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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:		811-21786

ING Global Advantage and Premium Opportunity Fund

(Exact name of registrant as specified in charter)

 

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

The Corporation Trust Company, 1209 Orange

Street, Wilmington, DE 19801

(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, 2013

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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):

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Annual Report

February 28, 2013

ING Global Advantage and Premium Opportunity Fund

 

 

		E-Delivery Sign-up – details inside

 

MUTUAL FUNDS

 

 

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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			21
Tax Information			26
Trustee and Officer Information			27
Advisory Contract Approval Discussion			31
Shareholder Meeting Information			43
Additional Information			44

 

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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 ING Funds’ 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 ING Funds’ 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 Global Advantage and Premium Opportunity Fund (the “Fund”) is a diversified, closed-end management investment company whose shares are traded on the New York Stock Exchange under the symbol “IGA.” The primary objective of the Fund is to provide a high level of income, with a secondary objective of capital appreciation.

The Fund seeks to achieve its investment objectives by investing at least 80% of its managed assets in a diversified global equity portfolio and employing an option strategy of writing index call options on a portion of its equity portfolio. The Fund also hedges most of its foreign currency exposure to seek to reduce volatility of total returns.

For the year ended February 28, 2013 the Fund made quarterly distributions totaling $1.18 per share, characterized of $0.54 per share capital gains, $0.20 per share return of capital, and $0.44 per share net investment income.

Based on net asset value (“NAV”), the Fund provided a total return of 12.85% including reinvestments for the year ended February 28, 2013.⁽¹⁾ This NAV return reflects an increase in

the Fund’s NAV from $12.66 on February 29, 2012 to $12.92 on February 28, 2013. Based on its share price, the Fund provided a total return of 17.49% including reinvestments for the year ended February 28, 2013.⁽²⁾ This share price return reflects an increase in the Fund’s share price from $11.90 on February 29, 2012 to $12.64 on February 28, 2013.

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 Funds 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.

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 P. Mathews

President and Chief Executive Officer

ING Funds

April 1, 2013

 

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 disclaim 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.

 

1

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MARKET PERSPECTIVE:  YEAR ENDED FEBRUARY 28, 2013

 

 

 

 

2

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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 U.S. Treasury Index		An unmanaged index that includes public obligations of the U.S. Treasury. Treasury bills, certain special issues, such as state and local government series bonds (SLGs), as well as U.S. Treasury TIPS and STRIPS, are excluded.
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.
S&P/Case-Shiller 20-City Composite Home Price Index		A composite index of the home price index for the top 20 Metropolitan Statistical Areas in the United States. The index is published monthly by Standard & Poor’s.

 

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ING GLOBAL ADVANTAGE AND PREMIUM OPPORTUNITY FUND		PORTFOLIO MANAGERS’ REPORT

 

 

Sub-Advisers seek to identify opportunities in mispricing between the bottom-up fundamental fair value and the market price of individual stocks using a proprietary discounted cash flow valuation model. Highest conviction ideas are selected from the focus list to construct a coherent, well-diversified portfolio.

The Fund’s weighting between U.S. and international equities depends on the Sub-Advisers’ ongoing assessment of market opportunities for the Fund. Under normal market conditions, the Fund seeks to target at least a 40% weighting in international (ex-U.S.) equity securities.

The Sub-Advisers seek to target a relatively high active share in combination with a moderate tracking error as measured against the MSCI World Index^SM.

The Fund’s Integrated Option Strategy: The option strategy of the Fund is designed to seek gains and lower volatility of total returns over a market cycle by writing (selling) index call options on selected indices and/or exchange traded funds (“ETFs”) in an amount equal to approximately 50% to 100% of the value of the Fund’s holdings in common stocks.

The extent of call option writing activity depends upon market conditions and the Sub-Advisers’ ongoing assessment of the attractiveness of writing call options on selected indices and/or ETFs. Call options will be written (sold) usually at-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 writes call options that are generally short-term (between 10 days and three months until expiration). The Fund typically maintains its call positions until expiration, but it retains the option to buy back the call options and sell new call options.

 

 

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PORTFOLIO MANAGERS’ REPORT		ING GLOBAL ADVANTAGE AND PREMIUM OPPORTUNITY FUND

 

return reflects an increase in the Fund’s share price from $11.90 on February 29, 2012 to $12.64 on February 28, 2013. The Fund’s reference index, the MSCI World Index^SM returned 10.69%.⁽¹⁾ During the year, the Fund made quarterly distributions totaling $1.18 per share, characterized of $0.54 per share capital gains, $0.20 per share return of capital, and $0.44 per share net investment income. As of February 28, 2013, the Fund had 18,340,467 shares outstanding.

Overview: Global equity markets performed well during the reporting period. The S&P 500^® Index rose more than 13% and international equity indices posted double-digit returns. The euro zone staged a comeback, thanks to actions by the European Central Bank. There were increasing signs of a turnaround in the global economy in the second half of the year. Macroeconomic data improved markedly in the United States throughout the reporting period; what’s more, Chinese data got better towards the end. This resulted in an increase in risk appetite among investors, which favored the beaten-down financial sector. The consumer sectors also posted strong performance, as did health care. Lower Chinese demand for resources and a drop in oil prices hurt performance of the materials and energy sectors during the period and caused them to lag the total reference index.

Equity Portfolio: The Fund outperformed the reference index thanks to stock selection in the equity sleeve and contributions from the currency hedges. The equity sleeve outperformed the reference index thanks to stock picking in the information technology (“IT”), consumer discretionary and energy sectors. In contrast, selection in the materials and consumer staples sectors detracted from results.

Responsibility for managing the equity sleeve was transferred to the global core equity team of ING Investment Management Advisors B.V. as of December 20, 2012. On that date, the sleeve’s investment style switched from a quantitative discipline to a low-tracking-error, fundamental, bottom-up, stock-picking discipline. As a result, we reduced the number of stocks in the sleeve from 750 to around 120.

Options Portfolio: The options sleeve sold short-maturity options on the S&P 500^® Index, the DJ Eurostoxx 50 Index (and/or component country indices), the Nikkei 225 Index, the FTSE 100 Index, the S&P/ASX 200, CAC40 and the DAX Index. The last two indexes were added due to regulatory constraints relating to positions in the DJ Eurostoxx 50 Index, which prevented selling call options. The strike prices of the traded options were typically at or near the money, and the expiration dates ranged between three and six weeks. We maintained the coverage ratio between 65–70% throughout the period. Equity markets rallied towards the end of the period, which reduced implied volatility to its lowest level in recent years. As a result, premiums the Fund received for its call-writing activities declined and the option sleeve detracted from performance as total premiums received fell short of options settlements in generally strong markets.

The Fund continued its policy of hedging currencies back to the U.S. dollar in order to seek to reduce volatility of NAV returns. These hedges contributed significantly to overall return as the U.S. dollar strengthened towards the end of the reporting period.

Outlook and Current Strategy: We remain positive about the prospects for equities. In light of generally accommodative central bank policies and lower euro zone risks, we believe markets seem more willing to look beyond the uncertainties related to the U.S. debt ceiling and budget negotiations and the challenges in peripheral Europe. Four key factors underpin our view: cyclical recovery in the global economy, reduced risks of systemic shocks, current depressed investor sentiment and defensive positioning. We are seeing signs of strengthening in the U.S. and Chinese economies and we expect other countries to follow these leaders. Since we think markets trade more on the direction of the cycle than on the level of growth, we expect this to put upward pressure on Treasury yields and support “risk” assets such as equities. We prefer equities over other asset classes given this supportive macroeconomic and policy backdrop as well as the attractive valuations, particularly in cyclical sectors and among European equities.

Earnings momentum remains weak but is slowly improving, and has turned positive in Japan, the U.S. and the UK. Across the globe, many companies are in excellent shape, with manageable leverage and ample cash reserves. Combined with attractive valuations we’re seeing increased merger and acquisition activity, which in our view is another positive driver for equities.

 

*

On December 20, 2012, shareholders approved the addition of ING Investment Management Advisors B.V. as a sub-adviser to the Fund. Effective December 20, 2012, Paul Zemsky, Vincent Costa, Jody Hrazanek, Sam Lam and Frank van Etten were removed as portfolio managers to the Fund, and Edwin Cuppen, Willem van Dommelen, Bert Veldman and Pieter Schop were added as portfolio managers to the Fund.

 

(1)

Prior to December 20, 2012, the Fund’s reference index was a blended index consisting of 60% S&P 500® Index and 40% MSCI EAFE® Index.

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.

 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

 

The Shareholders and Board of Trustees

ING Global Advantage and Premium Opportunity Fund

We have audited the accompanying statement of assets and liabilities, including the summary portfolio of investments, of ING Global Advantage and Premium Opportunity Fund as of February 28, 2013, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the seven-year period then ended and the period from October 31, 2005 (commencement of operations) to February 28, 2006. 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, 2013, 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 Global Advantage and Premium Opportunity Fund as of February 28, 2013, and the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the seven-year period then ended and the period from October 31, 2005 to February 28, 2006, in conformity with U.S. generally accepted accounting principles.

 

Boston, Massachusetts

April 25, 2013

 

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STATEMENT OF ASSETS AND LIABILITIES AS OF FEBRUARY 28, 2013

 

 

 

ASSETS:
Investments in securities at fair value*		$	226,632,085
Cash			8,286,517
Cash collateral for futures			813,375
Foreign currencies at value**			694,374
Foreign cash collateral for futures***			3,125,638
Receivables:
Investment securities sold			1,368,923
Dividends			459,843
Foreign tax reclaims			167,447
Variation margin			7,678
Unrealized appreciation on forward foreign currency contracts			1,188,565
Prepaid expenses			1,694
Reimbursement due from manager			13,200
Total assets			242,759,339
LIABILITIES:
Payable for investment securities purchased			1,349,199
Unrealized depreciation on forward foreign currency contracts			101,832
Payable for derivatives collateral (Note 2)			830,000
Payable for investment management fees			136,643
Payable for administrative fees			18,219
Payable for trustee fees			2,039
Other accrued expenses and liabilities			193,533
Written options, at fair value^			3,093,462
Total liabilities			5,724,927
NET ASSETS		$	237,034,412
NET ASSETS WERE COMPRISED OF:
Paid-in capital		$	225,750,388
Distributions in excess of net investment income			(288,785	)
Accumulated net realized loss			(541,004	)
Net unrealized appreciation			12,113,813
NET ASSETS		$	237,034,412
*      Cost of investments in securities		$	215,380,672
**    Cost of foreign currencies		$	763,400
*** Cost of foreign cash collateral for futures		$	3,125,638
^      Premiums received on written options		$	2,586,658
Net assets		$	237,034,412
Shares authorized			unlimited
Par value		$	0.01
Shares outstanding			18,340,467
Net asset value and redemption price per share		$	12.92

 

See Accompanying Notes to Financial Statements

 

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STATEMENT OF OPERATIONS FOR THE YEAR ENDED FEBRUARY 28, 2013

 

 

 

INVESTMENT INCOME:
Dividends, net of foreign taxes withheld*		$	6,075,577
Total investment income			6,075,577
EXPENSES:
Investment management fees			1,701,740
Transfer agent fees			26,097
Administrative service fees			226,896
Shareholder reporting expense			28,884
Professional fees			57,336
Custody and accounting expense			250,004
Trustee fees			7,138
Proxy and solicitation costs (Note 5)			97,100
Miscellaneous expense			38,570
Interest expense			1,595
Total expenses			2,435,360
Net waived and reimbursed fees			(169,045	)
Net expenses			2,266,315
Net investment income			3,809,262
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments			19,155,560
Foreign currency related transactions			1,537,046
Futures			2,593,149
Written options			(6,228,991	)
Net realized gain			17,056,764
Net change in unrealized appreciation (depreciation) on:
Investments			1,825,238
Foreign currency related transactions			2,443,922
Futures			247,369
Written options			1,210,954
Net change in unrealized appreciation (depreciation)			5,727,483
Net realized and unrealized gain			22,784,247
Increase in net assets resulting from operations		$	26,593,509
*      Foreign taxes withheld		$	262,657

 

See Accompanying Notes to Financial Statements

 

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STATEMENTS OF CHANGES IN NET ASSETS

 

 

 

		Year Ended February 28, 2013				Year Ended February 29, 2012
FROM OPERATIONS:
Net investment income		$	3,809,262			$	4,035,464
Net realized gain			17,056,764				16,611,481
Net change in unrealized appreciation (depreciation)			5,727,483				(16,786,516	)
Increase in net assets resulting from operations			26,593,509				3,860,429
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income			(8,099,640	)			(24,121,012	)
Net realized gains			(9,831,041	)			—
Return of capital			(3,784,430	)			—
Total distributions			(21,715,111	)			(24,121,012	)
FROM CAPITAL SHARE TRANSACTIONS:
Reinvestment of distributions			—				871,120
Net increase in net assets resulting from capital share transactions			—				871,120
Net increase (decrease) in net assets			4,878,398				(19,389,463	)
NET ASSETS:
Beginning of year or period			232,156,014				251,545,477
End of year or period		$	237,034,412			$	232,156,014
Undistributed (distributions in excess of) net investment income at end of year or period		$	(288,785	)		$	1,017,789

 

See Accompanying Notes to Financial Statements

 

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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 gain (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/ recoupment(3)				Net expenses after expense waiver/ recoupment(3)(4)				Net investment income after expense waiver/ recoupment(3)(4)				Portfolio turnover rate
Year or period ended		($)				($)				($)				($)				($)				($)				($)				($)				($)				($)				(%)				(%)				($000’s)				(%)				(%)				(%)				(%)
02-28-13			12.66				0.21				1.23				1.44				0.44				0.54				0.20				1.18				12.92				12.64				12.85				17.49				237,034				1.07				1.00				1.68				234
02-29-12			13.76				0.22	•			0.00	*			0.22				1.32				—				—				1.32				12.66				11.90				2.43				(3.44	)			232,156				1.00				1.00				1.76				135
02-28-11			13.37				0.20				1.57				1.77				1.38				—				—				1.38				13.76				13.72				14.05				6.32				251,545				0.98				0.99	†			1.48	†			164
02-28-10			11.29				0.21	•			3.64				3.85				—				—				1.77				1.77				13.37				14.30				35.81				57.38				242,426				1.01				1.00	†			1.61	†			141
02-28-09			17.79				0.31	•			(4.95	)			(4.64	)			0.74				—				1.12				1.86				11.29				10.42				(26.96	)			(28.32	)			204,546				0.99				0.99	†			2.01	†			178
02-29-08			21.19				0.30	•			(0.73	)			(0.43	)			—				2.40				0.57				2.97				17.79				16.73				(2.40	)			(7.87	)			324,275				0.97				0.97	†			1.45	†			194
02-28-07			20.24				0.26				2.55				2.81				0.04				1.54				0.28				1.86				21.19				21.11				14.81				24.40				385,433				0.95				0.95				1.29				132
10-31-05(5) - 02-28-06			19.06	(6)			0.06	•			1.28				1.34				0.16				—				—				0.16				20.24				18.61				7.08				(6.17	)			365,374				1.06				1.00				0.86				41

 

(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 $0.90 per share and offering costs of $0.04 per share paid by the shareholder from the $20.00 offering price.

·

Calculated using average number of shares outstanding throughout the period.

*

Amount is less than $0.005 or 0.005% or more than $(0.005) or (0.005)%.

†

Impact of waiving the advisory fee for the ING Institutional Prime Money Market Fund holding has less than 0.005% impact on the expense ratio and net investment income or loss ratio.

 

See Accompanying Notes to Financial Statements

 

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NOTES TO FINANCIAL STATEMENTS AS OF FEBRUARY 28, 2013

 

 

 

 

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NOTES TO FINANCIAL STATEMENTS AS OF FEBRUARY 28, 2013 (CONTINUED)

 

 

 

NOTE 2 — SIGNIFICANT ACCOUNTING

POLICIES (continued)

 

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 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 and 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. 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.

Fair value is defined as the price that 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. 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 valued in good faith at fair value nor can it be assured the Fund can obtain the fair value assigned to a security if it 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 third party 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

 

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NOTE 2 — SIGNIFICANT ACCOUNTING

POLICIES (continued)

 

presented when the Fund has a significant amount of Level 3 investments.

For the year ended February 28, 2013, 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.

 

(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.

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. generally accepted accounting principles 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

 

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NOTE 2 — SIGNIFICANT ACCOUNTING

POLICIES (continued)

 

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. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported mounts 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, futures 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 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 duration, which tend to have higher yields, are subject to potentially greater fluctuations in value from changes in interest rates than obligations with shorter duration. 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

 

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NOTE 2 — SIGNIFICANT ACCOUNTING

POLICIES (continued)

 

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.

As of February 28, 2013, the maximum amount of loss the Fund would incur if the counterparties to its derivative transactions failed to perform would be $1,188,565, which represents the gross payments to be received by the Fund on open forward foreign currency contracts were they to be unwound as of February 28, 2013. To reduce the amount of potential loss to the

Fund, certain counterparties have posted $830,000 in cash collateral to mitigate counterparty credit risk. There were no credit events during the year ended February 28, 2013 that triggered any credit related contingent features.

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.

As of February 28, 2013, the Fund had a liability position of $3,195,294 on open forward foreign currency contracts and written options with credit related contingent features. If a contingent feature would have been triggered as of February 28, 2013, the Fund could have been required to pay this amount in cash to its counterparties. As of February 28, 2013 the Fund did not post collateral for its open derivatives transactions. There were no credit events during the year ended February 28, 2013 that triggered any credit related contingent features.

H. Forward Foreign Currency Contracts and Futures Contracts. The Fund may enter into forward foreign currency contracts primarily to hedge against foreign currency exchange rate risks on its non-U.S. dollar denominated investment securities. When entering into a forward foreign currency contract, the Fund agrees to receive or deliver a fixed quantity of reign currency for an agreed-upon price on an agreed future date. These contracts are valued daily and the Fund’s net equity therein, representing unrealized gain or loss on the contracts as measured by the difference between the forward foreign exchange rates at the dates of entry into the contracts and the forward rates at the reporting date, is included in the statement of assets and liabilities. Realized and unrealized gains and losses on forward foreign currency contracts are included on the Statement of Operations. These instruments involve market and/or credit risk in excess of the amount recognized in the statement of assets and liabilities. Risks arise from the

 

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NOTE 2 — SIGNIFICANT ACCOUNTING

POLICIES (continued)

 

possible inability of counterparties to meet the terms of their contracts and from movement in currency and securities values and interest rates.

During the year ended February 28, 2013, the Fund used forward foreign currency contracts to hedge its investments in non-U.S. dollar denominated equity securities in an attempt to decrease the volatility of the Fund’s NAV.

During the year ended February 28, 2013, the Fund had average contract amounts on forward foreign currency contracts to buy and sell of $7,603,297 and $90,464,306, respectively.

The Fund may enter into futures contracts involving foreign currency, interest rates, securities and securities indices. A futures contract obligates the seller of the contract to deliver and the purchaser of the contract to take delivery of the type of foreign currency, financial instrument or security called for in the contract at a specified future time for a specified price. Upon entering into such a contract, the Fund is required to deposit and maintain as collateral such initial margin as required by the exchange on which the contract is traded. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount equal to the daily fluctuations in the value of the contract. Such receipts or payments are known as variation margin and are recorded as unrealized gains or losses by the Fund. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.

Futures contracts are exposed to the market risk factor of the underlying financial instrument. During the year ended February 28, 2013, the Fund had purchased futures contracts on various equity indices primarily to provide exposures to such index returns while allowing the fund managers to maintain a certain level of cash balances in the Fund. Additional associated risks of entering into futures contracts include the possibility that there may be an illiquid market where the Fund is unable to liquidate the contract or enter into an offsetting position and, if used for hedging purposes, the risk that the price of the contract will correlate imperfectly with the prices of the Fund’s securities. With futures, there is minimal counterparty credit risk to the Fund since futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default.

During the year ended February 28, 2013, the Fund had an average notional value of $12,687,764 on purchased futures contracts.

I. 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 generates premiums and seeks gains by writing OTC call options on indices on a portion of the value of the equity portfolio. Please refer to Note 7 for the volume of written option activity during the year ended February 28, 2013.

J. 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 0.75% of the Fund’s average daily managed assets. For purposes of the Management Agreement, managed assets are

 

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NOTE 3 — INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES (continued)

 

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, 2013, there were no preferred shares outstanding.

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

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, and extraordinary expenses (and acquired fund fees and expenses) to 1.00% 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 and shall renew automatically for one-year terms unless ING Investments or the Fund provides written notice of the termination within 90 days of the end of the then current term or upon written termination of the Management Agreement.

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 for the Fund. As of February 28, 2013, the amounts of waived or reimbursed fees that are subject to possible recoupment by the Investment Adviser, and the related expiration dates, are as follows:

 

February 28,
2014				2015				2016				Total
$	—			$	—			$	71,945			$	71,945

NOTE 5 — OTHER TRANSACTIONS WITH AFFILIATED AND RELATED PARTIES

The Fund incurred $97,100 of proxy and solicitation costs associated with the shareholder vote to add ING Investment Management Advisors B.V. as a sub-advisor to the Fund. The investment advisor reimbursed the Fund $97,100 for these costs.

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, 2013, excluding short-term securities, were $522,740,580 and $549,626,584, respectively.

NOTE 7 — TRANSACTIONS IN WRITTEN OPTIONS

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

 

		Number of Contracts				Premiums Received
Balance at 02/29/12			214,991			$	2,646,412
Options Written			2,598,092				34,468,034
Options Expired			(838,016	)			(10,420,120	)
Options Exercised			—				—
Options Terminated in Closing Purchase Transactions			(1,800,467	)			(24,107,668	)
Balance at 02/28/13			174,600			$	2,586,658

NOTE 8 — CONCENTRATION OF INVESTMENT 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

 

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NOTE 8 — CONCENTRATION OF INVESTMENT

RISKS (continued)

 

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 may invest up to 20% of its managed assets in 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 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.

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		#				#						($)				($)
2/28/2013			—				—						—				—
2/29/2012			66,109				66,109						871,120				871,120

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. generally accepted accounting principles for investment companies. These book/tax differences may be either temporary or permanent. Permanent differences are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences are not reclassified. Key differences include the treatment of short-term capital gains, foreign currency transactions, 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, 2012:

 

Paid-in Capital				Undistributed Net Investment Income				Accumulated Net Realized Gains/ (Losses)
$	(3,827,168	)		$	2,983,804			$	843,364

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, 2013. 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, 2012												Tax Year Ended December 31, 2011
Ordinary Income				Long-term Capital Gain				Return of Capital				Ordinary Income
$	12,130,631			$	5,800,051			$	3,784,430			$	24,121,012

The tax-basis components of distributable earnings as of the tax year ended December 31, 2012 were:

 

Unrealized Appreciation/ (Depreciation)
$	2,073,041

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 2008.

As of February 28, 2013, 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.

 

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NOTE 11 — RESTRUCTURING PLAN

 

The Investment Adviser, ING IM, and the Administrator, are indirect, wholly-owned subsidiaries of ING U.S., Inc. (“ING U.S.”). ING U.S. is a U.S.-based financial institution whose subsidiaries operate in the retirement, investment, and insurance industries. As of February 28, 2013, ING U.S. and IIMA are wholly-owned subsidiaries of ING Groep N.V. (“ING Groep”), which is a global financial institution of Dutch origin, with operations in more than 40 countries.

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”).

On November 9, 2012, ING U.S. filed a Registration Statement on Form S-1 (the “Form S-1”) with the U.S. Securities and Exchange Commission (“SEC”) to register an initial public offering of ING U.S. common stock (the “IPO”). Following an IPO, ING Groep would likely continue to own a majority of the common stock of ING U.S. Subsequent to an IPO, ING Groep would likely sell its controlling ownership interest in ING U.S. over time. While the base case for the Separation Plan is the IPO, all options remain open and it is possible that ING Groep’s divestment of ING U.S. may take place by means of a sale to a single buyer or group of buyers. Notwithstanding the filing of the Form S-1, there can be no assurance that the IPO will occur.

It is anticipated that one or more of the transactions contemplated by the Separation Plan would result in the automatic termination of the existing advisory and sub-advisory agreements under which the Adviser and sub-adviser(s) 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. In addition, shareholders of the Fund will be asked to approve 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 be materially different from the current agreements. This means that shareholders may not have another opportunity to vote on a new agreement with the 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 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 Adviser’s and affiliated entities loss of access to the resources of ING Groep, which could adversely affect its business. It is anticipated that ING U.S., as a stand-alone entity, may be a publicly held U.S. company 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.

During the time that ING Groep retains a majority 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 Adviser and its affiliates. Currently, the 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.

 

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NOTES TO FINANCIAL STATEMENTS AS OF FEBRUARY 28, 2013 (CONTINUED)

 

 

 

NOTE 12 — SUBSEQUENT EVENTS

 

Dividends: Subsequent to February 28, 2013, the Fund made a distribution of:

 

Per Share Amount

Declaration Date

Payable Date

Record Date

$

0.280

3/15/2013

4/15/2013

4/3/2013

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.

At a meeting of the Board on January 10, 2013, the Board nominated to Class II of the Board five individuals (collectively, the “Nominees”) for election as Trustees of the Trust. The Nominees include John V. Boyer, Patricia W. Chadwick, and Sheryl K. Pressler, each of whom is a current member of the Board. In addition, the Board has nominated to Class II of the Board Albert E. DePrince Jr. and Martin J. Gavin and appointed to Class I of the Board Joseph E. Obermeyer and Russell H. Jones, each of whom is not currently a

member of the Board, but serves as a director or trustee to other investment companies in the ING Fund complex. If the Nominees are approved by shareholders, the election of the Nominees and appointment of Messrs. Obermeyer and Jones are expected to be effective May 21, 2013. These nominations and appointments are, in part, the result of an effort on the part of the Board, another board in the ING Fund complex, and the Investment Adviser to the Fund to consolidate the membership of the boards so that the same members serve on each board in the ING Fund complex. A proxy statement has been sent to shareholders of the Fund included in this report, as well as shareholders of other ING Funds, seeking approval of the same Nominees. If these proposals were all approved by shareholders, the result would be that all ING Funds would be governed by a board made up of the same individuals.

The Fund has evaluated events occurring after the balance sheet 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.

 

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ING GLOBAL ADVANTAGE AND PREMIUM OPPORTUNITY FUND		SUMMARY PORTFOLIO OF INVESTMENTS AS OF FEBRUARY 28, 2013

 

 

See Accompanying Notes to Financial Statements

 

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ING GLOBAL ADVANTAGE AND PREMIUM OPPORTUNITY FUND		SUMMARY PORTFOLIO OF INVESTMENTS AS OF FEBRUARY 28, 2013 (CONTINUED)

 

 

See Accompanying Notes to Financial Statements

 

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ING GLOBAL ADVANTAGE AND PREMIUM OPPORTUNITY FUND		SUMMARY PORTFOLIO OF INVESTMENTS AS OF FEBRUARY 28, 2013 (CONTINUED)

 

Fair Value Measurements^

The following is a summary of the fair valuations according to the inputs used as of February 28, 2013 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, 2013
Asset Table
Investments, at fair value
Common Stock
Brazil		$	3,409,902			$	—			$	—			$	3,409,902
Canada			1,218,733				—				—				1,218,733
China			—				2,058,703				—				2,058,703
France			—				6,662,192				—				6,662,192
Germany			—				8,987,303				—				8,987,303
Hong Kong			—				2,058,364				—				2,058,364
Ireland			2,014,652				—				—				2,014,652
Israel			2,931,921				1,203,367				—				4,135,288
Italy			—				1,229,810				—				1,229,810
Japan			—				22,294,884				—				22,294,884
Mexico			2,596,061				—				—				2,596,061
Netherlands			—				981,751				—				981,751
Norway			—				1,471,877				—				1,471,877
Peru			1,185,642				—				—				1,185,642
Poland			—				1,725,852				—				1,725,852
Russia			2,939,674				—				—				2,939,674
Singapore			—				4,760,633				—				4,760,633
South Korea			—				2,978,647				—				2,978,647
Spain			—				1,813,196				—				1,813,196
Sweden			—				1,410,165				—				1,410,165
Switzerland			1,512,098				13,684,352				—				15,196,450
Taiwan			1,489,346				—				—				1,489,346
Turkey			—				885,869				—				885,869
United Kingdom			—				20,212,366				—				20,212,366
United States			112,914,725				—				—				112,914,725
Total Common Stock			132,212,754				94,419,331				—				226,632,085
Total Investments, at fair value		$	132,212,754			$	94,419,331			$	—			$	226,632,085
Other Financial Instruments+
Futures			359,457				—				—				359,457
Forward Foreign Currency Contracts			—				1,188,565				—				1,188,565
Total Assets		$	132,572,211			$	95,607,896			$	—			$	228,180,107
Liabilities Table
Other Financial Instruments+
Written Options		$	—			$	(3,093,462	)		$	—			$	(3,093,462	)
Forward Foreign Currency Contracts			—				(101,832	)			—				(101,832	)
Total Liabilities		$	—			$	(3,195,294	)		$	—			$	(3,195,294	)

 

^	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, equity forwards, futures, swaps, and written options. Forward foreign currency contracts, equity forwards and futures are valued at the unrealized gain (loss) on the instrument. 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.

 

See Accompanying Notes to Financial Statements

 

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ING GLOBAL ADVANTAGE AND PREMIUM OPPORTUNITY FUND		SUMMARY PORTFOLIO OF INVESTMENTS AS OF FEBRUARY 28, 2013 (CONTINUED)

 

At February 28, 2013, the following forward foreign currency contracts were outstanding for the ING Global Advantage and Premium Opportunity Fund:

 

 

Counterparty		Currency				Contract Amount				Buy/Sell				Settlement Date				In Exchange For				Fair Value				Unrealized Appreciation (Depreciation)
Barclays Bank PLC			Japanese Yen				140,000,000				Buy				03/19/13			$	1,521,622			$	1,510,558			$	(11,064	)
																										$	(11,064	)
Barclays Bank PLC			Japanese Yen				2,292,000,000				Sell				03/19/13			$	24,639,227			$	24,729,995			$	(90,768	)
Barclays Bank PLC			Israeli New Shekel				15,750,000				Sell				03/19/13				4,274,388				4,238,487				35,901
Barclays Bank PLC			British Pound				13,750,000				Sell				03/19/13				21,335,999				20,857,668				478,331
Barclays Bank PLC			Swiss Franc				12,500,000				Sell				03/19/13				13,549,577				13,338,170				211,407
Barclays Bank PLC			EU Euro				16,740,000				Sell				03/19/13				22,320,279				21,857,353				462,926
																										$	1,097,797

ING Global Advantage and Premium Opportunity Fund Open Futures Contracts on February 28, 2013:

 

Contract Description		Number of Contracts				Expiration Date				Notional Value				Unrealized Appreciation/ (Depreciation)
Long Contracts
Euro STOXX 50®			462				03/15/13			$	15,893,389			$	172,206
FTSE 100 Index			144				03/15/13				13,890,559				87,502
NIKKEI 225 (SGX)			103				03/07/13				6,386,800				77,463
S&P 500 E-Mini			82				03/15/13				6,204,530				22,286
										$	42,375,278			$	359,457

ING Global Advantage and Premium Opportunity Fund Written OTC Options on February 28, 2013:

 

Number of Contracts				Counterparty		Description		Exercise Price								Expiration Date		Premiums Received				Fair Value
	Options on Indices
	1,000			Barclays Bank PLC		Call on CAC 40 Index			3,743.740				EUR			03/01/13		$	90,178			$	(10,076	)
	200			Barclays Bank PLC		Call on DAX Index			7,725.400				EUR			03/01/13			35,172				(9,355	)
	1,700			Barclays Bank PLC		Call on Euro Stoxx 50® Index			2,630.628				EUR			04/05/13			134,316				(140,756	)
	1,600			Royal Bank of Scotland Group PLC		Call on Euro Stoxx 50® Index			2,711.710				EUR			03/15/13			107,128				(25,381	)
	1,200			Barclays Bank PLC		Call on FTSE 100 Index			6,284.053				GBP			04/05/13			188,767				(230,780	)
	1,300			Royal Bank of Scotland Group PLC		Call on FTSE 100 Index			6,139.830				GBP			03/01/13			169,330				(434,088	)
	1,200			Royal Bank of Scotland Group PLC		Call on FTSE 100 Index			6,306.430				GBP			03/15/13			168,731				(150,333	)
	36,000			Barclays Bank PLC		Call on Nikkei 225 Index			11,079.325				JPY			04/05/13			148,713				(232,902	)
	36,900			Royal Bank of Scotland Group PLC		Call on Nikkei 225 Index			10,968.260				JPY			03/01/13			120,480				(235,264	)
	36,300			Royal Bank of Scotland Group PLC		Call on Nikkei 225 Index			11,219.630				JPY			03/15/13			121,872				(167,580	)
	17,900			Royal Bank of Scotland Group PLC		Call on S&P 500 Index			1,473.810				USD			03/01/13			421,509				(729,833	)
	19,800			Royal Bank of Scotland Group PLC		Call on S&P 500 Index			1,509.520				USD			03/15/13			436,154				(339,841	)
	19,500			Royal Bank of Scotland Group PLC		Call on S&P 500 Index			1,519.000				USD			04/05/13			444,308				(387,273	)
						Total Written OTC Options												$	2,586,658			$	(3,093,462	)

 

See Accompanying Notes to Financial Statements

 

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ING GLOBAL ADVANTAGE AND PREMIUM OPPORTUNITY FUND		SUMMARY PORTFOLIO OF INVESTMENTS AS OF FEBRUARY 28, 2013 (CONTINUED)

 

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, 2013 was as follows:

 

Derivatives not accounted for as hedging instruments		Location on Statement of Assets and Liabilities		Fair Value
Asset Derivatives
Foreign exchange contracts		Unrealized appreciation on forward foreign currency contracts		$	1,188,565
Equity contracts		Net Assets- Unrealized appreciation*			359,457
Total Asset Derivatives				$	1,548,022
Liability Derivatives
Foreign exchange contracts		Unrealized depreciation on forward foreign currency contracts		$	101,832
Equity contracts		Written options, at fair value			3,093,462
Total Liability Derivatives				$	3,195,294

 

*	Includes cumulative appreciation/depreciation of futures contracts as reported in the table following the Summary Portfolio of Investments.

The effect of derivative instruments on the Fund’s Statement of Operations for the year ended February 28, 2013 was as follows:

 

Derivatives not accounted for as hedging instruments		Amount of Realized Gain or (Loss) on Derivatives Recognized in Income
		Foreign currency related transactions*				Futures				Written options				Total
Equity contracts		$	—			$	2,593,149			$	(6,228,991	)		$	(3,635,842	)
Foreign exchange contracts			3,816,945				—				—				3,816,945
Total		$	3,816,945			$	2,593,149			$	(6,228,991	)		$	181,103
Derivatives not accounted for as hedging instruments		Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income
		Foreign currency related transactions*				Futures				Written options				Total
Equity contracts		$	—			$	247,369			$	1,210,954			$	1,458,323
Foreign exchange contracts			2,520,851				—				—				2,520,851
Total		$	2,520,851			$	247,369			$	1,210,954			$	3,979,174

 

*	Amounts recognized for forward foreign currency contracts are included in net realized gain (loss) on foreign currency related transactions and net change in unrealized appreciation or depreciation on foreign currency related transactions.

Supplemental Option Information (Unaudited)

 

Supplemental Call Option Statistics as of February 28, 2013:
% of Total Net Assets against which calls written			65.27%
Average Days to Expiration at time written			44 days
Average Call Moneyness* at time written			ATM
Premium received for calls		$	2,586,658
Value of calls		$	(3,093,462	)

 

*

“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

 

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TAX INFORMATION (UNAUDITED)

 

 

 

 

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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: 52		Trustee		October 2007 - Present		President, Glantuam Partners, LLC, a business consulting firm (January 2009 - Present).		143		None.
John V. Boyer 7337 East Doubletree Ranch Rd. Suite 100 Scottsdale, Arizona 85258 Age: 59		Trustee		July 2005-Present		President and Chief Executive Officer, Bechtler Arts Foundation, an arts and education foundation (January 2008 - Present).		143		None.
Patricia W. Chadwick 7337 East Doubletree Ranch Rd. Suite 100 Scottsdale, Arizona 85258 Age: 64		Trustee		January 2006 - Present		Consultant and President, Ravengate Partners LLC, a consulting firm that provides advice regarding financial markets and the global economy (January 2000 - Present).		143		Wisconsin Energy Corporation (June 2006 - Present) and The Royce Fund, (35 funds) (December 2009 - Present).
Peter S. Drotch 7337 East Doubletree Ranch Rd. Suite 100 Scottsdale, Arizona 85258 Age: 71		Trustee		October 2007 - Present		Retired.		143		First Marblehead Corporation (September 2003- Present).
J. Michael Earley 7337 East Doubletree Ranch Rd. Suite 100 Scottsdale, Arizona 85258 Age: 67		Trustee		July 2005 - Present		Retired. Formerly, Banking President and Chief Executive Officer, Bankers Trust Company, N.A., Des Moines (June 1992 - December 2008).		143		None.
Patrick W. Kenny 7337 East Doubletree Ranch Rd. Suite 100 Scottsdale, Arizona 85258 Age: 70		Trustee		July 2005 - Present		Retired. Formerly, President and Chief Executive Officer, International Insurance Society (June 2001 - June 2009).		143		Assured Guaranty Ltd. (April 2004 - Present).
Sheryl K. Pressler 7337 East Doubletree Ranch Rd. Suite 100 Scottsdale, Arizona 85258 Age: 62		Trustee		January 2006 - Present		Consultant (May 2001 - Present).		143		Stillwater Mining Company (May 2002 - Present).
Roger B. Vincent 7337 East Doubletree Ranch Rd. Suite 100 Scottsdale, Arizona 85258 Age: 67		Chairperson/Trustee		July 2005 - Present		Retired. Formerly, President, Springwell Corporation, a corporate finance firm (March 1989 - August 2011).		143		UGI Corporation (February 2006 - Present) and UGI Utilities, Inc. (February 2006 - Present).

 

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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
Trustees who are “Interested Persons”:
Robert W. Crispin(3) 7337 East Doubletree Ranch Rd. Suite 100 Scottsdale, Arizona 85258 Age: 66		Trustee		October 2007 - Present		Retired.		143		Intact Financial Corporation (December 2004 - Present) and PFM Group (November 2010 - Present).
Shaun P. Mathews(3) 7337 East Doubletree Ranch Rd. Suite 100 Scottsdale, Arizona 85258 Age: 57		Trustee		June 2006 - Present		President and Chief Executive Officer, ING Investments, LLC (November 2006 - Present).		177		ING Capital Corporation, LLC (December 2005 - Present).

 

(1)

The Board is divided into three classes, with the term of one class expiring at each annual meeting of the Trust. At each annual meeting, one class of Trustees is elected to a three - year term and serves until their successors are duly elected and qualified. The tenure of each Trustee is subject to the Board’s retirement policy, which states that each duly elected or appointed Trustee who is not an “interested person” of the Trust, as defined in the Investment Company Act of 1940, as amended (“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 Independent 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)

Except for Mr. Mathews and for the purposes of this table “Fund Complex” means the following investment companies: ING Asia Pacific High Dividend Equity Income Fund; ING Emerging Markets High Dividend Equity Fund; ING Emerging Markets Local Bond Fund; ING Equity Trust; ING Funds Trust; ING Global Equity Dividend and Premium Opportunity Fund; ING Global Advantage and Premium Opportunity Fund; ING Global Strategic Income Fund; ING Infrastructure, Industrials and Materials Fund; ING International High Dividend Equity Income Fund; ING Investors Trust; ING Mayflower Trust; 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 Short Duration High Income Fund; ING Variable Insurance Trust; and ING Variable Products Trust. For Mr. Mathews, the ING Fund Complex also includes the following investment companies: ING Balanced Portfolio, Inc.; ING Intermediate Bond Portfolio; ING Money Market Portfolio; ING Series Fund, Inc.; ING Strategic Allocation Portfolios, Inc.; ING Variable Funds; and ING Variable Portfolios, Inc. Therefore, for the purposes of this table with reference to Mr. Mathews, “Fund Complex” includes these investment companies. The number of funds in the ING Fund Complex is as of March 31, 2013.

(3)

Messrs. Crispin and Mathews are deemed “Interested Persons” of the Trust because of their current or prior affiliation with ING Groep, N.V., the parent corporation of the Investment Adviser(s) and the Distributor.

 

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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: 57		President and Chief Executive Officer		November 2006 - 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: 54		Executive Vice President		July 2005 - Present		Managing Director and Chief Operating Officer, ING Investments, LLC and ING Funds Services, LLC (April 2012 - Present) and Chief Compliance Officer, Directed Services LLC and ING Investments, LLC (March 2011 - Present). Formerly, 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: 62		Executive Vice President Chief Investment Risk Officer		July 2005 - 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: 46		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: 45		Senior Vice President, Chief/Principal Financial Officer and Assistant Secretary		July 2005 - 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: 48		Senior Vice President		July 2005 - Present		Senior Vice President, ING Investments, LLC (October 2003 - Present).
Robert Terris 7337 East Doubletree Ranch Rd. Suite 100 Scottsdale, Arizona 85258 Age: 42		Senior Vice President		May 2006 - 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: 46		Senior Vice President		July 2012 - Present		Senior Vice President - Fund Compliance, ING Funds Services, LLC (June 2012 - 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: 40		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: 45		Vice President		July 2005 - Present		Vice President and Treasurer, 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: 54		Vice President		July 2005 - Present		Vice President, ING Funds Services, LLC (September 2004 - Present).

 

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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: 59		Vice President		July 2005 - 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: 37		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: 55		Vice President		March 2006 - 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: 44		Assistant Vice President		May 2008 - 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: 49		Secretary		July 2005 - 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: 50		Assistant Secretary		July 2005 - 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) and Counsel, ING Americas, U.S. Legal Services (April 2003 - April 2008).
Paul A. Caldarelli 7337 East Doubletree Ranch Rd. Suite 100 Scottsdale, Arizona 85258 Age: 61		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) and Counsel, ING Americas, U.S. Legal Services (May 2005 - April 2008).

 

(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.

 

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ADVISORY CONTRACT APPROVAL DISCUSSION (UNAUDITED)

 

 

 

 

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ADVISORY CONTRACT APPROVAL DISCUSSION (UNAUDITED) (CONTINUED)

 

 

 

 

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ADVISORY CONTRACT APPROVAL DISCUSSION (UNAUDITED) (CONTINUED)

 

 

 

 

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ADVISORY CONTRACT APPROVAL DISCUSSION (UNAUDITED) (CONTINUED)

 

 

 

 

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ADVISORY CONTRACT APPROVAL DISCUSSION (UNAUDITED) (CONTINUED)

 

 

 

 

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ADVISORY CONTRACT APPROVAL DISCUSSION (UNAUDITED) (CONTINUED)

 

 

 

 

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ADVISORY CONTRACT APPROVAL DISCUSSION (UNAUDITED) (CONTINUED)

 

 

 

 

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ADVISORY CONTRACT APPROVAL DISCUSSION (UNAUDITED) (CONTINUED)

 

 

 

 

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ADVISORY CONTRACT APPROVAL DISCUSSION (UNAUDITED) (CONTINUED)

 

 

 

 

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ADVISORY CONTRACT APPROVAL DISCUSSION (UNAUDITED) (CONTINUED)

 

 

 

 

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ADVISORY CONTRACT APPROVAL DISCUSSION (UNAUDITED) (CONTINUED)

 

 

 

 

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ADVISORY CONTRACT APPROVAL DISCUSSION (UNAUDITED) (CONTINUED)

 

 

 

 

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SHAREHOLDER MEETING INFORMATION (UNAUDITED)

 

 

 

An annual meeting of shareholders of the ING Global Advantage and Premium Opportunity Fund was held July 5, 2012, at the offices of ING Funds, 7337 East Doubletree Ranch Road, Suite 100, Scottsdale, AZ 85258.

ING Global Advantage and Premium Opportunity Fund, Class I Trustees

 

1

To elect three members of the Board of Trustees to represent the interests of the holders of Common Shares of the Fund, with all three individuals to serve as Class I Trustees, for a term of three-years, and until the election and qualification of their successors.

 

		Proposal*				Shares voted for				Shares voted against or withheld				Shares abstained		Total Shares Voted
Class I Trustees			Colleen D. Baldwin				16,129,633.760				1,096,570.391						17,226,204.151
			Robert W. Crispin				14,623,959.801				2,602,244.350						17,226,204.151
			Peter S. Drotch				16,108,320.794				1,117,883.357						17,226,204.151

 

*

Proposal Passed

An annual meeting of shareholders of the ING Global Advantage and Premium Opportunity Fund was held December 20, 2012, at the offices of ING Funds, 7337 East Doubletree Ranch Road, Suite 100, Scottsdale, AZ 85258.

ING Global Advantage and Premium Opportunity Fund, Class I Trustees

 

1

To approve a new sub-advisory agreement between ING Investments, LLC and ING Investment Management Advisors B.V.

 

		Proposal*				Shares voted for				Shares voted against or withheld				Shares abstained				Total Shares Voted
			1				10,378,036.406				472,202.907				468,811.064				11,319,050.377

 

*

Proposal Passed

 

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ADDITIONAL INFORMATION (UNAUDITED)

 

 

 

 

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ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)

 

 

 

 

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ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)

 

 

 

 

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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-UIGA		(0213-042413)

 

 

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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)(l), 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 each of the last two fiscal years for professional services rendered by KPMG LLP (“KPMG”), the principal accountant for the audit of the registrant’s annual financial statements, for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the fiscal year were $24,500 for the year ended February 28, 2013 and $25,000 for year ended February 29, 2012.
(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 seasonably 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, 2013 and $2,400 for the year ended February 29, 2012.
(c)		Tax Fees: The aggregate fees billed in each of the last two fiscal years for professional services rendered by KPMG for tax compliance, tax advice, and tax planning were $8,926 in the year ended February 28, 2013 and $7,390 in the year ended February 28, 2011. Such services included review of excise distribution calculations (if applicable), preparation of the Funds’ federal state and excise tax returns, tax services related to mergers and routine consulting.
(d)		All Other Fees: The aggregate fees billed in each of the last two fiscal years for all other fees were $2,205 for the year ended February 28, 2013 and $2,458 for the year ended February 29, 2012.
(e)(1)		Audit Committee Pre-Approval Policies and Procedures

 

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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.

 

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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.

 

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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.

 

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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 29, 2012

 

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Appendix A

Pre-Approved Audit Services for the Pre-Approval Period January 1, 2013 through December 31, 2013

Service

 

		The Fund(s)		Fee Range
Statutory audits or financial audits (including tax services associated with audit services)		ü		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.		ü		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.		ü		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		ü		Not to exceed $13,000 per audit

 

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.

 

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Appendix B

Pre-Approved Audit-Related Services for the Pre-Approval Period January 1, 2013 through December 31, 2013

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)		ü		ü		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.]		ü				Not to exceed $5,000 per occurrence during the Pre-Approval Period
Review of the Funds’ semi-annual and quarterly financial statements		ü				Not to exceed $2,400 per set of financial statements per fund
Reports to regulatory or government agencies related to the annual engagement		ü				Up to $5,000 per occurrence during the Pre-Approval Period
Regulatory compliance assistance		ü		ü		Not to exceed $5,000 per quarter
Training courses				ü		Not to exceed $2,000 per course
For Prime Rate Trust, agreed upon procedures for quarterly reports to rating agencies		ü				Not to exceed $9,450 per quarter

 

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Appendix C

Pre-Approved Tax Services for the Pre-Approval Period January 1, 2013 through December 31, 2013

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		ü				As presented to Audit Committee2
Review of IRC Sections 851(b) and 817(h) diversification testing on a real-time basis		ü				As presented to Audit Committee2
Assistance and advice regarding year-end reporting for 1099’s		ü				As presented to Audit Committee2
Tax assistance and advice regarding statutory, regulatory or administrative developments		ü		ü		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.

 

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Appendix C, continued

Service

 

		The Fund(s)		Fund Affiliates		Fee Range
Tax training courses				ü		Not to exceed $2,000 per course during the Pre-Approval Period
Tax services associated with Fund mergers		ü		ü		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.		ü				Not to exceed $120,000 during the Pre-Approval Period

 

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Appendix D

Pre-Approved Other Services for the Pre-Approval Period January 1, 2013 through December 31, 2013

Service

 

		The Fund(s)		Fund Affiliates		Fee Range
Agreed-upon procedures for Class B share 12b-1 programs				ü		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.		ü		ü		Not to exceed $5,000 per Fund during the Pre-Approval Period
Agreed upon procedures for 15 (c) FACT Books		ü				Not to exceed $35,000 during the Pre-Approval Period

 

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Appendix E

Prohibited Non-Audit Services

Dated: January 1, 2013 to December 31, 2013

 

•

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

 

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EXHIBIT A

ING ASIA PACIFIC HIGH DIVIDEND EQUITY INCOME FUND

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 INTERNATIONAL HIGH DIVIDEND EQUITY INCOME FUND

ING INVESTORS TRUST

ING MAYFLOWER TRUST

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 VARIABLE INSURANCE TRUST

ING VARIABLE PRODUCTS TRUST

 

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(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 non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser, and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant were $574,179 for the year ended February 28, 2013 and $1,233,678 for year ended February 29, 2013.
(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, Patricia W. Chadwick and Peter S. Drotch.
b.		Not applicable.

 

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Item 6.

Schedule of Investments.

Report of Independent Registered Public Accounting Firm

The Shareholders and Board of Trustees

ING Global Advantage and Premium Opportunity 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 Global Advantage and Premium Opportunity Fund as of February 28, 2013, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the seven-year period then ended and the period from October 31, 2005 (commencement of operations) to February 28, 2006 and have issued our unqualified report thereon dated April 24, 2013 (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

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ING Global Advantage and Premium Opportunity Fund											PORTFOLIO OF INVESTMENTS as of February 28, 2013
		Shares																Value				Percentage of Net Assets
COMMON STOCK:											95.6	%
								Brazil:							1.4	%
			57,885					Banco do Brasil S.A.											770,280				0.3
			30,545					Embraer SA ADR											1,036,697				0.4
			56,792					Petroleo Brasileiro SA ADR											833,139				0.4
			80,748					Sul America SA											769,786				0.3
																			3,409,902				1.4
								Canada:							0.5	%
			40,302					Barrick Gold Corp.											1,218,733				0.5
								China:							0.9	%
			1,152,000					Bank of China Ltd.											543,025				0.2
			220,000					China Resources Enterprise											714,073				0.3
			1,978,000					Shanghai Electric Group Co., Ltd.											801,605				0.4
																			2,058,703				0.9
								France:							2.8	%
			101,099					AXA S.A.											1,748,969				0.7
			63,902					Total S.A.											3,190,356				1.4
			40,056					Veolia Environnement											503,141				0.2
			26,459					Vinci S.A.											1,219,726				0.5