Edgar Filing: ING PRIME RATE TRUST

As filed with the Securities and Exchange Commission on April 30, 2004
Securities Act File No. 333-68239

Investment Company Act File No. 811-05410

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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM N-2

(CHECK APPROPRIATE BOX OR BOXES)

Registration Statement Under The Securities Act Of 1933 /X/

Pre-Effective Amendment No. / /

Post-Effective Amendment No. 11 /X/

and/or

Registration Statement Under The Investment Company Act Of 1940 /X/

Amendment No. 56 /X/
(Check appropriate box or boxes)

ING PRIME RATE TRUST

(Exact Name of Registrant Specified in Charter)
7337 E. Doubletree Ranch Road
Scottsdale, AZ 85258
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (800) 992-0180

Huey P. Falgout, Jr. With copies to:
ING Investments, LLC Jeffrey S. Puretz, Esq.
7337 E. Doubletree Ranch Road Dechert LLP
Scottsdale, AZ 85258 1775 I Street, NW
(Name and Address of Agent for Service) Washington, DC 20006

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Approximate Date of Proposed Offering:
As soon as practical after the effective date of this Registration Statement

If any securities being registered on this form will be offered on a delayed or
continuous basis in reliance on Rule 415 under the Securities Act of 1933, other
than securities offered in connection with a dividend reinvestment plan, check
the following box. /X/

It is proposed that this filing will become effective:

/X/ When declared effective pursuant to Section 8(c) of the Securities Act of
1933.

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PROSPECTUS

JULY 1, 2004

5,000,000
COMMON SHARES

ING PRIME RATE TRUST

[GRAPHIC]

THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION ABOUT THE ING PRIME RATE
TRUST (THE TRUST) THAT A PROSPECTIVE INVESTOR OUGHT TO KNOW BEFORE INVESTING.
YOU SHOULD READ IT CAREFULLY BEFORE YOU INVEST, AND KEEP IT FOR FUTURE
REFERENCE.

THE TRUST HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE SEC) A
STATEMENT OF ADDITIONAL INFORMATION DATED JULY 1, 2004 (THE SAI) CONTAINING
ADDITIONAL INFORMATION ABOUT THE TRUST. THE SAI IS INCORPORATED BY REFERENCE IN
ITS ENTIRETY INTO THIS PROSPECTUS. YOU MAY OBTAIN A FREE COPY OF THE SAI BY
CONTACTING THE TRUST AT (800) 992-0180 OR BY WRITING TO THE TRUST AT 7337 E.
DOUBLETREE RANCH ROAD, SCOTTSDALE, ARIZONA 85258. THE PROSPECTUS, SAI AND OTHER
INFORMATION ABOUT THE TRUST ARE AVAILABLE ON THE SEC'S WEB-SITE
(http://www.sec.gov). THE TABLE OF CONTENTS FOR THE SAI APPEARS ON PAGE __ OF
THIS PROSPECTUS.

COMMON SHARES OF THE TRUST TRADE ON THE NEW YORK STOCK EXCHANGE (THE NYSE) UNDER
THE SYMBOL PPR.

MARKET FLUCTUATIONS AND GENERAL ECONOMIC CONDITIONS CAN ADVERSELY AFFECT THE
TRUST. THERE IS NO GUARANTEE THAT THE TRUST WILL ACHIEVE ITS INVESTMENT
OBJECTIVE. INVESTMENT IN THE TRUST INVOLVES CERTAIN RISKS AND SPECIAL
CONSIDERATIONS, INCLUDING RISKS ASSOCIATED WITH THE TRUST'S USE OF LEVERAGE. SEE
"RISK FACTORS AND SPECIAL CONSIDERATIONS" BEGINNING ON PAGE 14 FOR A DISCUSSION
OF ANY FACTORS THAT MAKE INVESTMENT IN THE TRUST SPECULATIVE OR HIGH RISK.

NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED
THESE SECURITIES, OR DETERMINED THAT THIS PROSPEC-TUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

[ING FUNDS LOGO]

WHAT'S INSIDE

Introduction to the Trust 1
Prospectus Synopsis 2
What You Pay To Invest -- Trust Expenses 6
Financial Highlights 8
Trading and NAV Information 9
Investment Objective and Policies 10
The Trust's Investments 12
Risk Factors and Special Considerations 16
Transaction Policies 19
Plan of Distribution 20
Use of Proceeds 22
Dividends and Distributions 22
Investment Management and Other
Service Providers 23
Description of the Trust 25
Description of Capital Structure 27
Tax Matters 28
More Information 29
Statement of Additional Information
Table of Contents 30

[GRAPHIC]
OBJECTIVE

[GRAPHIC]
INVESTMENT This Prospectus describes the Trust's objective,
STRATEGY investment strategy and risks.

[GRAPHIC]
RISKS

You'll also find:

[GRAPHIC] WHAT YOU PAY TO INVEST.
WHAT YOU A list of the fees and expenses you pay -- both directly
PAY TO INVEST and -- indirectly when you invest in the Trust.

(THIS PAGE INTENTIONALLY LEFT BLANK)

INTRODUCTION TO THE TRUST

THIS PROSPECTUS IS DESIGNED TO HELP YOU MAKE AN INFORMED DECISION ABOUT MAKING
AN INVESTMENT IN ING PRIME RATE TRUST. PLEASE READ IT CAREFULLY AND RETAIN IT
FOR FUTURE REFERENCE.

Who should invest in the Trust?

ING PRIME RATE TRUST MAY SUIT YOU IF YOU:

- are seeking a high level of current income; and
- are willing to accept the risks associated with an investment in a
leveraged portfolio consisting primarily of senior loans that are typically
below investment grade credit quality.

DESCRIPTION OF THE TRUST

The Trust is a diversified, closed-end 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 in a professionally managed portfolio comprised primarily of
senior loans, an investment typically not available directly to individual
investors.

The Trust cannot guarantee that it will achieve its investment objective. In
addition, since the senior loans in the Trust's portfolio typically are below
investment grade credit quality and the portfolio is leveraged, the Trust has
speculative characteristics.

Common Shares of the Trust trade on the NYSE under the symbol PPR.

The Trust's investment manager is ING Investments, LLC. The Trust's
sub-adviser is ING Investment Management Co. (formerly Aeltus Investment
Management, Inc.)

[SIDE NOTE]

Risk is the potential that your investment will lose money or not earn as much
as you hope. All funds have varying degrees of risk, depending upon the
securities they invest in.

This Trust involves certain risks and special considerations, including risks
associated with investing in below investment grade assets and risks associated
with the Trust's use of borrowing and other leverage strategies. See "Risk
Factors and Special Considerations" beginning on page 14.

Please read this Prospectus carefully to be sure you understand the principal
risks and strategies associated with the Trust. You should consult the SAI for a
complete list of the risks and strategies.

[GRAPHIC]

If you have any questions about the Trust, please call your financial consultant
or us at (800) 992-0180.

If you have any questions, please call (800) 992-0180.

PROSPECTUS SYNOPSIS

The following synopsis is qualified in its entirety by reference to the more
detailed information appearing elsewhere in this prospectus.

DESCRIPTION OF
THE TRUST

THE TRUST The Trust is a diversified, closed-end management investment
company registered under the Investment Company Act of 1940, as
amended (the 1940 Act). It was organized as a Massachusetts
business trust on December 2, 1987. As of ____, 2004, the
Trust's net asset value (NAV) per Common Share was $____.

NYSE LISTED As of ____, 2004, the Trust had ____ Common Shares outstanding,
which are traded on the NYSE under the symbol PPR. As of ____,
2004, the last reported sales price of a Common Share of the
Trust was $____.

INVESTMENT OBJECTIVE To provide investors with as high a level of current income as
is consistent with the preservation of capital. There is no
assurance that the Trust will achieve its investment objective.

INVESTMENT The Trust's investment manager is ING Investments, LLC (ING
MANAGER/SUB-ADVISER Investments or the Investment Manager), an Arizona limited
liability company. The Investment Manager had assets under
management of over $____ billion as of March 31, 2004.

The Investment Manager is an indirect wholly-owned subsidiary of
ING Groep N.V. (NYSE: ING) (ING Groep). ING Groep is a global
financial institution active in the fields of insurance, banking
and asset management in more than 65 countries with more than
100,000 employees.

The Investment Manager receives an annual fee, payable monthly,
in a maximum amount equal to 0.80% of 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) (Managed Assets). This definition includes the
assets acquired through the Trust's use of leverage.

Effective August 1, 2003, ING Investment Management Co. ("INGIM"
or "Sub-Adviser") (formerly known as Aeltus Investment
Management, Inc.) serves as Sub-Adviser to the Trust. See
"Investment Management and other Service Providers --
Sub-Adviser" on page ____. INGIM is an affiliate of the
Investment Manager.

DISTRIBUTIONS Income dividends on Common Shares accrue and are declared and
paid monthly. Income dividends may be distributed in cash or
reinvested in additional full and fractional shares of the Trust
through the Trust's Shareholder Investment Program.

PRIMARY INVESTMENT The Trust seeks to achieve its investment objective by investing
STRATEGY under normal circumstances at least 80% of its net assets, plus
the amount of any borrowings for investment purposes, in higher
yielding, U.S. dollar denominated, floating rate secured senior
loans (Senior Loans). The Senior Loans are typically rated below
investment grade credit quality. The Trust makes its investments
in Senior Loans by purchasing a portion of the overall loan,
I.E., the Trust becomes one of a number of lenders participating
in the loan. The Trust will provide shareholders with at least
60 days' prior notice of any change in this investment policy.

The Trust only invests in Senior Loans made to corporations or
other business entities organized under U.S. or Canadian law and
which are domiciled in the U.S., Canada or in U.S. territories
or possessions. Senior Loans either hold the most senior
position in the capital structure of the borrower or hold an
equal ranking with other senior debt or have characteristics
that the Investment Manager believes justify treatment as senior
debt.

OTHER INVESTMENT Assets not invested in Senior Loans may be invested in unsecured
STRATEGIES AND POLICIES loans, subordinated loans, short-term debt securities, and
equities acquired in connection with investments in loans. See
"Investment Objective and Policies" on page 10.

Loans in which the Trust invests typically have interest rates
which reset at least quarterly and may reset as frequently as
daily. The maximum duration of an interest rate reset on any
loan in which the Trust may invest is one year. In order to
achieve overall reset balance, the Trust will ordinarily
maintain a dollar-weighted average time to next interest rate
adjustment on its loans of 90 days or less.

Normally at least 80% of the Trust's portfolio will be invested
in Senior Loans with maturities of one to ten years. The maximum
maturity on any loan in which the Trust may invest is ten years.

To seek to increase the yield on the Common Shares, the Trust
may engage in lending its portfolio securities. Such lending
will be fully secured by investment grade collateral held by an
independent agent.

The Trust may hold a portion of its assets in short-term
interest bearing instruments. Moreover, in periods when, in the
opinion of the Investment Manager or Sub-Adviser, a temporary
defensive position is appropriate, up to 100% of the Trust's
assets may be held in cash or short-term interest bearing
instruments. The Trust may not achieve its investment objective
when pursuing a temporary defensive position.

The Trust may not invest in Senior Loans made to foreign
borrowers other than borrowers organized under Canadian law and
which are domiciled in the U.S., Canada or in U.S. territories
or possessions.

The Trust may engage in executing repurchase and reverse
repurchase agreements.

LEVERAGE To seek to increase the yield on the Common Shares, the Trust
employs financial leverage by borrowing money and issuing
preferred shares. See "Risk Factors and Special Considerations
-- Leverage" on page 15.

BORROWINGS Under the 1940 Act, the Trust may borrow up to an amount equal
to 33 1/3% of its total assets (including the proceeds of the
borrowings) less all liabilities other than borrowings. The
Trust's obligations to holders of its debt are senior to its
ability to pay dividends on, or redeem or repurchase, Common
Shares and preferred shares, or to pay holders of Common Shares
and preferred shares in the event of liquidation.

PREFERRED SHARES Under the 1940 Act, the Trust may issue preferred shares so long
as immediately after any issuance of preferred shares the value
of the Trust's total assets (less all Trust liabilities and
indebtedness that is not senior indebtedness) is at least twice
the amount of the Trust's senior indebtedness plus the
involuntary liquidation preference of all outstanding shares.

The Trust is authorized to issue an unlimited number of shares
of a class of preferred stock in one or more series. In November
2000, the Trust issued 3,600 shares each of Series M, T, W, Th
and F Auction Rate Cumulative Preferred Shares, $0.01 par value,
$25,000 liquidation preference per share, for a total issuance
of $450 million (the Preferred Shares). The Trust's obligations
to holders of the Preferred Shares and holders of any other
preferred shares, are senior to its ability to pay dividends on,
or redeem or repurchase, Common Shares, or to pay holders of
Common Shares in the event of liquidation.

The 1940 Act also requires that the holders of the Preferred
Shares and holders of any other preferred shares of the Trust,
voting as a separate class, have the right to:

- elect at least two trustees at all times; and

- elect a majority of the trustees at any time when dividends
on any series of Preferred Shares are unpaid for two full
years.

In each case, the holders of Common Shares voting separately as
a class will elect the remaining trustees.

DIVERSIFICATION The Trust maintains a diversified investment portfolio, a
strategy which seeks to limit exposure to any one issuer or
industry.

As a diversified investment company, the Trust may not make
investments in any one issuer (other than the U.S. government)
if, immediately after such purchase or acquisition, more than 5%
of the value of the Trust's total assets would be invested in
such issuer, or the Trust would own more than 25% of any
outstanding issue. The Trust will consider a borrower on a loan,
including a loan participation, to be the issuer of that loan.
This strategy is a fundamental policy that may not be changed
without shareholder approval. With respect to no more than 25%
of its total assets, the Trust may make investments that are not
subject to the foregoing restrictions.

In addition, a maximum of 25% of the Trust's total assets,
measured at the time of investment, may be invested in any one
industry. This strategy is also a fundamental policy that may
not be changed without shareholder approval.

PLAN OF DISTRIBUTION The Common Shares are offered by the Trust through the Trust's
Shareholder Investment Program. The Shareholder Investment
Program allows participating shareholders to reinvest all
dividends in additional shares of the Trust, and also allows
participants to purchase additional Common Shares through
optional cash investments in amounts ranging from a minimum of
$100 to a maximum of $100,000 per month. The Trust reserves the
right to reject any purchase order. Please note that cash,
travelers checks, third party checks, money orders and checks
drawn on non-US banks (even if payment may be effected through a
US bank) generally will not be accepted. Common Shares may be
issued by the Trust under the Shareholder Investment Program
only if the Trust's Common Shares are trading at a premium to
net asset value (NAV). If the Trust's Common Shares are trading
at a discount to NAV, Common Shares purchased under the
Shareholder Investment Program will be purchased on the open
market. See "Plan of Distribution" on page 20.

Shareholders may elect to participate in the Shareholder
Investment Program by telephoning the Trust or submitting a
completed Participation Form to DST Systems, Inc. (DST).

Common Shares also may be offered pursuant to privately
negotiated transactions between the Trust or ING Funds
Distributor, LLC and individual investors. Common Shares of the
Trust issued in connection with privately negotiated
transactions will be issued at the greater of (i) NAV per Common
Share of the Trust's Common Shares or (ii) at a discount ranging
from 0% to 5% of the average daily market price of the Trust's
Common Shares at the close of business on the two business days
preceding the date upon which Common Shares are sold pursuant to
the privately negotiated transaction. See "Plan of Distribution"
on page 20.

ADMINISTRATOR The Trust's administrator is ING Funds Services, LLC (the
Administrator). The Administrator is an affiliate of the
Investment Manager. The Administrator receives an annual fee,
payable monthly, in a maximum amount equal to 0.25% of the
Trust's Managed Assets.

RISK FACTORS
AND SPECIAL
CONSIDERATIONS

CREDIT RISK ON LOANS Loans in the Trust's portfolio will typically be below
investment grade credit quality. Investment in the Trust
involves the risk that borrowers may default on obligations to
pay principal or interest when due, that lenders may have
difficulty liquidating the collateral securing the loans or
enforcing their rights under the terms of the loans, and that
the Trust's investment objective may not be realized.

INTEREST RATE RISK Changes in market interest rates will affect the yield on the
Trust's Common Shares. If market interest rates fall, the yield
on the Trust's Common Shares will also fall. In addition,
changes in market interest rates may cause the Trust's NAV to
experience moderate volatility because of the lag between
changes in market rates and the resetting of the floating rates
on assets in the Trust's portfolio. To the extent that market
interest rate changes are reflected as a change in the market
spreads for loans of the type and quality in which the Trust
invests, the value of the Trust's portfolio may decrease in
response to an increase in such spreads. Finally, substantial
increases in interest rates may cause an increase in loan
defaults as borrowers may lack the resources to meet higher debt
service requirements.

DISCOUNT FROM OR As with any security, the market value of the Common Shares may
PREMIUM TO NAV increase or decrease from the amount that you paid for the
Common Shares.

The Trust's Common Shares may trade at a discount to NAV. This
is a risk separate and distinct from the risk that the Trust's
NAV per Common Share may decrease.

LEVERAGE The Trust's use of leverage through borrowings and the issuance
of preferred shares can adversely affect the yield on the
Trust's Common Shares. To the extent that the Trust is unable to
invest the proceeds from the use of leverage in assets which pay
interest at a rate which exceeds the rate paid on the leverage,
the yield on the Trust's Common Shares will decrease. In
addition, 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 leverage.
As of ____, 2004, the Trust had $____ million of borrowings
outstanding under two credit facilities totaling $____, and
$____ million of Preferred Shares

LIMITED SECONDARY Because of the limited secondary market for loans, the Trust may
MARKET FOR LOANS be limited in its ability to sell loans in its portfolio in a
timely fashion and/or at a favorable price.

DEMAND FOR LOANS An increase in demand for loans may adversely affect the rate of
interest payable on new loans acquired by the Trust, and it may
also increase the price of loans in the secondary market.

IMPACT OF SHAREHOLDER The issuance of Common Shares through the Shareholder Investment
INVESTMENT PROGRAM Program may have an adverse effect on prices in the secondary
market for the Trust's Common Shares by increasing the number of
Common Shares available for sale. In addition, the Common Shares
may be issued at a discount to the market price for such Common
Shares, which may put downward pressure on the market price for
Common Shares of the Trust.

WHAT YOU PAY TO INVEST -- TRUST EXPENSES

The cost you pay to invest in the Trust includes the expenses incurred by the
Trust. In accordance with SEC requirements, the table below shows the expenses
of the Trust, including interest expense on borrowings, as a percentage of the
net assets of the Trust, and not as a percentage of gross assets or Managed
Assets. By showing expenses as a percentage of net assets, expenses are not
expressed as a percentage of all of the assets that are invested for the Trust.
The Table below assumes that the Trust has issued $450 million of Preferred
Shares and has borrowed an amount equal to 25% of its Managed Assets. For
information about the Trust's expense ratios if the Trust had not borrowed or
issued Preferred Shares, see "Risk Factors and Special Considerations -- Annual
Expenses Without Borrowings or Preferred Shares."

SHAREHOLDER TRANSACTION EXPENSES

Shareholder Investment Program Fees NONE
Privately Negotiated Transactions
Commission (as a percentage of offering price) NONE
ANNUAL EXPENSES (AS A PERCENTAGE OF NET ASSETS ATTRIBUTABLE TO COMMON SHARES)
Management and Administrative Fees(1) [--]%
Interest Expense on Borrowed Funds [ ]%
Other Operating Expenses(2) [ ]%
Total Annual Expenses(3) [ ]%

(1) Pursuant to the Investment Management Agreement with the Trust, ING
Investments is paid a fee of 0.80% of the Trust's Managed Assets. Pursuant
to its Administration Agreement with the Trust, ING Funds Services, LLC,
the Trust's Administrator, is paid a fee of 0.25% of the Trust's Managed
Assets. See "Investment Management and Other Service Providers -- The
Administrator."

(2) "Other Operating Expenses" are based on estimated amounts for the current
fiscal year, which, in turn, are based on "other operating expenses" for
the fiscal year ended February 29, 2004, and does not include the expenses
of borrowing.

(3) If the Total Annual Expenses of the Trust were expressed as a percentage of
Managed Assets (assuming the same 25% borrowing), the Total Annual Expense
ratio would be ____%.

EXAMPLES

The following hypothetical example shows the amount of the expenses that an
investor in the Trust would bear on a $1,000 investment that is held for the
different time periods in the table. The example assumes that all dividends and
other distributions are reinvested at NAV and that the percentage amounts listed
under Total Annual Expenses above remain the same in the years shown. The tables
and the assumption in the hypothetical example of a 5% annual return are
required by regulation of the SEC applicable to all investment companies. The
assumed 5% annual return is not a prediction of, and does not represent, the
projected or actual performance of the Trust's Common Shares. For more complete
descriptions of certain of the Trust's costs and expenses, see "Investment
Management and Other Service Providers."

The following example applies to shares issued in connection with the Trust's
Shareholder Investment Program and shares issued in connection with privately
negotiated transactions. This example does not take into account whether such
shares are purchased at a discount or a premium to the Trust's net asset value.

1 YEAR 3 YEARS 5 YEARS 10 YEARS
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You would pay the following expenses on a
$1,000 investment, assuming a 5% annual
return and where the Trust has borrowed in an
amount equal to 25% of its Managed Assets $ $ $ $

You would pay the following expenses on a
$1,000 investment, assuming a 5% annual
return and where the Trust has not borrowed $ $ $ $

The purpose of the above table is to assist you in understanding the various
costs and expenses that an investor in the Trust will bear directly or
indirectly.

THE FOREGOING EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

FINANCIAL HIGHLIGHTS

FINANCIAL HIGHLIGHTS TABLE

The table below sets forth selected financial information which has been derived
from the financial statements in the Trust's Annual Report dated as of February
29, 2004. For the fiscal years ended February 29, 2004, February 28, 2003,
February 28, 2002, February 28, 2001, and February 29, 2000, the information in
the table below has been audited by KPMG LLP, independent auditors. The
auditors' report is contained in the Trust's Annual Report dated as of February
29, 2004. A free copy of the Annual Report may be obtained by calling (800)
992-0180.

YEARS ENDED FEBRUARY 28 OR FEBRUARY 29,
---------------------------------------------------------------------
2004 2003 2002 2001 2000(4)
--------- --------- --------- ------------ ------------

PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 7.20 $ 8.09 $ 8.95 $ 9.24
Net investment income 0.50 0.74 0.88 0.79
Net realized and unrealized gain (loss) on investments (0.47) (0.89) (0.78) (0.30)
--------- --------- ------------ ------------
Increase (decrease) in net asset value from
investment operations (0.02) (0.15) 0.10 0.49
Distributions to Common Shareholders from net
investment income (0.45) (0.63) (0.86) (0.78)
Distribution to Preferred Shareholders (0.05) (0.11) (0.06) --
Increase in net asset value from share offerings -- -- -- --
Reduction in net asset value from Preferred
Shares offerings -- -- (0.04) --
--------- --------- ------------ ------------
Net asset value, end of period $ 6.73 $ 7.20 $ 8.09 $ 8.95
========= ========= ============ ============
Closing market price at end of period $ 6.46 $ 6.77 $ 8.12 $ 8.25
TOTAL INVESTMENT RETURN(1)
Total investment return at closing market price(2) 2.53% (9.20)% 9.10% (5.88)%
Total investment return at net asset value(3) 0.44% (3.02)% 0.19% 5.67%
RATIOS/SUPPLEMENTAL DATA
Net assets end of period (000's) $ 922,383 $ 985,982 $ 1,107,432 $ 1,217,339
Preferred Shares Aggregate amount
outstanding (000's) $ 450,000 $ 450,000 $ 450,000 --
Borrowings at end of period (000's) $ 167,000 $ 282,000 $ 510,000 $ 484,000
Liquidation and market value per share
of Preferred Shares $ 25,000 $ 25,000 $ 25,000 --
Asset coverage ratios(6) 250% 235% 215% 352%
Average borrowings (000's) $ 190,671 $ 365,126 $ 450,197 $ 524,019
Ratios to average net assets including Preferred
Shares(7)
Expenses (before interest and other
fees related to revolving credit facility) 1.49% 1.57% 1.62% --
Expenses 1.81% 2.54% 3.97% --
Net investment income 4.97% 6.83% 9.28% --
Ratios to average net assets plus borrowing
Expenses (before interest and other
fees related to revolving credit facility) 1.82% 1.66% 1.31% 1.00%(5)
Expenses 2.23% 2.70% 3.21% 2.79%(5)
Net investment income 6.10% 7.24% 7.50% 6.12%
Ratios to average net assets
Expenses (before interest and other
fees related to revolving credit facility) 2.19% 2.25% 1.81% 1.43%(5)
Expenses 2.68% 3.64% 4.45% 4.00%(5)
Net investment income 7.33% 9.79% 10.39% 8.77%
Portfolio turnover rate 48% 53% 46% 71%
Common shares outstanding at end of period (000's) 136,973 136,973 136,847 136,036

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

(2) Total investment return measures the change in the market value of your
investment assuming reinvestment of dividends and capital gain
distributions, if any, in accordance with the provisions of the dividend
reinvestment plan.

(3) 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 in accordance with the provisions
of the dividend reinvestment plan. This calculation differs from total
investment return because it excludes the effects of changes in the market
values of the Trust's shares.

(4) The Investment Manager agreed to reduce its fee for a period of three years
from the Expiration Date of the November 12, 1996 Rights Offering to 0.60%
of the average daily net assets, plus the proceeds of any outstanding
borrowings, over $1.15 billion.

(5) Calculated on total expenses before impact of earnings credits.

(6) Asset coverage represents the total assets available for settlement of
Preferred Stockholder's interest and notes payables in relation to the
Preferred Shareholder interest and notes payable balance outstanding. The
Preferred Shares were first offered November 2, 2000.

(7) Ratios do not reflect the effect of dividend payments to Preferred
Shareholders; income ratios reflect income earned on assets attributable to
preferred shares.

TRADING AND NAV INFORMATION

The following table shows for the Trust's Common Shares for the periods
indicated: (1) the high and low closing prices as shown on the NYSE Composite
Transaction Tape; (2) the NAV per Common Share represented by each of the high
and low closing prices as shown on the NYSE Composite Transaction Tape; and (3)
the discount from or premium to NAV per Share (expressed as a percentage)
represented by these closing prices. The table also sets forth the aggregate
number of shares traded as shown on the NYSE Composite Transaction Tape during
the respective quarter.

PREMIUM/(DISCOUNT)
PRICE NAV TO NAV
------------------- ------------------- --------------------- REPORTED
CALENDAR QUARTER ENDED HIGH LOW HIGH LOW HIGH LOW NYSE VOLUME
-------- -------- -------- -------- -------- -------- -------------

March 31, 2002 $ 6.950 $ 6.640 $ 7.29 $ 7.25 (4.66)% (8.41)% 11,781,400
June 30, 2002 6.950 6.230 7.25 7.13 (4.14) (12.62) 13,759,808
September 30, 2002 6.290 5.610 7.07 6.96 (11.03) (19.40) 16,512,192
December 31, 2002 6.100 5.440 6.69 6.55 (8.82) (16.95) 16,672,498
March 31, 2003 6.690 6.130 6.74 6.69 (0.74) (8.37) 16,702,202
June 30, 2003 [ ] [ ] [ ] [ ] [ ] [ ] [ ]
September 30, 2003 [ ] [ ] [ ] [ ] [ ] [ ] [ ]
December 31, 2003 [ ] [ ] [ ] [ ] [ ] [ ] [ ]
March 31, 2004 [ ] [ ] [ ] [ ] [ ] [ ] [ ]

On ____, 2004, the last reported sale price of a Common Share of the Trust's
Common Shares on the NYSE was $____. The Trust's NAV on ____, 2004 was $____.
See "Transaction Policies Net Asset Value." On ____, 2004 the last reported sale
price of a share of the Trust's Common Shares on the NYSE ($____) represented a
____% premium above NAV ($____) as of that date.

The Trust's Common Shares have traded in the market above, at, and below NAV
since March 9, 1992, when the Trust's Common Shares were listed on the NYSE. The
Trust cannot predict whether its Common Shares will trade in the future at a
premium or discount to NAV, and if so, the level of such premium or discount.
Shares of closed-end investment companies frequently trade at a discount from
NAV.

INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT OBJECTIVE

The Trust's investment objective is 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 investment objective by investing in the types of assets
described below:

1. SENIOR LOANS. Under normal circumstances, at least 80% of the Trust's net
assets, plus the amount of any borrowings for investment purposes, will be
invested in higher yielding, U.S. dollar denominated, floating rate secured
senior loans (Senior Loans). The Trust will provide shareholders with at
least 60 days' prior notice of any change in this investment policy.

The Trust only invests in Senior Loans made to corporations or other business
entities organized under U.S. or Canadian law and which are domiciled in the
U.S., Canada or in U.S. territories or possessions. These Senior Loans are
typically below investment grade in quality. The Trust makes its investments
in Senior Loans by purchasing a portion of the overall loan, I.E., the Trust
becomes one of a number of lenders participating in the loan.

Senior Loans either hold the most senior position in the capital structure of
the borrower or hold an equal ranking with other senior debt or have
characteristics that the Investment Manager or Sub-Adviser believes justify
treatment as senior debt.

The Trust does not invest in Senior Loans whose interest rates are tied to
non-domestic interest rates other than the London Inter-Bank Offered Rate
(LIBOR).

2. OTHER INVESTMENTS. Under normal circumstances the Trust may also invest up to
20% of its total assets in the following types of investments (Other
Investments):

- unsecured loans

- subordinated loans

- short-term debt securities

- equity securities incidental to investment in loans

3. CASH AND SHORT-TERM INSTRUMENTS. Under normal circumstances, the Trust may
invest in cash and/or short-term instruments. During periods when, in the
opinion of the Investment Manager or Sub-Adviser, a temporary defensive
posture in the market is appropriate, the Trust may hold up to 100% of its
assets in cash and/or short-term instruments.

FUNDAMENTAL DIVERSIFICATION POLICIES

1. INDUSTRY DIVERSIFICATION. The Trust may invest in any industry. The Trust may
not invest more than 25% of its total assets in any single industry.

2. BORROWER DIVERSIFICATION. As a diversified investment company, the Trust may
not make investments in any one issuer (other than the U.S. government) if,
immediately after such purchase or acquisition, more than 5% of the value of
the Trust's total assets would be invested in such issuer, or the Trust would
own more than 25% of any outstanding issue. The Trust will consider the
borrower on a loan, including a loan participation, to be the issuer of such
loan. With respect to no more than 25% of its total assets, the Trust may
make investments that are not subject to the foregoing restrictions.

These fundamental diversification policies may only be changed with approval by
a majority of all shareholders, including the vote of a majority of the holders
of Preferred Shares, and holders of any other preferred shares, voting
separately as a class.

INVESTMENT POLICIES

The Investment Manager and Sub-Adviser follow certain investment policies set by
the Trust's Board of Trustees. Some of those policies are set forth below.
Please refer to the SAI for additional information on these and other investment
policies.

1. PAYABLE IN U.S. DOLLARS. All investments purchased by the Trust must be
denominated in U.S. dollars.

2. MATURITY. Normally at least 80% of the Trust's total assets will be invested
in Senior Loans with maturities of one to ten years. The maximum maturity on
any loan in which the Trust can invest is ten years.

3. INTEREST RATE RESETS. Normally, at least 80% of the Trust's total assets will
be invested in assets with rates of interest which reset either daily,
monthly, or quarterly. The maximum duration of an interest rate reset on any
loan investment in which the Trust may invest is one year. In addition, the
Trust will ordinarily maintain a dollar-weighted average time until the next
interest rate adjustment on its loan investments of 90 days or less.

4. LIMITATIONS ON SUBORDINATED AND UNSECURED LOANS. The Trust may also invest up
to 5% of its total assets, measured at the time of investment, in
subordinated and unsecured 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 Manager or Sub-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. The maximum of 5% of the Trust's assets
invested in subordinated and unsecured loans will constitute part of the 20%
of the Trust's assets that may be invested in "Other Investments" as
described above, and will not count toward the 80% of the Trust's assets that
are normally invested in Senior Loans.

5. INVESTMENT QUALITY; CREDIT ANALYSIS. Loans in which the Trust invests
generally are rated below investment grade credit quality or are unrated. In
acquiring a loan, the Investment Manager or Sub-Adviser will consider some or
all of the following factors concerning the borrower: ability to service debt
from internally generated funds; adequacy of liquidity and working capital;
appropriateness of capital structure;

leverage consistent with industry norms; historical experience of achieving
business and financial projections; the quality and experience of management;
and adequacy of collateral coverage. The Investment Manager or Sub-Adviser
performs its own independent credit analysis of each borrower. In so doing,
the Investment Manager or Sub-Adviser may utilize information and credit
analyses from agents that originate or administer loans, other lenders
investing in a loan, and other sources. The Investment Manager or Sub-Adviser
also may communicate directly with management of the borrowers. These
analyses continue on a periodic Investment Objective and Policies basis for
any Senior Loan held by the Trust. See "Risk Factors and Special
Considerations -- Credit Risk on Senior Loans."

6. USE OF LEVERAGE. The Trust may borrow money and issue preferred shares to the
fullest extent permitted by the 1940 Act. See "Policy on Borrowing" and
"Policy on Issuance of Preferred Shares" below.

7. SHORT-TERM INSTRUMENTS. Short-term instruments in which the Trust invests may
include (i) commercial paper rated A-1 by Standard and Poor's or P-1 by
Moody's Investors Service, Inc., or of comparable quality as determined by
the Investment Manager, (ii) certificates of deposit, banker's acceptances,
and other bank deposits and obligations, and (iii) securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities.

8. SECURITIES LENDING. The Trust also may lend portfolio securities on a
short-term or long-term basis, an amount equal to up to 33 1/3% of its total
assets.

POLICY ON BORROWING

Beginning in May of 1996, the Trust began a policy of borrowing for investment
purposes. The Trust seeks to use proceeds from borrowing to acquire loans and
other investments which pay interest at a rate higher than the rate the Trust
pays on borrowings. Accordingly, borrowing has the potential to increase the
Trust's total income available to holders of its Common Shares.

The Trust may issue notes, commercial paper, or other evidences of indebtedness
and may be required to secure repayment by mortgaging, pledging, or otherwise
granting a security interest in the Trust's assets. The terms of any such
borrowings are subject to the provisions of the 1940 Act, and also subject to
the more restrictive terms of the credit agreements relating to borrowings and
additional guidelines imposed by rating agencies which are more restrictive than
the provisions of the 1940 Act. The Trust is permitted to borrow an amount equal
to up to 33 1/3%, or such other percentage permitted by law, of its total assets
(including the amount borrowed) less all liabilities other than borrowings. See
"Risk Factors and Special Considerations -- Leverage" and "Risk Factors and
Special Considerations -- Restrictive Covenants and 1940 Act Restrictions."

POLICY ON ISSUANCE OF PREFERRED SHARES

The Trust has a policy of issuing preferred shares for investment purposes. The
Trust seeks to use the proceeds from preferred shares to acquire loans and other
investments which pay interest at a rate higher than the dividends payable on
preferred shares. The terms of the issuance of preferred shares are subject to
the 1940 Act and to additional guidelines imposed by rating agencies, which are
more restrictive than the provisions of the 1940 Act. Under the 1940 Act, the
Trust may issue preferred shares so long as immediately after any issuance of
preferred shares the value of the Trust's total assets (less all Trust
liabilities and indebtedness that is not senior indebtedness) is at least twice
the amount of the Trust's senior indebtedness plus the involuntary liquidation
preference of all outstanding shares. In November 2000, the Trust issued 18,000
Preferred Shares for a total of $450 million. See "Risk Factors and Special
Considerations -- Leverage."

THE TRUST'S INVESTMENTS

As stated above under Investment Objective and Policies, the Trust will invest
primarily in Senior Loans. This section contains a discussion of the
characteristics of Senior Loans, the manner in which those investments are made
and the market for Senior Loans.

SENIOR LOAN CHARACTERISTICS

Senior Loans are loans that are typically made to business borrowers to finance
leveraged buy-outs, recapitalizations, mergers, stock repurchases and internal
growth. Senior Loans generally hold the most senior position in the capital
structure of a borrower and are usually secured by liens on the assets of the
borrowers, including tangible assets such as cash, accounts receivable,
inventory, property, plant and equipment, common and/or preferred stock of
subsidiaries, and intangible assets including trademarks, copyrights, patent
rights and franchise value. The Trust may also receive guarantees as a form of
collateral.

Senior Loans that the Trust may acquire include participation interests in lease
financings (Lease Participations) where the collateral quality, credit quality
of the borrower and the likelihood of payback are believed by the Investment
Manager or Sub-Adviser to be the same as those applied to conventional Senior
Loans. A Lease Participation is also required to have a floating interest rate
that is indexed to a benchmark indicator of prevailing interest rates, such as
LIBOR or the Prime Rate.

By virtue of their senior position and collateral, Senior Loans typically
provide lenders with the first right to cash flows or proceeds from the sale of
a borrower's collateral if the borrower becomes insolvent (subject to the
limitations of bankruptcy law, which may provide higher priority to certain
claims such as, for example, employee salaries, employee pensions and taxes).
This means Senior Loans are generally repaid before unsecured bank loans,
corporate bonds, subordinated debt, trade creditors, and preferred or common
stockholders.

Senior Loans typically pay interest at least quarterly at rates which equal a
fixed percentage spread over a base rate such as LIBOR. For example, if LIBOR
were 2.00% and the borrower were paying a fixed spread of 3.00%, the total
interest rate paid by the borrower would be 5.00%. Base rates and, therefore,
the total rates paid on Senior Loans float, I.E., they change as market rates of
interest change.

Although a base rate such as LIBOR can change every day, loan agreements for
Senior Loans typically allow the borrower the ability to choose how often the
base rate for its loan will change. Such periods can range from one day to one
year, with most borrowers choosing monthly or quarterly reset periods. During
periods of rising interest rates, borrowers will tend to choose longer reset
periods, and during periods of declining interest rates, borrowers will tend to
choose shorter reset periods. The fixed spread over the base rate on a Senior
Loan typically does not change.

Senior Loans generally are arranged through private negotiations between a
borrower and several financial institutions represented by an agent who is
usually one of the originating lenders. In larger transactions, it is common to
have several agents; however, generally only one such agent has primary
responsibility for ongoing administration of a Senior Loan. Agents are typically
paid fees by the borrower for their services. The agent is primarily responsible
for negotiating the loan agreement which establishes the terms and conditions of
the Senior Loan and the rights of the borrower and the lenders. The agent also
is responsible for monitoring collateral and for exercising remedies available
to the lenders such as foreclosure upon collateral.

Loan agreements may provide for the termination of the agent's agency status in
the event that it fails to act as required under the relevant loan agreement,
becomes insolvent, enters FDIC receivership or, if not FDIC insured, enters into
bankruptcy. Should such an agent, lender or assignor with respect to an
assignment interpositioned between the Trust and the borrower become insolvent
or enter FDIC receivership or bankruptcy, any interest in the Senior Loan of
such person and any loan payment held by such person for the benefit of the
Trust should not be included in such person's or entity's bankruptcy estate. If,
however, any such amount were included in such person's or entity's bankruptcy
estate, the Trust would incur certain costs and delays in realizing payment or
could suffer a loss of principal or interest. In this event, the Trust could
experience a decrease in NAV.

The Trust acquires Senior Loans from lenders such as banks, insurance companies,
finance companies, other investment companies and private investment funds. The
Trust may also acquire Senior Loans from U.S. branches of foreign banks that are
regulated by the Federal Reserve System or appropriate state regulatory
authorities.

INVESTMENT BY THE TRUST

The Trust invests in Senior Loans primarily by purchasing an assignment of a
portion of a Senior Loan from a third party, either in connection with the
original loan transaction (I.E., in the primary market) or after the initial
loan transaction (I.E., in the secondary market). When the Trust purchases an
assignment in the primary market, it may share in a fee paid to the original
lender. When the Trust acquires a Senior Loan in the secondary market, it may
pay a fee to, or forego a portion of interest payments from, the lender making
the assignment. The Trust will act as lender, or purchase an assignment with
respect to a Senior Loan, only if the agent is determined by the Investment
Manager or Sub-Adviser to be creditworthy.

Except for rating agency guidelines imposed on the Trust's portfolio while it
has outstanding Preferred Shares, there is no minimum rating or other
independent evaluation of a borrower limiting the Trust's investments and most
Senior Loans that the Trust may acquire, if rated, will be rated below
investment grade credit quality. See "Risk Factors and Special Considerations --
Credit Risk on Senior Loans."

ASSIGNMENTS. When the Trust is a purchaser of an assignment, it succeeds to all
the rights and obligations under the loan agreement of the assigning lender and
becomes a lender under the loan agreement with the same rights and obligations
as the assigning lender. These rights include the ability to vote along with the
other lenders on such matters as enforcing the terms of the loan agreement,
E.G., declaring defaults, initiating collection action, etc. Taking such actions
usually requires at least a vote of the lenders holding a majority of the
investment in the loan, and may require a vote by lenders holding two-thirds or
more of the investment in the loan. Because the Trust typically does not hold a
majority of the investment in any loan, it will not be able by itself to control
decisions that require a vote by the lenders.

ACQUISITION COSTS. When the Trust acquires an interest in a Senior Loan in the
primary market, it typically acquires the loan at par less its portion of the
fee paid to all originating lenders. When the Trust acquires an interest in a
Senior Loan, in the secondary market, it may be at par, but typically the Trust
will do so at premium or discount to par.

SENIOR LOAN MARKET

Total U.S. domestic Senior Loan volume has increased dramatically over the last
10 years. Total Senior Loan volume was approximately $375 billion in 1992. For
the 2003 year, volume has increased to approximately $___ billion. Originated
Senior loan volume peaked in year 2000 at approximately $1,296 billion. Despite
continuing volatility in U.S. capital markets, demand has remained strong.
Institutional investors other than banks, such as investment companies,
insurance companies and private investment vehicles are continuing to increase
investment allocations to the Senior Loan market. The entrance of new investors
has helped create a more active secondary trading market in Senior Loans with
approximately $____ billion in trading volume during 2003. This secondary
market, coupled with lender focus on portfolio management and the move toward
standard market practices, has helped increase the liquidity for Seniors Loans.

Credit quality is the primary issue currently impacting the loan market. The
industry has experienced deteriorating credit quality, high profile corporate
bankruptcies, historically high default-rates and continuing concerns about the
direction of the general economy.

RISK FACTORS AND SPECIAL CONSIDERATIONS

RISK IS INHERENT IN ALL INVESTING. THE FOLLOWING DISCUSSION SUMMARIZES SOME OF
THE RISKS THAT YOU SHOULD CONSIDER BEFORE DECIDING WHETHER TO INVEST IN THE
TRUST. FOR ADDITIONAL INFORMATION ABOUT THE RISKS ASSOCIATED WITH INVESTING IN
THE TRUST, SEE "ADDITIONAL INFORMATION ABOUT INVESTMENTS AND INVESTMENT
TECHNIQUES" IN THE SAI.

CREDIT RISK ON SENIOR LOANS

The Trust's ability to pay dividends and repurchase its Common Shares is
dependent upon the performance of the assets in its portfolio. That performance,
in turn, is subject to a number of risks, chief among which is credit risk on
the underlying assets.

Credit risk is the risk of nonpayment of scheduled interest or principal
payments. In the event a borrower fails to pay scheduled interest or principal
payments on a Senior Loan held by the Trust, the Trust will experience a
reduction in its income and a decline in the market value of the Senior Loan,
which will likely reduce dividends and lead to a decline in the NAV of the
Trust's Common Shares. If the Trust acquires a Senior Loan from another lender,
either by means of assignment or by acquiring a participation, the Trust may
also be subject to credit risks with respect to that lender. See "The Trust's
Investments -- Investment by the Trust."

Senior Loans generally involve less risk than unsecured or subordinated debt and
equity instruments of the same issuer because the payment of principal and
interest on Senior Loans is a contractual obligation of the issuer that, in most
instances, takes precedence over the payment of dividends, or the return of
capital, to the issuer's shareholders and payments to bond holders. The Trust
generally invests in Senior Loans that are usually secured with specific
collateral. However, the value of the collateral may not equal the Trust's
investment when the loan is acquired or may decline below the principal amount
of the Senior Loan subsequent to the Trust's investment. Also, to the extent
that collateral consists of stock of the borrower or its subsidiaries or
affiliates, the Trust bears the risk that the stock may decline in value, be
relatively illiquid, or may lose all or substantially all of its value, causing
the Senior Loan to be undercollateralized. Therefore, the liquidation of the
collateral underlying a Senior Loan may not satisfy the issuer's obligation to
the Trust in the event of non-payment of scheduled interest or principal, and
the collateral may not be readily liquidated.

In the event of the bankruptcy of a borrower, the Trust could experience delays
and limitations on its ability to realize the benefits of the collateral
securing the Senior Loan. Among the credit risks involved in a bankruptcy are
assertions that the pledge of collateral to secure a loan constitutes a
fraudulent conveyance or preferential transfer that would have the effect of
nullifying or subordinating the Trust's rights to the collateral.

The Senior Loans in which the Trust invests are generally rated lower than
investment grade credit quality, I.E., rated lower than "Baa" by Moody's or
"BBB" by S&P, or have been issued by issuers who have issued other debt
securities which, if unrated, would be rated lower than investment grade credit
quality. Investment decisions will be based largely on the credit analysis
performed by the Investment Manager or Sub-Adviser, and not on rating agency
evaluation. This analysis may be difficult to perform. Information about a
Senior Loan and its issuer generally is not in the public domain. Moreover,
Senior Loans are not often rated by any nationally recognized rating service.
Many issuers have not issued securities to the public and are not subject to
reporting requirements under federal securities laws. Generally, however,
issuers are required to provide financial information to lenders and information
may be available from other Senior Loan participants or agents that originate or
administer Senior Loans.

INTEREST RATE RISK

During normal market conditions, changes in market interest rates will affect
the Trust in certain ways. The principal effect will be that the yield on the
Trust's Common Shares will tend to rise or fall as market interest rates rise
and fall. This is because almost all of the assets in which the Trust invests
pay interest at rates which float in response to changes in market rates.
However, because the interest rates on the Trust's assets reset over time, there
will be an imperfect correlation between changes in market rates and changes to
rates on the portfolio as a whole. This means that changes to the rate of
interest paid on the portfolio as a whole will tend to lag behind changes in
market rates.

Market interest rate changes may also cause the Trust's NAV to experience
moderate volatility. This is because the value of a loan asset in the Trust is
partially a function of whether it is paying what the market perceives to be a
market rate of interest for the particular loan, given its individual credit and
other characteristics. If market interest rates change, a loan's value could be
affected to the extent the interest rate paid on that loan does not reset at the
same time. As discussed above, the rates of interest paid on the loans in which
the Trust invests have a weighted average reset period that typically is less
than 90 days. Therefore, the impact of the lag between a change in market
interest rates and the change in the overall rate on the portfolio is expected
to be minimal.

To the extent that changes in market rates of interest are reflected not in a
change to a base rate such as LIBOR but in a change in the spread over the base
rate which is payable on loans of the type and quality in which the Trust
invests, the Trust's NAV could also be adversely affected. Again, this is
because the value of a loan asset in the Trust is partially a function of
whether it is paying what the market perceives to be a market rate of interest
for the particular loan, given its individual credit and other characteristics.
However, unlike changes in market rates of interest for which there is only a
temporary lag before the portfolio reflects those changes, changes in a loan's
value based on changes in the market spread on loans in the Trust's portfolio
may be of longer duration.

Finally, substantial increases in interest rates may cause an increase in loan
defaults as borrowers may lack the resources to meet higher debt service
requirements.

CHANGES TO NAV

The NAV of the Trust is expected to change in response to a variety of factors,
primarily in response to changes in the creditworthiness of the borrowers on the
loans in which the Trust invests. See "Credit Risk on Senior Loans" above.
Changes in market interest rates may also have a moderate impact on the Trust's
NAV. See "Interest Rate Risk." Another factor which can affect the Trust's NAV
is changes in the pricing obtained for the Trust's assets. See "Transaction --
Policies Valuation of the Trust's Assets."

DISCOUNT FROM OR PREMIUM TO NAV

The Trust's Common Shares have traded in the market above, at, and below NAV
since March 9, 1992, when the Trust's shares were listed on the NYSE. The
reasons for the Trust's Common Shares trading at a premium to or discount from
NAV are not known to the Trust, and the Trust cannot predict whether its Common
Shares will trade in the future at a premium to or discount from NAV, and if so,
the level of such premium or discount. Shares of closed-end investment companies
frequently trade at a discount from NAV. The possibility that Common Shares of
the Trust will trade at a discount from NAV is a risk separate and distinct from
the risk that the Trust's NAV may decrease.

LEVERAGE

The Trust may borrow an amount equal to up to 33 1/3% (or such other percentage
permitted by law) of its total assets (including the amount borrowed) less all
liabilities other than borrowings. Under the 1940 Act, the Trust may issue
preferred shares so long as immediately after any issuance of preferred shares
the value of the Trust's total assets (less all Trust liabilities and
indebtedness that is not senior indebtedness) is at least twice the amount of
the Trust's senior indebtedness plus the involuntary liquidation preference of
all outstanding shares. In November 2000, the Trust issued 18,000 Preferred
Shares for a total of $450 million. Borrowings and the issuance of preferred
shares are referred to in this Prospectus collectively as "leverage." The Trust
may use leverage for investment purposes, to finance the repurchase of its
Common Shares, and to meet other cash requirements. The use of leverage for
investment purposes increases both investment opportunity and investment risk.

Capital raised through leverage will be subject to interest and other costs, and
these costs could exceed the income earned by the Trust on the proceeds of such
leverage. There can be no assurance that the Trust's income from the proceeds of
leverage will exceed these costs. However, the Investment Manager or Sub-Adviser
seek to use leverage for the purposes of making additional investments only if
they believe, at the time of using leverage, that the total return on the assets
purchased with such funds will exceed interest payments and other costs on the
leverage. In addition, the Investment Manager or Sub-Adviser intend to reduce
the risk that the costs of the use of leverage will exceed the total return on
investments purchased with the proceeds of leveraging by utilizing leverage
mechanisms whose interest rates float (or reset frequently). In the event of a
default on one or more loans or other interest-bearing instruments held by the
Trust, the use of leverage would exaggerate the loss to the Trust and may
exaggerate the effect on the Trust's NAV. The Trust's lenders and preferred
shareholders have priority to the Trust's assets over the Trust's Common
shareholders.

The Trust currently uses leverage by borrowing money on a floating rate basis
and by the issuance of Preferred Shares. The current rate on the borrowings (as
of ____, 2004) is ____%. The current dividend rate on the Preferred Shares (as
of ____, 2004) is ____%. To cover the annual interest and dividends on the
borrowings and the Preferred Shares for the current fiscal year (assuming that
the current interest and dividend rates remain in effect for the entire fiscal
year and assuming that the Trust borrows an amount equal to 25% of its Managed
Assets and the current Preferred Shares remain outstanding), the Trust would
need to earn $____ million or ____% on its amount of Managed Assets as of ____,
2004.

The Trust's leveraged capital structure creates special risks not associated
with unleveraged funds having similar investment objectives and policies. The
funds borrowed pursuant to the credit facilities or obtained through the
issuance of Preferred Shares, or any other preferred shares, constitute a
substantial lien and burden by reason of their prior claim against the income of
the Trust and against the net assets of the Trust in liquidation.

The Trust is not permitted to declare dividends or other distributions,
including dividends and distributions with respect to Common Shares or Preferred
Shares, or any other preferred shares, or purchase Common Shares, Preferred
Shares or any other preferred shares unless (i) at the time thereof the Trust
meets certain asset coverage requirements and (ii) there is no event of default
under any credit facility program that is continuing. See "Risk Factors and
Special Considerations -- Restrictive Covenants and 1940 Act Restrictions"
below. In the event of a default under a credit facility program, the lenders
have the right to cause a liquidation of the collateral (I.E., sell Senior Loans
and other assets of the Trust) and, if any such default is not cured, the
lenders may be able to control the liquidation as well.

In addition, the Trust is not permitted to pay dividends on, or redeem Common
Shares unless all accrued dividends, or accrued interest on borrowings, on the
Preferred Shares or any other preferred shares, have been paid or set aside for
payment.

Because the fee paid to the Investment Manager will be calculated on the basis
of Managed Assets, the fee will be higher when leverage is utilized, giving the
Investment Manager an incentive to utilize leverage.

The Trust is subject to certain restrictions imposed by lenders to the Trust and
by guidelines of one or more rating agencies which issue ratings for the
Preferred Shares issued by the Trust. These restrictions impose asset coverage,
fund composition requirements and limits on investment techniques, such as the
use of financial derivative products, that are more stringent than those imposed
on the Trust by the 1940 Act. These covenants or guidelines could impede the
Investment Manager or Sub-Adviser from fully managing the Trust's portfolio in
accordance with the Trust's investment objective and policies.

ANNUAL EXPENSES WITHOUT BORROWINGS OR PREFERRED SHARES

From the inception of the Trust through ____, 2004, the income earned on the
assets purchased with the Trust's borrowings and Preferred Shares has always
exceeded the expenses on such borrowings and Preferred Shares. This has
increased the overall yield of the Trust. If the Trust were not to have borrowed
or have Preferred Shares outstanding, the remaining expenses, as a percentage of
the net assets of the Trust, would be as follows:

ANNUAL EXPENSES WITHOUT BORROWINGS OR PREFERRED SHARES
(AS A PERCENTAGE OF NET ASSETS ATTRIBUTABLE TO COMMON SHARES)

Management and Administrative Fees(1) 1.05%
Other Operating Expenses(2) %
Total Annual Expenses %

EFFECT OF LEVERAGE

The following table is designed to illustrate the effect on return to a holder
of the Trust's Common Shares of the leverage created by the Trust's use of
borrowing, using an assumed initial interest rate of ____%, assuming the Trust
has used leverage by borrowing an amount equal to 25% of the Trust's Managed
Assets and assuming hypothetical annual returns on the Trust's portfolio of
minus 10% to plus 10%. As can be seen, leverage generally increases the return
to shareholders when portfolio return is positive and decreases return when the
portfolio return is negative. Actual returns may be greater or less than those
appearing in the table.

Assumed Portfolio Return, net of
expenses(1) (10%) (5%) 0% 5% 10%
Corresponding Return to Common
Shareholders(2) (____%) (____%) (____%) ____% ____%

(1) The Assumed Portfolio Return is required by regulation of the SEC and is
not a prediction of, and does not represent, the projected or actual
performance of the Trust.

(2) In order to compute the "Corresponding Return to Common Shareholders," the
"Assumed Portfolio Return" is multiplied by the total value of the Trust's
assets at the beginning of the Trust's fiscal year to obtain an assumed
return to the Trust. From this amount, all interest accrued during the year
is subtracted to determine the return available to shareholders. The return
available to shareholders is then divided by the total value of the Trust's
net assets attributable to Common Shares as of the beginning of the fiscal
year to determine the "Corresponding Return to Common Shareholders."

IMPACT OF SHAREHOLDER INVESTMENT PROGRAM

The issuance of Common Shares through the Trust's Shareholder Investment Program
may have an adverse effect on the secondary market for the Trust's Common
Shares. The increase in the number of the Trust's outstanding Common Shares
resulting from issuances pursuant to the Trust's Shareholder Investment Program
or pursuant to privately negotiated transactions, and the discount to the market
price at which such Common Shares may be issued, may put downward pressure on
the market price for Common Shares of the Trust. Common Shares will not be
issued pursuant to the Trust's Shareholder Investment Program at any time when
Common Shares are trading at a price lower than the Trust's NAV per Common
Share.

When the Trust's Common Shares are trading at a premium, the Trust may also
issue Common Shares of the Trust that are sold through transactions effected on
the NYSE or through broker-dealers who have entered into selected dealer
agreements with ING Funds Distributor, LLC (ING Funds Distributor) the Trust's
distributor. The increase in the number of outstanding Common Shares resulting
from these offerings may put downward pressure on the market price for the
Common Shares.

LIMITED SECONDARY MARKET FOR LOANS

Although the resale, or secondary, market for loans is growing, it is currently
limited. There is no organized exchange or board of trade on which loans are
traded. Instead, the secondary market for loans is an unregulated inter-dealer
or inter-bank re-sale market.

Loans usually trade in large denominations (typically more than $1 million
units) and trades can be infrequent. The market has limited transparency so that
information about actual trades may be difficult to obtain. Accordingly, some or
many of the loans in which the Trust invests will be relatively illiquid.

In addition, loans in which the Trust invests may require the consent of the
borrower and/or the agent prior to sale or assignment. These consent
requirements can delay or impede the Trust's ability to sell loans and can
adversely affect the price that can be obtained. The Trust may have difficulty
disposing of loans if it needs cash to repay debt, to pay dividends, to pay
expenses or to take advantage of new investment opportunities. Although the
Trust has not conducted a tender offer since 1992, if it determines to again
conduct a tender offer, limitations of a secondary market may result in
difficulty raising cash to purchase tendered Common Shares.

These considerations may cause the Trust to sell securities at lower prices than
it would otherwise consider to meet cash needs or cause the Trust to maintain a
greater portion of its assets in cash equivalents than it would otherwise, which
could negatively impact performance. The Trust seeks to avoid the necessity of
selling assets to meet such needs by the use of borrowings.

The Trust values its assets daily. However, because the secondary market for
loans is limited, it may be difficult to value loans. Market quotations may not
be readily available for some loans and valuation may require more research than
for liquid securities. In addition, elements of judgment may play a greater role
in valuation than for securities with a secondary market, because there is less
reliable, objective market value data available. In addition, if the Trust
purchases a relatively large loan to generate extra income sometimes paid to
large lenders, the limitations of the secondary market may inhibit the Trust
from selling a portion of the loan and reducing its exposure to a borrower when
the Investment Manager or Sub-Adviser deems it advisable to do so.

LENDING PORTFOLIO SECURITIES

To generate additional income, the Trust may lend portfolio securities in an
amount equal to up to 33 1/3% of total Trust assets to broker-dealers, major
banks, or other recognized domestic institutional borrowers of securities. As
with other extensions of credit, there are risks of delay in recovery or even
loss of rights in the collateral should the borrower default or fail
financially. The Trust intends to engage in lending portfolio securities only
when such lending is fully secured by investment grade collateral held by an
independent agent.

DEMAND FOR LOANS

Although the volume of loans has increased in recent years, demand for loans has
also grown. An increase in demand may benefit the Trust by providing increased
liquidity for loans, but it may also adversely affect the rate of interest
payable on loans acquired by the Trust, the rights provided to the Trust under
the terms of a loan, and increase the price of loans in the secondary market.

UNSECURED LOANS AND SUBORDINATED LOANS

Subject to the 20% of the Trust's assets that may be invested in Other
Investments, the Trust may invest up to 5% of its total assets, measured at the
time of investment, in unsecured loans and in subordinated loans. Unsecured
loans and subordinated loans share the same credit risks as those discussed
above under "Credit Risk on Senior Loans" except that unsecured loans are not
secured by any collateral of the borrower and subordinated loans are not the
most senior debt in a borrower's capital structure. Unsecured loans do not enjoy
the security associated with collateralization and may pose a greater risk of
nonpayment of interest or loss of principal than do secured loans. The primary
additional risk in a subordinated loan is the potential loss in the event of
default by the issuer of the loan. Subordinated loans in an insolvency bear an
increased share, relative to senior secured lenders, of the ultimate risk that
the borrower's assets are insufficient to meet its obligations to its creditors.

SHORT-TERM DEBT SECURITIES

Subject to the 20% of the Trust's assets that may be invested in Other
Investments, the Trust may invest in short-term debt securities. Short-term debt
securities are subject to the risk of the issuer's inability to meet principal
and interest payments on

the obligation and also may be subject to price volatility due to such factors
as interest rates, market perception of the creditworthiness of the issuer and
general market liquidity.

Because short-term debt securities pay interest at a fixed-rate, when interest
rates decline, the value of the Trust's short-term debt securities can be
expected to rise, and when interest rates rise, the value of those securities
can be expected to decline.

INVESTMENTS IN EQUITY SECURITIES INCIDENTAL TO INVESTMENT IN LOANS

Subject to the 20% of the Trust's assets that may be invested in Other
Investments, the Trust may acquire equity securities as an incident to the
purchase or ownership of a loan or in connection with a reorganization of a
borrower or its debt. Investments in equity securities incidental to If you have
any questions, please call (800) 992-0180.Risk Factors and Special
Considerations investment in loans entail certain risks in addition to those
associated with investment in loans. The value of these securities may be
affected more rapidly, and to a greater extent, by company-specific developments
and general market conditions. These risks may increase fluctuations in the
Trust's NAV. The Trust may frequently possess material non-public information
about a borrower as a result of its ownership of a loan of such borrower.
Because of prohibitions on trading in securities of issuers while in possession
of such information the Trust might be unable to enter into a transaction in a
security of such a borrower when it would otherwise be advantageous to do so.

BORROWINGS UNDER THE CREDIT FACILITY PROGRAM

In May 1996, the Trust began a policy of borrowing to acquire income-producing
investments which, by their terms, pay interest at a rate higher than the rate
the Trust pays on borrowings. Accordingly, borrowing has the potential to
increase the Trust's total income. The Trust currently is a party to two credit
facilities with financial institutions that permit the Trust to borrow up to an
aggregate of $415 million. Interest is payable on the credit facilities by the
Trust at a variable rate that is tied to either LIBOR, the federal funds rate,
or a commercial paper based rate and includes a facility fee on unused
commitments. As of ____, 2004, the Trust had outstanding borrowings under the
credit facilities of approximately $____ million. Collectively, the lenders
under the credit facilities have a security interest in all assets of the Trust.
Under each of the credit facilities, the lenders have the right to liquidate
Trust assets in the event of default by the Trust under such credit facility,
and the Trust may be prohibited from paying dividends in the event of certain
adverse events or conditions respecting the Trust or Investment Manager or
Sub-Adviser until the credit facility is repaid in full or until the event or
condition is cured.

RANKING OF SENIOR INDEBTEDNESS

The rights of lenders to receive payments of interest on and repayments of
principal of any borrowings made by the Trust under the credit facility program
are senior to the rights of holders of Common Shares, Preferred Shares and any
other preferred shares, with respect to the payment of dividends or upon
liquidation.

RESTRICTIVE COVENANTS AND 1940 ACT RESTRICTIONS

The credit agreements governing the credit facility program (the Credit
Agreements) include usual and customary covenants for their respective type of
transaction, including limits on the Trust's ability to (i) issue preferred
shares, (ii) incur liens or pledge portfolio securities, (iii) change its
investment objective or fundamental investment restrictions without the approval
of lenders, (iv) make changes in any of its business objectives, purposes or
operations that could result in a material adverse effect, (v) make any changes
in its capital structure, (vi) amend the Trust documents in a manner which could
adversely affect the rights, interests or obligations of any of the lenders,
(vii) engage in any business other than the businesses currently engaged in,
(viii) create, incur, assume or permit to exist certain debt except for certain
specified types of debt, and (ix) permit any of its ERISA affiliates to cause or
permit to occur an event that could result in the imposition of a lien under the
Internal Revenue Code or ERISA. In addition, the Credit Agreements do not permit
the Trust's asset coverage ratio (as defined in the credit agreements) to fall
below 300% at any time (the Credit Agreement Asset Coverage Test).

Under the requirements of the 1940 Act, the Trust must have asset coverage of at
least 300% immediately after any borrowing, including borrowing under the credit
facility program. For this purpose, asset coverage means the ratio which the
value of the total assets of the Trust, less liabilities and indebtedness not
represented by senior securities, bears to the aggregate amount of borrowings
represented by senior securities issued by the Trust. The Credit Agreements
limit the Trust's ability to pay dividends or make other distributions on the
Trust's Common Shares, or purchase or redeem Common Shares, unless the Trust
complies with the Credit Agreement Asset Coverage Test. In addition, the Credit
Agreements do not permit the Trust to declare dividends or other distributions
or purchase or redeem Common Shares or any preferred shares (i) at any time that
an event of default under a Credit Agreement has occurred and is continuing; or
(ii) if, after giving effect to such declaration, the Trust would not meet the
Credit Agreement Asset Coverage Test set forth in the Credit Agreement.

TRANSACTION POLICIES

NET ASSET VALUE

The net asset value (NAV) per share of the Fund is determined each business
day as of the close of regular trading on the New York Stock Exchange
("NYSE") (usually 4:00 p.m. Eastern Time). The Trust is open for business
every day the NYSE is open. The NYSE is closed on all weekends and on
national holidays and Good Friday. Trust shares will not be priced on those
days. The NAV per share of the Trust is calculated by taking the value of the
Trust's assets, subtracting the Trust's liabilities, and dividing by the
number of shares that are outstanding.

VALUATION OF THE TRUST'S ASSETS

The assets in the Trust's portfolio are valued daily in accordance with the
Trust's Loan Valuation Procedures adopted by the Board of Trustees. A majority
of the Trust's assets are valued using quotations supplied by a third party loan
pricing service. However, the loans in which the Trust invests are not listed on
any securities exchange or board of trade. Some loans are traded by
institutional investors in an over-the-counter secondary market that has
developed in the past several years. This secondary market generally has fewer
trades and less liquidity than the secondary markets for other types of
securities. Some loans have few or no trades. Accordingly, determinations of the
value of loans may be based on infrequent and dated trades. Because there is
less reliable, objective market value data available, elements of judgment may
play a greater role in valuation of loans than for other types of securities.
For further information, see "Risk Factors and Special Considerations -- Limited
Secondary Market for Loans."

Loans are normally valued at the mean of the means of one or more bid and asked
quotations obtained from a pricing service or other sources believed to be
reliable. Loans for which reliable market value quotations are not readily
available from a pricing service may be valued with reference to another loan or
a group of loans for which reliable market value 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 an independent pricing
service to provide quotations from dealers in loans and to calculate values
under this proxy procedure.

It is expected that most of the loans held by the Trust will be valued with
reference to quotations from the independent pricing service or with reference
to the proxy procedure described above. The Investment Manager or Sub-Adviser
may believe that the price for a loan derived from 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 Manager or Sub-Adviser that they believe may not be known to the
pricing service or reflected in a price quote. In this event, the loan is valued
at fair value under procedures established by the Trust's Board of Trustees, and
in accordance with the provisions of the 1940 Act.

Under these procedures, fair value is determined by the Investment Manager or
Sub-Adviser and monitored by the Trust's Board of Trustees through its Valuation
and Proxy Voting Committee. In fair valuing a loan, consideration is given to
several factors, which may include, among others, the following:

- 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;

- the nature, adequacy and value of the collateral, including the Trust's
rights, remedies and interests with respect to the collateral;

- 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;

- information relating to the market for the loan, including price
quotations for, and trading in, the loan and interests in similar loans
and the market environment and investor attitudes towards the loan and
interests in similar loans;

- the reputation and financial condition of the agent of the loan and any
intermediate participants in the loans;

- the borrower's management; and

- the general economic and market conditions affecting the fair value of the
loan.

In general, securities are valued based on actual or estimated market value,
with special provisions for securities not having readily available market
quotations and short-term debt securities, and for situations where market
quotations are deemed unreliable. Investments in securities maturing in 60
days or less are valued at amortized cost, which, when combined with accrued
interest, approximates market value. Securities prices may be obtained from
automated pricing services.

Trading of foreign securities may not take place every day the NYSE is open.
Also, trading in some foreign markets and on some electronic trading networks
may occur on weekends or holidays when the Fund's NAV is not calculated. As a
result, the NAV of the Trust may change on days when shareholders will not be
able to purchase or redeem the Trust's shares.

When market quotations are not readily available or are deemed unreliable, the
Investment Manager may determine a fair value for the security in accordance
with procedures

adopted by the Trust's Board. The types of securities for which such fair value
pricing might be required include, but are not limited to:

- Foreign securities, where an event occurs after the close of the foreign
market on which such security principally trades, but before the close of
the NYSE, that is likely to have changed the value of such security, or
the daily fluctuation in the S&P 500 Index exceeds certain thresholds, or
the closing value is otherwise deemed unreliable;

- Securities of an issuer that has entered into a restructuring;

- Securities whose trading has been halted or suspended;

- Fixed income securities that have gone into default and for which there is
not current market value quotation;

The Trust or Investment Manager may use a fair value pricing service approved
by the Board in valuing foreign securities. Valuing securities at fair value
involves greater reliance on judgment than securities that have readily
available market quotations. The Investment Manager makes such determinations
in good faith in accordance with procedures adopted by the Trust's Board.
Fair value determinations can also involve reliance on quantitative models
employed by a fair value pricing service. There can be no assurance that the
Trust could obtain the fair value assigned to a security if it were to sell
the security at approximately the time at which the Trust determines its NAV
per share.

ACCOUNT ACCESS

Unless your Common Shares are held through a third-party fiduciary or in an
omnibus registration at your bank or brokerage firm, you may be able to access
your account information over the internet at www.ingfunds.com, or via a touch
tone telephone by calling (800) 992-0180 and selecting Option 1. Should you wish
to speak with a Shareholder Services Representative, you may call the toll-free
number listed above and select Option 2.

PLAN OF DISTRIBUTION

SHAREHOLDER INVESTMENT PROGRAM

The following is a summary of the Shareholder Investment Program (Program).
Shareholders are advised to review a fuller explanation of the Program contained
in the Trust's SAI.

Common Shares are offered by the Trust through the Program. The Program allows
participating shareholders to reinvest all dividends (Dividends) in additional
Common Shares of the Trust, and also allows participants to purchase additional
Common Shares through optional cash investments in amounts ranging from a
minimum of $100 to a maximum of $100,000 per month.

The Trust reserves the right to reject any purchase order. Please note that
cash, travelers checks, third party checks, money orders and checks drawn on
non-US banks (even if payment may be effected through a US bank) generally will
not be accepted.

Common Shares will be issued by the Trust under the Program when the Trust's
Common Shares are trading at a premium to NAV. If the Trust's Common Shares are
trading at a discount to NAV, Common Shares purchased under the Program will be
purchased on the open market. Common Shares purchased under the Program directly
from the Trust will be acquired at the greater of (i) NAV at the close of
business on the day preceding the relevant investment date or (ii) the average
of the daily market price of the Common Shares during the pricing period minus a
discount of 5%, for reinvested Dividends, and 0% to 5%, for optional cash
investments. Common Shares purchased under the Program when shares are trading
at a discount to NAV will be purchased at market price. Shares issued by the
Trust under the Program will be issued without a fee or a commission.

Shareholders may elect to participate in the Program by telephoning the Trust or
submitting a completed Participation Form to DST Systems, Inc. (DST), the
Program administrator. DST will credit to each participant's account funds it
receives from: (a) Dividends paid on Trust shares registered in the
participant's name, and (b) optional cash investments. DST will apply all
Dividends and optional cash investments received to purchase Common Shares as
soon as practicable beginning on the relevant investment date (as described
below) and not later than six business days after the relevant investment date,
except when necessary to comply with applicable provisions of the federal
securities laws. For more information on the Trust's distribution policy, see
"Dividends and Distributions."

In order for participants to purchase shares through the Program in any month,
the Administrator must receive from the participant any optional cash investment
by the relevant investment date. The relevant investment date will be set in
advance by the Trust, upon which optional cash investments are first applied by
DST to the purchase of Common Shares. Participants may obtain a schedule of
relevant dates, including investments dates, the dates in which all requests for
a Waiver must be received and the dates in which shares will be paid by calling
ING's Shareholder Services Department at (800) 992-0180.

Participants will pay a pro rata share of brokerage commissions with respect to
DST's open market purchases in connection with the reinvestment of Dividends or
purchases made with optional cash investments.

Program. Such transactions could cause fluctuations in the trading volume and
price of the Common Shares. The difference between the price such owners pay to
the Trust for Shares acquired under the Program, after deduction of the
applicable discount from the market price, and the price at which such Common
Shares are resold, may be deemed to constitute underwriting commissions received
by such owners in connection with such transactions.

The Program is intended for the benefit of investors in the Trust. The Trust
reserves the right to exclude from participation, at any time, (i) persons or
entities who attempt to circumvent the Program's standard $100,000 maximum by
accumulating accounts over which they have control or (ii) any other persons or
entities, as determined in the sole discretion of the Trust.

Currently, persons who are not shareholders of the Trust may not participate in
the Program. The Board of Trustees of the Trust may elect to change this policy
at a future date, and permit non-shareholders to participate in the Program.
Shareholders may request to receive their Dividends in cash at any time by
giving DST written notice or by contacting ING's Shareholder Services Department
at (800) 992-0180, Option 2. Shareholders may elect to close their account at
any time by giving DST written notice. When a participant closes their account,
the participant upon request will receive a certificate for full Common Shares
in the Account. Fractional Common Shares will be held and aggregated with other
fractional Common Shares being liquidated by DST as agent of the Program and
paid for by check when actually sold.

The automatic reinvestment of Dividends does not affect the tax characterization
of the Dividends (I.E., capital gains and income are realized even though cash
is not received). If shares are issued pursuant to the Program's dividend
reinvestment provisions or cash purchase provisions at a discount from market
price, participants may have income equal to the discount.

Additional information about the Program may be obtained from ING's Shareholder
Services Department at (800) 992-0180, Option 2.

PRIVATELY NEGOTIATED TRANSACTIONS

The Common Shares may also be offered pursuant to privately negotiated
transactions between the Trust or ING Funds Distributor, LLC and specific
investors. Generally, such investors will be sophisticated institutional
investors. The terms of such privately negotiated transactions will be subject
to the discretion of the management of the Trust. In determining whether to sell
Common Shares pursuant to a privately negotiated transaction, the Trust will
consider relevant factors including, but not limited to, the attractiveness of
obtaining additional funds through the sale of Common Shares, the purchase price
to apply to any such sale of Common Shares and the person seeking to purchase
the Common Shares.

Common Shares issued by the Trust in connection with privately negotiated
transactions will be issued at the greater of (i) NAV per Common Share of the
Trust's Common Shares or (ii) at a discount ranging from 0% to 5% of the average
of the daily market price of the Trust's Common Shares at the close of business
on the two business days preceding the date upon which Common Shares are sold
pursuant to the privately negotiated transaction. The discount to apply to such
privately negotiated transactions will be determined by the Trust with regard to
each specific transaction.

USE OF PROCEEDS

It is expected that 100% of the net proceeds of Common Shares issued pursuant to
the Shareholder Investment Program and privately negotiated transactions will be
invested in Senior Loans and other securities consistent with the Trust's
investment objective and policies. Pending investment in Senior Loans, the
proceeds will be used to pay down the Trust's outstanding borrowings under its
credit facilities. See "Investment Objective and Policies -- Policy on
Borrowing."

As of ____, 2004, the Trust's outstanding borrowings under its credit facilities
was $____ million. By paying down the Trust's borrowings, the Trust can avoid
adverse impacts on yields pending investment of such proceeds in Senior Loans.
As investment opportunities are subsequently identified, it is expected that the
Trust will reborrow amounts previously repaid and invest such amounts in
additional Senior Loans.

DIVIDENDS AND DISTRIBUTIONS

DISTRIBUTION POLICY. Income dividends are declared and paid monthly. Income
dividends consist of interest accrued and amortization of fees earned less any
amortization of premiums paid and the estimated expenses of the Trust, including
fees payable to ING Investments. Income dividends are calculated monthly under
guidelines approved by the Trustees. Each dividend is payable to shareholders of
record on the 10th day of the following month (unless it is a holiday, in which
case the next business day is the record date). Accrued amounts of fees
received, including facility fees, will be taken in as income and passed on to
shareholders as part of dividend distributions. Any fees or commissions paid to
facilitate the sale of portfolio Senior Loans in connection with tender offers
or other portfolio transactions may reduce the dividend yield.

Capital gains, if any, are declared and paid annually. Because the Trust
currently has capital loss carry forwards, it is not anticipated that capital
gains distributions will be made for the foreseeable future.

DIVIDEND REINVESTMENT. Unless you instruct the Trust to pay you dividends in
cash, dividends and distributions paid by the Trust will be reinvested in
additional Common Shares of the Trust. You may request to receive dividends in
cash at any time by giving DST written notice or by contacting the ING's
Shareholder Services Department at (800) 992-0180, Option 2.

INVESTMENT MANAGEMENT AND OTHER SERVICE PROVIDERS

INVESTMENT MANAGER

ING INVESTMENTS, LLC (the Investment Manager or ING Investments), an Arizona
limited liability company, serves as Investment Manager to the Trust and has
overall responsibility for the management of the Trust under the general
supervision of the Board of Trustees. Its principal business address is 7337
East Doubletree Ranch Road, Scottsdale, Arizona 85258.

The Trust and the Investment Manager have entered into an Investment Management
Agreement that requires ING Investments to provide all investment advisory and
portfolio management services for the Trust. The agreement with ING Investments
may be canceled by the Board of Trustees upon 60 days' written notice.

ING Investments is an indirect wholly-owned subsidiary of
ING Groep N.V. (NYSE: ING) (ING Groep). ING Groep is a global financial
institution active in the fields of insurance, banking and asset management in
more than 65 countries with more than 100,000 employees. The Investment Manager
is registered as an investment adviser with the SEC. ING Investments began
investment management in April, 1995, and serves as an investment adviser to
registered investment companies as well as structured finance vehicles. As of
March 31, 2004, ING Investments had assets under management of over $____
billion.

The Investment Manager bears its expenses of providing the services described
above. The Investment Manager currently receives from the Trust an annual fee,
paid monthly, of 0.80% of the Trust's Managed Assets.

SUB-ADVISER

ING Investments has engaged a Sub-Adviser to provide the day-to-day management
of the Trust's portfolio. The Sub-Adviser has, at least in part, been selected
primarily on the basis of its successful application of a consistent,
well-defined, long-term investment approach over a period of several market
cycles. ING Investments is responsible for monitoring the investment program and
performance of the Sub-Adviser. Under the terms of the sub-advisory agreement,
the agreement can be terminated by either ING Investments or the Board of
Trustees of the Trust. In the event the sub-advisory agreement is terminated,
the Sub-Adviser may be replaced subject to any regulatory requirements or ING
Investments may assume day-to-day investment management of the Trust.

ING INVESTMENT MANAGEMENT CO. (INGIM)

INGIM serves as Sub-Adviser to the Trust. Founded in 1972, INGIM is registered
as an investment adviser with the SEC. INGIM is an indirect wholly-owned
subsidiary of ING Groep, N.V., and is an affiliate of ING Investments. INGIM has
acted as adviser or subadviser to mutual funds since 1994 and has managed
institutional accounts since 1972.

As of March 31, 2004, INGIM managed almost $[ ] billion in assets. Its principal
office is located at 10 State House Square, Hartford, Connecticut 06103-3602.
For its services, INGIM is entitled to receive a sub-advisory fee of 0.36%,
expressed as an annual rate based on the average daily Managed Assets of the
Fund and is paid by ING Investments.

PORTFOLIO MANAGEMENT. The Trust is managed by the Senior Debt Group. That team
is comprised of the following individuals:

DANIEL A. NORMAN. Mr. Norman is Senior Vice President and Senior Portfolio
Manager in the Senior Debt Group, and has served in that capacity since
November 1999. Prior to that, Mr. Norman was Senior Vice President and
Portfolio Manager in the Senior Debt Group (since April 1995). Mr. Norman
also serves as Senior Vice President of the Trust, and he serves as Senior
Vice President of ING Senior Income Fund, another closed-end fund managed by
the Investment Manager that invests primarily in Senior Loans. Mr. Norman
co-manages the Trust with Mr. Bakalar.

JEFFREY A. BAKALAR. Mr. Bakalar is Senior Vice President and Senior Portfolio
Manager in the Senior Debt Group, and has served in that capacity since November
1999. Prior to that, Mr. Bakalar was Senior Vice President and Portfolio Manager
in the Senior Debt Group (since January 1998). Before joining ING Groep N.V.,
Mr. Bakalar was Vice President of The First National Bank of Chicago (from 1994
to 1998). Mr. Bakalar also serves as Senior Vice President of the Trust and as
Senior Vice President of ING Senior Income Fund, another closed-end fund managed
by the Investment Manager that invests primarily in Senior Loans. Mr. Bakalar
co-manages the Trust with Mr. Norman.

CURTIS F. LEE. Mr. Lee is Senior Vice President and Chief Credit Officer in the
Senior Debt Group and has served in that capacity since August 1999. Prior to
joining the Investment Manager, Mr. Lee held a series of positions with Standard
Chartered Bank in the credit approval and problem loan management functions
(1992 - 1999). Mr. Lee also serves as Senior Vice President and Chief Credit
Officer of the Trust (since January 2001), and he serves as Senior Vice
President and Chief Credit Officer of ING Senior Income Fund, another closed-end
fund managed by the Sub-Adviser that invests primarily in Senior Loans.

ROBERT L. WILSON. Mr. Wilson is a Senior Vice President in the Senior Debt Group
(since March 2003) and before that was Vice President in the Senior Debt Group
(since July 1998). Prior to joining ING Groep N.V., Mr. Wilson was Vice
President of Bank of Hawaii (from 1997 to 1998) and Vice President of Union Bank
of California (from 1994 to 1997).

MICHEL PRINCE. Mr. Prince is a Vice President in the Senior Debt Group (since
May 1998). Prior to joining the Investment Manager, Mr. Prince was Vice
President of Rabobank International, Chicago branch (from 1996 to 1998).

JASON T. GROOM. Mr. Groom is a Vice President in the Senior Debt Group (since
June 2000), and before that was an Assistant Vice President in the Senior
Debt Group (1998 to 2000). Prior to joining ING Groep N.V., Mr. Groom was an
Associate in the Corporate Finance Group of NationsBank (in 1998) and
Assistant Vice President, Corporate Finance group, of The Industrial Bank of
Japan Limited (from 1995 to 1997).

CHARLES E. LEMIEUX. Mr. LeMieux is a Vice President in the Senior Debt Group
(since June 2000), and before that was Assistant Vice President in the Senior
Debt Group (from 1998 to 2000). Prior to joining ING Groep N.V., Mr. LeMieux
was Assistant Treasurer, Cash Management, with Salt River Project (from 1993
to 1998).

MARK F. HAAK. Mr. Haak is a Vice President in the Senior Debt Group (since June
1999). Prior to joining ING Groep N.V., Mr. Haak was Assistant Vice President,
Corporate Banking with Norwest Bank (from 1997 to 1998) and Lead Financial
Analyst and Portfolio Manager for Bank One AZ, N.A. (from 1996 to 1997).

WILLIAM F. NUTTING, JR. Mr. Nutting is a Vice President in the Senior Debt Group
(since November 1999), and joined ING Funds Services, LLC, an affiliate of the
Investment Manager in 1995 as an Operations Associate.

THEODORE M. HAAG. Mr. Haag is a Vice President in the Senior Debt Group (since
March 2001). Mr. Haag joined ING Groep N.V. in June 2000 as Vice President and
Senior Portfolio Manager, a position he continues to hold. From 1997 to 2000,
Mr. Haag served as Vice President and Portfolio Manager for Gen Re-New England
Asset Management. From 1995 to 1997, Mr. Haag was a Director of Fixed Income
Securities and Securities Policy Committee member for Providian Capital
Management. Prior to working at Providian, Mr. Haag was a high yield portfolio
manager at ICH Corporation.

RALPH E. BUCHER. Mr. Bucher is a Vice President in the Senior Debt Group (since
November 2001). Prior to joining ING Groep N.V., Mr. Bucher was the North
American Head of Special Assets for Standard Chartered Bank (from 1999 to 2001).
Mr. Bucher has also held other senior credit approval positions with Societe
Generale (from 1997 to 1999).

BRIAN S. HORTON. Mr. Horton is a Vice President in the Senior Debt Group (since
September 2001). Prior to joining ING Groep N.V., Mr. Horton was a Vice
President in the Corporate and Investment Banking Group at Bank of America
Securities LLC, where he worked in the Consumer and Retail Industry Group (from
1999 to 2001). Mr. Horton also served in various other corporate finance and
relationship management positions during his seven years at Bank of America,
including corporate finance specialist for the Southeast U.S. region (from 1997
- 1999).

MOHAMED N. BASMA. Mr. Basma is a Vice President in the Senior Debt Group (since
March 2003), and before that was Research Analyst on the Senior Debt Management
team (since January 2000). Prior to joining ING Groep N.V., Mr. Basma was a
senior auditor/consultant in the audit and business advisory group with Arthur
Andersen, LLP (from 1995 to 1997). Mr. Basma attended school for the years
between his employment at Arthur Andersen and the Investment Manager.

JAMES E. GRIMES. Mr. Grimes is a Vice President in the Senior Debt Group (since
2001), and before that was Manager of Structured Investments for the Investment
Manager (since 1999). Prior to joining ING Groep N.V., Mr. Grimes was Manager of
Finance and Strategic Planning for NationsBank Auto Leasing, Inc. (formerly
Oxford Resources Corp.) (from 1994 to 1998).

JEFFREY S. SCHULTZ. Mr. Schultz is an Analyst in the Senior Debt Group (since
March 2003), and before that was Treasury Operations Assistant (from 1998 to
2000) and Jr. Research Analyst (from 2000 to 2003). Prior to joining ING Groep
N.V., Mr. Schultz prepared taxes for Arthur Andersen LLP (1998).

THE ADMINISTRATOR

The Administrator of the Trust is ING Funds Services, LLC
(ING Funds Services). Its principal business address is 7337 East Doubletree
Ranch Road, Scottsdale, Arizona 85258. The Administrator is a wholly-owned
subsidiary of ING Groep and the immediate parent company of the Investment
Manager.

Under an Administration Agreement between ING Funds Services and the Trust, ING
Funds Services administers the Trust's corporate affairs subject to the
supervision of the Board of Trustees of the Trust. In that connection, ING Funds
Services monitors the provisions of the Senior Loan agreements and any
agreements with respect to interests in Senior Loans and is responsible for
recordkeeping with respect to the Senior Loans in the Trust's repurchase offers
portfolio. ING Funds Services also furnishes the Trust with office facilities
and furnishes executive personnel together with clerical and certain
recordkeeping and administrative services. These services include preparation of
annual and other reports to shareholders and to the SEC. ING Funds Services also
handles the filing of federal, state and local income tax returns not being
furnished by the Custodian or Transfer Agent (as defined below). The
Administration Agreement also requires ING Funds Services to assist in managing
and supervising all aspects of the general day-to-day business activities and
operations of the Trust, including custodial, transfer agency, dividend
disbursing, accounting, auditing, compliance and related services. ING Funds
Services provides the Trust with office space, equipment and personnel necessary
to administer the Trust. The Administrator has authorized all of its officers
and employees who have been elected as officers of the Trust to serve in such
capacities. All services furnished by the Administrator under the Administration
Agreement may be furnished by such officers or employees of the Administrator.

The Trust pays ING Funds Services an administration fee, computed daily and
payable monthly. The Administration Agreement states that ING Funds Services is
entitled to receive a fee at an annual rate of 0.25% of the Trust's Managed
Assets. The Administration Agreement may be canceled by the Board of Trustees
upon 60 days' written notice.

TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND REGISTRAR

The transfer agent, dividend disbursing agent and registrar for the Common
Shares is DST Systems, Inc., whose principal business address is 816 Wyandotte,
Kansas City, Missouri 64105.

CUSTODIAN

The Trust's securities and cash are held and maintained under a Custody
Agreement with State Street Bank and Trust Company, whose principal place of
business is 801 Pennsylvania Avenue, Kansas City, Missouri 64105.

DESCRIPTION OF THE TRUST

The Trust is an unincorporated business trust established under the laws of the
Commonwealth of Massachusetts by the Declaration of Trust dated December 2,
1987, as amended. The Board of Trustees is responsible for protecting the
interests of shareholders. The Trustees are experienced executives who oversee
the Trust's activities, review contractual arrangements with companies that
provide services to the Trust and review the Trust's performance.

The Declaration of Trust provides that the Trustees of the Trust may authorize
separate classes of shares of beneficial interest. The Trustees have authorized
an unlimited number of shares of beneficial interest, par value $0.01 per share,
all of which were initially classified as Common Shares. The Declaration of
Trust also authorizes the creation of an unlimited number of shares of
beneficial interest with preference rights, including preferred shares, having a
par value of $0.01 per share, in one or more series, with rights as determined
by the Board of Trustees, by action of the Board of Trustees without the
approval of the shareholders. The following table shows the amount of (i) shares
authorized, (ii) shares held by the Trust for its own account and (iii) shares
outstanding, for each class of authorized securities of the Trust as of ____,
2004.

AMOUNT HELD BY
AMOUNT TRUST FOR ITS AMOUNT
TITLE OF CLASS AUTHORIZED OWN ACCOUNT OUTSTANDING
-------------- ---------- ----------- -----------

Common Shares unlimited 0 ____
Preferred Shares, Series M 3,600 0 3,600
Preferred Shares, Series T 3,600 0 3,600
Preferred Shares, Series W 3,600 0 3,600
Preferred Shares, Series Th 3,600 0 3,600
Preferred Shares, Series F 3,600 0 3,600

The Common Shares outstanding are fully paid and nonassessable by the Trust.
Holders of Common Shares are entitled to share equally in dividends declared by
the Board of Trustees payable to holders of common shares and in the net assets
of the Trust available for distribution to holders of Common Shares after
payment of the preferential amounts payable to holders of any outstanding
Preferred Shares. Neither holders of Common Shares nor holders of Preferred
Shares have pre-emptive or conversion rights and Common Shares are not
redeemable. Upon liquidation of the Trust, after paying or adequately providing
for the payment of all liabilities of the Trust and the liquidation preference
with respect to any outstanding preferred shares, and upon receipt of such
releases, indemnities and refunding agreements as they deem necessary for their
protection, the Trustees may distribute the remaining assets of the Trust among
the holders of the Common Shares. Under the rules of the NYSE applicable to
listed companies, the Trust is required to hold an annual meeting of
shareholders in each year. If the Trust is converted to an open-end investment
company or if for any other reason Common Shares are no longer listed on the
NYSE (or any other national securities exchange the rules of which require
annual meetings of shareholders), the Trust does not intend to hold annual
meetings of shareholders.

The Trust is responsible for paying the following expenses, among others: the
fees payable to the Investment Manager; the fees payable to the Administrator;
the fees and certain expenses of the Trust's custodian and transfer agent,
including the cost of providing records to the Administrator in connection with
its obligation of maintaining required records of the Trust; the charges and
expenses of the Trust's legal counsel, legal counsel to the Trustees who are not
"interested persons" of the Trust, as defined in the 1940 Act and independent
accountants; commissions and any issue or transfer taxes chargeable to the Trust
in connection with its transactions; all taxes and corporate fees payable by the
Trust to governmental agencies; the fees of any trade association of which the
Trust is a member; the costs of share certificates representing Common Shares of
the Trust; organizational and offering expenses of the Trust and the fees and
expenses involved in registering and maintaining registration of the Trust and
its Common Shares with the SEC, including the preparation and printing of the
Trust's registration statement and prospectuses for such purposes; allocable
communications expenses with respect to investor services, and all expenses of
shareholders' and Trustees' meetings and of preparing, printing and mailing
reports, proxy statements and prospectuses to shareholders; the cost of
insurance; and litigation and indemnification expenses and extraordinary
expenses not incurred in the ordinary course of the Trust's business.

Under Massachusetts law, shareholders, including holders of Preferred Shares,
could under certain circumstances be held personally liable for the obligations
of the Trust. However, the Declaration of Trust disclaims shareholder liability
for acts or obligations of the Trust and requires that notice of such disclaimer
be given in each agreement, obligation or instrument entered into or executed by
the Trust or the Trustees. The Declaration of Trust provides for indemnification
out of Trust property for all loss and expense of any shareholder held
personally liable for the obligations of the Trust. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust would be unable to meet its
obligations.

Holders of Common Shares are entitled to one vote for each share held and will
vote with the holders of any outstanding Preferred Shares or any other preferred
shares on each matter submitted to a vote of holders of Common Shares, except as
described under "Description of Capital Structure -- Preferred Shares."

Shareholders are entitled to one vote for each share held. The Common Shares,
Preferred Shares and any other preferred shares do not have cumulative voting
rights, which means that the holders of more than 50% of the shares of Common
Shares, Preferred Shares and any other preferred shares voting for the election
of Trustees can elect all of the Trustees standing for election by such holders,
and, in such event, the holders of the remaining shares of Common Shares,
Preferred

Shares and any other preferred shares will not be able to elect any of
such Trustees.

So long as any Preferred Shares or any other preferred shares are outstanding,
holders of Common Shares will not be entitled to receive any dividends of or
other distributions from the Trust, unless at the time of such declaration, (1)
all accrued dividends on preferred shares or accrued interest on borrowings has
been paid and (2) the value of the Trust's total assets (determined after
deducting the amount of such dividend or other distribution), less all
liabilities and indebtedness of the Trust not represented by senior securities,
is at least 300% of the aggregate amount of such securities representing
indebtedness and at least 200% of the aggregate amount of securities
representing indebtedness plus the aggregate liquidation value of the
outstanding preferred shares (expected to equal the aggregate original purchase
price of the outstanding preferred shares plus redemption premium, if any,
together with any accrued and unpaid dividends thereon, whether or not earned or
declared and on a cumulative basis). In addition to the If you have any
questions, please call 1-800-992-0180.Description of the Trust requirements of
the 1940 Act, the Trust is required to comply with other asset coverage
requirements as a condition of the Trust obtaining a rating of the preferred
shares from a rating agency. These requirements include an asset coverage test
more stringent than under the 1940 Act.

The Trust will send unaudited reports at least semi-annually and audited
financial statements annually to all of its shareholders.

The Declaration of Trust further provides that obligations of the Trust are not
binding upon Trustees individually but only upon the property of the Trust and
that the Trustees will not be liable for errors of judgment or mistakes of fact
or law, but nothing in the Declaration of Trust protects a Trustee against any
liability to which he or she would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office.

CONVERSION TO OPEN-END FUND

The Trustees may at any time propose conversion of the Trust to an open-end
management investment company depending upon their judgment as to the
advisability of such action in light of circumstances then prevailing. In
considering whether to submit an open-ending proposal to shareholders, the
Trustees might consider, among other factors, the differences in operating
expenses between open-end and closed-end funds (due to the expenses of
continuously selling shares and of standing ready to effect redemptions), the
potentially adverse tax consequences to non-redeeming shareholders once a fund
is open-ended, and the impact of open-ending on portfolio management policies.
Such a conversion would require the approval of both a majority of the Trust's
outstanding Common Shares and preferred shares voting together as a single class
and a majority of the outstanding preferred shares voting as a separate class on
such conversion. Conversion of the Trust to an open-end investment company would
require the redemption of all outstanding preferred shares, including the
Preferred Shares, which would eliminate the leveraged capital structure of the
Trust with respect to the Common Shares. A delay in conversion could result
following shareholder approval due to the Trust's inability to redeem the
preferred shares. Shareholders of an open-end investment company may require the
company to redeem their shares at any time (except in certain circumstances as
authorized by or under the 1940 Act) at their next computed NAV less any
redemption charge as might be in effect at the time of redemption. If the Trust
is converted to an open-end management investment company, it could be required
to liquidate portfolio securities to meet requests for redemption, and its
shares would no longer be listed on the NYSE. If the Trust were to experience
significant redemptions as an open-end fund, the decrease in total assets could
result in a higher expense ratio and inefficiencies in portfolio management. In
this regard, the Trust could reserve the right to effect redemptions in-kind
with portfolio securities, which would subject redeeming shareholders to
transaction costs in liquidating those securities.

REPURCHASE OF COMMON SHARES

In recognition of the possibility that the Trust's Common Shares may trade at a
discount to their NAV, the Trust may from time to time take action to attempt to
reduce or eliminate a market value discount from NAV by repurchasing its Common
Shares in the open market or by tendering its Common Shares at NAV. So long as
any preferred shares are outstanding, the Trust may not purchase, redeem or
otherwise acquire any Common Shares unless (1) all accumulated dividends on the
preferred shares have been paid or set aside for payment through the date of
such purchase, redemption or other acquisition and (2) at the time of such
purchase, redemption or acquisition asset coverage requirements set forth in the
Declaration of Trust and the Trust's Certificate of Designation for Preferred
Shares are met. Repurchases of Common Shares may result in the Trust being
required to redeem preferred shares to satisfy asset coverage requirements.

FUNDAMENTAL AND NON-FUNDAMENTAL POLICIES OF THE TRUST

The investment objective of the Trust, certain policies of the Trust specified
herein as fundamental and the investment restrictions of the Trust described in
the SAI are fundamental policies of the Trust and may not be changed without a
Majority Vote of the shareholders of the Trust. The term Majority Vote means the
affirmative vote of (a) more than 50% of the outstanding shares of the Trust or
(b) 67% or more of the shares present at a meeting if more than 50% of the
outstanding shares of the Trust are represented at the meeting in person or by
proxy, whichever is less. All other policies of the Trust may be modified by
resolution of the Board of Trustees of the Trust.

DESCRIPTION OF CAPITAL STRUCTURE

COMMON SHARES

The Trust's Declaration of Trust authorizes the issuance of an unlimited number
of Common Shares of beneficial interest, par value $.01 per share. All Common
Shares have equal rights to the payment of dividends and the distribution of
assets upon liquidation. Common Shares will, when issued, be fully paid and
non-assessable, and will have no pre-emptive or conversion rights or rights to
cumulative voting.

Whenever preferred shares are outstanding, holders of Common Shares will not be
entitled to receive any distributions from the Trust, unless at the time of such
declaration, (1) all accrued dividends on preferred shares or accrued interest
on borrowings have been paid and (2) the value of the Trust's total assets
(determined after deducting the amount of such dividend or other distribution),
less all liabilities and indebtedness of the Trust not represented by senior
securities, is at least 300% of the aggregate amount of such securities
representing indebtedness and at least 200% of the aggregate amount of
securities representing indebtedness plus the aggregate liquidation value of the
outstanding preferred shares. In addition to the requirements of the 1940 Act,
the Trust is required to comply with the other asset coverage requirements as a
condition of the Trust obtaining a rating of the preferred shares from a rating
agency. These requirements include asset coverage tests more stringent than
under the 1940 Act. See "Preferred Shares" below.

BORROWINGS

The Trust's Declaration of Trust authorizes the Trust, without the prior
approval of holders of Common Shares, to borrow money. In this connection, the
Trust may issue notes or other evidence of indebtedness (including bank
borrowings or commercial paper) and may secure any such borrowings by
mortgaging, pledging or otherwise granting a security interest in the Trust's
assets. See "Risk Factors and Special Consideration -- Leverage."

PREFERRED SHARES

Under the 1940 Act, the Trust is permitted to have outstanding more than one
series of preferred shares as long as no single series has priority over another
series nor holders of preferred shares have pre-emptive rights to purchase any
Preferred Shares or any other preferred shares that might be issued.

The Trust's Declaration of Trust authorizes the issuance of a class of preferred
shares (which class may be divided into two or more series) as the Trustees may,
without shareholder approval, authorize. The preferred shares have such
preferences, voting powers, terms of redemption, if any, and special or relative
rights or privileges (including conversion rights, if any) as the Trustee may
determine and as are set forth in the Trust's Certificate of Designation
establishing the terms of the preferred shares. The number of shares of the
preferred class or series authorized is unlimited, and the shares authorized may
be represented in part by fractional shares. Under the Trust's Certificate of
Designation, the Trustees have authorized the creation of 18,000 Auction Rate
Cumulative Preferred Shares, having a par value of $0.01 per share, with a
liquidation preference of $25,000 per share, classified as Series M, T, W, Th
and F Auction Rate Cumulative Preferred Shares.

Any decision to offer preferred shares is subject to market conditions and to
the Board of Trustees' and the Investment Manager's continuing belief that
leveraging the Trust's capital structure through the issuance of preferred
shares is likely to achieve the benefits to the Common Shares described in this
Prospectus for long-term investors. The terms of the preferred shares will be
determined by the Board of Trustees in consultation with the Investment Manager
(subject to applicable law and the Trust's Declaration of Trust) if and when it
authorizes a preferred shares offering.

The preferred shares have complete priority over the Common Shares as to
distribution of assets. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Trust, holders of
preferred shares will be entitled to receive a preferential liquidating
distribution (expected to equal the original purchase price per share plus
accumulated and unpaid dividends thereon, whether or not earned or declared)
before any distribution of assets is made to holders of Common Shares.

TAX MATTERS

The following information is meant as a general summary for U.S. shareholders.
Please see the SAI for additional information. Investors should rely on their
own tax adviser for advice about the particular federal, state and local tax
consequences to them of investing in the Trust.

The federal income tax treatment of the Trust's Preferred Shares is not entirely
clear, but the Trust believes, based on the advice of its counsel, that the
Preferred Shares will constitute stock of the Trust. It is possible, however,
that the IRS might take a contrary position, asserting, for example, that the
Preferred Shares constitute debt of the Trust. The discussion below assumes that
the Preferred Shares are stock.

The Trust will distribute all or substantially all of its net investment income
and net realized capital gains, if any, to its shareholders each year. Although
the Trust will not be taxed on amounts it distributes, most shareholders will be
taxed on amounts they receive. A particular distribution generally will be
taxable as either ordinary income or long-term capital gain. The Trust will
allocate a proportionate amount of each type of its income to the Common Shares
and to the Preferred Shares. It generally does not matter how long a shareholder
has held the Trust's Common Shares or Preferred Shares or whether the
shareholder elects to receive distributions in cash or reinvest them in
additional Trust's Common Shares or Preferred Shares. For example, if the Trust
designates a particular distribution as a long-term capital gains distribution,
it will be taxable to a shareholder at his or her long-term capital gains rate.
Dividends from the Trust are generally not eligible for the reduced rate of tax
that may apply to certain qualifying dividends on corporate stock.

Dividends declared by the Trust in October, November or December and paid during
the following January may be treated as having been received by shareholders in
the year the distributions were declared.

Each shareholder will receive an annual statement summarizing the shareholder's
dividend and capital gains distributions.

If a shareholder invests through a tax-deferred account, such as a retirement
plan, the shareholder generally will not have to pay tax on dividends until they
are distributed from the account. These accounts are subject to complex tax
rules, and shareholders should consult a tax adviser about investment through a
tax-deferred account.

There may be tax consequences to a shareholder if the shareholder sells the
Trust's Common Shares or Preferred Shares. A shareholder will generally have a
capital gain or loss, which will be long-term or short-term, generally depending
on how long the shareholder holds those Common Shares or Preferred Shares. If a
shareholder exchanges shares, the shareholder may be treated as if he or she
sold them. Shareholders are responsible for any tax liabilities generated by
their own transactions.

As with all investment companies, the Trust may be required to withhold U.S.
federal income tax at the rate of 28% of all taxable distributions payable to a
shareholder if the shareholder fails to provide the Trust with his or her
correct taxpayer identification number or to make required certifications, or if
the shareholder has been notified by the IRS that he or she is subject to backup
withholding. Backup withholding is not an additional tax; rather, it is a way in
which the IRS ensures it will collect taxes otherwise due. Any amounts withheld
may be credited against a shareholder's U.S. federal income tax liability.

MORE INFORMATION

DISTRIBUTION ARRANGEMENTS

Pursuant to the terms of a Distribution Agreement, ING Funds Distributor, LLC
will act as the Trust's distributor for the optional cash investments and
privately negotiated transactions under the Trust's Shareholder Investment
Program. The Distribution Agreement provides that ING Fund's Distributor LLC
does not recieve compensation or commissions from the Trust for such
services. ING Funds Distributor, LLC's principal business address is 7337 E.
Doubletree Ranch Road, Scottsdale, Arizona 85258. ING Funds Distributor, LLC
and ING Investments, LLC, the Trust's Investment Manager, and INGIM, the
Trust's Sub-Adviser, are indirect, wholly-owned subsidiaries of ING Groep.
See "Investment Management and Other Service Providers -- Investment
Manager/Sub-Adviser."

The Trust bears the expenses of issuing the Common Shares. These expenses
include, but are not limited to, the expense of preparation and printing of the
prospectus and SAI, the expense of counsel and auditors, and others.

LEGAL MATTERS

The validity of the Common Shares offered hereby will be passed on for the Trust
by Dechert LLP, 1775 I Street, NW, Washington, DC, counsel to the Trust.

AUDITORS

KPMG LLP serves as independent auditors for the Trust. The auditors' address is
355 South Grand Avenue, Los Angeles, California 90071.

REGISTRATION STATEMENT

The Trust has filed with the SEC, Washington, DC, a Registration Statement under
the Securities Act, relating to the Common Shares offered hereby. For further
information with respect to the Trust and its Common Shares, reference is made
to such Registration Statement and the exhibits filed with it.

SHAREHOLDER REPORTS

The Trust issues reports that include financial information to its shareholders
at least semi-annually.

The Trust has adopted a policy concerning investor privacy. To review the
privacy policy, contact a Shareholder Services Representative at (800) 992-0180
and select Option 1, obtain a policy over the internet at www.ingfunds.com or
see the privacy policy that accompanies this Prospectus.

STATEMENT OF ADDITIONAL INFORMATION

TABLE OF CONTENTS

PAGE
----

Change of Name 2
Investment Objective 2
Investment Restrictions 2
Additional Information About Investments and Investment Techniques 3
Trustees and Officers 12
Compensation Table 23
Code of Ethics 24
Investment Management and Other Service Providers 24
Portfolio Transactions 29
Net Asset Value 30
Plans of Distribution 32
Federal Taxation 36
Advertising and Performance Data 40
General Information 42
Financial Statements 42

ING PRIME RATE TRUST
7337 E. DOUBLETREE RANCH ROAD
SCOTTSDALE, ARIZONA 85258
(800) 992-0180

5,000,000 COMMON SHARES OF BENEFICIAL INTERES

TTRUST ADVISORS AND AGENTS

INVESTMENT MANAGER

ING Investments, LLC
7337 E. Doubletree Ranch Road
Scottsdale, AZ 85258

SUB-ADVISER

ING Investment Management Co.
10 State House Square
Hartford, Connecticut 06103-3602

ADMINISTRATOR

ING Funds Services, LLC
7337 E. Doubletree Ranch Road
Scottsdale, AZ 85258

CUSTODIAN

State Street Bank and Trust Company
801 Pennsylvania Avenue
Kansas City, MO 64105

INDEPENDENT AUDITORS

KPMG LLP
355 South Grand Avenue
Los Angeles, California 90071

DISTRIBUTOR

ING Funds Distributor, LLC
7337 E. Doubletree Ranch Road
Scottsdale,
AZ 85258

TRANSFER AGENT

DST Systems, Inc.
816 Wyandotte
Kansas City, MO 64105

LEGAL COUNSEL

Dechert LLP
1775 I Street, NW
Washington, DC 20006

INSTITUTIONAL INVESTORS AND ANALYSTS

Call ING Prime Rate Trust
(800) 336-3436

THE TRUST HAS NOT AUTHORIZED ANY PERSON TO PROVIDE YOU WITH ANY INFORMATION OR
TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THIS OFFER. YOU SHOULD RELY ONLY ON THE INFORMATION IN THIS
PROSPECTUS OR OTHER INFORMATION TO WHICH WE HAVE REFERRED YOU. THIS PROSPECTUS
IS NOT AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY ANY SECURITY
OTHER THAN THE COMMON SHARES OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY THE COMMON SHARES BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN
OFFER OR SOLICITATION. THE DELIVERY OF THIS PROSPECTUS OR ANY SALE MADE PURSUANT
TO THIS PROSPECTUS DOES NOT IMPLY THAT THE INFORMATION CONTAINED IN THIS
PROSPECTUS IS CORRECT AS OF ANY TIME AFTER THE DATE OF THIS PROSPECTUS. HOWEVER,
IF ANY MATERIAL CHANGE OCCURS WHILE THIS PROSPECTUS IS REQUIRED BY LAW TO BE
DELIVERED, THIS PROSPECTUS WILL BE AMENDED OR SUPPLEMENTED.

WHEN CONTACTING THE SEC, YOU WILL WANT TO REFER TO THE TRUST'S SEC FILE NUMBER.
THE FILE NUMBER IS AS FOLLOWS: 1940 Act File No. 811-5410PRTPR0S0703-070103

[INGO FUNDS LOGO]

PRTPROS0703-070103

ING PRIME RATE TRUST

7337 East Doubletree Ranch Road

Scottsdale, Arizona 85258

STATEMENT OF ADDITIONAL INFORMATION

JULY 1, 2004

ING Prime Rate Trust ("Trust") is a diversified, closed-end management
investment company registered under the Investment Company Act of 1940, as
amended ("1940 Act"). The Trust's investment objective is to provide investors
with as high a level of current income as is consistent with the preservation of
capital. There is no assurance that the Trust will achieve its investment
objective. The Trust is managed by ING Investments, LLC ("ING Investments" or
"Investment Manager") and sub-advised by ING Investment Management Co. ("INGIM"
or "Sub-Adviser"), formerly known as Aeltus Investment Management, Inc.

This Statement of Additional Information ("SAI") does not constitute a
prospectus, but should be read in conjunction with the Prospectus relating
thereto dated July 1, 2004. This SAI does not include all information that a
prospective investor should consider before purchasing Common Shares in this
offering, and investors should obtain and read the Prospectus prior to
purchasing such shares. A copy of the Prospectus may be obtained without charge
by calling the Investment Manager at (800) 992-0180.

TABLE OF CONTENTS

PAGE

CHANGE OF NAME 2
INVESTMENT OBJECTIVE 2
INVESTMENT RESTRICTIONS 2
ADDITIONAL INFORMATION ABOUT INVESTMENTS AND INVESTMENT TECHNIQUES 4
TRUSTEES AND OFFICERS
COMPENSATION TABLE 10
CODE OF ETHICS 12
INVESTMENT MANAGEMENT AND OTHER SERVICE PROVIDERS 13
PORTFOLIO TRANSACTIONS 17
NET ASSET VALUE 19
PLANS OF DISTRIBUTION 22
FEDERAL TAXATION 26
ADVERTISING AND PERFORMANCE DATA 30
GENERAL INFORMATION 32
FINANCIAL STATEMENTS 32

The Prospectus and SAI omit certain information contained in the
registration statement filed with the Securities and Exchange Commission
("Commission" or "SEC"), Washington, DC. The registration statement may be
obtained from the Commission upon payment of the fee prescribed, or inspected at
the Commission's office for no charge. The registration statement is also
available on the Commission's website (www.sec.gov).

CHANGE OF NAME

The Trust changed its name from Pilgrim Prime Rate Trust to Pilgrim
America Prime Rate Trust in April 1996, and then changed its name back to
Pilgrim Prime Rate Trust on November 16, 1998. Effective March 1, 2002, the
Trust changed its name to ING Prime Rate Trust.

INVESTMENT OBJECTIVE

The Trust's investment objective is to obtain as high a level of
current income as is consistent with the preservation of capital. The Trust
seeks to achieve its investment objective by investing under normal
circumstances at least 80% of its net assets, plus the amount of any borrowings
for investment purposes, in higher yielding, U.S. dollar denominated, floating
rate secured senior loans ("Senior Loans"). These Senior Loans are typically
below investment grade credit quality.

The Trust only invests in Senior Loans made to corporations or other
business entities organized under U.S. or Canadian law and which are domiciled
in the U.S., Canada or in U.S. territories or possessions. The Trust can also
invest up to 20% of its total assets in other investments, including unsecured
loans, subordinated loans, short-term debt instruments, equity securities
acquired in connection with investments in loans and other instruments as
described under "Additional Information About Investments and Investment
Techniques." During periods when, in the opinion of the Trust's Investment
Manager or Sub-Adviser, a temporary defensive posture in the market is
appropriate, the Trust may hold up to 100% of its assets in cash and/or in
short-term debt instruments.

INVESTMENT RESTRICTIONS

The Trust has adopted the following restrictions relating to its
investments and activities, which may not be changed without a Majority Vote, as
defined in the 1940 Act. The Trust may not:

1. Issue senior securities, except insofar as the Trust may be
deemed to have issued a senior security by reason of (i) entering into certain
interest rate hedging transactions, (ii) entering into reverse repurchase
agreements, or (iii) borrowing money in an amount not exceeding 33 1/3%, or
such other percentage permitted by law, of the Trust's total assets (including
the borrowed amount) less all liabilities other than borrowings, or (iv) issuing
a class or classes of preferred shares in an amount not exceeding 50%, or such
other percentage permitted by law, of the Trust's total assets less all
liabilities and indebtedness not represented by senior securities.

2. Invest more than 25% of its total assets in any industry.

3. Invest in marketable warrants other than those acquired in
conjunction with Senior Loans and such warrants will not constitute more than 5%
of its assets.

4. Make investments in any one issuer other than U.S. government
securities if, immediately after such purchase or acquisition, more than 5% of
the value of the Trust's total assets would be invested in such issuer, or the
Trust would own more than 25% of any outstanding issue, except that up to 25% of
the Trust's total assets may be invested without regard to the foregoing
restrictions. For the purpose of the foregoing restriction, the Trust will
consider the borrower of a Senior Loan to be the issuer of such Senior Loan. In
addition, with respect to a Senior Loan under which the Trust does not have
privity with the borrower or would not have a direct cause of action against the
borrower in the event of the failure of the borrower to pay scheduled principal
or interest, the Trust will also separately

meet the foregoing requirements and consider each interpositioned bank (a lender
from which the Trust acquires a Senior Loan) to be an issuer of the Senior Loan.

5. Act as an underwriter of securities, except to the extent that it
may be deemed to act as an underwriter in certain cases when disposing of its
portfolio investments or acting as an agent or one of a group of co-agents in
originating Senior Loans.

6. Purchase or sell equity securities (except that the Trust may,
incidental to the purchase or ownership of an interest in a Senior Loan, or as
part of a borrower reorganization, acquire, sell and exercise warrants and/or
acquire or sell other equity securities), real estate, real estate mortgage
loans, commodities, commodity futures contracts, or oil or gas exploration or
development programs; or sell short, purchase or sell straddles, spreads, or
combinations thereof, or write put or call options.

7. Make loans of money or property to any person, except that the
Trust (i) may make loans to corporations or other business entities, or enter
into leases or other arrangements that have the characteristics of a loan; (ii)
may lend portfolio instruments; and (iii) may acquire securities subject to
repurchase agreements.

8. Purchase shares of other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization.

9. Make investments on margin or hypothecate, mortgage or pledge any
of its assets except for the purpose of securing borrowings as described above
in connection with the issuance of senior securities and then only in an amount
up to 33 1/3% (50% in the case of the issuance of a preferred class of shares),
or such other percentage permitted by law, of the value of the Trust's total
assets (including, with respect to borrowings, the amount borrowed) less all
liabilities other than borrowings (or, in the case of the issuance of senior
securities, less all liabilities and indebtedness not represented by senior
securities).

If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage resulting from a change in value of the
Trust's investments or amount of total assets will not be considered a violation
of any of the foregoing restrictions.

There is no limitation on the percentage of the Trust's total assets
that may be invested in instruments which are not readily marketable or subject
to restrictions on resale, and to the extent the Trust invests in such
instruments, the Trust's portfolio should be considered illiquid. The extent to
which the Trust invests in such instruments may affect its ability to realize
the net asset value ("NAV") of the Trust in the event of the voluntary or
involuntary liquidation of its assets.

The Trust has also adopted a non-fundamental policy as required by Rule
35d-1 under the 1940 Act to invest, under normal circumstances, at least 80% of
its net assets, plus the amount of any borrowings for investment purposes, in
higher yielding, U.S. dollar denominated, floating rate secured senior loans.
The Trust has also adopted a policy to provide its shareholders with at least 60
days' prior notice of any change in such investment policy. If, subsequent to an
investment, the 80% requirement is no longer met, the Trust's future investments
will be made in a manner that will bring the Trust into compliance with this
policy.

ADDITIONAL INFORMATION ABOUT INVESTMENTS AND INVESTMENT TECHNIQUES

Some of the different types of securities in which the Trust may
invest, subject to its investment objective, policies and restrictions, are
described in the prospectus under "Investment Objective and Policies."
Additional information concerning certain of the Trust's investments and
investment techniques is set forth below.

EQUITY SECURITIES

In connection with its purchase or holding of interests in Senior
Loans, the Trust may acquire (and subsequently sell) equity securities or
exercise warrants that it receives. The Trust will acquire such interests only
as an incident to the intended purchase or ownership of loans or in connection
with a reorganization of a borrower or its debt. The Trust normally will not
hold more than 20% of its total assets in equity securities. Equity securities
will not be treated as Senior Loans; therefore, an investment in such securities
will not count toward the 80% of the Trust's net assets, plus the amount of any
borrowings for investment purposes, that normally will be invested in Senior
Loans. Equity securities are subject to financial and market risks and can be
expected to fluctuate in value.

LEASE PARTICIPATIONS

The credit quality standards and general requirements that the Trust
applies to Lease Participations including collateral quality, the credit quality
of the borrower and the likelihood of payback are substantially the same as
those applied to conventional Senior Loans. A Lease Participation is also
required to have a floating interest rate that is indexed to the federal funds
rate, London Inter-Bank Offered Rate ("LIBOR"), or Prime Rate in order to be
eligible for investment.

The Office of the Comptroller of the Currency has established
regulations which set forth circumstances under which national banks may engage
in lease financings. Among other things, the regulation requires that a lease be
a net-full payout lease representing the noncancelable obligation of the lessee,
and that the bank make certain determinations with respect to any estimated
residual value of leased property relied upon by the bank to yield a full return
on the lease. The Trust may invest in lease financings only if the Lease
Participation meets these banking law requirements.

INTEREST RATES AND PORTFOLIO MATURITY

Interest rates on loans in which the Trust invests adjust periodically.
The interest rates are adjusted based on a base rate plus a premium or spread
over the base rate. The base rate usually is LIBOR, the Federal Reserve federal
funds rate, the Prime Rate or other base lending rates used by commercial
lenders. LIBOR usually is an average of the interest rates quoted by several
designated banks as the rates at which they pay interest to major depositors in
the London interbank market on U.S. dollar denominated deposits. The Investment
Manager and Sub-Adviser believe that changes in short-term LIBOR rates are
closely related to changes in the Federal Reserve federal funds rate, although
the two are not technically linked. The Prime Rate quoted by a major U.S. bank
is generally the interest rate at which that bank is willing to lend U.S.
dollars to its most creditworthy borrowers, although it may not be the bank's
lowest available rate.

Loans in which the Trust invests typically have interest rates which
reset at least quarterly and may reset as frequently as daily. The maximum
duration of an interest rate reset on any loan in which the Trust can invest is
one year. The maximum maturity on any loan in which the Trust can invest is ten
years. The Trust's portfolio of loans will ordinarily have a dollar-weighted
average time until the next interest rate adjustment of 90 days or less,
although the time may exceed 90 days. The Trust may find it

possible and appropriate to use interest rate swaps and other investment
practices to shorten the effective interest rate adjustment period of loans. If
the Trust does so, it will consider the shortened period to be the adjustment
period of the loan. As short-term interest rates rise, interest payable to the
Trust should increase. As short-term interest rates decline, interest payable to
the Trust should decrease. The amount of time that will pass before the Trust
experiences the effects of changing short-term interest rates will depend on the
dollar-weighted average time until the next interest rate adjustment on the
Trust's portfolio of loans.

Loans usually have mandatory and optional prepayment provisions.
Because of prepayments, the actual remaining maturity of a loan may be
considerably less than its stated maturity. If a loan is prepaid, the Trust will
have to reinvest the proceeds in other loans or securities which may have a
lower fixed spread over its base rate. In such a case, the amount of interest
paid to the Trust would likely decrease.

In the event of a change in the benchmark interest rate on a loan, the
rate payable to lenders under the loan will, in turn, change at the next
scheduled reset date. If the benchmark rate goes up, the Trust as lender would
earn interest at a higher rate, but only on and after the reset date. If the
benchmark rate goes down, the Trust as lender would earn interest at a lower
rate, but only on and after the reset date.

During normal market conditions, changes in market interest rates will
affect the Trust in certain ways. The principal effect will be that the yield on
the Trust's Common Shares will tend to rise or fall as market interest rates
rise and fall. This is because almost all of the assets in which the Trust
invests pay interest at rates which float in response to changes in market
rates. However, because the interest rates on the Trust's assets reset over
time, there will be an imperfect correlation between changes in market rates and
changes to rates on the portfolio as a whole. This means that changes to the
rate of interest paid on the portfolio as a whole will tend to lag behind
changes in market rates.

Market interest rate changes may also cause the Trust's NAV to
experience moderate volatility. This is because the value of a loan asset in the
Trust is partially a function of whether it is paying what the market perceives
to be a market rate of interest for the particular loan, given its individual
credit and other characteristics. If market interest rates change, a loan's
value could be affected to the extent the interest rate paid on that loan does
not reset at the same time. As discussed above, the rates of interest paid on
the loans in which the Trust invests have a weighted average reset period that
typically is less than 90 days. Therefore, the impact of the lag between a
change in market interest rates and the change in the overall rate on the
portfolio is expected to be minimal.

Finally, to the extent that changes in market rates of interest are
reflected not in a change to a base rate such as LIBOR but in a change in the
spread over the base rate which is payable on loans of the type and quality in
which the Trust invests, the Trust's NAV could be adversely affected. Again,
this is because the value of a loan asset in the Trust is partially a function
of whether it is paying what the market perceives to be a market rate of
interest for the particular loan, given its individual credit and other
characteristics. However, unlike changes in market rates of interest for which
there is only a temporary lag before the portfolio reflects those changes,
changes in a loan's value based on changes in the market spread on loans in the
Trust's portfolio may be of longer duration.

OTHER INVESTMENTS

Assets not invested in Senior Loans will generally consist of other
instruments, including unsecured loans and subordinated loans up to a maximum of
5% of the Trust's net assets, short-term debt instruments with remaining
maturities of 120 days or less (which may have yields tied to the Prime Rate,
commercial paper rates, the federal funds rate or LIBOR) and equity securities
acquired in connection with investments in loans. Short-term debt instruments
may include (i) commercial paper rated A-1 by

Standard & Poor's Ratings Services or P-1 by Moody's Investors Service, Inc., or
of comparable quality as determined by the Investment Manager or Sub-Adviser,
(ii) certificates of deposit, bankers' acceptances, and other bank deposits and
obligations, and (iii) securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities. During periods when, in the judgment of the
Investment Manager or Sub-Adviser, a temporary defensive posture in the market
is appropriate, the Trust may hold up to 100% of its assets in cash and/or in
short-term debt instruments.

REPURCHASE AGREEMENTS

The Trust has the ability, pursuant to its investment objective and
policies, to enter into repurchase agreements. Such agreements may be considered
to be loans by the Trust for purposes of the 1940 Act. Each repurchase agreement
must be collateralized fully, in accordance with the provisions of Rule 5b-3
under the 1940 Act, at all times. Pursuant to such repurchase agreements, the
Trust acquires securities from financial institutions such as brokers, dealers
and banks, subject to the seller's agreement to repurchase and the Trust's
agreement to resell such securities at a mutually agreed upon date and price.
The term of such an agreement is generally quite short, possibly overnight or
for a few days, although it may extend over a number of months (up to one year)
from the date of delivery. The repurchase price generally equals the price paid
by the Trust plus interest negotiated on the basis of current short-term rates
(which may be more or less than the rate on the underlying portfolio security).
The securities underlying a repurchase agreement will be marked to market every
business day so that the value of the collateral is at least equal to the value
of the loan, including the accrued interest thereon, and the Investment Manager
or Sub-Adviser will monitor the value of the collateral. Securities subject to
repurchase agreements will be held by the Custodian or in the Federal
Reserve/Treasury Book-Entry System or an equivalent foreign system. If the
seller defaults on its repurchase obligation, the Trust will suffer a loss to
the extent that the proceeds from a sale of the underlying securities is less
than the repurchase price under the agreement. Bankruptcy or insolvency of such
a defaulting seller may cause the Trust's rights with respect to such securities
to be delayed or limited. To mitigate this risk, the Trust may only enter into
repurchase agreements that qualify for an exclusion from any automatic stay of
creditors' rights against the counterparty under applicable insolvency law in
the event of the counterparty's insolvency.

REVERSE REPURCHASE AGREEMENTS

The Trust has the ability, pursuant to its investment objective and
policies, to enter into reverse repurchase agreements. A reverse repurchase
agreement is an instrument under which the Trust may sell an underlying debt
instrument and simultaneously obtain the commitment of the purchaser to sell the
security back to the Trust at an agreed upon price on an agreed upon date.
Reverse repurchase agreements will be considered borrowings by the Trust, and as
such are subject to the restrictions on borrowing. Borrowings by the Trust
create an opportunity for greater total return, but at the same time, increase
exposure to capital risk. The Trust will maintain in a segregated account with
its custodian cash or liquid high grade portfolio securities in an amount
sufficient to cover its obligations with respect to the reverse repurchase
agreements. The Trust will receive payment for such securities only upon
physical delivery or evidence of book entry transfer by its custodian.
Regulations of the Commission require either that securities sold by the Trust
under a reverse repurchase agreement be segregated pending repurchase or that
the proceeds be segregated on the Trust's books and records pending repurchase.
Reverse repurchase agreements may involve certain risks in the event of default
or insolvency of the other party, including possible loss from delays or
restrictions upon the Trust's ability to dispose of the underlying securities.
An additional risk is that the market value of securities sold by the Trust
under a reverse repurchase agreement could decline below the price at which the
Trust is obligated to repurchase them.

LENDING LOANS AND OTHER PORTFOLIO INSTRUMENTS

To generate additional income, the Trust may lend its portfolio
securities including an interest in a Senior Loan, in an amount equal to up to
33 1/3% of total Trust assets to broker-dealers, major banks, or other
recognized domestic institutional borrowers of securities. No lending may be
made with any companies affiliated with the Investment Manager or Sub-Adviser.
During the time portfolio securities are on loan, the borrower pays the Trust
any dividends or interest paid on such securities, and the Trust may invest the
cash collateral and earn additional income, or it may receive an agreed-upon
amount of interest income from the borrower who has delivered equivalent
collateral or a letter of credit. As with other extensions of credit, there are
risks of delay in recovery or even loss of rights in the collateral should the
borrower fail financially.

The Trust may seek to increase its income by lending financial
instruments in its portfolio in accordance with present regulatory policies,
including those of the Board of Governors of the Federal Reserve System and the
Commission. The lending of financial instruments is a common practice in the
securities industry. The loans are required to be secured continuously by
collateral, consistent with the requirements of the 1940 Act discussed below,
maintained on a current basis at an amount at least equal to the market value of
the portfolio instruments loaned. The Trust has the right to call a loan and
obtain the portfolio instruments loaned at any time on such notice as specified
in the transaction documents. For the duration of the loan, the Trust will
continue to receive the equivalent of the interest paid by the issuer on the
portfolio instruments loaned and may also receive compensation for the loan of
the financial instrument. Any gain or loss in the market price of the
instruments loaned that may occur during the term of the loan will be for the
account of the Trust.

The Trust may lend its portfolio instruments so long as the terms and
the structure of such loans are not inconsistent with the requirements of the
1940 Act, which currently require that (a) the borrower pledge and maintain with
the Trust collateral consisting of cash, a letter of credit issued by a domestic
U.S. bank, or securities issued or guaranteed by the U.S. government having a
value at all times not less than 100% of the value of the instruments loaned,
(b) the borrowers add to such collateral whenever the price of the instruments
loaned rises (I.E., the value of the loan is marked to market on a daily basis),
(c) the loan be made subject to termination by the Trust at any time, and (d)
the Trust receives reasonable interest on the loan (which may include the
Trust's investing any cash collateral in interest bearing short-term
investments), any distributions on the loaned instruments and increase in their
market value. The Trust may lend its portfolio instruments to member banks of
the Federal Reserve System, members of the New York Stock Exchange ("NYSE") or
other entities determined by the Investment Manager or Sub-Adviser to be
creditworthy. All relevant facts and circumstances, including the
creditworthiness of the qualified institution, will be monitored by the
Investment Manager or Sub-Adviser, and will be considered in making decisions
with respect to the lending of portfolio instruments.

The Trust may pay reasonable negotiated fees in connection with loaned
instruments. In addition, voting rights may pass with loaned securities, but if
a material event were to occur affecting such a loan, the Trust will retain the
right to call the loan and vote the securities. If a default occurs by the other
party to such transaction, the Trust will have contractual remedies pursuant to
the agreements related to the transaction, but such remedies may be subject to
bankruptcy and insolvency laws which could materially and adversely affect the
Trust's rights as a creditor. However, the loans will be made only to firms
deemed by the Investment Manager or Sub-Adviser to be of good financial standing
and when, in the judgment of the Investment Manager or Sub-Adviser, the
consideration which can be earned currently from loans of this type justifies
the attendant risk.

INTEREST RATE HEDGING TRANSACTIONS

The Trust has the ability, pursuant to its investment objectives and
policies, to engage in certain hedging transactions including interest rate
swaps and the purchase or sale of interest rate caps and floors. The Trust may
undertake these transactions primarily for the following reasons: to preserve a
return on or value of a particular investment or portion of the Trust's
portfolio, to protect against decreases in the anticipated rate of return on
floating or variable rate financial instruments which the Trust owns or
anticipates purchasing at a later date, or for other risk management strategies
such as managing the effective dollar-weighted average duration of the Trust's
portfolio. Market conditions will determine whether and in what circumstances
the Trust would employ any of the hedging techniques described below.

Interest rate swaps involve the exchange by the Trust with another
party of their respective commitments to pay or receive interest, E.G., an
exchange of an obligation to make floating rate payments on a specified dollar
amount referred to as the "notional" principal amount for an obligation to make
fixed rate payments. For example, the Trust may seek to shorten the effective
interest rate redetermination period of a Senior Loan in its portfolio that has
an interest rate redetermination period of one year. The Trust could exchange
its right to receive fixed income payments for one year from a borrower for the
right to receive payments under an obligation that readjusts monthly. In such an
event, the Trust would consider the interest rate redetermination period of such
Senior Loan to be the shorter period. The purchase of an interest rate cap
entitles the purchaser, to the extent that a specified index exceeds a
predetermined interest rate, to receive payments of interest on a notional
principal amount from the party selling such interest rate cap. The purchase of
an interest rate floor entitles the purchaser, to the extent that a specified
index falls below a predetermined interest rate, to receive payments of interest
on a notional principal amount from the party selling such interest rate floor.
The Trust will not enter into swaps, caps or floors if, on a net basis, the
aggregate notional principal amount with respect to such agreements exceeds the
net assets of the Trust or to the extent the purchase of swaps, caps or floors
would be inconsistent with the Trust's other investment restrictions.

The Trust will not treat swaps covered in accordance with applicable
regulatory guidance as senior securities. The Trust will usually enter into
interest rate swaps on a net basis, I.E., where the two parties make net
payments with the Trust receiving or paying, as the case may be, only the net
amount of the two payments. The net amount of the excess, if any, of the Trust's
obligations over its entitlement with respect to each interest rate swap will be
accrued and an amount of cash or liquid securities having an aggregate NAV at
least equal to the accrued excess will be maintained in a segregated account. If
the Trust enters into a swap on other than a net basis, the Trust will maintain
in the segregated account the full amount of the Trust's obligations under each
such swap. The Trust may enter into swaps, caps and floors with member banks of
the Federal Reserve System, members of the NYSE or other entities determined by
ING Investments. If a default occurs by the other party to such transaction, the
Trust will have contractual remedies pursuant to the agreements related to the
transaction but such remedies may be subject to bankruptcy and insolvency laws
which could materially and adversely affect the Trust's rights as a creditor.

The swap, cap and floor market has grown substantially in recent years
with a large number of banks and financial services firms acting both as
principals and as agents utilizing standardized swap documentation. As a result,
this market has become relatively liquid. There can be no assurance, however,
that the Trust will be able to enter into interest rate swaps or to purchase
interest rate caps or floors at prices or on terms the Investment Manager or
Sub-Adviser believes are advantageous to the Trust. In addition, although the
terms of interest rate swaps, caps and floors may provide for termination, there
can be no assurance that the Trust will be able to terminate an interest rate
swap or to sell or offset interest rate caps or floors that it has purchased.

The successful utilization of hedging and risk management transactions
requires skills different from those needed in the selection of the Trust's
portfolio securities and depends on the Investment Manager's or Sub-Adviser's
ability to predict correctly the direction and degree of movements in interest
rates. Although the Trust believes that use of the hedging and risk management
techniques described above will benefit the Trust, if the Investment Manager's
or Sub-Adviser's judgment about the direction or extent of the movement in
interest rates is incorrect, the Trust's overall performance would be worse than
if it had not entered into any such transactions. The Trust will incur brokerage
and other costs in connection with its hedging transactions.

ORIGINATING SENIOR LOANS

The Trust has the ability to act as an agent in originating and
administering a loan on behalf of all lenders or as one of a group of co-agents
in originating Senior Loans. However, the Trust has not acted as agent or
co-agent on any loans, and has no present intention of doing so in the future.
An agent for a loan is required to administer and manage the Senior Loan and to
service or monitor the collateral. The agent is also responsible for the
collection of principal and interest and fee payments from the borrower and the
apportionment of these payments to the credit of all lenders which are parties
to the loan agreement. The agent is charged with the responsibility of
monitoring compliance by the borrower with the restrictive covenants in the loan
agreement and of notifying the lenders of any adverse change in the borrower's
financial condition. In addition, the agent generally is responsible for
determining that the lenders have obtained a perfected security interest in the
collateral securing the Senior Loan.

Lenders generally rely on the agent to collect their portion of the
payments on a Senior Loan and to use the appropriate creditor remedies against
the borrower. Typically under loan agreements, the agent is given broad
discretion in enforcing the loan agreement and is obligated to use the same care
it would use in the management of its own property. The borrower compensates the
agent for these services. Such compensation may include special fees paid on
structuring and funding the Senior Loan and other fees on a continuing basis.
The precise duties and rights of an agent are defined in the loan agreement.

When the Trust is an agent, it has, as a party to the loan agreement, a
direct contractual relationship with the borrower and, prior to allocating
portions of the Senior Loan to the lenders, if any, assumes all risks associated
with the Senior Loan. The agent may enforce compliance by the borrower with the
terms of the loan agreement. Agents also have voting and consent rights under
the applicable loan agreement. Action subject to agent vote or consent generally
requires the vote or consent of the holders of some specified percentage of the
outstanding principal amount of the Senior Loan, which percentage varies
depending on the relative loan agreement. Certain decisions, such as reducing
the amount or increasing the time for payment of interest on or repayment of
principal of a Senior Loan, or relating collateral therefor, frequently require
the unanimous vote or consent of all lenders affected. When the Trust
participates as an original lender, it typically acquires the loan at par.

Pursuant to the terms of a loan agreement, the agent typically has sole
responsibility for servicing and administering a loan on behalf of the other
lenders. Each lender in a Senior Loan is generally responsible for performing
its own credit analysis and its own investigation of the financial condition of
the borrower. Generally, loan agreements will hold the agent liable for any
action taken or omitted that amounts to gross negligence or willful misconduct.
In the event of a borrower's default on a loan, the loan agreements provide that
the lenders do not have recourse against the Trust for its activities as agent.
Instead, lenders will be required to look to the borrower for recourse.

Acting in the capacity of an agent in a Senior Loan may subject the
Trust to certain risks in addition to those associated with the Trust's current
role as lender. An agent is charged with the above described duties and
responsibilities to lenders and borrowers subject to the terms of the loan
agreement.

Failure to adequately discharge such responsibilities in accordance with the
standard of care set forth in the loan agreement may expose the Trust to
liability for breach of contract. If a relationship of trust is found between
the agent and the lenders, the agent will be held to a higher standard of
conduct in administering the loan. In consideration of such risks, the Trust
will invest no more than 10% of its total assets in Senior Loans in which it
acts as agent or co-agent and the size of any individual loan will not exceed 5%
of the Trust's total assets.

ADDITIONAL INFORMATION ON SENIOR LOANS

Senior Loans are direct obligations of corporations or other business
entities and are arranged by banks or other commercial lending institutions and
made generally to finance internal growth, mergers, acquisitions, stock
repurchases, and leveraged buyouts. Senior Loans usually include restrictive
covenants which must be maintained by the borrower. Such covenants, in addition
to the timely payment of interest and principal, may include mandatory
prepayment provisions arising from free cash flow and restrictions on dividend
payments, and usually state that a borrower must maintain specific minimum
financial ratios as well as establishing limits on total debt. A breach of
covenant, which is not waived by the agent, is normally an event of
acceleration, I.E., the agent has the right to call the outstanding Senior Loan.
In addition, loan covenants may include mandatory prepayment provisions stemming
from free cash flow. Free cash flow is cash that is in excess of capital
expenditures plus debt service requirements of principal and interest. The free
cash flow shall be applied to prepay the Senior Loan in an order of maturity
described in the loan documents. Under certain interests in Senior Loans, the
Trust may have an obligation to make additional loans upon demand by the
borrower. The Trust intends to reserve against such contingent obligations by
segregating sufficient assets in high quality short-term liquid investments or
borrowing to cover such obligations.

In a typical interest in a Senior Loan, the agent administers the loan
and has the right to monitor the collateral. The agent is also required to
segregate the principal and interest payments received from the borrower and to
hold these payments for the benefit of the lenders. The Trust normally looks to
the agent to collect and distribute principal of and interest on a Senior Loan.
Furthermore, the Trust looks to the agent to use normal credit remedies, such as
to foreclose on collateral, monitor credit loan covenants, and notify the
lenders of any adverse changes in the borrower's financial condition or
declarations of insolvency. At times the Trust may also negotiate with the agent
regarding the agent's exercise of credit remedies under a Senior Loan. The agent
is compensated for these services by the borrower as set forth in the loan
agreement. Such compensation may take the form of a fee or other amount paid
upon the making of the Senior Loan and/or an ongoing fee or other amount.

The loan agreements in connection with Senior Loans set forth the
standard of care to be exercised by the agents on behalf of the lenders and
usually provide for the termination of the agent's agency status in the event
that it fails to act properly, becomes insolvent, enters FDIC receivership, or
if not FDIC insured, enters into bankruptcy or if the agent resigns. In the
event an agent is unable to perform its obligations as agent, another lender
would generally serve in that capacity.

The Trust believes that the principal credit risk associated with
acquiring Senior Loans from another lender is the credit risk associated with
the borrower of the underlying Senior Loan. The Trust may incur additional
credit risk, however, when the Trust acquires a participation in a Senior Loan
from another lender because the Trust must assume the risk of insolvency or
bankruptcy of the other lender from which the Senior Loan was acquired.

Senior Loans, unlike certain bonds, usually do not have call
protection. This means that investments comprising the Trust's portfolio, while
having a stated one to ten-year term, may be prepaid, often without penalty. The
Trust generally holds Senior Loans to maturity unless it has become necessary

to sell them to satisfy any shareholder tender offers or to adjust the Trust's
portfolio in accordance with the Investment Manager's or Sub-Adviser's view of
current or expected economic or specific industry or borrower conditions.

Senior Loans frequently require full or partial prepayment of a loan
when there are asset sales or a securities issuance. Prepayments on Senior Loans
may also be made by the borrower at its election. The rate of such prepayments
may be affected by, among other things, general business and economic
conditions, as well as the financial status of the borrower. Prepayment would
cause the actual duration of a Senior Loan to be shorter than its stated
maturity. Prepayment may be deferred by the Trust. This should, however, allow
the Trust to reinvest in a new loan and recognize as income any unamortized loan
fees. In many cases this will result in a new facility fee payable to the Trust.

Because interest rates paid on these Senior Loans fluctuate
periodically with the market, it is expected that the prepayment and a
subsequent purchase of a new Senior Loan by the Trust will not have a material
adverse impact on the yield of the portfolio. See "Portfolio Transactions."

Under a Senior Loan, the borrower generally must pledge as collateral
assets which may include one or more of the following: cash, accounts
receivable, inventory, property, plant and equipment, both common and preferred
stock in its subsidiaries, trademarks, copyrights, patent rights and franchise
value. The Trust may also receive guarantees as a form of collateral. In some
instances, a Senior Loan may be secured only by stock in a borrower or its
affiliates. There is no assurance, however, that the borrower would provide
additional collateral or that the liquidation of the existing collateral would
satisfy the borrower's obligation in the event of nonpayment of scheduled
interest or principal, or that such collateral could be readily liquidated.

The Trust may be required to pay and receive various fees and
commissions in the process of purchasing, selling and holding Senior Loans. The
fee component may include any, or a combination of, the following elements:
arrangement fees, non-use fees, facility fees, letter of credit fees and ticking
fees. Arrangement fees are paid at the commencement of a loan as compensation
for the initiation of the transaction. A non-use fee is paid based upon the
amount committed but not used under the loan. Facility fees are on-going annual
fees paid in connection with a loan. Letter of credit fees are paid if a loan
involves a letter of credit. Ticking fees are paid from the initial commitment
indication until loan closing if for an extended period. The amount of fees is
negotiated at the time of transaction.

MANAGEMENT OF THE TRUST

Set forth in the table below is information about each Trustee of the
ING Funds.

NUMBER OF
PORTFOLIOS IN
PORTFOLIO
TERM OF OFFICE COMPLEX
POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) - OVERSEEN BY OTHER DIRECTORSHIPS
NAME, ADDRESS AND AGE WITH TRUST TIME SERVED(1) DURING THE PAST 5 YEARS TRUSTEE HELD BY TRUSTEE
-----------------------------------------------------------------------------------------------------------------------------------

INDEPENDENT TRUSTEES

PAUL S. DOHERTY Trustee October 1993 - Mr. Doherty is President 122
7337 E. Doubletree Ranch Rd. Present and Partner, Doherty,
Scottsdale, Arizona 85258 Wallace, Pillsbury and
Date of Birth: 04/28/1934 Murphy, P.C., Attorneys
(1996 -Present); and
Trustee of each of the
funds managed by
Northstar Investment
Management Corporation
(1993 - 1999).

J. MICHAEL EARLEY Trustee February 2002 - President and Chief 122
7337 E. Doubletree Ranch Rd. Present Executive Officer,
Scottsdale, Arizona 85258 Bankers Trust Company,
Date of Birth: 05/02/1945 N.A. (1992 - Present).

R. BARBARA GITENSTEIN Trustee February 2002 - President, College of New 122
7337 E. Doubletree Ranch Rd. Present Jersey (1999 - Present).
Scottsdale, Arizona 85258
Date of Birth: 02/18/1948

WALTER H. MAY Trustee May 1995 - Retired. Formerly, 122 Trustee, Best Prep
7337 E. Doubletree Ranch Rd. Present Managing Director and Charity (1991 -
Scottsdale, Arizona 85258 Director of Marketing, Present).
Date of Birth: 12/21/1936 Piper Jaffray, Inc.;
Trustee of each of the
funds managed by
Northstar Investment
Management Corporation
(1996 - 1999).

JOCK PATTON Trustee October 1999 - Private Investor (June 122 Director, Hypercom, Inc.
7337 E. Doubletree Ranch Rd. Present 1997 - Present). (January 1999 -
Scottsdale, Arizona 85258 Formerly, Director and Present); JDA Software
Date of Birth: 12/11/1945 Chief Executive Officer, Group, Inc. (January
Rainbow Multimedia Group, 1999 - Present).
Inc. (January 1999 -
December 2001); Director
of Stuart Entertainment,
Inc.

DAVID W.C. PUTNAM Trustee October 1999 - President and Director, 122 Trustee, Anchor
7337 E. Doubletree Ranch Rd. Present F.L. Putnam Securities International Bond
Scottsdale, Arizona 85258 Company, Inc. and its Trust (December 2000 -
Date of Birth: 10/08/1939 affiliates; President, Present); F.L. Putnam
Secretary and Trustee, Foundation (December
The Principled Equity 2000 - Present);
Market Fund. Formerly, Progressive Capital
Trustee, Trust Realty Accumulation Trust
Corp.; Anchor Investment (August 1998 -
Trust; Bow Ridge Mining Present); Principled
Company and each of the Equity Market Fund
funds managed by (November 1996 -
Northstar Investment Present), Mercy
Management Corporation Endowment Foundation
(1994 - 1999). (1995 - Present);
Director, F.L. Putnam
Investment Management
Company (December 2001
- Present); Asian
American Bank and Trust
Company (June 1992 -
Present); Notre Dame

Health Care Center
(1991 - Present) F.L.
Putnam Securities
Company, Inc. (June
1978 - Present); and an
Honorary Trustee, Mercy
Hospital (1973 -
Present).

BLAINE E. RIEKE Trustee February 2001 - General Partner, 122 Trustee, Morgan Chase
7337 E. Doubletree Ranch Rd. Present Huntington Partners Trust Co. (January 1998
Scottsdale, Arizona 85258 (January 1997 - Present). - Present).
Date of Birth: 09/10/1933 Chairman of the Board and
Trustee of each of the
funds managed by ING
Investment Management Co.
LLC (November 1998 -
February 2001).

ROGER B. VINCENT Trustee February 2002 - President, Springwell 122 Trustee, AmeriGas
7337 E. Doubletree Ranch Rd. Present Corporation (1989 - Propane, Inc. (1998 -
Scottsdale, Arizona 85258 Present). Formerly, Present).
Date of Birth: 08/26/1945 Director, Tatham
Offshore, Inc. (1996 -
2000).

RICHARD A. WEDEMEYER Trustee February 2001 - Retired. Mr. Wedemeyer 122 Trustee, Touchstone
7337 E. Doubletree Ranch Rd. Present was formerly Vice Consulting Group (1997
Scottsdale, Arizona 85258 President - Finance and - Present).
Date of Birth: 03/23/1936 Administration, Channel
Corporation (June 1996 -
April 2002). Formerly,
Trustee, First Choice
Funds (1997 - 2001); and
of each of the funds
managed by ING Investment
Management Co. LLC (1998
- 2001).

TRUSTEES WHO ARE "INTERESTED PERSONS"

THOMAS J. MCINERNEY(2) Trustee February 2001 - Chief Executive Officer, 176 Director, Hemisphere,
7337 E. Doubletree Ranch Rd. Present ING U.S. Financial Inc.; Trustee,
Scottsdale, Arizona 85258 Services (September 2001 Equitable Life
Date of Birth: 05/05/1956 - Present); General Insurance Co., Golden
Manager and Chief American Life Insurance
Executive Officer, ING Co., Life Insurance
U.S. Worksite Financial Company of Georgia,
Services (December 2000 - Midwestern United Life
Present); Member, ING Insurance Co.,
Americas Executive ReliaStar Life
Committee (2001 - Insurance Co., Security
Present); President, Life of Denver,
Chief Executive Officer Security Connecticut
and Director of Northern Life Insurance Co.,
Life Insurance Company Southland Life
(March 2001 - October Insurance Co., USG
2002), ING Aeltus Holding Annuity and Life
Company, Inc. (2000 - Company, and United
Present), ING Retail Life and Annuity
Holding Company (1998 - Insurance Co. Inc
Present), ING Life (March 2001 - Present);
Insurance and Annuity Member of the Board,
Company (September 1997 - National Commission on
November 2002) and ING Retirement Policy,
Retirement Holdings, Inc. Governor's Council on
(1997 - Present). Economic
Formerly, General Manager Competitiveness and
and Chief Executive Technology of
Officer, ING Worksite Connecticut,
Division (December 2000 - Connecticut Business
October 2001), President, and Industry
ING-SCI, Inc. (August Association, Bushnell;
1997 - December 2000); Connecticut Forum;
President, Aetna Metro
Financial Services
(August 1997 - December
2000).

Hartford Chamber of
Commerce; and is
Chairman, Concerned
Citizens for Effective
Government.

JOHN G. TURNER(3) Chairman and October 1999 - Chairman, Hillcrest 122 Director, Hormel Foods
7337 E. Doubletree Ranch Rd. Trustee Present Capital Partners (May Corporation (March 2000
Scottsdale, Arizona 85258 2002-Present); President, - Present); Shopko
Date of Birth: 10/03/1939 Turner Investment Company Stores, Inc. (August
(January 2002 - Present). 1999 - Present); and
Mr. Turner was formerly M.A. Mortenson Company
Vice Chairman of ING (March 2002 - Present).
Americas (2000 - 2002);
Chairman and Chief
Executive Officer of
ReliaStar Financial Corp.
and ReliaStar Life
Insurance Company (1993 -
2000); Chairman of
ReliaStar Life Insurance
Company of New York (1995
- 2001); Chairman of
Northern Life Insurance
Company (1992 - 2001);
Chairman and Trustee of
the Northstar affiliated
investment companies
(1993 - 2001) and
Director, Northstar
Investment Management
Corporation and its
affiliates (1993 -
1999).

(1) Trustees serve until their successors are duly elected and qualified,
subject to the Board's retirement policy which states that each duly
elected or appointed Trustee who is not an "interested person" of the
Trust, as defined in the 1940 Act ("Independent Trustees"), shall
retire from service as a Trustee at the first regularly scheduled
quarterly meeting of the Board that is held after the Trustee reaches
the age of 70. A unanimous vote of the Board may extend the retirement
date of a Trustee for up to one year. An extension may be permitted if
the retirement would trigger a requirement to hold a meeting of
shareholders of the Trust under applicable law, whether for purposes
of appointing a successor to the Trustee or if otherwise necessary
under applicable law, in which the extension would apply until such
time as the shareholder meeting can be held or is no longer needed.

(2) Mr. McInerney is an "interested person," as defined by the 1940 Act,
because of his affiliation with ING Groep N.V., the parent corporation
of the investment adviser, ING Investments and the Distributor, ING
Funds Distributor, LLC.

(3) Mr. Turner is an "interested person," as defined by the 1940 Act,
because of his affiliation with ING Groep N.V., the parent corporation
of the investment adviser, ING Investments and the Distributor, ING
Funds Distributor, LLC.

OFFICERS

Information about the ING Funds' officers are set forth in the table below:

TERM OF OFFICE AND LENGTH PRINCIPAL OCCUPATION(S) DURING
NAME, ADDRESS AND AGE POSITIONS HELD WITH THE TRUST OF TIME SERVED (1)(2) THE LAST FIVE YEARS (3)
-----------------------------------------------------------------------------------------------------------------------------------

James M. Hennessy President and Chief February 2001 - Present President and Chief Executive
7337 E. Doubletree Ranch Rd. Executive Officer Officer, ING Capital Corporation,
Scottsdale, Arizona 85258 LLC, ING Funds Services, LLC, ING
Date of Birth: 04/09/1949 Chief Operating Officer July 2000 - Present Investments, LLC (December 2001 -
Senior Executive Vice Present); Chief Operating Officer,
President July 2000 - February 2001 ING Funds Distributor, LLC (June
Executive Vice President 2000 - Present); Vice President,
ING Life Insurance and Annuity
November 1999 - July 2000 Company (December 2003 - Present);
Secretary Director, ING Capital Corporation,
LLC, ING Funds Services, LLC, ING
Investments, LLC and ING Funds
November 1999 - February 2001 Distributor, LLC (December
2000-Present); and Executive Vice
President, ING Funds Distributor,
LLC (April 1998 - Present).
Formerly, President and Chief
Executive Officer, ING Advisors,
Inc. and EAMC Liquidation Corp.
(December 2001-October 2003) and
Express America T.C., Inc.
(December 2001-September 2003);
Senior Executive Vice President,
ING Capital Corporation, LLC, ING
Funds Services, LLC, ING
Investments, LLC, ING Advisors,
Inc., Express America T.C., Inc.
and EAMC Liquidation Corp. (June
2000-December 2000); Executive Vice
President, ING Capital Corporation,
LLC, ING Funds Services, LLC, ING
Investments, LLC (April 1998-June
2000) and ING Quantitative
Management, Inc. (October
2001-September 2002); Chief
Operating Officer, ING Quantitative
Management, Inc. (October
2001-September 2002); Senior Vice
President, ING Capital Corporation,
LLC, ING Funds Services, LLC, ING
Investments, LLC and ING Funds
Distributor, LLC (April 1995-April
1998); Secretary, ING Capital
Corporation, LLC, ING Funds
Services, LLC, ING Investments,
LLC, ING Funds Distributor, LLC,
ING Advisors, Inc., Express America
T.C., Inc. and EAMC Liquidation
Corp. (April 1995-December 2000);
and Director, ING Advisors, Inc.
and EAMC Liquidation Corp.
(December 2000- October 2003), ING
Quantitative Management, Inc.
(December 2000- September 2002) and
Express America T.C., Inc.
(December 2000- September 2003).

STANLEY D. VYNER Executive Vice President November 1999 - Present Executive Vice President, ING
7337 E. Doubletree Ranch Rd. Advisors, Inc. and ING Investments,
Scottsdale, Arizona 85258 LLC (July 2000 - Present); and
Date of Birth: 05/14/1950 Chief Investment Officer, ING
Investments, LLC (July 1996 -
Present). Formerly, President and
Chief Executive Officer, ING
Investments, LLC (August 1996 -
August 2000).

MICHAEL J. ROLAND Executive Vice President, February 2002 - Present Executive Vice President, Chief
7337 E. Doubletree Ranch Rd. and Assistant Secretary Financial Officer and Treasurer,
Scottsdale, Arizona 85258 ING Funds Services, LLC, ING Funds
Date of Birth: 05/30/1958 Principal Financial Officer November 1999 - Present Distributor, LLC, ING Advisors,
Inc., ING Investments, LLC, Express
America T.C., Inc. and EAMC
Liquidation Corp. (December 2001 -
Present). Formerly, Executive

Vice President, ING Quantitative
Senior Vice President November 1999 - February 2002 Management, Inc. (December
2001-September 2002); and Senior
Vice President, ING Funds Services,
LLC, ING Investments, LLC and ING
Funds Distributor, LLC (June 1998 -
December 2001).

ROBERT S. NAKA Senior Vice President and November 1999 - Present Senior Vice President and Assistant
7337 E. Doubletree Ranch Rd. Assistant Secretary Secretary, ING Funds Services, LLC,
Scottsdale, Arizona 85258 ING Funds Distributor, LLC, ING
Date of Birth: 06/17/1963 Advisors, Inc., ING Capital
Corporation, LLC and ING
Investments, LLC (December 2001 -
Present). Formerly, Senior Vice
President and Assistant Secretary,
ING Quantitative Management, Inc.
(October 2001 - September 2002);
and Vice President, ING
Investments, LLC (April 1997 -
October 1999) and ING Funds
Services, LLC (February 1997 -
August 1999).

ROBYN L. ICHILOV Vice President and Treasurer November 1999 - Present Vice President, ING Funds Services,
7337 E. Doubletree Ranch Rd. LLC (October 2001 - Present) and
Scottsdale, Arizona 85258 ING Investments, LLC (August 1997 -
Date of Birth: 09/25/1967 Present); and Accounting Manager,
ING Investments, LLC (November 1995
- Present).

KIMBERLY A. ANDERSON Senior Vice President November 2003 - Present Senior Vice President, ING Funds
7337 E. Doubletree Ranch Rd. Services, LLC, ING Funds
Scottsdale, Arizona 85258 Vice President February 2001 - November 2003 Distributor, LLC, ING Advisors,
Date of Birth: 07/25/1964 Inc. and ING Investments, LLC
Secretary February 2001 - August 2003 (November 2003 - Present).
Assistant Vice President and Formerly, Vice President, ING Funds
Assistant Secretary November 1999 - February 2001 Services, LLC, ING Funds
Distributor, LLC, ING Advisors,
Inc. and ING Investments, LLC
(October 2001 - October 2003);
Secretary, ING Funds Services, LLC,
ING Funds Distributor, LLC, ING
Advisors, Inc. and ING Investments,
LLC (October 2001 - August 2003);
Vice President, ING Quantitative
Management, Inc. (October 2001 -
September 2002); Assistant Vice
President, ING Funds Services, LLC
(November 1999 - January 2001); and
has held various other positions
with ING Funds Services, LLC for
more than the last five years.

J. DAVID GREENWALD Vice President August 2003 - Present Vice President of Mutual Fund
7337 E. Doubletree Ranch Rd. Compliance, ING Funds Services, LLC
Scottsdale, AZ 85258 (May 2003 - Present). Formerly,
Date of Birth: 09/24/1957 Assistant Treasurer and Director of
Mutual Fund Compliance and
Operations, American Skandia, a
Prudential Financial Company
(October 1996 - May 2003).

LAUREN D. BENSINGER Vice President February 2003 - Present Vice President, ING Funds
7337 E. Doubletree Ranch Rd. Distributor, LLC and ING Funds
Scottsdale, Arizona 85258 Services, LLC (July 1995 to
Date of Birth: 02/06/1954 Present), ING Investments, LLC
(February 1996-Present) and ING
Advisors, Inc. (July 2000 -
Present); and Chief Compliance
Officer, ING Funds Distributor, LLC
(July 1995-Present), ING
Investments, LLC (October 2001 to
Present) and ING Advisors, Inc.
(July 2000 - Present). Formerly,
Vice President, ING Quantitative
Management, Inc. (July
2000-September 2002); and Chief
Compliance Officer, ING
Quantitative Management, Inc. (July
2000-September 2002).

TODD MODIC Vice President August 2003 - Present Vice President of Financial
7337 E. Doubletree Ranch Rd. Reporting, Fund Accounting of ING
Scottsdale, Arizona 85258 Assistant Vice President August 2001 - August 2003 Funds Services, LLC (September 2002
Date of Birth: 11/03/1967 - Present). Formerly, Director of
Financial Reporting, ING
Investments, LLC (March 2001-
September 2002); Director of
Financial Reporting, Axient
Communications, Inc.

(May 2000 - January 2001); and
Director of Finance, Rural/Metro
Corporation (March 1995 - May
2000).

SUSAN P. KINENS Assistant Vice President and February 2003 - Present Assistant Vice President and
7337 E. Doubletree Ranch Rd. Assistant Secretary Assistant Secretary, ING Funds
Scottsdale, Arizona 85258 Services, LLC (December 2002 -
Date of Birth: 12/31/1976 Present); and has held various
other positions with ING Funds
Services, LLC for more than the
last five years.

MARIA M. ANDERSON Assistant Vice President August 2001 - Present Assistant Vice President, ING Funds
7337 E. Doubletree Ranch Rd. Services, LLC (October 2001 -
Scottsdale, Arizona 85258 Present). Formerly, Manager of Fund
Date of Birth: 05/29/1958 Accounting and Fund Compliance, ING
Investments, LLC (September 1999 -
November 2001).

HUEY P. FALGOUT, JR. Secretary August 2003 - Present Chief Counsel, ING U.S. Financial
7337 E. Doubletree Ranch Rd. Services (November 2003 - Present).
Scottsdale, AZ 85258 Formerly, Associate General
Date of Birth: 11/15/1963 Counsel, AIG American General
(January 1999 - November 2002).

THERESA K. KELETY Assistant Secretary August 2003 - Present Counsel, ING U.S. Financial
7337 E. Doubletree Ranch Rd. Services (April 2003 - Present).
Scottsdale, AZ 85258 Formerly, Senior Associate with
Date of Birth: 02/28/1963 Shearman & Sterling (February 2000
- April 2003); and Associate with
Sutherland Asbill & Brennan (1996 -
February 2000).

(1) The officers hold office until the next annual meeting of the Trustees
and until their successors shall have been elected and qualified.

(2) Prior to May 1999, the Pilgrim family of funds consisted of 5
registrants with 8 series. As of May 24, 1999, the former
Nicholas-Applegate Capital Management funds (consisting of 1
registrant with 11 series) joined the fund complex and the fund
complex retained the name "Pilgrim Funds." On November 16, 1999, the
former Northstar funds (consisting of 9 registrants with 22 series)
joined the fund complex and the fund complex retained the name
"Pilgrim Funds." On July 26, 2000, the former Lexington funds
(consisting of 14 registrants with 14 series) joined the fund complex
and the fund complex retained the name "Pilgrim Funds." On March 23,
2001, the original ING funds (consisting of 2 registrants with 18
series) joined the fund complex and the fund complex retained the name
"Pilgrim Funds." On March 1, 2002, the former Aetna funds (consisting
of 8 registrants with 50 series) joined the fund complex and the name
of the fund complex name changed to "ING Funds.

(3) The following documents the evolution of the name of each ING
corporate entity referenced in the above biographies:

ING Investments, LLC (March 2002 - name changed from ING ING Funds Services, LLC (March 2002 - name changed from ING
Pilgrim Investments, LLC) Pilgrim Group, LLC)
ING Mutual Funds Management Co., LLC (April 2001 - ING Pilgrim Group, Inc. (February 2001 - merged into Pilgrim
merged into ING Pilgrim Investments, LLC) Group LLC)
ING Pilgrim Investments, Inc. (February 2001 - merged ING Pilgrim Group, LLC (February 2001 - formed)
into ING Pilgrim Investments, LLC) ING Pilgrim Group, Inc. (September 2000 - name changed from
ING Pilgrim Investments, LLC (February 2001 - formed) Pilgrim Group, Inc.)
ING Pilgrim Investments, Inc. (September 2000 - name Lexington Global Asset Managers, Inc. (July 2000 - merged into
changed from Pilgrim Investments, Inc.) Pilgrim Group, Inc.)
Pilgrim Advisors, Inc.** (April 2000 - merged into Northstar Administrators, Inc. (November 1999 - merged into
Pilgrim Investments, Inc.) Pilgrim Group, Inc.)
Pilgrim Investments, Inc. (October 1998 - name changed Pilgrim Group, Inc. (October 1998 - name changed from Pilgrim
from Pilgrim America Investments, Inc.) American Group, Inc.)
Pilgrim America Investments, Inc. (April 1995 - name Pilgrim America Group, Inc. (April 1995 - name changed from
changed from Newco Advisory Corporation) Newco Holdings Management Corporation)
Newco Advisory Corporation (December 1994 - Newco Holdings Management Corporation (December 1994 -
incorporated) incorporated)

**Pilgrim Advisors, Inc. (November 1999 - name changed ING Capital Corporation, LLC (March 2002 - name changed from ING
from Northstar Investment Management Pilgrim Capital Corporation, LLC)

Corporation) ING Pilgrim Capital Corporation (February 2001 - merged into
ING Pilgrim Capital Corporation, LLC)
ING Funds Distributor, LLC (October 2002 - name changed ING Pilgrim Capital Corporation, LLC (February 2001 - formed)
from ING Funds Distributor, Inc.) ING Pilgrim Capital Corporation (September 2000 - name changed
ING Funds Distributor, Inc. (March 2002 - name changed from Pilgrim Capital Corporation)
from ING Pilgrim Securities, Inc.) Pilgrim Capital Corporation (February 2000 - name changed from
ING Pilgrim Securities, Inc. (September 2000 - name Pilgrim Holdings Corporation)
changed from Pilgrim Securities, Inc.) Pilgrim Holdings Corporation (October 1999 - name changed from
Northstar Distributors Inc. (November 1999 - merged Northstar Holdings, Inc.)
into Pilgrim Securities, Inc.) Northstar Holdings, Inc. (October 1999 - merged into Pilgrim
Pilgrim Securities, Inc. (October 1998 - name changed Capital Corporation)
from Pilgrim America Securities, Inc.) Pilgrim Capital Corporation (June 1999 - name changed from
Pilgrim America Securities, Inc. (April 1995 - name Pilgrim America Capital Corporation)
changed from Newco Distributors Corporation) Pilgrim Capital Corporation (June 1999 - merged into Pilgrim
Newco Distributors Corporation (December 1994 America Capital Corporation)
-incorporated) Pilgrim America Capital Corporation (April 1997 - incorporated)

ING Advisors, Inc. (Ownership transferred as of October 2003) ING Quantitative Management, Inc. (September 2002- Dissolved)
ING Advisors, Inc. (March 2002 - name changed from ING ING Quantitative Management, Inc. (March 2002 - name
Pilgrim Advisors, Inc.) changed from ING Pilgrim Quantitative Management, Inc.)
ING Pilgrim Advisors, Inc. (March 2001 - name changed ING Pilgrim Quantitative Management, Inc. (March 2001 - name
from ING Lexington Management Corporation) changed from Market Systems Research Advisors)
ING Lexington Management Corporation (October 2000 name Market Systems Research Advisors, Inc. (November 1986 -
changed from Lexington Management Corporation) incorporated)
Lexington Management Corporation (December 1996
- incorporated) Express America T.C., Inc. (September 2003 - Dissolved)

EAMC Liquidation Corp. (October 2003 - Dissolved)

The Trust currently has an Executive Committee, Audit Committee,
Valuation and Proxy Voting Committee (formerly Valuation Committee),
Nominating Committee, Investment Review Committee and Compliance and
Coordination Committee. The Audit, Valuation, Proxy Voting Nominating and
Compliance and Coordination Committees consist entirely of Independent
Trustees.

COMMITTEES

The Board of Trustees has an Executive Committee whose function is to
act on behalf of the full Board of Trustees between regularly scheduled meetings
when necessary. The Committee currently consists of two Independent Trustees and
two Trustees who are interested persons as defined in the 1940 Act: Messrs.
Turner, McInerney, May and Patton. Mr. Turner serves as Chairman of the
Committee. The Executive Committee held five [ ] meetings during the fiscal year
ended February 29, 2004.

The Board of Trustees has an Audit Committee whose function is to meet
with the independent auditors of the Trust to review the scope of the Trust's
audit, its financial statements and interim accounting controls, and to meet
with management concerning these matters, among other things. The Audit
Committee currently consists of four Independent Trustees: Messrs. Earley,
Rieke, Vincent and Putnam. Mr. Earley serves as Chairman of the Committee. The
Audit Committee held four [ ] meetings during the fiscal year ended February 29,
2004.

The Board has formed a Valuation and Proxy Voting Committee (formerly
the Valuation Committee) whose functions include, among others, reviewing the
determination of the value of securities held by the Trust for which market
value quotations are not readily available and, beginning in July 2003,
overseeing management's administration of proxy voting. The Committee currently
consists of five Independent Trustees: Dr. Gitenstein and Messrs. May, Patton,
Doherty and Wedemeyer. Mr. Patton serves as Chairman of the Committee. The
Valuation and Proxy Voting Committee held [ ] meetings during the fiscal year
ended February 29, 2004.

The Board of Trustees has established a Nominating Committee for the
purpose of considering and presenting to the Board of Trustees candidates it
proposes for nomination to fill Independent Trustee vacancies on the Board of
Trustees. The Nominating Committee currently consists of four Independent
Trustees: Dr. Gitenstein and Messrs. Doherty, May, and Wedemeyer. Mr. May serves
as Chairman of the Committee. The Committee does not currently have a charter
nor does it have a policy regarding whether it will consider nominees
recommended by shareholders. However, the Board expects to have the Committee
consider these matters fully during the upcoming year with a view towards
adopting and publishing a charter and policies regarding shareholder
recommendations for Trustee nominees. As part of its consideration, the
Committee will also consider minimum qualifications for Trustee positions as
well as a process for the Trust to identify and evaluate potential nominees.The
Nominating Committee held [ ] meetings during the fiscal year ended February 29,
2004.

The Board of Trustees has established an Investment Review Committee
that will monitor the investment performance of the Trust and make
recommendations to the Board of Trustees with respect to the Trust. The
Committee currently consists of five Independent Trustees and one Trustee who is
an interested person as defined in the 1940 Act: Dr. Gitenstein and Messrs.
Doherty, Patton, May, McInerney and Wedemeyer. Mr. Wedemeyer serves as Chairman
of the Committee. The Investment Review Committee held four [ ] meetings during
the fiscal year ended February 29, 2004.

The Board has established a Compliance and Coordination Committee for
the purpose of facilitating information flow among Board members and with
management between Board meetings, developing agendas for executive sessions of
independent Board members, evaluating potential improvements in the allocation
of work load among the Board members and Board committees, and evaluating other
opportunities to enhance the efficient operations of the Board. The Compliance
and Coordination Committee currently consists five Independent Trustees: Messrs.
Earley, May, Patton, Vincent and Wedemeyer. The Compliance and Coordination
Committee held one meeting during the fiscal year ended February 29, 2004.

TRUSTEE OWNERSHIP OF SECURITIES

SHARE OWNERSHIP POLICY

In order to further align the interests of the Independent Trustees
with shareholders, it is the policy to own, beneficially, shares of one or more
ING Funds at all times. For this purpose, beneficial ownership of Fund shares
includes ownership of a variable annuity contract or a variable life insurance
policy whose proceeds are invested in a Fund.

Under this Policy, the initial value of investments in the ING Funds
that are beneficially owned by a Trustee must equal at least $50,000. Existing
Trustees shall have a reasonable amount of time from the date of adoption of
this Policy in order to satisfy the foregoing requirements. A new Trustee shall
satisfy the foregoing requirements within a reasonable amount of time of
becoming a Trustee. A decline in the value of any Fund investments will not
cause a Trustee to have to make any additional investments under this Policy.

Set forth below is the dollar range of equity securities owned by each Trustee.

AGGREGATE DOLLAR RANGE OF EQUITY
SECURITIES IN ALL REGISTERED
DOLLAR RANGE OF EQUITY INVESTMENT COMPANIES OVERSEEN BY
SECURITIES IN THE TRUST AS OF TRUSTEE IN FAMILY OF INVESTMENT
NAME OF TRUSTEE DECEMBER 31, 2003 COMPANIES
---------------------------------------------------------------------------------------------------------

INDEPENDENT TRUSTEES
Paul S. Doherty
J. Michael Earley
R. Barbara Gitenstein
Walter H. May
Jock Patton
David W. C. Putnam
Blaine E. Rieke
Roger B. Vincent
Richard A. Wedemeyer
TRUSTEES WHO ARE INTERESTED PERSONS
Thomas J. McInerney
John G. Turner

INDEPENDENT TRUSTEE OWNERSHIP OF SECURITIES

Set forth in the table below is information regarding each Independent
Trustee's (and his or her immediate family members') share ownership in
securities of the Trust's investment adviser or principal underwriter, and the
ownership of securities in an entity controlling, controlled by or under common
control with the investment adviser or principal underwriter of the Trust (not
including registered investment companies) as of December 31, 2003.

NAME OF OWNERS
AND RELATIONSHIP VALUE OF PERCENTAGE OF
NAME OF TRUSTEE TO TRUSTEE COMPANY TITLE OF CLASS SECURITIES CLASS
--------------------------------------------------------------------------------------------------------------------

Paul S. Doherty N/A N/A N/A $ 0 N/A
J. Michael Earley N/A N/A N/A $ 0 N/A
R. Barbara Gitenstein N/A N/A N/A $ 0 N/A
Walter H. May N/A N/A N/A $ 0 N/A
Jock Patton N/A N/A N/A $ 0 N/A
David W. C. Putnam N/A N/A N/A $ 0 N/A
Blaine E. Rieke N/A N/A N/A $ 0 N/A
Roger B. Vincent N/A N/A N/A $ 0 N/A
Richard A. Wedemeyer N/A N/A N/A $ 0 N/A

COMPENSATION OF TRUSTEES

The Trust pays each Trustee who is not an interested person a pro rata
share, as described below of: (i) an annual retainer of $40,000 (Messrs. Patton
and May, as lead trustees, receive an annual retainer of $55,000); (ii) $7,000
for each in person meeting of the Board; (iii) $2,000 per attendance of any
committee meeting; (iv) $1,000 for meeting attendance as a chairperson; (v)
$2,000 per telephonic meeting; and (vi) out-of-pocket expenses. The pro rata
share paid by the Trust is based on the average net assets as a percentage of
the average net assets of all the funds managed by the Investment Manager or its
affiliates for which the Trustees serve in common as Directors/Trustees.

The following table has been provided to the Trust by ING Investments
and sets forth information regarding the compensation paid to the Trustees for
the Trust's fiscal year ended February 29, 2004 for service on the Boards of the
ING Funds complex. Officers of the Trust and Trustees who are interested persons
of the Trust do not receive any compensation from the Trust or any funds managed
by the Investment Manager or its affiliates.

COMPENSATION TABLE

PENSION OR TOTAL
RETIREMENT COMPENSATION
BENEFITS ESTIMATED FROM TRUST AND
AGGREGATE ACCRUED AS ANNUAL FUND COMPLEX
COMPENSATION PART OF TRUST BENEFITS UPON PAID TO
NAME OF TRUSTEE FROM TRUST EXPENSES RETIREMENT(4) TRUSTEES(5)
-----------------------------------------------------------------------------------------------------------

Paul S. Doherty N/A N/A

J. Michael Earley N/A N/A
R. Barbara Gitenstein N/A N/A
R. Glenn Hilliard(1) N/A N/A
Walter H. May N/A N/A
Thomas J. McInerney(2) N/A N/A
Jock Patton N/A N/A
David W.C. Putnam N/A N/A
Blaine E. Rieke N/A N/A
John G. Turner(3) N/A N/A
Roger B. Vincent(6) N/A N/A
Richard A. Wedemeyer(6) N/A N/A

(1) An interested person, as defined in the 1940 Act, because of his
relationship with ING Groep N.V., the parent company of of the Investment
Manager, ING Investments, LLC and the Distributor, ING Funds Distributor
LLC. Mr. Hilliard resigned as of April 30, 2003.

(2) An interested person, as defined in the 1940 Act, because of his
affiliation with ING Groep N.V. the parent company of the Investment
Manager, ING Investments, LLC and the Distributor, ING Funds Distributor
LLC.

(3) An interested person, as defined in the 1940 Act, because of his former
affiliation with ING Americas, an affiliate of ING Investments, LLC.

(4) The ING Funds have adopted a retirement policy under which a
director/trustee who has served as an Independent Director/Trustee for five
years or more will be paid by the ING Funds at the time of his or her
retirement an amount equal to twice the compensation normally paid to the
Independent Director/Trustee for one year of service.

(5) Represents compensation from 122 funds.

(6) Mr. Wedemeyer and Mr. Vincent were paid $10,000 each in recognition of an
extensive time commitment to format a methodolgy for presenting valuation
information to the Board.

As of [ ], 2004, the Trustees and Officers of the Trust as a group
owned beneficially less than 1% of the Trust's Common Shares.

As of [ ], 2004, the Trustees and Officers of the Trust as a group
owned beneficially less than 1% of the Trust's Preferred Shares.

As of [ ], 2004, no person to the knowledge of the Trust, owned
beneficially or of record more than 5% of the outstanding Common Shares of the
Trust.

As of [ ], no person, to the knowledge of the Trust, owned beneficially
or of record more than 5% of the outstanding Preferred Shares of the Trust.

CODE OF ETHICS

The Trust's Distributor, ING Funds Distributor, LLC ("Distributor"),
the Investment Manager and the Trust have adopted a Code of Ethics governing
personal trading activities of all Trustees and the officers of the Trust and
the Distributor and persons who, in connection with their regular functions,
play a role in the recommendation of any purchase or sale of a security by
the Trust or obtain information pertaining to such purchase or sale. The Code
of Ethics is intended to prohibit fraud against the Trust that may arise from
personal trading of securities that maybe purchased or held by the Trust or
of Trust shares. Personal trading is permitted by such persons subject to
certain restrictions; however such persons are generally required to
pre-clear all security transactions with the Trust's Compliance Officer or
her designee and to report all transactions on a regular basis. The
Sub-Adviser has adopted its own Codes of Ethics to govern the personal
trading activities of its personnel.

The Code of Ethics can be reviewed and copied at the SEC's Public
Reference Room located at 450 Fifth Street, NW, Washington, DC 20549.
Information on the operation of the Public Reference Room may be obtained by
calling the SEC at (202) 942-8090. The Code of Ethics is available on the SEC's
website (http://www.sec.gov) and copies may also be obtained at prescribed rates
by electronic request at publicinfo@sec.gov, or by writing the SEC's Public
Reference Section at the address listed above.

PROXY VOTING PROCEDURES

The Board of Trustees for the Trust (the "Board") has adopted proxy
voting procedures and guidelines to govern the voting of proxies relating to the
Trust's portfolio securities. The procedures and guidelines delegate to the
Investment Manager the authority to vote proxies relating to portfolio
securities, and provide a method for responding to potential conflicts of
interest. In delegating voting authority to the Investment Manager, the Board
has also approved the Investment Manager's proxy voting procedures which require
the Investment Manager to vote proxies in accordance with the Trust's proxy
voting procedures and guidelines. An independent proxy voting service has been
retained to assist in the voting of Trust proxies through the provision of vote
analysis, implementation and recordkeeping and disclosure services. A copy of
the proxy voting procedures and guidelines of the Trust, including the
procedures of the Investment Manager, is attached hereto as Appendix A.
Beginning on or about August 31, 2004, and no later than August 31st annually
thereafter, information regarding how the Trust votes proxies relating to
portfolio securities for the one year period ending June 30th will be made
available through the ING Funds' website (www.ingfunds.com) or by accessing the
SEC's EDGAR database ( www.sec.gov).

INVESTMENT MANAGEMENT AND OTHER SERVICE PROVIDERS

THE INVESTMENT MANAGER

The investment adviser for the ING Funds is ING Investments, LLC
("Investment Manager" or "ING Investments"), which is registered as an
investment adviser with the SEC and serves as an investment adviser to
registered investment companies (or series thereof), as well as structured
finance vehicles. The Investment Manager, subject to the authority of the
Trustees of the Trust, has the overall responsibility for the management of the
Trust's portfolio subject to delegation of certain responsibilities to the
investment adviser (the "Sub-Adviser"); ING Investment Management Co. ("INGIM"
(formerly known as Aeltus Investment Management, Inc.) The Investment Manager
and the Sub-Adviser are direct, wholly owned subsidiaries of ING Groep N.V.
(NYSE: ING) ("ING Groep N.V.") and are affiliates of each other. ING Groep N.V.
is a global financial institution active in the field of insurance, banking, and
asset management in more than 65 countries, with more than 100,000 employees.

On February 26, 2001, the name of the Investment Manager changed from
ING Pilgrim Investments, Inc. to ING Pilgrim Investments, LLC. On March 1, 2002,
the name of the Investment Manager was changed from ING Pilgrim Investments, LLC
to ING Investments, LLC.

The Investment Manager pays all of its expenses from the performance of
its obligations under the Investment Management Agreement, including executive
salaries and expenses of the officers of the Trust who are employees of the
Investment Manager. Other expenses incurred in the operation of the Trust are
borne by the Trust, including, without limitation, expenses incurred in
connection with the sale, issuance, registration and transfer of its Common
Shares; fees of its Custodian, Transfer and Shareholder Servicing; salaries of
officers and fees and expenses of Trustees or members of any advisory board or
committee of the Trust who are not members of, affiliated with or interested
persons of the Investment Manager; the cost of preparing and printing reports,
proxy statements and prospectuses of the Trust or other communications for
distribution to its shareholders; legal, auditing and accounting fees; the fees
of any trade association of which the Trust is a member; fees and expenses of
registering and maintaining registration of its Common Shares for sale under
federal and applicable state securities laws; and all other charges and costs of
its operation plus any extraordinary or non-recurring expenses.

After an initial term, the Investment Management Agreement continues
from year to year if specifically approved at least annually by the Trustees or
the Shareholders. In either event, the Investment Management Agreement must also
be approved by vote of a majority of the Trustees who are not parties to the
Investment Management Agreement or interested persons of any party, cast in
person at a meeting called for that purpose.

In connection with their deliberations relating to the Trust's current
Investment Management Agreement, the Board of Trustees considered information
that had been provided by the Investment Manager. In considering the Investment
Management Agreement, the Board of Trustees considered several factors they
believed, in light of the legal advice furnished to them by their independent
legal counsel and their own business judgment, to be relevant. The matters
considered by the Board of Trustees in reviewing the Investment Management
Agreement included, but were not limited to the following: (1) the performance
of the Trust compared to those of a peer group of funds; (2) the nature and
quality of the services provided by the Investment Manager to the Trust
including the Investment Manager's experience in managing a similar fund and the
nature and depth of the services it provides to that fund and the Trust; (3) the
fairness of the compensation under the Investment Management Agreement in light
of the services provided to the Trust; (4) the profitability to the Investment
Manager from the Investment Management Agreement; (5) the personnel, including
the portfolio managers, operations, financial condition, and investment
management capabilities, methodologies and resources of

the Investment Manager, as well as its efforts in recent years to build its
investment management capabilities and administrative infrastructure; (6) the
expenses borne by shareholders of the Trust and a comparison of the Trust's fees
and expenses to those of a peer group of funds; (7) the Investment Manager's
compliance capabilities and efforts on behalf of the Trust; (8) the complexity
of the instruments in which the Trust invests and the investment research
associated with those instruments performed by the Investment Manager and the
Investment Manager's proven expertise in managing the types of investments in
which the Trust invests; and (9) the substantial time and resources devoted to
the valuation process by the Investment Manager. The Board of Trustees also
considered the total services provided by ING Funds Services, LLC, the Trust's
administrator, as well as the fees it receives for such services.

In considering the Investment Management Agreement, the Board of
Trustees, including the Independent Trustees, did not identify any single factor
as all-important or controlling. However, the Independent Trustees indicated
that, generally, they initially scrutinized the performance of the Trust,
including performance in relation to a peer group of funds, and the fees paid by
the Trust. The Board concluded that the fees to be paid to the Investment
Manager are reasonable in relation to the services to be rendered, and that the
anticipated expenses to be borne by the shareholders were reasonable. The Board
of Trustees further determined that the contractual arrangements offer an
appropriate means for the Trust to obtain high quality portfolio management
services in furtherance of the Trust's objectives, and to obtain other
appropriate services for the Trust.

In reviewing the terms of the Investment Management Agreement and in
discussions with the Investment Manager concerning such Investment Management
Agreement, the Independent Trustees were represented by independent legal
counsel. Based upon its review, the Board of Trustees has determined that the
Investment Management Agreement is in the best interests of the Trust and its
shareholders, and that the Investment Management fees are fair and reasonable.
Accordingly, after consideration of the factors described above, and such other
factors and information it considered relevant, the Board of Trustees of the
Trust, including the unanimous vote of the Independent Trustees, approved the
Investment Management Agreement.

The Investment Management Agreement is terminable without penalty with
not less than 60 days' notice by the Board of Trustees or by a vote of the
holders of a majority of the Trust's outstanding shares voting as a single
class, or upon not less than 60 days' notice by the Investment Manager. The
Investment Management Agreement will terminate automatically in the event of its
"assignment" (as defined in the 1940 Act).

As of March 31, 2004, the Investment Manager had assets under
management of over $[ ] billion.

The use of the name ING in the Trust's name is pursuant to the
Investment Management Agreement between the Trust and the Investment Manager,
and in the event that the Agreement is terminated, the Trust has agreed to amend
its Agreement and Declaration of Trust to remove the reference to ING.

INVESTMENT ADVISORY FEES

For its services, ING Investments will be entitled to receive an
advisory fee of 0.80%, expressed as an annual rate based on the average daily
managed assets of the Trust.

For the fiscal years ended February 29, 2004, February 28, 2003, and
February 28, 2002 the Investment Manager was paid $[ ], $12,698,403, and
$14,838,307 respectively, for services rendered to the Trust.

SUB-ADVISER

The Investment Management Agreement for the Trust provides that the
Investment Manager, with the approval of the Board of Trustees, may select and
employ an investment adviser to serve as a Sub-Adviser to the Trust, shall
monitor the Sub-Adviser's investment programs and results, and coordinate the
investment activities of the Sub-Adviser to ensure compliance with regulatory
restrictions. The Investment Manager pays all of its expenses arising from the
performance of its obligations under the Investment Management Agreement,
including all fees payable to the Sub-Adviser, and executive salaries and
expenses of the officers of the Trust who are employees of the Investment
Manager. The Sub-Adviser pays all of its expenses arising from the performance
of its obligations under the sub-advisory agreement.

On August 1, 2003, ING underwent an internal reorganization plan that
among other things, integrated its portfolio management professionals across the
U.S. under a common management structure known as ING Investment Management
Americas, which includes ING Investment Management Inc. ("INGIM" or
"Sub-Adviser"). One of the primary purposes of the integration plan was to use
the resources of several ING Groep N.V. companies to promote consistently high
levels of performance in terms of investment standards, research, policies and
procedures from the portfolio management functions related to the Trust. As a
result of this integration plan the operational and supervisory functions were
separated from the portfolio management functions related to the Trust, with the
former continuing to be provided by the Investment Manager and the latter
provided by INGIM. The portfolio management personnel currently employed by ING
Investments became employees of INGIM, which assumed primary responsibility for
all portfolio management issues, including the purchase, retention, or sale of
portfolio securities. Effective August 1, 2003 ING Investment Management Co.
("INGIM or Sub-Adviser") serves as Sub-Adviser to the Trust pursuant to a
sub-advisory agreement ("Sub-Advisory Agreement") between the Investment Manager
and INGIM. The Sub-Advisory Agreement requires INGIM to provide, subject to the
supervision of the Board of Trustees and the Investment Manager, a continuous
investment program for the Trust and to determine the composition of the assets
of the Trust, including determination of the purchase, retention or sale of the
securities, cash and other investments for the Trust, in accordance with the
Trust's investment objectives, policies and restrictions and applicable laws and
regulations. The Sub-Advisory Agreement also requires INGIM to use reasonable
compliance techniques as the Sub-Adviser or the Board of Trustees may reasonably
adopt, including any written compliance procedures.

In approving the Sub-Advisory Agreement through September 2005 the
Board of Trustees considered a number of factors, including, but not limited to:
(1) the short-term and long-term performance of the Trust in absolute terms and
relative to other comparable mutual funds; (2) the nature and quality of the
services provided by the Sub-Adviser; (3) the reasonableness of the compensation
paid to the Sub-Adviser under the Sub-Advisory Agreements, including the
advisory fee retained by ING Investments for its services to the Trust; (4) the
profitability to the Sub-Adviser of the services provided under the Sub-Advisory
Agreement; (5) the personnel, operations, financial condition, and investment
management capabilities, methodologies and performance of the Sub-Adviser; and
(6) the brokerage and trading activities of the Sub-Adviser in managing the
Trust's portfolio, the impact of such activities on the performance of the Trust
and the sources of research used by the Sub-Adviser, including research
generated by the Sub-Adviser and soft dollar research. The Board of Trustees
also reviewed information provided by the Sub-Adviser relating to their
compliance systems, disaster recovery plans and personal trading policies and
internal monitoring procedures. In the context of reviewing the Sub-Advisory
Agreement with the Sub-Adviser, the Board of Trustees met with senior management
and reviewed absolute and relative performance of the Trust. The Board also
considered the compensation structure within the Sub-Adviser and its ability to
attract and retain high quality investment professionals.

The Sub-Advisory Agreement may be terminated at any time by the Trust
by a vote of the majority of the Board of Trustees or by a vote of a majority of
the outstanding securities. The Sub-Advisory Agreement also may be terminated
by: (i) the Investment Manager at any time, upon sixty (60) days' written notice
to the Trust and the Sub-Adviser; (ii) at any time, without payment of any
penalty by the Trust, by the Trust's Board of Trustees or a majority of the
outstanding voting securities of the Trust upon sixty (60) days' written notice
to the Investment Manager and the Sub-Adviser; or (iii) by the Sub-Adviser upon
three (3) months' written notice unless the Trust or the Investment Manager
requests additional time to find a replacement for the Sub-Adviser, in which
case, the Sub-Adviser shall allow the additional time, requested by the Trust or
the Investment Manager, not to exceed three (3) additional months beyond the
initial three (3) month notice period; provided, however, that the Sub-Adviser
may terminate the Sub-Advisory Agreement at any time without penalty, effective
upon written notice to the Investment Manager and the Trust, in the event either
the Sub-Adviser (acting in good faith) or the Investment Manager ceases to be
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended or otherwise becomes legally incapable of providing investment
management services pursuant to its respective contract with the Trust, or in
the event the Investment Manager becomes bankrupt or otherwise incapable of
carrying out its obligations under the Sub-Advisory Agreement, or in the event
that the Sub-Adviser does not receive compensation for its services from the
Investment Manager or the Trust as required by the terms of the Sub-Advisory
Agreement. Otherwise, the Sub-Advisory Agreement will remain in effect for two
years and will, thereafter, continue in effect from year to year, subject to the
annual appoval of the Board of Trustees, on behalf of the Trust, or the vote of
a majority of the outstanding voting securities, and the vote, cast in person at
a meetnig duly called and held, of a majority of the Trustees, on behalf of the
Trust, who are not parties to the Sub-Advisory Agreement or interested persons
(as defined in the 1940 Act) of any such party. The Sub-Advisory Agreement will
terminate automatically in the event of an assignment (as defined in the 1940
Act).

In this capacity, the Sub-Adviser, subject to the supervision and
control of ING Investments and the Trustees of the Trust, will manage the
Trust's portfolio investments, consistently with its investment objective, and
execute any of the Trust's investment policies that it deems appropriate to
utilize from time to time.

INGIM is an indirect, wholly-owned subsidiary of ING Groep, and an
affiliate of ING Investments. INGIM, a Connecticut Corporation formed in 1972
and a registered investment adviser, has been managing client assets for more
than a quarter of a century. Its principal office is located at 10 State House
Square, Hartford, Connecticut 06103.

As of March 31, 2004, INGIM had assets under management of almost $[ ]
billion.

For its services, INGIM will be entitled to receive a sub-advisory fee
of 0.36%, expressed as an annual rate based on the average daily managed assets
of the Trust, and payable by the Investment Manager.

For the 7 months ended February 29, 2004, ING Investments paid INGIM,
in its capacity as Sub-Adviser, $[ ] in sub-advisory fees.

THE ADMINISTRATOR

The Administrator of the Trust is ING Funds Services, LLC
("Administrator" or "ING Funds Services") which is an affiliate of the
Investment Manager. In connection with its administration of the corporate
affairs of the Trust, the Administrator bears the following expenses: the
salaries and expenses

of all personnel of the Trust and the Administrator except for the fees and
expenses of Trustees not affiliated with the Administrator or the Investment
Manager; costs to prepare information; determination of daily NAV by the
recordkeeping and accounting agent; expenses to maintain certain of the Trust's
books and records that are not maintained by the Investment Manager, the
custodian, or transfer agent; costs incurred to assist in the preparation of
financial information for the Trust's income tax returns, proxy statements,
quarterly, semi-annual, and annual shareholder reports; costs of providing
shareholder services in connection with any tender offers or to shareholders
proposing to transfer their shares to a third party; providing shareholder
services in connection with the dividend reinvestment plan; and all expenses
incurred by the Administrator or by the Trust in connection with administering
the ordinary course of the Trust's business other than those assumed by the
Trust, as described below.

Except as indicated immediately above and under "The Investment
Manager," the Trust is responsible for the payment of its expenses including:
the fees payable to the Investment Manager; the fees payable to the
Administrator; the fees and certain expenses of the Trust's custodian and
transfer agent, including the cost of providing records to the Administrator in
connection with its obligation of maintaining required records of the Trust; the
charges and expenses of the Trust's legal counsel, legal counsel to the Trustees
who are not "interested persons" as defined in the 1940 Act and independent
accountants; commissions and any issue or transfer taxes chargeable to the Trust
in connection with its transactions; all taxes and corporate fees payable by the
Trust to governmental agencies; the fees of any trade association of which the
Trust is a member; the costs of share certificates representing Common Shares of
the Trust; organizational and offering expenses of the Trust and the fees and
expenses involved in registering and maintaining registration of the Trust and
its Common Shares with the Commission, including the preparation and printing of
the Trust's registration statement and prospectuses for such purposes; allocable
communications expenses with respect to investor services, and all expenses of
shareholders' and Trustees' meetings and of preparing, printing and mailing
reports, proxy statements and prospectuses to shareholders; the cost of
insurance; and litigation and indemnification expenses and extraordinary
expenses not incurred in the ordinary course of the Trust's business.

For its services, the Administrator is entitled to receive from the
Trust a fee at an annual rate of 0.25% of the Fund's average daily net assets
plus the proceeds of any outstanding borrowings.

Administrative fees paid by the Trust for the fiscal years ended
February 29, 2004, February 28, 2003, and February 28, 2002 and the
Administrator was paid $[ ], $3,968,231, and $4,637,682, respectively, for
services rendered to the Trust.

PORTFOLIO TRANSACTIONS

The Trust will generally have at least 80% of its net assets, plus the
amount of any borrowings for investment purposes, invested in Senior Loans. The
remaining assets of the Trust will generally consist of short-term debt
instruments with remaining maturities of 120 days or less, longer-term debt
securities, certain other instruments such as subordinated loans up to a maximum
of 5% of the Trust's net assets, unsecured loans, interest rate swaps, caps and
floors, repurchase agreements, reverse repurchase agreements and equity
securities acquired in connection with investments in loans. The Trust will
acquire Senior Loans from and sell Senior Loans to banks, insurance companies,
finance companies, and other investment companies and private investment funds.
The Trust may also purchase Senior Loans from and sell Senior Loans to U.S.
branches of foreign banks which are regulated by the Federal Reserve System or
appropriate state regulatory authorities. The Trust's interest in a particular
Senior Loan will terminate when the Trust receives full payment on the loan or
sells a Senior Loan in the secondary market. Costs associated with purchasing or
selling investments in the secondary market include commissions paid to brokers
and processing fees paid to agents. These costs are allocated between the
purchaser and seller as agreed between the parties.

Purchases and sales of short-term debt and other financial instruments
for the Trust's portfolio usually are principal transactions, and normally the
Trust will deal directly with the underwriters or dealers who make a market in
the securities involved unless better prices and execution are available
elsewhere. Such market makers usually act as principals for their own account.
On occasion, securities may be purchased directly from the issuer. Short-term
debt instruments are generally traded on a net basis and do not normally involve
either brokerage commissions or transfer taxes. The cost of portfolio securities
transactions of the Trust that are not transactions with principals will consist
primarily of brokerage commissions or dealer or underwriter spreads between the
bid and asked price, although purchases from underwriters may involve a
commission or concession paid by the issuer.

In placing portfolio transactions, the Investment Manager or
Sub-Adviser will use its best efforts to choose a broker capable of providing
the brokerage services necessary to obtain the most favorable price and
execution available. The full range and quality of brokerage services available
will be considered in making these determinations, such as the size of the
order, the difficulty of execution, the operational facilities of the firm
involved, the firm's risk in positioning a block of securities and other
factors. While the Investment Manager or Sub-Adviser seeks to obtain the most
favorable net results in effecting transactions in the Trust's portfolio
securities, brokers or dealers who provide research services may receive orders
for transactions by the Trust. Such research services ordinarily consist of
assessments and analyses of the business or prospects of a company, industry, or
economic sector. The Investment Manager is authorized to pay spreads or
commissions to brokers or dealers furnishing such services which are in excess
of spreads or commissions that other brokers or dealers not providing such
research may charge for the same transaction, even if the specific services were
not imputed to the Trust and were useful to the Investment Manager in advising
other clients. Information so received will be in addition to, and not in lieu
of, the services required to be performed by the Investment Manager under the
Investment ManagementAgreement between the Investment Manager and the Trust. The
expenses of the Investment Manager will not necessarily be reduced as a result
of the receipt of such supplemental information. The Investment Manager or
Sub-Adviser may use any research services obtained in providing investment
advice to its other investment advisory accounts. Conversely, such information
obtained by the placement of business for the Investment Manager or Sub-Adviser
or other entities advised by the Investment Manager or Sub-Adviser will be
considered by and may be useful to the Investment Manager or Sub-Adviser in
carrying out its obligations to the Trust. As permitted by Section 28(e) of the
Securities Exchange Act of 1934, as amended ("1934 Act") the Investment Manager
may cause the Trust to pay a broker-dealer which provides brokerage and research
services (as defined in the 1934 Act) to the Investment Manager or Sub-Adviser
an amount of disclosed commissions for effecting a securities transaction for
the Trust in excess of the commission which another broker-dealer would have
charged for effecting the transaction.

The Trust does not intend to effect any brokerage transaction in its
portfolio securities with any broker-dealer affiliated directly or indirectly
with the Investment Manager or Sub-Adviser, except for any sales of portfolio
securities pursuant to a tender offer, in which event the Investment Manager or
Sub-Adviser will offset against the management fee a part of any tender fees
which legally may be received by such affiliated broker-dealer. To the extent
certain services which the Trust is obligated to pay for under the Investment
Management Agreement are performed by the Investment Manager, the Trust will
reimburse the Investment Manager for the costs of personnel involved in placing
orders for the execution of portfolio transactions.

There were no brokerage commissions paid by the Trust for the previous
three fiscal years.

PORTFOLIO TURNOVER RATE

The annual rate of the Trust's total portfolio turnover for the years
ended February 29, 2004, February 28, 2003, and February 28, 2002 was [ ]%, 48%,
and 53% respectively. The annual turnover rate of the Trust is generally
expected to be between 50% and 100%, although as part of its investment
policies, the Trust places no restrictions on portfolio turnover and the Trust
may sell any portfolio security without regard to the period of time it has been
held. The annual turnover rate of the Trust also includes Senior Loans on which
the Trust has received full or partial payment. The Investment Manager believes
that full and partial payments on loans generally comprise approximately 25% to
75% of the Trust's total portfolio turnover each year.

NET ASSET VALUE

As noted in the Prospectus, the NAV and offering price of each class of
the Trust's shares will be determined once daily as of the close of regular
trading on the New York Stock Exchange ("NYSE") (normally 4:00 p.m. Eastern
time) during each day on which the NYSE is open for trading. As of the date of
this Statement of Additional Information, the NYSE is closed on the following
holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day.

Portfolio securities listed or traded on a national securities exchange
will be valued at the last reported sale price on the valuation day. Securities
traded on an exchange for which there has been no sale that day and other
securities traded in the over-the-counter market will be valued at the mean
between the last reported bid and asked prices on the valuation day. Portfolio
securities reported by NASDAQ will be valued at the NASDAQ Official Closing
Price on the valuation day. In cases in which securities are traded on more than
one exchange, the securities are valued on the exchange that is normally the
primary market. Investments in securities maturing in 60 days or less are valued
at amortized cost, which, when combined with accrued interest, approximates
market value. This involves valuing a security at cost on the date of
acquisition and thereafter assuming a constant accretion of a discount or
amortization of a premium to maturity, regardless of the impact of fluctuating
interest rates on the market value of the instrument. While this method provides
certainty in valuation, it may result in periods during which value, as
determined by amortized cost, is higher or lower than the price the Fund would
receive if it sold the instrument. See "Net Asset Value" in the shareholder
guide of the Prospectus. The long-term debt obligations held in the Trust's
portfolio will be valued at the mean between the most recent bid and asked
prices as obtained from one or more dealers that make markets in the securities
when over-the counter market quotations are readily available.

Securities and assets for which market quotations are not readily
available (which may include certain restricted securities which are subject to
limitations as to their sale) or are deemed unreliable are valued at their fair
values as determined in good faith by or under the supervision of the Trust's
Board, in accordance with methods that are specifically authorized by the Board.
Securities traded on exchanges, including foreign exchanges, which close earlier
than the time that the Trust calculates its net asset value, may also be valued
at their fair values as determined in good faith by or under the supervision of
the Trust's Board, in accordance with methods that are specifically authorized
by the Board. The valuation techniques applied in any specific instance may vary
from case to case. With respect to a restricted security, for example,
consideration is generally given to the cost of the investment, the market value
of any unrestricted securities of the same class at the time of valuation, the
potential expiration of restrictions on the security, the existence of any
registration rights, the costs to the Trust related to registration of the
security, as well as factors relevant to the issuer itself. Consideration may
also be given to the price and extent of any public trading in similar
securities of the issuer or comparable companies' securities.

The prices of foreign securities are determined using information
derived from pricing services and other sources. The value of the foreign
securities traded on exchanges outside the United States is generally based upon
the price on the foreign exchange as of the close of business of the exchange
preceding the time of valuation (or, if earlier, at the time of the Trust's
valuation). Foreign securities markets may close before the Trust determines its
NAV. European, Asian, Latin American, or other international securities trading
may not take place on all days on which the NYSE is open. Further, trading takes
place in Japanese markets on certain Saturdays and in various foreign markets on
days on which the NYSE is not open. Consequently, the calculation of the Trust's
net asset value may not take place contemporaneously with the determination of
the prices of securities held by the Trust in foreign securities markets.
Further, the value of the Trust's assets may be significantly affected by
foreign trading on days when a shareholder cannot purchase or redeem shares of
the Trust. In calculating the Trust's NAV, foreign securities in foreign
currency are converted to U.S. dollar equivalents.

If a significant event which is likely to impact the value of one or
more foreign securities held by the Trust occurs after the time at which the
foreign market for such security(ies) closes but before the time that the
Trust's net asset value is calculated on any business day, such event may be
taken into account in determining the fair value of such security(ies) at the
time the Trust calculates its net asset value. The Board has adopted procedures
under which the fair value of foreign securities may, upon the occurrence of a
significant event or if the closing value is deemed unreliable, be determined as
of the time the Trust calculates its net asset value. For these purposes,
significant events after the close of trading on a foreign market may include,
among others, securities trading in the U.S. and other markets, corporate
announcements, natural and other disasters, and political and other events.
Among other elements of analysis, the Board has authorized the use of one or
more research services to assist with the determination of the fair value of
foreign securities. A research service may use statistical analyses and
quantitative models to help determine fair value as of the time the Trust
calculates its net asset value, and there can be no assurance that markets will
continue to behave in a fashion reflected in the models used by a service.
Unlike the closing price of a security on an exchange, fair value determinations
employ elements of judgment. The fair value assigned to a security may not
represent the actual value that a Trust could obtain if it were to sell the
security at the time of the close of the NYSE. Pursuant to procedures adopted by
the Board, the Trust is not obligated to use the fair valuations suggested by
any research service, and valuations provided by such research services may be
overridden if other events have occurred, or if other fair valuations or the
closing values are determined in good faith to be more accurate. Unless a market
movement or other event has occurred which constitutes a significant event under
procedures adopted by the Board or unless closing prices are otherwise deemed
unreliable, events affecting the values of portfolio securities that occur
between the time of the close of the foreign market on which they are traded and
the close of regular trading on the NYSE will not be reflected in the Trust's
net asset value per share.

Options on currencies purchased by the Trust are valued at their last
bid price in the case of listed options or at the average of the last bid prices
obtained from dealers in the case of OTC options.

The price of silver and gold bullion is determined by measuring the
mean between the closing bid and asked quotations of silver and gold bullion set
at the time of the close of the NYSE, as supplied by Precious Metals Fund's
custodian bank or other broker-dealers or banks approved by Precious Metals
Trust, on each date that the NYSE is open for business.

The fair value of other assets is added to the value of all securities
positions to arrive at the value of the Trust's total assets. The Trust's
liabilities, including accruals for expenses, are deducted from its total
assets. Once the total value of the Trust's net assets is so determined, that
value is then divided by the

total number of shares outstanding (excluding treasury shares), and the result,
rounded to the nearest cent, is the net asset value per share.

In computing the net asset value for a class of shares of the Trust,
all class-specific liabilities incurred or accrued are deducted from the class'
net assets. The resulting net assets are divided by the number of shares of the
class outstanding at the time of the valuation and the result (adjusted to the
nearest cent) is the net asset value per share.

The per share net asset value of Class A shares generally will be
higher than the per share NAV of shares of the other classes, reflecting daily
expense accruals of the higher distribution fees applicable to Class B and Class
C. It is expected, however, that the per share NAV of the classes will tend to
converge immediately after the payment of dividends or distributions that will
differ by approximately the amount of the expense accrual differentials between
the classes.

Orders received by dealers prior to the close of regular trading on the
NYSE will be confirmed at the offering price computed as of the close of regular
trading on the NYSE provided the order is received by the Distributor prior to
its close of business that same day (normally 4:00 P.M. Eastern time). It is the
responsibility of the dealer to insure that all orders are transmitted timely to
the Trust. Orders received by dealers after the close of regular trading on the
NYSE will be confirmed at the next computed offering price as described in the
Prospectus.

VALUATION OF THE TRUST'S ASSETS

The assets in the Trust's portfolio are valued daily in accordance with
the Trust's Loan Valuation Procedures adopted by the Board of Trustees. A
majority of the Trust's assets are valued using quotations supplied by a third
party loan pricing service. However, the loans in which the Trust invests are
not listed on any securities exchange or board of trade. Some loans are traded
by institutional investors in an over-the-counter secondary market that has
developed in the past several years. This secondary market generally has fewer
trades and less liquidity than the secondary markets for other types of
securities. Some loans have few or no trades. Accordingly, determinations of the
value of loans may be based on infrequent and dated trades. Because there is
less reliable, objective market value data available, elements of judgment may
play a greater role in valuation of loans than for other types of securities.

Loans are normally valued on the basis of one or more quotations
obtained from a pricing service or other sources believed to be reliable. Loans
for which reliable market value quotations are not readily available from a
pricing service may be valued with reference to another loan or a group of loans
for which reliable market value 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 an independent pricing service to provide
quotations from dealers in loans and to calculate values under this proxy
procedure. Loans are valued at the mean between bid and asked quotations.

It is expected that most of the loans held by the Trust will be valued
with reference to quotations from the independent pricing service or with
reference to the proxy procedure described above. The Investment Manager or
Sub-Adviser may believe that the price for a loan derived from 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 Manager or Sub-Adviser that they believe may
not be known to the pricing service or reflected in a price quote. In this
event, the loan is valued at fair value under procedures established by the
Trust's Board of Trustees, and in accordance with the provisions of the 1940
Act.

Under these procedures, fair value is determined by the Investment
Manager or Sub-Adviser and monitored by the Trust's Board of Trustees through
its Valuation 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 for, and trading
in, the loan and interests in similar loans and the market environment and
investor attitudes towards the senior loan and interests in similar senior
loans; (v) the reputation and financial condition of the agent of the loan and
any intermediate participants in the loans; (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 stated at the last reported sale price on the day of valuation.
Securities reported by NASDAQ National Market System will be valued at the
NASDAQ Official Closing Price on the valuation day. Debt and equity securities
traded in the over-the-counter market and listed securities for which no sale
was reported on that date are valued at the mean between the last reported bid
and asked price. Valuation of short term cash equivalent investments is at
amortized cost.

PLANS OF DISTRIBUTION

DISTRIBUTION AGREEMENT

The Trust has entered into a Distribution Agreement with ING Funds
Distributor, LLC ("ING Funds Distributor") which has been filed as an exhibit to
the Registration Statement. The summary of the Distribution Agreement contained
herein is qualified by reference to the Distribution Agreement. Subject to the
terms and conditions of the Distribution Agreement, the Trust may issue and sell
Common Shares of the Trust from time to time through ING Funds Distributor,
which is the principal underwriter of the Common Shares, through certain
broker-dealers which have entered into selected dealer agreements with ING Funds
Distributor.

The Common Shares will only be sold on such days as shall be agreed to
by the Trust and ING Funds Distributor. The Common Shares will be sold at market
prices, which shall be determined with reference to trades on the NYSE, subject
to a minimum price to be established each day by the Trust. The minimum price on
any day will not be less than the current NAV per Common Share plus the per
share amount of the commission to be paid to ING Funds Distributor. The Trust
and ING Funds Distributor will suspend the sale of Common Shares if the per
share price of the Common Shares is less than the minimum price.

Settlements of sales of Common Shares will occur on the third business
day following the date on which any such sales are made. Unless otherwise
indicated in a further prospectus supplement, ING Funds Distributor as
underwriter will act as underwriter on a reasonable efforts basis.

In connection with the sale of the Common Shares on behalf of the
Trust, ING Funds Distributor may be deemed to be an underwriter within the
meaning of the 1940 Act. As described below, ING

Funds Distributor also serves as distributor for the Trust in connection with
the sale of Common Shares of the Trust pursuant to privately negotiated
transactions and pursuant to optional cash investments.. In addition, ING Funds
Distributor provides administrative services in connection with a separate
at-the-market offering of Common Shares of the Trust.

The offering of Common Shares pursuant to the Distribution Agreement
will terminate upon the earlier of (i) the sale of all Common Shares subject
thereto or (ii) termination of the Distribution Agreement. The Trust and ING
Funds Distributor each have the right to terminate the Distribution Agreement in
its discretion at any time.

In addition to paying fees under the Trust's Distribution Agreement,
the Trust may pay service fees to intermediaries such as brokers-dealers,
financial advisors, or other financial institutions, including affiliates of the
Investment Manager (such as ING Funds Services, LLC) for administration,
sub-transfer agency, and other shareholder services associated with investors
whose shares are held of record in omnibus accounts. These additional fees paid
by the Trust to intermediaries may take two forms: (1) basis point payments on
net assets and/or (2) fixed dollar amount payments per shareholder account.
These may include payments for 401K sub-accounting services, networking fees,
and omnibus account servicing fees.

The Trust's Investment Manager or Distributor, out of its own resources
and without additional cost to the Trust or its shareholders, may provide
additional cash or non-cash compensation to intermediaries selling shares of the
Trust, including Trust affiliates. These amounts would be in addition to the
distribution payments made by the Trust under the Distribution Agreement, are in
addition to trails and commissions. The payments made under these arrangements
are paid out of the Investment Manager's or the Distributor's legitimate
profits, and are intended to result in the promotion or distribution of Trust
shares.

Compensation paid by the Investment Manager or the Distributor may
take the form of cash incentives and non-cash compensation, and may include,
but are not limited to: cash; merchandise; trips and financial assistance to
dealers in connection with pre-approved conferences or seminars; sales or
training programs for invited sales personnel; occasional entertainment;
charitable contributions to charities supported by an intermediary; payment
for travel expenses (including meals and lodging) incurred by sales personnel
to locations appropriate under applicable NASD Rules for such seminars or
training programs; radio and television shows regarding securities products;
seminars for the public; business development and educational enhancement
items such a software packages; prospecting lists; client appreciation
events; advertising and sales campaigns (including printing and postage
expenses) regarding the Trust or other funds managed by the Investment
Manager; other events sponsored by dealers; and professional certifications
and dues. The Distributor also may, at its own expense, pay concessions in
addition to those described above to dealers that satisfy certain criteria
established from time to time by the Distributor.

Currently, the Investment Manager and/or Distributor has payment
arrangements such as those described above with [____] intermediaries. The most
significant of these arrangements are with [ ]. The Distributor also has such
arrangements with several of its affiliates, including [ ]. Payment arrangements
with financial institutions are generally structured in one of three ways: (1)
as a percentage of net assets; (2) as a fixed dollar amount; or (3) as a
percentage of gross sales. For the year ended February 29, 2004, the Manager
and/or Distributor paid approximately [$______] to various unaffiliated entities
under these arrangements applicable to the Trust. During this period the
Investment Manager and/or Distributor also paid approximately [$______] to its
affiliates in accordance with these arrangements, applicable to the Trust.

SHAREHOLDER INVESTMENT PROGRAM

The Trust maintains a Shareholder Investment Program ("Program"), which
allows participating shareholders to reinvest all dividends and capital gain
distributions ("Dividends") in additional Common Shares of the Trust. The
Program also allows participants to purchase additional Common Shares through
optional cash investments in amounts ranging from a minimum of $100 to a maximum
of $100,000 per month. Common Shares may be issued by the Trust under the
Program only if the Trust's Common Shares are trading at a premium to net asset
value. If the Trust's Common Shares are trading at a discount to net asset
value, Common Shares purchased under the Program will be purchased on the open
market.

Shareholders may elect to participate in the Program by telephoning the
Trust or submitting a completed Participation Form to DST Systems, Inc. ("DST"),
the Program administrator. DST will credit to each participant's account funds
it receives from: (a) Dividends paid on Trust Common Shares registered in the
participant's name and (b) optional cash investments. DST will apply all
Dividends and optional cash investments received to purchase Common Shares as
soon as practicable beginning on the relevant Investment Date (as described
below) and not later than six business days after the investment Date, except
when necessary to comply with applicable provisions of the federal securities
laws. For more information on distribution policy, see "Dividends and
Distributions" in the Trust's Prospectus.

In order for participants to purchase Common Shares through the Program
in any month, the Administrator must receive from the participant any optional
cash investment not exceeding $100,000 by the OCI Payment Due Date. The DRIP
Investment Date will be the date upon which Dividends will be reinvested in
additional Common Shares of the Trust, which will be on the Dividend Payment
Date. The OCI Investment Date will be the date, set in advance by the Trust,
upon which optional cash investments not exceeding $100,000, are first applied
by DST to the purchase of Common Shares. Participants may obtain a schedule of
upcoming OCI Payment Due Dates, and Investment Dates by referring to the Summary
Program Description or calling the Trust at (800) 992-0180.

If the Market Price (the volume-weighted average sales price, per
share, as reported on the New York Stock Exchange Composite Transaction Tape as
shown daily on Bloomberg's AQR screen) plus estimated commissions for Common
Shares of the Trust is less than the net asset value on the Valuation Date
(defined below), DST will purchase Common Shares on the open market through a
bank or securities broker as provided herein. Open market purchases may be
effected on any securities exchange on which Common Shares of the Trust trade or
in the over-the-counter market. If the Market Price, plus estimated commissions,
exceeds the net asset value before DST has completed its purchases, DST will use
reasonable efforts to cease purchasing Common Shares, and the Trust shall issue
the remaining Common Shares. If the Market Price, plus estimated commissions, is
equal to or exceeds the net asset value on the Valuation Date, the Trust will
issue the Common Shares to be acquired by the Program. The Valuation Date is a
date preceding the DRIP Investment Date and OCI Investment Date, on which it is
determined, based on the Market Price and net asset value of Common Shares of
the Trust, whether DST will purchase Common Shares on the open market or the
Trust will issue the Common Shares for the Program. The Trust may, without prior
notice to participants, determine that it will not issue new Common Shares for
purchase pursuant to the Program, even when the Market Price plus estimated
commissions equals or exceeds net asset value, in which case DST will purchase
Common Shares on the open market.

Common Shares issued by the Trust under the Program will be issued
without incurring a fee. Common Shares purchased for the Program directly from
the Trust in connection with the reinvestment of Dividends will be acquired on
the DRIP Investment Date at the greater of (i) NAV at the close of business on
the Valuation Date or (ii) the average of the daily Market Price of the shares
during the DRIP Pricing

Period, minus a discount of 5%. The DRIP Pricing Period for a dividend
reinvestment is the Valuation Date and the prior Trading Day. A Trading Day
means any day on which trades of the Common Shares of the Trust are reported on
the NYSE.

Common Shares purchased directly from the Trust pursuant to optional
cash investments will be acquired on an OCI Investment Date at the greater of
(i) net asset value at the close of business on the Valuation Date or (ii) the
average of the daily Market Price of the shares during the OCI Pricing Period
minus a discount, determined at the sole discretion of the Trust and announced
in advance, ranging from 0% to 5%. The OCI Pricing Period for an OCI Investment
Date means the period beginning four Trading Days prior to the Valuation Date
through and including the Valuation Date. The discount for optional cash
investments is set by the Trust and may be changed or eliminated by the Trust
without prior notice to participants at any time. The discount for optional cash
investments is determined on the last business day of each month. In all
instances, however, the discount on Common Shares issued directly by the Trust
shall not exceed 5% of the market price, and Common Shares may not be issued at
a price less than net asset value without prior specific approval of
shareholders or of the Commission. Optional cash investments received by DST no
later than 4:00 p.m. Eastern time on the OCI payment Due Date to be invested on
the relevant OCI Investment Date.

Participants will pay a pro rata share of brokerage commissions with
respect to DST's open market purchases in connection with the reinvestment of
Dividends or purchases made with optional cash investments.

From time to time, financial intermediaries, including brokers and
dealers, and other persons may wish to engage in positioning transactions in
order to benefit from the discount from market price of the Common Shares
acquired under the Program. Such transactions could cause fluctuations in the
trading volume and price of the Common Shares. The difference between the price
such owners pay to the Trust for Common Shares acquired under the Program, after
deduction of the applicable discount from the market price, and the price at
which such Common Shares are resold, may be deemed to constitute underwriting
commissions received by such owners in connection with such transactions.

Subject to the availability of Common Shares registered for issuance
under the Program, there is no total maximum number of Common Shares that can be
issued pursuant to the Program.

The Program is intended for the benefit of investors in the Trust and
not for persons or entities who accumulate accounts under the Program over which
they have control for the purpose of exceeding the $100,000 per month maximum or
who engage in transactions that cause or are designed to cause aberrations in
the price or trading volume of the Common Shares. Notwithstanding anything in
the Program to the contrary, the Trust reserves the right to exclude from
participation, at any time, (i) persons or entities who attempt to circumvent
the Program's standard $100,000 maximum by accumulating accounts over which they
have control or (ii) any other persons or entities, as determined in the sole
discretion of the Trust.

Currently, persons who are not Shareholders of the Trust may not
participate in the Program. The Board of Trustees of the Trust may elect to
change this policy at a future date, and permit non-Shareholders to participate
in the Program.

Shareholders may request to receive their Dividends in cash at any time
by giving DST written notice or by contacting the Trust's Shareholder Services
Department at (800) 992-0180. Shareholders may elect to close their account at
any time by giving DST written notice. When a participant closes their account,
the participant upon request will receive a certificate for full Common Shares
in the Account.

Fractional Common Shares will be held and aggregated with other Fractional
Common Shares being liquidated by DST as agent of the Program and paid for by
check when actually sold.

The automatic reinvestment of Dividends does not affect the tax
characterization of the Dividends (I.E., capital gains and income are realized
even though cash is not received). If Common Shares are issued pursuant to the
Program's dividend reinvestment provisions or cash purchase provisions at a
discount from market price, participants may have income equal to the discount.

Additional information about the Program may be obtained from the
Trust's Shareholder Services Department at (800) 992-0180.

See "Federal Taxation--Distributions" for a discussion of the federal
income tax ramifications of obtaining Common Shares under the Program.

PRIVATELY NEGOTIATED TRANSACTIONS

The Common Shares may also be offered pursuant to privately negotiated
transactions between the Trust and specific investors. The terms of such
privately negotiated transactions will be subject to the discretion of the
management of the Trust. In determining whether to sell Common Shares pursuant
to a privately negotiated transaction, the Trust will consider relevant factors
including, but not limited to, the attractiveness of obtaining additional funds
through the sale of Common Shares, the purchase price to apply to any such sale
of Common Shares and the person seeking to purchase the Common Shares.

Common Shares issued by the Trust in connection with privately
negotiated transactions will be issued at the greater of (1) NAV per Common
Share of the Trust's Common Shares or (ii) at a discount ranging from 0% to 5%
of the average of the daily market price of the Trust's Common Shares at the
close of business on the two business days preceding the date upon which Common
Shares are sold pursuant to the privately negotiated transaction. The discount
to apply to such privately negotiated transactions will be determined by the
Trust with regard to each specific transaction.

FEDERAL TAXATION

The following is only a summary of certain U.S. federal income tax
considerations generally affecting the Trust and its shareholders. No attempt is
made to present a detailed explanation of the tax treatment of the Trust or its
shareholders, and the following discussion is not intended as a substitute for
careful tax planning. Shareholders should consult with their own tax advisers
regarding the specific federal, state, local, foreign and other tax consequences
of investing in the Trust.

QUALIFICATION AS A REGULATED INVESTMENT COMPANY

The Trust will elect each year to be taxed as a regulated investment
company under Subchapter M of the Internal Revenue Code ("Code"). As a regulated
investment company, the Trust generally will not be subject to federal income
tax on the portion of its investment company taxable income (I.E., taxable
interest, dividends and other taxable ordinary income, net of expenses, and net
short-term capital gains in excess of long-term capital losses) and net capital
gain (I.E., the excess of net long-term capital gains over the sum of net
short-term capital losses and capital loss carryovers from prior years) that it
distributes to shareholders, provided that it distributes at least 90% of its
investment company taxable income for the taxable year ("Distribution
Requirement"), and satisfies certain other requirements of the Code that are
described below.

In addition to satisfying the Distribution Requirement and an asset
diversification requirement discussed below, a regulated investment company must
derive at least 90% of its gross income for each taxable year from dividends,
interest, certain payments with respect to securities loans, gains from the sale
or other disposition of stock or securities or foreign currencies and other
income (including, but not limited to, gains from options, futures or forward
contracts) derived with respect to its business of investing in such stock,
securities or currencies.

In addition to satisfying the requirements described above, the Trust
must satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of the Trust's
taxable year, at least 50% of the value of the Trust's assets must consist of
cash and cash items (including receivables), U.S. government securities,
securities of other regulated investment companies, and securities of other
issuers (as to which the Trust has not invested more than 5% of the value of the
Trust's total assets in securities of any such issuer and as to which the Trust
does not hold more than 10% of the outstanding voting securities of any such
issuer), and no more than 25% of the value of its total assets may be invested
in the securities of any one issuer (other than U.S. government securities and
securities of other regulated investment companies), or in two or more issuers
which the Trust controls and which are engaged in the same or similar trades or
businesses.

In general, gain or loss recognized by the Trust on the disposition of
an asset will be a capital gain or loss. However, gain recognized on the
disposition of a debt obligation purchased by the Trust at a market discount
(generally at a price less than its principal amount) other than at the original
issue will be treated as ordinary income to the extent of the portion of the
market discount which accrued during the period of time the Trust held the debt
obligation.

In general, investments by the Trust in zero coupon or other original
issue discount securities will result in income to the Trust equal to a portion
of the excess of the face value of the securities over their issue price
("original issue discount") each year that the Trust holds the securities, even
though the Trust receives no cash interest payments. This income is included in
determining the amount of income which the Trust must distribute to maintain its
status as a regulated investment company and to avoid federal income and excise
taxes.

If for any taxable year the Trust does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable as
ordinary dividends to the extent of the Trust's current and accumulated earnings
and profits. Such distributions generally would be eligible for the
dividends-received deduction in the case of corporate shareholders.

If the Fund fails to qualify as a regulated investment company in any
year, it must pay out its earnings and profits accumulated in that year in order
to qualify again as a regulated investment company. Moreover, if the Fund failed
to qualify as a regulated investment company for a period greater than one
taxable year, the Fund may be required to recognize any net built-in gains with
respect to certain of its assets (the excess of the aggregate gains, including
items of income, over aggregate losses that would have been realized if the Fund
had been liquidated) in order to qualify as a regulated investment company in a
subsequent year.

EXCISE TAX ON REGULATED INVESTMENT COMPANIES

A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to the
sum of (1) 98% of its ordinary taxable income for the calendar year, (2) 98% of
its capital gain net income (I.E., capital gains in excess of capital losses)
for the one-year period ended on October 31 of such calendar year, and (3) any
ordinary taxable income and

capital gain net income for previous years that was not distributed or taxed to
the regulated investment company during those years. A distribution will be
treated as paid on December 31 of the current calendar year if it is declared by
the Trust in October, November or December with a record date in such a month
and paid by the Trust during January of the following calendar year. Such
distributions will be taxed to shareholders in the calendar year in which the
distributions are declared, rather than the calendar year in which the
distributions are received.

The Trust intends to make sufficient distributions or deemed
distributions (discussed below) of its ordinary taxable income and capital gain
net income to avoid liability for the excise tax.

HEDGING TRANSACTIONS

The Trust has the ability, pursuant to its investment objectives and
policies, to hedge its investments in a variety of transactions, including
interest rate swaps and the purchase or sale of interest rate caps and floors.
The treatment of these transactions for federal income tax purposes may in some
instances be unclear, and the regulated investment company qualification
requirements may limit the extent to which the Trust can engage in hedging
transactions.

Under certain circumstances, the Trust may recognize gain from a
constructive sale of an appreciated financial position. If the Trust enters into
certain transactions in property while holding substantially identical property,
the Trust would be treated as if it had sold and immediately repurchased the
property and would be taxed on any gain (but not loss) from the constructive
sale. The character of gain from a constructive sale would depend upon the
Trust's holding period in the property. Loss from a constructive sale would be
recognized when the property was subsequently disposed of, and its character
would depend on the Trust's holding period and the application of various loss
deferral provisions in the Code. Constructive sale treatment does not apply to
transactions closed in the 90-day period ending with the 30th day after the
close of the taxable year, if certain conditions are met.

DISTRIBUTIONS

The Trust anticipates distributing all or substantially all of its
investment company taxable income for the taxable year. Such distributions will
be taxable to shareholders as ordinary income. If a portion of the Trust's
income consists of dividends paid by U.S. corporations, a portion of the
dividends paid by the Trust may be eligible for the corporate dividends received
deduction.

The Trust may either retain or distribute to shareholders its net
capital gain for each taxable year. The Trust currently intends to distribute
any such amounts. If net capital gain is distributed and designated as a capital
gain dividend, it will generally be taxable to shareholders at a maximum federal
tax rate of 15%. Distributions are subject to these capital gains rates
regardless of the length of time the shareholder has held his shares.
Conversely, if the Trust elects to retain its net capital gain, the Trust will
be taxed thereon (except to the extent of any available capital loss carryovers)
at the applicable corporate tax rate. In such event, it is expected that the
Trust also will elect to treat such gain as having been distributed to
shareholders. As a result, each shareholder will be required to report his pro
rata share of such gain on his tax return as long-term capital gain, will be
entitled to claim a tax credit for his pro rata share of tax paid by the Trust
on the gain, and will increase the tax basis for his shares by an amount equal
to the deemed distribution less the tax credit.

Recently enacted tax legislation generally provides for a maximum tax
rate for individual taxpayers of 15% on long-term capital gains from sales on or
after May 6, 2003 and on certain qualifying dividend income. The rate reductions
do not apply to corporate taxpayers. The Trust will be able to separately
designate distributions of any qualifying long-term capital gains or qualifying
dividends earned

by the Trust that would be eligible for the lower maximum rate, although it does
not expect to distribute a material amount of qualifying dividends. A
shareholder would also have to qualify a 60-day holding period with respect to
any distributions of qualifying dividend in order to obtain the benefit of the
lower rate. Distributions from funds, such as the Trust, investing in debt
instruments will not generally qualify for the lower rate.

Distributions by the Trust in excess of the Trust's earnings and
profits will be treated as a return of capital to the extent of (and in
reduction of) the shareholder's tax basis in his shares; any such return of
capital distributions in excess of the shareholder's tax basis will be treated
as gain from the sale of his shares, as discussed below.

Distributions by the Trust will be treated in the manner described
above regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Trust. If the NAV at the time a shareholder purchases
shares of the Trust reflects undistributed income or gain, distributions of such
amounts will be taxable to the shareholder in the manner described above, even
though such distributions economically constitute a return of capital to the
shareholder.

The Trust will be required in certain cases to withhold and remit to
the U.S. Treasury 28% of all dividends and redemption proceeds payable to any
shareholder (1) who fails to provide the Trust with a certified, correct
identification number or other required certifications, or (2) if the Internal
Revenue Service notifies the Trust that the shareholder is subject to backup
withholding. Corporate shareholders and other shareholders specified in the Code
are exempt from such backup withholding. Backup withholding is not an additional
tax. Any amounts withheld may be credited against the shareholder's U.S. federal
income tax liability if the appropriate information is provided to the IRS.

SALE OF COMMON SHARES

A shareholder will recognize gain or loss on the sale or exchange of
shares of the Trust in an amount generally equal to the difference between the
proceeds of the sale and the shareholder's adjusted tax basis in the shares. In
general, any such gain or loss will be considered capital gain or loss if the
shares are held as capital assets, and gain or loss will be long-term or
short-term, depending upon the shareholder's holding period for the shares.
However, any capital loss arising from the sale of shares held for six months or
less will be treated as a long-term capital loss to the extent of any long-term
capital gains distributed (or deemed distributed) with respect to such shares.
Also, any loss realized on a sale or exchange of shares will be disallowed to
the extent the shares disposed of are replaced (including shares acquired
through the Shareholder Investment Program within a period of 61 days beginning
30 days before and ending 30 days after the shares are disposed of. In such
case, the tax basis of the acquired shares will be adjusted to reflect the
disallowed loss.

FOREIGN SHAREHOLDERS

U.S. taxation of a shareholder who, as to the United States, is a
nonresident alien individual, foreign trust or estate, foreign corporation, or
foreign partnership ("foreign shareholder") depends, in part, on whether the
shareholder's income from the Trust is effectively connected with a U.S. trade
or business carried on by such shareholder.

If the income from the Trust is not effectively connected with a U.S.
trade or business carried on by a foreign shareholder, distributions of
investment company taxable income will be subject to U.S. withholding tax at the
rate of 30% (or lower treaty rate). Such a foreign shareholder would generally
be exempt from U.S. federal income tax on gains realized on the sale or exchange
of shares of the Trust,

capital gain dividends, and amounts retained by the Trust that are designated as
undistributed capital gains.

If the income from the Trust is effectively connected with a U.S. trade
or business carried on by a foreign shareholder, then distributions of
investment company taxable income, capital gain dividends, amounts retained by
the Trust that are designated as undistributed capital gains and any gains
realized upon the sale or exchange of shares of the Trust will be subject to
U.S. federal income tax at the rates applicable to U.S. citizens or domestic
corporations. Such shareholders that are classified as corporations for U.S. tax
purposes also may be subject to a branch profits tax.

In the case of foreign noncorporate shareholders, the Trust may be
required to withhold U.S. federal income tax at a rate of 30% on distributions
that are otherwise exempt from withholding tax (or taxable at a reduced treaty
rate) unless such shareholders furnish the Trust with proper notification of
their foreign status. See "Distributions."

The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the
Trust, including the applicability of foreign taxes.

EFFECT OF FUTURE LEGISLATION; OTHER TAX CONSIDERATIONS

The foregoing general discussion of U.S. federal income tax
consequences is based on the Code and the Treasury Regulations issued thereunder
as in effect on the date of this SAI. Future legislative or administrative
changes or court decisions may significantly change the conclusions expressed
herein, and any such changes or decisions may have a retroactive effect with
respect to the transactions contemplated herein.

Income received by the Trust from foreign sources may be subject to
withholding and other taxes imposed by such foreign jurisdictions, absent treaty
relief. Distributions to shareholders also may be subject to state, local and
foreign taxes, depending upon each shareholder's particular situation.
Shareholders are urged to consult their tax advisers as to the particular
consequences to them of an investment in the Trust.

ADVERTISING AND PERFORMANCE DATA

ADVERTISING

From time to time, advertisements and other sales materials for the
Trust may include information concerning the historical performance of the
Trust. Any such information may include trading volume of the Trust's Common
Shares, the number of Senior Loan investments, annual total return, aggregate
total return, distribution rate, average compounded distribution rates and
yields of the Trust for specified periods of time, and diversification
statistics. Such information may also include rankings, ratings and other
information from independent organizations such as Lipper Analytical Services,
Inc. ("Lipper"), Morningstar, Value Line, Inc., CDA Technology, Inc., Standard &
Poor's, Portfolio Management Data (a division of Standard & Poor's), Moody's,
Bloomberg or other industry publications. These rankings will typically compare
the Trust to all closed-end Funds, to other Senior Loan funds, and/or also to
taxable closed-end fixed income funds. Any such use of rankings and ratings in
advertisements and sales literature will conform with the guidelines of the NASD
approved by the Commission. Ranking comparisons and ratings should not be
considered representative of the Trust's relative performance for any future
period.

Reports and promotional literature may also contain the following
information: (i) number of shareholders; (ii) average account size; (iii)
identification of street and registered account holdings; (iv) lists or
statistics of certain of the Trust's holdings including, but not limited to,
portfolio composition, sector weightings, portfolio turnover rates, number of
holdings, average market capitalization and modern portfolio theory statistics
alone or in comparison with itself (over time) and with its peers and industry
group; (v) public information about the assets class; and (vi) discussions
concerning coverage of the Trust by analysts.

In addition, reports and promotional literature may contain information
concerning the Investment Manager, the Sub-Adviser, ING Groep, the Portfolio
Managers, the Administrator or affiliates of the Trust including (i) performance
rankings of other funds managed by the Investment Manager or Sub-Adviser, or the
individuals employed by the Investment Manager or Sub-Adviser who exercise
responsibility for the day-to-day management of the Trust, including rankings
and ratings of investment companies published by Lipper, Morningstar, Inc.,
Value Line, Inc., CDA Technologies, Inc., or other rating services, companies,
publications or other persons who rank or rate investment companies or other
investment products on overall performance or other criteria; (ii) lists of
clients, the number of clients, or assets under management; (iii) information
regarding the acquisition of the ING Funds by ING Capital; (iv) the past
performance of ING Capital and ING Funds Services; (v) the past performance of
other funds managed by the Investment Manager or Sub-Adviser; (vi) quotes from a
portfolio manager of the Trust or industry specialists; and (vii) information
regarding rights offerings conducted by closed-end funds managed by the
Investment Manager or Sub-Adviser.

The Trust may compare the frequency of its reset period to the
frequency which LIBOR changes. Further, the Trust may compare its yield to (i)
LIBOR, (ii) the federal funds rate, (iii) the Prime Rate, quoted daily in the
Wall Street Journal as the base rate on corporate loans at large U.S. money
center commercial banks, (iv) the average yield reported by the Bank Rate
Monitor National Index for money market deposit accounts offered by the 100
leading banks and thrift institutions in the ten largest standard metropolitan
statistical areas, (v) yield data published by Lipper, Bloomberg or other
industry sources, or (vi) the yield on an investment in 90-day Treasury bills on
a rolling basis, assuming quarterly compounding. Further, the Trust may compare
such other yield data described above to each other. The Trust may also compare
its total return, NAV stability and yield to fixed income investments. As with
yield and total return calculations, yield comparisons should not be considered
representative of the Trust's yield or relative performance for any future
period.

The Trust may provide information designed to help individuals
understand their investment goals and explore various financial strategies. Such
information may include information about current economic, market and political
conditions; materials that describe general principles of investing, such as
asset allocation, diversification, risk tolerance, and goal setting; worksheets
used to project savings needs based on assumed rates of inflation and
hypothetical rates of return; and action plans offering investment alternatives.
Materials may also include discussion of other investment companies in the ING
Funds, products and services, and descriptions of the benefits of working with
investment professionals in selecting investments.

PERFORMANCE DATA

The Trust may quote annual total return and aggregate total return
performance data. Total return quotations for the specified periods will be
computed by finding the rate of return (based on net investment income and any
capital gains or losses on portfolio investments over such periods) that would
equate the initial amount invested to the value of such investment at the end of
the period. On occasion, the Trust may quote total return calculations published
by Lipper, a widely recognized independent publication that monitors the
performance of both open-end and closed-end investment companies.

The Trust's distribution rate is calculated on a monthly basis by
annualizing the dividend declared in the month and dividing the resulting
annualized dividend amount by the Trust's corresponding month-end net asset
value (in the case of NAV) or the last reported market 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.

Total return and distribution rate and compounded distribution rate
figures utilized by the Trust are based on historical performance and are not
intended to indicate future performance. Distribution rate, compounded
distribution rate and NAV per share can be expected to fluctuate over time.
Total return will vary depending on market conditions, the Senior Loans, and
other securities comprising the Trust's portfolio, the Trust's operating
expenses and the amount of net realized and unrealized capital gains or losses
during the period.

GENERAL INFORMATION

CUSTODIAN

State Street Bank and Trust Company, 801 Pennsylvania Avenue, Kansas
City, Missouri 64105 has been retained to act as the custodian for the Trust.
State Street Bank and Trust Company does not have any part in determining the
investment policies of the Trust or in determining which portfolio securities
are to be purchased or sold by the Trust or in the declaration of dividends and
distributions.

LEGAL COUNSEL

Legal matters for the Trust are passed upon by Dechert LLP, 1775 I
Street, NW, Washington, DC 20006.

INDEPENDENT AUDITORS

KPMG LLP, 355 South Grand Avenue, Los Angeles, California 90071,
currently serves as the independent auditors and has been selected as
independent auditors for the Trust for the fiscal year ending February 2, 2005.

FINANCIAL STATEMENTS

The Financial Statements and the independent auditors' reports
thereon, appearing in the Trust's Annual Report for the period ending
February 29, 2004 are incorporated by reference in this SAI. The Trust's
Annual and Semi-Annual Reports are available at 7337 East Doubletree Ranch
Road, Scottsdale, Arizona 85258, upon request and without charge by calling
(800) 992-0180.

APPENDIX A

ING FUNDS

---------------------------------

PROXY VOTING PROCEDURES AND GUIDELINES
Effective as of July 10, 2003
As amended August 21, 2003 and November 11, 2003

---------------------------------

I. INTRODUCTION

The following are the Proxy Voting Procedures and Guidelines (the "Procedures
and Guidelines") of the ING Funds set forth on Exhibit 1 attached hereto and
each portfolio or series thereof (each a "Fund" and collectively, the "Funds").
The purpose of these Procedures and Guidelines is to set forth the process by
which each Fund will vote proxies related to the assets in its investment
portfolio (the "portfolio securities"). The Procedures and Guidelines have been
approved by each of the Funds' Board of Trustees/Directors(1) (each a "Board"
and collectively, the "Boards"), including a majority of the independent
Trustees/Directors(2) of the Board. These Procedures and Guidelines may be
amended only by the Board. The Board shall review these Procedures and
Guidelines at its discretion, and make any revisions thereto as deemed
appropriate by the Board.

II. VALUATION AND PROXY VOTING COMMITTEE

The Boards hereby delegate to the Valuation and Proxy Voting Committee of each
Board (each a "Committee" and collectively, the "Committees") the authority and
responsibility to oversee the implementation of these Procedures and Guidelines,
and where applicable, to make determinations on behalf of the Board with respect
to the voting of proxies on behalf of each Fund. Furthermore, the Boards hereby
delegate to each Committee the authority to review and approve material changes
to proxy voting procedures of any Fund's investment adviser (the "Adviser"). The
Proxy Voting Procedures of the Adviser are attached hereto as Exhibit 2. Any
determination regarding the voting of proxies of each Fund that is made by a
Committee, or any member thereof, as permitted herein, shall be deemed to be a
good faith determination regarding the voting of proxies by the full Board. Each
Committee may rely on the Adviser through the Agent, Proxy Coordinator and/or
Proxy Group (as such terms are defined below and in the Adviser's proxy voting
procedures) to deal in the first instance with the application of these
Procedures and Guidelines. Each Committee shall conduct itself in accordance
with its charter.

III. DELEGATION OF VOTING RESPONSIBILITY

----------
(1) Reference in these Procedures to one or more Funds shall, as applicable,
mean those Funds that are under the jurisdiction of the particular Board or
Valuation and Proxy Voting Committee at issue. No provision in these
Procedures is intended to impose any duty upon the particular Board or
Valuation and Proxy Voting Committee with respect to any other Fund.

(2) The independent Trustees/Directors are those Board members who are not
"interested persons" within the meaning of Section 2(a)(19) the Investment
Company Act of 1940.

The Board hereby delegates to the Adviser to each Fund the authority and
responsibility to vote all proxies with respect to all portfolio securities of
each Fund in accordance with then current proxy voting procedures and guidelines
that have been approved by the Board. The Board may revoke such delegation with
respect to any proxy or proposal, and assume the responsibility of voting any
Fund proxy or proxies, as it deems appropriate. Non-material amendments to the
Procedures and Guidelines may be approved for immediate implementation by the
President or Chief Financial Officer of a Fund, subject to ratification at the
next regularly scheduled meeting of the Valuation and Proxy Voting Committee.

When a Fund participates in the lending of its securities and the securities are
on loan at record date, proxies related to such securities will not be forwarded
to the Adviser by the Fund's custodian and therefore will not be voted.

When a Fund is a feeder in a master/feeder structure, proxies for the portfolio
securities of the master fund will be voted pursuant to the master fund's proxy
voting policies and procedures.

IV. APPROVAL AND REVIEW OF PROCEDURES

Each Fund's Adviser has adopted proxy voting procedures in connection with the
voting of portfolio securities for the Funds as attached hereto in Exhibit 2.
The Board hereby approves such procedures. All material changes to such
procedures must be approved by the Board or the Valuation and Proxy Voting
Committee prior to implementation; however, the President or Chief Financial
Officer of a Fund may make such non-material changes as they deem appropriate,
subject to ratification by the Board or the Valuation and Proxy Voting Committee
at its next regularly scheduled meeting.

V. VOTING PROCEDURES AND GUIDELINES

THE GUIDELINES WHICH ARE SET FORTH IN EXHIBIT 3 HERETO SPECIFY THE MANNER IN
WHICH THE FUNDS GENERALLY WILL VOTE WITH RESPECT TO THE PROPOSALS DISCUSSED
THEREIN.

A. Routine Matters

The Agent shall be instructed to submit a vote in accordance with the
Guidelines where such Guidelines provide a clear "For", "Against" or
"Abstain" on a proposal. However, the Agent shall be directed to refer
proxy proposals to the Proxy Coordinator for instructions as if it were a
matter requiring case-by-case consideration under circumstances where the
application of the Guidelines is unclear, they appear to involve unusual or
controversial issues, or an Investment Professional recommends a vote
contrary to the Guidelines.

B. Matters Requiring Case-by-Case Consideration

The Agent shall be directed to refer proxy proposals accompanied by its
written analysis and voting recommendation to the Proxy Coordinator where
the Guidelines have noted a "case-by-case" consideration.

Upon receipt of a referral from the Agent, the Proxy Coordinator may
solicit additional research from the Agent, Investment Professional(s), as
well as from any other source or service.

The Proxy Coordinator will forward the Agent's analysis and recommendation
and/or any research obtained from the Investment Professional(s), the Agent
or any other source to the Proxy Group. The Proxy Group may consult with
the Agent and/or Investment Professional(s), as it deems necessary.

1. Votes in Accordance with Agent Recommendation

In the event the Proxy Group recommends a vote in accordance with
the Agent's recommendation, the Proxy Group will instruct the
Agent, through the Proxy Coordinator, to vote in accordance with
the Agent's recommendation.

2. Non-Votes

The Proxy Group may recommend that a Fund refrain from voting
under the following circumstances: (1) if the economic effect on
shareholders' interests or the value of the portfolio holding is
indeterminable or insignificant or (2) if the cost of voting a
proxy outweighs the benefits, E.G., certain international proxies.
In such instances, the Proxy Group may instruct the Agent, through
the Proxy Coordinator, not to vote such proxy.

3. Votes Contrary to Procedures and Guidelines, or Agent Recommendation,
where applicable, or where No Recommendation is provided by Agent.

If the Proxy Group recommends that a Fund vote contrary to the
Procedures and Guidelines, or the recommendation of the Agent,
where applicable, or if the Agent has made no recommendation and
the Procedures and Guidelines are silent, the Proxy Coordinator
will then request that each member of the Proxy Group and each
Investment Professional participating in the voting process
provide a Conflicts Report (as such term is defined for purposes
of the Adviser's proxy voting procedures).

If Counsel determines that a conflict of interest appears to exist
with respect to any member of the Proxy Group or the relevant
Investment Professional(s), the Proxy Coordinator will then call a
meeting of the Valuation and Proxy Voting Committee and forward to
such committee all information relevant to their review, including
the following materials or a summary thereof: the applicable
Procedures and Guidelines, the recommendation of the Agent where
applicable, the recommendation of the Investment Professional(s),
where applicable, any resources used by the Proxy Group in
arriving at its recommendation, the Conflicts Report and any other
written materials establishing whether a conflict of interest
exists, and findings of Counsel (as such term is defined for
purposes of the Adviser's proxy voting procedures).

If Counsel determines that there does not appear to be a conflict
of interest with respect to any member of the Proxy Group or the
relevant Investment Professional(s), the Proxy Coordinator will
instruct the Agent to vote the proxy as recommended by the Proxy
Group.

4. Referrals to a Fund's Valuation and Proxy Voting Committee

A Fund's Valuation and Proxy Voting Committee may consider all
recommendations, analysis, research and Conflicts Reports provided
to it by the Agent, Proxy Group and/or Investment Professional(s),
and any other written materials used to establish whether a
conflict of interest exists, in determining how to vote the
proxies referred to the Committee.

The Committee will instruct the Agent through the Proxy
Coordinator how to vote such referred proposals.

The Proxy Coordinator will maintain a record of all proxy
questions that have been referred to a Fund's Valuation and Proxy
Voting Committee, all applicable recommendations, analysis,
research and Conflicts Reports.

VI. CONFLICTS OF INTEREST

In all cases in which a vote has not been clearly determined in advance by the
Procedures and Guidelines or for which the Proxy Group recommends a vote
contrary to the Procedures and Guidelines, or contrary to the recommendation of
the Agent, or where the Procedures and Guidelines are silent and the Agent has
made no recommendation, and Counsel has determined that a conflict of interest
appears to exist with respect to any member of the Proxy Group or any Investment
Professional participating in the voting process, the proposal shall be referred
to the Fund's Valuation and Proxy Voting Committee for determination so that the
Adviser shall have no opportunity to vote a Fund's proxy in a situation in which
it may be deemed to have a conflict of interest.

VII. REPORTING AND RECORD RETENTION

Beginning in August 2004, on an annual basis, each Fund will post its proxy
voting record or a link thereto for the prior one-year period ending on June
30th on the ING Funds website. The proxy voting record posted for any Fund that
is a feeder in a master/feeder structure will be that of the master fund. The
proxy voting record for each Fund will also be available in the EDGAR database
on the SEC's website.

EXHIBIT 1
TO THE
ING FUNDS
PROXY VOTING PROCEDURES

ING EQUITY TRUST
ING FUNDS TRUST
ING INVESTMENT FUNDS, INC.
ING INVESTORS TRUST
ING MAYFLOWER TRUST
ING MUTUAL FUNDS
ING PRIME RATE TRUST
ING SENIOR INCOME FUND
ING VARIABLE INSURANCE TRUST
ING VARIABLE PRODUCTS TRUST
ING VP EMERGING MARKETS FUND, INC.
ING VP NATURAL RESOURCES TRUST
USLICO SERIES FUND

Effective as of July 10, 2003

EXHIBIT 2
TO THE
ING FUNDS
PROXY VOTING PROCEDURES

ING INVESTMENTS, LLC,
DIRECTED SERVICES, INC.
AND
ING LIFE INSURANCE AND ANNUITY COMPANY

---------------------------------

PROXY VOTING PROCEDURES
Effective as of July 10, 2003
As amended August 21, 2003

---------------------------------

I. INTRODUCTION

ING Investments, LLC, Directed Services, Inc. and ING Life Insurance
and Annuity Company (each an "Adviser" and collectively, the "Advisers") are the
investment advisers for the registered investment companies and each series or
portfolio thereof (each a "Fund" and collectively, the "Funds") comprising the
ING family of funds. As such, the Advisers have been delegated the authority to
vote proxies with respect to securities for the Funds over which they have
day-to-day portfolio management responsibility.

The Advisers will abide by the proxy voting guidelines adopted by a
Fund's respective Board of Directors or Trustees (each a "Board" and
collectively, the "Boards") with regard to the voting of proxies unless
otherwise provided in the proxy voting procedures adopted by a Fund's Board.

In voting proxies, the Advisers are guided by general fiduciary
principles. Each must act prudently, solely in the interest of the beneficial
owners of the Funds it manages. The Advisers will not subordinate the interest
of beneficial owners to unrelated objectives. Each Adviser will vote proxies in
the manner that it believes will do the most to maximize shareholder value.

The following are the Proxy Voting Procedures of ING Investments, LLC,
Directed Services, Inc. and ING Life Insurance and Annuity Company with respect
to the voting of proxies on behalf of their client Funds as approved by the
respective Board of each Fund.

Unless otherwise noted, proxies will be voted in all instances.

II. ROLES AND RESPONSIBILITIES

A. Proxy Coordinator

The Proxy Coordinator identified in Appendix 1 will assist in the coordination
of the voting of each Fund's proxies in accordance with the ING Funds Proxy
Voting Procedures and Guidelines ("Procedures

and Guidelines"). The Proxy Coordinator is authorized to direct the Agent to
vote a Fund's proxy in accordance with the Procedures and Guidelines unless the
Proxy Coordinator receives a recommendation from an Investment Professional (as
described below) to vote contrary to the Procedures and Guidelines. In such
event, the Proxy Coordinator will call a meeting of the Proxy Group.

B. Agent

An independent proxy voting service (the "Agent"), as approved
by the Board of each Fund, shall be engaged to assist in the voting of
Fund proxies through the provision of vote analysis, implementation,
recordkeeping and disclosure services. The Agent is responsible for
coordinating with the Funds' custodians to ensure that all proxy
materials received by the custodians relating to the portfolio
securities are processed in a timely fashion. To the extent applicable,
the Agent is required to vote and/or refer all proxies in accordance
with these Procedures. The Agent will retain a record of all proxy
votes handled by the Agent. Such record must reflect all the
information required to be disclosed in a Fund's Form N-PX pursuant to
Rule 30b1-4 under the Investment Company Act. In addition, the Agent is
responsible for maintaining copies of all proxy statements received by
issuers and to promptly provide such materials to the Adviser upon
request.

The Agent shall be instructed to vote all proxies in
accordance with the ING Funds' Guidelines, except as otherwise
instructed through the Proxy Coordinator by the Adviser's Proxy Group,
or a Fund's Valuation and Proxy Voting Committee.

The Agent shall be instructed to obtain all proxies from the
Funds' custodians and to review each proxy proposal against the
Guidelines. The Agent also shall be requested to call the Proxy
Coordinator's attention to specific proxy proposals that although
governed by the Guidelines appear to involve unusual or controversial
issues.

C. Proxy Group

The Adviser shall establish a Proxy Group (the "Proxy Group")
which shall assist in the review of the Agent's recommendations when a
proxy voting issue is referred to the Group through the Proxy
Coordinator. The members of the Proxy Group, which may include
employees of the Advisers' affiliates, are identified in Appendix 1, as
may be amended from time at the Advisers' discretion.

A minimum of four (4) members of the Proxy Group (or three (3)
if one member of the quorum is either the Fund's Chief Investment Risk
Officer or Chief Financial Officer) shall constitute a quorum for
purposes of taking action at any meeting of the Group. The vote of a
simple majority of the members present and voting shall determine any
matter submitted to a vote. The Proxy Group may meet in person or by
telephone. The Proxy Group also may take action via electronic mail in
lieu of a meeting, provided that each Group member has received a copy
of any relevant electronic mail transmissions circulated by each other
participating Group member prior to voting and provided that the Proxy
Coordinator follows the directions of a majority of a quorum (as
defined above) responding via electronic mail. For all votes taken in
person or by telephone or teleconference, the vote shall be taken
outside the presence of any person other than the members of the Proxy
Group.

A meeting of the Proxy Group will be held whenever the Proxy
Coordinator receives a recommendation from an Investment Professional
to vote a Fund's proxy contrary to the

Procedures and Guidelines, or the recommendation of the Agent, where
applicable, or if the Agent has made no recommendation with respect to
a vote on a proposal.

For each proposal referred to the Proxy Group, it will review
(1) the Procedures and Guidelines, (2) the recommendation of the Agent,
if any, (3) the recommendation of the Investment Professional(s) and
(4) any other resources that the Proxy Group deems appropriate to aid
in a determination of a recommendation.

If the Proxy Group recommends that a Fund vote in accordance
with the Procedures and Guidelines, or the recommendation of the Agent,
where applicable, it shall instruct the Proxy Coordinator to so advise
the Agent.

If the Proxy Group recommends that a Fund vote contrary to the
Procedures and Guidelines, or the recommendation of the Agent, where
applicable, it shall follow the procedures for such voting as
established by a Fund's Board.

D. Investment Professionals

The Funds' Advisers, sub-advisers and/or portfolio managers
(referred to herein as "Investment Professionals") may be asked to
submit a recommendation to the Proxy Group regarding the voting of
proxies related to the portfolio securities over which they have
day-to-day portfolio management responsibility. The Investment
Professionals may accompany their recommendation with any other
research materials that they deem appropriate.

III. VOTING PROCEDURES

A. In all cases, the Adviser shall follow the voting procedures
as set forth in the Procedures and Guidelines of the Fund on
whose behalf the Adviser is exercising delegated authority to
vote.

B. Routine Matters

The Agent shall be instructed to submit a vote in accordance
with the Guidelines where such Guidelines provide a clear "For",
"Against" or "Abstain" on a proposal. However, the Agent shall be
directed to refer proxy proposals to the Proxy Coordinator for
instructions as if it were a matter requiring case-by-case
consideration under circumstances where the application of the
Guidelines is unclear.

C. Matters Requiring Case-by-Case Consideration

The Agent shall be directed to refer proxy proposals accompanied by its
written analysis and voting recommendation to the Proxy Coordinator
where the Guidelines have noted a "case-by-case" consideration.

Upon receipt of a referral from the Agent, the Proxy Coordinator may
solicit additional research from the Agent, Investment Professional(s),
as well as from any other source or service.

The Proxy Coordinator will forward the Agent's analysis and
recommendation and/or any research obtained from the Investment
Professional(s), the Agent or any other source to the Proxy Group. The
Proxy Group may consult with the Agent and/or Investment
Professional(s), as it deems necessary.

1. Votes in Accordance with Agent Recommendation

In the event the Proxy Group recommends a vote in accordance
with the Agent's recommendation, the Proxy Group will instruct
the Agent, through the Proxy Coordinator, to vote in
accordance with the Agent's recommendation.

2. Non-Votes

The Proxy Group may recommend that a Fund refrain from voting
under the following circumstances: (1) if the economic effect
on shareholders' interests or the value of the portfolio
holding is indeterminable or insignificant or (2) if the cost
of voting a proxy outweighs the benefits, E.G., certain
international proxies. In such instances, the Proxy Group may
instruct the Agent, through the Proxy Coordinator, not to vote
such proxy.

3. Votes Contrary to Procedures and Guidelines, or Agent
Recommendation, where applicable, or Where No Recommendation
is Provided by Agent.

If the Proxy Group recommends that a Fund vote contrary to the
Procedures and Guidelines, or the recommendation of the Agent,
where applicable, or if the Agent has made no recommendation
and the Procedures and Guidelines are silent, the Proxy
Coordinator will then implement the procedures for handling
such votes as adopted by the Fund's Board.

4. The Proxy Coordinator will maintain a record of all proxy
questions that have been referred to a Fund's Valuation and
Proxy Voting Committee, all applicable recommendations,
analysis, research and Conflicts Reports.

IV. CONFLICTS OF INTEREST

In connection with their participation in the voting process for portfolio
securities, each member of the Proxy Group and each Investment Professional
participating in the voting process must act solely in the best interests of the
beneficial owners of the applicable Fund. The members of the Proxy Group may not
subordinate the interests of the Fund's beneficial owners to unrelated
objectives.

For all matters for which the Proxy Group recommends a vote contrary to
Procedures and Guidelines, or the recommendation of the Agent, where applicable,
or where the Agent has made no recommendation and the Procedures and Guidelines
are silent, the Proxy Coordinator will implement the procedures for handling
such votes as adopted by the Fund's Board, including completion of such
Conflicts Reports as may be required under the Fund's procedures. Completed
Conflicts Reports shall be provided to the Proxy Coordinator within two (2)
business days. Such Conflicts Report should describe any known conflicts of
either a business or personal nature, and set forth any contacts with respect to
the referral item with non-investment personnel in its organization or with
outside parties (except for routine communications from proxy solicitors). The
Conflicts Report should also include written confirmation that any
recommendation from an Investment Professional provided under circumstances
where a conflict of interest exists was made solely on the investment merits and
without regard to any other consideration.

The Proxy Coordinator shall forward all Conflicts Reports to a member of the
mutual funds practice group of ING US Legal Services ("Counsel") for review.
Counsel shall review each report and provide the Proxy Coordinator with a brief
statement regarding whether or not a material conflict of interest is

present. Matters as to which a conflict of interest is deemed to be present
shall be handled as provided in the Fund's Procedures and Guidelines.

V. REPORTING AND RECORD RETENTION

The Adviser shall maintain the records required by Rule 204-2(c)(2), as may be
amended from time to time, including the following: (1) A copy of each proxy
statement received regarding a Fund's portfolio securities. Such proxy
statements received from issuers are available either in the SEC's EDGAR
database or are kept by the Agent and are available upon request. (2) A record
of each vote cast on behalf of a Fund. (3) A copy of any document created by the
Adviser that was material to making a decision how to vote a proxy, or that
memorializes the basis for that decision. (4) A copy of written requests for
Fund proxy voting information and any written response thereto or to any oral
request for information on how the Adviser voted proxies on behalf of a Fund.
All proxy voting materials and supporting documentation will be retained for a
minimum of six (6) years.

APPENDIX 1
TO THE
ADVISERS' PROXY VOTING PROCEDURES

Proxy Group for registered investment company clients of ING Investments, LLC,
Directed Services, Inc. and ING Life Insurance and Annuity Company:

NAME TITLE OR AFFILIATION

Stanley D. Vyner Chief Investment Risk Officer and Executive Vice President of ING
Investments, LLC

Karla J. Bos Acting Proxy Coordinator

Kimberly A. Anderson Senior Vice President and Assistant Secretary, ING Investments, LLC

Maria Anderson Assistant Vice President - Manager Fund Compliance of ING Funds Services,
LLC

Michael J. Roland Executive Vice President and Chief Financial Officer of ING Investments, LLC

J. David Greenwald Vice President - Fund Compliance of ING Fund Services, LLC

Megan L. Dunphy, Esq. Counsel, ING Americas US Legal Services

Theresa K. Kelety, Esq. Counsel, ING Americas US Legal Services

Effective as of July 10, 2003

FORM OF EXHIBIT 3
TO THE
ING FUNDS PROXY VOTING PROCEDURES

---------------------------------

PROXY VOTING GUIDELINES OF THE ING FUNDS
Effective as of July 10, 2003
As amended August 21, 2003 and November 11, 2003

---------------------------------

I. INTRODUCTION

The following is a statement of the proxy voting Guidelines that have been
adopted by the respective Boards of Directors or Trustees of each Fund.

Proxies must be voted in the best interest of the Fund. The Guidelines summarize
the Funds' positions on various issues of concern to investors, and give a
general indication of how Fund portfolio securities will be voted on proposals
dealing with particular issues. The Guidelines are not exhaustive and do not
include all potential voting issues.

The Advisers, in exercising their delegated authority, will abide by the
Guidelines as outlined below with regard to the voting of proxies except as
otherwise provided in the Procedures. In voting proxies, the Advisers are guided
by general fiduciary principles. Each must act prudently, solely in the interest
of the beneficial owners of the Funds it manages. The Advisers will not
subordinate the interest of beneficial owners to unrelated objectives. Each
Adviser will vote proxies in the manner that it believes will do the most to
maximize shareholder value.

a. GUIDELINES

The following Guidelines are grouped according to the types of
proposals generally presented to shareholders of U.S. issuers:
Board of Directors, Proxy Contests, Auditors, Proxy Contest
Defenses, Tender Offer Defenses, Miscellaneous Governance
Provisions, Capital Structure, Executive and Director
Compensation, State of Incorporation, Mergers and Corporate
Restructurings, Mutual Fund Proxies and Social and
Environmental Issues. An additional section addresses
proposals most frequently found in Global Proxies.

In all cases where "case-by-case" consideration is noted, it
shall be the policy of the Funds to vote in accordance with
the recommendation provided by the Funds' Agent, Institutional
Shareholder Services, Inc. Such policy may be overridden in
any case pursuant to the procedures outlined herein.

THE BOARD OF DIRECTORS

Voting on Director Nominees in Uncontested Elections. Votes on director nominees
should be made on a CASE-BY-CASE basis.

SEPARATING CHAIRMAN AND CEO
Vote on a CASE-BY-CASE basis shareholder proposals requiring that the positions
of chairman and CEO be held separately.

PROPOSALS SEEKING A MAJORITY OF INDEPENDENT DIRECTORS

Evaluate on a CASE-BY-CASE basis shareholder proposals asking that a majority of
directors be independent. Vote FOR shareholder proposals asking that board
audit, compensation, and/or nominating committees be composed exclusively of
independent directors.

STOCK OWNERSHIP REQUIREMENTS

Generally, vote AGAINST shareholder proposals requiring directors to own a
minimum amount of company stock in order to qualify as a director or to remain
on the board.

TERM OF OFFICE

Generally, vote AGAINST shareholder proposals to limit the tenure of outside
directors.

AGE LIMITS

Generally, vote AGAINST shareholder proposals to impose a mandatory retirement
age for outside directors.

DIRECTOR AND OFFICER INDEMNIFICATION AND LIABILITY PROTECTION

Proposals on director and officer indemnification and liability protection
should be evaluated on a CASE-BY-CASE basis, using Delaware law as the standard.
Vote AGAINST proposals to limit or eliminate entirely directors' and officers'
liability for monetary damages for violating the duty of care. Vote AGAINST
indemnification proposals that would expand coverage beyond just legal expenses
to acts, such as negligence, that are more serious violations of fiduciary
obligation than mere carelessness. Vote FOR only those proposals providing such
expanded coverage in cases when a director's or officer's legal defense was
unsuccessful if:

(1) The director was found to have acted in good faith and in a manner
that he reasonably believed was in the best interests of the company,
and

(2) Only if the director's legal expenses would be covered.

PROXY CONTESTS
Voting for Director Nominees in Contested Elections. Votes in a contested
election of directors must be evaluated on a CASE-BY-CASE basis.

REIMBURSE PROXY SOLICITATION EXPENSES
Voting to reimburse proxy solicitation expenses should be analyzed on a
CASE-BY-CASE basis.

AUDITORS
RATIFYING AUDITORS
Generally, vote FOR proposals to ratify auditors.

Non-Audit Services

Consider on a CASE-BY-CASE basis proposals to approve auditors when total
non-audit fees exceed the total of audit fees, audit-related fees and
permissible tax fees.

AUDITOR INDEPENDENCE
Generally, vote AGAINST shareholder proposals asking companies to prohibit their
auditors from engaging in non-audit services (or capping the level of non-audit
services).

AUDIT FIRM ROTATION (SHAREHOLDER PROPOSALS):
Generally, vote AGAINST shareholder proposals asking for mandatory audit firm
rotation.

PROXY CONTEST DEFENSES
Board Structure: Staggered vs. Annual Elections

Generally, vote AGAINST proposals to classify the board.
Generally, vote FOR proposals to repeal classified boards and to elect all
directors annually.

SHAREHOLDER ABILITY TO REMOVE DIRECTORS
Generally, vote AGAINST proposals that provide that directors may be removed
only for cause. Generally, vote FOR proposals to restore shareholder ability to
remove directors with or without cause. Generally, vote AGAINST proposals that
provide that only continuing directors may elect replacements to fill board
vacancies. Generally, vote FOR proposals that permit shareholders to elect
directors to fill board vacancies.

CUMULATIVE VOTING

Generally, vote AGAINST proposals to eliminate cumulative voting.
Vote proposals to restore or permit cumulative voting on a CASE-BY-CASE basis
relative to the company's other governance provisions.

SHAREHOLDER ABILITY TO CALL SPECIAL MEETINGS

Generally, vote AGAINST proposals to restrict or prohibit shareholder ability to
call special meetings. Generally, vote FOR proposals that remove restrictions on
the right of shareholders to act independently of management.

SHAREHOLDER ABILITY TO ACT BY WRITTEN CONSENT
Generally, vote AGAINST proposals to restrict or prohibit shareholder ability to
take action by written consent. Generally, vote FOR proposals to allow or make
easier shareholder action by written consent.

SHAREHOLDER ABILITY TO ALTER THE SIZE OF THE BOARD

Review on a CASE-BY-CASE basis proposals that seek to fix the size of the board.
Review on a CASE-BY-CASE basis proposals that give management the ability to
alter the size of the board without shareholder approval.

TENDER OFFER DEFENSES
Poison Pills

Generally, vote FOR shareholder proposals that ask a company to submit its
poison pill for shareholder ratification.
Review on a CASE-BY-CASE basis shareholder proposals to redeem a company's
poison pill.
Review on a CASE-BY-CASE basis management proposals to ratify a poison pill.

FAIR PRICE PROVISIONS
Vote proposals to adopt fair price provisions on a CASE-BY-CASE basis.
Generally, vote AGAINST fair price provisions with shareholder vote requirements
greater than a majority of disinterested shares.

GREENMAIL

Generally, vote FOR proposals to adopt antigreenmail charter of bylaw amendments
or otherwise restrict a company's ability to make greenmail payments. Review on
a CASE-BY-CASE basis antigreenmail proposals when they are bundled with other
charter or bylaw amendments.

PALE GREENMAIL

Review on a CASE-BY-CASE basis restructuring plans that involve the payment of
pale greenmail.

UNEQUAL VOTING RIGHTS

Generally, vote AGAINST dual-class exchange offers.
Generally, vote AGAINST dual-class recapitalizations.

SUPERMAJORITY SHAREHOLDER VOTE REQUIREMENT TO AMEND THE CHARTER OR BYLAWS

Generally, vote AGAINST management proposals to require a supermajority
shareholder vote to approve charter and bylaw amendments.
Generally, vote FOR shareholder proposals to lower supermajority shareholder
vote requirements for charter and bylaw amendments.

SUPERMAJORITY SHAREHOLDER VOTE REQUIREMENT TO APPROVE MERGERS
Generally, vote AGAINST management proposals to require a supermajority
shareholder vote to approve mergers and other significant business combinations.
Generally, vote FOR shareholder proposals to lower supermajority shareholder
vote requirements for mergers and other significant business combinations.

WHITE SQUIRE PLACEMENTS

Generally, vote FOR shareholder proposals to require approval of blank check
preferred stock issues for other than general corporate purposes.

MISCELLANEOUS GOVERNANCE PROVISIONS
CONFIDENTIAL VOTING
Generally, vote FOR shareholder proposals that request companies to adopt
confidential voting, use independent tabulators, and use independent inspectors
of election as long as the proposals include clauses for proxy contests as
follows:

- In the case of a contested election, management should be permitted to
request that the dissident group honor its confidential voting policy.

- If the dissidents agree, the policy remains in place. - If the
dissidents do not agree, the confidential voting policy is waived.
Generally, vote FOR management proposals to adopt confidential voting.

EQUAL ACCESS

Generally, vote FOR shareholder proposals that would allow significant company
shareholders (defined as those holding more than $5 million in securities of the
company in question) equal access to management's proxy material in order to
evaluate and propose voting recommendations on proxy proposals and director
nominees, and in order to nominate their own candidates to the board.

BUNDLED PROPOSALS

Review on a CASE-BY-CASE basis bundled or "conditioned" proxy proposals.

SHAREHOLDER ADVISORY COMMITTEES

Review on a CASE-BY-CASE basis proposals to establish a shareholder advisory
committee.

CAPITAL STRUCTURE
Common Stock Authorization

Review proposals to increase the number of shares of common stock authorized for
issue on a CASE-BY-CASE basis.
Generally, vote AGAINST proposals to increase the number of authorized shares of
the class of stock that has superior voting rights in companies that have
dual-class capitalization structures.

STOCK DISTRIBUTIONS: SPLITS AND DIVIDENDS

Generally, vote FOR management proposals to increase common share authorization
for a stock split, provided that the increase in authorized shares would not
result in an excessive number of shares available for issuance given a company's
industry and performance in terms of shareholder returns.

REVERSE STOCK SPLITS

Consider on a CASE-BY-CASE basis management proposals to implement a reverse
stock split.

PREFERRED STOCK
Generally, vote AGAINST proposals authorizing the creation of new classes of
preferred stock with unspecified voting, conversion, dividend distribution, and
other rights ("blank check" preferred stock). Generally, vote FOR proposals to
create blank check preferred stock in cases when the company expressly states
that the stock will not be used as a takeover defense.

Generally, vote FOR proposals to authorize preferred stock in cases where the
company specifies the voting, dividend, conversion, and other rights of such
stock and the terms of the preferred stock appear reasonable.
Vote CASE-BY-CASE on proposals to increase the number of blank check preferred
shares after analyzing the number of preferred shares available for issue given
a company's industry and performance in terms of shareholder returns.

SHAREHOLDER PROPOSALS REGARDING BLANK CHECK PREFERRED STOCK

Generally, vote FOR shareholder proposals to have blank check preferred stock
placements, other than those shares issued for the purpose of raising capital or
making acquisitions in the normal course of business, submitted for shareholder
ratification.

ADJUSTMENTS TO PAR VALUE OF COMMON STOCK

Generally, vote FOR management proposals to reduce the par value of common
stock.

PREEMPTIVE RIGHTS

Review on a CASE-BY-CASE basis shareholder proposals that seek preemptive
rights. In evaluating proposals on preemptive rights, consider the size of a
company and the characteristics of its shareholder base.

DEBT RESTRUCTURINGS

Review on a CASE-BY-CASE basis proposals to increase common and/or preferred
shares and to issue shares as part of a debt restructuring plan.

SHARE REPURCHASE PROGRAMS
Generally, vote FOR management proposals to institute open-market share
repurchase plans in which all shareholders may participate on equal terms.

TRACKING STOCK

Votes on the creation of tracking stock are determined on a CASE-BY-CASE basis.

EXECUTIVE AND DIRECTOR COMPENSATION
Votes with respect to compensation plans should be determined on a CASE-BY-CASE
basis.

MANAGEMENT PROPOSALS SEEKING APPROVAL TO REPRICE OPTIONS

Generally, vote AGAINST management proposals seeking approval to reprice
options.

DIRECTOR COMPENSATION
Votes on stock-based plans for directors are made on a CASE-BY-CASE basis.

EMPLOYEE STOCK PURCHASE PLANS

Votes on employee stock purchase plans should be made on a CASE-BY-CASE basis.

OBRA-RELATED COMPENSATION PROPOSALS:

AMENDMENTS THAT PLACE A CAP ON ANNUAL GRANTS OR AMEND ADMINISTRATIVE
FEATURES Generally, vote FOR plans that simply amend shareholder-approved
plans to include administrative features or place a cap on the annual
grants any one participant may receive to comply with the provisions of
Section 162(m) of OBRA.

AMENDMENTS TO ADD PERFORMANCE-BASED GOALS
Generally, vote FOR amendments to add performance goals to existing
compensation plans to comply with the provisions of Section 162(m) of OBRA.

AMENDMENTS TO INCREASE SHARES AND RETAIN TAX DEDUCTIONS UNDER OBRA
Votes on amendments to existing plans to increase shares reserved and to
qualify the plan for favorable tax treatment under the provisions of
Section 162(m) should be evaluated on a CASE-BY-CASE basis.

APPROVAL OF CASH OR CASH-AND-STOCK BONUS PLANS
Generally, vote FOR cash or cash-and-stock bonus plans to exempt the
compensation from taxes under the provisions of Section 162(m) of OBRA.

SHAREHOLDER PROPOSALS TO LIMIT EXECUTIVE AND DIRECTOR PAY
Generally, vote FOR shareholder proposals that seek additional disclosure of
executive and director pay information. Review on a CASE-BY-CASE basis all other
shareholder proposals that seek to limit executive and director pay.

GOLDEN AND TIN PARACHUTES
Generally, vote FOR shareholder proposals to have golden and tin parachutes
submitted for shareholder ratification. Review on a CASE-BY-CASE basis all
proposals to ratify or cancel golden or tin parachutes.

EMPLOYEE STOCK OWNERSHIP PLANS (ESOPS)
Generally, vote FOR proposals that request shareholder approval in order to
implement an ESOP or to increase authorized shares for existing ESOPs, except in
cases when the number of shares allocated to the ESOP is "excessive" (i.e.,
generally greater than five percent of outstanding shares).

401(k) EMPLOYEE BENEFIT PLANS
Generally, vote FOR proposals to implement a 401(k) savings plan for employees.

EXPENSING OF STOCK OPTIONS
Consider shareholder proposals to expense stock options on a CASE-BY-CASE basis.

STATE OF INCORPORATION
VOTING ON STATE TAKEOVER STATUTES
Review on a CASE-BY-CASE basis proposals to opt in or out of state takeover
statutes (including control share acquisition statutes, control share cash-out
statutes, freezeout provisions, fair price provisions, stakeholder laws, poison
pill endorsements, severance pay and labor contract provisions, antigreenmail
provisions, and disgorgement provisions).

VOTING ON REINCORPORATION PROPOSALS
Proposals to change a company's state of incorporation should be examined on a
CASE-BY-CASE basis.

MERGERS AND CORPORATE RESTRUCTURINGS
MERGERS AND ACQUISITIONS
Votes on mergers and acquisitions should be considered on a CASE-BY-CASE basis.

CORPORATE RESTRUCTURING
Votes on corporate restructuring proposals, including minority squeezeouts,
leveraged buyouts, spinoffs, liquidations, and asset sales should be considered
on a CASE-BY-CASE basis.

SPINOFFS
Votes on spinoffs should be considered on a CASE-BY-CASE basis.

ASSET SALES
Votes on asset sales should be made on a CASE-BY-CASE basis.

LIQUIDATIONS
Votes on liquidations should be made on a CASE-BY-CASE basis.

ADJOURNMENT
Generally, vote FOR proposals to adjourn a meeting to provide additional time
for vote solicitation when the primary proposal is also voted FOR.

APPRAISAL RIGHTS
Generally, vote FOR proposals to restore, or provide shareholders with, rights
of appraisal.

CHANGING CORPORATE NAME
Generally, vote FOR changing the corporate name.

MUTUAL FUND PROXIES
ELECTION OF DIRECTORS
Vote the election of directors on a CASE-BY-CASE basis.

CONVERTING CLOSED-END FUND TO OPEN-END FUND
Vote conversion proposals on a CASE-BY-CASE basis.

PROXY CONTESTS
Vote proxy contests on a CASE-BY-CASE basis.

INVESTMENT ADVISORY AGREEMENTS
Vote the investment advisory agreements on a CASE-BY-CASE basis.

APPROVING NEW CLASSES OR SERIES OF SHARES
Generally, vote FOR the establishment of new classes or series of shares.

PREFERRED STOCK PROPOSALS
Vote the authorization for or increase in preferred shares on a CASE-BY-CASE
basis.

1940 ACT POLICIES
Vote these proposals on a CASE-BY-CASE basis.

CHANGING A FUNDAMENTAL RESTRICTION TO A NONFUNDAMENTAL RESTRICTION
Vote these proposals on a CASE-BY-CASE basis.

CHANGE FUNDAMENTAL INVESTMENT OBJECTIVE TO NONFUNDAMENTAL
Generally, vote AGAINST proposals to change a fund's fundamental investment
objective to nonfundamental.

NAME RULE PROPOSALS
Vote these proposals on a CASE-BY-CASE basis.

DISPOSITION OF ASSETS/TERMINATION/LIQUIDATION
Vote these proposals on a CASE-BY-CASE basis.

CHANGES TO THE CHARTER DOCUMENT
Vote changes to the charter document on a CASE-BY-CASE basis.

CHANGING THE DOMICILE OF A FUND
Vote reincorporations on a CASE-BY-CASE basis.

CHANGE IN FUND'S SUBCLASSIFICATION
Vote these proposals on a CASE-BY-CASE basis.

AUTHORIZING THE BOARD TO HIRE AND TERMINATE SUBADVISORS WITHOUT SHAREHOLDER
APPROVAL
Generally, vote FOR these proposals.

DISTRIBUTION AGREEMENTS
Vote these proposals on a CASE-BY-CASE basis.

MASTER-FEEDER STRUCTURE
Generally, vote FOR the establishment of a master-feeder structure.

CHANGES TO THE CHARTER DOCUMENT
Vote changes to the charter document on a CASE-BY-CASE basis.

MERGERS
Vote merger proposals on a CASE-BY-CASE basis.

ESTABLISH DIRECTOR OWNERSHIP REQUIREMENT
Generally, vote AGAINST shareholder proposals for the establishment of a
director ownership requirement.

REIMBURSE SHAREHOLDER FOR EXPENSES INCURRED
Voting to reimburse proxy solicitation expenses should be analyzed on a
CASE-BY-CASE basis.

TERMINATE THE INVESTMENT ADVISOR
Vote to terminate the investment advisor on a CASE-BY-CASE basis.

SOCIAL AND ENVIRONMENTAL ISSUES
These issues cover a wide range of topics, including consumer and public safety,
environment and energy, general corporate issues, labor standards and human
rights, military business, and workplace diversity.

In general, vote CASE-BY-CASE. While a wide variety of factors goes into each
analysis, the overall principal guiding all vote recommendations focuses on how
the proposal will enhance the economic value of the company.

GLOBAL PROXIES

While a number of the foregoing Guidelines may be applied to both U.S. and
global proxies, the following provide for the differing regulatory and legal
requirements, market practices and political and economic systems existing in
various global markets.

ROUTINE MANAGEMENT PROPOSALS

Generally, vote FOR the following and other similar routine management
proposals:
- the opening of the shareholder meeting
- that the meeting has been convened under local regulatory requirements
- the presence of quorum
- the agenda for the shareholder meeting
- the election of the chair of the meeting
- the appointment of shareholders to co-sign the minutes of the meeting
- regulatory filings (E.G., to effect approved share issuances)
- the designation of inspector or shareholder representative(s) of minutes
of meeting
- the designation of two shareholders to approve and sign minutes of meeting
- the allowance of questions
- the publication of minutes
- the closing of the shareholder meeting

DISCHARGE OF MANAGEMENT/SUPERVISORY BOARD MEMBERS

Generally, vote FOR management proposals seeking the discharge of management and
supervisory board members, unless there is concern about the past actions of the
company's auditors or directors or legal action is being taken against the board
by other shareholders.

DIRECTOR REMUNERATION

Consider director compensation plans on a CASE-BY-CASE basis. Generally, vote
FOR proposals to approve the remuneration of directors as long as the amount is
not excessive and there is no evidence of abuse.

APPROVAL OF FINANCIAL STATEMENTS AND DIRECTOR AND AUDITOR REPORTS

Generally, vote FOR management proposals seeking approval of financial accounts
and reports, unless there is concern about the company's financial accounts and
reporting.

REMUNERATION OF AUDITORS

Generally, vote FOR proposals to authorize the board to determine the
remuneration of auditors, unless there is evidence of excessive compensation
relative to the size and nature of the company.

INDEMNIFICATION OF AUDITORS

Generally, vote AGAINST proposals to indemnify auditors.

ALLOCATION OF INCOME AND DIVIDENDS

Generally, vote FOR management proposals concerning allocation of income and the
distribution of dividends, unless the amount of the distribution is consistently
and unusually small or large.

STOCK (SCRIP) DIVIDEND ALTERNATIVES

Generally, vote FOR most stock (scrip) dividend proposals, but vote AGAINST
proposals that do not allow for a cash option unless management demonstrates
that the cash option is harmful to shareholder value.

DEBT ISSUANCE REQUESTS

When evaluating a debt issuance request, the issuing company's present financial
situation is examined. The main factor for analysis is the company's current
debt-to-equity ratio, or gearing level. A high gearing level may incline markets
and financial analysts to downgrade the company's bond rating, increasing its
investment risk factor in the process. A gearing level up to 100 percent is
considered acceptable.

Generally, vote FOR debt issuances for companies when the gearing level is
between zero and 100 percent. Review on a CASE-BY-CASE basis proposals where the
issuance of debt will result in the gearing level being greater than 100
percent, comparing any such proposed debt issuance to industry and market
standards.

FINANCING PLANS

Generally, vote FOR the adoption of financing plans if they are in the best
economic interests of shareholders.

RELATED PARTY TRANSACTIONS

Consider related party transactions on a CASE-BY-CASE basis. Generally, vote FOR
approval of such transactions unless the agreement requests a strategic move
outside the company's charter or contains unfavorable terms.

CAPITALIZATION OF RESERVES

Generally, vote FOR proposals to capitalize the company's reserves for bonus
issues of shares or to increase the par value of shares.

ARTICLE AMENDMENTS

Review on a CASE-BY-CASE basis all proposals seeking amendments to the articles
of association.

Generally, vote FOR an article amendment if:
- it is editorial in nature;
- shareholder rights are protected;

- there is negligible or positive impact on shareholder value;
- management provides adequate reasons for the amendments; and
- the company is required to do so by law (if applicable).

PART C
OTHER INFORMATION

(5,000,000 COMMON SHARES)

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

1. Financial Statements

Contained in Part A:

Financial Highlights for the years ended February 29, 2004, February
28, 2003, 2002 and 2001; February 29, 2000.

Financial Statements are incorporated in Part B by reference to
Registrant's February 29, 2004 Annual Report (audited).

2. Exhibits

(a) (i) Agreement and Declaration of Trust(1)

(ii) Amendment to the Agreement and Declaration of Trust
dated March 26, 1996 and effective April 12, 1996(1)

(iii) Amendment to the Agreement and Declaration of Trust
dated October 23, 1998 and effective November 16,
1998(7)

(iv) Amendment to the Agreement and Declaration of Trust
dated October 20, 2000 and effective October 20,
2000(10)

(v) Amendment to the Agreement and Declaration of Trust
dated February 20, 2002 and effective March 1, 2002(11)

(b) (i) By-Laws(2)

(ii) Amendment to By-Laws(2)

(iii) Amendment to By-Laws(9)

(iv) Amendment to By-Laws(10)

(d) (i) Certificate of Designation for Preferred Shares(10)

(ii) Form of Share Certificate

(e) Form of Shareholder Investment Program(12)

(f) Not Applicable

(g) (i) Investment Management Agreement between ING Investment
Management, LLC and ING Prime Rate Trust(10)

(ii) Amended Schedule of Approvals with respect to the
Investment Management Agreement between ING Investments,
LLC and ING Prime Rate Trust - to be filed by subsequent
Post-Effective Amendment.

(iii) Sub-Advisory Agreement between ING Investments, LLC and
Aeltus Investment Management, Inc.(12)

(iv) First Amendment to Sub-Advisory Agreement between ING
Investments, LLC and Aeltus Investment Management, Inc.
- to be filed by subsequent Post-Effective Amendment.

(h) (i) Distribution Agreement between ING Prime Rate Trust
(formerly Pilgrim Prime Rate Trust) and ING Funds
Distributor, Inc. (formerly Pilgrim Securities, Inc.)
dated September 1, 2000. - to be filed by subsequent
Post-Effective Amendment.

(ii) Schedule of Approvals with respect to the Distribution
Agreement dated September 1, 2000 between ING Prime Rate
Trust (formerly Pilgrim Prime Rate Trust) and ING Funds
Distributor, Inc. (formerly Pilgrim Securities, Inc.) -
to be filed by subsequent Post-Effective Amendment.

(iii) Substitution Agreement dated October 8, 2002, between
ING Prime Rate Trust and ING Funds Distributor, LLC. -
to be filed by subsequent Post-Effective Amendment.

(iv) Form of Dealer Agreement(8)

(v) Form of Underwriting Agreement for the Preferred
Shares(10)

(i) Not Applicable

(j) (i) Custody and Investment Accounting Agreement between
registrant and State Street Bank and Trust Company - to
be filed by subsequent Post-Effective Amendment.

C-2

(k) (i) Amended and Restated Administration Agreement -- to be
filed by subsequent Post-Effective Amendment.

(ii) Amendment to the Amended and Restated Administration
Agreement(11)

(iii) Revolving Loan Agreement between ING Prime Rate Trust
and Citibank -- to be filed by subsequent Post-Effective
Amendment.

(iv) Credit Agreement with Bank of America -- to be filed by
subsequent Post-Effective Amendment.

(v) Auction Agency Agreement -- to be filed by subsequent
Post-Effective Amendment.

(vi) DTC Letter of Representations as to Preferred Shares --
to be filed by subsequent Post-Effective Amendment.

(l) Opinion of Dechert Price & Rhoads(7)

(m) Not Applicable

(n) (i) Consent of Dechert LLP-- to be filed by subsequent
Post Effective Amendment.

(ii) Consent of KPMG LLP -- to be filed by subsequent
Post-Effective Amendment.

(o) Not Applicable

(p) Certificate of Initial Capital(4)

(q) Not Applicable

(r) (i) ING Funds Code of Ethics - to be filed by subsequent
Post-Effective Amendment.

(ii) Aeltus Investment Management, Inc. Code of Ethics. (12)

----------
(1) Incorporated herein by reference to Amendment No. 20 to Registrant's
Registration Statement under the Investment Company Act of 1940 (the "1940
Act") on Form N-2 (File No. 811-5410), filed on September 16, 1996.

C-3

(2) Incorporated herein by reference to Amendment No. 24 to Registrant's
Registration Statement under the 1940 Act on Form N-2 (File No. 811-5410),
filed on November 7, 1997.

(3) Incorporated herein by reference to Amendment No. 22 to Registrant's
Registration Statement under the 1940 Act on Form N-2 (File No. 811-5410),
filed on June 23, 1997.

(4) Incorporated herein by reference to Pre-Effective Amendment No. 1 to
Registrant's initial registration statement on form N-2 (File No.
33-18886), filed on January 22, 1988.

(5) Incorporated herein by reference to Amendment No. 27 to Registrant's
Registration Statement under the 1940 Act on Form N-2 (File No. 811-5410),
filed on May 15, 1998.

(6) Incorporated herein by reference to Amendment No. 28 to Registrant's
Registration Statement under the 1940 Act on Form N-2 (File No. 811-5410),
filed on August 19, 1998.

(7) Incorporated herein by reference to Amendment No. 29 to Registrant's
Registration Statement under the 1940 Act on Form N-2 (File No. 811-5410),
filed on December 2, 1998.

(8) Incorporated herein by reference to Amendment No. 30 to Registrant's
Registration Statement under the 1940 Act Form N-2 (File No. 811-5410),
filed on March 3, 1999.

(9) Incorporated herein by reference to Amendment No. 33 to Registrant's
Registration Statement under the 1940 Act on Form N-2 (File No. 811-5410),
filed on May 9, 2000.

(10) Incorporated herein by reference to Amendment No. 38 to Registrant's
Registration Statement under the 1940 Act on Form N-2 (File No. 811-5410),
filed on October 23, 2000.

(11) Incorporated herein by reference to Amendment No. 46 to Registrant's
Registration Statement under the 1940 Act on Form N-2 (File No. 811-5410),
filed on April 30, 2002.

(12) Incorporated herein by reference to Amendment No. [ ] to Registrant's
Registration Statement under the 1940 Act on Form N-2 (File No. 811-5410),
filed on June 26, 2003.

ITEM 25. MARKETING AGREEMENTS

Not Applicable.

ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth expenses incurred or estimated to be
incurred in connection with the offering described in the Registration
Statement.

C-4

Registration Fees $ __
Trustee Fees $ __
Rating Agency Fees $ __
Printing Expenses $ __
Legal Fees $ __
Accounting Fees and Expenses $ __
Miscellaneous Expenses $ __
Total $ __

ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL

Not Applicable.

ITEM 28. NUMBER OF HOLDERS OF SECURITIES

(1) TITLE OF CLASS (2) NUMBER OF RECORD HOLDERS
-------------- ------------------------
Auction Rate Cumulative Preferred Shares __ as of June 16, 2004
of beneficial interest, par value $0.01 per
share, Series M, T, W, Th and F

Common Shares of beneficial interest, ___ as of June 16, 2004
par value $0.01 per share

ITEM 29. INDEMNIFICATION

Registrant's Agreement and Declaration of Trust generally provides that the
Trust shall indemnify each of its Trustees and officers (including persons who
serve at the Trust's request as directors, officers or trustees of another
organization in which the Trust has any interest as a shareholder, creditor or
otherwise) ("Covered Persons") against all liabilities and expenses, including
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and counsel fees reasonably incurred in connection with the defense
or disposition of any action, suit or other proceeding, whether civil or
criminal, by reason of being or having been such a Covered Person except with
respect to any matter as to which such Covered Person shall have been finally
adjudicated (a) not to have acted in good faith in the reasonable belief that
such Covered Person's action was in the best interest of the Trust or (b) to be
liable to the Trust or its shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of duties involved in the conduct
of such Covered Person's office.

C-5

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to Trustees, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Commission, such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment of the Registrant of expenses incurred or
paid by a Trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being
registered, the Registrant will submit, unless in the opinion of its counsel the
matter has been settled by controlling precedent, to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

ITEM 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

Information as to the Trustees and officers of the Adviser, together with
information as to any other business, profession, vocation or employment of a
substantial nature engaged in by the directors and officers of the Adviser in
the last two years, is included in its application for registration as an
investment adviser on Form ADV (File No. 801-48282) filed under the Investment
Advisers Act of 1940, as amended ("Advisers Act"), and is incorporated herein by
reference thereto.

ITEM 31. LOCATION OF ACCOUNTS AND RECORDS

The amounts and records of the Registrant will be maintained at its office
at 7337 E. Doubletree Ranch Road, Scottsdale, Arizona 85258 and at the office of
its custodian, State Street Bank & Trust - Kansas City, 801 Pennsylvania, Kansas
City, Missouri 64105.

ITEM 32. MANAGEMENT SERVICES

Not Applicable.

ITEM 33. UNDERTAKINGS

1. The Registrant undertakes to suspend the Offer until the prospectus is
amended if (1) subsequent to the effective date of this registration statement,
the net asset value declines more than ten percent from its net asset value as
of the effective date of this registration statement or (2) the net asset value
increases to an amount greater than the net proceeds as stated in the prospectus
included in this registration statement.

2. Not Applicable.

3. Not Applicable.

C-6

4. Not Applicable.

5. a. The Registrant undertakes that for the purpose of determining
any liability under the 1933 Act, the information omitted from the form of
prospectus filed as part of this Registration Statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the Registrant
under Rule 497(h) under the 1933 Act [17 CFR 230.497(h)] shall be deemed to
be part of this Registration Statement as of the time it was declared
effective; and

b. that for the purpose of determining any liability under the 1933
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of the securities at that time shall be
deemed to be the initial bona fide offering thereof.

6. The Registrant undertakes to send by first class mail or other means
designed to ensure equally prompt delivery, within two business days of receipt
of a written or oral request, any Statement of Additional Information.

C-7

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Scottsdale in the State of Arizona this 30th day
of April, 2004.

ING PRIME RATE TRUST

By: /s/ Michael J. Roland
---------------------
Michael J. Roland
Executive Vice President, Chief Financial Officer and
Assistant Secretary

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated:

SIGNATURE TITLE DATE
--------- ----- ----

------------------------------------- Trustee and Chairman April 30, 2004
John G. Turner*

President and Chief Executive April 30, 2004
------------------------------------- Officer
James M. Hennessy*
Executive Vice President, Chief
Financial Officer and Assistant
Secretary

/s/ Michael J. Roland April 30, 2004
-------------------------------------
Michael J. Roland

------------------------------------- Trustee April 30, 2004
Paul S. Doherty*

------------------------------------- Trustee April 30, 2004
J. Michael Earley*

------------------------------------- Trustee April 30, 2004
R. Barbara Gitenstein*

------------------------------------- Trustee April 30, 2004
Walter H. May, Jr.*

------------------------------------- Trustee April 30, 2004
Thomas J. McInerney*

------------------------------------- Trustee April 30, 2004
Jock Patton*

------------------------------------- Trustee April 30, 2004
David W.C. Putnam*

------------------------------------- Trustee April 30, 2004
Blaine E. Rieke*

------------------------------------- Trustee April 30, 2004
Roger B. Vincent*

------------------------------------- Trustee April 30, 2004
Richard A. Wedemeyer*

*By: /s/ Michael J. Roland
---------------------
Michael J. Roland
Attorney-in-Fact**

----------

** Powers of Attorney for each Trustee and James M. Hennessy are attached
hereto.

EXHIBIT INDEX

EXHIBIT NUMBER EXHIBIT NAME
NONE

POWER OF ATTORNEY

I, the undersigned Officer, constitute and appoint Huey P. Falgout, Jr., Jeffrey
S. Puretz, Theresa K. Kelety, and Michael J. Roland, and each of them
individually, the true and lawful attorneys-in-fact and agents, with full power
to them and each of them to sign for me, and in my name and in the capacity
indicated below, as the case may be, any and all Post-Effective Amendments to
Registration Statements filed with the Securities and Exchange Commission under
the Securities Act of 1933 and under the Investment Company Act of 1940 for the
following Registered Investment Companies:

REGISTRANT 1933 ACT SEC FILING # 1940 ACT SEC FILING #

ING Investors Trust 33-23512 811-5629
ING Equity Trust 333-56881 811-8817
ING Funds Trust 333-59745 811-8895
ING Investment Funds, Inc. 002-34552 811-1939
ING Mayflower Trust 33-67852 811-7978
ING Mutual Funds 33-56094 811-7428
ING Variable Insurance Trust 333-83071 811-9477
ING Variable Products Trust 33-73140 811-8220
ING VP Emerging Markets Fund, Inc. 33-73520 811-8250
ING VP Natural Resources Trust 33-26116 811-5710
USLICO Series Fund 33-20957 811-05451
ING Prime Rate Trust 333-68239 ($5 mil) 811-5410
333-61831 ($25 mil) 811-5410
ING Senior Income Fund 333-54910 811-10223

I hereby ratify and confirm on the date set forth below, my signature as it may
be signed by my said attorney-in-fact and agent to any and all amendments to
such Registration Statements.