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ING MUTUAL FUNDS - Notes to Mutual Funds Financial Statements - 7-9-2008

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ING MUTUAL FUNDS - Notes to Mutual Funds Financial Statements - 7-9-2008 Powered By Docstoc
					        NOTES TO FINANCIAL STATEMENTS AS OF APRIL 30, 2008 (UNAUDITED )
     




     




NOTE 1 — ORGANIZATION
     




Organization.  The ING Funds included in this report are comprised of ING Mutual Funds 
(“IMF”) and ING Mayflower Trust (“IMT”) (each a “Registrant” and collectively, the
“Registrants”); both are organized as open-end investment management companies
registered under the Investment Company Act of 1940, as amended (“1940 Act”).
     




IMF is a Delaware statutory trust organized December 18, 1992 with twenty-two separate
active series, all of which are included in this report, (each, a “Fund” and collectively, the
“IMF Funds”): ING Global Equity Dividend Fund (“Global Equity Dividend”), ING Global
Natural Resources Fund (“Global Natural Resources”), ING Global Real Estate Fund
(“Global Real Estate”), ING Global Value Choice Fund (“Global Value Choice”), ING Asia-
Pacific Real Estate Fund (Asia-Pacific Real Estate), ING Disciplined International
SmallCap Fund (“Disciplined International SmallCap”), ING Emerging Countries Fund
(“Emerging Countries”), ING European Real Estate Fund (European Real Estate), ING
Foreign Fund (“Foreign”), ING Greater China Fund (“Greater China”), ING Index Plus
International Equity Fund (“Index Plus International Equity”), ING International Capital
Appreciation Fund (“International Capital Appreciation”), ING International Equity
Dividend Fund (“International Equity Dividend”), ING International Growth Opportunities
Fund (“International Growth Opportunities”), ING International Real Estate Fund
(“International Real Estate”), ING International SmallCap Multi-Manager Fund
(“International SmallCap Multi-Manager”), ING International Value Choice Fund
(“International Value Choice”), ING International Value Opportunities Fund (“International
Value Opportunities”), ING Russia Fund (“Russia”), ING Emerging Markets Fixed Income
Fund (“Emerging Markets Fixed Income”), ING Global Bond Fund (“Global Bond”) and
ING Diversified International Fund (“Diversified International”). IMT is a Massachusetts
business trust organized August 18, 1993 with one series, ING International Value Fund 
(“International Value”) (a “Fund” and together with the IMF Funds, the “Funds”). The
investment objective of each Fund is described in the Funds’ prospectuses.
     




Each Fund offers at least one or more of the following classes of shares: Class A, 
Class B, Class C, Class I, Class O, Class Q, Class R and Class W. The separate 
classes of shares differ principally in the applicable sales charges (if any), distribution
fees and shareholder servicing fees and transfer agent fees. Generally, shareholders of
each class also bear certain expenses that pertain to that particular class. All
shareholders bear the common expenses of the Fund and earn income and realized
gains/losses from the portfolio pro rata based on the average daily net assets of each
class, without distinction between share classes. Common expenses of the Funds
(including custodial asset-based fees, legal and audit fees, printing and mailing
expenses, transfer agency out-of-pocket expenses, and fees and expenses of the
independent trustees) are allocated to each Fund in proportion to its relative daily net
assets. Expenses directly attributable to a particular fund (including advisory,
administration, custodial transaction-based, registration, other professional, distribution
and/or service fees, certain taxes, and offering costs) are charged directly to that Fund.
Differences in per share dividend rates generally result from the differences in separate
class expenses, including distribution and shareholder servicing fees. Class B shares, 
along with their pro rata reinvested dividend shares, automatically convert to Class A 
shares eight years after purchase.
     




International Value is closed to new investments except for shares purchased: (1) through 
the reinvestment of dividends and distributions; (2) by 401(k), 403(b) and 457 plans that 
have selected International Value as an investment option prior to June 28, 2002; (3) by
shareholders participating in mutual fund wrap fee programs who were invested in
International Value prior to June 28, 2002; (4) by new 401(k), 403(b) and 457 plans and 
new shareholders participating in mutual fund wrap fee programs subject to approval by
the Investment Adviser and Sub-Adviser based on their assessment of the Fund’s ability
to invest the monies consistent with the Fund’s objectives in light of market conditions, the
size of the purchase, and other relevant factors relating to International Value; (5) by 
certain institutional and separately managed account investors that are pre-existing
clients of the Sub-Adviser; and (6) by employees of the Investment Adviser or 
Sub-Adviser and their affiliates. Proof of eligibility may be required. Institutional and
separately managed account investors that are pre-existing clients of the
Sub-Adviser and employees of the Investment Adviser or Sub-Adviser and their affiliates
must identify themselves as such at the time of purchase. Failure to do so may result in a
rejection of the purchase. The Fund may reopen in the future subject to the discretion of
the Board of Trustees of IMT.


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           NOTES TO FINANCIAL STATEMENTS AS OF APRIL 30, 2008 (UNAUDITED ) (CONTINUED)
        




   NOTE 1 — ORGANIZATION (continued)
        




   Effective January 2, 2007, Class M shareholders of Emerging Countries were converted 
   to Class A shares of Emerging Countries. In addition, Emerging Countries does not 
   impose any front-end sales charge (load) on purchases of Class A shares of Emerging 
   Countries by its former Class M shareholders for the life of their account. 
        




   Diversified International seeks to achieve its investment objective by investing in other
   ING Funds (“Underlying Funds”) and uses asset allocation strategies to determine how
   much to invest in the Underlying Funds.
        




   NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES
        




   The following significant accounting policies are consistently followed by the Funds in the
   preparation of their financial statements, and such policies are in conformity with
   U.S. generally accepted accounting principles for investment companies. 
        




   A. Security Valuation.  For all Funds except Russia and Diversified International, 
      investments in equity securities traded on a national securities exchange are valued at
      the last reported sale price. Securities reported by National Association of Securities
      Dealers Automated Quotation System (“NASDAQ”) will be valued at the NASDAQ
      official closing prices. Securities traded on an exchange or NASDAQ for which there
      has been no sale, securities traded in the over-the-counter-market, gold and silver
      bullion, platinum and palladium are valued at the mean between the last reported bid
      and ask prices. All investments quoted in foreign currencies will be valued daily in
      U.S. dollars on the basis of the foreign currency exchange rates prevailing at that time. 
      Debt securities are valued at prices obtained from independent services or from one
      or more dealers making markets in the securities and may be adjusted based on the
      Funds’ valuation procedures. U.S. government obligations are valued by using market 
      quotations or independent pricing services that use prices provided by market-makers
      or estimates of market values obtained from yield data relating to instruments or
      securities with similar characteristics.
        




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




           The value of a foreign security traded on an exchange outside the United States is
           generally based on its price on the principal foreign exchange where it trades as of the
           time a Fund determines its NAV or if the foreign exchange closes prior to the time the
           Fund determines its NAV, the most recent closing price of the foreign security on its
           principal exchange. Trading in certain non-U.S. securities may not take place on all
           days on which the New York Stock Exchange (“NYSE”) is open. Further, trading takes
           place in various foreign markets on days on which the NYSE is not open.
           Consequently, the calculation of a Fund’s NAV may not take place contemporaneously
           with the determination of the prices of securities held by a Fund in foreign securities
           markets. Further, the value of a Fund’s assets may be significantly affected by foreign
        trading on days when a shareholder cannot purchase or redeem shares of the Fund. In
        calculating a Fund’s NAV, foreign securities in foreign currency are converted to
        U.S. dollar equivalents. 
     




        If an event occurs after the time at which the market for foreign securities held by a
        Fund


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           NOTES TO FINANCIAL STATEMENTS AS OF APRIL 30, 2008 (UNAUDITED ) (CONTINUED)
        




   NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (continued)
        




           closes but before the time that a Fund’s next NAV is calculated, such event may cause
           the closing price on the foreign exchange to not represent a readily available reliable
           market value quotation for such securities at the time a Fund determines its NAV. In
           such a case, a Fund will use the fair value of such securities as determined under the
           Funds’ valuation procedures. Events after the close of trading on a foreign market that
           could require a Fund to fair value some or all of its foreign securities include, among
           others, securities trading in the U.S. and other markets, corporate announcements,
           natural and other disasters, and political and other events. Among other elements of
           analysis in the determination of a security’s fair value, the Board has authorized the use
           of one or more independent research services to assist with such determinations. An
           independent research service may use statistical analyses and quantitative models to
           help determine fair value as of the time a Fund calculates its NAV. There can be no
           assurance that such models accurately reflect the behavior of the applicable markets
           or the effect of the behavior of such markets on the fair value of securities, or that such
           markets will continue to behave in a fashion that is consistent with such models. Unlike
           the closing price of a security on an exchange, fair value determinations employ
           elements of judgment. Consequently, the fair value assigned to a security may not
           represent the actual value that a Fund could obtain if it were to sell the security at the
           time of the close of the NYSE. Pursuant to procedures adopted by the Board, a Fund is
           not obligated to use the fair valuations suggested by any research service, and
           valuation recommendations provided by such research services may be overridden if
           other events have occurred or if other fair valuations are determined in good faith to be
           more accurate. Unless an event is such that it causes a Fund to determine that the
           closing prices for one or more securities do not represent readily available reliable
           market value quotations at the time the Fund determines its NAV, events that occur
           between the time of the close of the foreign market on which they are traded and the
           close of regular trading on the NYSE will not be reflected in the Fund’s NAV.
           Investments in securities maturing in 60 days or less are valued at amortized cost, 
           which, when combined with accrued interest approximates market value.
        




           For the Russia Fund, the valuation procedures for Russian equity securities are to
           price local shares according to the most recent available bid prices. If securities are
           not listed on the Russian Trade System (the “RTS”) or on any other pricing service that
           lists available bid quotes, then the mean of at least two broker bid quotes is used. For
           equity securities of an issuer in Russia for which there are no readily available reliable
           market value quotations, the following benchmark pricing procedure shall apply on any
           day on which the largest securities exchange in Russia declines by 2.5% or more; the
           price of the security shall be adjusted by the amount of the downward change in a
           composite of the other companies that are publicly traded in the same sector as the
           issuer, if ascertainable, and if not ascertainable, by the amount of downward change in
           the RTS.
        




           For Diversified International and other Funds with holdings in open end investment
           companies, the valuations of the Funds’ investments in Underlying Funds are based on
           the NAVs of the Underlying Funds each business day. In general, assets of the
           Underlying Funds are valued based on actual or estimated market value, with special
           provisions for assets not having readily available market quotations and short-term
           debt securities, and for situations where market quotations are deemed unreliable.
           Investments in securities maturing in 60 days or less are valued at amortized cost, 
           which approximates market value. Securities prices may be obtained from automated
           pricing services. Shares of investment companies held by the Underlying Funds will
           generally be valued at the latest NAV reported by that investment company.
        




   B. Security Transactions and Revenue Recognition.  Securities transactions are 
      accounted for on the trade date. Realized gains and losses are reported on the basis
      of identified cost of securities sold. Interest income is recorded on an accrual basis.
      Dividend income is recorded, net of any applicable withholding tax, on the ex-dividend
      date, or for certain foreign securities, when the information becomes available to the
        Funds. Premium amortization and discount accretion are determined by the effective
        yield method.
     




        For Diversified International, capital gain dividends from Underlying Funds are
        recorded as distributions of realized gains from affiliated Underlying Funds.


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           NOTES TO FINANCIAL STATEMENTS AS OF APRIL 30, 2008 (UNAUDITED ) (CONTINUED)
        




   NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (continued)
        




           Global Real Estate and International Real Estate estimate components of distributions
           from real estate investment trusts (“REITs”). Distributions received in excess of income
           are recorded as a reduction of cost of the related investments. If the Funds no longer
           own the applicable securities, any distributions received in excess of income are
           recorded as realized gains.
        




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




              (1)  Market value of investment securities, other assets and liabilities — at the
        
                   exchange rates prevailing at the end of the day.
              (2)  Purchases and sales of investment securities, income and expenses — at the
                   rates of exchange prevailing on the respective dates of such transactions.
        




           Although the net assets and the market values are presented at the foreign exchange
           rates at the end of the day, the Funds and Underlying Funds do not isolate the portion
           of the results of operations resulting from changes in foreign exchange rates on
           investments from the fluctuations arising from changes in market prices of securities
           held. Such fluctuations are included with the net realized and unrealized gains or losses
           from investments. For securities that are subject to foreign withholding tax upon
           disposition, liabilities are recorded on the Statements of Assets and Liabilities for the
           estimated tax withholding based on the securities’ current market value. Upon
           disposition, realized gains or losses on such securities are recorded net of foreign
           withholding tax.
        




           Reported net realized foreign exchange gains or losses arise from sales of foreign
           currencies, currency gains or losses realized between the trade and settlement dates
           on securities transactions, the difference between the amounts of dividends, interest,
           and foreign withholding taxes recorded on a Fund’s or an Underlying Fund’s books,
           and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized 
           foreign exchange gains and losses arise from changes in the value of assets and
           liabilities other than investments in securities at fiscal year end, resulting from changes
           in the exchange rate. Foreign security and currency transactions may involve certain
           considerations and risks not typically associated with investing in U.S. companies and 
           U.S. government securities. These risks include, but are not limited to revaluation of 
           currencies and future adverse political and economic developments which could cause
           securities and their markets to be less liquid and prices more volatile than those of
           comparable U.S. companies and U.S. government securities. The foregoing risks are 
           even greater with respect to securities of issuers in emerging markets.
        




   D. Foreign Currency Transactions and Futures Contracts.  Each Fund and Underlying 
      Fund may enter into foreign currency exchange transactions to convert to and from
      different foreign currencies and to and from the U.S. dollar, generally in connection with
      the planned purchases or sales of securities. The Funds and Underlying Funds either
      enter into these transactions on a spot basis at the spot rate prevailing in the foreign
      currency exchange market or may use forward foreign currency contracts to purchase
      or sell foreign currencies. When the contract is fulfilled or closed, gains or losses are
      realized. Until then, the gain or loss is included in unrealized appreciation or
      depreciation. Risks may arise upon entering into forward contracts from the potential
      inability of counterparties to meet the terms of their forward contracts and from
      unanticipated movements in the value of foreign currencies relative to the U.S. dollar. 
        




           Each Fund and Underlying Fund may enter into futures contracts involving foreign
           currency, interest rates, securities and securities indices. Each Fund and Underlying
           Fund intends to limit its use of futures contracts and futures options to “bona fide
           hedging” transactions, as such term is defined in applicable regulations, interpretations
           and practice. A futures contract obligates the seller of the contract to deliver and the
purchaser of the contract to take delivery of the type of foreign currency, financial
instrument or security called for in the contract at a specified future time for a specified
price. Upon entering into such a contract, a Fund or an Underlying Fund


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           NOTES TO FINANCIAL STATEMENTS AS OF APRIL 30, 2008 (UNAUDITED ) (CONTINUED)
        




   NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (continued)
        




           is required to deposit and maintain as collateral such initial margin as required by the
           exchange on which the contract is traded. Pursuant to the contract, a Fund or an
           Underlying Fund agrees to receive from or pay to the broker an amount equal to the
           daily fluctuations in the value of the contract. Such receipts or payments are known as
           variation margin and are recorded as unrealized gains or losses by the Fund or an
           Underlying Fund. When the contract is closed, the Fund or Underlying Fund records a
           realized gain or loss equal to the difference between the value of the contract at the
           time it was opened and the value at the time it was closed.
        




   E. Distributions to Shareholders.  The Funds record distributions to their shareholders on
      ex-dividend date. Each Fund pays dividends and capital gains, if any, annually (except,
      Global Equity Dividend, Global Real Estate Asia-Pacific Real Estate, European Real
      Estate, International Equity Dividend and International Real Estate, which pay
      dividends, if any, quarterly and Emerging Markets Fixed Income and Global Bond,
      which pay dividends monthly). The Funds may make distributions on a more frequent
      basis to comply with the distribution requirements of the Internal Revenue Code. The
      characteristics of income and gains to be distributed are determined in accordance
      with income tax regulations, which may differ from U.S. generally accepted accounting 
      principles for investment companies.
        




   F. Federal Income Taxes.  It is the policy of the Funds to comply with subchapter M of the
      Internal Revenue Code and related excise tax provisions applicable to regulated
      investment companies and to distribute substantially all of their net investment income
      and any net realized capital gains to their shareholders. Therefore, no federal income
      tax provision is required. No capital gain distributions shall be made until any capital
      loss carryforwards have been fully utilized or expire.
        




           The Funds may utilize equalization accounting for tax purposes, whereby a portion of
           redemption payments are treated as distributions of income or gain.
        




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




   H. Organization Expenses and Offering Costs.  Costs incurred with the organization of 
      the Funds and Underlying Funds are expensed as incurred. Costs incurred with the
      offering of shares of the Funds and Underlying Funds are deferred and amortized over
      a twelve-month period on a straight-line basis.
        




   I.   Repurchase Agreements.  Each Fund and Underlying Fund may invest in repurchase 
        agreements only with government securities dealers recognized by the Board of
        Governors of the Federal Reserve System. Under such agreements, the seller of the
        security agrees to repurchase it at a mutually agreed upon time and price. The resale
        price is in excess of the purchase price and reflects an agreed upon interest rate for
        the period of time the agreement is outstanding. The period of the repurchase
        agreements is usually short, from overnight to one week, while the underlying securities
        generally have longer maturities. Each Fund and Underlying Fund will receive as
        collateral securities acceptable to it whose market value is equal to at least 100% of
        the carrying amount of the repurchase agreements, plus accrued interest, being
        invested by the Fund or Underlying Fund. The underlying collateral is valued daily on a
        mark to market basis to assure that the value, including accrued interest is at least
        equal to the repurchase price. There would be potential loss to the Fund or Underlying
        Fund in the event the Fund or Underlying Fund is delayed or prevented from exercising
        its right to dispose of the collateral, and it might incur disposition costs in liquidating
        the collateral.
        
J.  Securities Lending.  Each Fund and Underlying Fund has the option to temporarily 
    loan up to 30% of its total assets to brokers, dealers or other financial institutions in
    exchange for a negotiated lender’s fee. The borrower is required to fully collateralize
    the loans with cash or U.S. government securities. Generally, in the event of 
    counterparty default, each Fund and


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           NOTES TO FINANCIAL STATEMENTS AS OF APRIL 30, 2008 (UNAUDITED ) (CONTINUED)
        




   NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (continued)
        




           Underlying Fund has the right to use collateral to offset losses incurred. There would be
           potential loss to a Fund or Underlying Fund in the event the Fund or Underlying Fund is
           delayed or prevented from exercising its right to dispose of the collateral. Each Fund
           and Underlying Fund bears the risk of loss with respect to the investment of collateral.
           Engaging in securities lending could have a leveraging effect, which may intensify the
           credit, market and other risks associated with investing in a Fund or Underlying Fund.
        




   K. Options Contracts.  All Funds and Underlying Funds may purchase put and call options
      and may write (sell) put options and covered call options. The Funds and Underlying 
      Funds may engage in option transactions as a hedge against adverse movements in
      the value of portfolio holdings or to increase market exposure. Option contracts are
      valued daily and unrealized gains or losses are recorded based upon the last sales
      price on the principal exchange on which the options are traded. The Funds and
      Underlying Funds will realize a gain or loss upon the expiration or closing of the option
      contract. When an option is exercised, the proceeds on sales of the underlying security
      for a written call option, the purchase cost of the security for a written put option, or the
      cost of the security for a purchased put or call option is adjusted by the amount of
      premium received or paid. Realized and unrealized gains or losses on option
      contracts are reflected in the accompanying financial statements. The value of an
      option purchased or written is marked to market daily and is valued at the closing price
      on the exchange on which it is traded or, if not traded on an exchange or no closing
      price is available, at the mean between last bid and asked prices. The risk in writing a
      covered call option is that the Funds and Underlying Funds give up the opportunity for
      profit if the market price of the security increases and the option is exercised. The risk
      in writing a put option is that the Funds and Underlying Funds may incur a loss if the
      market price of the security decreases and the option is exercised. The risk in buying
      an option is that the Funds and Underlying Funds pay 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.
        




   L. Swap Contracts.  Certain Funds and Underlying Funds may enter into interest rate 
      swaps, currency swaps and other types of swap agreements, including swaps on
      securities and indices. A swap is an agreement between two parties pursuant to which
      each party agrees to make one or more payments to the other on regularly scheduled
      dates over a stated term, based on different interest rates, currency exchange rates,
      security prices, the prices or rates of other types of financial instruments or assets or
      the levels of specified indices. During the term of the swap, changes in the value of the
      swap are recognized as unrealized appreciation or depreciation.
        




   M.  Illiquid and Restricted Securities.  Each Fund and Underlying Fund may not invest 
       more than 15% of its net assets in illiquid securities. Illiquid securities are not readily
       marketable. Disposing of illiquid investments may involve time-consuming negotiation
       and legal expenses, and it may be difficult or impossible for the Funds and Underlying
       Funds to sell them promptly at an acceptable price. Each Fund and Underlying Fund
       may also invest in restricted securities which include those sold under Rule 144A of 
       the Securities Act of 1933 (“1933 Act”) or securities offered pursuant to Section 4(2) 
       of the 1933 Act, and/or are subject to legal or contractual restrictions on resale and 
       may not be publicly sold without registration under the 1933 Act. Certain restricted 
       securities may be considered liquid pursuant to procedures adopted by the Board or
       may be deemed illiquid because they may not be readily marketable. Illiquid and
       restricted securities are valued using market quotations when readily available. In the 
       absence of market quotations, the securities are valued based upon their fair value
       determined in good faith under procedures approved by the Board.
        




   N. Delayed Delivery or When-Issued Transaction.  The Funds and Underlying Funds 
      may purchase or sell securities on a when-issued or forward commitment basis. The
      price of the securities and date when the securities will be delivered and paid for are
      fixed at the time the transaction is negotiated. The market value of these securities is
identified in each Fund’s


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           NOTES TO FINANCIAL STATEMENTS AS OF APRIL 30, 2008 (UNAUDITED ) (CONTINUED)
        




   NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (continued)
        




           Portfolio of Investments. Losses may arise due to changes in the market value of the
           securities or from the inability of counterparties to meet the terms of the contract. In
           connection with such purchases, the Funds and Underlying Funds are required to
           segregate liquid assets sufficient to cover the purchase price.
        




   NOTE 3 — INVESTMENT TRANSACTIONS
        




   For the six months ended April 30, 2008, the cost of purchases and the proceeds from 
   the sales of securities, excluding U.S. government and short-term securities, were as
   follows:
        

                                                                                                                                                                        




                                                                                                  Non U.S. Government
                                                                                          Purchases                 Sales
        




   Global Equity Dividend                                                             $ 47,726,190                                               $ 107,825,609  
   Global Natural Resources                                                            113,910,108                                                 120,064,236  
   Global Real Estate                                                                  486,627,576                                                 295,680,350  
   Global Value Choice                                                                  39,141,177                                                 43,006,812  
   Asia-Pacific Real Estate                                                             7,778,269                                                     2,037,313  
   Disciplined International SmallCap                                                  234,734,623                                                 261,188,368  
   Emerging Countries                                                                   47,626,461                                                 88,618,862  
   European Real Estate                                                                 10,285,557                                                    4,230,938  
   Foreign                                                                             225,711,836                                                 236,122,922  
   Greater China                                                                        56,306,302                                                 68,080,189  
   Index Plus International Equity                                                     373,598,200                                                 195,281,891  
   International Capital Appreciation                                                   56,245,413                                                 40,487,203  
   International Equity Dividend                                                        20,971,949                                                    8,295,638  
   International Growth Opportunities                                                   89,983,645                                                 96,442,510  
   International Real Estate                                                           341,515,421                                                 126,936,762  
   International SmallCap Multi-Manager                                                356,700,084                                                 458,763,059  
   International Value                                                                 537,944,358                                                1,178,345,997  
   International Value Choice                                                           24,762,038                                                 28,759,704  
   International Value Opportunities                                                    1,785,862                                                     1,993,458  
   Russia                                                                              223,026,163                                                 244,229,540  
   Emerging Markets Fixed Income                                                        60,040,319                                                 58,004,752  
   Global Bond                                                                          44,215,523                                                 28,492,068  
   Diversified International                                                           177,833,363                                                 134,665,264  
        




   Purchase and sales of long-term U.S. government securities not included above were as 
   follows:
        

                                                                                                                                                                                  




                                                                                                Purchases                                                Sales
        




   Global Bond                                                                            $230,444,986                                               $214,517,237  
        




   NOTE 4 — REDEMPTION FEES
        




   A 2% redemption fee is charged on shares of Russia that are redeemed (included in
   connection with an exchange) within 365 days or less from their date of purchase. The 
   redemption fee is recorded as an addition to paid-in capital. Total redemption fee
   proceeds for the six months ended April 30, 2008 and year ended October 31, 2007 
   were $322,893 and $3,086,432, respectively, and are set forth in the Statements of
   Changes in Net Assets.
        




   NOTE 5 — INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES
        




   Each of the Funds has entered into an investment management agreement
   (“Management Agreements”) with ING Investments, LLC (“ING Investments” or “Investment
   Adviser”). The Management Agreements compensate the Investment Adviser with a fee,
   computed daily and payable monthly, based on the average daily net assets of each
   Fund, at the following annual rates:
        

                                                                   




                                                                                               As a Percentage of Average Net Assets
        




   Global Equity Dividend                                     0.70%
   Global Natural Resources                                   1.00% on first $50 million; and 0.75% thereafter 
   Global Real Estate                                         0.80% on the first $250 million; 0.775% on the next $250 million; and 0.70% 
                                                              thereafter
   Global Value Choice (1)                                    0.90% on the first $500 million; 0.80% on the next $500 million; and 0.75% 
                                          thereafter
Asia-Pacific Real Estate                  1.00% on the first $250 million; 0.90% on the next $250 million; 0.80% 
                                          thereafter
Disciplined International SmallCap        0.60%
Emerging Countries                        1.25%
European Real Estate                      1.00% on the first $250 million; 0.90% on the next $250 million; 0.80% 
                                          thereafter
Foreign (2)                               1.00% on the first $500 million; and 0.90% thereafter 
Greater China                             1.15% on the first $100 million; 1.05% on the next $150 million; and 0.95% 
                                          thereafter
Index Plus International Equity           0.55%
International Capital Appreciation        0.85% on the first $500 million; 0.80% on the next $500 million; and 0.75% 
                                          thereafter
International Equity Dividend             0.75%
International Growth Opportunities        1.00%
International Real Estate                 1.00% on the first $250 million; 0.90% on the next $250 million; and 0.80% 
                                          thereafter
International SmallCap                    1.00% on first $500 million; 
Multi-Manager                             0.90% on next $500 million; and 
                                          0.85% thereafter
International Value                       1.00%
International Value Choice                1.00%
International Value Opportunities         0.80% on first $1 billion; and 
                                          0.75% thereafter
Russia                                    1.25%
Emerging Markets Fixed Income             0.65% on the first $250 million; 0.60% on the next $250 million; and 0.55% 
                                          thereafter
Global Bond                               0.40%
Diversified International                 0.00%




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           NOTES TO FINANCIAL STATEMENTS AS OF APRIL 30, 2008 (UNAUDITED ) (CONTINUED)
        




   NOTE 5 — INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES
   (continued)
        




   (1) Prior to January 2, 2008, the fee was 1.00% on the first $250 million, 0.90% on the next $250 million, 0.80% on the next 
      $500 million, and 0.75% thereafter. 
        




   (2) Effective July 31, 2007, ING Investments has contractually agreed to waive a portion of the advisory fee for ING Foreign 
      Fund. This advisory fee waiver will continue through at least May 1, 2009. There is no guarantee that this waiver will 
      continue after this date. This agreement will only renew if ING Investments elects to renew it.
        




   ING Investments has contractually agreed to waive a portion of the advisory fee for
   Foreign. The waiver is calculated as 50% of the difference between the former sub-
   advisory fee minus the new sub-advisory fee.
        




   For the six months ended April 30, 2008, ING Investments waived $16,587 for Foreign. 
        




   ING Investment Management Advisors B.V. (“IIMA”), a registered investment adviser,
   serves as the Sub-Adviser to Global Equity Dividend, Index Plus International Equity,
   International Equity Dividend, International Value Opportunities, Russia and Emerging
   Markets Fixed Income pursuant to a sub-advisory agreement between the Investment
   Adviser and IIMA.
        




   ING Clarion Real Estate Securities L.P. (“ING CRES”) a registered investment adviser,
   serves as the Sub-Adviser to Asia-Pacific Real Estate, European Real Estate, Global
   Real Estate and International Real Estate pursuant to a sub-advisory agreement between
   the Investment Adviser and ING CRES.
        




   Tradewinds Global Investors, LLC (“Tradewinds”), a registered investment adviser,
   serves as the Sub-Adviser to Global Value Choice and International Value Choice
   pursuant to a sub-advisory agreement between the Investment Adviser and Tradewinds.
        




   Brandes Investment Partners, L.P. (“Brandes”), a registered investment adviser, serves
   as the Sub-Adviser to Emerging Countries and International Value pursuant to a sub-
   advisory agreement between the Investment Adviser and Brandes.
        




   Artio Global Investment Management LLC (whose name changed on June 15, 2008 from 
   Julius Baer Investment Management LLC), a registered investment adviser, serves as
   Sub-Adviser to Foreign pursuant to a sub-advisory agreement between the Investment
   Adviser and the sub-adviser.
        




   ING Investment Management Co. (“ING IM”), a registered investment adviser, serves as
   sub-adviser to Disciplined International SmallCap, Global Natural Resources,
   International Growth Opportunities and Global Bond pursuant to a sub-advisory
   agreement between the Investment Adviser and ING IM.
        




   Acadian Asset Management, Inc. (“Acadian”), a registered investment adviser, serves as
   one of the Sub-Advisers to International SmallCap Multi-Manager pursuant to a sub-
   advisory agreement between the Investment Adviser and Acadian. Batterymarch
   Financial Management, Inc. (“Batterymarch”) serves as the second Sub-Adviser to
   International SmallCap Multi-Manager pursuant to a sub-advisory agreement between the
   Investment Adviser and Batterymarch. Schroder Investment Management North America,
   Inc. (“Schroders”), serves as the third Sub-Adviser to International SmallCap Multi-
   Manager pursuant to a sub-advisory agreement between the Investment Adviser and
   Schroders.
        




   ING Investment Management Asia/Pacific (Hong Kong) Limited (“ING Asia”), a registered
   investment adviser, serves as the Sub-Adviser to Greater China pursuant to a sub-
   advisory agreement between the Investment Adviser and ING Asia.
        




   Hansberger Global Investors, Inc. (“HGI”), a registered investment adviser, serves as the
   Sub-Adviser to International Capital Appreciation pursuant to a sub-advisory agreement
   between the Investment Adviser and HGI.
        




   For Diversified International, ING Investment Management Co. (the “Consultant” or “ING
IM”) is a consultant to the Investment Adviser. The Consultant provides tactical allocation
recommendations to the Investment Adviser. The Investment Adviser has set up an
Investment Committee made up of a team of professionals to consider, review and
implement the recommendations of the Consultant, and retains discretion over
implementation of the Consultant’s recommendations. The Consultant provides ongoing
recommendations to the Investment Committee of the Investment Adviser quarterly or as
warranted by market conditions.
     




ING Funds are permitted to invest end-of-day cash balances into ING Institutional Prime
Money Market Fund. Investment management fees paid by the Funds will be reduced by
an amount equal to the management fees paid indirectly to ING Institutional Prime Money
Market Fund with respect to assets invested by the Funds. For the six months ended
April 30, 2008, Global Natural Resources, Index Plus 


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           NOTES TO FINANCIAL STATEMENTS AS OF APRIL 30, 2008 (UNAUDITED ) (CONTINUED)
        




   NOTE 5 — INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES
   (continued)
        




   International Equity, International Growth Opportunities and Global Bond waived $141,
   $57, $1,209 and $5,095 of such management fees, respectively. These fees are not
   subject to recoupment.
        




   ING Funds Services, LLC (the “Administrator”), serves as administrator to each Fund.
   The Funds pay the Administrator a fee calculated at an annual rate of 0.10% of each
   Fund’s average daily net assets.
        




   International Value also pays the Administrator an annual shareholder account-servicing
   fee of $5.00 for each account of beneficial owners of shares.
        




   The Investment Adviser, ING IM, ING CRES, IIMA, ING Asia and the Administrator are 
   indirect, wholly-owned subsidiaries of ING Groep N.V. (“ING Groep”). ING Groep is one of
   the largest financial services organizations in the world, and offers an array of banking,
   insurance and asset management services to both individual and institutional investors.
        




   NOTE 6 — DISTRIBUTION AND SERVICE FEES
        




   Each share class of the Funds, except Class I and Class W, has adopted a Plan pursuant
   to Rule 12b-1 under the 1940 Act (the “12b-1 Plans”), whereby ING Funds Distributor,
   LLC (“IFD” or the “Distributor”), an indirect, wholly-owned subsidiary of ING Groep, is
   reimbursed or compensated (depending on the class of shares) by the Funds for
   expenses incurred in the distribution of each Funds’ shares (“Distribution Fees”).
   Pursuant to the 12b-1 Plans, the Distributor is entitled to a payment each month for
   expenses incurred in the distribution and promotion of each Fund’s shares, including
   expenses incurred in printing prospectuses and reports used for sales purposes,
   expenses incurred in preparing and printing sales literature and other such distribution
   related expenses, including any distribution or shareholder servicing fees (“Service
   Fees”) paid to securities dealers who have executed a distribution agreement with the
   Distributor. Under the 12b-1 Plans, each class of shares of a Fund pays the Distributor a
   Distribution and/or Service Fee based on average daily net assets at the following annual
   rates:
        

                                                                                                                                                                                                                 




                                                               Class A                  Class B   Class C                                 Class O                     Class Q                        Class R
        




   Global Equity Dividend                                       0.25%                    1.00%                  1.00%                       0.25%                       N/A                            N/A   
   Global Natural Resources                                     0.25%                     N/A                    N/A                         N/A                        N/A                            N/A   
   Global Real Estate                                           0.25%                    1.00%                  1.00%                       0.25%                       N/A                            N/A   
   Global Value Choice                                          0.25%(1)                 1.00%                  1.00%                        N/A                       0.25%                           N/A   
   Asia-Pacific Real Estate                                     0.25%                    1.00%                  1.00%                        N/A                        N/A                            N/A   
   Disciplined International SmallCap                           0.25%                    1.00%                  1.00%                        N/A                        N/A                            N/A   
   Emerging Countries                                           0.35%(2)                 1.00%                  1.00%                        N/A                       0.25%                           N/A   
   European Real Estate                                         0.25%                    1.00%                  1.00%                        N/A                        N/A                            N/A   
   Foreign                                                      0.25%                    1.00%                  1.00%                        N/A                       0.25%                           N/A   
   Greater China                                                0.25%                    1.00%                  1.00%                        N/A                        N/A                            N/A   
   Index Plus International Equity                              0.25%                    1.00%                  1.00%                       0.25%                       N/A                            N/A   
   International Capital Appreciation                           0.25%                    1.00%                  1.00%                        N/A                        N/A                            N/A   
   International Equity Dividend                                0.25%                    1.00%                  1.00%                        N/A                        N/A                            N/A   
   International Growth Opportunities                           0.25%                    1.00%                  1.00%                        N/A                       0.25%                           N/A   
   International Real Estate                                    0.25%                    1.00%                  1.00%                        N/A                        N/A                            N/A   
   International SmallCap Multi-Manager                         0.35%                    1.00%                  1.00%                        N/A                       0.25%                           N/A   
   International Value                                          0.30%                    1.00%                  1.00%         (3)            N/A                       0.25%         (3)               N/A   
   International Value Choice                                   0.25%                    1.00%                  1.00%                        N/A                        N/A                            N/A   
   International Value Opportunities                            0.25%                    1.00%                  1.00%                        N/A                        N/A                            N/A   
   Russia                                                       0.25%                     N/A                    N/A                         N/A                        N/A                            N/A   
   Emerging Markets Fixed Income                                0.25%                    1.00%                  1.00%                        N/A                        N/A                            N/A   
   Global Bond                                                  0.25%                    1.00%                  1.00%                        N/A                        N/A                            N/A   
   Diversified International                                    0.25%                    1.00%                  1.00%                        N/A                        N/A                           0.50%
        




   (1) Prior to January 2, 2008 the fee for Global Value Choice Class A was 0.35%. 
     
        




   (2) The Distributor has agreed to waive 0.10% of the Distribution Fee for Class A shares of Emerging Countries for the period 
      from January 1, 2008 through December 31, 2008. Previously, the Distributor had agreed to waive 0.10% of the Distribution 
      Fee for Class A shares of Emerging Countries for the period from January 1, 2007 through December 31, 2007. 
        




   (3) The Distributor has agreed to waive 0.25% of the Distribution Fee for Class Q shares and a portion of the Distribution Fee for
      Class C shares of International Value for the period from January 1, 2007 through December 31, 2007. 
        
Fees paid to the Distributor by class during the year ended April 30, 2008 are shown in 
the accompanying Statements of Operations. The Distributor voluntarily waived $29,658
of 12b-1 fees for International Growth Opportunities of Class Q shares. 
     




The Distributor also receives the proceeds of the initial sales charge paid by
shareholders upon the purchase of Class A shares, and the contingent deferred sales 
charge paid by shareholders upon certain redemptions for Class A and Class C shares. 
For the six months ended April 30, 2008, the Distributor 


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           NOTES TO FINANCIAL STATEMENTS AS OF APRIL 30, 2008 (UNAUDITED ) (CONTINUED)
        




   NOTE 6 — DISTRIBUTION AND SERVICE FEES (continued) 
        




   retained the following amounts in sales charges for the Funds:
        

                                                                                                                                                                                                                             




                                                                                                                                                          Class A                                   Class C
                                                                                                                                                          Shares                                    Shares
        




   Initial Sales Charges:                                                                                                                                                                                     
      Global Equity Dividend                                                                                                                         $ 20,234                                         N/A   
      Global Natural Resources                                                                                                                         20,389                                         N/A   
      Global Real Estate                                                                                                                              103,923                                         N/A   
      Global Value Choice                                                                                                                              6,807                                          N/A   
      Asia-Pacific Real Estate                                                                                                                         1,091                                          N/A   
      Disciplined International SmallCap                                                                                                                   71                                         N/A   
      Emerging Countries                                                                                                                               18,650                                         N/A   
      European Real Estate                                                                                                                             1,614                                          N/A   
      Foreign                                                                                                                                          30,757                                         N/A   
      Greater China                                                                                                                                    24,282                                         N/A   
      Index Plus International Equity                                                                                                                     930                                         N/A   
      International Capital Appreciation                                                                                                               3,680                                          N/A   
      International Equity Dividend                                                                                                                    1,614                                          N/A   
      International Growth Opportunities                                                                                                               3,729                                          N/A   
      International Real Estate                                                                                                                        19,599                                         N/A   
      International SmallCap Multi-Manager                                                                                                             18,983                                         N/A   
      International Value                                                                                                                                 421                                         N/A   
      International Value Choice                                                                                                                       2,044                                          N/A   
      International Value Opportunities                                                                                                                   242                                         N/A   
      Russia                                                                                                                                          279,465                                         N/A   
      Emerging Markets Fixed Income                                                                                                                       792                                         N/A   
      Global Bond                                                                                                                                      20,473                                         N/A   
      Diversified International                                                                                                                       103,421                                         N/A   
   Contingent Deferred Sales Charges:                                                                                                                                                                         
      Global Equity Dividend                                                                                                                           1,132                                          9,453   
      Global Natural Resources                                                                                                                             —                                             —   
      Global Real Estate                                                                                                                               3,759                                         64,324   
      Global Value Choice                                                                                                                                  —                                            586   
      Asia-Pacific Real Estate                                                                                                                             —                                             —   
      Disciplined International SmallCap                                                                                                                   —                                            274   
      Emerging Countries                                                                                                                               2,298                                          4,394   
      European Real Estate                                                                                                                                 —                                             —   
      Foreign                                                                                                                                          4,752                                          7,301   
      Greater China                                                                                                                                    1,026                                          5,080   
      Index Plus International Equity                                                                                                                      —                                            246   
      International Capital Appreciation                                                                                                                   —                                             32   
      International Equity Dividend                                                                                                                        —                                             —   
      International Growth Opportunities                                                                                                                   —                                            426   
      International Real Estate                                                                                                                        8,919                                         20,962   
      International SmallCap Multi-Manager                                                                                                             2,988                                         11,812   
      International Value                                                                                                                              2,429                                            115   
      International Value Choice                                                                                                                           25                                           304   
      International Value Opportunities                                                                                                                    —                                             —   
      Russia                                                                                                                                               —                                             —   
      Emerging Markets Fixed Income                                                                                                                        —                                            244   
      Global Bond                                                                                                                                          —                                          3,214   
      Diversified International Fund                                                                                                                   4,350                                         22,994   

        




   NOTE 7 — OTHER TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
        




   At April 30, 2008, the Funds had the following amounts recorded in payable to affiliates 
   on the accompanying Statements of Assets and Liabilities (See Notes 5 and 6): 
        

                                                                                                                                                                                                                   




                                                                                                              Accrued                                                                                   
                                                      Accrued                                               Shareholder                                                                                 
                                                     Investment                    Accrued                  Service and                                                                                 
                                                     Management                  Administrative             Distribution                         Accrued                                                
   Portfolio                                            Fees                        Fees                       Fees                             Recoupment                                          Total
        




   Global Equity Dividend                            $ 165,097                    $ 23,585                  $ 143,299                           $    —                                          $ 331,981  
   Global Natural Resources                            103,986                      12,501                    31,252                                 —                                            147,739  
   Global Real Estate                                  923,378                     126,786                    464,998                                —                                           1,515,162  
   Global Value Choice                                 89,676                       9,964                     28,034                              161                                             127,835  
   Asia-Pacific Real Estate                               3,854                        385                       1,051                               —                                               5,290  
   Disciplined International SmallCap                  208,201                      34,700                          33                               —                                            242,934  
   Emerging Countries                                  275,836                      22,067                    88,063                                 —                                            385,966  
   European Real Estate                                   4,931                        493                       1,310                               —                                               6,734  
   Foreign                                             540,580                      55,510                    265,498                                —                                            861,588  
   Greater China                                       57,021                       4,958                     19,860                                 —                                            81,839  
   Index Plus International Equity                     122,731                      22,314                    25,888                              1,319                                           172,252  
   International Capital Appreciation                  100,548                      11,829                       2,553                           27,218                                           142,148  
   International Equity Dividend                       33,010                       4,401                        2,242                               —                                            39,653  
   International Growth Opportunities                  101,354                      10,151                    39,786                                 —                                            151,291  
   International Real Estate                           476,826                      51,918                    128,336                            36,602                                           693,682  
   International SmallCap Multi-Manager                685,196                      71,578                    218,380                                —                                            975,154  
   International Value                                3,370,749                    337,070                   1,058,822                               —                                           4,766,641  
   International Value Choice                          62,960                       6,296                        9,350                               —                                            78,606  
   International Value Opportunities                      6,070                        759                       1,932                               —                                               8,761  
   Russia                                              913,934                      73,114                    182,787                                —                                           1,169,835  
   Emerging Markets Fixed Income                       160,335                      25,014                       2,850                               —                                            188,199  
   Global Bond                                         32,020                       8,315                     36,437                              804                                             77,576  
   Diversified International                                 —                      45,685                    235,049                                —                                            280,734  
        
At April 30, 2008, the following indirect, wholly owned subsidiaries of ING Groep owned 
the following Funds:
     




ING Diversified International Fund — Foreign (15.12%); Index Plus International Equity
(46.47%); International Capital Appreciation (95.35%); International Equity Dividend
(89.77%); International SmallCap Multi-Manager (6.05%); and International Value Choice
(64.05%).
     




ING Life Insurance and Annuity Company — Asia-Pacific Real Estate (80.40%);
European Real Estate (77.00%); Global Bond (24.43%); Greater China (12.52%);
International SmallCap Multi-Manager (6.56%); and International Value Opportunities
(98.81%).
     




ING LifeStyle Aggressive Growth Portfolio — Disciplined International SmallCap
(17.69%).
     




ING LifeStyle Growth Portfolio — Disciplined International SmallCap (42.23%) and
Emerging Markets Fixed Income (42.16%).
     




ING LifeStyle Moderate Growth Portfolio — Disciplined International SmallCap (28.94%)
and Emerging Markets Fixed Income (33.32%).


                                          129
Table of Contents

           NOTES TO FINANCIAL STATEMENTS AS OF APRIL 30, 2008 (UNAUDITED ) (CONTINUED)
        




   NOTE 7 — OTHER TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
   (continued)
        




   ING LifeStyle Moderate Portfolio — Disciplined International SmallCap (11.11%) and
   Emerging Markets Fixed Income (22.15%).
        




   ING Luxembourg SA — International Real Estate (6.49%).
        




   ING National Trust — International Growth Opportunities (17.93%).
        




   ING Strategic Allocation Growth Fund — Index Plus International Equity (6.40%).
        




   ING Strategic Allocation Moderate Fund — Index Plus International Equity (5.34%).
        




   Control is defined by the 1940 Act as the beneficial ownership, either directly or through
   one or more controlled companies, of more than 25% of the voting securities of a
   company. Investment activities of these shareholders could have a material impact on the
   Funds.
        




   The Investment Adviser may request that the Funds’ portfolio managers use their best
   efforts (subject to obtaining best execution of each transaction) to allocate a portfolio’s
   equity security transactions through certain designated broker-dealers. The designated
   broker-dealer, in turn, will reimburse a portion of the brokerage commissions to pay
   certain expenses of that Fund. Any amounts credited to a Fund are reflected as a
   reimbursement of expenses in the Statements of Operations.
        




   The Registrants have adopted a Retirement Policy covering all independent trustees of
   the Funds who will have served as an independent trustee for at least five years at the
   time of retirement. Benefits under this plan are based on an annual rate as defined in the
   plan agreement.
        




   The following Funds placed a portion of their portfolio transactions with brokerage firms
   which are affiliates of the investment adviser. The commissions paid to these affiliated
   firms were:
        

                                                                                                                   




                                                                        Affiliated                Commissions
   Fund                                                                 Brokers                     Received
        




   Global Real Estate                                           ING Baring LLC                      $46,575  
   Asia-Pacific Real Estate                                     ING Baring LLC                         1,016  
   Emerging Countries                                           ING Baring LLC                         4,169  
   Foreign                                                      ING Baring LLC                         3,178  
                                                                ING Securities                         5,428  
   Greater China                                                ING Baring LLC                        14,815  
   International Real Estate                                    ING Baring LLC                        35,653