankruptcy
Estate)
             
  (2 ), (@), (R)   Kevco Inc. (Residual Interest in Bankruptcy Estate)           25    
  (2 ), (@), (R)   Lincoln Paper & Tissue (Warrants for 291 Common Shares,
Expires August 14, 2015)
             
  (@), (R)     Lincoln Pulp and Eastern Fine (Residual Interest in
Bankruptcy Estate)
             
  (@)     LyondellBasell Industries NV (132,313 Class A Shares)             2,917,417    
  (@)     LyondellBasell Industries NV (286,245 Class B Shares)             5,865,160    
  (@)     Mega Brands Inc. (195,762 Common Shares)             80,711    
  (@)     Northeast Biofuels (Residual Interest)                
  (2 ), (@)   RDA Holding Co. (16,497 Common Shares)             354,686    
  (@)     Regent Broadcasting, LLC (314,505 Common Shares)             909,046    
  (@)     Regent Broadcasting, LLC (314,505 Preferred Shares)                
  (@), (R)     Safelite Realty Corporation (57,804 Common Shares)             305,205    
  (2 ), (@), (R)   Supermedia, Inc. (39,592 Common Shares)             294,632    
  (1 ), (@), (R)   Transtar Metals (Residual Interest in Bankruptcy Estate)                
  (2 ), (@), (R)   US Office Products Company (Residual Interest in
Bankruptcy Estate)
               
  (2 ), (@)   US Shipping Partners, L.P. (19,404 Common Shares)                
  (2 ), (@)   US Shipping Partners, L.P. (275,292 Contingency Rights)                
  (@)     Xerium Technologies, Inc. (99,244 Common Shares)             998,395    
        Total for Equities and Other Assets
(Cost $15,303,654)
            15,337,798    
        Total Investments
(Cost $1,163,084,936)**
    129.9 %   $ 1,088,923,215    
        Other Assets and Liabilities — Net     (29.9 )     (250,389,843 )  
        Net Assets     100.0 %   $ 838,533,372    

 

  *  Senior loans, while exempt from registration under the Securities Act of 1933, as amended, contain certain restrictions on resale and cannot be sold publicly. These senior loans bear interest (unless otherwise noted) at rates that float periodically at a margin above the London Inter-Bank Offered Rate ("LIBOR") and other short-term rates.

  †  Bank Loans rated below Baa are considered to be below investment grade.

  NR  Not Rated

  (1)  The borrower filed for protection under Chapter 7 of the U.S. Federal Bankruptcy code.

  (2)  The borrower filed for protection under Chapter 11 of the U.S. Federal Bankruptcy code.

  (3)  Loan is on non-accrual basis.

  (4)  The borrower filed for protection under the Canadian Bankruptcy and Insolvency Act.

  (5)  Trade pending settlement. Contract rates do not take effect until settlement date.

  (@)  Non-income producing security.

  (R)  Restricted security.

See Accompanying Notes to Financial Statements
48



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

  AUD  Australian Dollar

  GBP  British Pound Stirling

  EUR  Euro

  SEK  Swedish Kronor

  **  For Federal Income Tax purposes cost of investments is $1,164,220,565.

    Net unrealized depreciation consists of the following:

Gross Unrealized Appreciation   $ 8,190,093    
Gross Unrealized Depreciation     (83,487,443 )  
Net Unrealized Depreciation   $ (75,297,350 )  

 

Fair Value Measurements^

The following is a summary of the fair valuations according to the inputs used as of August 31, 2010 in valuing the Trust's assets and liabilities:

    Quoted Prices in
Active Markets
for Identical
Investments
  Significant
Other
Observable
Inputs
  Significant
Unobservable
Inputs
  Fair Value
at
 
    (Level 1)   (Level 2)   (Level 3)   8/31/10  
Asset Table
Investments, at value
 
Senior Loans   $     $ 1,048,191,768     $ 13,776,000     $ 1,061,967,768    
Other Corporate Debt           11,617,649             11,617,649    
Equities and Other Assets     10,511,000             4,826,798       15,337,798    
Total Investments, at value   $ 10,511,000     $ 1,059,809,417     $ 18,602,798     $ 1,088,923,215    
Other Financial Instruments+  
Forward foreign currency contracts           325,443             325,443    
Total Assets   $ 10,511,000     $ 1,060,134,860     $ 18,602,798     $ 1,089,248,658    
Liabilities Table
Other Financial Instruments+
 
Forward foreign currency contracts   $     $ (317,698 )   $     $ (317,698 )  
Unfunded Commitments           (1,529,148 )           (1,529,148 )  
Total Liabilities   $     $ (1,846,846 )   $     $ (1,846,846 )  

 

The following is a reconciliation of the fair valuations using significant unobservable inputs (Level 3) for the Trust's assets and liabilities during the period ended August 31, 2010:

    Beginning
Balance
at 02/28/10
  Purchases   Sales   Accrued
Discounts/
(Premiums)
  Total
Realized
Gain/(Loss)
  Total
Unrealized
Appreciation/
(Depreciation)
 
Senior Loans   $ 13,776,000     $     $     $     $     $    
Equities and
Other Assets
    5,029,484       1,525,693       (3,846,003 )           1,158,167       1,182,945    
Total   $ 18,805,484     $ 1,525,693     $ (3,846,003 )   $     $ 1,158,167     $ 1,182,945    

 

See Accompanying Notes to Financial Statements
49



ING Prime Rate Trust

PORTFOLIO OF INVESTMENTS as of August 31, 2010 (Unaudited) (continued)

    Transfers
Into
Level 3
  Transfers
Out of
Level 3
  Ending
Balance
at 8/31/10
 
Senior Loans   $     $     $ 13,776,000    
Equities and
Other Assets
    2,929,704       (3,153,192 )     4,826,798    
Total   $ 2,929,704     $ (3,153,192 )   $ 18,602,798    

 

As of August 31, 2010, total change in unrealized gain (loss) on Level 3 securities still held at period end and included in the change in net assets was $46,283.

  ^  See Note 2, "Significant Accounting Policies" in the Notes to Financial Statements for additional information.

  +  Other Financial Instruments are securities or derivatives not reflected in the Portfolio of Investments and may include open forward foreign currency contracts, futures, swaps, unfunded committments and written options. Forward foreign currency contracts, futures and unfunded commitments are reported at their unrealized gain/loss at measurement date which represents the amount due to/from the Trust. Swaps and written options are reported at their fair value at measurement date.

Transfers in or out of Level 3 represents either the beginning value (for transfer in), or the ending value (for transfers out) of any security or derivative instrument where a change in the pricing level occurred fom the beginning to the end of the period. The Trust's policy is to recognize transfers between levels at the end of the reporting period.

At August 31, 2010 the following forward foreign currency contracts were outstanding for ING Prime Rate Trust :

Counterparty   Currency   Buy/Sell   Settlement
Date
  In Exchange
For
  Value   Unrealized
Appreciation/
(Depreciation)
 
State Street Bank   Australian Dollar
AUD 20,875,000
  Sell   11/30/10     USD
$18,214,272
    $ 18,346,194     $ (131,922 )  
State Street Bank   British Pound Sterling
GBP 10,580,000
  Sell   10/08/10     16,356,479       16,219,432       137,047    
State Street Bank   British Pound Sterling
GBP 6,300,000
  Sell   10/29/10     9,754,731       9,656,705       98,026    
State Street Bank   Euro
EUR 48,153,500
  Sell   10/08/10     60,880,525       60,981,174       (100,649 )  
State Street Bank   Euro
EUR 2,368,500
  Sell   10/29/10     3,089,715       2,999,345       90,370    
State Street Bank   Euro
EUR 2,695,000
  Sell   11/30/10     3,409,741       3,412,559       (2,818 )  
State Street Bank   Sweden Kronor
SEK 20,851,000
  Sell   10/08/10     2,742,294       2,817,345       (75,051 )  
State Street Bank   Sweden Kronor
SEK 7,000,000
  Sell   11/30/10     937,629       944,887       (7,258 )  
            $115,385,386   $115,377,641   $7,745  

 

See Accompanying Notes to Financial Statements
50




ING Prime Rate Trust

SHAREHOLDER MEETING INFORMATION (Unaudited)

A special meeting of shareholders of the ING Prime Rate Trust Fund was held June 29, 2010, at the offices of ING Funds, 7337 East Doubletree Ranch Road, Scottsdale, AZ 85258.

ING Prime Rate Trust, Common Shares

1  To elect eight members of the Board of Trustees to represent the interests of the holders of Common Shares of the Trust until the election and qualification of their successors.

ING Prime Rate Trust, Preferred Shares

2  To elect two members of the Board of Trustees to represent the interests of the holders of Auction Rate Cumulative Preferred Shares - Series M, T, W, TH and F of the Trust - until the election and qualification of their successors.

    Proposals*   Shares voted
Shares
voted for
  against or
withheld
  Shares
abstained
  Total Shares
Voted
 
Common Shares Trustees   Colleen D. Baldwin     128,607,418.812       3,271,966.622         131,879,385.434    
    Patricia W. Chadwick     128,601,576.305       3,277,809.129         131,879,385.434    
    Robert W. Crispin     128,587,861.350       3,291,524.084         131,879,385.434    
    Peter S. Drotch     128,581,351.045       3,298,034.389         131,879,385.434    
    J. Michael Earley     128,653,367.122       3,226,018.312         131,879,385.434    
    Patrick W. Kenny     128,654,269.507       3,225,115.927         131,879,385.434    
    Shaun P. Mathews     128,563,887.707       3,315,497.727         131,879,385.434    
    Sheryl K. Pressler     128,675,735.101       3,203,650.333         131,879,385.434    
Preferred Shares Trustees   John V. Boyer     4,256.000       176.000         4,432.000    
    Roger B. Vincent     4,256.000       176.000         4,432.000    

 

*  Proposals Passed


51



ING Prime Rate Trust

ADDITIONAL INFORMATION (Unaudited)

SHAREHOLDER INVESTMENT PROGRAM

The Trust offers a Shareholder Investment Program (the "Program") which allows holders of the Trust's common shares a simple way to reinvest dividends and capital gains distributions, if any, in additional common shares of the Trust. The Program also offers holders of the Trust's common shares the ability to make optional cash investments in any amount from $100 to $100,000 on a monthly basis.

For dividend and capital gains distribution reinvestment purposes, PNC will purchase shares of the Trust on the open market when the market price plus estimated fees is less than the NAV on the valuation date. The Trust will issue new shares for dividend and capital gains distribution reinvestment purchases when the market price plus estimated fees is equal to or exceeds the net asset value on the valuation date. New shares may be issued at the greater of (i) NAV or (ii) the market price of the shares during the pricing period, minus a discount of 5%.

For optional cash investments, shares will be purchased on the open market by PNC when the market price plus estimated fees is less than the NAV on the valuation date. New shares will be issued by the Trust for optional cash investments when the market price plus estimated fees is equal to or exceeds the net asset value on the valuation date. Such shares will be issued at a discount to market, determined by the Trust, between 0% and 5%.

There is no charge to participate in the Program. Participants may elect to discontinue participation in the Program at any time. Participants will share, on a pro rata basis, in the fees or expenses of any shares acquired in the open market.

Participation in the Program is not automatic. If you would like to receive more information about the Program or if you desire to participate, please contact your broker or the Trust's Shareholder Services Department at (800) 992-0180.

KEY FINANCIAL DATES — CALENDAR 2010 DIVIDENDS:

DECLARATION DATE   EX-DIVIDEND DATE   PAYABLE DATE  
January 29, 2010   February 8, 2010   February 23, 2010  
February 26, 2010   March 8, 2010   March 22, 2010  
March 31, 2010   April 8, 2010   April 22, 2010  
April 30, 2010   May 6, 2010   May 24, 2010  
May 28, 2010   June 8, 2010   June 22, 2010  
June 30, 2010   July 8, 2010   July 22, 2010  
July 30, 2010   August 6, 2010   August 23, 2010  
August 31, 2010   September 8, 2010   September 22, 2010  
September 30, 2010   October 7, 2010   October 22, 2010  
October 29, 2010   November 8, 2010   November 22, 2010  
November 30, 2010   December 8, 2010   December 22, 2010  
December 21, 2010   December 29, 2010   January 12, 2011  

 

Record date will be two business days after each Ex-Dividend Date. These dates are subject to change.


52



ING Prime Rate Trust

ADDITIONAL INFORMATION (Unaudited) (continued)

STOCK DATA

The Trust's common shares are traded on the New York Stock Exchange (Symbol: PPR). Effective March 1, 2002, the Trust's name changed to ING Prime Rate Trust and its CUSIP number changed to 44977W106. The Trust's NAV and market price are published daily under the "Closed-End Funds" feature in Barron's, The New York Times, The Wall Street Journal and many other regional and national publications.

REPURCHASE OF SECURITIES BY CLOSED-END COMPANIES

In accordance with Section 23(c) of the 1940 Act, and Rule 23c-1 under the 1940 Act the Trust may from time to time purchase shares of beneficial interest of the Trust in the open market, in privately negotiated transactions and/or purchase shares to correct erroneous transactions.

NUMBER OF SHAREHOLDERS

The approximate number of record holders of Common Stock as of August 31, 2010 was 4,045 which does not include approximately 38,415 beneficial owners of shares held in the name of brokers of other nominees.

PROXY VOTING INFORMATION

A description of the policies and procedures that the Trust uses to determine how to vote proxies related to portfolio securities is available (1) without charge, upon request, by calling Shareholder Services toll-free at 1-800-336-3436; (2) on the Trust's website at www.ingfunds.com and (3) on the SEC's website at www.sec.gov. Information regarding how the Trust voted proxies related to portfolio securities during the most recent 12-month period ended June 30 is available without charge on the Trust's website at www.ingfunds.com and on the SEC's website at www.sec.gov.

QUARTERLY PORTFOLIO HOLDINGS

The Trust files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Trust's Forms N-Q are available on the SEC's website at www.sec.gov. The Trust's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330; and is available upon request from the Trust by calling Shareholder Services toll-free at (800) 336-3436.

CERTIFICATIONS

In accordance with Section 303A.12 (a) of the New York Stock Exchange Listed Company Manual, the Trust submitted the Annual CEO Certification on May 26, 2009 certifying that he was not aware, as of that date, of any violation by the Trust of the NYSE's Corporate governance listing standards. In addition, as required by Section 203 of the Sarbanes-Oxley Act of 2002 and related SEC rules, the Trust's principal executive and financial officers have made quarterly certifications, included in filings with the SEC on Forms N-CSR and N-Q, relating to, among other things, the Trust's disclosure controls and procedures and internal controls over financial reporting.


53




Investment Adviser

ING Investments, LLC

7337 East Doubletree Ranch Road, Suite 100

Scottsdale, Arizona 85258

Sub-Adviser

ING Investment Management Co.

230 Park Avenue

New York, NY 10169

Institutional Investors and Analysts

Call ING Prime Rate Trust

1-800-336-3436, Extension 2217

Administrator

ING Funds Services, LLC

7337 East Doubletree Ranch Road, Suite 100

Scottsdale, Arizona 85258

1-800-992-0180

Written Requests

Please mail all account inquiries and other comments to:

ING Prime Rate Trust Account

c/o ING Fund Services, LLC

7337 East Doubletree Ranch Road, Suite 100

Scottsdale, Arizona 85258

Distributor

ING Investments Distributor, LLC

7337 East Doubletree Ranch Road, Suite 100

Scottsdale, Arizona 85258

1-800-334-3444

Transfer Agent

BNY Mellon Investment Servicing (U.S.) Inc.
(formerly, PNC Global Investment Servicing (U.S.) Inc.)

301 Bellevue Parkway

Wilmington, Delaware 19809

Custodian

State Street Bank and Trust Company

801 Pennsylvania Avenue

Kansas City, Missouri 64105

Legal Counsel

Dechert LLP

1775 I Street, N.W.

Washington, D.C. 20006

Toll-Free Shareholder Information

Call us from 9:00 a.m. to 7:00 p.m. Eastern time on any business day for account or other information, at (800)-992-0180

For more complete information, or to obtain a prospectus on any ING Fund, please call your Investment Professional or ING Funds Distributor, LLC at (800) 992-0180 or log on to www.ingfunds.com. The prospectus should be read carefully before investing. Consider the Trust's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this information and other information about the Trust.

PRSAR-UPRT

(0810-102510)




 

ITEM 2.                             CODE OF ETHICS.

 

Not required for semi-annual filing.

 

ITEM 3.                             AUDIT COMMITTEE FINANCIAL EXPERT.

 

Not required for semi-annual filing.

 

ITEM 4.                             PRINCIPAL ACCOUNTANT FEES AND SERVICES.

 

Not required for semi-annual filing.

 

ITEM 5.                             AUDIT COMMITTEE OF LISTED REGISTRANTS.

 

Not required for semi-annual filing.

 

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 required for semi-annual filing.

 

ITEM 8.                             PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

 

Not applicable.

 

ITEM 9.                             PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.

 

None.

 

ITEM 10.                       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

 

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).  The Nominating Committee operates pursuant to a Charter approved by the Board. The primary purpose of the Nominating Committee is to consider and present to the Board the candidates it proposes for nomination to fill vacancies on the Board. In evaluating candidates, the Nominating Committee may consider a variety of factors, but it has not at this time set any specific minimum qualifications that must be met.  Specific qualifications of candidates for Board membership will be based on the needs of the Board at the time of nomination.

 

The Nominating Committee is willing to consider nominations received from shareholders and shall assess shareholder nominees in the same manner as it reviews its own nominees.  A shareholder nominee for director should be submitted in writing to the Fund’s Secretary. Any such shareholder nomination should include at a minimum the following information as to each individual proposed for nomination as trustee: such individual’s written consent to be named in the proxy statement as a nominee (if nominated) and to serve as a trustee (if elected), and all information relating to such individual that is required to be disclosed in the solicitation of proxies for election of trustees, or is otherwise required, in each case under applicable federal securities laws, rules and regulations.

 

The Secretary shall submit all nominations received in a timely manner to the Nominating Committee.  To be timely, any such submission must be delivered to the Fund’s Secretary not earlier than the 90th day prior to such meeting and not later than the close of business on the later of the 60th day prior to such meeting or the 10th day following the day on which public announcement of the date of the meeting is first made, by either disclosure in a press release or in a document publicly filed by the Fund with the Securities and Exchange Commission.

 



 

ITEM 11.                       CONTROLS AND PROCEDURES.

 

(a)                                  Based on our evaluation conducted within 90 days of the filing date, hereof, the design and operation of the registrant’s disclosure controls and procedures are effective to ensure that material information relating to the registrant is made known to the certifying officers by others within the appropriate entities, particularly during the period in which Forms N-CSR are being prepared, and the registrant’s disclosure controls and procedures allow timely preparation and review of the information for the registrant’s Form N-CSR and the officer certifications of such Form N-CSR.

 

(b)                                 There were no significant changes in the registrant’s internal controls 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 12.                       EXHIBITS.

 

(a)(1)                    The Code of Ethics is not required for the semi-annual filing.

 

(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.

 

(a)(3)                    Not required for semi-annual filing.

 

(b)                                 The officer certifications required by Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto as EX-99.906CERT

 



 

SIGNATURES

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

(Registrant): ING Prime Rate Trust

 

 

By

/s/ Shaun P. Mathews

 

Shaun P. Mathews

 

President and Chief Executive Officer

 

Date: November 4, 2010

 

 

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/ Shaun P. Mathews

 

Shaun P. Mathews

 

President and Chief Executive Officer

 

Date: November 4, 2010

 

 

By

/s/ Todd Modic

 

Todd Modic

 

Senior Vice President and Chief Financial Officer

 

Date: November 4, 2010