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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act file number:

   811-22004

Voya Asia Pacific High Dividend Equity Income Fund
(formerly known as, ING Asia Pacific High Dividend Equity Income Fund)

(Exact name of registrant as specified in charter)

 

7337 E. Doubletree Ranch Rd. Suite 100, Scottsdale, AZ   85258
(Address of principal executive offices)   (Zip code)

Huey P. Falgout, Jr., 7337 Doubletree Ranch Rd.

Scottsdale, AZ 85258

(Name and address of agent for service)

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

Date of fiscal year end: February 28

Date of reporting period: February 28, 2014


 

Item 1. Reports to Stockholders.

The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Act (17 CFR 270.30e-1):

 




Annual Report

February 28, 2014

ING Asia Pacific High Dividend Equity Income Fund
(Effective May 1, 2014, to be renamed Voya Asia Pacific High Dividend Equity Income Fund)

 
 
 

E-Delivery Sign-up — details inside

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

MUTUAL FUNDS






TABLE OF CONTENTS


President’s Letter
                 1   
Market Perspective
                 2   
Portfolio Managers’ Report
                 4   
Report of Independent Registered Public Accounting Firm
                 6   
Statement of Assets and Liabilities
                 7   
Statement of Operations
                 8   
Statements of Changes in Net Assets
                 9   
Financial Highlights
                 10   
Notes to Financial Statements
                 11   
Summary Portfolio of Investments
                 20   
Tax Information
                 24   
Shareholder Meeting Information
                 25   
Trustee and Officer Information
                 26   
Additional Information
                 30   
 
 

 
           
Go Paperless with E-Delivery!
   

 
Sign up now for on-line prospectuses, fund reports, and proxy statements. In less than five minutes, you can help reduce paper mail and lower fund costs.
 
Just go to www.inginvestment.com, click on the E-Delivery icon from the home page, follow the directions and complete the quick 5 Steps to Enroll.
 
You will be notified by e-mail when these communications become available on the internet. Documents that are not available on the internet will continue to be sent by mail.
 

PROXY VOTING INFORMATION

A description of the policies and procedures that the Fund uses to determine how to vote proxies related to portfolio securities is available (1) without charge, upon request, by calling Shareholder Services toll-free at (800) 992-0180; (2) on the Fund’s website at www.inginvestment.com and (3) on the SEC’s website at www.sec.gov. Information regarding how the Fund voted proxies related to portfolio securities during the most recent 12-month period ended June 30 is available without charge on the Fund’s website at www.inginvestment.com and on the SEC’s website at www.sec.gov.

QUARTERLY PORTFOLIO HOLDINGS

The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. This report contains a summary portfolio of investments for the Fund. The Fund’s Forms N-Q are available on the SEC’s website at www.sec.gov. The Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. The Fund’s Forms N-Q, as well as a complete portfolio of investments, are available without charge upon request from the Fund by calling Shareholder Services toll-free at (800) 992-0180.



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PRESIDENT’S LETTER



Dear Shareholder,

ING Asia Pacific High Dividend Equity Income Fund (the “Fund”) is a diversified, closed-end management investment company whose shares are traded on the New York Stock Exchange under the symbol “IAE.” The Fund’s investment objective is total return through a combination of current income, capital gains and capital appreciation.

The Fund seeks to achieve its investment objective by investing primarily in a portfolio of high dividend yielding equity securities of Asia Pacific companies. The Fund also seeks to enhance total returns over a market cycle by selling call options on selected Asia Pacific Indices and/or equity securities of Asia Pacific Companies and/or exchange-traded funds.

For the year ended February 28, 2014, the Fund made quarterly distributions totaling $1.35 per share, all characterized as net investment income.

Based on net asset value (“NAV”), the Fund provided a total return of (7.51)% for the year ended February 28, 2014.(1) This NAV return reflects a decrease in the Fund’s NAV from $15.93 on February 28, 2013 to $13.34 on February 28, 2014. Based on its share price, the Fund provided a total return of (14.02)% for the year ended February 28, 2014.(2) This share price return reflects a decrease in the Fund’s share price from $15.89 on February 28, 2013 to $12.37 on February 28, 2014.

The global equity markets have witnessed a challenging and turbulent period. Please read the Market Perspective and Portfolio Managers’ Report for more information on the market and the Fund’s performance.

At ING our mission is to help you grow, protect and enjoy your wealth. We seek to assist you and your financial advisor by offering a range of global investment solutions. We invite you to visit our website at www.inginvestment.com. Here you will find information on our products and services, including current market data and fund statistics on our open- and closed-end funds. You will see that we offer a broad variety of equity, fixed income and multi-asset funds that aim to fulfill a variety of investor needs.

On April 7, 2014, ING U.S., Inc. was renamed to Voya Financial, Inc. The actual rebranding of the various businesses that comprise ING U.S. — Retirement Solutions, Investment Management and Insurance Solutions — will occur in stages, with ING U.S. Investment Management among the first to rebrand.(3) As of May 1, 2014, ING U.S. Investment Management will be known as Voya Investment Management. Though the rebranding will affect product and legal entity names, there will be no disruption in service or product delivery to our clients. As always, we remain committed to delivering unmatched client service with a focus on sustainable long-term investment results, to help investors meet their long-term goals with confidence.

We thank you for trusting ING Funds with your investment assets, and we look forward to serving you in the months and years ahead.

Sincerely,

 

Shaun Mathews
President and Chief Executive Officer
ING Funds
April 1, 2014


The views expressed in the President’s Letter reflect those of the President as of the date of the letter. Any such views are subject to change at any time based upon market or other conditions and ING Funds disclaims any responsibility to update such views. These views may not be relied on as investment advice and because investment decisions for an ING Fund are based on numerous factors, may not be relied on as an indication of investment intent on behalf of any ING Fund. Reference to specific company securities should not be construed as recommendations or investment advice. International investing does pose special risks including currency fluctuation, economic and political risks not found in investments that are solely domestic.

For more complete information, or to obtain a prospectus for any ING Fund, please call your Investment Professional or the fund’s Shareholder Service Department at (800) 992-0180 or log on to www.inginvestment.com. The prospectus should be read carefully before investing. Consider the fund’s investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this information and other information about the fund. Check with your Investment Professional to determine which funds are available for sale within their firm. Not all funds are available for sale at all firms.


(1)  
  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, capital gain distributions, and return of capital distributions/allocations, if any, in accordance with the provisions of the Fund’s dividend reinvestment plan.

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

(3)  
  Please see the “Additional Information” section regarding rebranding details on page 30.

1



MARKET PERSPECTIVE:  YEAR ENDED FEBRUARY 28, 2014


By the middle of the fiscal year, global equities, in the form of the MSCI World IndexSM measured in local currencies, including net reinvested dividends (“the Index”), had already gained 7.15%. In the second half a change in the dynamics of investor sentiment seemed to emerge and in the end the Index returned 21.53% for the whole fiscal year. (The Index returned 21.68% for the one year ended February 28, 2014, measured in U.S. dollars.)

In the U.S., investor sentiment was cushioned by the U.S. Federal Reserve Board’s (“Fed”) $85 billion of monthly Treasury and mortgage-backed securities purchases in the face of an unimpressive economic recovery. Gross Domestic Product (“GDP”) in the first quarter of 2013 rose by just 1.8% (annualized) and in the second by only 2.5%. As late as October, the average number of new jobs being created was reported at fewer than 150,000 per month with the unemployment rate at 7.2%. However, a slow recovery was a double-edged sword for markets in risky assets: a faster pace would probably cause the “tapering” of bond purchases by the Fed.

During most of the summer then, the tapering issue dominated investor confidence. On May 22 and again on June 19, Fed Chairman Bernanke attempted to prepare markets for the beginning of the end of quantitative easing. The reaction was soaring bond yields and by June 24 an 8% slump in the Index from its May 21 peak. Nervous central bankers were forced to give assurances that easy money was here for a long time. Soothed by these and later words of comfort in July, markets recovered, but were dampened again by the threat of military engagement in the Middle East.

Yet a change in the dynamics of investor sentiment seemed to be underway. Middle East tensions eased and attention turned to the September 18 meeting of the Fed, which was widely expected to announce the imminent tapering of the Fed’s bond purchases. Surprisingly, on the day before Chairman Bernanke’s address, the Index had again reached a new high for the year. This would have been hard to imagine even a few months earlier, but the significance was apparently lost in the shock of the Fed’s decision not to taper.

The next jolt to investor sentiment was Congressional gridlock in October, which shut the government down and threatened a debt ceiling crisis of the type that sapped investor confidence in 2011. But a deal to postpone the day of reckoning for a few months was reached on October 16 and markets quickly regained their poise.

Increasingly it appeared that investors were reconciled to tapering, no longer treating “bad” news on the economy, which might prolong the Fed’s bond purchases, as “good” news. And better news was starting to flow. A limited budget deal was reached on December 11. The unemployment rate fell to 7.0%. GDP growth in the third quarter was revised up to 4.1% (flattered somewhat by inventory accumulation). Consumer confidence was clearly improving.

When on December 18 the Fed did announce a tapering to $75 billion per month with more to come, markets quickly took it in stride and the Index ended 2013 at a new all-time high. January and February saw some U.S. data deteriorate, perhaps cold weather-related, with two weak employment reports (despite the unemployment rate falling to 6.6%), fourth quarter GDP growth down to 2.4% and declining retail sales.

In U.S. fixed income markets, the Barclays U.S. Aggregate Bond Index (“Barclays Aggregate”) of investment grade bonds returned just 0.15% in the fiscal year. The anticipated end to quantitative easing undermined longer-dated issues. The Barclays Long Term U.S. Treasury sub-index dropped 4.90%, recovering in January and February most of a much larger loss suffered in the first 10 months. The Barclays U.S. Corporate Investment Grade Bond sub-index added 1.42%. However, the (separate) Barclays High Yield Bond — 2% Issuer Constrained Composite Index (not a part of the Barclays Aggregate) gained 8.36%.

U.S. equities, represented by the S&P 500® Index including dividends, soared 25.37%, to a record closing high. The health care sector did best with a gain of 39.26%, followed by consumer discretionary 33.79%. By far the worst performer was the telecommunications sector 0.92%, then utilities 12.46%. Operating earnings per share for S&P 500® companies set another record in the fourth quarter of 2013, with the share of profits in national income historically high, supported by low interest rates and sluggish wage growth.

In currencies, the dollar fell 5.40% against the euro during the 12 months and 9.45% against the pound on better economic news from Europe, especially the UK. But the dollar gained 9.98% on the yen in the face of the new Japanese government’s aggressive monetary easing.

In international markets, the MSCI Japan® Index surged 26.39% during the fiscal year, but has retreated by 7% in 2014. GDP grew for four consecutive quarters, albeit at declining rates. From October core consumer prices started rising again after years of decline. The MSCI Europe ex UK® Index advanced 21.13%. The euro zone finally recorded quarterly GDP growth of 0.3% in the second quarter of 2013 after six straight quarterly declines, followed by slim gains of 0.1% and 0.3%. The closely watched composite purchasing managers’ index registered expansion from July after 17 months of contraction. But there was still much to do with unemployment at 12.0%, near an all-time high. The MSCI UK® Index added 10.53%, held back by heavily weighted laggards especially among banks and miners. GDP in the third quarter of 2013 grew an improved 0.8% followed by 0.7%, while unemployment continued to fall. But concerns remained about a housing bubble and consumer prices rising faster than wages.

Past performance does not guarantee future results. The performance quoted represents past performance. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The Fund’s performance is subject to change since the period’s end and may be lower or higher than the performance data shown. Please call (800) 992-0180 or log on to www.inginvestment.com to obtain performance data current to the most recent month end.

Market Perspective reflects the views of ING’s Chief Investment Risk Officer only through the end of the period, and is subject to change based on market and other conditions.

2



BENCHMARK DESCRIPTIONS


Index         Description
Barclays U.S. Aggregate Bond Index
           
An unmanaged index of publicly issued investment grade U.S. Government, mortgage-backed, asset-backed and corporate debt securities.
Barclays U.S. Corporate Investment Grade Bond Index
           
An unmanaged index consisting of publicly issued, fixed rate, nonconvertible, investment grade debt securities.
Barclays High Yield Bond — 2% Issuer Constrained Composite Index
           
An unmanaged index that includes all fixed-income securities having a maximum quality rating of Ba1, a minimum amount outstanding of $150 million, and at least one year to maturity.
Barclays Long Term U.S. Treasury Index
           
The Index includes all publicly issued, U.S. Treasury securities that have a remaining maturity of 10 or more years, are rated investment grade, and have $250 million or more of outstanding face value.
MSCI All Country Asia Pacific ex-Japan® Index
           
A free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of Asia, excluding Japan.
MSCI Europe ex UK® Index
           
A free float-adjusted market capitalization index that is designed to measure developed market equity performance in Europe, excluding the UK.
MSCI Japan® Index
           
A free float-adjusted market capitalization index that is designed to measure developed market equity performance in Japan.
MSCI UK® Index
           
A free float-adjusted market capitalization index that is designed to measure developed market equity performance in the UK.
MSCI World IndexSM
           
An unmanaged index that measures the performance of over 1,400 securities listed on exchanges in the U.S., Europe, Canada, Australia, New Zealand and the Far East.
S&P 500® Index
           
An unmanaged index that measures the performance of securities of approximately 500 large-capitalization companies whose securities are traded on major U.S. stock markets.
 

3



ING ASIA PACIFIC HIGH DIVIDEND
EQUITY INCOME FUND

PORTFOLIO MANAGERS’ REPORT


 
Geographic Diversification
as of February 28, 2014

(as a percentage of net assets)
 
 
                      
 
Australia
                 23.7 %  
    
China
                 20.2 %  
 
South Korea
                 14.6 %  
 
Taiwan
                 11.0 %  
 
India
                 7.0 %  
 
Hong Kong
                 6.4 %  
 
Indonesia
                 3.9 %  
 
United Kingdom
                 2.4 %  
 
Singapore
                 2.3 %  
 
Malaysia
                 2.3 %  
 
Countries between 1.2%–1.4%ˆ
                 2.6 %  
 
Assets in Excess of Other Liabilities
                   3.6 %  
 
Net Assets
                 100.0 %  
 

ˆIncludes 2 countries, which each represents 1.2%–1.4% of net assets.
 

Portfolio holdings are subject to change daily.
 

ING Asia Pacific High Dividend Equity Income Fund* (the “Fund”) is a diversified, closed-end fund with the investment objective of total return through a combination of current income, capital gains and capital appreciation.

The Fund seeks to achieve its investment objective by investing primarily in a portfolio of dividend yielding equity securities of Asia Pacific companies. For purposes of the Fund’s investments, issuers in Asia Pacific countries are those that meet one or more of the following factors: (i) whose principal securities trading markets are in Asia Pacific countries; (ii) that derive at least 50% of their total revenue or profit from either goods produced or sold, investments made or services performed in Asia Pacific countries; (iii) that have at least 50% of their assets in Asia Pacific countries; or (iv) that are organized under the laws of, or with principal offices in, Asia Pacific countries.

The Fund also seeks to enhance returns over a market cycle by selling call options on selected Asia Pacific Indices and/or equity securities of Asia Pacific companies and/or exchange-traded funds (“ETFs”).

Portfolio Management: The Fund is managed by Manu Vandenbulck, Robert Davis, Nicholas Simar, Willem van Dommelen and Edwin Cuppen, Portfolio Managers of ING Investment Management Advisors B.V. — the Sub-Adviser.

Equity Portfolio Construction and Option Strategy: Under normal market conditions, the Fund will seek to achieve its investment objective by investing at least 80% of its managed assets in dividend producing equity securities of, or derivatives having economic characteristics similar to the equity securities of Asia Pacific Companies that are listed and traded principally on Asia Pacific exchanges. The Sub-Adviser seeks to construct a portfolio with a weighted average gross dividend yield that exceeds the dividend yield of the MSCI All Country Asia Pacific ex-Japan® Index.

The Fund will invest in approximately 60 to 120 equity securities and will select securities through a bottom-up process that is based upon quantitative screening and fundamental analysis. Quantitative screening narrows the investable universe by focusing on primarily two criteria, liquidity and dividend yield. Screens are employed based on market capitalization, dividend yield and average daily volumes thresholds. The screening process reduces the number of names that undergo further bottom-up analysis. Fundamental factors are used to evaluate dividend sustainability, valuation and growth prospects in order to identify the highest conviction stocks from the investable universe. During this process, stocks are reviewed in detail for cash flow strength, capital structure, capital expenditures and operating margins.

Top Ten Holdings
as of February 28, 2014

(as a percentage of net assets)
 
                           
Taiwan Semiconductor Manufacturing Co., Ltd.
                 2.7 %    
Incitec Pivot Ltd.
                 1.6 %    
China Construction Bank
                 1.6 %    
Quanta Computer, Inc.
                 1.5 %    
Cheng Uei Precision Industry Co., Ltd.
                 1.4 %    
Indofood Sukses Makmur Tbk PT
                 1.4 %    
China Petroleum & Chemical Corp.
                 1.4 %    
Guangdong Investment Ltd.
                 1.4 %    
Sky Network Television Ltd.
                 1.4 %    
BHP Billiton Ltd.
                 1.3 %    
 
                        
Portfolio holdings are subject to change daily.
 

The Fund also employs a strategy of writing call options on selected Asia Pacific indices and/or equity securities of Asia Pacific companies and/or ETFs, with the underlying value of such calls generally representing 0% to 50% of the value of its holdings in equity securities. The Fund seeks to generate gains from the call writing strategy over a market cycle to supplement the dividend yield of its underlying portfolio. Call options will be written (sold) usually at-the money, out-of-the-money or near-the-money and can be written both in exchange-listed option markets and over-the-counter markets with major international banks, broker-dealers and financial institutions. The Fund seeks to maintain written call options positions on selected international, regional or country indices and/or equity securities of Asia Pacific companies and/or ETFs whose price movements, taken in the aggregate, are correlated with the price movements of the Fund’s portfolio.

Performance: Based on net asset value (“NAV”) as of February 28, 2014, the Fund provided a total return of (7.51)% for the year. This NAV return reflects a decrease in its NAV from $15.93 on February 28, 2013 to $13.34 on February 28, 2014. Based on its share price as of February 28, 2014, the Fund provided a total return of (14.02)% for the year. This share price return reflects a decrease in its share price from $15.89 on February 28, 2013 to $12.37 on February 28, 2014. To reflect the strategic emphasis of the Fund, the equity portfolio uses the MSCI All Country Asia Pacific ex-Japan Index as a reference index. The MSCI All Country Asia Pacific ex-Japan Index (a market weighted equity index without any style tilt and without call option writing) returned (0.97)% for the reporting period. For the period ended February 28, 2014, the Fund made quarterly distributions totaling $1.35 per share, all characterized net investment income. As of February 28, 2014, the Fund had 12,651,007 shares outstanding.

Portfolio Specifics: Asian equities generally declined during the 12-month period ended February 28, 2014 and considerably lagged developed markets. The region faced two major headwinds during the period: doubts about Chinese economic growth and fears that the U.S. Federal Reserve Board’s (the “Fed”) tapering of quantitative easing would dry up liquidity. There was currency turmoil for India, Indonesia, Thailand and the Philippines, as markets predicted that Fed tapering would put downward pressure on the currencies of

4



ING ASIA PACIFIC HIGH DIVIDEND
EQUITY INCOME FUND

PORTFOLIO MANAGERS’ REPORT



countries with current account deficits. Indonesia (–21.9%) was the hardest hit. Macroeconomic imbalances, leaking foreign exchange (“FX”) reserves and high valuations seemed to be a big worry for investors.

One of the heaviest currency depreciations was for the Indian rupee after markets dismissed attempts by India’s government and India’s central bank to stop the slide. The country recovered, however, after the Reserve Bank of India (“RBI”) opened a special FX swap line for India’s state-owned oil companies to source their U.S. dollar requirement instead of using the spot market. The new governor of the RBI, Raghuram Rajan, also adopted measures to support banks and the rupee. Towards the end of the period the performance of equities in India became linked to the 2014 elections, and finished the period down 1.7%.

Chinese equities fell 0.8%, roughly in line with the index. Macroeconomic indicators were weak at the beginning of the period, and then showed signs of improvement before eventually softening towards the end. GDP growth decreased from 7.9% to 7.7%. Further evidence of a slowdown came from the HSBC/market Flash PMI manufacturing indicator, which dropped to 48.3 having been above 50. China’s shadow banking industry was also in focus after a trust loan made to a coal mining company came close to an unprecedented default.

Elsewhere, the depreciating Japanese yen put pressure on Korea’s automobile firms, but Korean equities (+0.5%) still managed to outperform, helped by the country’s large information technology (“IT”) sector. IT was the best performing sector in the region. Taiwan, another tech heavyweight, made strong gains (+6.6%). Malaysia was the best performing country overall, helped by its current account surplus and also better visibility following its general election. Australian equities (-3.2%) underperformed due to a weak Australian dollar. In local terms, however, Australian stocks actually gained 10.8%.

Equity Portfolio: The equity dividend portfolio part of the strategy underperformed the MSCI All Country Asia Pacific ex-Japan Index due to stock selection. The main detractor from performance was a lack of exposure to Asian internet stocks that do not pay dividends, yet performed strongly. Not holding the Chinese company Tencent Holdings Ltd. had the largest negative impact on relative performance as the stock rose due to enthusiasm for its social media messaging app called “WeChat.” In addition to China, stock picking was negative in India, Australia and Hong Kong. Our Taiwanese, South Korean and Singaporean stocks did relatively better. Hyundai Motor Co. Ltd. was the biggest active contributor in the portfolio. Country allocation contributed to relative performance due to our positioning in China, Thailand, Australia and Singapore. Allocation to Indonesia detracted from results.

Our main overweight positions are in India and Indonesia. Singapore, Australia and Malaysia are the largest country underweights. The utility sector is the largest overweight and financials is the largest underweight. We are extra tilted to “value” with overweights in the energy and industrial sectors, which we believe offer more valuation support than “growth” and greater cyclical upside than “bond proxies,” i.e., stocks with so-called “safe” dividends that won’t be cut even if the economy falters.

Option Portfolio: The Fund generates premiums and seeks gains by writing (selling) call options on a basket of international indexes, which make up a portion of the equity portfolio’s value. During the reporting period, the managers sold call options on the Australia (“ASX”), Hong Kong (“Hang Seng”), Korea (“KOSPI 200”) and Taiwan (“TWSE”) indices. The coverage ratio was kept low and stable at around 25% of total Fund value. The Fund managers generally sold options at-the-money, with a maturity of about four weeks.

Our reporting year started with a decline in the relevant markets. Lows were reached around the end of June. Since then, markets have been in an uptrend. By the end of the reporting period, the Taiwanese and Australian markets were up, while the Korean market ended in negative territory. The Hong Kong market also posted a negative return for the reporting period, although this was marginal. Overall, the option overlay detracted from Fund performance.

Current Strategy and Outlook: We maintain a balanced view on Asia-Pacific assets. On the one hand, Asia ex-Japan markets have been underperforming global equity markets and valuations are starting to look cheap, in our opinion, in select stocks and countries. On the other hand, we believe there are potential challenges ahead: 1) the gradual adjustment of China towards a path of slower economic growth; 2) the impact of tapering on global liquidity and investment flows to emerging markets; and 3) the uncertain political landscape; 2014 is an important election year for some markets, obscuring the direction of monetary and fiscal policy.

We believe equity investors can still benefit from diversification into the Asia-Pacific region. In our view, prospects remain good there for companies that are able to steadily grow earnings and cash flows, and that have the capital discipline to deliver a portion of their profits to shareholders. The current dividend yield on Asia ex-Japan equities, 2.7%, remains higher than some major developed markets such as the United States (2.1%) and Japan (1.9%).


*  
  Effective May 1, 2014, the Fund will be renamed “Voya Asia Pacific High Dividend Equity Income Fund.”

Portfolio holdings and characteristics are subject to change and may not be representative of current holdings and characteristics. The outlook for this Fund is based only on the outlook of its portfolio managers through the end of this period, and may differ from that presented for other ING Funds. Performance data represents past performance and is no guarantee of future results. Past performance is not indicative of future results. The indices do not reflect fees, brokerage commissions, taxes or other expenses of investing. Investors cannot invest directly in an index.

5



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Shareholders and Board of Trustees
ING Asia Pacific High Dividend Equity Income Fund

We have audited the accompanying statement of assets and liabilities, including the summary portfolio of investments, of ING Asia Pacific High Dividend Equity Income Fund, as of February 28, 2014, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years or periods in the seven-year period then ended. These financial statements and financial highlights are the responsibility of management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of February 28, 2014, by correspondence with the custodian, transfer agent, and brokers, or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of ING Asia Pacific High Dividend Equity Income Fund as of February 28, 2014, and the results of its operations for the year then ended, the statements of changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for the each of the years or periods in the seven-year period then ended, in conformity with U.S. generally accepted accounting principles.

 

Boston, Massachusetts
April 24, 2014

6



STATEMENT OF ASSETS AND LIABILITIES AS OF FEBRUARY 28, 2014


ASSETS:
                      
Investments in securities at fair value*
              $ 162,691,683   
Cash
                 7,666,548   
Foreign currencies at value**
                 84,304   
Receivables:
                       
Dividends
                 621,923   
Prepaid expenses
                 1,210   
Total assets
                 171,065,668   
LIABILITIES:
                      
Payable for investment management fees
                 147,057   
Payable for administrative fees
                 12,788   
Payable for trustee fees
                 2,332   
Other accrued expenses and liabilities
                 143,294   
Written options, at fair valueˆ
                 1,999,870   
Total liabilities
                 2,305,341   
NET ASSETS
              $ 168,760,327   
NET ASSETS WERE COMPRISED OF:
                      
Paid-in capital
              $ 201,526,819   
Undistributed net investment income
                 212,463   
Accumulated net realized loss
                 (18,213,017 )  
Net unrealized depreciation
                 (14,765,938 )  
NET ASSETS
              $ 168,760,327   
 

______________
                       
*  Cost of investments in securities
              $ 176,084,950   
**  Cost of foreign currencies
              $ 85,297   
ˆ   Premiums received on written options
              $ 628,138   
 
Net assets
              $ 168,760,327   
Shares authorized
                 unlimited    
Par value
              $ 0.010   
Shares outstanding
                 12,651,007   
Net asset value
              $ 13.34   
 

See Accompanying Notes to Financial Statements

7



STATEMENT OF OPERATIONS FOR THE YEAR ENDED FEBRUARY 28, 2014


INVESTMENT INCOME:
                      
Dividends, net of foreign taxes withheld*
              $ 7,092,839   
Total investment income
                 7,092,839   
 
EXPENSES:
                      
Investment management fees
                 2,087,041   
Transfer agent fees
                 23,114   
Administrative service fees
                 181,480   
Shareholder reporting expense
                 41,058   
Professional fees
                 101,930   
Custody and accounting expense
                 184,349   
Trustee fees
                 6,343   
Miscellaneous expense
                 46,692   
Total expenses
                 2,672,007   
Net investment income
                 4,420,832   
 
REALIZED AND UNREALIZED GAIN (LOSS):
                      
Net realized gain (loss) on:
                       
Investments (net of Indian capital gains tax withheldˆ)
                 12,488,415   
Foreign currency related transactions
                 (192,827 )  
Written options
                 (212,316 )  
Net realized gain
                 12,083,272   
Net change in unrealized appreciation (depreciation) on:
                       
Investments
                 (31,729,219 )  
Foreign currency related transactions
                 (1,031 )  
Written options
                 (454,663 )  
Net change in unrealized appreciation (depreciation)
                 (32,184,913 )  
Net realized and unrealized loss
                 (20,101,641 )  
Decrease in net assets resulting from operations
              $ (15,680,809 )  
 

______________
                    
*   Foreign taxes withheld
              $ 505,749   
ˆ   Foreign taxes on sale of Indian investments
              $ 67,944   
 

See Accompanying Notes to Financial Statements

8



STATEMENTS OF CHANGES IN NET ASSETS


        Year Ended
February 28,
2014
    Year Ended
February 28,
2013
FROM OPERATIONS:
                                     
Net investment income
              $ 4,420,832          $ 3,688,164   
Net realized gain
                 12,083,272             6,344,541   
Net change in unrealized appreciation (depreciation)
                 (32,184,913 )            1,699,082   
Increase (decrease) in net assets resulting from operations
                 (15,680,809 )            11,731,787   
 
FROM DISTRIBUTIONS TO SHAREHOLDERS:
                                 
Net investment income
                 (17,078,221 )            (7,002,466 )  
Return of capital
                              (11,906,624 )  
Total distributions
                 (17,078,221 )            (18,909,090 )  
 
FROM CAPITAL SHARE TRANSACTIONS:
                                      
Reinvestment of distributions
                 28,199             1,249,909   
Net increase in net assets resulting from capital share transactions
                 28,199             1,249,909   
Net decrease in net assets
                 (32,730,831 )            (5,927,394 )  
 
NET ASSETS:
                                      
Beginning of year or period
                 201,491,158             207,418,552   
End of year or period
              $ 168,760,327          $ 201,491,158   
Undistributed net investment income at end of year or period
              $ 212,463          $ 350,612   
 

See Accompanying Notes to Financial Statements

9



FINANCIAL HIGHLIGHTS


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

  Per Share Operating Performance
    Ratios and Supplemental Data
   
      Income (loss)
from investment
operations
  
    Less distributions
  
                        Ratios to average
net assets
  
                                                                     
  Net
asset
value,
beginning
of
year
or
period
  
Net
investment
income
(loss)
  
Net
realized
and
unrealized
gain
(loss)
  
Total
from
investment
operations
  
From
net
investment
income
  
From
net
realized
gains
  
From
return
of
capital
  
Total
distributions
  
Net
asset
value,
end
of
year
or
period
  
Market
value,
end
of
year
or
period
  
Total
investment
return
at
net
asset
value(1)

  
Total
investment
return
at
market
value(2)

  
Net
assets,
end
of
year
or
period
(000’s)
  
Gross
expenses
prior
to
expense
waiver(3)
  
Net
expenses
after
expense
waiver(3)(4)
  
Net
investment
income
after
expense
waiver(3)(4)
  
Portfolio
turnover
Year or period ended
   
($)
   
($)
   
($)
   
($)
   
($)
   
($)
   
($)
   
($)
   
($)
   
($)
   
(%)
   
(%)
   
($000’s)
   
(%)
   
(%)
   
(%)
   
(%)
02-28-14
         15.93             0.35             (1.59 )            (1.24 )            1.35                                       1.35             13.34             12.37             (7.51 )            (14.02 )            168,760             1.47             1.47             2.44             64    
02-28-13
         16.51             0.29             0.63             0.92             0.55                          0.95             1.50             15.93             15.89             6.32             2.04             201,491             1.42             1.42             1.90             130    
02-29-12
         18.16             0.38             (0.35 )            0.03             0.98                          0.70             1.68             16.51             17.16             0.63             0.92             207,419             1.49             1.49             2.35             123    
02-28-11
         17.02             0.33             2.54             2.87             1.73                                       1.73             18.16             18.82             17.31             14.64             225,975             1.42             1.42             1.86             112    
02-28-10
         11.34             0.32             7.30             7.62             0.34                          1.60             1.94             17.02             18.05             69.95             100.78             208,611             1.41             1.41             1.98             31    
02-28-09
         22.99             0.64             (10.30 )            (9.66 )            0.64                          1.35             1.99             11.34             10.18             (43.57 )            (43.61 )            138,220             1.45             1.45             3.61             55    
03-30-07(5)–02-29-08
         23.83 (6)            0.72             0.13             0.85             0.77             0.92                          1.69             22.99             20.65             3.61             (11.31 )            281,759             1.42             1.40             3.11             121    
 


(1)    
  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, capital gain distributions and return of capital distributions/allocations, if any, in accordance with the provisions of the dividend reinvestment plan. Total investment return at net asset value is not annualized for periods less than one year.

(2)    
  Total investment return at market value measures the change in the market value of your investment assuming reinvestment of dividends, capital gain distributions and return of capital distributions/allocations, if any, in accordance with the provisions of the Fund’s dividend reinvestment plan. Total investment return at market value is not annualized for periods less than one year.

(3)    
  Annualized for periods less than one year.

(4)    
  The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage, extraordinary expenses and acquired fund fees and expenses) subject to possible recoupment by ING Investments, LLC within three years of being incurred.

(5)    
  Commencement of operations.

(6)    
  Net asset value at beginning of period reflects the deduction of the sales load of $1.125 per share and the offering costs of $0.05 per share paid by the shareholder from the $25.00 offering price.

    
  Calculated using average number of shares outstanding throughout the period.

See Accompanying Notes to Financial Statements

10



NOTES TO FINANCIAL STATEMENTS AS OF FEBRUARY 28, 2014


NOTE 1 — ORGANIZATION

ING Asia Pacific High Dividend Equity Income Fund (the “Fund”) is a diversified, closed-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Fund is organized as a Delaware statutory trust.

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies are consistently followed by the Fund in the preparation of its financial statements, and such policies are in conformity with U.S. generally accepted accounting principles (“GAAP”) for investment companies.

A.  Security Valuation. U.S. GAAP defines fair value as the price the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. Investments in equity securities traded on a national securities exchange are valued at the official closing price when available or, for certain markets, the last reported sale price on each valuation day. Securities traded on an exchange for which there has been no sale and equity securities traded in the over-the-counter-market are valued at the mean between the last reported bid and ask prices on each valuation day. All investments quoted in foreign currencies will be valued daily in U.S. dollars on the basis of the foreign currency exchange rates prevailing at that time. Debt securities with more than 60 days to maturity are valued using matrix pricing methods determined by an independent pricing service which takes into consideration such factors as yields, maturities, liquidity, ratings and traded prices in similar or identical securities. Securities for which valuations are not readily available from an independent pricing service may be valued by brokers which use prices provided by market makers or estimates of fair market value obtained from yield data relating to investments or securities with similar characteristics. Investments in open-end mutual funds are valued at the net asset value (“NAV”). Investments in securities of sufficient credit quality, maturing 60 days or less from date of acquisition are valued at amortized cost, which approximates fair value.

Securities and assets for which market quotations are not readily available (which may include certain restricted securities that are subject to limitations as to their sale) are valued at their fair values, as defined by the 1940 Act, and as determined in good faith by or under the supervision of the Fund’s Board of Trustees (“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 Fund calculates its NAV may also be valued at their fair values, as defined by the 1940 Act and as determined in good faith by or under the supervision of the Board, in accordance with methods that are specifically authorized by the Board. The value of a foreign security traded on an exchange outside the United States is generally based on its price on the principal foreign exchange where it trades as of the time the Fund determines its NAV or if the foreign exchange closes prior to the time the Fund determines its NAV, the most recent closing price of the foreign security on its principal exchange. Trading in certain non-U.S. securities may not take place on all days on which the NYSE Euronext (“NYSE”) is open. Further, trading takes place in various foreign markets on days on which the NYSE is not open. Consequently, the calculation of the Fund’s NAV may not take place contemporaneously with the determination of the prices of securities held by the Fund in foreign securities markets. Further, the value of the Fund’s assets may be significantly affected by foreign trading on days when a shareholder cannot purchase or redeem shares of the Fund. In calculating the Fund’s NAV, foreign securities denominated in foreign currency are converted to U.S. dollar equivalents. If an event occurs after the time at which the market for foreign securities held by the Fund closes but before the time that the Fund’s NAV is calculated, such event may cause the closing price on the foreign exchange to not represent a readily available reliable market value quotation for such securities at the time the Fund determines its NAV. In such a case, the Fund will use the fair value of such securities as determined under the Fund’s valuation procedures. Events after the close of trading on a foreign market that could require the Fund to fair value some or all of its foreign securities 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 in the determination of a security’s fair value, the Board has authorized the use of one or more independent research services to assist with such determinations. An independent research service may use statistical analyses and quantitative models to help determine fair value as of the time the Fund calculates its NAV. There can be no assurance that such models accurately reflect the behavior of the applicable markets or the effect of the behavior of such markets on the fair value of securities, or that such markets will continue to behave in a fashion that is consistent with such models. Unlike the closing price of a security on an exchange, fair value determinations employ elements of judgment. Consequently, the fair value assigned to a security may not represent the actual value that the Fund 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 Fund is not obligated to use the fair valuations suggested by any research service, and valuation recommendations provided by such research services may be overridden if other events have occurred

11



NOTES TO FINANCIAL STATEMENTS AS OF FEBRUARY 28, 2014 (CONTINUED)


NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (continued)


or if other fair valuations are determined in good faith to be more accurate. Unless an event is such that it causes the Fund to determine that the closing prices for one or more securities do not represent readily available reliable market value quotations at the time the Fund determines its NAV, events 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 Fund’s NAV.

Options that are traded over-the-counter will be valued using one of three methods: (1) dealer quotes; (2) industry models with objective inputs; or (3) by using a benchmark arrived at by comparing prior-day dealer quotes with the corresponding change in the underlying security or index. Exchange traded options will be valued using the last reported sale. If no last sale is reported, exchange traded options will be valued using an industry accepted model such as “Black Scholes.” Options on currencies purchased by the Fund are valued using industry models with objective inputs 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 over-the-counter options.

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

The Board has adopted methods for valuing securities and other assets in circumstances where market quotes are not readily available, and has delegated the responsibility for applying the valuation methods to the “Pricing Committee” as established by the Fund’s Administrator. The Pricing Committee considers all facts it deems relevant that are reasonably available, through either public information or information available to the Investment Adviser or sub-adviser, when determining the fair value of the security. In the event that a security or asset cannot be valued pursuant to one of the valuation methods established by the Board, the fair value of the security or asset will be determined in good faith by the Pricing Committee. When the Fund uses these fair valuation methods that use significant unobservable inputs to determine its NAV, securities will be priced by a method that the Pricing Committee believes accurately reflects fair value and are categorized as Level 3 of the fair value hierarchy. The methodologies used for valuing securities are not necessarily an indication of the risks of investing in those securities nor can it be assured the Fund can obtain the fair value assigned to a security if they were to sell the security.

To assess the continuing appropriateness of security valuations, the Pricing Committee may compare prior day prices, prices on comparable securities, and traded prices to the prior or current day prices and the Pricing Committee challenges those prices exceeding certain tolerance levels with the independent pricing service or broker source. For those securities valued in good faith at fair value, the Pricing Committee reviews and affirms the reasonableness of the valuation on a regular basis after considering all relevant information that is reasonably available.

For fair valuations using significant unobservable inputs, U.S. GAAP requires a reconciliation of the beginning to ending balances for reported fair values that presents changes attributable to total realized and unrealized gains or losses, purchases and sales, and transfers in or out of the Level 3 category during the period. The end of period timing recognition is used for the transfers between Levels of the Fund’s assets and liabilities. A reconciliation of Level 3 investments is presented only when the Fund has a significant amount of Level 3 investments.

For the year ended February 28, 2014, there have been no significant changes to the fair valuation methodologies.

B.  Security Transactions and Revenue Recognition. Security transactions are recorded on the trade date. Realized gains or losses on sales of investments are calculated on the identified cost basis. Interest income is recorded on the accrual basis. Premium amortization and discount accretion are determined using the effective yield method. Dividend income is recorded on the ex-dividend date, or in the case of some foreign dividends, when the information becomes available to the Fund.

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

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

12



NOTES TO FINANCIAL STATEMENTS AS OF FEBRUARY 28, 2014 (CONTINUED)


NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (continued)

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

Although the net assets and the market values are presented at the foreign exchange rates at the end of the day, the Fund does not isolate the portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gains or losses from investments. For securities, which are subject to foreign withholding tax upon disposition, liabilities are recorded on the Statement of Assets and Liabilities for the estimated tax withholding based on the securities current market value. Upon disposition, realized gains or losses on such securities are recorded net of foreign withholding tax. Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at period end, resulting from changes in the exchange rate. Foreign security and currency transactions may involve certain considerations and risks not typically associated with investing in U.S. companies and U.S. government securities. These risks include, but are not limited to, revaluation of currencies and future adverse political and economic developments which could cause securities and their markets to be less liquid and prices more volatile than those of comparable U.S. companies and U.S. government securities. The foregoing risks are even greater with respect to securities in emerging markets.

D.  Distributions to Shareholders. The Fund intends to make quarterly distributions from its cash available for distribution, which consists of the Fund’s dividends and interest income after payment of Fund expenses, net option premiums and net realized and unrealized gains on investments. Such quarterly distributions may also consist of a return of capital. At least annually, the Fund intends to distribute all or substantially all of its net realized capital gains. Distributions are recorded on the ex-dividend date. Distributions are determined annually in accordance with federal tax principles, which may differ from U.S. GAAP for investment companies.

The tax treatment and characterization of the Fund’s distributions may vary significantly from time to time depending on whether the Fund has gains or losses on the call options written on its portfolio versus gains or losses on the equity securities in the portfolio. Each quarter, the Fund will provide disclosures with distribution payments made that estimate the percentages of that distribution that represent net investment income, other income or capital gains, and return of capital, if any. The final composition of the tax characteristics of the distributions cannot be determined with certainty until after the end of the Fund’s tax year, and will be reported to shareholders at that time. A significant portion of the Fund’s distributions may constitute a return of capital. The amount of quarterly distributions will vary, depending on a number of factors. As portfolio and market conditions change, the rate of dividends on the common shares will change. There can be no assurance that the Fund will be able to declare a dividend in each period.

E.  Federal Income Taxes. It is the policy of the Fund to comply with the requirements of subchapter M of the Internal Revenue Code that are applicable to regulated investment companies and to distribute substantially all of its net investment income and any net realized capital gains to its shareholders. Therefore, a federal income tax or excise tax provision is not required. Management has considered the sustainability of the Fund’s tax positions taken on federal income tax returns for all open tax years in making this determination.

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

G.  Risk Exposures and the use of Derivative Instruments. The Fund’s investment objectives permit the Fund to enter into various types of derivatives contracts, including, but not limited to, forward foreign currency exchange contracts and purchased and written options. In doing so, the Fund will employ strategies in differing combinations to permit it to increase or decrease the level of risk, or change the level or types of exposure to market risk factors. This may allow the Fund to pursue its objectives more quickly, and efficiently than if it were to make direct purchases or sales of securities capable of affecting a similar response to market factors.

Market Risk Factors. In pursuit of its investment objectives, the Fund may seek to use derivatives to

13



NOTES TO FINANCIAL STATEMENTS AS OF FEBRUARY 28, 2014 (CONTINUED)


NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (continued)


increase or decrease its exposure to the following market risk factors:

Credit Risk. Credit risk relates to the ability of the issuer to meet interest and principal payments, or both, as they come due. In general, lower-grade, higher-yield bonds are subject to credit risk to a greater extent than lower-yield, higher-quality bonds.

Equity Risk. Equity risk relates to the change in value of equity securities as they relate to increases or decreases in the general market.

Foreign Exchange Rate Risk. Foreign exchange rate risk relates to the change in U.S. dollar value of a security held that is denominated in a foreign currency. The U.S. dollar value of a foreign currency denominated security will decrease as the dollar appreciates against the currency, while the U.S. dollar value will increase as the dollar depreciates against the currency.

Interest Rate Risk. Interest rate risk refers to the fluctuations in value of fixed-income securities resulting from the inverse relationship between price and yield. For example, an increase in general interest rates will tend to reduce the market value of already issued fixed-income investments, and a decline in general interest rates will tend to increase their value. In addition, debt securities with longer durations, which tend to have higher yields, are subject to potentially greater fluctuations in value from changes in interest rates than obligations with shorter durations. The Fund may lose money if short-term or long-term interest rates rise sharply or otherwise change in a manner not anticipated by the sub-adviser. As of the date of this report, interest rates in the United States are at, or near, historic lows, which may increase the Fund’s exposure to risks associated with rising interest rates.

Risks of Investing in Derivatives. The Fund’s use of derivatives can result in losses due to unanticipated changes in the market risk factors and the overall market. In instances where the Fund is using derivatives to decrease, or hedge, exposures to market risk factors for securities held by the Fund, there are also risks that those derivatives may not perform as expected resulting in losses for the combined or hedged positions.

The use of these strategies involves certain special risks, including a possible imperfect correlation, or even no correlation, between price movements of derivative instruments and price movements of related investments. While some strategies involving derivative instruments can reduce the risk of loss, they can also reduce the opportunity for gain or even result in losses by offsetting favorable price movements in related investments or otherwise, due to the possible inability of the Fund to purchase or sell a portfolio security at a time that otherwise would be favorable or the possible need to sell a portfolio security at a disadvantageous time because the Fund is required to maintain asset coverage or offsetting positions in connection with transactions in derivative instruments. Additional associated risks from investing in derivatives also exist and potentially could have significant effects on the valuation of the derivative and the Fund. Associated risks are not the risks that the Fund is attempting to increase or decrease exposure to, per its investment objectives, but are the additional risks from investing in derivatives. Examples of these associated risks are liquidity risk, which is the risk that the Fund will not be able to sell the derivative in the open market in a timely manner, and counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Fund. Associated risks can be different for each type of derivative and are discussed by each derivative type in the following notes.

Counterparty Credit Risk and Credit Related Contingent Features. Certain derivative positions are subject to counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Fund. The Fund’s derivative counterparties are financial institutions who are subject to market conditions that may weaken their financial position. The Fund intends to enter into financial transactions with counterparties that it believes to be creditworthy at the time of the transaction. To reduce this risk, the Fund generally enters into master netting arrangements, established within the Fund’s International Swap and Derivatives Association, Inc. (“ISDA”) Master Agreements (“Master Agreements”). These agreements are with select counterparties and they govern transactions, including certain over-the-counter (“OTC”) derivative and forward foreign currency contracts, entered into by the Fund and the counterparty. The Master Agreements maintain provisions for general obligations, representations, agreements, collateral, and events of default or termination. The occurrence of a specified event of termination may give a counterparty the right to terminate all of its contracts and affect settlement of all outstanding transactions under the applicable Master Agreement.

The Fund may also enter into collateral agreements with certain counterparties to further mitigate credit risk associated with OTC derivative and forward foreign currency contracts. Subject to established minimum levels, collateral is generally determined based on the net aggregate unrealized gain or loss on contracts with a certain counterparty. Collateral pledged to the Fund is held in a segregated account by a third-party agent and can be in the form of cash or debt securities issued by the U.S. government or related agencies.

14



NOTES TO FINANCIAL STATEMENTS AS OF FEBRUARY 28, 2014 (CONTINUED)


NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (continued)

The Fund’s maximum risk of loss from counterparty credit risk on OTC derivatives is generally the aggregate unrealized gain in excess of any collateral pledged by the counterparty to the Fund. For purchased OTC options, the Fund bears the risk of loss in the amount of the premiums paid and the change in market value of the options should the counterparty not perform under the contracts. The Fund did not enter into any purchased OTC options during the year ended February 28, 2014.

The Fund’s master agreements with derivative counterparties have credit related contingent features that if triggered would allow its derivatives counterparties to close out and demand payment or additional collateral to cover their exposure from the Fund. Credit related contingent features are established between the Fund and its derivatives counterparties to reduce the risk that the Fund will not fulfill its payment obligations to its counterparties. These triggering features include, but are not limited to, a percentage decrease in the Fund’s net assets and or a percentage decrease in the Fund’s NAV, which could cause the Fund to accelerate payment of any net liability owed to the counterparty. The contingent features are established within the Fund’s Master Agreements.

Written options by the Fund do not give rise to counterparty credit risk, as written options obligate the Fund to perform and not the counterparty. As of February 28, 2014, the total value of written OTC call options subject to Master Agreements in a liability position was $1,999,870. If a contingent feature had been triggered, the Fund could have been required to pay this amount in cash to its counterparties. The Fund did not hold or post collateral for its open written OTC call options at year end. There were no credit events during the year ended February 28, 2014 that triggered any credit related contingent features.

H. Options Contracts. The Fund may purchase put and call options and may write (sell) put options and covered call options. The premium received by the Fund upon the writing of a put or call option is included in the Statement of Assets and Liabilities as a liability which is subsequently marked-to-market until it is exercised or closed, or it expires. The Fund will realize a gain or loss upon the expiration or closing of the option contract. When an option is exercised, the proceeds on sales of the underlying security for a written call option or purchased put option or the purchase cost of the security for a written put option or a purchased call option is adjusted by the amount of premium received or paid. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. Risks may also arise from an illiquid secondary market or from the inability of counterparties to meet the terms of the contract.

The Fund seeks to generate gains from the call options writing strategy over a market cycle to supplement the dividend yield of its underlying portfolio of high dividend yield equity securities. Please refer to Note 7 for the volume of written OTC call option activity during the year ended February 28, 2014.

I.  Indemnifications. In the normal course of business, the Fund may enter into contracts that provide certain indemnifications. The Fund’s maximum exposure under these arrangements is dependent on future claims that may be made against the Fund and, therefore, cannot be estimated; however, based on experience, management considers the risk of loss from such claims remote.

NOTE 3 — INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES

ING Investments, LLC (“ING Investments” or the “Investment Adviser”), an Arizona limited liability company, is the Investment Adviser of the Fund. The Fund pays the Investment Adviser for its services under the investment management agreement (“Management Agreement”), a fee, payable monthly, based on an annual rate of 1.15% of the Fund’s average daily managed assets. For purposes of the Management Agreement, managed assets are defined as the Fund’s average daily gross asset value, minus the sum of the Fund’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 Fund and the liquidation preference of any outstanding preferred shares). As of February 28, 2014, there were no preferred shares outstanding.

The Investment Adviser has retained ING Investment Management Co. LLC (“ING IM” or the “Consultant”), a Delaware limited liability company, to provide certain consulting services for the Investment Adviser. These services include, among other things, furnishing statistical and other factual information; providing advice with respect to potential investment strategies that may be employed for the Fund, including, but not limited to, potential options strategies; developing economic models of the anticipated investment performance and yield for the Fund; and providing advice to the Investment Adviser and/or sub-adviser with respect to the Fund’s level and/or managed distribution policy. For its services, the Consultant will receive a consultancy fee from the Investment Adviser. No fee will be paid by the Fund directly to the Consultant.

15



NOTES TO FINANCIAL STATEMENTS AS OF FEBRUARY 28, 2014 (CONTINUED)


NOTE 3 — INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES (continued)

The Investment Adviser entered into a sub-advisory agreement with ING Investment Management Advisors B.V. (“IIMA”) a subsidiary of ING Groep N.V. (“ING Groep”), domiciled in The Hague, The Netherlands. Subject to policies as the Board or the Investment Adviser might determine, IIMA manages the Fund’s assets in accordance with the Fund’s investment objectives, policies and limitations.

Effective May 6, 2013, the Investment Adviser entered into a sub-advisory agreement with ING IM. Subject to policies as the Board or the Investment Adviser might determine, ING IM will manage the Fund’s assets in accordance with the Fund’s investment objectives, policies and limitations.

IIMA currently manages the Fund’s assets; however, in the future, the Investment Adviser may allocate the Fund’s assets to ING IM for management, and may change the allocation of the Fund’s assets among the two sub-advisers in its discretion, to pursue the Fund’s investment objective. Each sub-adviser would make investment decisions for the assets it is allocated to manage.

ING Funds Services, LLC (the “Administrator”), a Delaware limited liability company, serves as Administrator to the Fund. The Fund pays the Administrator for its services a fee based on an annual rate of 0.10% of the Fund’s average daily managed assets.

NOTE 4 — EXPENSE LIMITATION AGREEMENT

The Investment Adviser has entered into a written expense limitation agreement (“Expense Limitation Agreement”) with the Fund under which it will limit the expenses of the Fund, excluding interest, taxes, leverage expenses, extraordinary expenses, and acquired fund fees and expenses to 1.50% of average daily managed assets. The Investment Adviser may at a later date recoup from the Fund fees waived and other expenses assumed by the Investment Adviser during the previous 36 months, but only if, after such recoupment, the Fund’s expense ratio does not exceed the percentage described above. The Expense Limitation Agreement is contractual through March 1, 2015 and shall renew automatically for one-year terms unless; (i) ING Investments provides 90 days written notice of its termination and such termination is approved by the Board; or (ii) the Management Agreement has been terminated.

Waived and reimbursed fees and any recoupment by the Investment Adviser of such waived and reimbursed fees are reflected on the accompanying Statement of Operations.

As of February 28, 2014, there are no amounts of waived or reimbursed fees that are subject to possible recoupment by the Investment Adviser.

NOTE 5 — OTHER TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

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

NOTE 6 — PURCHASES AND SALES OF INVESTMENT SECURITIES

The cost of purchases and proceeds from sales of investments for the year ended February 28, 2014, excluding short-term securities, were $113,429,755 and $131,248,874 respectively.

NOTE 7 — TRANSACTIONS IN WRITTEN OPTIONS

Transactions in written OTC call options on equity indices were as follows:

        Number of
Contracts
    Premiums
Received
Balance at 02/28/13
                 45,439,800          $ 578,096   
Options Written
                 489,343,900             8,233,981   
Options Expired
                 (245,658,900 )            (3,436,131 )  
Options Exercised
                                 
Options Terminated in Closing Purchase Transactions
                 (251,491,000 )            (4,747,808 )  
Balance at 02/28/14
                 37,633,800          $ 628,138   
 

NOTE 8 — CONCENTRATION OF RISKS

All mutual funds involve risk — some more than others — and there is always the chance that you could lose money or not earn as much as you hope. The Fund’s risk profile is largely a factor of the principal securities in which it invests and investment techniques that it uses. For more information regarding the types of securities and investment techniques that may be used by the Fund and its corresponding risks, see the Fund’s most recent Prospectus and/or the Statement of Additional Information.

Foreign Securities and Emerging Markets. The Fund makes significant investments in foreign securities and securities issued by companies located in countries with emerging markets. Investments in foreign securities may entail risks not present in domestic investments. Since investments in securities are denominated in foreign currencies, changes in the relationship of these foreign currencies to the U.S. dollar can significantly affect the

16



NOTES TO FINANCIAL STATEMENTS AS OF FEBRUARY 28, 2014 (CONTINUED)


NOTE 8 — CONCENTRATION OF RISKS (continued)


value of the investments and earnings of the Fund. Foreign investments may also subject the Fund to foreign government exchange restrictions, expropriation, taxation or other political, social or economic developments, as well as from movements in currency, security value and interest rate, all of which could affect the market and/or credit risk of the investments. The risks of investing in foreign securities can be intensified in the case of investments in issuers located in countries with emerging markets.

Leverage. Although the Fund has no current intention to do so, the Fund is authorized to utilize leverage through the issuance of preferred shares and/or borrowings, including the issuance of debt securities. In the event that the Fund determines in the future to utilize investment leverage, there can be no assurance that such a leveraging strategy will be successful during any period in which it is employed.

Asia Pacific Regional and Country Risks. Investments in the Asia Pacific region are subject to special risks. The Asia Pacific region includes countries in all stages of economic development. Some Asia Pacific economies may be characterized by over-extension of credit, currency devaluations and restrictions, underdeveloped financial services sectors, heavy reliance on international trade, and economic recessions. In addition, the economies of many Asia Pacific countries are dependent on the economies of the United States, Europe and other Asian countries, and a deceleration in any of these economies could negatively impact the economies of Asia Pacific countries. Currency fluctuations, devaluations and trading restrictions in any one country can have a significant effect on the entire Asia Pacific region. Increased political and social instability in any Asia Pacific country could cause further economic and market uncertainty in the region, or result in significant downturns and volatility in the economies of Asia Pacific countries. The development of Asia Pacific economies, and particularly those of China, Japan and South Korea, may also be affected by political, military, economic and other factors related to North Korea.

NOTE 9 — CAPITAL SHARES

Transactions in capital shares and dollars were as follows:

        Reinvestment
of
distributions
    Net increase
in shares
outstanding
    Reinvestment
of
distributions
    Net
increase
Year or period ended
        #
    #
    ($)
    ($)
2/28/2014
                 1,800             1,800             28,199             28,199   
2/28/2013
                 82,817             82,817             1,249,909             1,249,909   
 

NOTE 10 — FEDERAL INCOME TAXES

The amount of distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP for investment companies. These book/tax differences may be either temporary or permanent. Permanent differences are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences are not reclassified. Key differences include the treatment of short-term capital gains, foreign currency transactions, income from passive foreign investment companies (PFICs) and wash sale deferrals. Distributions in excess of net investment income and/or net realized capital gains for tax purposes are reported as return of capital.

The following permanent tax differences have been reclassified as of the Fund’s tax year ended December 31, 2013(1):

Paid-in
Capital
        Undistributed
Net Investment Income
    Accumulated
Net Realized
Gains/(Losses)
$(13,144,143)
           
$12,519,240
   
$624,903
 


(1)  
  $13,130,880 relates to distributions in excess of net investment income taxed as ordinary income due to current year earnings and profits.

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

The tax composition of dividends and distributions in the current period will not be determined until after the Fund’s tax year-end of December 31, 2014. The tax composition of dividends and distributions as of the Fund’s most recent tax year-ends was as follows:

Tax Year Ended
December 31, 2013
        Tax Year Ended
December 31, 2012
Ordinary
Income
        Ordinary
Income
    Return
of Capital
$17,078,220
           
$7,002,465
   
$11,906,624
 

The tax-basis components of distributable earnings and the capital loss carryforwards which may be used to offset future realized capital gains for federal income tax purposes as of December 31, 2013 are detailed below. The Regulated Investment Company Modernization Act of 2010 (the “Act”) provides an unlimited carryforward period for newly generated capital losses. Under the Act, there may be a greater likelihood that all or a portion of the Fund’s pre-enactment capital loss carryforwards may expire without being utilized due to the fact that post-enactment capital losses are required to be utilized before pre-enactment capital loss carryforwards.

17



NOTES TO FINANCIAL STATEMENTS AS OF FEBRUARY 28, 2014 (CONTINUED)


NOTE 10 — FEDERAL INCOME TAXES (continued)

Late Year
Ordinary
Losses
Deferred
        Post-October
Capital
Losses
Deferred
    Unrealized
Appreciation/
(Depreciation)
    Short-term
Capital Loss
Carryforwards
    Expiration
$(190,748)
              $ (2,338,300 )         $ (9,042,590 )         $ (16,547,878 )            2017    
 

The Fund’s major tax jurisdictions are U.S. federal and Arizona. The earliest tax year that remains subject to examination by these jurisdictions is 2009.

As of February 28, 2014, no provision for income tax is required in the Fund’s financial statements as a result of tax positions taken on federal and state income tax returns for open tax years. The Fund’s federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state department of revenue.

NOTE 11 — RESTRUCTURING PLAN

In October 2009, ING Groep submitted a restructuring plan (the “Restructuring Plan”) to the European Commission in order to receive approval for state aid granted to ING Groep by the Kingdom of the Netherlands in November 2008 and March 2009. To receive approval for this state aid, ING Groep was required to divest its insurance and investment management businesses, including ING U.S., before the end of 2013. In November 2012, the Restructuring Plan was amended to permit ING Groep additional time to complete the divestment. Pursuant to the amended Restructuring Plan, ING Groep must divest at least 25% of ING U.S. by the end of 2013, more than 50% by the end of 2014, and the remaining interest by the end of 2016 (such divestment, the “Separation Plan”).

In May 2013, ING U.S. conducted an initial public offering of ING U.S. common stock (the “IPO”). In October 2013, ING Groep divested additional shares in a secondary offering of common stock of ING U.S. In March 2014, ING Groep divested additional shares, reducing its ownership interest in ING U.S. below 50%. ING U.S. did not receive any proceeds from these offerings.

ING Groep has stated that it intends to sell its remaining interest in ING U.S. over time. While the base case for the remainder of the Separation Plan is the divestment of ING Groep’s remaining interest in one or more broadly distributed offerings, all options remain open and it is possible that ING Groep’s divestment of its remaining interest in ING U.S. may take place by means of a sale to a single buyer or group of buyers.

It is anticipated that one or more of the transactions contemplated by the Separation Plan would result in the automatic termination of the existing investment advisory and sub-advisory agreements under which the Investment Adviser and sub-adviser provide services to the Fund. In order to ensure that the existing investment advisory and sub-advisory services can continue uninterrupted, the Board approved new advisory and sub-advisory agreements for the Fund in connection with the IPO. Shareholders of the Fund approved the new investment advisory and sub-advisory agreements prompted by the IPO, as well as any future advisory and sub-advisory agreements prompted by the Separation Plan that are approved by the Board and whose terms are not materially different from the current agreements. This means that shareholders may not have another opportunity to vote on a new agreement with the Investment Adviser or an affiliated sub-adviser even if they undergo a change of control, as long as no single person or group of persons acting together gains “control” (as defined in the 1940 Act) of ING U.S.

The Separation Plan, whether implemented through public offerings or other means, may be disruptive to the businesses of ING U.S. and its subsidiaries, including the Investment Adviser and affiliated entities that provide services to the Fund, and may cause, among other things, interruption of business operations or services, diversion of management’s attention from day-to-day operations, reduced access to capital, and loss of key employees or customers. The completion of the Separation Plan is expected to result in the Investment Adviser’s loss of access to the resources of ING Groep, which could adversely affect its business. Since a portion of the shares of ING U.S., as a standalone entity, are publicly held, it is subject to the reporting requirements of the Securities Exchange Act of 1934 as well as other U.S. government and state regulations, and subject to the risk of changing regulation.

The Separation Plan may be implemented in phases. During the time that ING Groep retains a significant interest in ING U.S., circumstances affecting ING Groep, including restrictions or requirements imposed on ING Groep by European and other authorities, may also affect ING U.S. A failure to complete the Separation Plan could create uncertainty about the nature of the relationship between ING U.S. and ING Groep, and could adversely affect ING U.S. and the Investment Adviser and its affiliates. Currently, the Investment Adviser and its affiliates do not anticipate that the Separation Plan will have a material adverse impact on their operations or the Fund and its operation.

18



NOTES TO FINANCIAL STATEMENTS AS OF FEBRUARY 28, 2014 (CONTINUED)


NOTE 12 — SUBSEQUENT EVENTS

Dividends: Subsequent to February 28, 2014, the Fund made a distribution of:

Per Share
Amount
        Declaration
Date
    Payable
Date
    Record
Date
$0.320
           
3/17/2014
   
4/15/2014
   
4/3/2014
 

Each quarter, the Fund will provide disclosures with distribution payments made that estimate the percentages of that distribution that represent net investment income, capital gains, and return of capital, if any. A significant portion of the quarterly distribution payments made by the Fund may constitute a return of capital.

Effective May 1, 2014, the Fund is to be renamed Voya Asia Pacific High Dividend Equity Income Fund.

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

19



ING ASIA PACIFIC HIGH DIVIDEND
EQUITY INCOME FUND

SUMMARY PORTFOLIO OF INVESTMENTS
AS OF FEBRUARY 28, 2014


Shares


  

  

  
Value
  
Percentage
of Net
Assets
COMMON STOCK: 93.6%
 
Australia: 23.8%
71,775
           
 
   
Australia & New Zealand Banking Group Ltd.
      $   2,063,556             1.2   
67,032
           
 
   
BHP Billiton Ltd.
         2,299,098             1.4   
1,159,378
           
 
   
CFS Retail Property Trust
         2,041,283             1.2   
188,754
           
 
   
Coca-Cola Amatil Ltd.
         1,905,529             1.1   
505,737
           
 
   
Goodman Group
         2,172,826             1.3   
981,600
           
 
   
Incitec Pivot Ltd.
         2,758,167             1.6   
382,675
           
 
   
Insurance Australia Group
         1,858,125             1.1   
694,339
           
 
   
Metcash Ltd.
         1,921,403             1.1   
64,274
           
 
   
National Australia Bank Ltd.
         1,998,849             1.2   
35,778
           
 
   
Rio Tinto Ltd.
         2,137,472             1.3   
161,211
           
 
   
Santos Ltd.
         1,965,555             1.2   
3,893,304
           
 
   
Sigma Pharmaceuticals Ltd.
         2,212,416             1.3   
1,394,797
           
 
   
Spark Infrastructure Group
         2,130,957             1.3   
622,179
           
 
   
Stockland
         2,148,692             1.3   
171,544
           
 
   
Suncorp Group Ltd
         1,865,264             1.1   
610,602
           
 
   
Sydney Airport
         2,216,149             1.3   
410,488
           
 
   
Toll Holdings Ltd.
         1,952,986             1.2   
346,785
           
 
   
Transurban Group
         2,191,609             1.3   
72,128
           
 
   
Westpac Banking Corp.
         2,164,699             1.3   
 
           
 
   
 
         40,004,635             23.8   
 
 
China: 20.2%
648,000
           
 
   
BOC Hong Kong Holdings Ltd.
         1,969,460             1.2   
3,132,000
           
 
   
China BlueChemical Ltd.
         1,831,116             1.1   
3,949,960
           
 
   
China Construction Bank
         2,721,451             1.6   
184,500
           
 
   
China Mobile Ltd.
         1,750,062             1.0   
716,000
           
 
   
China Overseas Land & Investment Ltd.
         1,929,686             1.1   
2,631,800
           
 
   
China Petroleum & Chemical Corp.
         2,329,687             1.4   
916,000
           
 
   
China Resources Power Holdings Co.
         2,216,391             1.3   
5,140,000
           
 
   
China Shanshui Cement Group Ltd.
         1,823,159             1.1   
4,074,000
           
 
   
China Telecom Corp., Ltd.
         1,763,173             1.0   
2,218,000
           
 
   
Guangdong Investment Ltd.
         2,324,278             1.4   
2,909,379
           
 
   
Industrial and Commercial Bank of China Ltd.
         1,749,042             1.0   
1,840,000
           
 
   
PetroChina Co., Ltd.
         1,943,285             1.2   
580,000
           
 
   
Shanghai Industrial Holdings Ltd.
         1,979,502             1.2   
2,340,000
           
 
   
Zhejiang Expressway Co., Ltd.
         2,056,347             1.2   
9,794,500
           
 
   
Other Securities
         5,714,724             3.4   
 
           
 
   
 
         34,101,363             20.2   
 
 
Hong Kong: 6.4%
298,398
           
 
   
Cheung Kong Infrastructure Holdings Ltd.
         1,947,053             1.2   
260,000
           
 
   
CLP Holdings Ltd.
         2,029,794             1.2   
607,000
           
 
   
Hang Lung Properties Ltd.
         1,689,156             1.0   
COMMON STOCK: (continued)
 
Hong Kong: (continued)
436,212
           
 
   
Link Real Estate Investment Trust
      $   2,031,876             1.2   
319,100
           
 
   
Television Broadcasts Ltd.
         1,973,343             1.2   
13,570,000
           
 
   
Other Securities
         1,069,717             0.6   
 
           
 
   
 
         10,740,939             6.4   
 
 
India: 7.0%
760,230
           
 
   
Bharat Heavy Electricals Ltd.
         2,062,943             1.2   
442,225
           
 
   
Coal India Ltd.
         1,741,537             1.1   
6,537,138
           
 
   
NHPC Ltd.
         1,902,730             1.1   
916,589
           
 
   
NTPC Ltd.
         1,664,998             1.0   
427,653
           
 
   
Oil & Natural Gas Corp., Ltd.
         2,018,376             1.2   
671,389
           
 
   
Other Securities
         2,417,247             1.4   
 
           
 
   
 
         11,807,831             7.0   
 
 
Indonesia: 3.9%
885,500
           
 
   
Indo Tambangraya Megah PT
         1,988,531             1.2   
3,779,000
           
 
   
Indofood Sukses Makmur Tbk PT
         2,342,591             1.4   
5,451,500
           
 
   
XL Axiata Tbk PT
         2,186,806             1.3   
 
           
 
   
 
         6,517,928             3.9   
 
 
Malaysia: 2.3%
1,587,104
           
 
   
Berjaya Sports Toto BHD
         1,850,527             1.1   
1,156,500
           
 
   
IJM Corp. Bhd
         2,039,279             1.2   
 
           
 
   
 
         3,889,806             2.3   
 
 
New Zealand: 1.4%
451,989
           
 
   
Sky Network Television Ltd.
         2,319,740             1.4   
 
 
Singapore: 2.3%
1,331,000
           
 
   
CapitaMall Trust
         1,997,251             1.2   
122,000
           
 
   
United Overseas Bank Ltd.
         1,987,068             1.1   
 
           
 
   
 
         3,984,319             2.3   
 
 
South Korea: 11.7%
84,780
           
 
   
Hite Jinro Co. Ltd.
         1,868,457             1.1   
77,370
           
 
   
Hyundai Marine & Fire Insurance Co., Ltd.
         2,109,347             1.2   
69,990
           
 
   
Kangwon Land, Inc.
         2,093,891             1.2   
58,709
           
 
   
KB Financial Group, Inc.
         2,195,144             1.3   
73,790
           
 
   
KT Corp.
         2,097,464             1.2   
31,100
           
 
   
KT&G Corp.
         2,278,239             1.3   
6,956
           
 
   
POSCO
         1,850,179             1.1   
50,900
           
 
   
Shinhan Financial Group Co., Ltd.
         2,123,954             1.3   
15,826
           
 
   
SK Innovation Co. Ltd.
         1,982,601             1.2   
18,851
           
 
   
Other Securities
         1,330,165             0.8   
 
           
 
   
 
         19,929,441             11.7   
 
 
Taiwan: 11.0%
1,099,000
           
 
   
Cheng Uei Precision Industry Co., Ltd.
         2,355,545             1.4   
3,149,322
           
 
   
CTBC Financial Holding Co. Ltd
         2,037,527             1.2   
146,273
           
 
   
MediaTek, Inc.
         2,156,322             1.3   

See Accompanying Notes to Financial Statements

20



ING ASIA PACIFIC HIGH DIVIDEND
EQUITY INCOME FUND

SUMMARY PORTFOLIO OF INVESTMENTS
AS OF FEBRUARY 28, 2014 (CONTINUED)


Shares


  

  

  
Value
  
Percentage
of Net
Assets
COMMON STOCK: (continued)
 
Taiwan: (continued)
2,726,021
           
 
   
Mega Financial Holdings Co., Ltd.
      $ 2,181,017             1.3   
1,010,000
           
 
   
Quanta Computer, Inc.
         2,491,959             1.5   
1,263,167
           
 
   
Taiwan Semiconductor Manufacturing Co., Ltd.
         4,556,627             2.7   
2,137,335
           
 
   
Other Securities
         2,789,365             1.6   
 
           
 
   
 
         18,568,362             11.0   
 
 
Thailand: 1.2%
227,300
           
 
   
PTT PCL-Foreign
         2,043,274             1.2   
 
 
United Kingdom: 2.4%
188,800
           
 
   
HSBC Holdings PLC
         1,985,928             1.2   
97,543
           
 
   
Standard Chartered PLC
         2,064,811             1.2   
 
           
 
   
 
         4,050,739             2.4   
 
 
           
 
   
Total Common Stock
(Cost $173,118,727)
         157,958,377             93.6   
 
           
 
   
 
                             
PREFERRED STOCK: 2.8%
 
South Korea: 2.8%
6,220
           
 
   
Hyundai Motor Co.
         804,565             0.5   
12,290
           
 
   
Hyundai Motor Co.- Series 2
         1,669,358             1.0   
2,267
           
 
   
Samsung Electronics Co., Ltd.
         2,259,383             1.3   
 
 
           
 
   
Total Preferred Stock
(Cost $2,966,223)
         4,733,306             2.8   
 
 
           
 
   
Total Investments in Securities
(Cost $176,084,950)
      $ 162,691,683             96.4   
 
           
 
   
Assets in Excess of Other Liabilities
         6,068,644             3.6   
 
           
 
   
Net Assets
      $ 168,760,327             100.0   
 

“Other Securities” represents issues not identified as the top 50 holdings in terms of market value and issues or issuers not exceeding 1% of net assets individually or in aggregate respectively as of February 28, 2014.

The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item.

  Cost for federal income tax purposes is $176,307,217.

Net unrealized depreciation consists of:
                      
Gross Unrealized Appreciation
              $ 9,933,339   
Gross Unrealized Depreciation
                 (23,548,873 )  
Net Unrealized Depreciation
              $ (13,615,534 )  
 

Sector Diversification
        Percentage
of Net Assets
Financials
                 29.2 %  
Industrials
                 10.6   
Information Technology
                 9.8   
Energy
                 9.7   
Utilities
                 8.5   
Consumer Discretionary
                 7.6   
Materials
                 7.5   
Consumer Staples
                 6.1   
Telecommunication Services
                 5.4   
Health Care
                 2.0   
Assets in Excess of Other Liabilities
                 3.6   
Net Assets
                 100.0 %  
 

Fair Value Measurementsˆ

The following is a summary of the fair valuations according to the inputs used as of February 28, 2014 in valuing the assets and liabilities:

        Quoted Prices
in Active Markets
for Identical
Investments
(Level 1)
    Significant
Other
Observable
Inputs#
(Level 2)
    Significant
Unobservable
Inputs
(Level 3)
    Fair Value
at
February 28, 2014
Asset Table
                                                                      
Investments, at fair value
                                                                      
Common Stock
                                                                       
Australia
              $           $ 40,004,635          $           $ 40,004,635   
China
                              34,101,363                          34,101,363   
Hong Kong
                              10,740,939                          10,740,939   
India
                              11,807,831                          11,807,831   
Indonesia
                              6,517,928                          6,517,928   
Malaysia
                              3,889,806                          3,889,806   
New Zealand
                              2,319,740                          2,319,740   
Singapore
                              3,984,319                          3,984,319   
South Korea
                 2,278,239             17,651,202                          19,929,441   
Taiwan
                              18,568,362                          18,568,362   
Thailand
                              2,043,274                          2,043,274   
United Kingdom
                              4,050,739                          4,050,739   
Total Common Stock
                 2,278,239             155,680,138                          157,958,377   
Preferred Stock
                              4,733,306                          4,733,306   
Total Investments, at fair value
              $ 2,278,239          $ 160,413,444          $           $ 162,691,683   

See Accompanying Notes to Financial Statements

21



ING ASIA PACIFIC HIGH DIVIDEND
EQUITY INCOME FUND

SUMMARY PORTFOLIO OF INVESTMENTS
AS OF FEBRUARY 28, 2014 (CONTINUED)


        Quoted Prices
in Active Markets
for Identical
Investments
(Level 1)
    Significant
Other
Observable
Inputs#
(Level 2)
    Significant
Unobservable
Inputs
(Level 3)
    Fair Value
at
February 28, 2014
Liabilities Table
                                                                      
Other Financial Instruments+
                                                                      
Written Options
              $           $ (1,999,870 )         $           $ (1,999,870 )  
Total Liabilities
              $           $ (1,999,870 )         $           $ (1,999,870 )  
 


ˆ
  See Note 2, “Significant Accounting Policies” in the Notes to Financial Statements for additional information.

+
  Other Financial Instruments are derivatives not reflected in the Portfolio of Investments and may include open forward foreign currency contracts, futures, centrally cleared swaps, OTC swaps and written options. Forward foreign currency contracts, futures and centrally cleared swaps are valued at the unrealized gain (loss) on the instrument. OTC swaps and written options are valued at the fair value of the instrument.

#
  The earlier close of the foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities. To account for this, the Fund may frequently value many of its foreign equity securities using fair value prices based on third party vendor modeling tools to the extent available. Accordingly, a portion of the Fund’s investments are categorized as Level 2 investments.

ING Asia Pacific High Dividend Equity Income Fund Written OTC Options on February 28, 2014:

Number of Contracts
        Counterparty
    Description
    Exercise
Price
    Expiration
Date
    Premiums
Received
Fair Value
   
Options on Indices        
3,400
           
Morgan Stanley
   
Call on S&P/ASX 200 Index
         5,103.498   AUD          03/06/14          $ 229,870          $ (900,994 )  
3,400
           
Citigroup, Inc.
   
Call on Hang Seng Index
         21,489.953   HKD          03/06/14             174,551             (586,646 )  
37,600,000
           
Deutsche Bank AG
   
Call on Korea Stock Exchange KOSPI 200 Index
         250.776   KRW          03/06/14             142,716             (279,906 )  
27,000
           
Citigroup, Inc.
   
Call on Taiwan Stock Exchange Weighted Index
         8,377.077   TWD          03/06/14             81,001              (232,324 )  
 
                       
 
Total Written OTC Options           $ 628,138           $ (1,999,870 )  
 

A summary of derivative instruments by primary risk exposure is outlined in the following tables.

The fair value of derivative instruments as of February 28, 2014 was as follows:

Derivatives not accounted for as
hedging instruments
        Location on Statement
of Assets and Liabilities
    Fair Value
Liability Derivatives
           
 
              
Equity contracts
           
Written options, at fair value
      $ 1,999,870   
Total Liability Derivatives
           
 
      $ 1,999,870   
 

The effect of derivative instruments on the Fund’s Statement of Operations for the year ended February 28, 2014 was as follows:

        Amount of Realized Gain or (Loss)
on Derivatives Recognized in Income
Derivatives not accounted for as hedging instruments
        Written options
Equity contracts
              $ (212,316 )  
Total
              $ (212,316 )  
 

        Change in Unrealized Appreciation or Depreciation
on Derivatives Recognized in Income
Derivatives not accounted for as hedging instruments         Written options
Equity contracts
              $ (454,663 )  
Total
              $ (454,663 )  
 

See Accompanying Notes to Financial Statements

22



ING ASIA PACIFIC HIGH DIVIDEND
EQUITY INCOME FUND

SUMMARY PORTFOLIO OF INVESTMENTS
AS OF FEBRUARY 28, 2014 (CONTINUED)


The following is a summary by counterparty of the fair value of OTC derivative instruments subject to Master Netting Agreements and collateral pledged (received), if any, at February 28, 2014:

        Citigroup, Inc.
    Deutsche Bank AG
    Morgan Stanley
    Totals
Liabilities:
                                                                      
Written options
              $ 818,970          $ 279,906          $ 900,994          $ 1,999,870   
Total Liabilities
              $ 818,970          $ 279,906          $ 900,994          $ 1,999,870   
Net OTC derivative instruments by counterparty, at fair value
              $ (818,970 )         $ (279,906 )         $ (900,994 )         $ (1,999,870 )  
Total collateral pledged by the Fund/(Received from counterparty)
              $           $           $           $    
Net Exposure(1)
              $ (818,970 )         $ (279,906 )         $ (900,994 )         $ (1,999,870 )  
 


(1)    
  Positive net exposure represents amounts due from each respective counterparty. Negative exposure represents amounts due from the Fund. Please refer to Note 2 for additional details regarding counterparty credit risk and credit related contingent features.

Supplemental Option Information (Unaudited)

Supplemental Call Option Statistics as of February 28, 2014:

% of Total Net Assets against which calls written
                 24.94 %  
Average Days to Expiration at time written
                 36 days   
Average Call Moneyness* at time written
                 ATM    
Premiums received for calls
              $ 628,138   
Value of calls
              $ (1,999,870 )  
 


*    
  “Moneyness” is the term used to describe the relationship between the price of the underlying asset and the option’s exercise or strike price. For example, a call (buy) option is considered “in-the-money” when the value of the underlying asset exceeds the strike price. Conversely, a put (sell) option is considered “in-the-money” when its strike price exceeds the value of the underlying asset. Options are characterized for the purpose of Moneyness as, “in-the-money” (“ITM”), “out-of-the-money” (“OTM”) or “at-the-money” (“ATM”), where the underlying asset value equals the strike price.

See Accompanying Notes to Financial Statements

23



TAX INFORMATION (UNAUDITED)


Dividends paid during the tax year ended December 31, 2013 were as follows:

Fund Name
        Type
    Per Share Amount
ING Asia Pacific High Dividend Equity Income Fund
                 NII           $ 1.3500   
 


NII — Net investment income

For the tax year ended December 31, 2013, 22.36% of ordinary income dividends paid by the Fund (including creditable foreign taxes paid) are designated as qualifying dividend income (QDI) subject to reduced income tax rates for individuals.

Pursuant to Section 853 of the Internal Revenue Code, the Fund designates the following amounts as foreign taxes paid for the tax year ended December 31, 2013:

Creditable Foreign
Taxes Paid
        Per Share
Amount
    Portion of Ordinary
Income Distribution
Derived from Foreign
Sourced Income*
$383,717
           
$0.0303
   
100.00%
 


*
  None of the Fund’s income was derived from ineligible foreign sources as defined under Section 901(j) of the Internal Revenue Code.

Foreign taxes paid or withheld should be included in taxable income with an offsetting deduction from gross income or as a credit for taxes paid to foreign governments. Shareholders are strongly advised to consult their own tax advisors regarding the appropriate treatment of foreign taxes paid.

Above figures may differ from those cited elsewhere in this report due to differences in the calculation of income and gains under U.S. generally accepted accounting principles (book) purposes and Internal Revenue Service (tax) purposes.

Shareholders are strongly advised to consult their own tax advisers with respect to the tax consequences of their investments in the Fund. In January, shareholders, excluding corporate shareholders, receive an IRS 1099-DIV regarding the federal tax status of the dividends and distributions they received in the calendar year.

24



SHAREHOLDER MEETING INFORMATION (UNAUDITED)


An annual shareholder meeting of ING Asia Pacific High Dividend Equity Income Fund was held May 6, 2013, at the offices of ING Funds, 7337 East Doubletree Ranch Road, Suite 100, Scottsdale, AZ 85258.

Proposals:

1
  To approve a new investment advisory agreement for the Fund with ING Investments prompted by the IPO, and to approve, under certain circumstances, any future advisory agreements prompted by Change of Control Events that occur as part of the Separation Plan.

2
  To approve a new investment sub-advisory agreement between ING Investments and IIMA with respect to the Fund prompted by the IPO, and to approve, under certain circumstances, any future sub-advisory agreements prompted by Change of Control Events that occur as part of the Separation Plan.

3
  To elect five nominees to the Board of Trustees of the Fund.

4
  To approve a new investment sub-advisory agreement between ING Investments and ING IM with respect to the Fund.

        Proposal
    Shares
voted for
    Total Shares
Voted
    Shares
abstained
    Broker
non-vote
    Total Shares
Voted
ING Asia Pacific High Dividend Equity Income Fund
           
1*
         5,929,203.171             362,959.034             186,143.834             1,472,189.938             7,950,495.977   
 
           
2*
         5,907,334.338             377,058.940             193,912.761             1,472,189.938             7,950,495.977   
  
        Proposal
    For All
    Withhold All
    For all
Except
    Broker
non-vote
    Total Shares
Voted
John V. Boyer
           
3*
         7,639,870.863             310,625.114             0.000             0.000             7,950,495.977   
Patricia W. Chadwick
           
3*
         7,660,740.778             289,755.199             0.000             0.000             7,950,495.977   
Albert E. DePrince, Jr.
           
3*
         7,640,852.206             309,643.771             0.000             0.000             7,950,495.977   
Martin J. Gavin**
           
3*
         7,637,593.017             312,902.960             0.000             0.000             7,950,495.977   
Sheryl K. Pressler
           
3*
         7,643,619.438             306,876.539             0.000             0.000             7,950,495.977   
  
        Proposal
    Shares
voted for
    Total Shares
Voted
    Shares
abstained
    Broker
non-vote
    Total Shares
Voted
 
           
4*
         5,928,454.482             358,181.356             191,670.201             1,472,189.938             7,950,495.977   
 


*
  Proposals Passed

**
  Effective close of business September 12, 2013, Mr. Gavin resigned as Trustee.

25



TRUSTEE AND OFFICER INFORMATION (UNAUDITED)


The business and affairs of the Trust are managed under the direction of the Trust’s Board. A Trustee, who is not an interested person of the Trust, as defined in the 1940 Act, is an independent trustee (“Independent Trustee”). The Trustees and Officers of the Trust are listed below. The Statement of Additional Information includes additional information about trustees of the Trust and is available, without charge, upon request at (800) 992-0180.

Name, Address and Age
        Position(s)
Held with
the Trust
    Term of Office
and Length of
Time Served(1)
    Principal
Occupation(s) —
During the Past 5 Years
    Number of
Funds in
Fund
Complex
Overseen by
Trustee(2)
    Other Board
Positions
Held by
Trustee
 
Independent Trustees:
 
Colleen D. Baldwin
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 53
           
Trustee
   
October 2007–Present
   
President, Glantuam Partners, LLC, a business consulting firm (January 2009–Present).
   
164
   
DSM/Dentaquest, Boston, MA (February 2014–Present).
 
John V. Boyer
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 60
           
Chairperson



Trustee
   
January 2014–Present

January 2007–Present
   
President and Chief Executive Officer, Bechtler Arts Foundation, an arts and education foundation (January 2008–Present).
   
164
   
None.
 
Patricia W. Chadwick
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 65
           
Trustee
   
January 2007–Present
   
Consultant and President, Ravengate Partners LLC, a consulting firm that provides advice regarding financial markets and the global economy (January 2000–Present).
   
164
   
Wisconsin Energy Corporation (June 2006–Present) and The Royce Funds (35 funds) (December 2009–Present).
 
Albert E. DePrince, Jr.
7337 E. Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 73
           
Trustee
   
May 2013–Present
   
Professor of Economics and Finance, Middle Tennessee State University (August 1991–Present).
   
164
   
None.
 
Peter S. Drotch
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 72
           
Trustee
   
October 2007–Present
   
Retired.
   
164
   
First Marblehead Corporation (September 2003–Present).
 
J. Michael Earley
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 68
           
Trustee
   
January 2007–Present
   
Retired.
   
164
   
None.
 
Russell H. Jones
7337 E. Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 69
           
Trustee
   
May 2013–Present
   
Retired.
   
164
   
None.
 
Patrick W. Kenny
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 71
           
Trustee
   
January 2007–Present
   
Retired. Formerly, President and Chief Executive Officer, International Insurance Society (June 2001–June 2009).
   
164
   
Assured Guaranty Ltd. (April 2004–Present).
 
Joseph E. Obermeyer
7337 E. Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 56
           
Trustee
   
May 2013–Present
   
President, Obermeyer & Associates, Inc., a provider of financial and economic consulting services (November 1999–Present).
   
164
   
None.

26



TRUSTEE AND OFFICER INFORMATION (UNAUDITED) (CONTINUED)


Name, Address and Age
        Position(s)
Held with
the Trust
    Term of Office
and Length of
Time Served(1)
    Principal
Occupation(s) —
During the Past 5 Years
    Number of
Funds in
Fund
Complex
Overseen by
Trustee(2)
    Other Board
Positions
Held by
Trustee
 
Sheryl K. Pressler
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 63
           
Trustee
   
January 2007–Present
   
Consultant (May 2001–Present).
   
164
   
None.
 
Roger B. Vincent
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 68
           
Trustee
   
January 2007–Present
   
Retired. Formerly, President, Springwell Corporation, a corporate finance firm (March 1989–August 2011).
   
164
   
UGI Corporation (February 2006–Present) and UGI Utilities, Inc. (February 2006–Present).
 
Trustee who is an “Interested Person”:
 
Shaun P. Mathews(3)
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 58
           
Trustee
   
January 2007–Present
   
President and Chief Executive Officer, ING Investments, LLC (November 2006–Present).
   
164
   
ING Capital Corporation, LLC (December 2005–Present) and ING Investments Distributor, LLC (December 2005–Present; ING Funds Services, LLC, ING Investments LLC and ING Investment Management, LLC (March 2006–Present); and ING Investment Trust Co. (April 2009–Present).
 


(1)    
  Trustees serve until their successors are duly elected and qualified. The tenure of each Trustee (“Independent Trustee”) is subject to the Board’s retirement policy, which states that each duly elected or appointed Independent Trustee shall retire from and cease to be a member of the Board of Trustees as of the close of business on December 31 of the calendar year in which the Independent Trustee attains the age of 73. A majority vote of the Board’s other Independent Trustees may extend the retirement date of an Independent Trustee 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 otherwise comply with applicable law, in which case the extension would apply until such time as the shareholder meeting can be held or is no longer required (as determined by a vote of a majority of the other Independent Trustees).

(2)    
  For the purpose of this table “ING Fund Complex” means the following investment companies: ING Asia Pacific High Dividend Equity Income Fund; ING Balanced Portfolio, Inc.; ING Emerging Markets High Dividend Equity Fund; ING Equity Trust; ING Funds Trust; ING Global Advantage and Premium Opportunity Fund; ING Global Equity Dividend and Premium Opportunity Fund; ING Infrastructure, Industrials and Materials Fund; ING Intermediate Bond Portfolio; ING International High Dividend Equity Income Fund; ING Investors Trust; ING Money Market Portfolio; ING Mutual Funds; ING Partners, Inc.; ING Prime Rate Trust; ING Risk Managed Natural Resources Fund; ING Senior Income Fund; ING Separate Portfolios Trust; ING Series Fund, Inc.; ING Strategic Allocation Portfolios, Inc.; ING Variable Funds; ING Variable Insurance Trust; ING Variable Portfolios, Inc.; and ING Variable Products Trust. The number of funds in the ING Fund Complex is as of March 31, 2014.

(3)    
  “Interested person,” as defined in the 1940 Act, by virtue of this Trustee’s current affiliation with any of the Funds, ING or any of ING’s affiliates.

27



TRUSTEE AND OFFICER INFORMATION (UNAUDITED) (CONTINUED)


Name, Address and Age
        Position(s) Held
With the Trust
    Term of Office
and Length of
Time Served(1)
    Principal Occupation(s) —
During the Past 5 Years
 
Shaun P. Mathews
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 58
           
President and Chief Executive Officer
   
January 2007–Present
   
President and Chief Executive Officer, ING Investments, LLC (November 2006–Present).
 
Michael J. Roland
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 55
           
Executive Vice President
   
January 2007–Present
   
Managing Director and Chief Operating Officer, ING Investments, LLC and ING Funds Services, LLC (April 2012–Present). Formerly, Chief Compliance Officer, Directed Services LLC and ING Investments, LLC (March 2011–December 2013); Executive Vice President and Chief Operating Officer, ING Investments, LLC and ING Funds Services, LLC (January 2007–April 2012) and Chief Compliance Officer, ING Funds (March 2011–February 2012).
 
Stanley D. Vyner
230 Park Avenue
New York, New York 10169
Age: 63
           
Executive Vice President
Chief Investment Risk Officer
   
January 2007–Present

September 2009–Present
   
Executive Vice President, ING Investments, LLC (July 2000–Present) and Chief Investment Risk Officer, ING Investments, LLC (January 2003–Present).
 
Kevin M. Gleason
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 47
           
Chief Compliance Officer
   
February 2012–Present
   
Senior Vice President, ING Investments, LLC (February 2012–Present). Formerly, Assistant General Counsel and Assistant Secretary, The Northwestern Mutual Life Insurance Company (June 2004–January 2012).
 
Todd Modic
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 46
           
Senior Vice President, Chief/Principal Financial Officer and Assistant Secretary
   
January 2007–Present
   
Senior Vice President, ING Funds Services, LLC (March 2005–Present).
 
Kimberly A. Anderson
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 49
           
Senior Vice President
   
January 2007–Present
   
Senior Vice President, ING Investments, LLC (October 2003–Present).
 
Robert Terris
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 43
           
Senior Vice President
   
January 2007–Present
   
Senior Vice President, Head of Division Operations, ING Funds Services, LLC (January 2006–Present).
 
Julius A. Drelick, III
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 47
           
Senior Vice President
   
July 2012–Present
   
Senior Vice President — Fund Compliance, ING Funds Services, LLC (June 2012–Present). Chief Compliance Officer of Directed Services LLC and ING Investments LLC (January 2014–Present). Formerly, Vice President — Platform Product Management & Project Management, ING Investments, LLC (April 2007–June 2012).
 
Fred Bedoya
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 41
           
Vice President and Treasurer
   
September 2012–Present
   
Vice President, ING Funds Services, LLC (March 2012–Present). Formerly, Assistant Vice President — Director, ING Funds Services, LLC (March 2003–March 2012).
 
Robyn L. Ichilov
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 46
           
Vice President
   
January 2007–Present
   
Vice President, ING Funds Services, LLC (November 1995–Present) and ING Investments, LLC (August 1997–Present). Formerly, Treasurer, ING Funds (November 1999–February 2012).
 
Maria M. Anderson
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 55
           
Vice President
   
January 2007–Present
   
Vice President, ING Funds Services, LLC (September 2004–Present).

28



TRUSTEE AND OFFICER INFORMATION (UNAUDITED) (CONTINUED)


Name, Address and Age
        Position(s) Held
With the Trust
    Term of Office
and Length of
Time Served(1)
    Principal Occupation(s) —
During the Past 5 Years
 
Lauren D. Bensinger
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 60
           
Vice President
   
January 2007–Present
   
Vice President, ING Investments, LLC and ING Funds Services, LLC (February 1996–Present); Director of Compliance, ING Investments, LLC (October 2004–Present); and Vice President and Money Laundering Reporting Officer, ING Investments Distributor, LLC (April 2010–Present). Formerly, Chief Compliance Officer, ING Investments Distributor, LLC (August 1995–April 2010).
 
Jason Kadavy
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 38
           
Vice President
   
September 2012–Present
   
Vice President, ING Funds Services, LLC (July 2007–Present).
 
Kimberly K. Springer
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 56
           
Vice President
   
January 2007–Present
   
Vice President — Platform Product Management & Project Management, ING Investments, LLC (July 2012–Present); Vice President, ING Investment Management — ING Funds (March 2010–Present) and Vice President, ING Funds Services, LLC (March 2006–Present). Formerly Managing Paralegal, Registration Statements (June 2003–July 2012).
 
Craig Wheeler
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 45
           
Vice President
   
May 2013–Present
   
Vice President — Director of Tax, ING Funds Services, LLC (March 2013–Present). Formerly, Assistant Vice President — Director of Tax, ING Funds Services, LLC (March 2008–March 2013).
 
Huey P. Falgout, Jr.
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 50
           
Secretary
   
January 2007–Present
   
Senior Vice President and Chief Counsel, ING Investment Management — ING Funds (March 2010–Present). Formerly, Chief Counsel, ING Americas, U.S. Legal Services (October 2003–March 2010).
 
Theresa K. Kelety
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 51
           
Assistant Secretary
   
January 2007–Present
   
Vice President and Senior Counsel, ING Investment Management — ING Funds (March 2010–Present). Formerly, Senior Counsel, ING Americas, U.S. Legal Services (April 2008–March 2010).
 
Paul A. Caldarelli
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 62
           
Assistant Secretary
   
June 2010–Present
   
Vice President and Senior Counsel, ING Investment Management — ING Funds
(March 2010–Present). Formerly, Senior Counsel, ING Americas, U.S. Legal Services (April 2008–March 2010).
 


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

29



ADDITIONAL INFORMATION (UNAUDITED)


During the period, there were no material changes in the Fund’s investment objective or policies that were not approved by the shareholders or the Fund’s charter or by-laws or in the principal risk factors associated with investment in the Fund.

The Fund was granted exemptive relief by the SEC (the “Order”), which under the 1940 Act, would permit the Fund, subject to Board approval, to include realized long-term capital gains as a part of its regular distributions to Common Shareholders more frequently than would otherwise be permitted by the 1940 Act (generally once per taxable year) (“Managed Distribution Policy”). The Fund may in the future adopt a Managed Distribution Policy.

Dividend Reinvestment Plan

Unless the registered owner of Common Shares elects to receive cash by contacting Computershare Shareowner Services LLC (the “Plan Agent”), all dividends declared on Common Shares of the Fund will be automatically reinvested by the Plan Agent for shareholders in additional Common Shares of the Fund through the Fund’s Dividend Reinvestment Plan (the “Plan”). Shareholders who elect not to participate in the Plan will receive all dividends and other distributions in cash paid by check mailed directly to the shareholder of record (or, if the Common Shares are held in street or other nominee name, then to such nominee) by the Plan Agent. Participation in the Plan is completely voluntary and may be terminated or resumed at any time without penalty by notice if received and processed by the Plan Agent prior to the dividend record date; otherwise such termination or resumption will be effective with respect to any subsequently declared dividend or other distribution. Some brokers may automatically elect to receive cash on your behalf and may re-invest that cash in additional Common Shares of the Fund for you. If you wish for all dividends declared on your Common Shares of the Fund to be automatically reinvested pursuant to the Plan, please contact your broker.

The Plan Agent will open an account for each Common Shareholder under the Plan in the same name in which such Common Shareholder’s Common Shares are registered. Whenever the Fund declares a dividend or other distribution (together, a “Dividend”) payable in cash, non-participants in the Plan will receive cash and participants in the Plan will receive the equivalent in Common Shares. The Common Shares will be acquired by the Plan Agent for the participants’ accounts, depending upon the circumstances described below, either (i) through receipt of additional unissued but authorized Common Shares from the Fund (“Newly Issued Common Shares”) or (ii) by purchase of outstanding Common Shares on the open market (“Open-Market Purchases”) on the NYSE or elsewhere. Open-market purchases and sales are usually made through a broker affiliated with the Plan Agent.

If, on the payment date for any Dividend, the closing market price plus estimated brokerage commissions per Common Share is equal to or greater than the net asset value per Common Share, the Plan Agent will invest the Dividend amount in Newly Issued Common Shares on behalf of the participants. The number of Newly Issued Common Shares to be credited to each participant’s account will be determined by dividing the dollar amount of the Dividend by the net asset value per Common Share on the payment date; provided that, if the net asset value is less than or equal to 95% of the closing market value on the payment date, the dollar amount of the Dividend will be divided by 95% of the closing market price per Common Share on the payment date. If, on the payment date for any Dividend, the net asset value per Common Share is greater than the closing market value plus estimated brokerage commissions, the Plan Agent will invest the Dividend amount in Common Shares acquired on behalf of the participants in Open-Market Purchases. In the event of a market discount on the payment date for any Dividend, the Plan Agent will have until the last business day before the next date on which the Common Shares trade on an “ex-dividend” basis or 30 days after the payment date for such Dividend, whichever is sooner (the “Last Purchase Date”), to invest the Dividend amount in Common Shares acquired in Open-Market Purchases.

The Fund pays quarterly Dividends. Therefore, the period during which Open-Market Purchases can be made will exist only from the payment date of each Dividend through the date before the next “ex-dividend” date, which typically will be approximately ten days.

If, before the Plan Agent has completed its Open-Market Purchases, the market price per common share exceeds the net asset value per Common Share, the average per Common Share purchase price paid by the Plan Administrator may exceed the net asset value of the Common Shares, resulting in the acquisition of fewer Common Shares than if the Dividend had been paid in Newly Issued Common Shares on the Dividend payment date. Because of the foregoing difficulty with respect to Open-Market Purchases, the Plan provides that if the Plan Agent is unable to invest the full Dividend amount in Open-Market Purchases during the purchase period or if the market discount shifts to a market premium during the purchase period, the Plan Agent will cease making Open-Market Purchases and will invest the un-invested portion of the Dividend amount in Newly Issued Common Shares at the net asset value per common share at the close of business on the Last Purchase Date provided that, if the net asset value is less than or equal to 95% of the then current market price per Common Share, the dollar amount of the Dividend will be divided by 95% of the market price on the payment date.

30



ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)


The Plan Agent maintains all shareholders’ accounts in the Plan and furnishes written confirmation of all transactions in the accounts, including information needed by shareholders for tax records. Common Shares in the account of each Plan participant will be held by the Plan Agent on behalf of the Plan participant, and each shareholder proxy will include those shares purchased or received pursuant to the Plan. The Plan Agent will forward all proxy solicitation materials to participants and vote proxies for shares held under the Plan in accordance with the instructions of the participants.

In the case of shareholders such as banks, brokers or nominees which hold shares for others who are the beneficial owners, the Plan Agent will administer the Plan on the basis of the number of Common Shares certified from time to time by the record shareholder’s name and held for the account of beneficial owners who participate in the Plan.

There will be no brokerage charges with respect to Common Shares issued directly by the Fund. However, each participant will pay a pro rata share of brokerage commissions incurred in connection with Open-Market Purchases. The automatic reinvestment of Dividends will not relieve participants of any federal, state or local income tax that may be payable (or required to be withheld) on such Dividends. Participants that request a partial or full sale of shares through the Plan Agent are subject to a $15.00 sales fee and a $0.10 per share brokerage commission on purchases or sales, and may be subject to certain other service charges.

The Fund reserves the right to amend or terminate the Plan. There is no direct service charge to participants with regard to purchases in the Plan; however, the Fund reserves the right to amend the Plan to include a service charge payable by the participants.

All questions concerning the Plan should be directed to the Fund’s Shareholder Service Department at (800) 992-0180.

Key Financial Dates — Calendar 2014 Distributions:

Declaration Date
        Ex Date
    Payable Date
March 17, 2014
                 April 1, 2014             April 15, 2014   
June 16, 2014
                 July 1, 2014             July 15, 2014   
September 15, 2014
                 October 1, 2014             October 15, 2014   
December 15, 2014
                 December 29, 2014             January 15, 2015   
 

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

Stock Data

The Fund’s common shares are traded on the NYSE (Symbol: IAE).

Repurchase of Securities by Closed-End Companies

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

Number of Shareholders

The approximate number of record holders of Common Stock as of February 28, 2014 was 9, which does not include approximately 7,647 beneficial owners of shares held in the name of brokers of other nominees.

Certifications

In accordance with Section 303A.12 (a) of the New York Stock Exchange Listed Company Manual, the Fund’s CEO submitted the Annual CEO Certification on June 27, 2013 certifying that he was not aware, as of that date, of any violation by the Fund of the NYSE’s Corporate governance listing standards. In addition, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and related SEC rules, the Fund’s principal executive and financial officers have made quarterly certifications, included in filings with the SEC on Forms N-CSR and N-Q, relating to, among other things, the Fund’s disclosure controls and procedures and internal controls over financial reporting.

31



ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)


On April 7, 2014, ING U.S., Inc. changed its name to Voya Financial, Inc. Effective May 1, 2014, ING Investments, LLC, the Investment Adviser to the Fund, will be renamed Voya Investments, LLC. ING Investment Management Co. LLC, a sub-adviser and Consultant to the Fund, will be renamed Voya Investment Management Co. LLC. ING Funds Services, LLC, the Administrator for the Fund, will be renamed Voya Funds Services, LLC. The Fund as well as the Registrant that the Fund is organized under will also be renamed.

The new Registrant and Fund name will be as follows:

Current Registrant Name and
Current Fund Name
        New Registrant Name and
New Fund Name, effective May 1, 2014
ING Asia Pacific High Dividend Equity Income Fund
           
Voya Asia Pacific High Dividend Equity Income Fund
 

32



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Investment Adviser
ING Investments, LLC
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, Arizona 85258

Administrator
ING Funds Services, LLC
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, Arizona 85258

Transfer Agent
Computershare Shareowner Services LLC
480 Washington Boulevard
Jersey City, New Jersey 07310-1900

Independent Registered Public Accounting Firm
KPMG LLP
Two Financial Center
60 South Street
Boston, Massachusetts 02111

Custodian
The Bank of New York Mellon
One Wall Street
New York, New York 10286

Legal Counsel
Dechert LLP
1900 K Street, N.W.
Washington, D.C. 20006

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

AR-UIAE     (0214-042414)




 

Item 2. Code of Ethics.

As of the end of the period covered by this report, Registrant had adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to the Registrant’s principal executive officer and principal financial officer. There were no amendments to the Code during the period covered by the report. The Registrant did not grant any waivers, including implicit waivers, from any provisions of the Code during the period covered by this report. The code of ethics is filed herewith pursuant to Item 10 (a)(1), Exhibit 99.CODE ETH.

 

Item 3. Audit Committee Financial Expert.

The Board of Trustees has determined that J. Michael Earley, Peter S. Drotch and Colleen Baldwin are audit committee financial experts, as defined in Item 3 of Form N-CSR. Mr Earley, Mr. Drotch and Ms. Baldwin are “independent” for purposes of Item 3 of Form N-CSR.

 

Item 4. Principal Accountant Fees and Services.

 

(a)    Audit Fees: The aggregate fees billed for professional services rendered by KPMG LLP (“KPMG”), the principal accountant for the audit of the registrant’s annual financial statements, for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements, was $26,600 for the year ended February 28, 2014 and $24,500 for the year ended February 28, 2013.
(b)    Audit-Related Fees: The aggregate fees billed in each of the last two fiscal years for assurance and related services by KPMG that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this item were $2,400 for the year ended February 28, 2014 and $2,400 for the year ended February 28, 2013.
(c)    Tax Fees: The aggregate fees billed for professional services rendered by KPMG for tax compliance, tax advice, and tax planning was $10,426 in the year ended February 28, 2014 and $11,426 in the year ended February 28, 2013. Such services include review of excise distribution calculations (if applicable), preparation of the Fund’s federal, state and excise tax returns, tax services related to mergers and routine consulting.
(d)    All Other Fees: NONE.
(e)(1)    Audit Committee Pre-Approval Policies and Procedures

 


 

 

AUDIT AND NON-AUDIT SERVICES
PRE-APPROVAL POLICY

I. Statement of Principles

Under the Sarbanes-Oxley Act of 2002 (the “Act”), the Audit Committee of the Board of Directors or Trustees (the “Committee”) of the ING Funds (each a “Fund,” collectively, the “Funds”) set out on Exhibit A to this Audit and Non-Audit Services Pre-Approval Policy (“Policy”) is responsible for the oversight of the work of the Funds’ independent auditors. As part of its responsibilities, the Committee must pre-approve the audit and non-audit services performed by the auditors in order to assure that the provision of these services does not impair the auditors’ independence from the Funds. The Committee has adopted, and the Board has ratified, this Policy, which sets out the procedures and conditions under which the services of the independent auditors may be pre-approved.

Under Securities and Exchange Commission (“SEC”) rules promulgated in accordance with the Act, the Funds may establish two different approaches to pre-approving audit and non-audit services. The Committee may approve services without consideration of specific case-by-case services (“general pre-approval”) or it may pre-approve specific services (“specific pre-approval”). The Committee believes that the combination of these approaches contemplated in this Policy results in an effective and efficient method for pre-approving audit and non-audit services to be performed by the Funds’ independent auditors. Under this Policy, services that are not of a type that may receive general pre-approval require specific pre-approval by the Committee. Any proposed services that exceed pre-approved cost levels or budgeted amounts will also require the Committee’s specific pre-approval.

For both types of approval, the Committee considers whether the subject services are consistent with the SEC’s rules on auditor independence and that such services are compatible with maintaining the auditors independence. The Committee also considers whether a particular audit firm is in the best position to provide effective and efficient services to the Funds. Reasons that the auditors are in the best position include the auditors’ familiarity with the Funds’ business, personnel, culture, accounting systems, risk profile, and other factors, and whether the services will enhance the Funds’ ability to manage and control risk or improve audit quality. Such factors will be considered as a whole, with no one factor being determinative.

The appendices attached to this Policy describe the audit, audit-related, tax-related, and other services that have the Committee’s general pre-approval. For any service that has been approved through general pre-approval, the general pre-approval will remain in place for a period 12 months from the date of pre-approval, unless the Committee determines that a different period is appropriate. The Committee will annually review and pre-approve the services that may be provided by the independent auditors without specific pre-approval. The Committee will revise the list of services subject to general pre-approval as appropriate. This Policy does not serve as a delegation to Fund management of the Committee’s duty to pre-approve services performed by the Funds’ independent auditors.

 



II. Audit Services

The annual audit services engagement terms and fees are subject to the Committee’s specific pre-approval. Audit services are those services that are normally provided by auditors in connection with statutory and regulatory filings or engagements or those that generally only independent auditors can reasonably provide. They include the Funds’ annual financial statement audit and procedures that the independent auditors must perform in order to form an opinion on the Funds’ financial statements (e.g., information systems and procedural reviews and testing). The Committee will monitor the audit services engagement and approve any changes in terms, conditions or fees deemed by the Committee to be necessary or appropriate.

The Committee may grant general pre-approval to other audit services, such as statutory audits and services associated with SEC registration statements, periodic reports and other documents filed with the SEC or issued in connection with securities offerings.

The Committee has pre-approved the audit services listed on Appendix A. The Committee must specifically approve all audit services not listed on Appendix A.

III. Audit-related Services

Audit-related services are assurance and related services that are reasonably related to the performance of the audit or the review of the Funds’ financial statements or are traditionally performed by the independent auditors. The Committee believes that the provision of audit-related services will not impair the independent auditors’ independence, and therefore may grant pre-approval to audit-related services. Audit-related services include accounting consultations related to accounting, financial reporting or disclosure matters not classified as “audit services;” assistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities; agreed-upon or expanded audit procedures relating to accounting and/or billing records required to respond to or comply with financial, accounting or regulatory reporting matters; and assistance with internal control reporting requirements under Form N-SAR or Form N-CSR.

The Committee has pre-approved the audit-related services listed on Appendix B. The Committee must specifically approve all audit-related services not listed on Appendix B.

IV. Tax Services

The Committee believes the independent auditors can provide tax services to the Funds, including tax compliance, tax planning, and tax advice, without compromising the auditors’ independence. Therefore, the Committee may grant general pre-approval with respect to tax services historically provided by the Funds’ independent auditors that do not, in the Committee’s view, impair auditor independence and that are consistent with the SEC’s rules on auditor independence.

The Committee will not grant pre-approval if the independent auditors initially recommends a transaction the sole business purpose of which is tax avoidance and the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. The Committee may consult

 



outside counsel to determine that tax planning and reporting positions are consistent with this Policy.

The Committee has pre-approved the tax-related services listed on Appendix C. The Committee must specifically approve all tax-related services not listed on Appendix C.

V. Other Services

The Committee believes it may grant approval of non-audit services that are permissible services for independent auditors to a Fund. The Committee has determined to grant general pre-approval to other services that it believes are routine and recurring, do not impair auditor independence, and are consistent with SEC rules on auditor independence.

The Committee has pre-approved the non-audit services listed on Appendix D. The Committee must specifically approve all non-audit services not listed on Appendix D.

A list of the SEC’s prohibited non-audit services is attached to this Policy as Appendix E. The SEC’s rules and relevant guidance should be consulted to determine the precise definitions of these impermissible services and the applicability of exceptions to certain of the SEC’s prohibitions.

VI. Pre-approval of Fee levels and Budgeted Amounts

The Committee will annually establish pre-approval fee levels or budgeted amounts for audit, audit-related, tax and non-audit services to be provided to the Funds by the independent auditors. Any proposed services exceeding these levels or amounts require the Committee’s specific pre-approval. The Committee considers fees for audit and non-audit services when deciding whether to pre-approve services. The Committee may determine, for a pre-approval period of 12 months, the appropriate ratio between the total amount of fees for the Fund’s audit, audit-related, and tax services (including fees for services provided to Fund affiliates that are subject to pre-approval), and the total amount of fees for certain permissible non-audit services for the Fund classified as other services (including any such services provided to Fund affiliates that are subject to pre-approval).

VII. Procedures

Requests or applications for services to be provided by the independent auditors will be submitted to management. If management determines that the services do not fall within those services generally pre-approved by the Committee and set out in the appendices to these procedures, management will submit the services to the Committee or its delagee. Any such submission will include a detailed description of the services to be rendered. Notwithstanding this paragraph, the Committee will, on a quarterly basis, receive from the independent auditors a list of services provided for the previous calendar quarter on a cumulative basis by the auditors during the Pre-Approval Period.

 



VIII. Delegation

The Committee may delegate pre-approval authority to one or more of the Committee’s members. Any member or members to whom such pre-approval authority is delegated must report any pre-approval decisions, including any pre-approved services, to the Committee at its next scheduled meeting. The Committee will identify any member to whom pre-approval authority is delegated in writing. The member will retain such authority for a period of 12 months from the date of pre-approval unless the Committee determines that a different period is appropriate. The period of delegated authority may be terminated by the Committee or at the option of the member.

IX. Additional Requirements

The Committee will take any measures the Committee deems necessary or appropriate to oversee the work of the independent auditors and to assure the auditors’ independence from the Funds. This may include reviewing a formal written statement from the independent auditors delineating all relationships between the auditors and the Funds, consistent with Independence Standards Board No. 1, and discussing with the auditors their methods and procedures for ensuring independence.

Effective April 23, 2008, the KPMG LLP (“KPMG”) audit team for the ING Funds accepted the global responsibility for monitoring the auditor independence for KPMG relative to the ING Funds. Using a proprietary system called Sentinel, the audit team is able to identify and manage potential conflicts of interest across the member firms of the KPMG International Network and prevent the provision of prohibited services to the ING entities that would impair KPMG independence with the respect to the ING Funds. In addition to receiving pre-approval from the ING Funds Audit Committee for services provided to the ING Funds and for services for ING entities in the Investment Company Complex, the audit team has developed a process for periodic notification via email to the ING Funds’ Audit Committee Chairpersons regarding requests to provide services to ING Groep NV and its affiliates from KPMG offices worldwide. Additionally, KPMG provides a quarterly summary of the fees for services that have commenced for ING Groep NV and Affiliates at each Audit Committee Meeting.

 

 



 

Last Approved: November 21, 2013

 



Appendix A
Pre-Approved Audit Services for the Pre-Approval Period October 1, 2013through December 31, 2014

Service                                                                                                
  The Fund(s) Fee Range
Statutory audits or financial audits (including tax services associated with audit services) As presented to
Audit Committee1
Services associated with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings (e.g., consents), and assistance in responding to SEC comment letters. Not to exceed
$9,750 per filing
Consultations by Fund management with respect to accounting or disclosure treatment of transactions or events and/or the actual or potential effect of final or proposed rules, standards or interpretations by the SEC, Financial Accounting Standards Board, or other regulatory or standard setting bodies. Not to exceed
$8,000 during the
Pre-Approval Period
Seed capital audit and related review and issuance of consent on the N-2 registration statement Not to exceed
$13,750 per audit
Audit of summary portfolio of investments Not to exceed
$525 per fund

 


1
  For new Funds launched during the Pre-Approval Period, the fee ranges pre-approved will be the same as those for existing Funds, pro-rated in accordance with inception dates as provided in the auditors’ Proposal or any Engagement Letter covering the period at issue. Fees in the Engagement Letter will be controlling.

 



Appendix B
Pre-Approved Audit-Related Services for the Pre-Approval Period October 1, 2013through December 31, 2014

Service                                                                                                
  The Fund(s) Fund Affiliates Fee Range
Services related to Fund mergers (Excludes tax services  - See Appendix C for tax services associated with Fund mergers) Not to exceed
$10,000 per merger
Consultations by Fund management with respect to accounting or disclosure treatment of transactions or events and/or the actual or potential effect of final or proposed rules, standards or interpretations by the SEC, Financial Accounting Standards Board, or other regulatory or standard setting bodies. [Note: Under SEC rules some consultations may be “audit” services and others may be “audit-related” services.]   Not to exceed
$5,000 per occurrence
during the
Pre-Approval Period
Review of the Funds’ semi-annual and quarterly financial statements   Not to exceed
$2,525 per set of
financial statements
per fund
Reports to regulatory or government agencies related to the annual engagement   Up to $5,000
per occurrence
during the
Pre-Approval Period
Regulatory compliance assistance Not to exceed
$5,000 per quarter
Training courses   Not to exceed
$5,000 per course
For Prime Rate Trust, agreed upon procedures for quarterly reports to rating agencies   Not to exceed
$9,450 per quarter

 



Appendix C
Pre-Approved Tax Services for the Pre-Approval Period October 1, 2013 through December 31, 2014

Service                                                                                                
  The Fund(s) Fund Affiliates Fee Range
Preparation of federal and state income tax returns and federal excise tax returns for the Funds including assistance and review with excise tax distributions   As presented to
Audit Committee2
Review of IRC Sections 851(b) and 817(h) diversification testing on a real-time basis   As presented to
Audit Committee2
Assistance and advice regarding year-end reporting for 1099’s   As presented to
Audit Committee2
Tax assistance and advice regarding statutory, regulatory or administrative developments Not to exceed
$5,000 for the
Funds or for the
Funds’ investment
adviser during the
Pre-Approval Period

 


2
  For new Funds launched during the Pre-Approval Period, the fee ranges pre-approved will be the same as those for existing Funds, pro-rated in accordance with inception dates as provided in the auditors’ Proposal or any Engagement Letter covering the period at issue. Fees in the Engagement Letter will be controlling.

 



 

 

Appendix C, continued

 

Service                                                                                                
  The Fund(s) Fund Affiliates Fee Range
Tax training courses   Not to exceed
$5,000 per course
during the
Pre-Approval Period
Tax services associated with Fund mergers Not to exceed
$4,000 per fund
per merger
during the
Pre-Approval Period
Other tax-related assistance and consultation, including, without limitation, assistance in evaluating derivative financial instruments and international tax issues, qualification and distribution issues, and similar routine tax consultations.   Not to exceed
$120,000 during the
Pre-Approval Period

 



Appendix D
Pre-Approved Other Services for the Pre-Approval Period October 1, 2013 through December 31, 2014

Service                                                                                                
  The Fund(s) Fund Affiliates Fee Range
Agreed-upon procedures for Class B share 12b-1 programs   Not to exceed
$60,000 during the
Pre-Approval Period

Security counts performed pursuant to Rule 17f-2 of the 1940 Act (i.e., counts for Funds holding securities with affiliated sub-custodians)

Cost to be borne 50% by the Funds and 50% by ING Investments, LLC.

 

 

Not to exceed
$5,300 per Fund
during the
Pre-Approval Period
Agreed upon procedures for 15 (c) FACT Books   Not to exceed
$50,000 during the
Pre-Approval Period

 



Appendix E

Prohibited Non-Audit Services
Dated:    October 1, 2013 to December 31, 2014

·Bookkeeping or other services related to the accounting records or financial statements of the Funds
·Financial information systems design and implementation
·Appraisal or valuation services, fairness opinions, or contribution-in-kind reports
·Actuarial services
·Internal audit outsourcing services
·Management functions
·Human resources
·Broker-dealer, investment adviser, or investment banking services
·Legal services
·Expert services unrelated to the audit
·Any other service that the Public Company Accounting Oversight Board determines, by regulation, is impermissible

 



EXHIBIT A

 

ING ASIA PACIFIC HIGH DIVIDEND EQUITY INCOME FUND

ING BALANCED PORTFOLIO, INC.

ING EMERGING MARKETS LOCAL BOND FUND

ING EMERING MARKETS HIGH DIVIDEND EQUITY FUND

ING EQUITY TRUST

ING FUNDS TRUST

ING GLOBAL ADVANTAGE AND PREMIUM OPPORTUNITY FUND

ING GLOBAL EQUITY DIVIDEND AND PREMIUM OPPORTUNITY FUND

ING GLOBAL STRATEGIC INCOME FUND

ING INFRASTRUCTURE, INDUSTRIALS, AND MATERIALS FUND

ING INTERMEDIATE BOND PORTFOLIO

ING INTERNATIONAL HIGH DIVIDEND EQUITY INCOME FUND

ING INVESTORS TRUST

ING MONEY MARKET PORTFOLIO

ING MUTUAL FUNDS

ING PARTNERS, INC.

ING PRIME RATE TRUST

ING RISK MANAGED NATURAL RESOURCES FUNDING INVESTORS TRUST

ING SENIOR INCOME FUND

ING SEPARATE PORTFOLIOS TRUST

ING SERIES FUND, INC.

ING SHORT DURATION HIGH INCOME FUND

ING STRATEGIC ALLOCATIONS PORTFOLIOS, INC.
ING VARIABLE FUNDS

ING VARIABLE INSURANCE TRUST

ING VARIABLE PORTFOLIOS INC,

ING VARIABLE PRODUCTS TRUST

 

 



 

(e) (2)    Percentage of services referred to in 4(b) — (4)(d) that were approved by the audit committee
   100% of the services were approved by the audit committee.
(f)    Percentage of hours expended attributable to work performed by other than full time employees of KPMG if greater than 50%.
   Not applicable.
(g)    Non-Audit Fees: The following table presents (i) the aggregate non-audit fees (i.e., fees for audit-related, tax, and other services) billed to each Registrant by the independent registered public accounting firm for each Registrant's fiscal years ended February 28, 2014 and February 28, 2013; and (ii) the aggregate non-audit fees billed to the investment adviser, or any of its affiliates that provide ongoing services to the registrant, by the independent registered public accounting firm for the same time periods.

 

Registrant/Investment Adviser 2014 2013
Voya Asia Pacific High Dividend Equity Income Fund $ 12,826 $ 13,826
Voya Investments, LLC (1) $ 345,500 $ 461,250

 

 _____________

 (1) Each Registrant's investment adviser and any of its affiliates, which are subsidiaries of Voya Financial, Inc.

 

(h)    Principal Accountants Independence: The Registrant’s Audit committee has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X is compatible with maintaining KPMG’s independence.

 

Item 5. Audit Committee of Listed Registrants.

 

a. The registrant has a separately-designated standing audit committee. The members are J. Michael Earley, Colleen D. Baldwin, Peter S. Drotch. Patrick W. Kenny, Joseph E. Obermeyer, and Roger B. Vincent.

 

b. Not applicable.

 

13

 


 

Item 6. Schedule of Investments


Report of Independent Registered Public Accounting Firm




The Shareholders and Board of Trustees

ING Asia Pacific High Dividend Equity Income Fund


We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the statement of assets and liabilities, including the summary portfolio of investments, of ING Asia Pacific High Dividend Equity Income Fund as of February 28, 2014, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years or periods in the seven-year period then ended, and have issued our unqualified report thereon dated April 24, 2014 (which report and financial statements are included in Item 1 of this Certified Shareholder Report on Form N-CSR). In connection with our audits of the aforementioned financial statements and financial highlights, we also audited the related portfolio of investments included in Item 6 of this Form N-CSR. The portfolio of investments is the responsibility of management. Our responsibility is to express an opinion on the portfolio of investments based on our audits.


In our opinion, the portfolio of investments, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.



Boston, Massachusetts

April 24, 2013





 

ING ASIA PACIFIC HIGH DIVIDEND
EQUITY INCOME FUND
PORTFOLIO OF INVESTMENTS
AS OF FEBRUARY 28, 2014

 

Shares


  

  

  
Value
  
Percentage
of Net
Assets

 
COMMON STOCK: 93.6%
 
Australia: 23.7%
71,775
           
 
   
Australia & New Zealand Banking Group Ltd.
      $   2,063,556             1.2   
67,032
           
 
   
BHP Billiton Ltd.
         2,299,098             1.4   
1,159,378
           
 
   
CFS Retail Property Trust
         2,041,283             1.2   
188,754
           
 
   
Coca-Cola Amatil Ltd.
         1,905,529             1.1   
505,737
           
 
   
Goodman Group
         2,172,826             1.3   
981,600
           
 
   
Incitec Pivot Ltd.
         2,758,167             1.6   
382,675
           
 
   
Insurance Australia Group
         1,858,125             1.1   
694,339
           
 
   
Metcash Ltd.
         1,921,403             1.1   
64,274
           
 
   
National Australia Bank Ltd.
         1,998,849             1.2   
35,778
           
 
   
Rio Tinto Ltd.
         2,137,472             1.3   
161,211
           
 
   
Santos Ltd.
         1,965,555             1.2   
3,893,304
           
 
   
Sigma Pharmaceuticals Ltd.
         2,212,416             1.3   
1,394,797
           
 
   
Spark Infrastructure Group
         2,130,957             1.3   
622,179
           
 
   
Stockland
         2,148,692             1.3   
171,544
           
 
   
Suncorp Group Ltd
         1,865,264             1.1   
610,602
           
 
   
Sydney Airport
         2,216,149             1.3   
410,488
           
 
   
Toll Holdings Ltd.
         1,952,986             1.1   
346,785
           
 
   
Transurban Group
         2,191,609             1.3   
72,128
           
 
   
Westpac Banking Corp.
         2,164,699             1.3   
 
           
 
   
 
         40,004,635             23.7   
 
 
China: 20.2%
648,000
           
 
   
BOC Hong Kong Holdings Ltd.
         1,969,460             1.2   
3,132,000
           
 
   
China BlueChemical Ltd.
         1,831,116             1.1   
3,350,000
           
 
   
China Communications Services Corp., Ltd.
         1,578,786             0.9   
3,949,960
           
 
   
China Construction Bank
         2,721,451             1.6   
184,500
           
 
   
China Mobile Ltd.
         1,750,062             1.0   
716,000
           
 
   
China Overseas Land & Investment Ltd.
         1,929,686             1.1   
2,631,800
           
 
   
China Petroleum & Chemical Corp.
         2,329,687             1.4   
916,000
           
 
   
China Resources Power Holdings Co.
         2,216,391             1.3   
5,140,000
           
 
   
China Shanshui Cement Group Ltd.
         1,823,159             1.1   
759,000
           
 
   
China Shineway Pharmaceutical Group Ltd.
         1,182,487             0.7   
4,074,000
           
 
   
China Telecom Corp., Ltd.
         1,763,173             1.0   
2,218,000
           
 
   
Guangdong Investment Ltd.
         2,324,278             1.4   
1,526,000
           
 
   
Harbin Electric Co. Ltd.
         961,437             0 .6   
2,909,379
           
 
   
Industrial and Commercial Bank of China Ltd.
         1,749,042             1.0   
836,000
           
 
   
Jiangsu Expressway Co. Ltd.
         1,065,838             0.6   
3,323,500
           
 
   
Parkson Retail Group Ltd.
         926,176             0.6   
1,840,000
           
 
   
PetroChina Co., Ltd.
         1,943,285             1.2   
580,000
           
 
   
Shanghai Industrial Holdings Ltd.
         1,979,502             1.2   
2,340,000
           
 
   
Zhejiang Expressway Co., Ltd.
         2,056,347             1.2   
 
           
 
   
 
         34,101,363             20.2   
 
 
Hong Kong: 6.4%
298,398
           
 
   
Cheung Kong Infrastructure Holdings Ltd.
         1,947,053             1.2   
260,000
           
 
   
CLP Holdings Ltd.
         2,029,794             1.2   
13,570,000
           
 
   
Emperor Watch & Jewellery Ltd.
         1,069,717             0.6   
607,000
           
 
   
Hang Lung Properties Ltd.
         1,689,156             1.0   
436,212
           
 
   
Link Real Estate Investment Trust
         2,031,876             1.2   
319,100
           
 
   
Television Broadcasts Ltd.
         1,973,343             1.2   
 
           
 
   
 
         10,740,939             6.4   
 
 
India: 7.0%
760,230
           
 
   
Bharat Heavy Electricals Ltd.
         2,062,943             1.2   
442,225
           
 
   
Coal India Ltd.
         1,741,537             1.1   
6,537,138
           
 
   
NHPC Ltd.
         1,902,730             1.1   
916,589
           
 
   
NTPC Ltd.
         1,664,998             1.0   
427,653
           
 
   
Oil & Natural Gas Corp., Ltd.
         2,018,376             1.2   
575,708
           
 
   
Oriental Bank Of Commerce
         1,561,643             0.9   
95,681
           
 
   
Punjab National Bank
         855,604             0.5   
 
           
 
   
 
         11,807,831             7.0   
 
 
Indonesia: 3.9%
885,500
           
 
   
Indo Tambangraya Megah PT
         1,988,531             1.2   
3,779,000
           
 
   
Indofood Sukses Makmur Tbk PT
         2,342,591             1.4   
5,451,500
           
 
   
XL Axiata Tbk PT
         2,186,806             1.3   
 
           
 
   
 
         6,517,928             3.9   
 
 
Malaysia: 2.3%
1,587,104
           
 
   
Berjaya Sports Toto BHD
         1,850,527             1.1   
1,156,500
           
 
   
IJM Corp. Bhd
         2,039,279             1.2   
 
           
 
   
 
         3,889,806             2.3   
 
 
New Zealand: 1.4%
451,989
           
 
   
Sky Network Television Ltd.
         2,319,740             1.4   
 
 
Singapore: 2.3%
1,331,000
           
 
   
CapitaMall Trust
         1,997,251             1.2   
122,000
           
 
   
United Overseas Bank Ltd.
         1,987,068             1.1   
 
           
 
   
 
         3,984,319             2.3   
 
 
South Korea: 11.8%
84,780
           
 
   
Hite Jinro Co. Ltd.
         1,868,456             1.1   
77,370
           
 
   
Hyundai Marine & Fire Insurance Co., Ltd.
         2,109,347             1.3   
69,990
           
 
   
Kangwon Land, Inc.
         2,093,892             1.2   
58,709
           
 
   
KB Financial Group, Inc.
         2,195,144             1.3   
73,790
           
 
   
KT Corp.
         2,097,464             1.2   


 

ING ASIA PACIFIC HIGH DIVIDEND
EQUITY INCOME FUND
PORTFOLIO OF INVESTMENTS
AS OF FEBRUARY 28, 2014 (CONTINUED)

 

Shares


  

  

  
Value
  
Percentage
of Net
Assets

 
COMMON STOCK: (continued)
 
South Korea: (continued)
31,100
           
 
   
KT&G Corp.
      $   2,278,239             1.3   
6,956
           
 
   
POSCO
         1,850,179             1.1   
18,851
           
@
   
Samsung Engineering Co. Ltd.
         1,330,165             0.8   
50,900
           
 
   
Shinhan Financial Group Co., Ltd.
         2,123,954             1.3   
15,826
           
 
   
SK Innovation Co. Ltd.
         1,982,601             1.2   
 
           
 
   
 
         19,929,441             11.8   
 
 
Taiwan: 11.0%
1,099,000
           
 
   
Cheng Uei Precision Industry Co., Ltd.
         2,355,545             1.4   
3,149,322
           
 
   
CTBC Financial Holding Co. Ltd
         2,037,527             1.2   
146,273
           
 
   
MediaTek, Inc.
         2,156,322             1.3   
2,726,021
           
 
   
Mega Financial Holdings Co., Ltd.
         2,181,017             1.3   
1,130,000
           
 
   
Powertech Technology, Inc.
         1,581,512             0.9   
1,010,000
           
 
   
Quanta Computer, Inc.
         2,491,960             1.5   
1,263,167
           
 
   
Taiwan Semiconductor Manufacturing Co., Ltd.
         4,556,627             2.7   
1,007,335
           
 
   
TXC Corp.
         1,207,852