Transcript Market Book - IMA Michigan Council

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