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.
The Fund’s maximum risk of loss from counterparty credit risk on OTC derivatives is generally the aggregate unrealized gain in excess of any collateral pledged by the counterparty to the Fund. For purchased OTC options, the Fund bears the risk of loss in the amount of the premiums paid and the change in market value of the options should the counterparty not perform under the contracts. The Fund did not enter into any purchased OTC options during the period ended August 31, 2013.
The Fund’s contracts with derivative counterparties have credit related contingent features that if triggered would allow its derivatives counterparties to close out and demand payment or additional collateral to cover their exposure from the Fund. Credit related contingent features are established between the Fund and its derivatives counterparties to reduce the risk that the Fund will not fulfill its payment obligations to its counterparties. These triggering features include, but are not limited to, a percentage decrease in the Fund’s net assets and or a percentage decrease in the Fund’s NAV, which could cause the Fund to accelerate payment of any net liability owed to the counterparty. The contingent features are established within the Fund’s Master Agreements.
Written options by the Fund do not give rise to counterparty credit risk, as written options obligate the Fund to perform and not the counterparty. As of August 31, 2013, the total value of written OTC call options subject to Master Agreements in a liability position was $624,435. If a contingent feature had been triggered, the Fund could have been required to pay this amount in cash to its counterparties. The Fund did not hold or post collateral for its open written OTC call options at period end. There were no credit events for period ended August 31, 2013 that triggered any credit related contingent features.
NOTES TO FINANCIAL STATEMENTS AS OF AUGUST 31, 2013 (UNAUDITED) (CONTINUED)
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (continued)
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 options on ETFs or indexes on a portion of the value of the equity portfolio. Please refer to Note 7 for the volume of written call option activity during the period ended August 31, 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 risk of loss from such claims remote.
NOTE 3 — INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES
ING Investments, LLC (“ING Investments” or the “Investment Adviser”), an Arizona limited liability company, is the Investment Adviser of the Fund. The Fund pays the Investment Adviser for its services under the investment management agreement (“Management Agreement”), a fee, payable monthly, based on an annual rate of 1.00% of the Fund’s average daily managed assets. For the purposes of the Management Agreement, managed assets are defined as the Fund’s average daily gross asset value, minus the sum of the Fund’s accrued and unpaid dividends on any outstanding preferred shares and accrued liabilities (other than liabilities for the principal amount of any borrowings incurred, commercial paper or notes issued by the Fund and the liquidation preference of any outstanding preferred shares). As of August 31, 2013, there were no preferred shares outstanding.
The Investment Adviser entered into a sub-advisory agreement (a “Sub-Advisory Agreement”) with ING Investment Management Co. LLC (“ING IM”), a Delaware limited liability company. Subject to policies as the Board or the Investment Adviser might determine, ING IM manages 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 — OTHER TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
The Fund has adopted a Deferred Compensation Plan (the “Plan”), which allows eligible non-affiliated trustees as described in the Plan to defer the receipt of all or a portion of the trustees fees payable. Amounts deferred are treated as though invested in various “notional” funds advised by ING Investments until distribution in accordance with the Plan.
NOTE 5 — PURCHASES AND SALES OF INVESTMENT SECURITIES
The cost of purchases and the proceeds from sales of investments for the period ended August 31, 2013, excluding short-term securities, were $67,326,555 and $89,060,053, respectively.
NOTE 6 — EXPENSE LIMITATION
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 to 1.25% 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 reimbursement, the Fund’s expense ratio does not exceed the percentage described above. The Expense Limitation Agreement is contractual through March 1, 2014 and shall renew automatically for one-year terms unless; (i) ING Investments provides 90 days written notice of its termination; and (ii) such termination is approved by the Board; or (iii) the Investment Management Agreement has been terminated. As of August 31, 2013, the Fund did not have any amounts waived or reimbursed that are subject to recoupment by the Investment Adviser.
15
NOTES TO FINANCIAL STATEMENTS AS OF AUGUST 31, 2013 (UNAUDITED) (CONTINUED)
NOTE 7 — TRANSACTIONS IN WRITTEN OPTIONS
Transactions in written OTC call options on custom baskets on equity securities were as follows:
| | | | Number of
Contracts
| | Premiums
Received
|
|---|
| | | | | 1,152,978 | | | $ | 1,893,639 | |
| | | | | 52,058,120 | | | | 12,852,984 | |
| | | | | (2,295,504 | ) | | | (4,417,684 | ) |
| | | | | — | | | | — | |
Options Terminated in Closing Purchase Transactions | | | | | (49,799,014 | ) | | | (8,167,520 | ) |
| | | | | 1,116,580 | | | $ | 2,161,419 | |
NOTE 8 — CONCENTRATION OF RISKS
All mutual funds involve risk — some more than others — and there is always the chance that you could lose money or not earn as much as you hope. The Fund’s risk profile is largely a factor of the principal securities in which it invests and investment techniques that it uses. For more information regarding the types of securities and investment techniques that may be used by the Fund and its corresponding risks, see the Fund’s Prospectus and/or the Statement of Additional Information.
Foreign Securities and Emerging Markets. The Fund makes significant investments in foreign securities and securities issued by companies located in countries with emerging markets. Investments in foreign securities may entail risks not present in domestic investments. Since investments in securities are denominated in foreign currencies, changes in the relationship of these foreign currencies to the U.S. dollar can significantly affect the 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.
Infrastructure-Related Investment. Because the Fund invests in infrastructure companies, it has greater exposure to potentially adverse economic, regulatory, political and other changes affecting such companies. Infrastructure companies are subject to a variety of factors that may adversely affect their business or operations including interest rates and costs in connection with capital construction projects, costs associated with environmental and other regulations, the effects of economic slowdowns, surplus capacity, increased competition from other suppliers of services, uncertainties concerning the availability of necessary fuels, energy costs, the effects of energy conservation policies and other factors.
Industrials Sector. The industrials sector can be significantly affected by general economic trends, including employment, economic growth, and interest rates, changes in consumer sentiment and spending, the supply of and demand for specific industrial and energy products or services, commodity prices, legislation, government regulation and spending, import controls, and worldwide competition. Furthermore, a company in the industrials sector can be subject to liability for environmental damage, depletion of resources, and mandated expenditures for safety and pollution control.
Materials Sector. The materials sector can be significantly affected by the level and volatility of commodity prices, the exchange value of the dollar, import controls, and worldwide competition. At times, worldwide production of materials has exceeded demand as a result of over-building or economic downturns, which has led to commodity price declines and unit price reductions. Companies in the materials industries can also be adversely affected by liability for environmental damage, depletion of resources, mandated expenditures for safety and pollution control, labor relations, and government regulations.
NOTE 9 — CAPITAL SHARES
There was no capital share activity during the six months ended August 31, 2013, and during the year ended February 28, 2013.
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
16
NOTES TO FINANCIAL STATEMENTS AS OF AUGUST 31, 2013 (UNAUDITED) (CONTINUED)
NOTE 10 — FEDERAL INCOME TAXES (continued)
reclassified. Key differences include the treatment of short-term capital gains, foreign currency transactions, and wash sale deferrals. Distributions in excess of net investment income and/or net realized capital gains for tax purposes are reported as return of capital.
Dividends paid by the 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-end was as follows:
Tax Year Ended
December 31, 2012
| |
|---|
Ordinary
Income
| | Long-term
Capital Gain
| | Return
of Capital
|
|---|
| $5,871,930 | | $ | 3,903,387 | | | $ | 24,091,234 | |
The tax-basis components of distributable earnings as of the tax year ended December 31, 2012 were:
Unrealized
Appreciation/
(Depreciation)
| | | |
|---|
|
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 the Fund’s initial tax year of 2010.
As of August 31, 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.
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. ING U.S. is a majority-owned subsidiary 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”).
In May 2013, ING U.S. conducted an initial public offering of ING U.S. common stock (the “IPO”).
On September 13, 2013, ING U.S. filed a new Registration Statement on Form S-1 with the U.S. Securities and Exchange Commission (the “SEC”) in connection with another potential public offering of ING U.S. common stock held by ING Groep. ING U.S. will not issue or sell common stock in the offering. On October 23, 2013, ING U.S. announced the pricing of 33 million shares of its common stock being offered by ING Groep in this offering. Closing of the offering is expected to occur on October 29, 2013. ING Groep also granted the underwriters in the offering an option exercisable within 30 days, to acquire up to approximately an additional 5 million shares from ING Groep. This option was exercised in full. ING U.S. will not receive any proceeds from the offering.
ING Groep continues to own a majority of the common stock of ING U.S. ING Groep has stated that it intends to sell its remaining controlling ownership interest in ING U.S. over time. While the base case for the remainder of the Separation Plan is the divestment of ING Groep’s remaining interest in one or more broadly distributed offerings, all options remain open and it is possible that ING Groep’s divestment of its remaining interest in ING U.S. may take place by means of a sale to a single buyer or group of buyers.
It is anticipated that one or more of the transactions contemplated by the Separation Plan would result in the automatic termination of the existing advisory and sub-advisory agreements under which the Adviser and sub-adviser provide services to the Fund. In order to ensure that the existing investment advisory and sub-advisory services can continue uninterrupted, the Board approved new advisory and sub-advisory agreements for the Fund in connection with the IPO. In addition, shareholders of the Fund were asked to
17
NOTES TO FINANCIAL STATEMENTS AS OF AUGUST 31, 2013 (UNAUDITED) (CONTINUED)
NOTE 11 — RESTRUCTURING PLAN (continued)
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. Shareholders of the Fund approved a new advisory and sub-advisory agreement on May 6, 2013. 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.
The Separation Plan may be implemented in phases. 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.
Shareholder Proxy Proposals
At a meeting of the Board on January 10, 2013, the Board nominated to Class I 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 was a current member of the Board. In addition, the Board nominated to Class I of the Board Albert E. DePrince Jr. and Martin J. Gavin and appointed to Class III of the Board Joseph E. Obermeyer and Russell H. Jones, each of whom was not a member of the Board at the time, but who served as a director or trustee to other investment companies in the ING Funds complex. The Nominees were approved by shareholders on May 6, 2013. The election of the Nominees was effective on May 21, 2013. The appointment of Messrs. Obermeyer and Jones was effective May 21, 2013. These nominations and appointments were, in part, the result of an effort on the part of the Board, another board in the ING Funds 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 Funds complex. The result is that all ING Funds are now governed by Boards that are compromised of the same individuals.
NOTE 12 — SUBSEQUENT EVENTS
Dividends: Subsequent to August 31, 2013, the Fund made a distribution of:
Per Share
Amount
| | | | Declaration
Date
| | Payable
Date
| | Record
Date
|
|---|
| | | | | | | | |
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 monthly distribution payments made by the Fund may constitute a return of capital.
The Fund was granted exemptive relief by the SEC (the “Order”), which under the 1940 Act, would permit the Fund, subject to Board approval, to include realized long-term capital gains as a part of its regular distributions to Common Shareholders more frequently than would otherwise be permitted by the 1940 Act (generally once per taxable year) (“Managed Distribution Policy”). The Fund may in the future adopt a Managed Distribution Policy.
Effective close of business September 12, 2013, Mr. Gavin resigned as Trustee.
The Fund has evaluated events occurring after the Statement of Assets and Liabilities date (subsequent events) to determine whether any subsequent events necessitated adjustment to or disclosure in the financial statements. Other than the above, no such subsequent events were identified.
18
ING INFRASTRUCTURE, INDUSTRIALS
AND MATERIALS FUND
SUMMARY PORTFOLIO OF INVESTMENTS
AS OF AUGUST 31, 2013 (UNAUDITED)
Shares
|
|
|
|
|
|
|
| Value
|
| Percentage
of Net
Assets
|
|---|
|
| |
| | | | | | | | $ | 3,291,561 | | | | 1.0 | |
| | | | | | | | | 2,225,779 | | | | 0.6 | |
| | | | | | | | | 5,517,340 | | | | 1.6 | |
|
| |
| | | | | | | | | 2,417,511 | | | | 0.7 | |
|
| |
| | | | | | | | | 2,050,840 | | | | 0.6 | |
|
| |
| | | | | | | | | 4,317,600 | | | | 1.3 | |
| | | | | | China Unicom Hong Kong Ltd. ADR | | | 4,665,500 | | | | 1.3 | |
| | | | | | | | | 2,393,099 | | | | 0.7 | |
| | | | | | | | | 11,376,199 | | | | 3.3 | |
|
| |
| | | | | | | | | 2,398,880 | | | | 0.7 | |
|
| |
| | | | | | | | | 4,807,950 | | | | 1.4 | |
| | | | | | | | | 3,762,922 | | | | 1.1 | |
| | | | | | | | | 6,064,822 | | | | 1.7 | |
| | | | | | | | | 5,841,770 | | | | 1.7 | |
| | | | | | | | | 5,466,811 | | | | 1.5 | |
| | | | | | | | | 4,812,755 | | | | 1.4 | |
| | | | | | | | | 30,757,030 | | | | 8.8 | |
|
| |
| | | | | | | | | 6,898,113 | | | | 2.0 | |
| | | | | | | | | 6,488,914 | | | | 1.8 | |
| | | | | | | | | 5,210,449 | | | | 1.5 | |
| | | | | | | | | 3,997,292 | | | | 1.1 | |
| | | | | | | | | 7,354,174 | | | | 2.1 | |
| | | | | | | | | 1,686,821 | | | | 0.5 | |
| | | | | | | | | 31,635,763 | | | | 9.0 | |
|
| |
| | | | | | | | | 1,522,549 | | | | 0.4 | |
|
| |
| | | | | | | | | 4,928,914 | | | | 1.4 | |
|
| |
| | | | | | | | | 4,566,524 | | | | 1.3 | |
| | | | | | | | | 4,651,313 | | | | 1.3 | |
| | | | | | | | | 9,217,837 | | | | 2.6 | |
|
| |
| | | | | | | | | 4,953,166 | | | | 1.4 | |
| | | | | | | | | 3,546,699 | | | | 1.0 | |
| | | | | | Mitsubishi Electric Corp. | | | 4,142,345 | | | | 1.2 | |
| | | | | | | | | 4,557,287 | | | | 1.3 | |
| | | | | | | | | 17,199,497 | | | | 4.9 | |
COMMON STOCK: (continued) |
| |
| | | | | | | | $ | 4,393,268 | | | | 1.3 | |
| | | | | | Millicom International Cellular SA | | | 3,987,568 | | | | 1.1 | |
| | | | | | | | | 8,380,836 | | | | 2.4 | |
|
| |
| | | | | | European Aeronautic Defence and Space Co. NV | | | 5,167,191 | | | | 1.5 | |
| | | | | | | | | 3,910,728 | | | | 1.1 | |
| | | | | | | | | 9,077,919 | | | | 2.6 | |
|
| |
| | | | | | Mobile Telesystems OJSC ADR | | | 4,733,492 | | | | 1.4 | |
|
| |
| | | | | | | | | 4,340,861 | | | | 1.2 | |
|
| |
| | | | | | | | | 4,651,927 | | | | 1.3 | |
|
| |
| | | | | | | | | 4,870,775 | | | | 1.4 | |
| | | | | | | | | 4,834,476 | | | | 1.4 | |
| | | | | | | | | 3,072,961 | | | | 0.9 | |
| | | | | | | | | 12,778,212 | | | | 3.7 | |
|
| |
| | | | | | | | | 6,854,400 | | | | 2.0 | |
| | | | | | | | | 4,916,240 | | | | 1.4 | |
| | | | | | | | | 8,563,014 | | | | 2.4 | |
| | | | | | | | | 3,452,313 | | | | 1.0 | |
| | | | | | | | | 2,097,492 | | | | 0.6 | |
| | | | | | | | | 25,883,459 | | | | 7.4 | |
|
| |
| | | | | | | | | 4,437,450 | | | | 1.3 | |
| | | | | | | | | 5,010,205 | | | | 1.4 | |
| | | | | | | | | 6,290,316 | | | | 1.8 | |
| | | | | | | | | 7,096,320 | | | | 2.0 | |
| | | | | | | | | 4,741,083 | | | | 1.4 | |
| | | | | | | | | 6,458,640 | | | | 1.9 | |
| | | | | | EI Du Pont de Nemours & Co. | | | 4,841,010 | | | | 1.4 | |
| | | | | | | | | 6,279,570 | | | | 1.8 | |
| | | | | | Freeport-McMoRan Copper & Gold, Inc. | | | 4,868,442 | | | | 1.4 | |
| | | | | | | | | 7,334,325 | | | | 2.1 | |
| | | | | | | | | 4,341,064 | | | | 1.2 | |
| | | | | | Honeywell International, Inc. | | | 8,935,711 | | | | 2.6 | |
| | | | | | | | | 3,514,522 | | | | 1.0 | |
| | | | | | Lincoln Electric Holdings, Inc. | | | 3,364,114 | | | | 1.0 | |
| | | | | | | | | 7,492,104 | | | | 2.1 | |
See Accompanying Notes to Financial Statements
19
ING INFRASTRUCTURE, INDUSTRIALS
AND MATERIALS FUND
SUMMARY PORTFOLIO OF INVESTMENTS
AS OF AUGUST 31, 2013 (UNAUDITED)
Shares
|
|
|
|
|
|
|
| Value
|
| Percentage
of Net
Assets
|
|---|
COMMON STOCK: (continued) |
| United States: (continued)
|
| | | | | | | | $ | 4,688,931 | | | | 1.3 | |
| | | | | | National Oilwell Varco, Inc. | | | 5,921,710 | | | | 1.7 | |
| | | | | | | | | 3,380,946 | | | | 1.0 | |
| | | | | | | | | 3,927,208 | | | | 1.1 | |
| | | | | | | | | 5,591,240 | | | | 1.6 | |
| | | | | | | | | 6,823,242 | | | | 2.0 | |
| | | | | | | | | 3,582,880 | | | | 1.0 | |
| | | | | | | | | 8,905,320 | | | | 2.5 | |
| | | | | | | | | 3,938,495 | | | | 1.1 | |
| | | | | | | | | 25,161,248 | | | | 7.1 | |
| | | | | | | | | 156,926,096 | | | | 44.8 | |
| |
| | | | | | Total Common Stock
(Cost $301,271,302) | | | 345,795,162 | | | | 98.8 | |
|
| |
| | | | | | | | | 308 | | | | 0.0 | |
| |
| | | | | | | | | 308 | | | | 0.0 | |
| |
| | | | | | Total Long-Term Investments
(Cost $301,271,302) | | | 345,795,470 | | | | 98.8 | |
SHORT-TERM INVESTMENTS: 1.1% |
| |
| | | | | | BlackRock Liquidity Funds, TempFund, Institutional Class, 0.040%††
(Cost $4,028,000) | | | 4,028,000 | | | | 1.1 | |
| |
| | | | | | Total Short-Term Investments
(Cost $4,028,000) | | | 4,028,000 | | | | 1.1 | |
| |
| | | | | | Total Investments in Securities
(Cost $305,299,302) | | $ | 349,823,470 | | | | 99.9 | |
| | | | | | Assets in Excess of Other Liabilities | | | 500,385 | | | | 0.1 | |
| | | | | | | | $ | 350,323,855 | | | | 100.0 | |
“Other Securities” represents issues not identified as the top 50 holdings in terms of market value and issues or issuers not exceeding 1% of net assets individually or in aggregate respectively as of August 31, 2013.
The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item.
| †† | | Rate shown is the 7-day yield as of August 31, 2013. |
| @ | | Non-income producing security |
| ADR | | American Depositary Receipt |
| | Cost for federal income tax purposes is $305,753,005. |
Net unrealized appreciation consists of: | | | | | | |
Gross Unrealized Appreciation | | | | $ | 64,290,893 | |
Gross Unrealized Depreciation | | | | | (20,220,428 | ) |
Net Unrealized Appreciation | | | | $ | 44,070,465 | |
Industry Diversification
| | | | | Percentage
of Net Assets
|
|---|
| | | | | 49.6 | % |
| | | | | 14.0 | |
| | | | | 8.9 | |
| | | | | 5.5 | |
Oil & Gas Equipment & Services | | | | | 5.2 | |
Telecommunication Services | | | | | 3.5 | |
| | | | | 2.1 | |
| | | | | 1.6 | |
| | | | | 1.4 | |
Diversified Metals & Mining | | | | | 1.4 | |
| | | | | 1.4 | |
| | | | | 1.0 | |
| | | | | 0.9 | |
| | | | | 0.8 | |
Miscellaneous Manufacturing | | | | | 0.6 | |
Electrical Components & Equipment | | | | | 0.5 | |
| | | | | 0.4 | |
| | | | | 1.1 | |
Assets in Excess of Other Liabilities | | | | | 0.1 | |
| | | | | 100.0 | % |
Fair Value Measurementsˆ
The following is a summary of the fair valuations according to the inputs used as of August 31, 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
August 31, 2013
|
|---|
| | | | | | | | | | | | | | | | | | |
Investments, at fair value | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | $ | 5,517,340 | | | $ | — | | | $ | — | | | $ | 5,517,340 | |
| | | | | 2,417,511 | | | | — | | | | — | | | | 2,417,511 | |
| | | | | 2,050,840 | | | | — | | | | — | | | | 2,050,840 | |
| | | | | 8,983,100 | | | | 2,393,099 | | | | — | | | | 11,376,199 | |
| | | | | — | | | | 2,398,880 | | | | — | | | | 2,398,880 | �� |
| | | | | — | | | | 30,757,030 | | | | — | | | | 30,757,030 | |
See Accompanying Notes to Financial Statements
20
ING INFRASTRUCTURE, INDUSTRIALS
AND MATERIALS FUND
SUMMARY PORTFOLIO OF INVESTMENTS
AS OF AUGUST 31, 2013 (UNAUDITED)
| | | | Quoted Prices
in Active Markets
for Identical
Investments
(Level 1)
| | Significant
Other
Observable
Inputs#
(Level 2)
| | Significant
Unobservable
Inputs
(Level 3)
| | Fair Value
at
August 31, 2013
|
|---|
| | | | $ | 1,686,821 | | | $ | 29,948,942 | | | $ | — | | | $ | 31,635,763 | |
| | | | | — | | | | 1,522,549 | | | | — | | | | 1,522,549 | |
| | | | | — | | | | 4,928,914 | | | | — | | | | 4,928,914 | |
| | | | | — | | | | 9,217,837 | | | | — | | | | 9,217,837 | |
| | | | | — | | | | 17,199,497 | | | | — | | | | 17,199,497 | |
| | | | | 8,380,836 | | | | — | | | | — | | | | 8,380,836 | |
| | | | | — | | | | 9,077,919 | | | | — | | | | 9,077,919 | |
| | | | | 4,733,492 | | | | — | | | | — | | | | 4,733,492 | |
| | | | | 4,340,861 | | | | — | | | | — | | | | 4,340,861 | |
| | | | | — | | | | 4,651,927 | | | | — | | | | 4,651,927 | |
| | | | | 4,870,775 | | | | 7,907,437 | | | | — | | | | 12,778,212 | |
| | | | | — | | | | 25,883,459 | | | | — | | | | 25,883,459 | |
| | | | | 156,926,096 | | | | — | | | | — | | | | 156,926,096 | |
| | | | | 199,907,672 | | | | 145,887,490 | | | | — | | | | 345,795,162 | |
| | | | | — | | | | 308 | | | | — | | | | 308 | |
| | | | | — | | | | — | | | | — | | | | 4,028,000 | |
Total Investments, at fair value | | | | $ | 199,907,672 | | | $ | 145,887,798 | | | $ | — | | | $ | 349,823,470 | |
| | | | | | | | | | | | | | | | | | |
Other Financial Instruments+ | | | | | | | | | | | | | | | | | | |
| | | | $ | — | | | $ | (624,435 | ) | | $ | — | | | $ | (624,435 | ) |
| | | | $ | — | | | $ | (624,435 | ) | | $ | — | | | $ | (624,435 | ) |
| ˆ | | See Note 2, “Significant Accounting Policies” in the Notes to Financial Statements for additional information. |
+ | | Other Financial Instruments are derivatives not reflected in the Portfolio of Investments and may include open forward foreign currency contracts, 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. |
ING Infrastructure, Industrials and Materials Fund Written OTC Options on August 31, 2013:
Number of Contracts
| | | | Counterparty
| | Description
| | Exercise
Price
| | Expiration
Date
| | Premiums
Received
| | Fair Value
|
|---|
Options on Securities
| | | | | | | | | | | |
|---|
| | | | | | Call on Custom Basket of Equity Securities | | | | | 09/20/13 | | | $ | 723,952 | | | $ | (176,891 | ) |
| | | | | | Call on Custom Basket of Equity Securities | | | | | 09/20/13 | | | | 322,060 | | | | (213,703 | ) |
| | | | | | Call on Custom Basket of Equity Securities | | | | | 09/18/13 | | | | 537,168 | | | | (120,133 | ) |
| | | | | | Call on Custom Basket of Equity Securities | | | | | 09/18/13 | | | | 578,239 | | | | (113,708 | ) |
| | | | | | Total Written OTC Options | | $ | 2,161,419 | | | $ | (624,435 | ) |
A summary of derivative instruments by primary risk exposure is outlined in the following tables.
The fair value of derivative instruments as of August 31, 2013 was as follows:
Derivatives not accounted for as
hedging instruments
| | | | Location on Statement
of Assets and Liabilities
| | | Fair Value
|
|---|
| | | | | | | |
| | | | Written options, at fair value | | $ | 624,435 |
Total Liability Derivatives | | | | | | $ | 624,435 |
See Accompanying Notes to Financial Statements
21
ING INFRASTRUCTURE, INDUSTRIALS
AND MATERIALS FUND
SUMMARY PORTFOLIO OF INVESTMENTS
AS OF AUGUST 31, 2013 (UNAUDITED)
The effect of derivative instruments on the Fund’s Statement of Operations for the period ended August 31, 2013 was as follows:
| | | Amount of Realized Gain or (Loss)
on Derivatives Recognized in Income |
|---|
Derivatives not accounted for as hedging instruments
| | | Written options
|
|---|
| | $ | (10,126,314 | ) |
| | $ | (10,126,314 | ) |
| | | Change in Unrealized Appreciation
or Depreciation on Derivatives
Recognized in Income |
|---|
Derivatives not accounted for as hedging instruments
| | | Written options
|
|---|
| | $ | 1,387,566 | |
| | $ | 1,387,566 | |
Supplemental Option Information
Supplemental Call Option Statistics as of August 31, 2013:
% of Total Net Assets against which calls written | | | | | 34.96 | % |
Average Days to Expiration at time written | | | | | 35 days | |
Average Call Moneyness* at time written | | | | | ATM | |
Premiums received for calls | | | | $ | 2,161,419 | |
| | | | $ | (624,435 | ) |
| * | | “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. |
The following is a summary by counterparty of the fair value of OTC derivative instruments subject to Master Netting Agreements and collateral pledged (received), if any, at August 31, 2013:
| | | | Credit Suisse
Group AG
| | Goldman
Sachs & Co.
| | UBS
Warburg LLC
| | Totals
|
|---|
| | | | | | | | | | | | | | | | | | |
| | | | $ | 333,836 | | | $ | 113,708 | | | $ | 176,891 | | | $ | 624,435 | |
| | | | $ | 333,836 | | | $ | 113,708 | | | $ | 176,891 | | | $ | 624,435 | |
| | | | | | | | | | | | | | | | | | |
Net OTC derivative instruments by counterparty, at fair value | | | | $ | (333,836 | ) | | $ | (113,708 | ) | | $ | (176,891 | ) | | $ | (624,435 | ) |
| | | | | | | | | | | | | | | | | | |
Total collateral pledged by Fund/(Received from counterparty) | | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | | | |
| | | | $ | (333,836 | ) | | $ | (113,708 | ) | | $ | (176,891 | ) | | $ | (624,435 | ) |
(1) | | Positive net exposure represents amounts due from each respective counterparty. Negative exposure represents amounts due from the Fund. Please refer to Note 2 for additional details regarding counterparty credit risk and credit related contingent features. |
See Accompanying Notes to Financial Statements
22
SHAREHOLDER MEETING INFORMATION (UNAUDITED)
An annual shareholder meeting of the ING Infrastructure, Industrials and Materials Fund Registrant was held May 6, 2013, at the offices of ING Funds, 7337 East Doubletree Ranch Road, Suite 100, Scottsdale, AZ 85258.
Proposals:
| 1 | | To approve a new investment advisory agreement for the Funds with ING Investments prompted by the IPO, and to approve, under certain circumstances, any future advisory agreements prompted by Change of Control Events that occur as part of the Separation Plan. |
| 2 | | To approve a new investment sub-advisory agreement between ING Investments and ING IM with respect to certain Funds prompted by the IPO, and to approve, under certain circumstances, any future sub-advisory agreements prompted by Change of Control Events that occur as part of the Separation Plan. |
| 5 | | To elect five nominees to the Boards of Trustees of certain Funds. |
| | | | Proposal
| | Shares
voted for
| | Shares voted
against or
withheld
| | Shares
abstained
| | Broker
non-vote
| | Total Shares
Voted
|
|---|
ING Infrastructure, Industrials and Materials Fund | | | | | | | 9,020,474.157 | | | | 295,367.870 | | | | 290,564.866 | | | | 3,283,755.888 | | | | 12,890,162.781 | |
| | | | | | | 9,002,879.283 | | | | 310,696.482 | | | | 292,831.128 | | | | 3,283,755.888 | | | | 12,890,162.781 | |
| | | | Proposal
| | For All
| | Withhold All
| | For all
Except
| | Broker
non-vote
| | Total Shares
Voted
|
|---|
| | | | | | | 12,422,050.714 | | | | 468,112.067 | | | | 0.000 | | | | 0.000 | | | | 12,890,162.781 | |
| | | | | | | 12,428,236.281 | | | | 461,926.500 | | | | 0.000 | | | | 0.000 | | | | 12,890,162.781 | |
| | | | | | | 12,415,067.260 | | | | 475,095.521 | | | | 0.000 | | | | 0.000 | | | | 12,890,162.781 | |
| | | | | | | 12,416,864.346 | | | | 473,298.435 | | | | 0.000 | | | | 0.000 | | | | 12,890,162.781 | |
| | | | | | | 12,412,802.254 | | | | 477,360.527 | | | | 0.000 | | | | 0.000 | | | | 12,890,162.781 | |
23
ADDITIONAL INFORMATION (UNAUDITED)
During the period, there were no material changes in the Fund’s investment objective or policies that were not approved by the shareholders or the Fund’s charter or by-laws or in the principal risk factors associated with investment in the Fund.
The Fund may lend portfolio securities in an amount equal to up to 33 1/3% of its managed assets to broker dealers or other institutional borrowers, in exchange for cash collateral and fees. The fund may use the cash collateral in connection with the Fund’s investment program as approved by the Adviser, including generating cash to cover collateral posting requirements. Although the Fund has no current intention to do so, it may use the cash collateral to generate additional income. The use of cash collateral in connection with the Fund’s investment program may have a leveraging effect on the Fund, which would increase the volatility of the Fund and could reduce its returns and/or cause a loss.
The Fund intends to engage in lending portfolio securities only when such lending is secured by cash or other permissible collateral in an amount at least equal to the market value of the securities loaned. The Fund will maintain cash, cash equivalents or liquid securities holdings in an amount sufficient to cover its repayment obligation with respect to the collateral, marked to market on a daily basis.
Securities lending involves the risks of delay in recovery or even loss of rights in the securities loaned if the borrower of the securities fails financially. Loans will be made only to organizations whose credit quality or claims paying ability is considered by the Sub-Adviser to be at least investment grade. The financial condition of the borrower will be monitored by the Adviser on an ongoing basis. The Fund will not lend portfolio securities subject to a written American style covered call option contract. The Fund may lend portfolio securities subject to a written European style covered call option contract as long as the lending period is less than or equal to the term of the covered call option contract.
Dividend Reinvestment Plan
Unless the registered owner of Common Shares elects to receive cash by contacting Computershare Shareowner Services LLC (the ”Plan Agent“), all dividends declared on Common Shares of the Fund will be automatically reinvested by the Plan Agent for shareholders in additional Common Shares of the Fund through the Fund’s Dividend Reinvestment Plan (the ”Plan“). Shareholders who elect not to participate in the Plan will receive all dividends and other distributions in cash paid by check mailed directly to the shareholder of record (or, if the Common Shares are held in street or other nominee name, then to such nominee) by the Plan Agent. Participation in the Plan is completely voluntary and may be terminated or resumed at any time without penalty by notice if received and processed by the Plan Agent prior to the dividend record date; otherwise such termination or resumption will be effective with respect to any subsequently declared dividend or other distribution. Some brokers may automatically elect to receive cash on your behalf and may re-invest that cash in additional Common Shares of the Fund for you. If you wish for all dividends declared on your Common Shares of the Fund to be automatically reinvested pursuant to the Plan, please contact your broker.
The Plan Agent will open an account for each Common Shareholder under the Plan in the same name in which such Common Shareholder’s Common Shares are registered. Whenever the Fund declares a dividend or other distribution (together, a ”Dividend“) payable in cash, non-participants in the Plan will receive cash and participants in the Plan will receive the equivalent in Common Shares. The Common Shares will be acquired by the Plan Agent for the participants’ accounts, depending upon the circumstances described below, either (i) through receipt of additional unissued but authorized Common Shares from the Fund (”Newly Issued Common Shares“) or (ii) by purchase of outstanding Common Shares on the open market (”Open-Market Purchases“) on the NYSE or elsewhere. Open-market purchases and sales are usually made through a broker affiliated with the Plan Agent.
If, on the payment date for any Dividend, the closing market price plus estimated brokerage commissions per Common Share is equal to or greater than the net asset value per Common Share, the Plan Agent will invest the Dividend amount in Newly Issued Common Shares on behalf of the participants. The number of Newly Issued Common Shares to be credited to each participant’s account will be determined by dividing the dollar amount of the Dividend by the net asset value per Common Share on the payment date; provided that, if the net asset value is less than or equal to 95% of the closing market value on the payment date, the dollar amount of the Dividend will be divided by 95% of the closing market price per Common Share on the payment date. If, on the payment date for any Dividend, the net asset value per Common Share is greater than the closing market value plus estimated brokerage commissions, the Plan Agent will invest the Dividend amount in Common Shares acquired on behalf of the participants in Open-Market Purchases. In the event of a market discount on the payment date for any Dividend, the Plan Agent will have until the last business day before the next date on which the Common Shares trade on an ”ex-dividend“ basis or 30 days after the payment date for such Dividend, whichever is sooner (the ”Last Purchase Date“), to invest the Dividend amount in Common Shares acquired in Open-Market Purchases.
The Fund pays quarterly Dividends. Therefore, the period during which Open-Market Purchases can be made will exist only from the payment date of each Dividend through the date before the next ”ex-dividend“ date, which typically will be approximately ten days.
If, before the Plan Agent has completed its Open-Market Purchases, the market price per common share
24
ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)
exceeds the net asset value per Common Share, the average per Common Share purchase price paid by the Plan Administrator may exceed the net asset value of the Common Shares, resulting in the acquisition of fewer Common Shares than if the Dividend had been paid in Newly Issued Common Shares on the Dividend payment date. Because of the foregoing difficulty with respect to Open-Market Purchases, the Plan provides that if the Plan Agent is unable to invest the full Dividend amount in Open-Market Purchases during the purchase period or if the market discount shifts to a market premium during the purchase period, the Plan Agent will cease making Open-Market Purchases and will invest the un-invested portion of the Dividend amount in Newly Issued Common Shares at the net asset value per common share at the close of business on the Last Purchase Date provided that, if the net asset value is less than or equal to 95% of the then current market price per Common Share, the dollar amount of the Dividend will be divided by 95% of the market price on the payment date.
The Plan Agent maintains all shareholders’ accounts in the Plan and furnishes written confirmation of all transactions in the accounts, including information needed by shareholders for tax records. Common Shares in the account of each Plan participant will be held by the Plan Agent on behalf of the Plan participant, and each shareholder proxy will include those shares purchased or received pursuant to the Plan. The Plan Agent will forward all proxy solicitation materials to participants and vote proxies for shares held under the Plan in accordance with the instructions of the participants.
In the case of shareholders such as banks, brokers or nominees which hold shares for others who are the beneficial owners, the Plan Agent will administer the Plan on the basis of the number of Common Shares certified from time to time by the record shareholder’s name and held for the account of beneficial owners who participate in the Plan.
There will be no brokerage charges with respect to Common Shares issued directly by the Fund. However, each participant will pay a pro rata share of brokerage commissions incurred in connection with Open-Market Purchases. The automatic reinvestment of Dividends will not relieve participants of any federal, state or local income tax that may be payable (or required to be withheld) on such Dividends. Participants that request a partial or full sale of shares through the Plan Agent are subject to a $15.00 sales fee and a $0.10 per share brokerage commission on purchases or sales, and may be subject to certain other service charges.
The Fund reserves the right to amend or terminate the Plan. There is no direct service charge to participants with regard to purchases in the Plan; however, the Fund reserves the right to amend the Plan to include a service charge payable by the participants.
All questions concerning the Plan should be directed to the Fund’s Shareholder Service Department at (800) 992-0180.
Key Financial Dates — Calendar 2013 Distributions:
Declaration
Date
| | Ex-Dividend
Date
| | Payable
Date
|
|---|
| March 15, 2013 | | | April 1, 2013 | | | | April 15, 2013 | |
| June 17, 2013 | | | July 1, 2013 | | | | July 15, 2013 | |
| September 16, 2013 | | | October 1, 2013 | | | | October 15, 2013 | |
| December 16, 2013 | | | December 27, 2013 | | | | January 15, 2014 | |
Record date will be two business days after each Ex-Dividend Date. These dates are subject to change.
Stock Data
The Fund’s common shares are traded on the NYSE (Symbol: IDE).
Repurchase of Securities by Closed-End Companies
In accordance with Section 23(c) of the 1940 Act, and Rule 23c-1 under the 1940 Act the Fund may from time to time purchase shares of beneficial interest of the Fund in the open market, in privately negotiated transactions and/or purchase shares to correct erroneous transactions.
Number of Shareholders
The approximate number of record holders of Common Stock as of August 31, 2013 was 4, which does not include approximately 8,862 beneficial owners of shares held in the name of brokers of other nominees.
Certifications
In accordance with Section 303A.12 (a) of the New York Stock Exchange Listed Company Manual, the Fund’s CEO submitted the Annual CEO Certification on June 27, 2013 certifying that he was not aware, as of the date of submission, of any violation by the Fund of the NYSE’s Corporate governance listing standards. In addition, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and related SEC rules, the Fund’s principal executive and financial officers are required to make quarterly certifications, included in filings with the SEC on Forms N-CSR and N-Q, relating to, among other things, the Fund’s disclosure controls and procedures and internal controls over financial reporting.
25
(THIS PAGE INTENTIONALLY LEFT BLANK)
(THIS PAGE INTENTIONALLY LEFT BLANK)
Investment Adviser
ING Investments, LLC
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, Arizona 85258
Administrator
ING Funds Services, LLC
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, Arizona 85258
Transfer Agent
Computershare Shareowner Services LLC
480 Washington Boulevard
Jersey City, New Jersey 07310-1900
Custodian
The Bank of New York Mellon
One Wall Street
New York, New York 10286
Legal Counsel
Dechert LLP
1900 K Street, N.W.
Washington, D.C. 20006
Toll-Free Shareholder Information
Call us from 9:00 a.m. to 7:00 p.m. Eastern time on any business day for account or other information, at (800) 992-0180
SAR-UIDE (0813-102513)
Item 2. Code of Ethics.
Not required for semi-annual filing.
Item 3. Audit Committee Financial Expert.
Not required for semi-annual filing.
Item 4. Principal Accountant Fees and Services.
Not required for semi-annual filing.
Item 5. Audit Committee Of Listed Registrants.
Not required for semi-annual filing.
Item 6. Schedule of Investments.
ING INFRASTRUCTURE, INDUSTRIALS
AND MATERIALS FUND | PORTFOLIO OF INVESTMENTS
AS OFAUGUST 31, 2013 (UNAUDITED) |
Shares
|
|
|
|
|
|
|
| Value
|
| Percentage
of Net
Assets
|
|---|
|
| |
| | | | | | | | | 2,225,779 | | | | 0.6 | |
| | | | | | | | | 3,291,561 | | | | 1.0 | |
| | | | | | | | | 5,517,340 | | | | 1.6 | |
|
| |
| | | | | | Bombardier, Inc. — Class B | | | 2,417,511 | | | | 0.7 | |
|
| |
| | | | | | | | | 2,050,840 | | | | 0.6 | |
|
| |
| | | | | | | | | 4,317,600 | | | | 1.3 | |
| | | | | | China Unicom Hong Kong Ltd. ADR | | | 4,665,500 | | | | 1.3 | |
| | | | | | Dongfang Electrical Machinery Co., Ltd. | | | 2,393,099 | | | | 0.7 | |
| | | | | | | | | 11,376,199 | | | | 3.3 | |
| |
| | | | | | | | | 2,398,880 | | | | 0.7 | |
|
| |
| | | | | | | | | 4,807,950 | | | | 1.4 | |
| | | | | | | | | 3,762,922 | | | | 1.1 | |
| | | | | | | | | 6,064,822 | | | | 1.7 | |
| | | | | | | | | 5,841,770 | | | | 1.7 | |
| | | | | | | | | 5,466,811 | | | | 1.5 | |
| | | | | | | | | 4,812,755 | | | | 1.4 | |
| | | | | | | | | 30,757,030 | | | | 8.8 | |
|
| |
| | | | | | | | | 6,898,113 | | | | 2.0 | |
| | | | | | | | | 6,488,914 | | | | 1.8 | |
| | | | | | | | | 5,210,449 | | | | 1.5 | |
| | | | | | | | | 3,997,292 | | | | 1.1 | |
| | | | | | | | | 1,686,821 | | | | 0.5 | |
| | | | | | | | | 7,354,174 | | | | 2.1 | |
| | | | | | | | | 31,635,763 | | | | 9.0 | |
|
| |
| | | | | | | | | 1,522,549 | | | | 0.4 | |
|
| |
| | | | | | | | | 4,928,914 | | | | 1.4 | |
|
| |
| | | | | | | | | 4,566,524 | | | | 1.3 | |
| | | | | | | | | 4,651,313 | | | | 1.3 | |
| | | | | | | | | 9,217,837 | | | | 2.6 | |
|
| |
| | | | | | | | | 4,953,166 | | | | 1.4 | |
| | | | | | | | | 1,571,125 | | | | 0.4 | |
| | | | | | | | | 3,546,699 | | | | 1.0 | |
| | | | | | Mitsubishi Electric Corp. | | | 4,142,345 | | | | 1.2 | |
| | | | | | Shin-Etsu Chemical Co., Ltd. | | | 2,986,162 | | | | 0.9 | |
| | | | | | | | | 17,199,497 | | | | 4.9 | |
|
| |
| | | | | | | | | 4,393,268 | | | | 1.3 | |
| | | | | | Millicom International Cellular SA | | | 3,987,568 | | | | 1.1 | |
| | | | | | | | | 8,380,836 | | | | 2.4 | |
|
| |
| | | | | | European Aeronautic Defence and Space Co. NV | | | 5,167,191 | | | | 1.5 | |
| | | | | | | | | 3,910,728 | | | | 1.1 | |
| | | | | | | | | 9,077,919 | | | | 2.6 | |
|
| |
| | | | | | Mobile Telesystems OJSC ADR | | | 4,733,492 | | | | 1.4 | |
|
| |
| | | | | | | | | 4,340,861 | | | | 1.2 | |
|
| |
| | | | | | | | | 4,651,927 | | | | 1.3 | |
|
| |
| | | | | | | | | 4,870,775 | | | | 1.4 | |
| | | | | | | | | 4,834,476 | | | | 1.4 | |
| | | | | | | | | 3,072,961 | | | | 0.9 | |
| | | | | | | | | 12,778,212 | | | | 3.7 | |
|
| |
| | | | | | | | | 6,854,400 | | | | 2.0 | |
| | | | | | | | | 4,916,240 | | | | 1.4 | |
| | | | | | | | | 2,097,492 | | | | 0.6 | |
| | | | | | | | | 8,563,014 | | | | 2.4 | |
| | | | | | | | | 3,452,313 | | | | 1.0 | |
| | | | | | | | | 25,883,459 | | | | 7.4 | |
|
| |
| | | | | | | | | 4,437,450 | | | | 1.3 | |
| | | | | | | | | 5,010,205 | | | | 1.4 | |
| | | | | | | | | 6,290,316 | | | | 1.8 | |
| | | | | | | | | 7,096,320 | | | | 2.0 | |
| | | | | | | | | 2,762,816 | | | | 0.8 | |
| | | | | | | | | 4,741,083 | | | | 1.4 | |
| | | | | | | | | 6,458,640 | | | | 1.8 | |
| | | | | | EI Du Pont de Nemours & Co. | | | 4,841,010 | | | | 1.4 | |
| | | | | | | | | 6,279,570 | | | | 1.8 | |
| | | | | | Freeport-McMoRan Copper & Gold, Inc. | | | 4,868,442 | | | | 1.4 | |
| | | | | | | | | 7,334,325 | | | | 2.1 | |
| | | | | | | | | 4,341,064 | | | | 1.2 | |
| | | | | | Honeywell International, Inc. | | | 8,935,711 | | | | 2.6 | |
| | | | | | | | | 3,514,522 | | | | 1.0 | |
| | | | | | Lincoln Electric Holdings, Inc. | | | 3,364,114 | | | | 1.0 | |
| | | | | | | | | 7,492,104 | | | | 2.1 | |
| | | | | | | | | 3,090,906 | | | | 0.9 | |
See Accompanying Notes to Financial Statements
1
ING INFRASTRUCTURE, INDUSTRIALS
AND MATERIALS FUND | PORTFOLIO OF INVESTMENTS
AS OFAUGUST 31, 2013 (UNAUDITED) (CONTINUED) |
Shares
|
|
|
|
|
|
|
| Value
|
| Percentage
of Net
Assets
|
|---|
| | | | | | | | | 4,688,931 | | | | 1.3 | |
| | | | | | National Oilwell Varco, Inc. | | | 5,921,710 | | | | 1.7 | |
| | | | | | | | | 1,919,520 | | | | 0.6 | |
| | | | | | | | | 3,069,605 | | | | 0.9 | |
| | | | | | Old Dominion Freight Line | | | 3,165,318 | | | | 0.9 | |
| | | | | | | | | 3,380,946 | | | | 1.0 | |
| | | | | | Patterson-UTI Energy, Inc. | | | 2,787,657 | | | | 0.8 | |
| | | | | | | | | 2,637,526 | | | | 0.8 | |
| | | | | | | | | 3,927,208 | | | | 1.1 | |
| | | | | | | | | 5,591,240 | | | | 1.6 | |
| | | | | | | | | 6,823,242 | | | | 1.9 | |
| | | | | | | | | 3,233,200 | | | | 0.9 | |
| | | | | | | | | 2,494,700 | | | | 0.7 | |
| | | | | | | | | 3,582,880 | | | | 1.0 | |
| | | | | | | | | 8,905,320 | | | | 2.5 | |
| | | | | | | | | 3,938,495 | | | | 1.1 | |
| | | | | | | | | 156,926,096 | | | | 44.8 | |
| |
| | | | | | Total Common Stock
(Cost $301,271,302) | | | 345,795,162 | | | | 98.8 | |
| |
|
| |
| | | | | | | | | 308 | | | | 0.0 | |
| |
| | | | | | | | | 308 | | | | 0.0 | |
| |
| | | | | | Total Long-Term
Investments
(Cost $301,271,302) | | | 345,795,470 | | | | 98.8 | |
| |
SHORT-TERM INVESTMENTS: 1.1% |
| |
| | | | | | BlackRock Liquidity Funds, TempFund, Institutional Class, 0.040%††
(Cost $4,028,000) | | | 4,028,000 | | | | 1.1 | |
| | | | | | Total Short-Term Investments
(Cost $4,028,000) | | | 4,028,000 | | | | 1.1 | |
| | | | | | Total Investments in Securities
(Cost $305,299,302) | | $ | 349,823,470 | | | | 99.9 | |
| | | | | | Assets in Excess of Other Liabilities | | | 500,385 | | | | 0.1 | |
| | | | | | | | $ | 350,323,855 | | | | 100.0 | |
| †† | | Rate shown is the 7-day yield as of August 31, 2013. |
| @ | | Non-income producing security |
| ADR | | American Depositary Receipt |
| | Cost for federal income tax purposes is $305,753,005. |
Net unrealized appreciation consists of: | | | | | | |
Gross Unrealized Appreciation | | | | $ | 64,290,893 | |
Gross Unrealized Depreciation | | | | | (20,220,428 | ) |
Net Unrealized Appreciation | | | | $ | 44,070,465 | |
Industry Diversification
| | | | Percentage
of Net Assets
|
|---|
| | | | | 50.2 | % |
| | | | | 14.0 | |
Telecommunication Services | | | | | 9.0 | |
| | | | | 8.9 | |
Oil & Gas Equipment & Services | | | | | 5.9 | |
| | | | | 2.1 | |
| | | | | 1.7 | |
| | | | | 1.4 | |
Diversified Metals & Mining | | | | | 1.4 | |
| | | | | 1.4 | |
| | | | | 1.0 | |
| | | | | 0.9 | |
Electronic Equipment, Instruments & Components | | | | | 0.5 | |
| | | | | 0.4 | |
| | | | | 0.0 | |
| | | | | 1.1 | |
Assets in Excess of Other Liabilities | | | | | 0.1 | |
| | | | | 100.0 | % |
See Accompanying Notes to Financial Statements
2
ING INFRASTRUCTURE, INDUSTRIALS
AND MATERIALS FUND | PORTFOLIO OF INVESTMENTS
AS OFAUGUST 31, 2013 (UNAUDITED) (CONTINUED) |
Fair Value Measurementsˆ
The following is a summary of the fair valuations according to the inputs used as of August 31, 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
August 31, 2013
|
|---|
| | | | | | | | | | | | | | | | | | |
Investments, at fair value | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | $ | 5,517,340 | | | $ | — | | | $ | — | | | $ | 5,517,340 | |
| | | | | 2,417,511 | | | | — | | | | — | | | | 2,417,511 | |
| | | | | 2,050,840 | | | | — | | | | — | | | | 2,050,840 | |
| | | | | 8,983,100 | | | | 2,393,099 | | | | — | | | | 11,376,199 | |
| | | | | — | | | | 2,398,880 | | | | — | | | | 2,398,880 | |
| | | | | — | | | | 30,757,030 | | | | — | | | | 30,757,030 | |
| | | | | 1,686,821 | | | | 29,948,942 | | | | — | | | | 31,635,763 | |
| | | | | — | | | | 1,522,549 | | | | — | | | | 1,522,549 | |
| | | | | — | | | | 4,928,914 | | | | — | | | | 4,928,914 | |
| | | | | — | | | | 9,217,837 | | | | — | | | | 9,217,837 | |
| | | | | — | | | | 17,199,497 | | | | — | | | | 17,199,497 | |
| | | | | 8,380,836 | | | | — | | | | — | | | | 8,380,836 | |
| | | | | — | | | | 9,077,919 | | | | — | | | | 9,077,919 | |
| | | | | 4,733,492 | | | | — | | | | — | | | | 4,733,492 | |
| | | | | 4,340,861 | | | | — | | | | — | | | | 4,340,861 | |
| | | | | — | | | | 4,651,927 | | | | — | | | | 4,651,927 | |
| | | | | 4,870,775 | | | | 7,907,437 | | | | — | | | | 12,778,212 | |
| | | | | — | | | | 25,883,459 | | | | — | | | | 25,883,459 | |
| | | | | 156,926,096 | | | | — | | | | — | | | | 156,926,096 | |
| | | | | 199,907,672 | | | | 145,887,490 | | | | — | | | | 345,795,162 | |
| | | | | — | | | | 308 | | | | — | | | | 308 | |
| | | | | — | | | | — | | | | — | | | | 4,028,000 | |
Total Investments, at fair value | | | | $ | 199,907,672 | | | $ | 145,887,798 | | | $ | — | | | $ | 349,823,470 | |
| | | | | | | | | | | | | | | | | | |
Other Financial Instruments+ | | | | | | | | | | | | | | | | | | |
| | | | $ | — | | | $ | (624,435 | ) | | $ | — | | | $ | (624,435 | ) |
| | | | $ | — | | | $ | (624,435 | ) | | $ | — | | | $ | (624,435 | ) |
| ˆ | | See Note 2, “Significant Accounting Policies” in the Notes to Financial Statements for additional information. |
| + | | Other Financial Instruments are derivatives not reflected in the Portfolio of Investments and may include open forward foreign currency contracts, 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
3
ING INFRASTRUCTURE, INDUSTRIALS
AND MATERIALS FUND | PORTFOLIO OF INVESTMENTS
AS OFAUGUST 31, 2013 (UNAUDITED) (CONTINUED) |
ING Infrastructure, Industrials and Materials Fund Written OTC Options on August 31, 2013:
Number of
Contracts
|
|
|
| Counterparty
|
| Description
|
| Exercise
Price
|
| Expiration
Date
|
| Premiums
Received
|
| Fair Value
|
|---|
Options on Securities
| | | |
|---|
| | | | | | Call on Custom Basket of
Equity Securities | | | | | | $ | 723,952 | | | $ | (176,891 ) | |
| | | | | | Call on Custom Basket of
Equity Securities | | | | | | | 322,060 | | | | (213,703 ) | |
| | | | | | Call on Custom Basket of
Equity Securities | | | | | | | 537,168 | | | | (120,133 ) | |
| | | | | | Call on Custom Basket of
Equity Securities | | | | | | | 578,239 | | | | (113,708 | ) |
| | | | | | | | | Total Written OTC Options | $ | 2,161,419 | | | $ | (624,435 | ) |
See Accompanying Notes to Financial Statements
4
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-end Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-end Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-end Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
The Board has a Nominating Committee for the purpose of considering and presenting to the Board candidates it proposes for nomination to fill Independent Trustee vacancies on the Board. The Committee currently consists of all Independent Trustees of the Board. (6 individuals). The Nominating Committee operates pursuant to a Charter approved by the Board. The primary purpose of the Nominating Committee is to consider and present to the Board the candidates it proposes for nomination to fill vacancies on the Board. In evaluating candidates, the Nominating Committee may consider a variety of factors, but it has not at this time set any specific minimum qualifications that must be met. Specific qualifications of candidates for Board membership will be based on the needs of the Board at the time of nomination.
The Nominating Committee is willing to consider nominations received from shareholders and shall assess shareholder nominees in the same manner as it reviews its own nominees. A shareholder nominee for director should be submitted in writing to the Fund’s Secretary. Any such shareholder nomination should include at a minimum the following information as to each individual proposed for nomination as trustee: such individual’s written consent to be named in the proxy statement as a nominee (if nominated) and to serve as a trustee (if elected), and all information relating to such individual that is required to be disclosed in the solicitation of proxies for election of trustees, or is otherwise required, in each case under applicable federal securities laws, rules and regulations.
The secretary shall submit all nominations received in a timely manner to the Nominating Committee. To be timely, any such submission must be delivered to the Fund’s Secretary not earlier than the 90th day prior to such meeting and not later than the close of business on the later of the 60th day prior to such meeting or the 10th day following the day on which public announcement of the date of the meeting is first made, by either disclosure in a press release or in a document publicly filed by the Fund with the Securities and Exchange Commission.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): ING Infrastructure, Industrials and Materials
| | |
| By: | | /s/ Shaun P. Mathews |
| | Shaun P. Mathews |
| | President and Chief Executive Officer |
Date: November 5, 2013
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | |
| By: | | /s/ Shaun P. Mathews |
| | Shaun P. Mathews |
| | President and Chief Executive Officer |
Date: November 5, 2013
| | |
| By | | /s/ Todd Modic |
| | Todd Modic |
| | Senior Vice President and Chief Financial Officer |
Date: November 5, 2013
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