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GLOBAL PERSPECTIVES October 2010 for the period ending 9/30/10 Rational Portfolios for Irrational Markets Global Perspectives Market Overview Presented by: Douglas Coté, CFA SVP and Senior Market Strategist ING Investment Management GLOBAL PERSPECTIVES All of the data contained herein is as of 9/30/10 Rational Portfolios for Irrational Markets Disclosure This presentation has been prepared by ING Investment Management for informational purposes. Nothing contained herein should be construed as (i) an offer to sell or solicitation of an offer to buy any security or (ii) a recommendation as to the advisability of investing in, purchasing or selling any security. Any opinions expressed herein reflect our judgment and are subject to change. Certain of the statements contained herein are statements of future expectations and other forward-looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation, (1) general economic conditions, (2) performance of financial markets, (3) interest rate levels, (4) increasing levels of loan defaults (5) changes in laws and regulations and (6) changes in the policies of governments and/or regulatory authorities. The opinions, views and information expressed in this commentary regarding holdings are subject to change without notice. The information provided regarding holdings is not a recommendation to buy or sell any security. Fund holdings are fluid and are subject to daily change based on market conditions and other factors. Past performance is no guarantee of future results. ING Funds is a wholly owned subsidiary of ING Groep (Group), N.V. GLOBAL PERSPECTIVES Rational Portfolios for Irrational Markets The Three Pillars of Investment Success Global Strategic Allocation We believe a global approach to investing offers potential benefits for all investors, whether their primary objective is capital growth, income, capital preservation or a balance between them. Portfolio Construction We believe both active management and broad asset class diversification offer rewards through intelligent risk-taking. Behavioral Finance We advocate disciplined rebalancing to mitigate timing (behavioral) errors. Executive Summary Where Have We Been – Credit crisis (global financial systemic risk) – Great recession – Global government monetary and fiscal stimulus – Global V-shaped recovery Where Are We – Recovery: U.S. corporate earnings, manufacturing, retail sales consistently exceed expectations – Europe crisis subsiding while Asia, Brazil, Eurozone and Canada show particularly robust growth – Moderate gains in U.S. payrolls support personal income, but unemployment still high – M&A Activity soared with emerging markets accounting for 1/3 of merger activity in 1H10 Where Are We Headed – U.S. and global economic recovery evolve into synchronized sustainable expansion – Earnings, manufacturing and consumer continue to positively surprise – Uncertainty from Tax and Regulatory environment 3 Overview GLOBAL PERSPECTIVES Rational Portfolios for Irrational Markets Market Overview Much Ado About the Euro: Credit, Earnings Market Resilience Driven by Fundamentals Market Volatility U.S. and World Economies Much Ado About the Euro Corporate Spreads Baa Ted Spread (Libor – 3 month Treasury) 7 % 4 6 % Lehman crisis 3 5 2 4 3 3.1% 1 0.13% 2 0 1 0 1990 1994 1998 2002 2006 2010 Spreads have declined since the credit crisis and despite recent volatility, spreads are only slightly higher than year-to-date lows. Euro crisis (1) 90 92 94 96 98 00 02 04 06 08 10 The TED spread stayed near the low end of its historic range, perhaps reflecting an end to the euro crisis. Note: Corporate Baa Spreads are benchmark average rates in excess of 10-year U.S. Treasury yields. “Libor” is the London Inter-bank Offer Rate, the interest rate banks charge each other for loans. Source: Moody’s, Reuters, Federal Reserve, Bloomberg, FactSet Fixed Income 5 Much Ado About the Euro Fundamentals Drive the Stock Market % 2,200 150 2,000 100 S&P 500 Index (right scale) 1,600 2Q 1,400 50 1,200 0 S&P 500 Price S&P 500 EPS Growth 1,800 1Q 1,000 800 (50) S&P 500 EPS growth (left scale) 600 (100) 400 1998 2000 2002 2004 2006 2008 2010 Accelerating and positive earnings drive markets up, and decelerating and negative earnings drive markets down, albeit with a reporting lag. Source: Standard & Poor’s, First Call, FactSet, ING Investment Management Equity 6 Market Resilience Driven by Fundamentals U.S. ISM – Manufacturing Global Purchasing Managers Index 65 65 Expansionary (>50) 60 Euro zone PMI 60 54.10 55 55 54.4 50 50 45 45 40 40 52.50 Global PMI Contractionary (<50) 35 35 30 30 1990 1994 1998 2002 2006 2010 ISM – Manufacturing Index greater than 50 is expansionary. A number close to 60 is indicative of rapid economic growth. 2003 2004 2005 2006 2007 2008 2009 2010 The Global Purchasing Managers Index for manufacturing includes countries that represent over 75% of global GDP. 7 Source: Institute of Supply Management, Federal Reserve, FactSet Economy Market Resilience Driven by Fundamentals Retail Sales ex-Autos Non-farm Payrolls 600 000’s Total Nonfarm Payroll 10 +64 most Recent Private 3 month average, % change 8 400 6 4.7 200 4 2 0 0 (200) (400) Total Private (2) -95 most Recent Total (4) (6) (600) (8) (800) 1996 1998 2000 2002 2004 2006 2008 2010 (10) 1994 1996 1998 2000 2002 2004 2006 2008 2010 Total non-farm payroll reports reversed their negative trend, turning positive before declining again. The private sector has made positive contributions all year, but the high unemployment rate remains troublesome. In the last three months, retail sales grew at the fastest annual rate in three years, and the monthly change exceeded expectations. Note: Core CPI reflects consumer price inflation excluding food and energy. Source: Bureau of Labor Statistics, U.S. Census Bureau, FactSet Economy 8 Market Volatility Equity Volatility is capricious and unpredictable Long period of low volatility leads to overconfidence and excessive risk taking 90 70 60 – May 6 “Flash Crash” – Market drops 1000 points before partially recovering 50 – Euro crisis 40 – Sovereign Debt worries 30 – Gulf of Mexico oil spill 20 September While there is still volatility in the market, levels are nowhere near the highs experienced in 2008. Source: Standard & Poor’s, Chicago Board Option Exchange, FactSet 12/31/07 = 22.5 11/20/08 = 80.9 12/31/08 = 40.0 09/30/10 = 23.7 80 Recent tests of volatility – Economic slowdown Equity Volatility (VIX) 10 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 The VIX “fear gauge” dropped more than 8% on September 1 and has steadily ticked down. 9 January – June 2010 Merger Activity % Increase (right scale) $ billions Deal value (left scale) 1200 1,100 125% 1000 120% 800 84% 600 80% 70% 389 400 346 40% 200 73 9% 0 0% Worldwide Cross Border Emerging Markets Private Equity Backed July and August were the busiest months for M&A activity and as of August 31st YTD activity totaled $1.7 trillion, up 24% from the same time in 2009. August was the biggest month for merger and acquisition activity since July 2008, with the consummation of more than 2,800 deals worth upward of $280 billion. 10 Source: Nasdaq, Bloomberg, ING Investment Management Economy Global Equity Returns Index Currency YTD Sep-10 2009 2008 2007 2006 2005 2004 2003 1 year 3 years 5 years 10 years DJIA 5.6 8.0 22.6 (31.8) 8.8 19.0 1.7 5.6 28.3 14.1 (5.4) 3.1 2.5 S&P 500 3.9 9.0 26.5 (37.0) 5.5 15.8 4.9 10.9 28.7 10.2 (7.2) 0.6 (0.4) S&P 400 Midcap 10.4 11.2 35.0 (37.3) 6.7 9.0 11.3 15.2 34.0 16.1 (3.2) 2.3 4.1 S&P600 Smallcap 7.8 11.3 23.8 (32.0) (1.2) 14.1 6.7 21.6 37.5 13.0 (5.4) 0.5 5.1 United States Europe EAFE USD 1.5 9.3 32.5 (43.1) 11.6 26.9 14.0 20.7 39.2 3.7 (9.1) 2.4 3.0 Germany USD (0.2) 13.7 26.6 (45.5) 35.9 36.8 10.5 16.7 64.8 2.0 (10.2) 6.0 3.7 FTSE 100 USD 0.0 8.6 37.1 (50.4) 5.6 26.2 4.4 15.3 26.3 6.5 (12.8) (2.0) (0.6) Brazil USD 3.2 12.5 128.6 (56.1) 80.0 45.8 57.0 36.5 115.0 16.6 5.5 22.5 21.0 Russia USD 2.5 5.8 104.9 (73.8) 24.8 55.9 73.8 5.7 75.9 13.2 (13.6) 2.3 15.5 India USD 18.3 15.6 102.8 (64.6) 73.1 51.0 37.6 19.1 78.4 27.4 1.5 19.1 18.6 China USD 4.1 8.3 62.6 (50.8) 66.2 82.9 19.8 1.9 87.6 14.1 (7.1) 20.3 12.1 BRIC USD 5.7 10.5 93.5 (59.3) 59.1 56.6 44.5 17.1 91.7 16.9 (3.1) 16.4 16.2 Emerging Markets 11 Note: Returns for periods greater than one year are annualized. All returns reflect total return including dividends expressed as a percentage. Source: MSCI, Standard & Poor’s, FactSet International Bond and Loan Returns Index Spread (bp) Sep-10 3 months YTD 2009 2008 2007 2006 1 year 3 years 5 years 10 years U.S. Investment Grade Treasury 0 0.0 2.7 8.7 (3.6) 13.7 9.0 3.1 7.3 7.4 6.2 6.2 Treasury (1- 3Yr) 0 0.2 0.6 2.6 0.8 6.7 7.3 3.9 2.6 4.1 4.4 4.2 Treasury (20+ Yr) 0 (2.2) 5.0 20.6 (21.4) 33.7 10.2 0.9 11.5 10.5 7.4 8.3 Government-Related 54 0.3 2.6 6.9 2.5 8.5 8.0 4.3 6.7 7.1 6.1 6.5 Corporate 175 0.7 4.7 10.8 18.7 (4.9) 4.6 4.3 12.3 8.4 6.5 7.1 Fixed-Rate MBS 85 (0.4) 0.6 5.1 5.8 8.5 7.0 5.2 5.7 7.5 6.4 6.3 ABS 71 0.4 2.5 7.4 24.7 (12.7) 2.2 4.7 8.9 5.1 4.7 5.4 CMBS 304 2.1 6.4 19.3 28.5 (20.5) 5.6 4.7 23.2 7.6 6.2 7.1 Hybrid ARM 55 0.2 0.8 2.3 7.8 6.1 6.3 NA 3.3 6.1 NA NA Barclays Aggregate 76 0.1 2.5 7.9 5.9 5.2 7.0 4.3 8.2 7.4 6.2 6.4 High Yield 621 3.0 6.7 11.5 3.3 9.2 4.7 2.1 18.4 9.0 8.4 7.9 Global Aggregate 69 2.3 7.3 7.0 5.9 5.2 7.0 4.3 6.1 7.4 6.7 7.3 Emerging Markets 337 1.7 8.8 14.4 25.9 (9.7) 6.5 10.5 22.0 11.0 9.8 10.9 Senior Loans 659 1.4 3.3 6.8 51.6 (29.1) 2.0 6.8 10.8 4.7 4.8 10.2 High Yield & Global CMBS led the U.S. investment grade bonds for the month of September but U.S. long term Treasuries still lead in year-to-date return. Note: All spreads are option-adjusted spreads except for Emerging Markets and Senior Loans. Emerging Markets spread is the spread over the U.S. Treasury curve. Senior Loans spread is the average three-year call secondary spread as of 6/25/10. All returns are total returns including dividends expressed as percentages. Returns for 3- and 5-year periods are annualized. All other returns are cumulative. Source: Barclays Capital, JPMorgan, Standard & Poor’s Fixed Income 12 Stock vs. Bond Valuation 16 % Earnings Yield (solid = forward, dotted = trailing) 14 U.S. Treasury Yield (10 year) 12 10 8 8.8 6 4 2.5 2 65 70 75 80 85 90 95 00 05 10 Stocks look cheap compared to bonds using the “Fed Model”, which compares the yield-to-maturity on U.S. Treasury bonds to the earnings yield (E/P) of stocks. Bond prices are near 45-year highs. Note: Earnings Yield is the inverse of the P/E ratio and is calculated as the sum of the reported next twelve months’ earnings estimates divided by market capitalization. The 10-year U.S. Treasury is used for bonds. Source: Standard & Poor’s, First Call, Reuters, Bloomberg, FactSet Equity 13 Dividend Yields 4 Dividend Yield Minus Bond Yield 2 % % Stocks Attractive 0 3 (2) average (4) 2 (6) Bonds Attractive 1 (8) 88 90 92 94 96 98 00 02 04 06 08 10 Dividend yields remain above levels seen for most of the past decade. Note: Bond yield is represented by the 10-year U.S. Treasury note. Source: Standard & Poor’s, Reuters, FactSet Equity 88 90 92 94 96 98 00 02 04 06 08 10 Stocks offer attractive dividend yields relative to bond yields. 14 Housing S&P Case-Shiller Home Price Index 220 20 207 15 200 10 180 5 0 160 149 140 (5) (10) (15) 120 (20) 100 (25) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Home values have declined by about 29% from the summer of 2006 but have turned positive for the 20 City Composite Index. 15 Source: National Association of Realtors, S&P Case-Shiller, Bloomberg Economy Weaker Growth but Continued Expansion U.S. Leading Indicators 1.5 % change 1.0 0.5 0.0 (0.5) (1.0) Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 U.S. leading indicators remain consistently positive in 12 out of the last 14 months. Source: Bloomberg Conference Board U.S. Leading Index consists of the weighted average of the following indices: 1. Average weekly hours, manufacturing 2. Average weekly initial jobless claims 3. Manufacturers’ new orders, consumer 4. Vendor performance, slower deliveries 5. Manufacturers’ new orders, capital 6. Building permits, new private housing units 7. Stock prices, 500 common stocks 8. Money Supply, M2 9. Interest Rate Spreads 10. Index of consumer expectations Economy 16 Weaker Growth but Continued Expansion Real GDP (Q/Q) 20 Breakdown Consumption: 71% Government: 20% Investment: 12% Exports: 12% Imports: (15%) % (1 15 Growth of $1 $11 $10 $9 Real annualized GDP % Y/Y Change (left scale) $8 10 $7 5 $6 $5 0 $4 -5 Real GDP Cumulative Value starting at $1 (right scale) Q/Q 2Q10 1.7% $3 $2 -10 1950 $1 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 The economy has surged after each of the past 2%+ falls in GDP (Y/Y) since 1948. Expectations are for a weaker recovery this time, but three consecutive positive quarters have brought us near the previous peak. Expansions historically have lasted for five years. 17 Source: Bloomberg Economy Global Perspectives on U.S. Market Importance in the World Economy 70% Percent Contribution to Global Growth, PPP Basis U.S. + European Union + Japan Growth Rates GDP Growth Emerging World vs. U.S. and European Union GDP-weighted 9% Emerging Markets 60% 7% 50% 5% 40% 3% 30% 1% United States 20% -1% European Union Global Emerging Markets Top 8* 10% 0% 1990 -3% 1993 1996 1999 2002 2005 2008 The largest 8 emerging markets now contribute more to global growth than the European Union, Japan and the U.S. combined. Source: The World Bank Group * China, India, Russia, Brazil, Mexico, Korea, Indonesia and Taiwan International -5% 1992 1995 1998 2001 2004 2007 2010 2013 Emerging markets are widely expected to continue growing more rapidly than developed markets. Source: International Monetary Fund 18 Global Perspectives on U.S. Market International Economics GDP Countries Trade (% of GDP) Deficit/ Surplus Exports Demographics Population (Millions) Unempl. USD (Billions) Per Capita US 14,575 46.3 3.0% 0.9% 12.5 % (3.7%) 315 9.6 Canada 1,566 46.6 3.4% 1.3% 29.6% (1.6%) 34 8.0 UK 2,248 36.5 (1.7%) 0.4% 28.1 % (2.6%) 62 7.8 Eurozone 11,066 33.7 1.9% 0.8% 15.3% 0.2% 329 10.0 Japan 5,390 42.4 1.9% 0.0% 15.7% 1.3% 127 5.2 Germany 3,335 40.6 (0.3%) 0.9% 42.8% 5.3% 82 7.6 Brazil 1,795 9.3 8.9% 4.5% 10.8 % (0.4%) 194 6.9 Russia 1,254 8.9 2.9% 4.1% 27.8% 7.4% 141 6.8 India 1,325 1.1 6.1% 8.5% 18.6 % (4.0%) 1,198 7.2 China 5,417 4.1 10.3% 10.5% 26.3% 3.2% 1,328 4.2 Mexico 996 9.1 7.6% 1.5% 7.5 % (0.0%) 110 5.7 Developed Markets (G7) 1-Yr Change 5-Yr Change Emerging Markets Previously crisis-prone emerging nations weathered the economic turbulence better than the developed economies. China, India and Brazil have resumed rapid growth. China now ranks 2nd in GDP contribution behind the U.S. Source: CIA – The World Fact Book, Bureau of Economic Analysis, US Department of Labor, Statistics Canada, Statistiches Bundesamt Deutschland, National Institute of Statistics and Economic Studies (France), UK National Statistics, Italian National Institute of Statistics, Japanese Cabinet Office, Statistics Bureau (Japan), FactSet. Data is most recent available. International 19 Executive Summary Where Have We Been – Credit crisis (global financial systemic risk) – Great recession – Global government monetary and fiscal stimulus – Global V-shaped recovery Where Are We – Recovery: U.S. corporate earnings, manufacturing, retail sales consistently exceed expectations – Europe crisis subsiding while Asia, Brazil, Eurozone and Canada show particularly robust growth – Moderate gains in U.S. payrolls support personal income, but unemployment still high – M&A Activity soared with emerging markets accounting for 1/3 of merger activity in 1H10 Where Are We Headed – U.S. and global economic recovery evolve into synchronized sustainable expansion – Earnings, manufacturing and consumer continue to positively surprise – Uncertainty from Tax and Regulatory environment 20 Overview GLOBAL PERSPECTIVES Rational Portfolios for Irrational Markets Thank You www.INGglobalperspectives.com GLOBAL PERSPECTIVES Rational Portfolios for Irrational Markets Appendix www.INGglobalperspectives.com Tax & Spend - U.S. Government Debt and Deficit Levels Both government debt and the deficit are up sharply in the wake of the recession 15 Trillions ($) 100 14 90 12 80 11 70 9 60 8 50 Debt 6 (% of GDP) > 90% of GDP U.S. Government Debt % 40 5 30 3 20 2 10 0 > 10% of GDP U.S. Government Deficit % 0 Deficit (2) 1982 (10) 1986 1990 1994 1998 2002 2006 2010 1982 1986 1990 1994 1998 2002 2006 2010 The total federal public debt outstanding is $13.5 trillion and exceeds 90% of GDP. Notably, entitlements such as Social Security and Medicare are not included. The current U.S. deficit (receipts – outlays) is over $1.4 trillion—more than 10% of GDP. Ten years ago the U.S. posted a surplus of over $200 billion. 23 Source: Bloomberg, US Treasury Economy 12.5% 16.5% 17.0% 17.0% 18.0% 20.0% 20.0% 24.3% 25.0% 28.0% 28.0% 30.0% 30.0% 30.0% 30.0% 33.0% 33.3% 34.0% 35.0% Hong Kong Singapore Taiw an Canada Russia Turkey OECD Avg. China U.K. Indonesia Mexico Aust ralia Japan India Germany France Brazil U.S. 0.0% Ireland BVI Tax & Spend – taxing corporate profits abroad Corporate tax rates in the U.S. are high relative to other major economies U.S.: 35% OECD: 24.3% G-7 Average: 28.8% Source: Organisat ion f or Economic Co-Operat ion and Development 24 Inflation – CPI 16 % $ 14 3.11 Cumulative Change in Price Level 12 10 3.5 3.0 2.5 8 2.0 6 CPI Core 4 1.5 2 0 1.31% 0.98% CPI Headline (2) 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 1.0 0.5 Core and headline inflation remain under control, but compounded for many years, price levels are at historic highs. Note: Core CPI reflects consumer price inflation excluding food and energy. Source: Bureau of Labor Statistics, U.S. Census Bureau, FactSet Economy 25 Index Definitions Barclays Capital U.S. Aggregate Bond Index is composed of U.S. securities in Treasury, Government-Related, Corporate, and Securitized sectors that are of investment-grade quality or better, have at least one year to maturity, and have an outstanding par value of at least $250 million. Barclays Capital U.S. Corporate High-Yield Bond Index tracks the performance of non-investment grade U.S. dollar-denominated, fixed rate, taxable corporate bonds including those for which the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below, and excluding Emerging Markets debt. Barclays Capital Global Aggregate Bond Index measures a wide spectrum of global government, government-related, agencies, corporate and securitized fixed-income investments, all with maturities greater than one year. The Credit Suisse/Tremont Hedge Fund Index is an assetweighted hedge fund index covering over 5000 funds with at least US$50 million under management, a 12-month track record, and audited financial statements. It is calculated net of performance fees and expenses. CS/Tremont sub-indexes track hedge fund strategies according to the methods by which fund managers seek investment opportunities such as by asset class and/or use of leverage. Dow Jones Industrial Average is a price-weighted average computed from the stock prices of 30 large, widely held public companies in the U.S., adjusted to reflect stock splits and dividends. FTSE NAREIT US Real Estate Index presents comprehensive REIT performance across the U.S. economy, including all commercial investment and property sectors. FTSE EPRA/NAREIT Global Real Estate Index is designed to represent general trends in eligible real estate equities worldwide. The Chicago Board Options Exchange Volatility Index (CBOE VIX) is a measure of the implied volatility of S&P 500 index options. It is one measure of the market's expectation of volatility over the next 30 day period. JPMorgan Emerging Markets Bond Index Plus (EMBI+) tracks total returns for actively traded emerging markets debt instruments including U.S.-dollar denominated Brady bonds, Eurobonds, and traded loans issued by sovereign entities. MSCI EAFE Index is a free float-adjusted market capitalization weighted index designed to measure the developed markets’ equity performance, excluding the U.S. & Canada, for 21 countries. MSCI Europe Index is a free float-adjusted market capitalization weighted index designed to measure equity performance of the developed markets in Europe consisting of 16 country indices. MSCI Pacific Index is a free float-adjusted market capitalization weighted index designed to measure developed markets’ equity performance of the in the Pacific region consisting of 5 countries. MSCI Emerging Markets Index is a free float-adjusted market capitalization index that measures emerging market equity performance of 22 countries. The Municipal Bond Index is a bond index that includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than two years) selected from issues larger than $50 million. NASDAQ Composite Index is a market capitalization weighted index of the performance of domestic and international common stocks listed on The NASDAQ Stock Market including over 2,800 securities. 26 Index Definitions The NCREIF (National Council of Real Estate Investment Fiduciaries) Property Index (NPI) is a market value-weighted index of total rates of return for a large pool of commercial real estate properties acquired in the private market for investment purposes. For properties with leverage, returns are reported as if there were no leverage. Russell 3000 Index measures the performance of the largest 3000 U.S. companies representing approximately 98% of the investible U.S. equity market. Russell 1000 Index measures the performance of the large-cap segment of the U.S. equity market and includes approximately 1000 of the largest securities based on market capitalization and representing approximately 92% of the U.S. market. Russell 1000 Growth Index measures the large-cap growth segment of the U.S. equity market including Russell 1000 companies with higher price-to-book ratios and forecasted growth. Russell 1000 Value Index measures the large-cap value segment of the U.S. equity market including Russell 1000 companies with lower price-to-book ratios and lower expected growth. Russell Midcap Index measures the performance of mid-cap stocks in the U.S. equity market including 800 of the smallest securities in the Russell 1000® Index, based on market capitalization. Russell Midcap Growth Index measures the performance of the mid-cap growth segment of the U.S. equity market including Russell Midcap Index companies with higher price-to-book ratios and forecasted growth. Russell Midcap Value Index measures the performance of the mid-cap growth segment of the U.S. equity market including Russell Midcap Index companies with lower price-to-book ratios and forecasted growth. Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity market including approximately 2000 of the smallest securities based on market capitalization. Russell 2000 Growth Index measures the performance of smallcap growth stocks in the U.S. equity market including Russell 2000 companies with higher price-to-value ratios and forecasted growth. Russell 2000 Value Index measures the performance of small-cap growth stocks in the U.S. equity market including Russell 2000 companies with lower price-to-value ratios and forecasted growth. S&P 500 Index is a widely regarded as the best single gauge of the U.S. equities market, including 500 leading companies in major industries of the U.S. economy. S&P/LSTA (Loan Syndications and Trading Association) Leveraged Loan Index (LLI) is a total return market value index that tracks fully funded, senior secured, first lien term loans syndicated in the U.S., as well as dollar-denominated overseas loans, including 90-95% of the institutional universe. The S&P GICS (Global Industry Classification Standard) sectors were developed by MSCI and Standard & Poor’s to provide standardized industry definitions consisting (in the U.S.) of 10 sectors, 24 industry groups, and 68 industries. Thomson VentureXpertTM is a database provided by Thomson Venture Economics, a leading provider of industry data about venture capital and private equity firms, which is regarded as the industry-standard source for comprehensive information on venture funds, private firms, venture-backed companies and limited partners, as well as analytics for fund statistics and performance. U.S. Treasury Index is a component of the Barclays Capital U.S. Aggregate Index. 27 Important Disclosures This information has been prepared by ING Investment Management for informational purposes. Nothing contained herein should be construed as (i) an offer to sell or solicitation of an offer to buy any security or (ii) a recommendation as to the advisability of investing in, purchasing or selling any security. Certain of the statements contained herein are statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation, (1) general economic conditions, (2) performance of financial markets, (3) interest rate levels and (4) increasing levels of loan defaults (5) changes in laws and regulations and (6) changes in the policies of governments and/or regulatory authorities. All indexes are unmanaged and an individual cannot invest directly in an index. Index returns do not include fees or expenses. Past performance is no guarantee of future results. The performance quoted represents past performance. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. You may obtain performance information current to the most recent month-end by visiting www.ingfunds.com. The views and judgments expressed are those of ING Investment Management. They are subject to change at any time. These views do not necessarily reflect the opinions of any other firm. All investing involves risks of fluctuating prices and the uncertainties of rates of return and yield inherent in investing. All security transactions involve substantial risk of loss. You should consult your tax, legal, accounting or other advisors about the matters discussed herein. As indicated on each page, some information was obtained from outside sources and is believed to be reliable, but ING does not guarantee its completeness or accuracy. Not FDIC Insured; no bank guarantee; may lose value An investor should consider the investment objectives, risks, charges and expenses of the Fund(s) carefully before investing. For a free copy of the Funds' prospectus, which contains this and other information, visit us at www.ingfunds.com or call ING Investments Distributor, LLC at (800) 992-0180. Please read the prospectus carefully before investing. 28 ING Investments Distributor, LLC