NOTES TO FINANCIAL STATEMENTS AS OF FEBRUARY 28,
2014 (CONTINUED)
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES
(continued)
a certain counterparty. Collateral pledged to the Fund
is held in a segregated account by a third-party agent and can be in the form of cash or debt securities issued by the U.S. government or related
agencies.
The Fund’s master agreements with derivative
counterparties have credit related contingent features that if triggered would allow its derivatives counterparties to close out and demand payment or
additional collateral to cover their exposure from the Fund. Credit related contingent features are established between the Fund and its derivatives
counterparties to reduce the risk that the Fund will not fulfill its payment obligations to its counterparties. These triggering features include, but
are not limited to, a percentage decrease in the Fund’s net assets and or a percentage decrease in the Fund’s NAV, which could cause the Fund
to accelerate payment of any net liability owed to the counterparty. The contingent features are established within the Fund’s Master
Agreements.
As of February 28, 2014, the Fund had a liability position
of $4,120,714 on open forward foreign currency contracts and written options with credit related contingent features. If a contingent feature would
have been triggered as of February 28, 2014, the Fund could have been required to pay this amount in cash to its counterparties. As of February 28,
2014 the Fund had posted $2,730,000 in cash collateral for its open OTC derivatives transactions. There were no credit events during the year ended
February 28, 2014 that triggered any credit related contingent features.
H. Forward Foreign Currency Contracts and Futures
Contracts. The Fund may enter into forward foreign currency contracts primarily to hedge against foreign currency exchange rate risks on its
non-U.S. dollar denominated investment securities. When entering into a forward foreign currency contract, the Fund agrees to receive or deliver a
fixed quantity of foreign currency for an agreed-upon price on an agreed future date. These contracts are valued daily and the Fund’s net equity
therein, representing unrealized gain or loss on the contracts as measured by the difference between the forward foreign exchange rates at the dates of
entry into the contracts and the forward rates at the reporting date, is included in the statement of assets and liabilities. Realized and unrealized
gains and losses on forward foreign currency contracts are included on the Statement of Operations. These instruments involve market and/or credit risk
in excess of the amount recognized in the statement of assets and liabilities. Risks arise from the possible inability of counterparties to meet the
terms of their contracts and from movement in currency and securities values and interest rates.
During the year ended February 28, 2014, the Fund used
forward foreign currency contracts to hedge its investments in non-U.S. dollar denominated equity securities in an attempt to decrease the volatility
of the Fund’s NAV. Please refer to the table following the Summary Portfolio of Investments for open forward foreign currency at February 28,
2014.
During the year ended February 28, 2014, the Fund had
average contract amounts on forward foreign currency contracts to buy and sell of $1,521,622 and $85,199,243, respectively.
The Fund may enter into futures contracts involving foreign
currency, interest rates, securities and securities indices. A futures contract obligates the seller of the contract to deliver and the purchaser of
the contract to take delivery of the type of foreign currency, financial instrument or security called for in the contract at a specified future time
for a specified price. Upon entering into such a contract, the Fund is required to deposit and maintain as collateral such initial margin as required
by the exchange on which the contract is traded. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount equal to the
daily fluctuations in the value of the contract. Such receipts or payments are known as variation margin and are recorded as unrealized gains or losses
by the Fund. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
Futures contracts are exposed to the market risk factor of
the underlying financial instrument. During the year ended February 28, 2014, the Fund had purchased futures contracts on various equity indices
primarily to provide exposures to such index returns while allowing the fund managers to maintain a certain level of cash balances in the Fund.
Additional associated risks of entering into futures contracts include the possibility that there may be an illiquid market where the Fund is unable to
liquidate the contract or enter into an offsetting position and, if used for hedging purposes, the risk that the price of the contract will correlate
imperfectly with the prices of the Fund’s securities. With futures, there is minimal counterparty credit risk to the Fund since futures are
exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default. Please
refer to the table following the Summary Portfolio of Investments for open futures contracts at February 28, 2014.
During the year ended February 28, 2014, the Fund had
average notional values on futures contracts purchased and sold of $14,967,052 and $3,207,358, respectively.
15
NOTES TO FINANCIAL STATEMENTS AS OF FEBRUARY 28,
2014 (CONTINUED)
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES
(continued)
I. Options Contracts. The Fund may
purchase put and call options and may write (sell) put options and covered call options. The premium received by the Fund upon the writing of a put or
call option is included in the Statement of Assets and Liabilities as a liability which is subsequently marked-to-market until it is exercised or
closed, or it expires. The Fund will realize a gain or loss upon the expiration or closing of the option contract. When an option is exercised, the
proceeds on sales of the underlying security for a written call option or purchased put option or the purchase cost of the security for a written put
option or a purchased call option is adjusted by the amount of premium received or paid. The risk in writing a call option is that the Fund gives up
the opportunity for profit if the market price of the security increases and the option is exercised. The risk in buying an option is that the Fund
pays a premium whether or not the option is exercised. Risks may also arise from an illiquid secondary market or from the inability of counterparties
to meet the terms of the contract.
The Fund generates premiums and seeks gains by writing call
options on indices on a portion of the value of the equity portfolio. Please refer to Note 7 for the volume of written option activity during the year
ended February 28, 2014.
J. Indemnifications. In the normal
course of business, the Fund may enter into contracts that provide certain indemnifications. The Fund’s maximum exposure under these arrangements
is dependent on future claims that may be made against the Fund and, therefore, cannot be estimated; however, based on experience, management considers
the risk of loss from such claims remote.
NOTE 3 — INVESTMENT MANAGEMENT AND ADMINISTRATIVE
FEES
ING Investments, LLC (“ING Investments” or the
“Investment Adviser”), an Arizona limited liability company, is the Investment Adviser of the Fund. The Fund pays the Investment Adviser for
its services under the investment management agreement (“Management Agreement”), a fee, payable monthly, based on an annual rate of 0.75% of
the Fund’s average daily managed assets. For purposes of the Management Agreement, managed assets are defined as the Fund’s average daily
gross asset value, minus the sum of the Fund’s accrued and unpaid dividends on any outstanding preferred shares and accrued liabilities (other
than liabilities for the principal amount of any borrowings incurred, commercial paper or notes issued by the Fund and the liquidation preference of
any outstanding preferred shares). As of February 28, 2014, there were no preferred shares outstanding.
The Investment Adviser has retained ING Investment
Management Co. LLC (“ING IM” or “Consultant”), a Delaware limited liability company, to provide certain consulting services for the
Investment Adviser. These services include, among other things, furnishing statistical and other factual information; providing advice with respect to
potential investment strategies that may be employed for the Fund, including, but not limited to, potential options strategies; developing economic
models of the anticipated investment performance and yield for the Fund; and providing advice to the Investment Adviser and/or sub-adviser with respect
to the Fund’s level and/or managed distribution policy. For its services, the Consultant will receive a consultancy fee from the Investment
Adviser. No fee will be paid by the Fund directly to the Consultant.
The Investment Adviser entered into sub-advisory agreements
with ING Investment Management Advisors B.V. (“IIMA”), a subsidiary of ING Groep N.V. (“ING Groep”), domiciled in The Hague, The
Netherlands, and ING IM. Subject to policies as the Board or the Investment Adviser might determine, IIMA and ING IM manage the Fund’s assets in
accordance with the Fund’s investment objectives, policies and limitations.
ING Funds Services, LLC (the “Administrator”), a
Delaware limited liability company, serves as Administrator to the Fund. The Fund pays the Administrator for its services a fee based on an annual rate
of 0.10% of the Fund’s average daily managed assets.
NOTE 4 — EXPENSE LIMITATION
AGREEMENT
The Investment Adviser has entered into a written expense
limitation agreement (“Expense Limitation Agreement”) with the Fund under which it will limit the expenses of the Fund, excluding interest,
taxes, leverage expenses, extraordinary expenses, and acquired fund fees and expenses to 1.00% of average daily managed assets. The Investment Adviser
may at a later date recoup from the Fund fees waived and other expenses assumed by the Investment Adviser during the previous 36 months, but only if,
after such recoupment, the Fund’s expense ratio does not exceed the percentage described above. The Expense Limitation Agreement is contractual
through March 1, 2015 and shall renew automatically for one-year terms unless: (i) ING Investments provides 90 days written notice of its termination
and such termination is approved by the Board; or (ii) the Management Agreement has been terminated.
Waived and reimbursed fees and any recoupment by the
Investment Adviser of such waived and reimbursed fees are reflected on the accompanying Statement of Operations.
16
NOTES TO FINANCIAL STATEMENTS AS OF FEBRUARY 28,
2014 (CONTINUED)
NOTE 4 — EXPENSE LIMITATION
AGREEMENT
(continued)
As of February 28, 2014, the amounts of waived or
reimbursed fees that are subject to possible recoupment by the Investment Adviser, and the related expiration dates, are as follows:
February 28,
|
|
|
|
2015
|
|
|
|
2016
|
|
2017
|
|
Total
|
|
|
|
|
$ |
37,214 |
|
|
|
|
$ |
37,214 |
|
NOTE 5 — OTHER TRANSACTIONS WITH AFFILIATES AND RELATED
PARTIES
The Fund has adopted a Deferred Compensation Plan (the
“Plan”), which allows eligible non-affiliated trustees as described in the Plan to defer the receipt of all or a portion of the trustees fees
payable. Amounts deferred are treated as though invested in various “notional” funds advised by ING Investments until distribution in
accordance with the Plan.
NOTE 6 — PURCHASES AND SALES OF INVESTMENT
SECURITIES
The cost of purchases and proceeds from sales of
investments for the year ended February 28, 2014, excluding short-term securities, were $26,101,587 and $53,970,781, respectively.
NOTE 7 — TRANSACTIONS IN WRITTEN
OPTIONS
Transactions in written OTC call options on equity indices
were as follows:
|
|
|
|
Number of
Contracts
|
|
Premiums
Received
|
|
|
|
|
|
174,600 |
|
|
$ |
2,586,658 |
|
|
|
|
|
|
1,411,800 |
|
|
|
24,520,794 |
|
|
|
|
|
|
(362,900 |
) |
|
|
(5,898,140 |
) |
|
|
|
|
|
— |
|
|
|
— |
|
Options Terminated in Closing Purchase Transactions |
|
|
|
|
(1,059,900 |
) |
|
|
(18,285,397 |
) |
|
|
|
|
|
163,600 |
|
|
$ |
2,923,915 |
|
NOTE 8 — CONCENTRATION OF INVESTMENT
RISKS
All mutual funds involve risk — some more than others
— and there is always the chance that you could lose money or not earn as much as you hope. The Fund’s risk profile is largely a factor of
the principal securities in which it invests and investment techniques that it uses. For more information regarding the types of securities and
investment techniques that may be used by the Fund and its corresponding risks, see the Fund’s most recent Prospectus and/or the Statement of
Additional Information.
Foreign Securities and Emerging Markets. The
Fund makes significant investments in foreign securities and may invest up to 20% of its managed assets in securities issued by companies located in
countries with emerging markets. Investments in foreign securities may entail risks not present in domestic investments. Since investments in
securities are denominated in foreign currencies, changes in the relationship of these foreign currencies to the U.S. dollar can significantly affect
the value of the investments and earnings of the Fund. Foreign investments may also subject the Fund to foreign government exchange restrictions,
expropriation, taxation or other political, social or economic developments, as well as from movements in currency, security value and interest rate,
all of which could affect the market and/or credit risk of the investments. The risks of investing in foreign securities can be intensified in the case
of investments in issuers located in countries with emerging markets.
Leverage. Although the Fund has no current
intention to do so, the Fund is authorized to utilize leverage through the issuance of preferred shares and/or borrowings, including the issuance of
debt securities. In the event that the Fund determines in the future to utilize investment leverage, there can be no assurance that such a leveraging
strategy will be successful during any period in which it is employed.
NOTE 9 — CAPITAL SHARES
Transactions in capital shares and dollars were as
follows:
|
|
|
|
Reinvestment
of
distributions
|
|
Net increase
in shares
outstanding
|
|
Reinvestment
of
distributions
|
|
Net
increase
|
Year or period ended
|
|
|
|
# |
|
# |
|
($) |
|
($) |
|
|
|
|
|
13,105 |
|
|
|
13,105 |
|
|
|
168,572 |
|
|
|
168,572 |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
NOTE 10 — FEDERAL INCOME TAXES
The amount of distributions from net investment income and
net realized capital gains are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP for investment companies.
These book/tax differences may be either temporary or permanent. Permanent differences are reclassified within the capital accounts based on their
federal tax-basis treatment; temporary differences are not reclassified. Key differences include the treatment of short-term capital gains, foreign
currency transactions, income from passive foreign investment companies (PFICs) and wash sale deferrals. Distributions in excess of net investment
income and/or net realized capital gains for tax purposes are reported as return of capital.
17
NOTES TO FINANCIAL STATEMENTS AS OF FEBRUARY 28,
2014 (CONTINUED)
NOTE 10 — FEDERAL INCOME TAXES
(continued)
The following permanent tax differences have been
reclassified as of the Fund’s tax year ended December 31, 2013:
Undistributed
Net Investment Income
|
|
|
|
Accumulated
Net Realized
Gains/(Losses)
|
|
|
|
|
|
Dividends paid by the Fund from net investment income and
distributions of net realized short-term capital gains are, for federal income tax purposes, taxable as ordinary income to
shareholders.
The tax composition of dividends and distributions in the
current period will not be determined until after the Fund’s tax year-end of December 31, 2014. The tax composition of dividends and distributions
as of the Fund’s most recent tax year-ends was as follows:
Tax Year Ended
December 31, 2013
|
|
Tax Year Ended
December 31, 2012
|
|
Ordinary
Income
|
|
|
|
Return
of Capital
|
|
Ordinary
Income
|
|
Long-term
Capital Gain
|
|
Return
of Capital
|
|
|
|
|
|
|
|
|
|
|
|
The tax-basis components of distributable earnings and the
capital loss carryforwards which may be used to offset future realized capital gains for federal income tax purposes as of December 31, 2013 are
detailed below. The Regulated Investment Company Modernization Act of 2010 (the “Act”) provides an unlimited carryforward period for newly
generated capital losses. Under the Act, there may be a greater likelihood that all or a portion of the Fund’s pre-enactment capital loss
carryforwards may expire without being utilized due to the fact that post-enactment capital losses are required to be utilized before pre-enactment
capital loss carryforwards.
Post-October
Capital
Losses
Deferred
|
|
|
|
Unrealized
Appreciation/
(Depreciation)
|
|
Short-term
Capital Loss
Carryforwards
|
|
Expiration
|
|
|
|
|
|
|
|
|
|
The Fund’s major tax jurisdictions are U.S. federal
and Arizona. The earliest tax year that remains subject to examination by these jurisdictions is 2009.
As of February 28, 2014, no provision for income tax is
required in the Fund’s financial statements as a result of tax positions taken on federal and state income tax returns for open tax years. The
Fund’s federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are
subject to examination by the Internal Revenue Service and state department of revenue.
NOTE 11 — RESTRUCTURING PLAN
In October 2009, ING Groep submitted a restructuring plan
(the “Restructuring Plan”) to the European Commission in order to receive approval for state aid granted to ING Groep by the Kingdom of the
Netherlands in November 2008 and March 2009. To receive approval for this state aid, ING Groep was required to divest its insurance and investment
management businesses, including ING U.S., before the end of 2013. In November 2012, the Restructuring Plan was amended to permit ING Groep additional
time to complete the divestment. Pursuant to the amended Restructuring Plan, ING Groep must divest at least 25% of ING U.S. by the end of 2013, more
than 50% by the end of 2014, and the remaining interest by the end of 2016 (such divestment, the “Separation Plan”).
In May 2013, ING U.S. conducted an initial public offering
of ING U.S. common stock (the “IPO”). In October 2013, ING Groep divested additional shares in a secondary offering of common stock of ING
U.S. In March 2014, ING Groep divested additional shares, reducing its ownership interest in ING U.S. below 50%. ING U.S. did not receive any proceeds
from these offerings.
ING Groep has stated that it intends to sell its remaining
interest in ING U.S. over time. While the base case for the remainder of the Separation Plan is the divestment of ING Groep’s remaining interest
in one or more broadly distributed offerings, all options remain open and it is possible that ING Groep’s divestment of its remaining interest in
ING U.S. may take place by means of a sale to a single buyer or group of buyers.
18
NOTES TO FINANCIAL STATEMENTS AS OF FEBRUARY 28,
2014 (CONTINUED)
NOTE 11 — RESTRUCTURING PLAN
(continued)
It is anticipated that one or more of the transactions
contemplated by the Separation Plan would result in the automatic termination of the existing investment advisory and sub-advisory agreements under
which the Investment Adviser and sub-adviser provide services to the Fund. In order to ensure that the existing investment advisory and sub-advisory
services can continue uninterrupted, the Board approved new advisory and sub-advisory agreements for the Fund in connection with the IPO. Shareholders
of the Fund approved the new investment advisory and sub-advisory agreements prompted by the IPO, as well as any future advisory and sub-advisory
agreements prompted by the Separation Plan that are approved by the Board and whose terms are not materially different from the current agreements.
This means that shareholders may not have another opportunity to vote on a new agreement with the Investment Adviser or an affiliated sub-adviser even
if they undergo a change of control, as long as no single person or group of persons acting together gains “control” (as defined in the 1940
Act) of ING U.S.
The Separation Plan, whether implemented through public
offerings or other means, may be disruptive to the businesses of ING U.S. and its subsidiaries, including the Investment Adviser and affiliated
entities that provide services to the Fund, and may cause, among other things, interruption of business operations or services, diversion of
management’s attention from day-to-day operations, reduced access to capital, and loss of key employees or customers. The completion of the
Separation Plan is expected to result in the Investment Adviser’s loss of access to the resources of ING Groep, which could adversely affect its
business. Since a portion of the shares of ING U.S., as a standalone entity, are publicly held, it is subject to the reporting requirements of the
Securities Exchange Act of 1934 as well as other U.S. government and state regulations, and subject to the risk of changing
regulation.
The Separation Plan may be implemented in phases. During
the time that ING Groep retains a significant interest in ING U.S., circumstances affecting ING Groep, including restrictions or requirements imposed
on ING Groep by European and other authorities, may also affect ING U.S. A failure to complete the Separation Plan could create uncertainty about the
nature of the relationship between ING U.S. and ING Groep, and could adversely affect ING U.S. and the Investment Adviser and its affiliates.
Currently, the Investment Adviser and its affiliates do not anticipate that the Separation Plan will have a material adverse impact on their operations
or the Fund and its operation.
NOTE 12 — SUBSEQUENT EVENTS
Dividends: Subsequent to February 28, 2014, the Fund
made distributions of:
Per Share
Amount
|
|
|
|
Declaration
Date
|
|
Payable
Date
|
|
Record
Date
|
|
|
|
|
|
|
|
|
|
Each quarter, the Fund will provide disclosures with
distribution payments made that estimate the percentages of that distribution that represent net investment income, capital gains, and return of
capital, if any. A significant portion of the quarterly distribution payments made by the Fund may constitute a return of capital.
Effective May 1, 2014, the Fund is to be renamed Voya
Global Advantage and Premium Opportunity Fund.
The Fund has evaluated events occurring after the Statement
of Assets and Liabilities date (subsequent events) to determine whether any subsequent events necessitated adjustment to or disclosure in the financial
statements. Other than the above, no such subsequent events were identified.
19
ING GLOBAL ADVANTAGE AND
PREMIUM OPPORTUNITY FUND |
SUMMARY PORTFOLIO OF INVESTMENTS
AS OF FEBRUARY 28, 2014 |
Shares
|
|
|
|
|
|
|
|
Value
|
|
Percentage
of Net
Assets
|
| |
|
|
|
|
|
|
|
|
|
|
|
$ |
1,815,647 |
|
|
|
0.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,732,300 |
|
|
|
0.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,037,383 |
|
|
|
0.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2,478,742 |
|
|
|
1.0 |
|
|
|
|
|
|
|
|
|
|
3,221,703 |
|
|
|
1.3 |
|
|
|
|
|
|
|
|
|
|
2,288,875 |
|
|
|
1.0 |
|
|
|
|
|
|
|
|
|
|
438,240 |
|
|
|
0.2 |
|
|
|
|
|
|
|
|
|
|
8,427,560 |
|
|
|
3.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2,510,252 |
|
|
|
1.0 |
|
|
|
|
|
|
|
Bayerische Motoren Werke AG |
|
|
2,313,355 |
|
|
|
1.0 |
|
|
|
|
|
|
|
|
|
|
2,228,828 |
|
|
|
0.9 |
|
|
|
|
|
|
|
|
|
|
2,323,498 |
|
|
|
1.0 |
|
|
|
|
|
|
|
|
|
|
1,908,346 |
|
|
|
0.8 |
|
|
|
|
|
|
|
|
|
|
11,284,279 |
|
|
|
4.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2,195,608 |
|
|
|
0.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
3,062,086 |
|
|
|
1.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2,583,758 |
|
|
|
1.1 |
|
|
|
|
|
|
|
Mitsubishi UFJ Financial Group, Inc. |
|
|
2,641,204 |
|
|
|
1.1 |
|
|
|
|
|
|
|
Sumitomo Mitsui Financial Group, Inc. |
|
|
2,545,719 |
|
|
|
1.1 |
|
|
|
|
|
|
|
|
|
|
3,487,719 |
|
|
|
1.4 |
|
|
|
|
|
|
|
|
|
|
6,132,707 |
|
|
|
2.5 |
|
|
|
|
|
|
|
|
|
|
17,391,107 |
|
|
|
7.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
299 |
|
|
|
0.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,826,263 |
|
|
|
0.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
3,717,575 |
|
|
|
1.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,119,170 |
|
|
|
0.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,268,618 |
|
|
|
0.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,645,556 |
|
|
|
0.7 |
|
|
| |
COMMON STOCK: (continued) |
|
|
|
|
|
|
|
|
|
|
$ |
1,379,561 |
|
|
|
0.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2,230,719 |
|
|
|
0.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2,194,103 |
|
|
|
0.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,999,378 |
|
|
|
0.8 |
|
|
|
|
|
|
|
|
|
|
Cie Financiere Richemont SA |
|
|
2,500,819 |
|
|
|
1.0 |
|
|
|
|
|
|
|
|
|
|
4,017,719 |
|
|
|
1.7 |
|
|
|
|
|
|
|
|
|
|
3,631,746 |
|
|
|
1.5 |
|
|
|
|
|
|
|
Roche Holding AG — Genusschein |
|
|
5,166,564 |
|
|
|
2.2 |
|
|
|
|
|
|
|
|
|
|
1,481,712 |
|
|
|
0.6 |
|
|
|
|
|
|
|
|
|
|
16,798,560 |
|
|
|
7.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,388,065 |
|
|
|
0.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
442,188 |
|
|
|
0.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
3,067,607 |
|
|
|
1.3 |
|
|
|
|
|
|
|
|
|
|
2,878,173 |
|
|
|
1.2 |
|
|
|
|
|
|
|
|
|
|
3,181,913 |
|
|
|
1.3 |
|
|
|
|
|
|
|
|
|
|
3,722,585 |
|
|
|
1.5 |
|
|
|
|
|
|
|
|
|
|
2,562,723 |
|
|
|
1.1 |
|
|
|
|
|
|
|
|
|
|
5,459,476 |
|
|
|
2.3 |
|
|
|
|
|
|
|
|
|
|
20,872,477 |
|
|
|
8.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2,783,988 |
|
|
|
1.2 |
|
|
|
|
|
|
|
|
|
|
2,301,132 |
|
|
|
1.0 |
|
|
|
|
|
|
|
|
|
|
3,220,325 |
|
|
|
1.3 |
|
|
|
|
|
|
|
|
|
|
2,967,683 |
|
|
|
1.2 |
|
|
|
|
|
|
|
|
|
|
2,325,623 |
|
|
|
1.0 |
|
|
|
|
|
|
|
|
|
|
2,677,956 |
|
|
|
1.1 |
|
|
|
|
|
|
|
|
|
|
3,367,093 |
|
|
|
1.4 |
|
|
|
|
|
|
|
|
|
|
3,504,796 |
|
|
|
1.5 |
|
|
|
|
|
|
|
|
|
|
2,375,594 |
|
|
|
1.0 |
|
|
|
|
|
|
|
Freeport-McMoRan Copper & Gold, Inc. |
|
|
2,578,448 |
|
|
|
1.1 |
|
|
|
|
|
|
|
|
|
|
3,966,800 |
|
|
|
1.6 |
|
|
|
|
|
|
|
Goldman Sachs Group, Inc. |
|
|
3,216,313 |
|
|
|
1.3 |
|
|
|
|
|
|
|
|
|
|
5,284,430 |
|
|
|
2.2 |
|
|
|
|
|
|
|
Honeywell International, Inc. |
|
|
2,288,281 |
|
|
|
1.0 |
|
|
|
|
|
|
|
|
|
|
4,266,102 |
|
|
|
1.8 |
|
|
|
|
|
|
|
|
|
|
4,312,661 |
|
|
|
1.8 |
|
|
|
|
|
|
|
|
|
|
2,316,531 |
|
|
|
1.0 |
|
See Accompanying Notes to Financial
Statements
20
ING GLOBAL ADVANTAGE AND
PREMIUM OPPORTUNITY FUND |
SUMMARY PORTFOLIO OF INVESTMENTS
AS OF FEBRUARY 28, 2014 (CONTINUED) |
Shares
|
|
|
|
|
|
|
|
Value
|
|
Percentage
of Net
Assets
|
| |
COMMON STOCK: (continued) |
|
United States: (continued) |
|
|
|
|
|
|
|
|
$ |
3,675,883 |
|
|
|
1.5 |
|
|
|
|
|
|
|
|
|
|
4,181,253 |
|
|
|
1.7 |
|
|
|
|
|
|
|
|
|
|
2,784,348 |
|
|
|
1.2 |
|
|
|
|
|
|
|
Occidental Petroleum Corp. |
|
|
2,795,026 |
|
|
|
1.2 |
|
|
|
|
|
|
|
|
|
|
3,487,791 |
|
|
|
1.5 |
|
|
|
|
|
|
|
|
|
|
5,075,981 |
|
|
|
2.1 |
|
|
|
|
|
|
|
Philip Morris International, Inc. |
|
|
2,311,760 |
|
|
|
1.0 |
|
|
|
|
|
|
|
|
|
|
3,247,321 |
|
|
|
1.3 |
|
|
|
|
|
|
|
|
|
|
2,518,074 |
|
|
|
1.0 |
|
|
|
|
|
|
|
|
|
|
2,513,825 |
|
|
|
1.0 |
|
|
|
|
|
|
|
|
|
|
3,001,203 |
|
|
|
1.2 |
|
|
|
|
|
|
|
|
|
|
4,317,385 |
|
|
|
1.8 |
|
|
|
|
|
|
|
|
|
|
38,868,185 |
|
|
|
16.2 |
|
|
|
|
|
|
|
|
|
|
132,531,791 |
|
|
|
55.2 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
236,360,293 |
|
|
|
98.4 |
|
|
|
|
|
|
|
Assets in Excess of Other Liabilities |
|
|
3,940,982 |
|
|
|
1.6 |
|
|
|
|
|
|
|
|
|
$ |
240,301,275 |
|
|
|
100.0 |
|
“Other Securities” represents issues not
identified as the top 50 holdings in terms of market value and issues or issuers not exceeding 1% of net assets individually or in aggregate
respectively as of February 28, 2014.
The following footnotes apply to either the individual
securities noted or one or more of the securities aggregated and listed as a single line item.
@ |
|
Non-income producing security |
|
|
Cost for federal income tax purposes is
$194,977,308. |
Net unrealized appreciation consists of: |
|
|
|
|
|
|
Gross Unrealized Appreciation |
|
|
|
$ |
47,253,828 |
|
Gross Unrealized Depreciation |
|
|
|
|
(5,870,843 |
) |
Net Unrealized Appreciation |
|
|
|
$ |
41,382,985 |
|
Sector Diversification
|
|
|
|
Percentage
of Net Assets
|
|
|
|
|
|
24.4 |
% |
|
|
|
|
|
15.4 |
|
|
|
|
|
|
10.6 |
|
|
|
|
|
|
10.5 |
|
|
|
|
|
|
9.5 |
|
|
|
|
|
|
8.7 |
|
|
|
|
|
|
8.6 |
|
|
|
|
|
|
6.5 |
|
|
|
|
|
|
2.6 |
|
Telecommunication Services |
|
|
|
|
1.6 |
|
Assets in Excess of Other Liabilities |
|
|
|
|
1.6 |
|
|
|
|
|
|
100.0 |
% |
Fair Value Measurementsˆ
The following is a summary of the fair valuations according
to the inputs used as of February 28, 2014 in valuing the assets and liabilities:
|
|
|
|
Quoted Prices
in Active Markets
for
Identical
Investments
(Level 1)
|
|
Significant
Other
Observable
Inputs#
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Fair Value
at
February 28, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments, at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,815,647 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,815,647 |
|
|
|
|
|
|
1,732,300 |
|
|
|
— |
|
|
|
— |
|
|
|
1,732,300 |
|
|
|
|
|
|
— |
|
|
|
1,037,383 |
|
|
|
— |
|
|
|
1,037,383 |
|
|
|
|
|
|
438,240 |
|
|
|
7,989,320 |
|
|
|
— |
|
|
|
8,427,560 |
|
|
|
|
|
|
— |
|
|
|
11,284,279 |
|
|
|
— |
|
|
|
11,284,279 |
|
|
|
|
|
|
— |
|
|
|
2,195,608 |
|
|
|
— |
|
|
|
2,195,608 |
|
|
|
|
|
|
3,062,086 |
|
|
|
— |
|
|
|
— |
|
|
|
3,062,086 |
|
|
|
|
|
|
— |
|
|
|
17,391,107 |
|
|
|
— |
|
|
|
17,391,107 |
|
|
|
|
|
|
— |
|
|
|
299 |
|
|
|
— |
|
|
|
299 |
|
|
|
|
|
|
1,826,263 |
|
|
|
— |
|
|
|
— |
|
|
|
1,826,263 |
|
|
|
|
|
|
— |
|
|
|
3,717,575 |
|
|
|
— |
|
|
|
3,717,575 |
|
|
|
|
|
|
1,119,170 |
|
|
|
— |
|
|
|
— |
|
|
|
1,119,170 |
|
|
|
|
|
|
1,268,618 |
|
|
|
— |
|
|
|
— |
|
|
|
1,268,618 |
|
|
|
|
|
|
— |
|
|
|
1,645,556 |
|
|
|
— |
|
|
|
1,645,556 |
|
|
|
|
|
|
1,379,561 |
|
|
|
— |
|
|
|
— |
|
|
|
1,379,561 |
|
|
|
|
|
|
— |
|
|
|
2,230,719 |
|
|
|
— |
|
|
|
2,230,719 |
|
|
|
|
|
|
— |
|
|
|
2,194,103 |
|
|
|
— |
|
|
|
2,194,103 |
|
|
|
|
|
|
— |
|
|
|
1,999,378 |
|
|
|
— |
|
|
|
1,999,378 |
|
|
|
|
|
|
— |
|
|
|
16,798,560 |
|
|
|
— |
|
|
|
16,798,560 |
|
|
|
|
|
|
1,388,065 |
|
|
|
— |
|
|
|
— |
|
|
|
1,388,065 |
|
|
|
|
|
|
— |
|
|
|
442,188 |
|
|
|
— |
|
|
|
442,188 |
|
See Accompanying Notes to Financial
Statements
21
ING GLOBAL ADVANTAGE AND
PREMIUM OPPORTUNITY FUND |
SUMMARY PORTFOLIO OF INVESTMENTS
AS OF FEBRUARY 28, 2014 (CONTINUED) |
|
|
|
|
Quoted Prices
in Active Markets
for
Identical
Investments
(Level 1)
|
|
Significant
Other
Observable
Inputs#
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Fair Value
at
February 28, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments, at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
— |
|
|
$ |
20,872,477 |
|
|
$ |
— |
|
|
$ |
20,872,477 |
|
|
|
|
|
|
132,489,718 |
|
|
|
42,073 |
|
|
|
— |
|
|
|
132,531,791 |
|
|
|
|
|
|
146,519,668 |
|
|
|
89,840,625 |
|
|
|
— |
|
|
|
236,360,293 |
|
Total Investments, at fair value |
|
|
|
$ |
146,519,668 |
|
|
$ |
89,840,625 |
|
|
$ |
— |
|
|
$ |
236,360,293 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial Instruments+ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward Foreign Currency Contracts |
|
|
|
$ |
— |
|
|
$ |
(562,659 |
) |
|
$ |
— |
|
|
$ |
(562,659 |
) |
|
|
|
|
|
(128,062 |
) |
|
|
— |
|
|
|
— |
|
|
|
(128,062 |
) |
|
|
|
|
|
— |
|
|
|
(3,558,055 |
) |
|
|
— |
|
|
|
(3,558,055 |
) |
|
|
|
|
$ |
(128,062 |
) |
|
$ |
(4,120,714 |
) |
|
$ |
— |
|
|
$ |
(4,248,776 |
) |
ˆ |
|
See Note 2, “Significant Accounting Policies” in the
Notes to Financial Statements for additional information. |
+ |
|
Other Financial Instruments are derivatives not reflected in the
Portfolio of Investments and may include open forward foreign currency contracts, futures, centrally cleared swaps, OTC swaps and written options.
Forward foreign currency contracts, futures and centrally cleared swaps are valued at the unrealized gain (loss) on the instrument. OTC swaps and
written options are valued at the fair value of the instrument. |
# |
|
The earlier close of the foreign markets gives rise to the
possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those
securities. To account for this, the Fund may frequently value many of its foreign equity securities using fair value prices based on third party
vendor modeling tools to the extent available. Accordingly, a portion of the Fund’s investments are categorized as Level 2
investments. |
At February 28, 2014, the following forward foreign currency contracts were outstanding for the ING Global Advantage and Premium Opportunity
Fund:
Counterparty
|
|
|
|
Currency
|
|
Contract
Amount
|
|
Buy/Sell
|
|
Settlement
Date
|
|
In Exchange For
|
|
Fair Value
|
|
Unrealized
Appreciation
(Depreciation)
|
|
|
|
|
|
|
|
13,094,327 |
|
|
|
|
|
|
$ |
21,823,228 |
|
|
$ |
21,922,640 |
|
|
$ |
(99,412 |
) |
Royal Bank of Scotland Group PLC |
|
|
|
|
|
|
1,789,205,639 |
|
|
|
|
|
|
|
17,494,409 |
|
|
|
17,583,364 |
|
|
|
(88,955 |
) |
Royal Bank of Scotland Group PLC |
|
|
|
|
|
|
13,621,301 |
|
|
|
|
|
|
|
15,320,876 |
|
|
|
15,490,562 |
|
|
|
(169,686 |
) |
|
|
|
|
|
|
|
19,122,971 |
|
|
|
|
|
|
|
26,216,580 |
|
|
|
26,395,116 |
|
|
|
(178,536 |
) |
|
|
|
|
|
|
|
10,616,931 |
|
|
|
|
|
|
|
3,016,750 |
|
|
|
3,042,706 |
|
|
|
(25,956 |
) |
Royal Bank of Scotland Group PLC |
|
|
|
|
|
|
12,670 |
|
|
|
|
|
|
|
21,097 |
|
|
|
21,211 |
|
|
|
(114 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(562,659 |
) |
ING Global Advantage and Premium Opportunity Fund Open
Futures Contracts on February 28, 2014:
Contract Description
|
|
|
|
Number
of Contracts
|
|
Expiration
Date
|
|
Notional
Value
|
|
Unrealized
Appreciation/
(Depreciation)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/19/14 |
|
|
$ |
650,121 |
|
|
$ |
(2 |
) |
|
|
|
|
|
|
|
03/21/14 |
|
|
|
3,063,373 |
|
|
|
(9,024 |
) |
|
|
|
|
|
|
|
03/13/14 |
|
|
|
1,097,327 |
|
|
|
(3,940 |
) |
|
|
|
|
|
|
|
|
|
|
$ |
4,810,821 |
|
|
$ |
(12,966 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/21/14 |
|
|
|
(2,229,120 |
) |
|
|
(115,096 |
) |
|
|
|
|
|
|
|
|
|
|
$ |
(2,229,120 |
) |
|
$ |
(115,096 |
) |
See Accompanying Notes to Financial
Statements
22
ING GLOBAL ADVANTAGE AND
PREMIUM OPPORTUNITY FUND |
SUMMARY PORTFOLIO OF INVESTMENTS
AS OF FEBRUARY 28, 2014 (CONTINUED) |
ING Global Advantage and Premium Opportunity Fund
Written OTC Options on February 28, 2014:
Number of Contracts
|
|
|
|
Counterparty
|
|
Description
|
|
Exercise
Price
|
|
Expiration
Date
|
|
Premiums
Received
|
|
Fair Value
|
| Options on Indices |
|
|
|
|
|
|
|
|
|
Call on Euro Stoxx 50® Index |
|
|
3,120.560 |
EUR |
|
|
04/04/14 |
|
|
$ |
119,985 |
|
|
$ |
(131,502 |
) |
|
|
|
|
|
|
Call on Euro Stoxx 50® Index |
|
|
3,045.078 |
EUR |
|
|
03/21/14 |
|
|
|
130,575 |
|
|
|
(229,538 |
) |
|
|
|
|
|
|
Call on Euro Stoxx 50® Index |
|
|
3,158.155 |
EUR |
|
|
03/07/14 |
|
|
|
115,956 |
|
|
|
(33,671 |
) |
|
|
|
|
|
|
|
|
|
6,802.850 |
GBP |
|
|
03/07/14 |
|
|
|
227,159 |
|
|
|
(83,584 |
) |
|
|
|
|
|
|
|
|
|
6,520.060 |
GBP |
|
|
03/21/14 |
|
|
|
265,596 |
|
|
|
(607,974 |
) |
|
|
|
|
|
|
|
|
|
6,801.140 |
GBP |
|
|
04/04/14 |
|
|
|
241,291 |
|
|
|
(177,593 |
) |
|
|
|
|
|
|
|
|
|
14,738.235 |
JPY |
|
|
04/04/14 |
|
|
|
178,088 |
|
|
|
(172,794 |
) |
|
|
|
|
|
|
|
|
|
14,530.093 |
JPY |
|
|
03/20/14 |
|
|
|
179,779 |
|
|
|
(191,028 |
) |
|
|
|
|
|
|
|
|
|
15,880.388 |
JPY |
|
|
03/07/14 |
|
|
|
170,261 |
|
|
|
(1,680 |
) |
|
|
|
|
|
|
|
|
|
1,790.894 |
USD |
|
|
03/21/14 |
|
|
|
474,016 |
|
|
|
(1,033,154 |
) |
|
|
|
|
|
|
|
|
|
1,838.173 |
USD |
|
|
04/04/14 |
|
|
|
433,895 |
|
|
|
(569,239 |
) |
|
|
|
|
|
|
|
|
|
1,841.994 |
USD |
|
|
03/07/14 |
|
|
|
387,314 |
|
|
|
(326,298 |
) |
|
|
|
|
|
|
|
Total Written OTC
Options |
|
|
$ |
2,923,915 |
|
|
$ |
(3,558,055 |
) |
A summary of derivative instruments by primary risk
exposure is outlined in the following tables.
The fair value of derivative instruments as of February 28,
2014 was as follows:
Derivatives not accounted for as
hedging
instruments
|
|
|
|
Location on Statement
of Assets and
Liabilities
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts |
|
|
|
Unrealized depreciation on forward foreign currency contracts |
|
$ |
562,659 |
|
|
|
|
|
Written options, at fair value |
|
|
3,558,055 |
|
|
|
|
|
Net Assets — Unrealized depreciation* |
|
|
128,062 |
|
Total Liability Derivatives |
|
|
|
|
|
$ |
4,248,776 |
|
* |
|
Includes cumulative appreciation/depreciation of futures
contracts as reported in the table following the Summary Portfolio of Investments. |
The effect of derivative instruments on the Fund’s
Statement of Operations for the year ended February 28, 2014 was as follows:
|
|
|
|
Amount of Realized Gain or (Loss) on Derivatives
Recognized in Income
|
|
Derivatives not accounted for as
hedging
instruments
|
|
|
|
Foreign currency
related transactions*
|
|
Futures
|
|
Written options
|
|
Total
|
|
|
|
|
$ |
— |
|
|
$ |
(2,353,756 |
) |
|
$ |
(11,562,087 |
) |
|
$ |
(13,915,843 |
) |
Foreign exchange contracts |
|
|
|
|
(718,723 |
) |
|
|
— |
|
|
|
— |
|
|
|
(718,723 |
) |
|
|
|
|
$ |
(718,723 |
) |
|
$ |
(2,353,756 |
) |
|
$ |
(11,562,087 |
) |
|
$ |
(14,634,566 |
) |
| |
|
|
|
|
Change in Unrealized Appreciation or (Depreciation)
on Derivatives Recognized in Income
|
|
Derivatives not accounted for as
hedging
instruments
|
|
|
|
Foreign currency
related transactions*
|
|
Futures
|
|
Written options
|
|
Total
|
|
|
|
|
$ |
— |
|
|
$ |
(487,519 |
) |
|
$ |
(127,336 |
) |
|
$ |
(614,855 |
) |
Foreign exchange contracts |
|
|
|
|
(1,649,392 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,649,392 |
) |
|
|
|
|
$ |
(1,649,392 |
) |
|
$ |
(487,519 |
) |
|
$ |
(127,336 |
) |
|
$ |
(2,264,247 |
) |
* |
|
Amounts recognized for forward foreign currency contracts are
included in net realized gain (loss) on foreign currency related transactions and net change in unrealized appreciation or depreciation on foreign
currency related transactions. |
See Accompanying Notes to Financial
Statements
23
ING GLOBAL ADVANTAGE AND
PREMIUM OPPORTUNITY FUND |
SUMMARY PORTFOLIO OF INVESTMENTS
AS OF FEBRUARY 28, 2014 (CONTINUED) |
The following is a summary by counterparty of the fair
value of OTC derivative instruments subject to Master Netting Agreements and collateral pledged (received), if any, at February 28,
2014:
|
|
|
|
Barclays
Bank PLC
|
|
BNP
Paribas Bank
|
|
Citigroup, Inc.
|
|
Royal Bank
of Scotland
Group PLC
|
|
Totals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward foreign currency contracts |
|
|
|
$ |
99,412 |
|
|
$ |
204,492 |
|
|
$ |
— |
|
|
$ |
258,755 |
|
|
$ |
562,659 |
|
|
|
|
|
|
387,880 |
|
|
|
2,617,498 |
|
|
|
552,677 |
|
|
|
— |
|
|
|
3,558,055 |
|
|
|
|
|
$ |
487,292 |
|
|
$ |
2,821,990 |
|
|
$ |
552,677 |
|
|
$ |
258,755 |
|
|
$ |
4,120,714 |
|
| |
Net OTC derivative instruments by counterparty, at fair value |
|
|
|
$ |
(487,292 |
) |
|
$ |
(2,821,990 |
) |
|
$ |
(552,677 |
) |
|
$ |
(258,755 |
) |
|
$ |
(4,120,714 |
) |
| |
Total collateral pledged by the Fund/(Received from counterparty) |
|
|
|
$ |
20,000 |
|
|
$ |
2,710,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2,730,000 |
|
| |
|
|
|
|
$ |
(467,292 |
) |
|
$ |
(111,990 |
) |
|
$ |
(552,677 |
) |
|
$ |
(258,755 |
) |
|
$ |
(1,390,714 |
) |
(1) |
|
Positive net exposure represents amounts due from each
respective counterparty. Negative exposure represents amounts due from the Fund. Please refer to Note 2 for additional details regarding counterparty
credit risk and credit related contingent features. |
Supplemental Option Information
Supplemental Option Information
(Unaudited)
Supplemental Call Option Statistics as of February 28,
2014:
% of Total Net Assets against which calls written |
|
|
|
|
65.04 |
% |
Average Days to Expiration at time written |
|
|
|
|
44 days |
|
Average Call Moneyness* at time written |
|
|
|
|
ATM |
|
Premium received for calls |
|
|
|
$ |
2,923,915 |
|
|
|
|
|
$ |
3,558,055 |
|
* |
|
“Moneyness” is the term used to describe the
relationship between the price of the underlying asset and the option’s exercise or strike price. For example, a call (buy) option is considered
“in-the-money” when the value of the underlying asset exceeds the strike price. Conversely, a put (sell) option is considered
“in-the-money” when its strike price exceeds the value of the underlying asset. Options are characterized for the purpose of Moneyness as,
“in-the-money” (“ITM”), “out-of-the-money” (“OTM”) or “at-the-money” (“ATM”), where the
underlying asset value equals the strike price. |
See Accompanying Notes to Financial
Statements
24
TAX INFORMATION
(UNAUDITED)
Dividends and distributions paid during the tax year ended
December 31, 2013 were as follows:
Fund Name
|
|
|
|
Type
|
|
Per Share Amount
|
ING Global Advantage and Premium Opportunity Fund |
|
|
|
|
NII |
|
|
$ |
0.2724 |
|
|
|
|
|
|
ROC |
|
|
$ |
0.8476 |
|
NII — Net investment income
ROC — Return of capital
Of the ordinary distributions made during the tax year ended December 31, 2013, 52.48% qualifies for the dividends received deduction (DRD)
available to corporate shareholders.
For the tax year ended December 31, 2013, 100.00% of
ordinary income dividends paid by the Fund are designated as qualifying dividend income (QDI) subject to reduced income tax rates for
individuals.
Above figures may differ from those cited elsewhere in this
report due to differences in the calculation of income and gains under U.S. generally accepted accounting principles (book) purposes and Internal
Revenue Service (tax) purposes.
Shareholders are strongly advised to consult their own tax
advisers with respect to the tax consequences of their investments in the Fund. In January, shareholders, excluding corporate shareholders, receive an
IRS 1099-DIV regarding the federal tax status of the dividends and distributions they received in the calendar year.
25
SHAREHOLDER MEETING
INFORMATION (UNAUDITED)
An annual shareholder meeting of ING Global Advantage
and Premium Opportunity Fund was held May 6, 2013, at the offices of ING Funds, 7337 East Doubletree Ranch Road, Suite 100, Scottsdale, AZ
85258.
Proposals:
1 |
|
To approve a new investment advisory agreement for the Fund with
ING Investments prompted by the IPO, and to approve, under certain circumstances, any future advisory agreements prompted by Change of Control Events
that occur as part of the Separation Plan. |
2 |
|
To approve a new investment sub-advisory agreement between ING
Investments and ING IM with respect to the Fund prompted by the IPO, and to approve, under certain circumstances, any future sub-advisory agreements
prompted by Change of Control Events that occur as part of the Separation Plan. |
3 |
|
To approve a new investment sub-advisory agreement between ING
Investments and IIMA with respect to the Fund prompted by the IPO, and to approve, under certain circumstances, any future sub-advisory agreements
prompted by Change of Control Events that occur as part of the Separation Plan. |
4 |
|
To elect five nominees to the Board of Trustees of the
Fund. |
|
|
|
|
Proposal
|
|
Shares voted for
|
|
Shares voted
against or withheld
|
|
Shares
abstained
|
|
Broker
non-vote
|
|
Total Shares
Voted
|
ING Global Advantage and Premium Opportunity Fund |
|
|
|
|
|
|
8,742,116.496 |
|
|
|
421,890.473 |
|
|
|
336,749.391 |
|
|
|
2,796,883.235 |
|
|
|
12,297,639.595 |
|
|
|
|
|
|
|
|
8,721,912.258 |
|
|
|
437,498.312 |
|
|
|
341,345.790 |
|
|
|
2,796,883.235 |
|
|
|
12,297,639.595 |
|
|
|
|
|
|
|
|
8,708,756.406 |
|
|
|
441,444.826 |
|
|
|
350,555.128 |
|
|
|
2,796,883.235 |
|
|
|
12,297,639.595 |
|
| |
|
|
|
|
Proposal
|
|
For All
|
|
Withhold All
|
|
For all Except
|
|
Broker
non-vote
|
|
Total Shares
Voted
|
|
|
|
|
|
|
|
11,887,834.288 |
|
|
|
409,805.307 |
|
|
|
0.000 |
|
|
|
0.000 |
|
|
|
12,297,639.595 |
|
|
|
|
|
|
|
|
11,855,824.162 |
|
|
|
441,815.433 |
|
|
|
0.000 |
|
|
|
0.000 |
|
|
|
12,297,639.595 |
|
|
|
|
|
|
|
|
11,853,097.554 |
|
|
|
444,542.041 |
|
|
|
0.000 |
|
|
|
0.000 |
|
|
|
12,297,639.595 |
|
|
|
|
|
|
|
|
11,889,001.273 |
|
|
|
408,638.322 |
|
|
|
0.000 |
|
|
|
0.000 |
|
|
|
12,297,639.595 |
|
|
|
|
|
|
|
|
11,855,485.523 |
|
|
|
442,154.072 |
|
|
|
0.000 |
|
|
|
0.000 |
|
|
|
12,297,639.595 |
|
** |
|
Effective close of business September 12, 2013, Mr. Gavin
resigned as Trustee. |
26
TRUSTEE AND
OFFICER INFORMATION (UNAUDITED)
The business and affairs of the Trust are managed under the
direction of the Trust’s Board. A Trustee, who is not an interested person of the Trust, as defined in the 1940 Act, is an independent trustee
(“Independent Trustee”). The Trustees and Officers of the Trust are listed below. The Statement of Additional Information includes additional
information about trustees of the Trust and is available, without charge, upon request at (800) 992-0180.
Name, Address and Age
|
|
|
|
Position(s)
Held with
the Trust
|
|
Term of Office
and Length of
Time Served(1)
|
|
Principal
Occupation(s) —
During the Past 5 Years
|
|
Number of
Funds in
Fund
Complex
Overseen
by
Trustee(2)
|
|
Other Board
Positions
Held by
Trustee
|
| |
|
| |
Colleen D. Baldwin
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 53 |
|
|
|
|
|
|
|
President, Glantuam Partners, LLC, a business consulting firm (January 2009–Present). |
|
|
|
DSM/Dentaquest, Boston, MA (February 2014–Present). |
| |
John V. Boyer
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 60 |
|
|
|
|
|
January 2014–Present
July 2005–Present |
|
President and Chief Executive Officer, Bechtler Arts Foundation, an arts and education foundation (January
2008–Present). |
|
|
|
|
| |
Patricia W. Chadwick
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 65 |
|
|
|
|
|
|
|
Consultant and President, Ravengate Partners LLC, a consulting firm that provides advice regarding financial markets and the global
economy (January 2000–Present). |
|
|
|
Wisconsin Energy Corporation (June 2006–Present) and The Royce Funds (35 funds) (December
2009–Present). |
| |
Albert E. DePrince, Jr.
7337 E. Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 73 |
|
|
|
|
|
|
|
Professor of Economics and Finance, Middle Tennessee State University (August 1991–Present).
|
|
|
|
|
| |
Peter S. Drotch
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 72 |
|
|
|
|
|
|
|
|
|
|
|
First Marblehead Corporation (September 2003–Present). |
| |
J. Michael Earley
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 68 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Russell H. Jones
7337 E. Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 69 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Patrick W. Kenny
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 71 |
|
|
|
|
|
|
|
Retired. Formerly, President and Chief Executive Officer, International Insurance Society (June 2001–June
2009). |
|
|
|
Assured Guaranty Ltd. (April 2004–Present). |
| |
Joseph E. Obermeyer
7337 E. Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 56 |
|
|
|
|
|
|
|
President, Obermeyer & Associates, Inc., a provider of financial and economic consulting services (November
1999–Present). |
|
|
|
|
27
TRUSTEE AND
OFFICER INFORMATION (UNAUDITED) (CONTINUED)
Name, Address and Age
|
|
|
|
Position(s)
Held with
the Trust
|
|
Term of Office
and Length of
Time Served(1)
|
|
Principal
Occupation(s) —
During the Past 5 Years
|
|
Number of
Funds in
Fund
Complex
Overseen
by
Trustee(2)
|
|
Other Board
Positions
Held by
Trustee
|
| |
Sheryl K. Pressler
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 63 |
|
|
|
|
|
|
|
Consultant (May 2001–Present). |
|
|
|
|
| |
Roger B. Vincent
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 68 |
|
|
|
|
|
|
|
Retired. Formerly, President, Springwell Corporation, a corporate finance firm (March 1989–August 2011). |
|
|
|
UGI Corporation (February 2006–Present) and UGI Utilities, Inc. (February 2006–Present). |
| |
Trustee who is an “Interested Person”: |
| |
Shaun P. Mathews(3)
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale,
Arizona 85258
Age: 58 |
|
|
|
|
|
|
|
President and Chief Executive Officer, ING Investments, LLC (November 2006–Present). |
|
|
|
ING Capital Corporation, LLC (December 2005–Present) and ING Investments Distributor, LLC (December 2005–Present; ING Funds
Services, LLC, ING Investments LLC and ING Investment Management, LLC (March 2006–Present); and ING Investment Trust Co. (April
2009–Present). |
(1) |
|
Trustees serve until their successors are duly elected and
qualified. The tenure of each Trustee (“Independent Trustee”) is subject to the Board’s retirement policy, which states that each duly
elected or appointed Independent Trustee shall retire from and cease to be a member of the Board of Trustees as of the close of business on December 31
of the calendar year in which the Independent Trustee attains the age of 73. A majority vote of the Board’s other Independent Trustees may extend
the retirement date of an Independent Trustee if the retirement would trigger a requirement to hold a meeting of shareholders of the Trust under
applicable law, whether for purposes of appointing a successor to the Trustee or otherwise comply with applicable law, in which case the extension
would apply until such time as the shareholder meeting can be held or is no longer required (as determined by a vote of a majority of the other
Independent Trustees). |
(2) |
|
For the purpose of this table “ING Fund Complex” means
the following investment companies: ING Asia Pacific High Dividend Equity Income Fund; ING Balanced Portfolio, Inc.; ING Emerging Markets High Dividend
Equity Fund; ING Equity Trust; ING Funds Trust; ING Global Advantage and Premium Opportunity Fund; ING Global Equity Dividend and Premium Opportunity
Fund; ING Infrastructure, Industrials and Materials Fund; ING Intermediate Bond Portfolio; ING International High Dividend Equity Income Fund; ING
Investors Trust; ING Money Market Portfolio; ING Mutual Funds; ING Partners, Inc.; ING Prime Rate Trust; ING Risk Managed Natural Resources Fund; ING
Senior Income Fund; ING Separate Portfolios Trust; ING Series Fund, Inc.; ING Strategic Allocation Portfolios, Inc.; ING Variable Funds; ING Variable
Insurance Trust; ING Variable Portfolios, Inc.; and ING Variable Products Trust. The number of funds in the ING Fund Complex is as of March 31,
2014. |
(3) |
|
“Interested person,” as defined in the 1940 Act, by
virtue of this Trustee’s current affiliation with any of the Funds, ING or any of ING’s affiliates. |
28
TRUSTEE AND
OFFICER INFORMATION (UNAUDITED) (CONTINUED)
Name, Address and Age
|
|
|
|
Position(s) Held
With the Trust
|
|
Term of Office
and Length of
Time Served(1)
|
|
Principal Occupation(s) —
During
the Past 5 Years
|
| |
Shaun P. Mathews
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 58 |
|
|
|
President and Chief Executive Officer |
|
|
|
President and Chief Executive Officer, ING Investments, LLC (November 2006–Present). |
| |
Michael J. Roland
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 55 |
|
|
|
|
|
|
|
Managing Director and Chief Operating Officer, ING Investments, LLC and ING Funds Services, LLC (April 2012–Present). Formerly,
Chief Compliance Officer, Directed Services LLC and ING Investments, LLC (March 2011–December 2013); Executive Vice President and Chief Operating
Officer, ING Investments, LLC and ING Funds Services, LLC (January 2007–April 2012) and Chief Compliance Officer, ING Funds (March
2011–February 2012). |
| |
Stanley D. Vyner
230 Park Avenue
New York, New York 10169
Age: 63 |
|
|
|
Executive Vice President
Chief Investment Risk Officer |
|
July 2005–Present
September 2009–Present |
|
Executive Vice President, ING Investments, LLC (July 2000–Present) and Chief Investment Risk Officer, ING Investments, LLC
(January 2003–Present). |
| |
Kevin M. Gleason
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 47 |
|
|
|
|
|
|
|
Senior Vice President, ING Investments, LLC (February 2012–Present). Formerly, Assistant General Counsel and Assistant
Secretary, The Northwestern Mutual Life Insurance Company (June 2004–January 2012). |
| |
Todd Modic
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 46 |
|
|
|
Senior Vice President, Chief/Principal Financial Officer and Assistant Secretary |
|
|
|
Senior Vice President, ING Funds Services, LLC (March 2005–Present). |
| |
Kimberly A. Anderson
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 49 |
|
|
|
|
|
|
|
Senior Vice President, ING Investments, LLC (October 2003–Present). |
| |
Robert Terris
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 43 |
|
|
|
|
|
|
|
Senior Vice President, Head of Division Operations, ING Funds Services, LLC (January 2006–Present). |
| |
Julius A. Drelick, III
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 47 |
|
|
|
|
|
|
|
Senior Vice President — Fund Compliance, ING Funds Services, LLC (June 2012–Present). Chief Compliance Officer of Directed
Services LLC and ING Investments LLC (January 2014–Present). Formerly, Vice President — Platform Product Management & Project Management,
ING Investments, LLC (April 2007–June 2012). |
| |
Fred Bedoya
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 41 |
|
|
|
Vice President and Treasurer |
|
|
|
Vice President, ING Funds Services, LLC (March 2012– Present). Formerly, Assistant Vice President — Director, ING Funds
Services, LLC (March 2003–March 2012). |
| |
Robyn L. Ichilov
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 46 |
|
|
|
|
|
|
|
Vice President, ING Funds Services, LLC (November 1995–Present) and ING Investments, LLC (August 1997–Present). Formerly,
Treasurer, ING Funds (November 1999–February 2012). |
| |
Maria M. Anderson
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 55 |
|
|
|
|
|
|
|
Vice President, ING Funds Services, LLC (September 2004–Present). |
29
TRUSTEE AND
OFFICER INFORMATION (UNAUDITED) (CONTINUED)
Name, Address and Age
|
|
|
|
Position(s) Held
With the Trust
|
|
Term of Office
and Length of
Time Served(1)
|
|
Principal Occupation(s) —
During
the Past 5 Years
|
| |
Lauren D. Bensinger
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 60 |
|
|
|
|
|
|
|
Vice President, ING Investments, LLC and ING Funds Services, LLC (February 1996–Present); Director of Compliance, ING
Investments, LLC (October 2004–Present); and Vice President and Money Laundering Reporting Officer, ING Investments Distributor, LLC (April
2010–Present). Formerly, Chief Compliance Officer, ING Investments Distributor, LLC (August 1995–April 2010). |
| |
Jason Kadavy
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 38 |
|
|
|
|
|
|
|
Vice President, ING Funds Services, LLC (July 2007–Present). |
| |
Kimberly K. Springer
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 56 |
|
|
|
|
|
|
|
Vice President — Platform Product Management & Project Management, ING Investments, LLC (July 2012–Present); Vice
President, ING Investment Management — ING Funds (March 2010–Present) and Vice President, ING Funds Services, LLC (March 2006–Present).
Formerly Managing Paralegal, Registration Statements (June 2003–July 2012). |
| |
Craig Wheeler
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 45 |
|
|
|
|
|
|
|
Vice President — Director of Tax, ING Funds Services, LLC (March 2013–Present). Formerly, Assistant Vice President —
Director of Tax, ING Funds Services, LLC (March 2008–March 2013). |
| |
Huey P. Falgout, Jr.
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 50 |
|
|
|
|
|
|
|
Senior Vice President and Chief Counsel, ING Investment Management — ING Funds (March 2010–Present). Formerly, Chief
Counsel, ING Americas, U.S. Legal Services (October 2003–March 2010). |
| |
Theresa K. Kelety
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 51 |
|
|
|
|
|
|
|
Vice President and Senior Counsel, ING Investment Management — ING Funds (March 2010–Present). Formerly, Senior Counsel,
ING Americas, U.S. Legal Services (April 2008–March 2010). |
| |
Paul A. Caldarelli
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 62 |
|
|
|
|
|
|
|
Vice President and Senior Counsel, ING Investment Management — ING Funds (March 2010–Present). Formerly, Senior Counsel,
ING Americas, U.S. Legal Services (April 2008–March 2010). |
(1) |
|
The Officers hold office until the next annual meeting of the
Board of Trustees and until their successors shall have been elected and qualified. |
30
ADDITIONAL INFORMATION
(UNAUDITED)
During the period, there were no material changes in the
Fund’s investment objective or policies that were not approved by the shareholders or the Fund’s charter or by-laws or in the principal risk
factors associated with investment in the Fund.
The Fund may lend portfolio securities in an amount equal
to up to 33-1/3% of its managed assets to broker dealers or other institutional borrowers, in exchange for cash collateral and fees. The fund may use
the cash collateral in connection with the Fund’s investment program as approved by the Adviser, including generating cash to cover collateral
posting requirements. Although the Fund has no current intention to do so, it may use the cash collateral to generate additional income. The use of
cash collateral in connection with the Fund’s investment program may have a leveraging effect on the Fund, which would increase the volatility of
the Fund and could reduce its returns and/or cause a loss.
The Fund intends to engage in lending portfolio securities
only when such lending is secured by cash or other permissible collateral in an amount at least equal to the market value of the securities loaned. The
Fund will maintain cash, cash equivalents or liquid securities holdings in an amount sufficient to cover its repayment obligation with respect to the
collateral, marked to market on a daily basis.
Securities lending involves the risks of delay in recovery
or even loss of rights in the securities loaned if the borrower of the securities fails financially. Loans will be made only to organizations whose
credit quality or claims paying ability is considered by the Sub-Adviser to be at least investment grade. The financial condition of the borrower will
be monitored by the Adviser on an ongoing basis. The Fund will not lend portfolio securities subject to a written American style covered call option
contract. The Fund may lend portfolio securities subject to a written European style covered call option contract as long as the lending period is less
than or equal to the term of the covered call option contract.
The Fund was granted exemptive relief by the SEC (the
“Order”), which under the 1940 Act, would permit the Fund, subject to Board approval, to include realized long-term capital gains as a part
of its regular distributions to Common Shareholders more frequently than would otherwise be permitted by the 1940 Act (generally once per taxable year)
(“Managed Distribution Policy”). The Fund may in the future adopt a Managed Distribution Policy.
Dividend Reinvestment Plan
Unless the registered owner of Common Shares elects to
receive cash by contacting Computershare Shareowner Services LLC (the “Plan Agent”), all dividends declared on Common Shares of the Fund will
be automatically reinvested by the Plan Agent for shareholders in additional Common Shares of the Fund through the Fund’s Dividend Reinvestment
Plan (the “Plan”). Shareholders who elect not to participate in the Plan will receive all dividends and other distributions in cash paid by
check mailed directly to the shareholder of record (or, if the Common Shares are held in street or other nominee name, then to such nominee) by the
Plan Agent. Participation in the Plan is completely voluntary and may be terminated or resumed at any time without penalty by notice if received and
processed by the Plan Agent prior to the dividend record date; otherwise such termination or resumption will be effective with respect to any
subsequently declared dividend or other distribution. Some brokers may automatically elect to receive cash on your behalf and may re-invest that cash
in additional Common Shares of the Fund for you. If you wish for all dividends declared on your Common Shares of the Fund to be automatically
reinvested pursuant to the Plan, please contact your broker.
The Plan Agent will open an account for each Common
Shareholder under the Plan in the same name in which such Common Shareholder’s Common Shares are registered. Whenever the Fund declares a dividend
or other distribution (together, a “Dividend”) payable in cash, non-participants in the Plan will receive cash and participants in the Plan
will receive the equivalent in Common Shares. The Common Shares will be acquired by the Plan Agent for the participants’ accounts, depending upon
the circumstances described below, either (i) through receipt of additional unissued but authorized Common Shares from the Fund (“Newly Issued
Common Shares”) or (ii) by purchase of outstanding Common Shares on the open market (“Open-Market Purchases”) on the NYSE or elsewhere.
Open-market purchases and sales are usually made through a broker affiliated with the Plan Agent.
If, on the payment date for any Dividend, the closing
market price plus estimated brokerage commissions per Common Share is equal to or greater than the net asset value per Common Share, the Plan Agent
will invest the Dividend amount in Newly Issued Common Shares on behalf of the participants. The number of Newly Issued Common Shares to be credited to
each participant’s account will be determined by dividing the dollar amount of the Dividend by the net asset value per Common Share on the payment
date; provided that, if the net asset value is less than or equal to 95% of the closing market value on the payment date, the dollar amount of the
Dividend will be divided by 95% of the closing market price per Common Share on the payment date. If, on the payment date for any Dividend, the net
asset value per Common Share is greater than the closing market value plus estimated brokerage commissions, the Plan Agent will invest the Dividend
amount in Common Shares acquired on behalf of the participants in Open-Market Purchases. In the event of a market discount on the payment date for any
Dividend, the Plan Agent will have until the last business day before the next date on which the Common Shares trade on an
31
ADDITIONAL INFORMATION
(UNAUDITED) (CONTINUED)
“ex-dividend” basis or 30 days after the payment date for such Dividend,
whichever is sooner (the “Last Purchase Date”), to invest the Dividend amount in Common Shares acquired in Open-Market Purchases.
The Fund pays quarterly Dividends. Therefore, the period
during which Open-Market Purchases can be made will exist only from the payment date of each Dividend through the date before the next
“ex-dividend” date, which typically will be approximately ten days.
If, before the Plan Agent has completed its Open-Market
Purchases, the market price per common share exceeds the net asset value per Common Share, the average per Common Share purchase price paid by the Plan
Administrator may exceed the net asset value of the Common Shares, resulting in the acquisition of fewer Common Shares than if the Dividend had been
paid in Newly Issued Common Shares on the Dividend payment date. Because of the foregoing difficulty with respect to Open-Market Purchases, the Plan
provides that if the Plan Agent is unable to invest the full Dividend amount in Open-Market Purchases during the purchase period or if the market
discount shifts to a market premium during the purchase period, the Plan Agent will cease making Open-Market Purchases and will invest the un-invested
portion of the Dividend amount in Newly Issued Common Shares at the net asset value per common share at the close of business on the Last Purchase Date
provided that, if the net asset value is less than or equal to 95% of the then current market price per Common Share, the dollar amount of the Dividend
will be divided by 95% of the market price on the payment date.
The Plan Agent maintains all shareholders’ accounts in
the Plan and furnishes written confirmation of all transactions in the accounts, including information needed by shareholders for tax records. Common
Shares in the account of each Plan participant will be held by the Plan Agent on behalf of the Plan participant, and each shareholder proxy will
include those shares purchased or received pursuant to the Plan. The Plan Agent will forward all proxy solicitation materials to participants and vote
proxies for shares held under the Plan in accordance with the instructions of the participants.
In the case of shareholders such as banks, brokers or
nominees which hold shares for others who are the beneficial owners, the Plan Agent will administer the Plan on the basis of the number of Common
Shares certified from time to time by the record shareholder’s name and held for the account of beneficial owners who participate in the
Plan.
There will be no brokerage charges with respect to Common
Shares issued directly by the Fund. However, each participant will pay a pro rata share of brokerage commissions incurred in connection with
Open-Market Purchases. The automatic reinvestment of Dividends will not relieve participants of any federal, state or local income tax that may be
payable (or required to be withheld) on such Dividends. Participants that request a partial or full sale of shares through the Plan Agent are subject
to a $15.00 sales fee and a $0.10 per share brokerage commission on purchases or sales, and may be subject to certain other service
charges.
The Fund reserves the right to amend or terminate the Plan.
There is no direct service charge to participants with regard to purchases in the Plan; however, the Fund reserves the right to amend the Plan to
include a service charge payable by the participants.
All questions concerning the Plan should be directed to the
Fund’s Shareholder Service Department at (800) 992-0180.
Key Financial Dates — Calendar 2014
Distributions:
Declaration Date
|
|
|
|
Ex Date
|
|
Payable Date
|
March 17, 2014 |
|
|
|
|
April 1, 2014 |
|
|
|
April 15, 2014 |
|
June 16, 2014 |
|
|
|
|
July 1, 2014 |
|
|
|
July 15, 2014 |
|
September 15, 2014 |
|
|
|
|
October 1, 2014 |
|
|
|
October 15, 2014 |
|
December 15, 2014 |
|
|
|
|
December 29, 2014 |
|
|
|
January 15, 2015 |
|
Ex-Dividend Date. These dates are subject to
change.
Stock Data
The Fund’s common shares are traded on the NYSE
(Symbol: IGA).
Repurchase of Securities by Closed-End
Companies
In accordance with Section 23(c) of the 1940 Act, and Rule
23c-1 under the 1940 Act the Fund may from time to time purchase shares of beneficial interest of the Fund in the open market, in privately negotiated
transactions and/or purchase shares to correct erroneous transactions.
Number of Shareholders
The approximate number of record holders of Common Stock as
of February 28, 2014 was 13, which does not include approximately 8,701 beneficial owners of shares held in the name of brokers of other
nominees.
Certifications
In accordance with Section 303A.12 (a) of the New York
Stock Exchange Listed Company Manual, the Fund’s CEO submitted the Annual CEO Certification on June 27, 2013 certifying that he was not aware, as
of that date, of any violation by the Fund of the NYSE’s Corporate governance listing standards. In addition, as required by Section 302 of the
Sarbanes-Oxley Act of 2002 and related SEC rules, the Fund’s principal executive and financial officers have made quarterly certifications,
included in filings with the SEC on Forms N-CSR and N-Q, relating to, among other things, the Fund’s disclosure controls and procedures and
internal controls over financial reporting.
32
ADDITIONAL INFORMATION
(UNAUDITED) (CONTINUED)
On April 7, 2014, ING U.S., Inc. changed its name to Voya
Financial, Inc. Effective May 1, 2014, ING Investments, LLC, the Investment Adviser to the Fund, will be renamed Voya Investments, LLC. ING Investment
Management Co. LLC, a sub-adviser and Consultant to the Fund, will be renamed Voya Investment Management Co. LLC. ING Funds Services, LLC, the
Administrator for the Fund, will be renamed Voya Funds Services, LLC. The Fund as well as the Registrant that the Fund is organized under will also be
renamed.
The new Registrant and Fund name will be as
follows:
Current Registrant Name
and Current Fund Name
|
|
|
|
New Registrant Name and
New Fund Name,
effective May 1, 2014
|
ING Global Advantage and Premium Opportunity Fund |
|
|
|
Voya Global Advantage and Premium Opportunity Fund |
33
(THIS PAGE INTENTIONALLY LEFT BLANK)
(THIS PAGE INTENTIONALLY LEFT BLANK)
Investment Adviser
ING Investments, LLC
7337 East
Doubletree Ranch Road, Suite 100
Scottsdale, Arizona 85258
Administrator
ING Funds Services, LLC
7337 East
Doubletree Ranch Road, Suite 100
Scottsdale, Arizona 85258
Transfer Agent
Computershare Shareowner Services
LLC
480 Washington Boulevard
Jersey City, New Jersey 07310-1900
Independent Registered Public Accounting Firm
KPMG
LLP
Two Financial Center
60 South Street
Boston, Massachusetts 02111
Custodian
The Bank of New York Mellon
One Wall
Street
New York, New York 10286
Legal Counsel
Dechert LLP
1900 K Street, N.W.
Washington, D.C. 20006
Toll-Free Shareholder Information
Call us from 9:00
a.m. to 7:00 p.m. Eastern time on any business day for account or other information, at (800) 992-0180
 |
AR-UIGA (0214-042414) |
As of the end of the
period covered by this report, Registrant had adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to the Registrant’s principal
executive officer and principal financial officer. There were no amendments to the Code
during the period covered by the report. The Registrant did not grant any waivers, including implicit waivers, from any provisions of the Code during the period
covered by this report. The code of ethics is filed herewith pursuant to
Item 10(a)(l), Exhibit 99,CODE ETH.
| Item 3. |
Audit Committee Financial Expert. |
The
Board of Trustees has determined that J. Michael Earley, Peter S. Drotch and Colleen Baldwin are audit committee financial experts, as defined in Item 3 of
Form N-CSR. Mr. Earley, Mr. Drotch and Ms. Baldwin are “independent” for
purposes of Item 3 of Form N-CSR.
| Item 4. |
Principal Accountant Fees and Services. |
|
|
|
| (a) |
|
Audit Fees: The aggregate fees billed for each of the last two fiscal
years for professional services rendered by KPMG LLP (“KPMG”), the principal accountant for
the audit of the registrant’s annual financial statements, for services that are normally provided by the accountant in connection with statutory and
regulatory filings or engagements for the fiscal year were $26,600 for the year ended
February 28, 2014 and $24,500 for year ended February 28, 2013. |
|
|
| (b) |
|
Audit-Related Fees: The aggregate fees billed in each of the last two
fiscal years for assurance and related services by KPMG that are seasonably related to the
performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item were $2,400 for the year ended
February 28, 2014 and $2,400 for the year ended February 28, 2013. |
|
|
| (c) |
|
Tax Fees: The aggregate fees billed in each of the last two fiscal
years for professional services rendered by KPMG for tax compliance, tax advice, and tax planning were
$10,567 in the year ended February 28, 2014 and $8,926 in the year ended February 28, 2013. Such services included review of excise distribution
calculations (if applicable), preparation of the Funds’ federal state and excise tax
returns, tax services related to mergers and routine consulting. |
|
|
| (d) |
|
All Other Fees: The aggregate fees billed in each of the last two
fiscal years for all other fees were $0 for the year ended February 28, 2014 and $2,205 for the year ended February 28, 2013. |
|
|
| (e)(1) |
|
Audit Committee Pre-Approval Policies and Procedures |
1
AUDIT
AND NON-AUDIT SERVICES
PRE-APPROVAL POLICY
I. Statement of
Principles
Under
the Sarbanes-Oxley Act of 2002 (the “Act”), the Audit Committee of the Board of Directors or Trustees (the “Committee”)
of the ING Funds (each a “Fund,” collectively, the “Funds”) set out on Exhibit A to this
Audit and Non-Audit Services Pre-Approval Policy (“Policy”) is
responsible for the oversight of the work of the Funds’ independent auditors. As part of its responsibilities, the Committee
must pre-approve the audit and non-audit services performed by the auditors in order to assure that the provision of these services
does not impair the auditors’ independence from the Funds. The Committee has adopted, and the Board has ratified, this Policy,
which sets out the procedures and conditions under which the services of the independent auditors may be pre-approved.
Under Securities and
Exchange Commission (“SEC”) rules promulgated in accordance with the Act, the Funds may establish two different approaches
to pre-approving audit and non-audit services. The Committee may approve services without consideration of specific case-by-case
services (“general pre-approval”) or it may pre-approve specific services (“specific pre-approval”). The
Committee believes that the combination of these approaches contemplated in this Policy results in an effective and efficient method
for pre-approving audit and non-audit services to be performed by the Funds’ independent auditors. Under this Policy, services
that are not of a type that may receive general pre-approval require specific pre-approval by the Committee. Any proposed services
that exceed pre-approved cost levels or budgeted amounts will also require the Committee’s specific pre-approval.
For both types of approval,
the Committee considers whether the subject services are consistent with the SEC’s rules on auditor independence and that
such services are compatible with maintaining the auditors independence. The Committee also considers whether a particular audit
firm is in the best position to provide effective and efficient services to the Funds. Reasons that the auditors are in the best
position include the auditors’ familiarity with the Funds’ business, personnel, culture, accounting systems, risk profile,
and other factors, and whether the services will enhance the Funds’ ability to manage and control risk or improve audit quality.
Such factors will be considered as a whole, with no one factor being determinative.
The appendices attached
to this Policy describe the audit, audit-related, tax-related, and other services that have the Committee’s general pre-approval.
For any service that has been approved through general pre-approval, the general pre-approval will remain in place for a period
12 months from the date of pre-approval, unless the Committee determines that a different period is appropriate. The Committee
will annually review and pre-approve the services that may be provided by the independent auditors without specific pre-approval.
The Committee will revise the list of services subject to general pre-approval as appropriate. This Policy does not serve as a
delegation to Fund management of the Committee’s duty to pre-approve services performed by the Funds’ independent auditors.
II. Audit Services
The annual
audit services engagement terms and fees are subject to the Committee’s specific pre-approval. Audit services are
those services that are normally provided by auditors in connection with statutory and regulatory filings or engagements or those
that generally only independent auditors can reasonably provide. They include the Funds’ annual financial statement audit
and procedures that the independent auditors must perform in order to form an opinion on the Funds’ financial statements
(e.g., information systems and procedural reviews and testing). The Committee will monitor the audit services engagement
and approve any changes in terms, conditions or fees deemed by the Committee to be necessary or appropriate.
The Committee may grant general pre-approval to other audit
services, such as statutory audits and services associated with SEC registration statements, periodic reports and other documents
filed with the SEC or issued in connection with securities offerings.
The Committee has pre-approved the audit services listed on
Appendix A. The Committee must specifically approve all audit services not listed on Appendix A.
III. Audit-related Services
Audit-related services
are assurance and related services that are reasonably related to the performance of the audit or the review of the Funds’
financial statements or are traditionally performed by the independent auditors. The Committee believes that the provision of audit-related
services will not impair the independent auditors’ independence, and therefore may grant pre-approval to audit-related services.
Audit-related services include accounting consultations related to accounting, financial reporting or disclosure matters not classified
as “audit services;” assistance with understanding and implementing new accounting and financial reporting guidance
from rulemaking authorities; agreed-upon or expanded audit procedures relating to accounting and/or billing records required to
respond to or comply with financial, accounting or regulatory reporting matters; and assistance with internal control reporting
requirements under Form N-SAR or Form N-CSR.
The Committee has pre-approved the audit-related services
listed on Appendix B. The Committee must specifically approve all audit-related services not listed on Appendix B.
IV. Tax Services
The Committee believes
the independent auditors can provide tax services to the Funds, including tax compliance, tax planning, and tax advice, without
compromising the auditors’ independence. Therefore, the Committee may grant general pre-approval with respect to tax services
historically provided by the Funds’ independent auditors that do not, in the Committee’s view, impair auditor independence
and that are consistent with the SEC’s rules on auditor independence.
The Committee will not
grant pre-approval if the independent auditors initially recommends a transaction the sole business purpose of which is tax avoidance
and the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. The Committee may consult
outside counsel to determine
that tax planning and reporting positions are consistent with this Policy.
The Committee has pre-approved the tax-related services listed
on Appendix C. The Committee must specifically approve all tax-related services not listed on Appendix C.
V. Other Services
The Committee believes
it may grant approval of non-audit services that are permissible services for independent auditors to a Fund. The Committee has
determined to grant general pre-approval to other services that it believes are routine and recurring, do not impair auditor independence,
and are consistent with SEC rules on auditor independence.
The Committee has pre-approved the non-audit services listed
on Appendix D. The Committee must specifically approve all non-audit services not listed on Appendix D.
A list of the SEC’s prohibited non-audit services is
attached to this Policy as Appendix E. The SEC’s rules and relevant guidance should be consulted to determine the precise
definitions of these impermissible services and the applicability of exceptions to certain of the SEC’s prohibitions.
VI. Pre-approval of Fee levels and Budgeted Amounts
The Committee will annually
establish pre-approval fee levels or budgeted amounts for audit, audit-related, tax and non-audit services to be provided to the
Funds by the independent auditors. Any proposed services exceeding these levels or amounts require the Committee’s specific
pre-approval. The Committee considers fees for audit and non-audit services when deciding whether to pre-approve services. The
Committee may determine, for a pre-approval period of 12 months, the appropriate ratio between the total amount of fees for the
Fund’s audit, audit-related, and tax services (including fees for services provided to Fund affiliates that are subject to
pre-approval), and the total amount of fees for certain permissible non-audit services for the Fund classified as other services
(including any such services provided to Fund affiliates that are subject to pre-approval).
VII. Procedures
Requests or applications
for services to be provided by the independent auditors will be submitted to management. If management determines that the services
do not fall within those services generally pre-approved by the Committee and set out in the appendices to these procedures, management
will submit the services to the Committee or its delagee. Any such submission will include a detailed description of the services
to be rendered. Notwithstanding this paragraph, the Committee will, on a quarterly basis, receive from the independent auditors
a list of services provided for the previous calendar quarter on a cumulative basis by the auditors during the Pre-Approval Period.
VIII. Delegation
The Committee may delegate pre-approval authority to one or
more of the Committee’s members. Any member or members to whom such pre-approval authority is delegated must report any pre-approval
decisions, including any pre-approved services, to the Committee at its next scheduled meeting. The Committee will identify any
member to whom pre-approval authority is delegated in writing. The member will retain such authority for a period of 12 months
from the date of pre-approval unless
the Committee determines that a different period is appropriate. The period of delegated authority may be terminated by the Committee
or at the option of the member.
IX. Additional
Requirements
The Committee will take
any measures the Committee deems necessary or appropriate to oversee the work of the independent auditors and to assure the auditors’
independence from the Funds. This may include reviewing a formal written statement from the independent auditors delineating all
relationships between the auditors and the Funds, consistent with Independence Standards Board No. 1, and discussing with the auditors
their methods and procedures for ensuring independence.
Effective April 23,
2008, the KPMG LLP (“KPMG”) audit team for the ING Funds accepted the global responsibility for monitoring the auditor
independence for KPMG relative to the ING Funds. Using a proprietary system called Sentinel, the audit team is able to identify
and manage potential conflicts of interest across the member firms of the KPMG International Network and prevent the provision
of prohibited services to the ING entities that would impair KPMG independence with the respect to the ING Funds. In addition to
receiving pre-approval from the ING Funds Audit Committee for services provided to the ING Funds and for services for ING entities
in the Investment Company Complex, the audit team has developed a process for periodic notification via email to the ING Funds’
Audit Committee Chairpersons regarding requests to provide services to ING Groep NV and its affiliates from KPMG offices worldwide.
Additionally, KPMG provides a quarterly summary of the fees for services that have commenced for ING Groep NV and Affiliates at
each Audit Committee Meeting.
Last Approved: November
21, 2013
Appendix A
Pre-Approved Audit Services for the Pre-Approval Period October 1, 2013through December 31, 2014
| Service |
| |
The Fund(s) |
Fee Range |
| Statutory audits or financial audits (including tax services associated with audit services) |
√ |
As presented to Audit Committee[1] |
| Services associated with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings (e.g., consents), and assistance in responding to SEC comment letters. |
√ |
Not to exceed $9,750 per filing |
| Consultations by Fund management with respect to accounting or disclosure treatment of transactions or events and/or the actual or potential effect of final or proposed rules, standards or interpretations by the SEC, Financial Accounting Standards Board, or other regulatory or standard setting bodies. |
√ |
Not to exceed $8,000 during the Pre-Approval Period |
| Seed capital audit and related review and issuance of consent on the N-2 registration statement |
√ |
Not to exceed $13,750 per audit |
| Audit of summary portfolio of investments |
√ |
Not to exceed $525 per fund |
| ____________________ |
| (1) |
|
For new Funds launched during the Pre-Approval Period, the fee ranges pre-approved will be the same as those for existing Funds, pro-rated in accordance with inception dates as provided in the auditors’ Proposal or any Engagement Letter covering the period at issue. Fees in the Engagement Letter will be controlling. |
Appendix B
Pre-Approved Audit-Related Services for the Pre-Approval Period October 1, 2013through December 31, 2014
| Service |
| |
The Fund(s) |
Fund Affiliates |
Fee Range |
| Services related to Fund mergers (Excludes tax services - See Appendix C for tax services associated with Fund mergers) |
√ |
√ |
Not to exceed $10,000 per merger |
| Consultations by Fund management with respect to accounting or disclosure treatment of transactions or events and/or the actual or potential effect of final or proposed rules, standards or interpretations by the SEC, Financial Accounting Standards Board, or other regulatory or standard setting bodies. [Note: Under SEC rules some consultations may be “audit” services and others may be “audit-related” services.] |
√ |
|
Not to exceed $5,000 per occurrence during the Pre-Approval Period |
| Review of the Funds’ semi-annual and quarterly financial statements |
√ |
|
Not to exceed $2,525 per set of financial statements per fund |
| Reports to regulatory or government agencies related to the annual engagement |
√ |
|
Up to $5,000 per occurrence during the Pre-Approval Period |
| Regulatory compliance assistance |
√ |
√ |
Not to exceed $5,000 per quarter |
| Training courses |
|
√ |
Not to exceed $5,000 per course |
| For Prime Rate Trust, agreed upon procedures for quarterly reports to rating agencies |
√ |
|
Not to exceed $9,450 per quarter |
Appendix C
Pre-Approved Tax Services for the Pre-Approval Period October 1, 2013 through December 31, 2014
| Service |
| |
The Fund(s) |
Fund Affiliates |
Fee Range |
| Preparation of federal and state income tax returns and federal excise tax returns for the Funds including assistance and review with excise tax distributions |
√ |
|
As presented to Audit Committee[2] |
| Review of IRC Sections 851(b) and 817(h) diversification testing on a real-time basis |
√ |
|
As presented to Audit Committee[2] |
| Assistance and advice regarding year-end reporting for 1099’s |
√ |
|
As presented to Audit Committee[2] |
| Tax assistance and advice regarding statutory, regulatory or administrative developments |
√ |
√ |
Not to exceed $5,000 for the Funds or for the Funds’ investment adviser during the Pre-Approval Period |
| ____________________ |
| (1) |
|
For new Funds launched during the Pre-Approval Period, the fee ranges pre-approved will be the same as those for existing Funds, pro-rated in accordance with inception dates as provided in the auditors’ Proposal or any Engagement Letter covering the period at issue. Fees in the Engagement Letter will be controlling. |
Appendix C, continued
| Service |
| |
The Fund(s) |
Fund Affiliates |
Fee Range |
| Tax training courses |
|
√ |
Not to exceed $5,000 per course during the Pre-Approval Period |
| Tax services associated with Fund mergers |
√ |
√ |
Not to exceed $4,000 per fund per merger during the Pre-Approval Period |
| Other tax-related assistance and consultation, including, without limitation, assistance in evaluating derivative financial instruments and international tax issues, qualification and distribution issues, and similar routine tax consultations. |
√ |
|
Not to exceed $120,000 during the Pre-Approval Period |
Appendix D
Pre-Approved Other Services for the Pre-Approval Period October 1, 2013 through December 31, 2014
| Service |
| |
The Fund(s) |
Fund Affiliates |
Fee Range |
| Agreed-upon procedures for Class B share 12b-1 programs |
|
√ |
Not to exceed $60,000 during the Pre-Approval Period |
|
Security counts performed
pursuant to Rule 17f-2 of the 1940 Act (i.e., counts for Funds holding securities with affiliated sub-custodians)
Cost to be borne 50%
by the Funds and 50% by ING Investments, LLC. |
√
|
√
|
Not to exceed $5,300 per Fund during the Pre-Approval Period |
| Agreed upon procedures for 15 (c) FACT Books |
√ |
|
Not to exceed $50,000 during the Pre-Approval Period |
Appendix E
Prohibited Non-Audit Services
Dated: October 1, 2013 to December 31, 2014
| · | Bookkeeping or other services related to the accounting records or financial
statements of the Funds |
| · | Financial information systems design and implementation |
| · | Appraisal or valuation services, fairness opinions, or contribution-in-kind
reports |
| · | Internal audit outsourcing services |
| · | Broker-dealer, investment adviser, or investment banking services |
| · | Expert services unrelated to the audit |
| · | Any other service that the Public Company Accounting Oversight Board
determines, by regulation, is impermissible |
EXHIBIT
A
ING ASIA PACIFIC HIGH DIVIDEND EQUITY INCOME
FUND
ING BALANCED PORTFOLIO, INC.
ING EMERGING MARKETS LOCAL BOND FUND
ING EMERING MARKETS HIGH DIVIDEND EQUITY FUND
ING EQUITY TRUST
ING FUNDS TRUST
ING GLOBAL ADVANTAGE AND PREMIUM OPPORTUNITY
FUND
ING GLOBAL EQUITY DIVIDEND AND PREMIUM OPPORTUNITY
FUND
ING GLOBAL STRATEGIC INCOME FUND
ING INFRASTRUCTURE, INDUSTRIALS, AND MATERIALS
FUND
ING INTERMEDIATE BOND PORTFOLIO
ING INTERNATIONAL HIGH DIVIDEND EQUITY INCOME
FUND
ING INVESTORS TRUST
ING MONEY MARKET PORTFOLIO
ING MUTUAL FUNDS
ING PARTNERS, INC.
ING PRIME RATE TRUST
ING RISK MANAGED NATURAL RESOURCES FUNDING INVESTORS
TRUST
ING SENIOR INCOME FUND
ING SEPARATE PORTFOLIOS TRUST
ING SERIES FUND, INC.
ING SHORT DURATION HIGH INCOME FUND
ING STRATEGIC ALLOCATIONS PORTFOLIOS, INC.
ING VARIABLE FUNDS
ING VARIABLE INSURANCE TRUST
ING VARIABLE PORTFOLIOS INC,
ING VARIABLE PRODUCTS TRUST
|
|
|
| (e)(2) |
|
Percentage of services referred to in 4(b) — (4)(d) that were approved by the audit committee |
|
|
|
|
100% of the services were approved by the audit committee. |
|
|
| (f) |
|
Percentage of hours expended attributable to work performed by other than full time employees of KPMG if greater than 50%. |
|
|
|
|
Not applicable. |
|
|
| (g) |
|
Non-Audit Fees: The following table presents
(i) the aggregate non-audit fees (i.e., fees for audit-related, tax, and other services) billed to each Registrant by the
independent registered public accounting firm for each Registrant's fiscal years ended February 28, 2014 and February 28,
2013; and (ii) the aggregate non-audit fees billed to the investment adviser, or any of its affiliates that provide ongoing services to the registrant, by the independent
registered public accounting firm for the same time periods. |
|
|
| Registrant/Investment
Adviser | |
| 2014 | | |
| 2013 | |
| Voya Global Advantage and Premium
Opportunity | |
$ | 12,967 | | |
$ | 13,531 | |
| Voya Investments, LLC (1) | |
$ | 345,500 | | |
$ | 461,250 | |
_____________
(1) Each Registrant's investment adviser
and any of its affiliates, which are subsidiaries of Voya Financial, Inc.
|
|
|
| (h) |
|
Principal Accountants Independence: The Registrant’s Audit committee has considered whether the provision of non-audit services that were rendered to the
registrant’s investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to Rule 2-01(c)(7)(ii) of
Regulation S-X is compatible with maintaining KPMG’s independence. |
| Item 5. |
Audit Committee of Listed Registrants. |
|
|
|
| a. |
|
The registrant has a separately-designated standing audit committee.
The members are J. Michael Earley, Colleen D. Baldwin, Peter S. Drotch, Patrick W. Kenny, Joseph E. Obermeyer, and Roger B. Vincent. |
|
|
| b. |
|
Not applicable. |
13
| Item 6. |
Schedule of Investments. |
Report of Independent Registered Public
Accounting Firm
The Shareholders and Board of Trustees
ING Global Advantage and Premium Opportunity
Fund
We have audited, in accordance with the standards
of the Public Company Accounting Oversight Board (United States), the statement of assets and liabilities, including the summary
portfolio of investments, of ING Global Advantage and Premium Opportunity Fund as of February 28, 2014, and the related statement
of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then
ended, and the financial highlights for each of the years or periods in the nine-year period then ended, and have issued our unqualified
report thereon dated April 24, 2014 (which report and financial statements are included in Item 1 of this Certified Shareholder
Report on Form N-CSR). In connection with our audits of the aforementioned financial statements and financial highlights, we also
audited the related portfolio of investments included in Item 6 of this Form N-CSR. The portfolio of investments is the responsibility
of management. Our responsibility is to express an opinion on the portfolio of investments based on our audits.
In our opinion, the portfolio of investments,
when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
Boston, Massachusetts
April 24, 2014
ING GLOBAL ADVANTAGE AND
PREMIUM OPPORTUNITY FUND |
PORTFOLIO OF INVESTMENTS
AS OF FEBRUARY 28, 2014 |
Shares
|
|
|
|
|
|
|
|
Value
|
|
Percentage
of Net
Assets
|
| |
COMMON STOCK: 98.4% |
|
|
| 54,486 |
|
|
|
|
|
Banco do Brasil S.A. |
|
$ |
481,015 |
|
|
|
0.2 |
|
| 67,577 |
|
|
|
|
|
Petroleo Brasileiro SA ADR |
|
|
756,862 |
|
|
|
0.3 |
|
| 90,496 |
|
|
|
|
|
Sul America SA |
|
|
577,770 |
|
|
|
0.3 |
|
| |
|
|
|
|
|
|
|
|
1,815,647 |
|
|
|
0.8 |
|
| |
|
|
| 85,000 |
|
|
|
|
|
Barrick Gold Corp. |
|
|
1,732,300 |
|
|
|
0.7 |
|
| |
|
|
| 1,084,000 |
|
|
|
|
|
Bank of China Ltd. |
|
|
456,482 |
|
|
|
0.2 |
|
| 206,000 |
|
|
|
|
|
China Resources Enterprise |
|
|
580,901 |
|
|
|
0.2 |
|
| |
|
|
|
|
|
|
|
|
1,037,383 |
|
|
|
0.4 |
|
| |
|
|
| 95,163 |
|
|
|
|
|
AXA S.A. |
|
|
2,478,742 |
|
|
|
1.0 |
|
| 8,196 |
|
|
|
@ |
|
Criteo SA ADR |
|
|
438,240 |
|
|
|
0.2 |
|
| 49,657 |
|
|
|
|
|
Total S.A. |
|
|
3,221,703 |
|
|
|
1.3 |
|
| 30,692 |
|
|
|
|
|
Vinci S.A. |
|
|
2,288,875 |
|
|
|
1.0 |
|
| |
|
|
|
|
|
|
|
|
8,427,560 |
|
|
|
3.5 |
|
| |
|
|
| 14,076 |
|
|
|
|
|
Allianz AG |
|
|
2,510,252 |
|
|
|
1.0 |
|
| 19,938 |
|
|
|
|
|
Bayerische Motoren Werke AG |
|
|
2,313,355 |
|
|
|
1.0 |
|
| 46,084 |
|
|
|
|
|
Deutsche Bank AG |
|
|
2,228,828 |
|
|
|
0.9 |
|
| 9,220 |
|
|
|
@ |
|
Linde AG |
|
|
1,908,346 |
|
|
|
0.8 |
|
| 17,427 |
|
|
|
|
|
Siemens AG |
|
|
2,323,498 |
|
|
|
1.0 |
|
| |
|
|
|
|
|
|
|
|
11,284,279 |
|
|
|
4.7 |
|
| |
|
|
| 448,125 |
|
|
|
|
|
AIA Group Ltd. |
|
|
2,195,608 |
|
|
|
0.9 |
|
| |
|
|
| 23,958 |
|
|
|
@ |
|
Check Point Software Technologies |
|
|
1,615,248 |
|
|
|
0.7 |
|
| 35,220 |
|
|
|
|
|
Nice Systems Ltd. ADR |
|
|
1,446,838 |
|
|
|
0.6 |
|
| |
|
|
|
|
|
|
|
|
3,062,086 |
|
|
|
1.3 |
|
| |
|
|
| 173,400 |
|
|
|
|
|
Itochu Corp. |
|
|
2,160,895 |
|
|
|
0.9 |
|
| 61,100 |
|
|
|
|
|
Japan Tobacco, Inc. |
|
|
1,946,019 |
|
|
|
0.8 |
|
| 6,000 |
|
|
|
|
|
Keyence Corp. |
|
|
2,583,758 |
|
|
|
1.1 |
|
| 455,800 |
|
|
|
|
|
Mitsubishi UFJ Financial Group, Inc. |
|
|
2,641,204 |
|
|
|
1.1 |
|
| 56,700 |
|
|
|
|
|
Sumitomo Mitsui Financial Group, Inc. |
|
|
2,545,719 |
|
|
|
1.1 |
|
| 68,189 |
|
|
|
|
|
Tokio Marine Holdings, Inc. |
|
|
2,025,793 |
|
|
|
0.8 |
|
| 60,600 |
|
|
|
|
|
Toyota Motor Corp. |
|
|
3,487,719 |
|
|
|
1.4 |
|
| |
|
|
|
|
|
|
|
|
17,391,107 |
|
|
|
7.2 |
|
| |
|
|
| 100 |
|
|
|
|
|
Malayan Banking BHD |
|
|
299 |
|
|
|
0.0 |
|
| |
|
|
| 12,673 |
|
|
|
@ |
|
Fomento Economico Mexicano SAB de CV ADR |
|
|
1,085,062 |
|
|
|
0.5 |
|
| 114,489 |
|
|
|
|
|
Grupo Financiero Banorte |
|
|
741,201 |
|
|
|
0.3 |
|
| |
|
|
|
|
|
|
|
|
1,826,263 |
|
|
|
0.8 |
|
| |
|
|
| 18,826 |
|
|
|
@ |
|
Airbus Group NV |
|
|
1,383,284 |
|
|
|
0.6 |
|
| 60,904 |
|
|
|
|
|
Reed Elsevier NV |
|
|
1,332,875 |
|
|
|
0.5 |
|
| 27,441 |
|
|
|
|
|
Royal Dutch Shell PLC |
|
|
1,001,416 |
|
|
|
0.4 |
|
| |
|
|
|
|
|
|
|
|
3,717,575 |
|
|
|
1.5 |
|
| |
|
|
| 58,666 |
|
|
|
|
|
Subsea 7 SA |
|
|
1,119,170 |
|
|
|
0.5 |
|
| |
|
|
| 100,684 |
|
|
|
|
|
Cia de Minas Buenaventura SAA ADR |
|
|
1,268,618 |
|
|
|
0.5 |
|
| |
|
|
| 11,260 |
|
|
|
|
|
Powszechny Zaklad Ubezpieczen SA |
|
|
1,645,556 |
|
|
|
0.7 |
|
| |
|
|
| 133,808 |
|
|
|
|
|
Sberbank of Russia ADR |
|
|
1,379,561 |
|
|
|
0.6 |
|
| |
|
|
| 171,000 |
|
|
|
|
|
DBS Group Holdings Ltd. |
|
|
2,230,719 |
|
|
|
0.9 |
|
| |
|
|
| 1,732 |
|
|
|
|
|
Samsung Electronics Co., Ltd. |
|
|
2,194,103 |
|
|
|
0.9 |
|
| |
|
|
| 130,761 |
|
|
|
|
|
Telefonica S.A. |
|
|
1,999,378 |
|
|
|
0.8 |
|
| |
|
|
| 25,173 |
|
|
|
|
|
Cie Financiere Richemont SA |
|
|
2,500,819 |
|
|
|
1.0 |
|
| 269,074 |
|
|
|
|
|
Glencore Xstrata PLC |
|
|
1,481,712 |
|
|
|
0.6 |
|
| 53,183 |
|
|
|
|
|
Nestle S.A. |
|
|
4,017,719 |
|
|
|
1.7 |
|
| 43,635 |
|
|
|
|
|
Novartis AG |
|
|
3,631,746 |
|
|
|
1.5 |
|
| 16,780 |
|
|
|
|
|
Roche Holding AG—Genusschein |
|
|
5,166,564 |
|
|
|
2.2 |
|
| |
|
|
|
|
|
|
|
|
16,798,560 |
|
|
|
7.0 |
|
| |
|
|
| 76,816 |
|
|
|
|
|
Taiwan Semiconductor Manufacturing Co., Ltd. ADR |
|
|
1,388,065 |
|
|
|
0.6 |
|
| |
|
|
| 171,648 |
|
|
|
|
|
Akbank TAS |
|
|
442,188 |
|
|
|
0.2 |
|
| |
|
|
| 283,764 |
|
|
|
|
|
Barclays PLC |
|
|
1,195,365 |
|
|
|
0.5 |
|
| 61,243 |
|
|
|
|
|
BG Group PLC |
|
|
1,114,230 |
|
|
|
0.5 |
|
| 362,988 |
|
|
|
|
|
BP PLC |
|
|
3,067,607 |
|
|
|
1.3 |
|
| 272,711 |
|
|
|
|
|
HSBC Holdings PLC |
|
|
2,878,173 |
|
|
|
1.2 |
|
| 140,528 |
|
|
|
|
|
Prudential PLC |
|
|
3,181,913 |
|
|
|
1.3 |
|
ING GLOBAL ADVANTAGE AND
PREMIUM OPPORTUNITY FUND |
PORTFOLIO OF INVESTMENTS
AS OF FEBRUARY 28, 2014 (CONTINUED) |
Shares
|
|
|
|
|
|
|
|
Value
|
|
Percentage
of Net
Assets
|
| |
COMMON STOCK: (continued) |
|
United Kingdom: (continued) |
| 64,921 |
|
|
|
|
|
Rio Tinto PLC |
|
$ |
3,722,585 |
|
|
|
1.5 |
|
| 71,757 |
|
|
|
@ |
|
Scottish & Southern Energy PLC |
|
|
1,684,681 |
|
|
|
0.7 |
|
| 69,217 |
|
|
|
|
|
Standard Chartered PLC |
|
|
1,465,200 |
|
|
|
0.6 |
|
| 117,008 |
|
|
|
|
|
WPP PLC |
|
|
2,562,723 |
|
|
|
1.1 |
|
| |
|
|
|
|
|
|
|
|
20,872,477 |
|
|
|
8.7 |
|
| |
|
|
| 40,577 |
|
|
|
@ |
|
Adobe Systems, Inc. |
|
|
2,783,988 |
|
|
|
1.2 |
|
| 12,676 |
|
|
|
|
|
Air Products & Chemicals, Inc. |
|
|
1,537,852 |
|
|
|
0.6 |
|
| 11,065 |
|
|
|
@ |
|
Allegion Public Ltd. |
|
|
601,383 |
|
|
|
0.2 |
|
| 63,462 |
|
|
|
|
|
Altria Group, Inc. |
|
|
2,301,132 |
|
|
|
1.0 |
|
| 39,362 |
|
|
|
|
|
American Electric Power Co., Inc. |
|
|
1,975,972 |
|
|
|
0.8 |
|
| 57,589 |
|
|
|
|
|
AT&T, Inc. |
|
|
1,838,817 |
|
|
|
0.8 |
|
| 194,817 |
|
|
|
|
|
Bank of America Corp. |
|
|
3,220,325 |
|
|
|
1.3 |
|
| 88,986 |
|
|
|
|
|
Blackstone Group LP |
|
|
2,967,683 |
|
|
|
1.2 |
|
| 58,639 |
|
|
|
|
|
Carnival Corp. |
|
|
2,325,623 |
|
|
|
1.0 |
|
| 122,842 |
|
|
|
|
|
Cisco Systems, Inc. |
|
|
2,677,956 |
|
|
|
1.1 |
|
| 69,239 |
|
|
|
|
|
Citigroup, Inc. |
|
|
3,367,093 |
|
|
|
1.4 |
|
| 21,733 |
|
|
|
|
|
Comcast Corp. — Class A |
|
|
1,123,379 |
|
|
|
0.5 |
|
| 47,919 |
|
|
|
|
|
CVS Caremark Corp. |
|
|
3,504,796 |
|
|
|
1.5 |
|
| 17,916 |
|
|
|
|
|
Cytec Industries, Inc. |
|
|
1,696,108 |
|
|
|
0.7 |
|
| 16,874 |
|
|
|
@ |
|
Dresser-Rand Group, Inc. |
|
|
916,764 |
|
|
|
0.4 |
|
| 22,718 |
|
|
|
@ |
|
eBay, Inc. |
|
|
1,335,137 |
|
|
|
0.6 |
|
| 90,087 |
|
|
|
|
|
EMC Corp. |
|
|
2,375,594 |
|
|
|
1.0 |
|
| 43,362 |
|
|
|
|
|
Exelon Corp. |
|
|
1,318,638 |
|
|
|
0.5 |
|
| 79,045 |
|
|
|
|
|
Freeport-McMoRan Copper & Gold, Inc. |
|
|
2,578,448 |
|
|
|
1.1 |
|
| 155,744 |
|
|
|
|
|
General Electric Co. |
|
|
3,966,800 |
|
|
|
1.6 |
|
| 19,323 |
|
|
|
|
|
Goldman Sachs Group, Inc. |
|
|
3,216,313 |
|
|
|
1.3 |
|
| 4,347 |
|
|
|
@ |
|
Google, Inc. — Class A |
|
|
5,284,431 |
|
|
|
2.2 |
|
| 37,648 |
|
|
|
|
|
Halliburton Co. |
|
|
2,145,936 |
|
|
|
0.9 |
|
| 23,484 |
|
|
|
|
|
Hess Corp. |
|
|
1,879,424 |
|
|
|
0.8 |
|
| 24,230 |
|
|
|
|
|
Honeywell International, Inc. |
|
|
2,288,281 |
|
|
|
1.0 |
|
| 33,195 |
|
|
|
@ |
|
Ingersoll-Rand PLC — Class A |
|
|
2,029,542 |
|
|
|
0.8 |
|
| 75,081 |
|
|
|
|
|
JPMorgan Chase & Co. |
|
|
4,266,102 |
|
|
|
1.8 |
|
| 27,995 |
|
|
|
|
|
Kellogg Co. |
|
|
1,699,017 |
|
|
|
0.7 |
|
| 51,055 |
|
|
|
|
|
Marathon Oil Corp. |
|
|
1,710,342 |
|
|
|
0.7 |
|
| 75,674 |
|
|
|
|
|
Merck & Co., Inc. |
|
|
4,312,661 |
|
|
|
1.8 |
|
| 45,718 |
|
|
|
|
|
Metlife, Inc. |
|
|
2,316,531 |
|
|
|
1.0 |
|
| 95,951 |
|
|
|
|
|
Microsoft Corp. |
|
|
3,675,883 |
|
|
|
1.5 |
|
| 75,243 |
|
|
|
@ |
|
Mylan Laboratories |
|
|
4,181,253 |
|
|
|
1.7 |
|
| 40,675 |
|
|
|
|
|
NetApp, Inc. |
|
|
1,643,677 |
|
|
|
0.7 |
|
| 35,560 |
|
|
|
|
|
Nike, Inc. |
|
|
2,784,348 |
|
|
|
1.2 |
|
| 71,407 |
|
|
|
@ |
|
Nuance Communications, Inc. |
|
|
1,091,813 |
|
|
|
0.5 |
|
| 28,958 |
|
|
|
|
|
Occidental Petroleum Corp. |
|
|
2,795,026 |
|
|
|
1.2 |
|
| 89,179 |
|
|
|
|
|
Oracle Corp. |
|
|
3,487,791 |
|
|
|
1.5 |
|
| 158,081 |
|
|
|
|
|
Pfizer, Inc. |
|
|
5,075,981 |
|
|
|
2.1 |
|
| 28,572 |
|
|
|
|
|
Philip Morris International, Inc. |
|
|
2,311,761 |
|
|
|
1.0 |
|
| 46,891 |
|
|
|
|
|
PPL Corp. |
|
|
1,514,110 |
|
|
|
0.6 |
|
| 22,089 |
|
|
|
@ |
|
Premier, Inc. |
|
|
738,877 |
|
|
|
0.3 |
|
| 41,283 |
|
|
|
|
|
Procter & Gamble Co. |
|
|
3,247,321 |
|
|
|
1.3 |
|
| 33,445 |
|
|
|
|
|
Qualcomm, Inc. |
|
|
2,518,074 |
|
|
|
1.0 |
|
| 177,738 |
|
|
|
|
|
Regions Financial Corp. |
|
|
1,891,132 |
|
|
|
0.8 |
|
| 34,408 |
|
|
|
@ |
|
Sensata Technologies Holdings N.V. |
|
|
1,398,341 |
|
|
|
0.6 |
|
| 35,231 |
|
|
|
|
|
Target Corp. |
|
|
2,203,347 |
|
|
|
0.9 |
|
| 998 |
|
|
|
|
|
Transocean Ltd |
|
|
42,073 |
|
|
|
0.0 |
|
| 27,156 |
|
|
|
@ |
|
Transocean Ltd. |
|
|
1,151,414 |
|
|
|
0.5 |
|
| 12,008 |
|
|
|
|
|
United Parcel Service, Inc. — Class B |
|
|
1,150,006 |
|
|
|
0.5 |
|
| 32,533 |
|
|
|
|
|
UnitedHealth Group, Inc. |
|
|
2,513,825 |
|
|
|
1.0 |
|
| 37,139 |
|
|
|
|
|
Walt Disney Co. |
|
|
3,001,203 |
|
|
|
1.2 |
|
| 99,336 |
|
|
|
@ |
|
Weatherford International Ltd. |
|
|
1,655,931 |
|
|
|
0.7 |
|
| 93,007 |
|
|
|
|
|
Wells Fargo & Co. |
|
|
4,317,385 |
|
|
|
1.8 |
|
| 11,254 |
|
|
|
@ |
|
Wesco International, Inc. |
|
|
970,207 |
|
|
|
0.4 |
|
| 21,719 |
|
|
|
|
|
Yum! Brands, Inc. |
|
|
1,608,944 |
|
|
|
0.7 |
|
| |
|
|
|
|
|
|
|
|
132,531,791 |
|
|
|
55.2 |
|
| |
| |
|
|
|
|
|
Total Common Stock |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
(Cost $194,676,099) |
|
|
236,360,293 |
|
|
|
98.4 |
|
| |
|
|
|
|
|
Assets in Excess of Other Liabilities |
|
|
3,940,982 |
|
|
|
1.6 |
|
| |
|
|
|
|
|
Net
Assets |
|
$ |
240,301,275 |
|
|
|
100.0 |
|
@ |
|
Non-income producing security |
ADR |
|
American Depositary Receipt |
|
|
Cost for federal income tax purposes is $194,977,308. |
Net unrealized
appreciation consists of: |
|
|
|
|
|
|
Gross
Unrealized Appreciation |
|
|
|
$ |
47,253,828 |
|
Gross
Unrealized Depreciation |
|
|
|
|
(5,870,843 |
) |
Net Unrealized
Appreciation |
|
|
|
$ |
41,382,985 |
|
Sector Diversification
|
|
|
|
Percentage
of Net Assets
|
Financials |
|
|
|
|
24.4 |
% |
Information
Technology |
|
|
|
|
15.4 |
|
Health
Care |
|
|
|
|
10.6 |
|
Consumer
Discretionary |
|
|
|
|
10.5 |
|
Energy |
|
|
|
|
9.5 |
|
Consumer
Staples |
|
|
|
|
8.7 |
|
Industrials |
|
|
|
|
8.6 |
|
Materials |
|
|
|
|
6.5 |
|
Utilities |
|
|
|
|
2.6 |
|
Telecommunication
Services |
|
|
|
|
1.6 |
|
Assets in Excess
of Other Liabilities |
|
|
|
|
1.6 |
|
Net
Assets |
|
|
|
|
100.0 |
% |
| Item 7. |
Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment companies. |
VOYA FAMILY OF FUNDS
PROXY
VOTING PROCEDURES and guidelines
Effective Date: July 10, 2003
Revision Date: May 1, 2014
B-1
Table of Contents
| I. |
Introduction |
1 |
| II. |
Compliance Committee |
1 |
| III. |
Delegation of Voting Authority |
1 |
| IV. |
Approval and Review of Procedures |
3 |
| V. |
Voting Procedures and Guidelines |
3 |
| VI. |
Conflicts of Interest |
7 |
| VII. |
Reporting and Record Retention |
8 |
| EXHIBIT 1 – List of Voya funds |
9 |
| EXHIBIT 2 – Proxy Voting Procedures of the Advisers |
10 |
| I. |
Introduction |
10 |
| II. |
Roles and Responsibilities |
10 |
| III. |
Voting Procedures |
14 |
| IV. |
Assessment of the Agent and Conflicts of Interest |
15 |
| V. |
Reporting and Record Retention |
17 |
| APPENDIX 1 – Proxy Group |
18 |
| EXHIBIT 3 – Proxy Voting Guidelines of the Voya funds |
19 |
| I. |
Introduction |
19 |
| II. |
Guidelines |
19 |
| General Policies |
19 |
| 1. |
The Board of Directors |
20 |
| 2. |
Proxy Contests |
28 |
| 3. |
Auditors |
28 |
| 4. |
Proxy Contest Defenses |
28 |
| 5. |
Tender Offer Defenses |
29 |
| 6. |
Miscellaneous |
31 |
| 7. |
Capital Structure |
33 |
| 8. |
Executive and Director Compensation |
35 |
| 9. |
State of Incorporation |
39 |
| 10. |
Mergers and Corporate Restructurings |
40 |
| 11. |
Mutual Fund Proxies |
40 |
| 12. |
Social and Environmental Issues |
41 |
| 13. |
Global Proxies |
42 |
i
The following are
the Proxy Voting Procedures and Guidelines (the “Procedures and Guidelines”) of the Voya family of funds set forth
on Exhibit 1 attached hereto and each portfolio or series thereof,
except for any “Sub-Adviser-Voted Series” identified on Exhibit 1 and further described in Section III.
below (each non-Sub-Adviser-Voted Series hereinafter referred to as a “Fund” and collectively, the “Funds”).
The purpose of these Procedures and Guidelines is to set forth the process by which each Fund subject
to these Procedures and Guidelines will vote proxies related to the equity assets in its investment portfolio (the “portfolio
securities”). The term “proxies” as used herein shall include votes in connection with annual and special meetings
of equity stockholders but not those regarding bankruptcy matters and/or related plans of reorganization. The Procedures and Guidelines
have been approved by the Funds’ Boards of Trustees/Directors1 (each a “Board” and collectively, the
“Boards”), including a majority of the independent Trustees/Directors2 of the Boards. These Procedures and
Guidelines may be amended only by the Boards. The Boards shall review these Procedures and Guidelines at their discretion, and
make any revisions thereto as deemed appropriate by the Boards.
The Boards hereby delegate to the Compliance
Committee of each Board (each a “Committee” and collectively, the “Committees”) the authority and responsibility
to oversee the implementation of these Procedures and Guidelines and, where applicable, to make determinations on behalf of a Board
with respect to the voting of proxies on behalf of each Fund. Furthermore, the Boards hereby delegate to each Committee the authority
to review and approve material changes to proxy voting procedures of any Fund’s investment adviser (the “Adviser”).
The Proxy Voting Procedures of the Adviser (the “Adviser Procedures”) are attached hereto as Exhibit 2.
Any determination regarding the voting of proxies of each Fund that is made by a Committee, or any member
thereof, as permitted herein, shall be deemed to be a good faith determination regarding the voting of proxies by the full Board.
Each Committee may rely on the Adviser through the Proxy Coordinator, Agent, and/or Proxy Group (as such terms are defined
in the Adviser Procedures (Exhibit 2, Sections II.A., B., and C., respectively)) to deal in the first instance
with the application of these Procedures and Guidelines. Each Committee shall conduct itself in accordance with its charter.
| III. | Delegation of Voting Authority |
Except as otherwise provided for herein,
the Boards hereby delegate to the Adviser to each Fund the authority and responsibility to vote all proxies with respect to all
portfolio securities of the
____________________
| 1 | Reference in these Procedures to one or more Funds shall, as applicable,
mean those Funds that are under the jurisdiction of the particular Board or Compliance Committee at issue. No provision in these
Procedures is intended to impose any duty upon the particular Board or Compliance Committee with respect to any other Fund. |
| 2 | The independent Trustees/Directors are those Board members who are
not “interested persons” of the Funds within the meaning of Section 2(a)(19) of the Investment Company Act of 1940. |
1
Fund in accordance with the current
proxy voting procedures and guidelines that have been approved by the Board. The Boards may revoke such delegation with respect
to any proxy or proposal, and assume the responsibility of voting any Fund proxy or proxies as they deem appropriate. Non-material
amendments to the Procedures and Guidelines may be approved for immediate implementation by the President or Chief Financial Officer
of a Fund, subject to ratification at the next regularly scheduled meeting of the Compliance Committee.
A Board may
elect to delegate the voting of proxies to the Sub-Adviser of a portfolio or series of the Voya funds. In so doing, the Board shall
also approve the Sub-Adviser’s proxy policies for implementation on behalf of such portfolio or series (a “Sub-Adviser-Voted
Series”). Sub-Adviser-Voted Series shall not be covered under
these Procedures and Guidelines, except as described in Section VII.A. below with respect to vote reporting requirements,
but rather shall be covered by such Sub-Adviser’s proxy policies, provided that the Board, including a majority of the independent
Trustees/Directors3, has approved them on behalf of such Sub-Adviser-Voted Series, and ratifies any subsequent
changes at the next regularly scheduled meeting of the Compliance Committee and the Board.
When a Fund participates in the lending
of its securities and the securities are on loan at record date, proxies related to such securities will not be forwarded to the
Adviser by the Fund’s custodian and therefore will not be voted. However, the Adviser shall use
best efforts to recall or restrict specific securities from loan for the purpose of facilitating a “material” vote
as described in the Adviser Procedures.
Funds that are “Funds-of-Funds”
will “echo” vote their interests in underlying mutual funds, which may include mutual funds other than the Voya funds
(or portfolios or series thereof) set forth on Exhibit 1 attached hereto. This means that, if the Fund-of-Funds
must vote on a proposal with respect to an underlying investment company, the Fund-of-Funds will vote its interest in that underlying
fund in the same proportion all other shareholders in the underlying investment company voted their interests.
However, if the underlying fund has
no other shareholders, the Fund-of-Funds will vote as follows:
| A. | If the Fund-of-Funds and the underlying fund are being solicited
to vote on the same proposal (e.g., the election of fund directors/trustees), the Fund-of-Funds will vote the shares it
holds in the underlying fund in the same proportion as all votes received from the holders of the Fund-of-Funds’ shares with
respect to that proposal; and |
| B. | If the Fund-of-Funds is being solicited to vote on a proposal for
an underlying fund (e.g., a new Sub-Adviser to the underlying fund), and there is no corresponding proposal at the Fund-of-Funds
level, the Board shall determine the most appropriate method of voting with respect to the underlying fund proposal. |
____________________
| 3 | The independent Trustees/Directors are those Board members who are
not “interested persons” of the Funds within the meaning of Section 2(a)(19) of the Investment Company Act of 1940. |
2
The foregoing procedure shall also apply
to any Voya fund (an “Investing Fund”) that, while not a Fund-of-Funds, invests in one or more underlying funds. Accordingly:
| A. | Each Investing Fund will “echo” vote its interests in
an underlying fund, if the underlying fund has shareholders other than the Investing Fund; |
| B. | In the event an underlying fund has no other shareholders, and the
Investing Fund and the underlying fund are being solicited to vote on the same proposal, the Investing Fund will vote its interests
in the underlying fund in the same proportion as all votes received from the holders of its own shares on that proposal; and |
| C. | In the event an underlying fund has no other shareholders, and there
is no corresponding proposal at the Investing Fund level, the Board shall determine the most appropriate method of voting with
respect to the underlying fund proposal. |
A fund that is a “Feeder Fund”
in a master-feeder structure does not echo vote. Rather, it passes votes requested by the underlying master fund to its shareholders.
This means that, if the Feeder Fund is solicited by the master fund, it will request instructions from its own shareholders, either
directly or, in the case of an insurance-dedicated Fund, through an insurance product or retirement plan, as to the manner in which
to vote its interest in an underlying master fund.
When a Voya fund is a feeder in a master-feeder
structure, proxies for the portfolio securities owned by the master fund will be voted pursuant to the master fund’s proxy
voting policies and procedures. As such, except as described in Section VII.A. below with respect to vote reporting requirements,
Feeder Funds shall not be subject to these Procedures and Guidelines.
| IV. | Approval and Review of Procedures |
Each
Fund’s Adviser has adopted proxy voting procedures in connection with the voting of portfolio securities for the Funds as
attached hereto in Exhibit 2. The Boards hereby approve such procedures. All material changes to the Adviser
Procedures must be approved by the Boards or the Compliance Committees prior to implementation; however, the President or Chief
Financial Officer of a Fund may make such non-material changes as he/she deems appropriate, subject to ratification by the Boards
or the Compliance Committees at their next regularly scheduled meeting.
| V. | Voting Procedures and Guidelines |
The
Guidelines that are set forth in Exhibit 3 hereto specify the manner in which the Funds generally
will vote with respect to the proposals discussed therein.
Unless otherwise noted, the defined
terms used hereinafter shall have the same meaning as defined in the Adviser Procedures (Exhibit 2).
A.
Routine Matters
The Agent shall be instructed
to submit a vote in accordance with the Guidelines where such Guidelines provide a clear policy (e.g., “For,”
“Against,” “Withhold,” or “Abstain”)
3
on a proposal. However,
the Agent shall be directed to refer any proxy proposal to the Proxy Coordinator for instructions as if it were a matter requiring
case-by-case consideration under circumstances where the application of the Guidelines is unclear, it appears to involve unusual
or controversial issues, or an Investment Professional (as such term is defined in the Adviser Procedures (Exhibit 2,
Section II.D.)) recommends a vote contrary to the Guidelines.
B.
Matters Requiring Case-by-Case Consideration
The Agent shall be directed
to refer proxy proposals accompanied by its written analysis and voting recommendation to the Proxy Coordinator where the Guidelines
have noted “case-by-case” consideration.
Upon receipt of a referral
from the Agent, the Proxy Coordinator may solicit additional research from the Agent, Investment Professional(s), as well as from
any other source or service.
Except in cases in which
the Proxy Group has previously provided the Proxy Coordinator with standing instructions to vote in accordance with the Agent’s
recommendation, the Proxy Coordinator will forward the Agent’s analysis and recommendation and/or any research obtained from
the Investment Professional(s), the Agent, or any other source to the Proxy Group. The Proxy Group may consult with the Agent and/or
Investment Professional(s), as it deems necessary.
In the event a Proxy
Group member believes he/she has a potential conflict of interest that may preclude him/her from making a vote determination in
the best interests of the beneficial owners of the applicable Fund, such Proxy Group member shall so advise the Proxy Coordinator.
The Proxy Group member may elect to recuse himself/herself from consideration of the relevant proxy or ask the Proxy Coordinator
to solicit the opinion of Counsel (as such term is defined in the Adviser Procedures (Exhibit 2, Section IV.A.)
on the matter, recusing himself/herself only in the event Counsel determines that a material conflict of interest (as such term
is defined in Section V.B.3. below) exists with respect to the Proxy Group member. If recusal, whether voluntary or pursuant
to a finding of Counsel, does not occur prior to the member’s participation in any Proxy Group discussion of the relevant
proxy, any Out-of-Guidelines Vote determination shall be subject to the Compliance Committee referral process described in Section V.B.3.
below.
The Proxy Coordinator shall
use best efforts to convene the Proxy Group with respect to all matters requiring its consideration. In the event quorum requirements
cannot be timely met in connection with a voting deadline, it shall be the policy of the Funds to vote in accordance with the Agent’s
recommendation, unless the Agent’s recommendation is deemed to be materially conflicted as provided for under the Adviser
Procedures, in which case no action shall be taken on such matter (i.e., a “Non-Vote”).
1.
Within-Guidelines Votes: Votes in Accordance with a Fund’s Guidelines and/or,
where applicable, Agent Recommendation
4
In the event the Proxy
Group and, where applicable, any Investment Professional participating in the voting process, recommend a vote Within Guidelines,
the Proxy Group will instruct the Agent, through the Proxy Coordinator, to vote in this manner, except that the
Proxy Coordinator may first consult with a Fund’s Compliance Committee as described in Section V.B.5. below. Except
as provided for herein, no Conflicts Report (as such term is defined in the Adviser Procedures (Exhibit 2, Section IV.B.))
is required in connection with Within-Guidelines Votes.
2.
Non-Votes: Votes in Which No Action is Taken
The Proxy Group may recommend
that a Fund refrain from voting under circumstances including, but not limited to, the following: (1) if the economic effect
on shareholders’ interests or the value of the portfolio holding is indeterminable or insignificant, e.g., proxies
in connection with fractional shares, securities no longer held in the portfolio of a Voya fund or proxies being considered on
behalf of a Fund that is no longer in existence; or (2) if the cost of voting a proxy outweighs the benefits, e.g.,
certain international proxies, particularly in cases in which share blocking practices may impose trading restrictions on the relevant
portfolio security. In such instances, the Proxy Group may instruct the Agent, through the Proxy Coordinator, not to vote such
proxy. The Proxy Group may provide the Proxy Coordinator with standing instructions on parameters that would dictate a Non-Vote
without the Proxy Group’s review of a specific proxy.
Reasonable efforts shall be made
to secure and vote all other proxies for the Funds, but, particularly in markets in which shareholders’ rights are limited,
Non-Votes may also occur in connection with a Fund’s related inability to timely access ballots or other proxy information
in connection with its portfolio securities.
Non-Votes may also result in certain
cases in which the Agent’s recommendation has been deemed to be conflicted, as described in Sections V.B. above and V.B.4.
below.
3.
Out-of-Guidelines Votes: Votes Contrary to Procedures and Guidelines, or Agent Recommendation;
where applicable, Where No Recommendation is Provided by Agent; or Where Agent’s Recommendation is Conflicted
If the Proxy Group recommends
that a Fund vote contrary to the Guidelines, or the recommendation of the Agent, where applicable; if the Agent has made no recommendation
on a matter and the Procedures and Guidelines are silent; or the Agent’s recommendation on a matter is deemed to be materially
conflicted as provided for under the Adviser Procedures, the Proxy Coordinator will then request that all members of the Proxy
Group participating in the voting process and each Investment Professional participating in the voting process complete a Conflicts
Report.
5
As provided for in the
Adviser Procedures, the Proxy Coordinator shall be responsible for identifying to Counsel potential conflicts of interest with
respect to the Agent, the Advisers, the Funds’ principal underwriters (“Underwriters”), or an affiliated person
(as such term is defined in Section 2(a)(3) of the Investment Company Act of 1940) of the Funds, their investment advisers, or
principal underwriters (hereinafter, “Affiliate”). Such potential conflicts of interest are identified by the Proxy
Coordinator based upon information periodically provided by the Agent; analyses of client, distributor, broker-dealer, and vendor
lists; and information derived from other sources, including public filings. The Proxy Coordinator gathers and analyzes this information
on a best efforts basis, as much of this information is provided directly by individuals and groups other than the Proxy Coordinator,
and the Advisers rely upon the accuracy of the information received from such parties. Such potential conflicts of interest shall
be documented as deemed appropriate by Counsel, e.g., on a consolidated basis rather than individual Conflicts Reports.
Upon Counsel’s finding that a conflict of interest exists that could unduly influence vote recommendation(s) (a “material
conflict of interest”) with respect to the Agent, the Advisers, Underwriters, or Affiliates, the participating members of
the Proxy Group shall not be required to complete a Conflicts Report in connection with the relevant proxy.
If Counsel determines that
a material conflict of interest appears to exist with respect to the Agent, the Advisers, Underwriters, or Affiliates, any participating
member of the Proxy Group, or any participating Investment Professional(s), the Proxy Coordinator will then contact the Compliance
Committee(s), generally through the Committee Chair, and forward all information relevant to the Committee’s review, including
the following materials or a summary thereof: the applicable Procedures and Guidelines; the recommendation of the Agent, where
applicable; the recommendation of the Investment Professional(s), where applicable; any resources used by the Proxy Group in arriving
at its recommendation; the Conflicts Report and/or any other written materials establishing whether a conflict of interest exists;
and findings of Counsel).
If Counsel determines that
there does not appear to be a material conflict of interest with respect to the Agent, the Advisers, Underwriters, Affiliates,
any participating member of the Proxy Group, or any participating Investment Professional(s), the Proxy Coordinator will instruct
the Agent to vote the proxy as recommended by the Proxy Group.
A
vote that is contrary to the Agent’s recommendation, but is based on input from an Investment Professional provided in connection
with a Guideline requiring case-by-case review while specifying that primary consideration will be given to such input, shall be
not be deemed an Out-of-Guidelines Vote if the Investment
Professional completes and returns a Conflicts Report and Counsel
determines that no material conflict of interest appears to be present. The Proxy Group members shall not be required to complete
a Conflicts Report in connection with such votes.
6
4.
Referrals to a Fund’s Compliance Committee
A Fund’s Compliance
Committee may consider all recommendations, analysis, research and Conflicts Reports provided to it by the Proxy Coordinator, Agent,
Proxy Group, and/or Investment Professional(s), and any other written materials used to establish whether a conflict of interest
exists, in determining how to vote the proxies referred to the Committee. The Committee, generally through the Committee Chair,
will instruct the Proxy Coordinator how such referred proposals should be voted.
The Proxy Coordinator shall
use best efforts to timely refer matters to a Fund’s Committee for its consideration. In the event any such matter cannot
be timely referred to or considered by the Committee, it shall be the policy of the Funds, except as noted below, to vote Within
Guidelines, except that Counsel may permit the Proxy Group to abstain from voting any proposal(s) subject
to the material conflict, provided such abstention does not have the same effect as an “against” vote and therefore
has no effect on the outcome of the vote. If the Agent’s recommendation is deemed by Counsel to be materially conflicted
on a matter, no action shall be taken on such matter, either by abstaining from voting any proposal(s)
subject to the material conflict or not voting the entire proxy (i.e., a “Non-Vote”), as deemed appropriate
by Counsel with respect to the nature of the Agent’s material conflict.
The Proxy Coordinator will
maintain a record of all proxy questions that have been referred to a Fund’s Committee, as well as all applicable recommendations,
analysis, research, Conflicts Reports, and vote determinations.
5.
Consultation with a Fund’s Compliance Committee
The
Proxy Coordinator may consult with the Chair of a Fund’s Compliance Committee for guidance on behalf of the Committee if
application of the Procedures and Guidelines is unclear or in connection with any unusual or controversial issue or a recommendation
received from an Investment Professional. The Chair may consider all recommendations, analysis, research, or Conflicts Reports
provided by the Agent, Proxy Group, and/or Investment Professional(s). The Chair may provide guidance or direct the Proxy Coordinator
to refer the proposal(s) to the full Compliance Committee. The guidance of the Chair, or the Committee, as applicable, shall be
given primary consideration by the Proxy Group in making a vote determination.
The Proxy Coordinator will maintain
a record of all proxy questions that have been referred to the Chair or Committee for guidance, as well as all applicable recommendations,
analysis, research, Conflicts Reports and vote determinations.
In
all cases in which a vote has not been clearly determined in advance by the Procedures and Guidelines or for which the Proxy Group
recommends an Out-of-Guidelines Vote, and Counsel
7
has
determined that a material conflict of interest appears to exist with respect to the Agent, the Advisers, Underwriters, Affiliates,
any participating member of the Proxy Group, or any Investment Professional participating in the voting process, the proposal shall
be referred to the Fund’s Committee for determination so that the Adviser shall have no opportunity to exercise voting discretion
over a Fund’s proxy in a situation in which the Adviser or its Underwriters or Affiliates
or the Agent may be deemed to have a conflict of interest. In the event a member of a Fund’s Committee believes he/she
has a conflict of interest that would preclude him/her from making a vote determination in the best interests of the beneficial
owners of the applicable Fund, such Committee member shall so advise the Committee Chair and recuse himself/herself with respect
to determinations regarding the relevant proxy.
| VII. | Reporting and Record Retention |
A.
Reporting by the Funds
Annually in August, each Fund
and each Sub-Adviser-Voted Series will post its proxy voting record, or a link thereto, for the prior one-year period ending on
June 30th on the Voya funds’ website. The proxy voting record for each Fund and each Sub-Adviser-Voted Series
will also be available on Form N-PX in the EDGAR database on the website of the Securities and Exchange Commission (“SEC”).
For any Voya fund that is a feeder in a master/feeder structure, no proxy voting record related to the portfolio securities owned
by the master fund will be posted on the Voya funds’ website or included in the Fund’s Form N-PX; however, a cross-reference
to the master fund’s proxy voting record as filed in the SEC’s EDGAR database will be included in the Fund’s
Form N-PX and posted on the Voya funds’ website. If any Feeder Fund was solicited for vote by its underlying master fund
during the reporting period, a record of the votes cast by means of the pass-through process described in Section III. above
will be included on the Voya funds’ website and in the Feeder Fund’s Form N-PX.
B.
Reporting to a Fund’s Compliance Committee
At each regularly scheduled
meeting, the Committee will receive a report from the Proxy Coordinator indicating each proxy proposal, or a summary of such proposals,
that was (1) voted Out-of-Guidelines, including any proposals voted Out-of-Guidelines pursuant to special circumstances raised
by an Investment Professional; (2) voted Within Guidelines in cases in which an Investment Professional’s recommendation
was not adopted by the Proxy Group; or (3) referred to the Committee for determination in accordance with Section V. hereof.
Such report shall indicate the name of the issuer, the substance of the proposal, a summary of the Investment Professional’s
recommendation, where applicable, and the reasons for voting, or recommending, an Out-of-Guidelines Vote or, in the case of (2)
above, a Within-Guidelines Vote.
8
EXHIBIT 1 – List
of Voya funds
VOYA ASIA PACIFIC HIGH DIVIDEND EQUITY
INCOME FUND
VOYA BALANCED PORTFOLIO, INC.
VOYA EMERGING MARKETS HIGH DIVIDEND EQUITY FUND
VOYA EQUITY TRUST
VOYA FUNDS TRUST
VOYA GLOBAL ADVANTAGE AND PREMIUM OPPORTUNITY
FUND
VOYA GLOBAL EQUITY DIVIDEND AND PREMIUM OPPORTUNITY
FUND
VOYA INFRASTRUCTURE, INDUSTRIALS AND MATERIALS
FUND
VOYA INTERMEDIATE BOND PORTFOLIO
VOYA INTERNATIONAL HIGH DIVIDEND EQUITY INCOME
FUND
VOYA INVESTORS TRUST4
VOYA MONEY MARKET PORTFOLIO
VOYA MUTUAL FUNDS
VOYA PARTNERS, INC.
VOYA PRIME RATE TRUST
VOYA NATURAL RESOURCES EQUITY INCOME FUND
VOYA SENIOR INCOME FUND
VOYA SEPARATE PORTFOLIOS TRUST
VOYA SERIES FUND, INC.
VOYA STRATEGIC ALLOCATION PORTFOLIOS, INC.
VOYA VARIABLE FUNDS
VOYA VARIABLE INSURANCE TRUST
VOYA VARIABLE PORTFOLIOS, INC.
VOYA VARIABLE PRODUCTS TRUST
____________________
4 Sub-Adviser-Voted Series: VY Franklin
Mutual Shares Portfolio
9
EXHIBIT 2 – Proxy
Voting Procedures of the Advisers
Voya Investments, LLC
and
Directed Services LLC
Voya
Investments, LLC and Directed Services LLC (each an “Adviser” and collectively, the “Advisers”) are the
investment advisers for the registered investment companies and each series or portfolio thereof
(each a “Fund” and collectively, the “Funds”) comprising the Voya family
of funds. As such, the Advisers have been delegated the authority to vote proxies with respect to securities for certain
Funds over which they have day-to-day portfolio management responsibility.
The Advisers will abide by the
proxy voting guidelines adopted by a Fund’s respective Board of Directors or Trustees (each a
“Board” and collectively, the “Boards”) with regard to the voting of proxies unless otherwise provided
in the proxy voting procedures adopted by a Fund’s Board.
In voting proxies, the Advisers are
guided by general fiduciary principles. Each must act prudently, solely in the interest of the beneficial owners of the Funds it
manages. The Advisers will not subordinate the interest of beneficial owners to unrelated objectives. Each Adviser will vote proxies
in the manner that it believes will do the most to maximize shareholder value.
The following
are the Proxy Voting Procedures of Voya Investments, LLC and Directed Services LLC (the “Adviser Procedures”) with
respect to the voting of proxies on behalf of their client Funds as approved by the respective Board of each Fund.
Unless
otherwise noted, best efforts shall be used to vote proxies in all instances.
| II. | Roles and Responsibilities |
The Proxy Coordinator
identified in Appendix 1 will assist in the coordination of the voting of each Fund’s proxies in accordance
with the Voya family of funds Proxy Voting Procedures and Guidelines (the “Procedures” or “Guidelines”
and collectively, the “Procedures and Guidelines”). The Proxy Coordinator is authorized to direct the Agent to vote
a Fund’s proxy in accordance with the Procedures and Guidelines unless the Proxy Coordinator receives a recommendation from
an Investment Professional (as described below) to vote contrary to the Guidelines. In such event, and in connection with proxy
proposals requiring case-by-case consideration (except in cases in which the Proxy Group has previously provided the Proxy Coordinator
with standing instructions to vote in accordance with the Agent’s recommendation), the Proxy Coordinator will call a meeting
of the Proxy Group (as described below).
10
Responsibilities assigned
herein to the Proxy Coordinator, or activities in support thereof, may be performed by such members of the Proxy Group or employees
of the Advisers’ Affiliates as are deemed appropriate by the Proxy Group.
Unless specified otherwise,
information provided to the Proxy Coordinator in connection with duties of the parties described herein shall be deemed delivered
to the Advisers.
An independent proxy
voting service (the “Agent”), as approved by the Board of each Fund, shall be engaged to assist in the voting of Fund
proxies for publicly traded securities through the provision of vote analysis, implementation, recordkeeping, and disclosure services.
The Agent is Institutional Shareholder Services Inc., a subsidiary of MSCI Inc. The Agent is responsible for coordinating with
the Funds’ custodians to ensure that all proxy materials received by the custodians relating to the portfolio securities
are processed in a timely fashion. To the extent applicable, the Agent is required to vote and/or refer all proxies in accordance
with these Adviser Procedures. The Agent will retain a record of all proxy votes handled by the Agent. Such record must reflect
all the information required to be disclosed in a Fund’s Form N-PX pursuant to Rule 30b1-4 under the Investment Company
Act. In addition, the Agent is responsible for maintaining copies of all proxy statements received by issuers and to promptly provide
such materials to the Adviser upon request.
The Agent shall be instructed
to vote all proxies in accordance with a Fund’s Guidelines, except as otherwise instructed through the Proxy Coordinator
by the Advisers’ Proxy Group or a Fund’s Compliance Committee (“Committee”).
The Agent shall be instructed
to obtain all proxies from the Funds’ custodians and to review each proxy proposal against the Guidelines. The Agent also
shall be requested to call the Proxy Coordinator’s attention to specific proxy proposals that although governed by the Guidelines
appear to involve unusual or controversial issues.
Subject to the oversight of
the Advisers, the Agent shall establish and maintain adequate internal controls and policies in connection with the provision of
proxy voting services voting to the Advisers, including methods to reasonably ensure that its analysis and recommendations are
not influenced by conflict of interest, and shall disclose such controls and policies to the Advisers when and as provided for
herein. Unless otherwise specified, references herein to recommendations of the Agent shall refer to those in which no material
conflict of interest has been identified.
The Adviser shall establish
a Proxy Group (the “Group” or “Proxy Group”) which shall assist in the review of the Agent’s recommendations
when a proxy voting issue is referred to the Group through the Proxy Coordinator. The members of the Proxy Group, which may include
employees of the Advisers’ Affiliates, are identified in Appendix 1, as may be amended from time at the Advisers’
discretion.
11
A minimum of four (4) members
of the Proxy Group (or three (3) if one member of the quorum is either the Fund’s Chief Investment Risk Officer or Chief
Financial Officer) shall constitute a quorum for purposes of taking action at any meeting of the Group. The vote of a simple majority
of the members present and voting shall determine any matter submitted to a vote, except that tie votes shall be resolved by securing
the vote of members not present at the meeting; provided, however, that the Proxy Coordinator shall ensure compliance with all
applicable voting and conflict of interest procedures and shall use best efforts to secure votes from as many absent members as
may reasonably be accomplished and to provide such members with a substantially similar level of relevant information as that provided
at the in-person meeting. In the event a tie vote cannot be timely resolved in this manner in connection with a voting deadline,
or in the event that the vote remains a tie, the Proxy Coordinator shall follow the procedures established by a Fund’s Board
for resolving a material conflict of interest. In the event a tie vote cannot be timely resolved in this manner, the Proxy Coordinator
shall follow the procedures established by a Fund’s Board to address a failure to timely meet quorum requirements. A member
of the Proxy Group may abstain from voting on any given matter, provided that the member does not participate in the Proxy Group
discussion(s) in connection with the vote determination. If abstention results in the loss of quorum, the process for resolving
tie votes shall be observed.
The Proxy Group may meet in
person or by telephone. The Proxy Group also may take action via electronic mail in lieu of a meeting, provided that each Group
member has received a copy of any relevant electronic mail transmissions circulated by each other participating Group member prior
to voting and provided that the Proxy Coordinator follows the directions of a majority of a quorum (as defined above) responding
via electronic mail. For all votes taken in person or by telephone or teleconference, the vote shall be taken outside the presence
of any person other than the members of the Proxy Group and such other persons whose attendance may be deemed appropriate by the
Proxy Group from time to time in furtherance of its duties or the day-to-day administration of the Funds. In its discretion, the
Proxy Group may provide the Proxy Coordinator with standing instructions to perform responsibilities assigned herein to the Proxy
Group, or activities in support thereof, on its behalf, provided that such instructions do not contravene any requirements of these
Adviser Procedures or a Fund’s Procedures and Guidelines.
A meeting of the Proxy Group
will be held whenever (1) the Proxy Coordinator receives a recommendation from an Investment Professional to vote a Fund’s
proxy contrary to the Guidelines, or the recommendation of the Agent, where applicable, (2) the Agent has made no recommendation
on a matter and the Procedures and Guidelines are silent, or (3) a matter requires case-by-case consideration, including those
in which the Agent’s recommendation is deemed to be materially conflicted as provided for herein, provided that, if the Proxy
Group has previously provided the Proxy Coordinator with standing instructions to vote in accordance with the Agent’s recommendation
and no issue of conflict must be considered, the Proxy Coordinator may implement the instructions without calling a meeting of
the Proxy Group.
12
For each proposal referred to
the Proxy Group, it will review (1) the relevant Procedures and Guidelines, (2) the recommendation of the Agent, if any,
(3) the recommendation of the Investment Professional(s), if any, and (4) any other resources that any member of the
Proxy Group deems appropriate to aid in a determination of a recommendation.
If the Proxy Group recommends
that a Fund vote in accordance with the Procedures and Guidelines, or the recommendation of the Agent, where applicable, it shall
instruct the Proxy Coordinator to so advise the Agent, except that the Proxy Coordinator shall follow any procedures established
by a Fund’s Board with respect to recommendations received from an Investment Professional.
If the Proxy Group recommends
that a Fund vote contrary to the Guidelines, or the recommendation of the Agent, where applicable, or if the Agent’s recommendation
on a matter is deemed to be materially conflicted as provided for herein, it shall follow the procedures for such voting as established
by a Fund’s Board. The Proxy Group may vote contrary to the Guidelines based on a recommendation from an Investment Professional,
provided that incorporation of any such recommendation shall be subject to the conflict of interest review process established
by a Fund’s Board.
The Proxy Coordinator shall
use best efforts to convene the Proxy Group with respect to all matters requiring its consideration. In the event quorum requirements
cannot be timely met in connection with a voting deadline, the Proxy Coordinator shall follow the procedures for such voting as
established by a Fund’s Board.
| D. | Investment Professionals |
The Funds’ Sub-Advisers
and/or portfolio managers (each referred to herein as an “Investment Professional” and collectively, “Investment
Professionals”) may submit, or be asked to submit, a recommendation to the Proxy Group regarding the voting of proxies related
to the portfolio securities over which they have day-to-day portfolio management responsibility. The Investment Professionals may
accompany their recommendation with any other research materials that they deem appropriate or with a request that the vote be
deemed “material” in the context of the portfolio(s) they manage, such that lending activity on behalf of such portfolio(s)
with respect to the relevant security should be reviewed by the Proxy Group and considered for recall and/or restriction. Input
from the relevant Investment Professionals shall be given primary consideration in the Proxy
Group’s determination of whether a given proxy vote is to be deemed material and the associated security accordingly restricted
from lending. The determination that a vote is material in the context of a Fund’s portfolio shall not mean that such vote
is considered material across all Funds voting that meeting. In order to recall or restrict shares timely for material voting purposes,
the Proxy Group shall use best efforts to consider, and when deemed appropriate, to act upon, such requests timely. Requests
to review lending activity in connection with a potentially material vote may be initiated by any relevant Investment Professional
and submitted for the Proxy Group’s consideration at any time.
13
| A. | In all cases, the Adviser shall follow the voting procedures as set
forth in the Procedures and Guidelines of the Fund on whose behalf the Adviser is exercising delegated authority to vote. |
The Agent shall be instructed
to submit a vote in accordance with the Guidelines where such Guidelines provide a clear policy (e.g., “For,”
“Against,” “Withhold,” or “Abstain”) on a proposal. However, the Agent shall be directed to
refer any proxy proposal to the Proxy Coordinator for instructions as if it were a matter requiring case-by-case consideration
under circumstances where the application of the Guidelines is unclear, it appears to involve unusual or controversial issues,
or an Investment Professional recommends a vote contrary to the Guidelines.
| C. | Matters Requiring Case-by-Case Consideration |
The Agent shall be directed
to refer proxy proposals accompanied by its written analysis and voting recommendation to the Proxy Coordinator where the Guidelines
have noted “case-by-case” consideration.
Upon receipt of a referral from
the Agent, the Proxy Coordinator may solicit additional research from the Agent, Investment Professional(s), as well as from any
other source or service.
Except in cases in which the
Proxy Group has previously provided the Proxy Coordinator with standing instructions to vote in accordance with the Agent’s
recommendation, the Proxy Coordinator will forward the Agent’s analysis and recommendation and/or any research obtained from
the Investment Professional(s), the Agent, or any other source to the Proxy Group. The Proxy Group may consult with the Agent and/or
Investment Professional(s), as it deems necessary.
| 1. | Within-Guidelines Votes: Votes in Accordance with a Fund’s
Guidelines and/or, where applicable, Agent Recommendation |
In the event the Proxy Group and,
where applicable, any Investment Professional participating in the voting process, recommend a vote Within Guidelines, the Proxy
Group will instruct the Agent, through the Proxy Coordinator, to vote in this manner, except that the Proxy Coordinator shall follow
any procedures established by a Fund’s Board with respect to recommendations received from an
Investment Professional. Except as provided for herein, no Conflicts Report (as such term is defined herein) is required
in connection with Within-Guidelines Votes.
| 2. | Non-Votes: Votes in Which No Action is Taken |
The Proxy Group may recommend
that a Fund refrain from voting under circumstances including, but not limited to, the following: (1) if the economic effect
on shareholders’ interests or the value of the portfolio holding is
14
indeterminable or insignificant,
e.g., proxies in connection with fractional shares, securities no longer held in the portfolio of a Voya fund or proxies
being considered on behalf of a Fund that is no longer in existence; or (2) if the cost of voting a proxy outweighs the benefits,
e.g., certain international proxies, particularly in cases in which share blocking practices may impose trading restrictions
on the relevant portfolio security. In such instances, the Proxy Group may instruct the Agent, through the Proxy Coordinator, not
to vote such proxy. The Proxy Group may provide the Proxy Coordinator with standing instructions on parameters that would dictate
a Non-Vote without the Proxy Group’s review of a specific proxy.
Reasonable efforts shall be made
to secure and vote all other proxies for the Funds, but, particularly in markets in which shareholders’ rights are limited,
Non-Votes may also occur in connection with a Fund’s related inability to timely access ballots or other proxy information
in connection with its portfolio securities.
Non-Votes may also result in certain
cases in which the Agent’s recommendation has been deemed to be conflicted, as provided for in the Funds’ Procedures.
| 3. | Out-of-Guidelines Votes: Votes Contrary to Procedures and
Guidelines, or Agent Recommendation, where applicable; Where No Recommendation is Provided by Agent; or Where Agent’s Recommendation
is Conflicted |
If the Proxy Group or, where applicable,
an Investment Professional, recommends that a Fund vote contrary to the Guidelines, or the recommendation of the Agent, where applicable;
if the Agent has made no recommendation on a matter and the Procedures and Guidelines are silent; or the Agent’s recommendation
on a matter is deemed to be materially conflicted as provided for under these Adviser Procedures, the Proxy Coordinator will then
implement the procedures for handling such votes as adopted by the Fund’s Board.
The Proxy Coordinator will maintain
a record of all recommendations from Investment Professionals to vote contrary to the Guidelines, all
proxy questions that have been referred to a Fund’s Compliance Committee, and all applicable recommendations, analysis,
research, Conflicts Reports, and vote determinations.
| IV. | Assessment of the Agent and Conflicts of Interest |
In furtherance of the Advisers’
fiduciary duty to the Funds and their beneficial owners, the Advisers shall establish the following:
| A. | Assessment of the Agent |
The
Advisers shall establish that the Agent (1) is independent from the Advisers, (2) has resources that indicate it can
competently provide analysis of proxy issues, and (3) can make recommendations in an impartial manner and in the best interests
of the Funds and their beneficial owners. The Advisers shall utilize, and the Agent shall comply with, such methods for establishing
the foregoing as the
15
Advisers
may deem reasonably appropriate and shall do so not less than annually as well as prior to engaging the services of any new proxy
service. The Agent shall also notify the Advisers in writing within fifteen (15) calendar days of any material change to information
previously provided to an Adviser in connection with establishing the Agent’s independence, competence, or impartiality.
Information
provided in connection with assessment of the Agent shall be forwarded to a member of the mutual funds practice group of Voya Investment
Management (“Counsel”) for review. Counsel shall review such information and advise the Proxy Coordinator as to whether
a material concern exists and if so, determine the most appropriate course of action to eliminate such concern.
The
Advisers shall establish and maintain procedures to identify and address potential conflicts that may arise from time to time concerning
the Agent. Upon the Advisers’ request, which shall be not less than annually, and within fifteen (15) calendar days of any
material change to such information previously provided to an Adviser, the Agent shall provide the Advisers with such information
as the Advisers deem reasonable and appropriate for use in determining material relationships of the Agent that may pose a conflict
of interest with respect to the Agent’s proxy analysis or recommendation(s). The Proxy Coordinator shall forward all such
information to Counsel for review. Counsel shall review such information and provide the Proxy Coordinator with a brief statement
regarding whether or not a material conflict of interest is present. Matters as to which a material conflict of interest is deemed
to be present shall be handled as provided in the Fund’s Procedures and Guidelines.
In
connection with their participation in the voting process for portfolio securities, each member of the Proxy Group, and each Investment
Professional participating in the voting process, must act solely in the best interests of the beneficial owners of the applicable
Fund. The members of the Proxy Group may not subordinate the interests of the Fund’s beneficial owners to unrelated objectives,
including taking steps to reasonably insulate the voting process from any conflict of interest that may exist in connection with
the Agent’s services or utilization thereof.
For all matters for which the
Proxy Group or, where applicable, an Investment Professional, recommends an Out-of-Guidelines Vote, or for which a recommendation
contrary to that of the Guidelines or, where applicable, the Agent, has been received from an Investment Professional, the Proxy
Coordinator will implement the procedures for handling such votes as adopted by the Fund’s Board, including completion of
such Conflicts Reports as may be required under the Fund’s Procedures. Completed Conflicts Reports should be provided to
the Proxy Coordinator within two (2) business days and may be submitted to the Proxy Coordinator verbally, provided the Proxy Coordinator
documents the Conflicts Report in writing. Such Conflicts Report should describe any known relationships of either a business or
personal nature not previously assessed by Counsel, which may include communications with respect to the referral item, but
16
excluding routine communications
with or submitted to the Proxy Coordinator or Investment Professional(s) on behalf of the subject company or a proponent of a shareholder
proposal. The Conflicts Report should also include written confirmation that any recommendation from an Investment Professional
provided in connection with an Out-of-Guidelines Vote or under circumstances where a conflict of interest exists was made solely
on the investment merits and without regard to any other consideration.
The Proxy Coordinator shall forward
all Conflicts Reports to Counsel for review. Counsel shall review each report and provide the Proxy Coordinator with a brief statement
regarding whether or not a material conflict of interest is present. Matters as to which a material conflict of interest is deemed
to be present shall be handled as provided in the Fund’s Procedures and Guidelines.
| V. | Reporting and Record Retention |
The Adviser shall maintain the records required
by Rule 204-2(c)(2), as may be amended from time to time, including the following: (1) A copy of each proxy statement received
regarding a Fund’s portfolio securities. Such proxy statements received from issuers are available either in the SEC’s
EDGAR database or are kept by the Agent and are available upon request. (2) A record of each vote cast on behalf of a Fund.
(3) A copy of any document created by the Adviser that was material to making a decision how to vote a proxy, or that memorializes
the basis for that decision. (4) A copy of written requests for Fund proxy voting information and any written response thereto
or to any oral request for information on how the Adviser voted proxies on behalf of a Fund. All proxy voting materials and supporting
documentation will be retained for a minimum of six (6) years, the first two (2) years in the Advisers’ office.
17
APPENDIX 1 – Proxy
Group
|
Name
|
Title or Affiliation
|
| Stanley D. Vyner |
Chief Investment Risk Officer and Executive Vice President, Voya
Investments, LLC
|
| Todd Modic |
Senior Vice President, Voya Funds Services, LLC and Voya Investments,
LLC; and Chief Financial Officer of the Voya Family of Funds
|
| Maria Anderson |
Vice President, Fund Compliance, Voya Funds Services, LLC
|
| Sara Donaldson |
Proxy Coordinator for the Voya Family of Funds and Vice President, Proxy Voting, Voya Funds Services, LLC |
| Julius A. Drelick III, CFA |
Senior Vice President, Head of Fund Compliance, Voya Funds Services,
LLC
|
| Harley Eisner |
Vice President, Financial Analysis, Voya Funds Services, LLC
|
| Evan Posner, Esq. |
Vice President and Counsel, Voya Family of Funds |
Effective as of May 1, 2014
18
EXHIBIT 3 – Proxy
Voting Guidelines of the Voya funds
The
following is a statement of the Proxy Voting Guidelines (“Guidelines”) that have been adopted by the respective Boards
of Directors or Trustees of each Fund. Unless otherwise provided for herein, any defined term used herein shall have the meaning
assigned to it in the Funds’ and Advisers’ Proxy Voting Procedures (the “Procedures”).
Proxies
must be voted in the best interest of the Fund(s). The Guidelines summarize the Funds’ positions on various issues
of concern to investors, and give a general indication of how Fund portfolio securities will be voted on proposals dealing with
particular issues. The Guidelines are not exhaustive and do not include all potential voting issues.
The Advisers, in exercising their
delegated authority, will abide by the Guidelines as outlined below with regard to the voting of proxies except as otherwise provided
in the Procedures. In voting proxies, the Advisers are guided by general fiduciary principles. Each must act prudently, solely
in the interest of the beneficial owners of the Funds it manages. The Advisers will not subordinate the interest of beneficial
owners to unrelated objectives. Each Adviser will vote proxies in the manner that it believes will do the most to maximize shareholder
value.
The following Guidelines are grouped according
to the types of proposals generally presented to shareholders of U.S. issuers: Board of Directors, Proxy Contests, Auditors, Proxy
Contest Defenses, Tender Offer Defenses, Miscellaneous, Capital Structure, Executive and Director Compensation, State of Incorporation,
Mergers and Corporate Restructurings, Mutual Fund Proxies, and Social and Environmental Issues. An additional
section addresses proposals most frequently found in global proxies.
General
Policies
These Guidelines apply to securities
of publicly traded companies and to those of privately held companies if publicly available disclosure permits such application.
All matters for which such disclosure is not available shall be considered Case-by-Case.
In all cases receiving case-by-case
consideration, including cases not specifically provided for under these Guidelines, unless otherwise determined in accordance
with the Procedures or otherwise provided for under these Guidelines, it shall generally be the policy of the Funds to vote in
accordance with the recommendation provided by the Funds’ Agent, Institutional Shareholder Services Inc., a subsidiary of
MSCI Inc.
Unless otherwise provided for herein,
it shall generally be the policy of the Funds to vote in accordance with the Agent’s recommendation when such recommendation
aligns with the recommendation of the relevant issuer’s management or management has made no recommendation. However, this
policy shall not apply to Case-by-Case proposals for which a contrary recommendation
from the relevant Investment Professional(s) has been received and
19
is to be utilized, provided that incorporation
of any such recommendation shall be subject to the conflict of interest review process required under the Procedures.
Recommendations from the Investment
Professionals, while not required under the Procedures, may be submitted or requested in connection with any proposal and are likely
to be requested with respect to proxies for private equity securities and/or proposals related to merger transactions/corporate
restructurings, proxy contests, or unusual or controversial issues. Such input shall be given primary consideration with respect
to CASE-BY-CASE proposals being considered on behalf of the relevant Fund, provided that incorporation of any such recommendation
shall be subject to the conflict of interest review process required under the Procedures.
Except as otherwise provided for herein,
it shall generally be the policy of the Funds not to support proposals that would impose a negative impact on existing rights of
the Funds to the extent that any positive impact would not be deemed sufficient to outweigh removal or diminution of such rights.
The foregoing policies may be overridden
in any case as provided for in the Procedures. Similarly, the Procedures provide that proposals whose Guidelines prescribe a firm
voting position may instead be considered on a CASE-BY-CASE basis when unusual or controversial circumstances so dictate.
Interpretation and application of
these Guidelines is not intended to supersede any law, regulation, binding agreement, or other legal requirement to which an issuer
may be or become subject. No proposal shall be supported whose implementation would contravene such requirements.
Voting on Director Nominees in Uncontested
Elections
Unless otherwise provided for
herein, the Agent’s standards with respect to determining director independence shall apply. These standards generally provide
that, to be considered completely independent, a director shall have no material connection to the company other than the board
seat.
Agreement with the Agent’s
independence standards shall not dictate that a Fund’s vote shall be cast according to the Agent’s corresponding recommendation.
Votes on director nominees not subject to specific policies described herein should be made on a CASE-BY-CASE basis.
Where applicable and except as
otherwise provided for herein, it shall generally be the policy of the Funds to lodge disagreement with an issuer’s policies
or practices by withholding support from a proposal for the relevant policy or practice rather than the director nominee(s) to
which the Agent assigns a correlation. Support shall be withheld from nominees deemed responsible for governance shortfalls, but
if they are not standing for election (e.g., the board is classified), support shall generally not be withheld from others
in their stead. When a determination is made to withhold support due to concerns other than those related to an individual director’s
independence or actions, responsibility may be attributed to the entire board, a committee, or an
20
individual (such as the CEO or
committee chair), taking into consideration whether the desired effect is to send a message or to remove the director from service.
Where applicable and except as
otherwise provided for herein, generally vote FOR nominees in connection with issues raised by the Agent if the nominee did not
serve on the board or relevant committee during the majority of the time period relevant to the concerns cited by the Agent.
WITHHOLD support from a nominee
who, during both of the most recent two years, attended less than 75 percent of the board and committee meetings during the nominee’s
period of service without a valid reason for the absences. WITHHOLD support if two-year attendance cannot be ascertained from available
disclosure. DO NOT WITHHOLD support in connection with attendance issues for nominees who have served on the board for less than
the two most recent years.
Unless a company has implemented
a policy that should reasonably prevent abusive use of its poison pill, WITHHOLD support from nominees responsible for implementing
excessive anti-takeover measures, including failure to remove restrictive poison pill features or to ensure a pill’s expiration
or timely submission to shareholders for vote. Responsibility will generally be assigned to the board chair or, if not standing
for election, the lead director. If neither is standing for election, WITHHOLD support from all continuing directors.
Consider on a CASE-BY-CASE basis
any nominee whom the Agent cites as having failed to implement a majority-approved shareholder proposal. Vote FOR if the shareholder
proposal has been reasonably addressed. Proposals seeking shareholder ratification of a poison pill may be deemed reasonably addressed
if the company has implemented a policy that should reasonably prevent abusive use of the pill. WITHHOLD support if the shareholder
proposal at issue is supported under these Guidelines and the board has not disclosed a credible rationale for not implementing
the proposal.
Consider on a CASE-BY-CASE basis
any nominee whom the Agent cites as having failed to opt out of a state law requiring companies to implement a staggered board
structure, generally withholding support when the company:
| (1) | Demonstrates sustained poor stock performance (measured by one- and three-year total shareholder
returns); |
| (2) | Has a non-shareholder-approved poison pill in place, without provisions to redeem or seek approval
in a reasonable period of time; and |
| (3) | Maintains a dual class capital structure, imposes a supermajority vote requirement, or has authority
to issue blank check preferred stock. |
21
If the board has not acted upon negative
votes (WITHHOLD or AGAINST, as applicable based on the issuer’s election standard) representing a majority of the votes cast
at the previous annual meeting, consider board nominees on a CASE-BY-CASE basis. Generally, vote FOR nominees when:
| (1) | The issue relevant to the majority negative vote has been adequately
addressed or cured, which may include disclosure of the board’s rationale; or |
| (2) | The Funds’ Guidelines or voting record do not support the relevant
issue causing the majority negative vote. |
If the above provisions have not
been satisfied, generally WITHHOLD support from the chair of the nominating committee, or if not standing for election, consider
CASE-BY-CASE.
WITHHOLD support from inside or
affiliated outside directors who sit on the audit committee.
Vote FOR inside or affiliated outside
directors who sit on the nominating or compensation committee, provided that such committee meets the applicable independence requirements
of the relevant listing exchange.
Vote FOR inside or affiliated outside
directors if the full board serves as the compensation or nominating committee OR has not created one or both committees, provided
that the issuer is in compliance with all provisions of the listing exchange in connection with performance of relevant functions
(e.g., performance of relevant functions by a majority of independent directors in lieu of the formation of a separate committee).
Compensation Practices:
It shall generally be the policy of
the Funds that matters of compensation are best determined by an independent board and compensation committee, but that support
may be withheld from compensation committee members whose actions or disclosure do not appear to support compensation practices
aligned with the best interests of the company and its shareholders. Votes on compensation committee members in connection with
compensation practices should be considered on a Case-by-Case basis, and generally:
| (1) | Say on pay. If shareholders have been provided with an advisory
vote on executive compensation (say on pay, or “SOP”), and practices not supported under these Guidelines have been
identified, it shall generally be the policy of the Funds to align with the Agent when a vote AGAINST the say on pay proposal has
been recommended in lieu of withholding support from certain nominees for compensation concerns. Issuers receiving negative recommendations
on both compensation committee members and say on pay regarding issues not otherwise supported by these Guidelines will be considered
on a CASE-BY-CASE basis. |
| (2) | Say on pay responsiveness. Compensation committee members
opposed by the Agent for failure to sufficiently address compensation concerns evidenced by significant opposition to the most
recent SOP vote will be considered on a CASE-BY-CASE basis, factoring in the following: |
| (a) | If the most recent SOP vote received majority opposition, generally
vote AGAINST the compensation committee chair if the company has not |
22
demonstrated an adequate level
of responsiveness.
| (b) | If the most recent SOP vote passed but received significant opposition,
generally vote FOR the nominee(s) if a Fund voted FOR that SOP proposal or did not have voting rights on that proposal. If a Fund
voted AGAINST the SOP proposal and the company has not demonstrated an adequate level of responsiveness, generally vote AGAINST
the compensation committee chair. |
| (c) | If the compensation committee chair is not standing for election
under circumstances meriting the chair’s opposition, consider the compensation committee member(s) opposed by the Agent on
a CASE-BY-CASE basis. |
| (3) | Say on frequency. If the Agent opposes nominees because the
company has implemented an SOP schedule that is less frequent than the frequency most recently preferred by at least a plurality
of shareholders, generally WITHHOLD support from the compensation committee chair. If the compensation committee chair is not standing
for election, WITHHOLD support from the other compensation committee members. If no compensation committee members are standing
for election, consider other nominees opposed by the Agent on a CASE-BY-CASE basis. |
| (4) | Tenure. Where applicable and except as otherwise provided
for herein, vote FOR compensation committee members who did not serve on the compensation committee during the majority of the
time period relevant to the concerns cited by the Agent. |
| (5) | Pay for performance. Consider compensation committee members
receiving an adverse recommendation from the Agent CASE-BY-CASE when the Agent has identified a pay practice (or combination of
practices) not otherwise supported under these Guidelines that appears to have created a misalignment between CEO pay and performance
with regard to shareholder value. Generally vote FOR nominees if the company has provided a reasonable rationale regarding pay
and performance and/or they appear reasonably correlated. Generally WITHHOLD support from compensation committee members for structuring
compensation packages that unreasonably insulate pay from performance conditions. |
| (6) | Pay disparity. Generally DO NOT WITHHOLD support from compensation
committee members solely due to internal pay disparity as assessed by the Agent, but consider pay magnitude concerns on a Case-by-Case
basis. |
| (7) | Change in control provisions. If the Agent recommends withholding
support from compensation committee members in connection with overly liberal change in control provisions, including those lacking
a double trigger, generally WITHHOLD support from such nominees. If the Agent recommends withholding support from compensation
committee members in connection with potential change in control payments or tax-gross-ups on change in control payments, vote
FOR the nominees if the amount appears reasonable and no material governance concerns exist. Generally WITHHOLD support if the
amount is so significant (individually or collectively) as to potentially influence an executive’s decision to enter into
a transaction or to effectively act as a poison pill. |
| (8) | Repricing. If the Agent recommends withholding support from
compensation committee members in connection with their failure to seek, or acknowledge, a |
23
shareholder vote on plans to
reprice, replace, buy back, or exchange options, generally WITHHOLD support from such nominees, except that cancellation of options
would not be considered an exchange unless the cancelled options were regranted or expressly returned to the plan reserve for reissuance.
| (9) | Tax benefits. If the Agent recommends withholding support
from compensation committee members that have approved compensation that is ineligible for tax benefits to the company (e.g.,
under Section 162(m) of OBRA), generally vote FOR such nominees if the company has provided an adequate rationale or the plan
itself is being put to shareholder vote at the same meeting. If the plan is up for vote, the provisions under Section 8. OBRA-Related
Compensation Proposals shall apply. |
| (10) | Director perquisites. If the Agent recommends withholding
support from compensation committee members in connection with director compensation in the form of perquisites, generally vote
FOR the nominees if the cost is reasonable in the context of the directors’ total compensation and the perquisites
themselves appear reasonable given their purpose, the directors’ duties, and the company’s line of business. |
| (11) | Incentive plans. Generally consider nominees on a CASE-BY-CASE
basis in connection with short-term incentive plans over which the nominee has exercised discretion to exclude extraordinary items,
and WITHHOLD support if treatment of such items has been inconsistent (e.g., exclusion of losses but not gains). Generally
WITHHOLD support from compensation committee members opposed by the Agent in connection with long-term incentive plans, or total
executive compensation packages, inadequately aligned with shareholders because the vesting period is too short, performance period
being measured is too short, or the packages lack an appropriate equity component (e.g., overly cash-based plans), except
that the latter will be considered CASE-BY-CASE in connection with executives already holding significant equity positions. |
| (12) | Options backdating. If the Agent has raised issues of options
backdating, consider members of the compensation committee, as well as company executives nominated as directors, on a CASE-BY-CASE
basis. |
| (13) | Independence from management. Generally WITHHOLD support from
compensation committee members cited by the Agent for permitting named executives to have excessive input into setting their own
compensation. |
| (14) | Multiple concerns. If the Agent recommends withholding support
from compensation committee members in connection with other compensation practices such as tax gross-ups, perquisites, retention
or recruitment provisions (including contract length or renewal provisions), “guaranteed” awards, pensions/SERPs, or
severance or termination arrangements, vote FOR such nominees if the issuer has provided adequate rationale and/or disclosure,
factoring in any overall adjustments or reductions to the compensation package at issue. Except as otherwise provided for herein,
generally DO NOT WITHHOLD support solely due to any single such practice if the total compensation appears reasonable, but consider
on a CASE-BY-CASE basis compensation packages representing a combination of such provisions and deemed by the Agent to be excessive. |
24
| (15) | Commitments. Generally, vote FOR compensation committee members
receiving an adverse recommendation from the Agent due to problematic pay practices if the issuer makes a public commitment (e.g.,
via a Form 8-K filing) to rectify the practice on a going-forward basis. |
| (16) | Other. If the Agent has raised other considerations regarding
poor compensation practices, consider compensation committee members on a Case-by-Case
basis. |
Accounting Practices:
| (1) | Generally, except as otherwise provided for herein, vote FOR independent
outside director nominees serving on the audit committee. |
| (2) | Where applicable and except as otherwise provided for herein, generally
vote FOR nominees serving on the audit committee, or the company’s CEO or CFO if nominated as directors, who did not serve
on that committee or have responsibility over the relevant financial function, as applicable, during the majority of the time period
relevant to the concerns cited by the Agent. |
| (3) | If the Agent has raised concerns regarding poor accounting practices,
consider the company’s CEO and CFO, if nominated as directors, and nominees serving on the audit committee on a CASE-BY-CASE
basis. Generally vote FOR nominees if the company has taken adequate steps to remediate the concerns cited, which would typically
include removing or replacing the responsible executives, and if the concerns are not re-occurring and/or the company has not yet
had a full year to remediate the concerns since the time they were identified. |
| (4) | If total non-audit fees exceed the total of audit fees, audit-related
fees, and tax compliance and preparation fees, the provisions under Section 3. Auditor Ratification shall apply. |
Board Independence:
It shall generally be the policy of the
Funds that a board should be majority independent and therefore to consider inside or affiliated outside director nominees when
the full board is not majority independent on a Case-by-Case basis. Generally:
| (1) | WITHHOLD support from the fewest directors whose removal would achieve
majority independence across the remaining board, except that support may be withheld from
additional nominees whose relative level of independence cannot be differentiated. |
| (2) | WITHHOLD support from all non-independent nominees, including the
founder, chairman, or CEO, if the number required to achieve majority independence is equal to or greater than the number of non-independent
nominees. |
| (3) | Except as provided above, vote FOR non-independent nominees in the
role of CEO, and when appropriate, founder or chairman, and determine support for other non-independent nominees based on the qualifications
and contributions of the nominee as well as the Funds’ voting precedent for assessing relative independence to management,
e.g., insiders holding senior executive positions are deemed less independent than affiliated outsiders with a transactional
or advisory relationship to the |
25
company, and affiliated outsiders
with a material transactional or advisory relationship are deemed less independent than those with lesser relationships.
| (4) | Non-voting directors (e.g., director emeritus or advisory
director) shall be excluded from calculations with respect to majority board independence. |
| (5) | When conditions contributing to a lack of majority independence remain
substantially similar to those in the previous year, it shall generally be the policy of the Funds to vote on nominees in a manner
consistent with votes cast by the Fund(s) in the previous year. |
Generally vote FOR nominees without regard
to “over-boarding” issues raised by the Agent unless other concerns requiring Case-by-Case
consideration have been raised.
Generally, when the Agent recommends withholding
support due to assessment that a nominee acted in bad faith or against shareholder interests in connection with a major transaction,
such as a merger or acquisition, or if the Agent recommends withholding support due to other material failures or egregious actions,
consider on a CASE-BY-CASE basis, factoring in the merits of the nominee’s performance and rationale and disclosure provided.
If the Agent cites concerns regarding actions in connection with a candidate’s service on another board, vote FOR the nominee
if the issuer has provided adequate rationale regarding the appropriateness of the nominee to serve on the board under consideration.
Generally, when the Agent recommends withholding
support from any nominee due to share pledging concerns, consider on a CASE-BY-CASE basis, factoring in the pledged amount, unwind
time, and any historical concerns being raised. Responsibility will generally be assigned to the pledgor, where the pledged amount
and unwind time are deemed significant and, therefore, an unnecessary risk to the company.
Performance Test for Directors
Consider nominees failing the Agent’s
performance test, which includes market-based and operating performance measures, on a CASE-BY-CASE basis. Input from the relevant
Investment Professional(s) shall be given primary consideration with respect to such proposals.
Support will generally be WITHHELD from
nominees receiving a negative recommendation from the Agent due to sustained poor stock performance (measured by one- and three-year
total shareholder returns) combined with multiple takeover defenses/entrenchment devices if the issuer:
| (1) | Is a controlled company or has a non-shareholder-approved poison pill in place, without provisions
to redeem or seek approval in a reasonable period of time; and |
| (2) | Maintains a dual class capital structure, imposes a supermajority vote requirement, or has authority
to issue blank check preferred stock. |
Nominees receiving a negative recommendation
from the Agent due to sustained poor stock performance combined with other takeover defenses/entrenchment devices will be considered
on a CASE-BY-CASE basis.
Proposals Regarding Board Composition
or Board Service
Generally, except as otherwise provided
for herein, vote AGAINST shareholder proposals to impose new board structures or policies, including those requiring that the positions
of chairman
26
and CEO be held separately, but vote
FOR proposals in connection with a binding agreement or other legal requirement to which an issuer has or reasonably may expect
to become subject, and consider such proposals on a CASE-BY-CASE basis if the board is not majority independent or corporate
governance concerns have been identified. Generally, except as otherwise provided for herein, vote FOR management proposals to
adopt or amend board structures or policies, except consider such proposals on a CASE-BY-CASE basis if the board is not majority
independent, corporate governance concerns have been identified, or the proposal may result in a material reduction in shareholders’
rights.
Generally, vote AGAINST shareholder proposals:
- Asking that more than a simple majority of directors be independent.
- Asking that the independence of the compensation and/or nominating
committees be greater than that required by the listing exchange.
- Limiting the number of public company boards on which a director
may serve.
- Seeking to redefine director independence or directors’ specific
roles (e.g., responsibilities of the lead director).
- Requesting creation of additional board committees or offices,
except as otherwise provided for herein.
- Limiting the tenure of outside directors or imposing a mandatory
retirement age for outside directors (unless the proposal seeks to relax existing standards), but generally vote FOR management
proposals in this regard.
Generally, vote FOR shareholder proposals
that seek creation of an audit, compensation, or nominating committee of the board, unless the committee in question is already
in existence or the issuer has availed itself of an applicable exemption of the listing exchange (e.g., performance of relevant
functions by a majority of independent directors in lieu of the formation of a separate committee).
Stock Ownership Requirements
Generally, vote AGAINST shareholder
proposals requiring directors to own a minimum amount of company stock in order to qualify as a director or to remain on the board.
Director and Officer Indemnification
and Liability Protection
Proposals on director and officer
indemnification and liability protection should be evaluated on a CASE-BY-CASE basis, using Delaware law as the standard. Vote
against proposals to limit or eliminate entirely directors’ and officers’
liability for monetary damages for violating the duty of care. Vote against indemnification
proposals that would expand coverage beyond just legal expenses to acts, such as negligence, that are more serious violations of
fiduciary obligation than mere carelessness. Vote for only those proposals providing
such expanded coverage in cases when a director’s or officer’s legal defense was unsuccessful if:
| (1) | The director was found to have acted in good faith and in a manner
that he reasonably believed was in the best interests of the company; and |
| (2) | Only if the director’s legal expenses would be covered. |
27
These proposals should generally be analyzed
on a case-by-case basis. Input from the relevant Investment Professional(s) shall
be given primary consideration with respect to proposals in connection with proxy contests being considered on behalf of that Fund.
Voting for Director Nominees in Contested
Elections
Votes in a contested election of directors
must be evaluated on a CASE-BY-CASE basis.
Reimburse Proxy Solicitation Expenses
Voting to reimburse proxy solicitation expenses
should be analyzed on a CASE-BY-CASE basis, generally voting FOR if associated nominees are also supported.
Ratifying Auditors
Generally, except in cases of poor
accounting practices or high non-audit fees, vote FOR management proposals to ratify auditors. Consider management proposals to
ratify auditors on a CASE-BY-CASE basis if the Agent cites poor accounting practices. If fees for non-audit services exceed 50
percent of total auditor fees as described below, consider on a CASE-BY-CASE basis, voting AGAINST management proposals to ratify
auditors only if concerns exist that remuneration for the non-audit work is so lucrative as to taint the auditor’s independence.
For purposes of this review, fees deemed to be reasonable, generally non-recurring exceptions to the non-audit fee category (e.g.,
those related to an IPO) shall be excluded. Generally vote FOR shareholder proposals asking the issuer to present its auditor annually
for ratification.
Auditor Independence
Generally,
consider shareholder proposals asking companies to prohibit their auditors from engaging in non-audit services (or capping the
level of non-audit services) on a CASE-BY-CASE basis.
Audit Firm Rotation
Generally, vote AGAINST shareholder proposals
asking for mandatory audit firm rotation.
Presentation of management and shareholder
proposals on the same matter on the same agenda shall not require a Fund to vote FOR one and AGAINST the other.
Board Structure: Staggered vs. Annual Elections
Generally, vote AGAINST proposals to
classify the board or otherwise restrict shareholders’ ability to vote upon directors and FOR proposals to repeal classified
boards and to elect all directors annually.
Shareholder Ability to Remove Directors
Generally, vote AGAINST proposals that
provide that directors may be removed only for cause.
Generally, vote FOR proposals to restore
shareholder ability to remove directors with or without cause.
28
Generally, vote AGAINST proposals that
provide that only continuing directors may elect replacements to fill board vacancies.
Generally, vote FOR proposals that
permit shareholders to elect directors to fill board vacancies.
Cumulative Voting
If the company is controlled or maintains
a classified board of directors or a dual class voting structure, generally, vote AGAINST management proposals to eliminate cumulative
voting (except that such proposals may be supported irrespective of classification in furtherance of an issuer’s plan to
declassify its board or adopt a majority voting standard), and vote FOR shareholder proposals to restore or permit cumulative voting.
Time-Phased Voting
Generally, vote AGAINST proposals to
implement, and FOR proposals to eliminate, time-phased or other forms of voting that do not promote a one share, one vote standard.
Shareholder Ability to Call Special
Meetings
Generally, vote FOR shareholder proposals
that provide shareholders with the ability to call special meetings when either (1) the company does not currently permit
shareholders to do so or (2) the existing ownership threshold is greater than 25 percent.
Consider management proposals to permit
shareholders to call special meetings on a CASE-BY-CASE basis, generally voting FOR such proposals not opposed by the Agent. Generally
vote FOR such proposals if the Agent’s sole concern relates to a net-long position requirement.
Shareholder Ability to Act by Written
Consent
Generally, vote AGAINST shareholder
proposals seeking the right to act by written consent if the issuer:
| (1) | Permits shareholders to call special meetings; |
| (2) | Does not impose supermajority vote requirements; and |
| (3) | Has otherwise demonstrated its accountability to shareholders (e.g.,
the company has reasonably addressed majority-supported shareholder proposals). |
Consider management proposals to eliminate
the right to act by written consent on a CASE-BY-CASE basis, generally voting FOR if the above conditions are present.
Generally, vote FOR shareholder proposals
seeking the right to act by written consent if the above conditions are not present.
Shareholder Ability to Alter the
Size of the Board
Generally, vote FOR proposals that
seek to fix the size of the board or designate a range for its size.
Generally, vote AGAINST proposals that
give management the ability to alter the size of the board outside of a specified range without shareholder approval.
Poison Pills
Generally, vote FOR shareholder proposals
that ask a company to submit its poison pill for
29
shareholder ratification, or to redeem
its pill in lieu thereof, unless (1) shareholders have approved adoption of the plan, (2) a
policy has already been implemented by the company that should reasonably prevent abusive use of the pill, or
(3) the board had determined that it was in the best interest of shareholders to adopt a pill without delay, provided that
such plan would be put to shareholder vote within twelve months of adoption or expire, and if not approved by a majority of the
votes cast, would immediately terminate.
Review on a CASE-BY-CASE basis shareholder
proposals to redeem a company’s poison pill.
Review on a CASE-BY-CASE basis management
proposals to approve or ratify a poison pill or any plan or charter amendment (e.g., investment restrictions) that can reasonably
be construed as an anti-takeover measure, with voting decisions generally based on the Agent’s approach to evaluating such
proposals, considering factors such as rationale, trigger level, and sunset provisions. Votes will generally be cast in a manner
that seeks to preserve shareholder value and the right to consider a valid offer, voting AGAINST management proposals in connection
with poison pills or anti-takeover activities that do not meet the Agent’s standards.
Fair Price Provisions
Vote proposals to adopt fair price
provisions on a CASE-BY-CASE basis.
Generally, vote AGAINST fair price
provisions with shareholder vote requirements greater than a majority of disinterested shares.
Greenmail
Generally, vote FOR proposals to adopt
anti-greenmail charter or bylaw amendments or otherwise restrict a company’s ability to make greenmail payments.
Review on a CASE-BY-CASE basis anti-greenmail
proposals when they are bundled with other charter or bylaw amendments.
Pale Greenmail
Review on a CASE-BY-CASE basis restructuring
plans that involve the payment of pale greenmail.
Unequal Voting Rights
Generally, except as otherwise provided
for herein, vote AGAINST dual-class exchange offers and dual-class recapitalizations.
Supermajority Shareholder Vote Requirement
Generally, vote AGAINST proposals to
require a supermajority shareholder vote and FOR management or shareholder proposals to lower supermajority shareholder vote requirements,
unless, for companies with shareholder(s) with significant ownership levels, the Agent recommends retention of existing supermajority
requirements in order to protect minority shareholder interests.
White Squire Placements
Generally, vote FOR shareholder proposals
to require approval of blank check preferred stock issues for other than general corporate purposes.
30
Amendments to Corporate Documents
Except
to align with legislative or regulatory changes or when support is recommended by the Agent or relevant Investment Professional(s)
(including, for example, as a condition to a major transaction such as a merger), generally, vote AGAINST proposals seeking to
remove shareholder approval requirements or otherwise remove or diminish shareholder rights, e.g., by (1) adding restrictive
provisions, (2) removing provisions or moving them to portions of the charter not requiring shareholder approval, or (3) in
corporate structures such as holding companies, removing provisions in an active subsidiary’s charter that provide voting
rights to parent company shareholders. This policy would also generally apply to proposals seeking approval of corporate agreements
or amendments to such agreements that the Agent recommends AGAINST because a similar reduction in shareholder rights is requested.
Generally, vote AGAINST proposals for
charter amendments that support board entrenchment or may be used as an anti-takeover device (or to further anti-takeover conditions),
particularly if the proposal is bundled or the board is classified.
Generally, vote FOR proposals seeking
charter or bylaw amendments to remove anti-takeover provisions.
Consider proposals seeking charter
or bylaw amendments not addressed under these Guidelines on a CASE-BY-CASE basis.
Confidential Voting
Generally, vote FOR shareholder proposals
that request companies to adopt confidential voting, use independent tabulators, and use independent inspectors of election as
long as the proposals include clauses for proxy contests as follows:
| · | In the case of a contested election, management should be permitted
to request that the dissident group honor its confidential voting policy. |
| · | If the dissidents agree, the policy remains in place. |
| · | If the dissidents do not agree, the confidential voting policy is
waived. |
Generally, vote FOR management
proposals to adopt confidential voting.
Proxy Access
Consider on a CASE-BY-CASE basis proposals
to provide shareholders with access to management’s proxy material in order to nominate their own candidates(s) to the board.
Generally, vote AGAINST shareholder proposals, unless significant or multiple corporate governance concerns have been identified.
Generally, vote FOR management proposals also supported by the Agent.
Majority Voting Standard
Generally, vote FOR proposals seeking
election of directors by the affirmative vote of the majority of votes cast in connection with a meeting of shareholders, provided
they contain a plurality carve-out for contested elections, and provided such standard does not conflict with state law in which
the company is incorporated. Generally, vote FOR amendments to corporate documents or other actions in furtherance of a majority
standard. (See also Section 11. Mutual Fund Proxies.)
31
Bundled Proposals
Except as otherwise provided for herein,
review on a CASE-BY-CASE basis bundled or “conditioned” proxy proposals, generally voting AGAINST bundled proposals
containing one or more items not supported under these Guidelines if the Agent or relevant Investment Professional(s) deems the
negative impact, on balance, to outweigh any positive impact.
Moot Proposals
Generally, vote with the Agent’s
recommendation to withhold support (AGAINST or ABSTAIN, as appropriate) from a proposal for which support has become moot (e.g.,
an incentive grant to a person no longer employed by the company.)
Shareholder Advisory Committees
Review on a CASE-BY-CASE basis proposals
to establish a shareholder advisory committee.
Reimburse Shareholder for Expenses
Incurred
Voting to reimburse expenses incurred
in connection with shareholder proposals should be analyzed on a CASE-BY-CASE basis.
Other Business
In connection with proxies of U.S.
issuers (e.g., those filing a DEF 14A and considered domestic by the Agent), generally vote FOR management proposals for
Other Business, except when the primary proposal is not supported by a Fund or in connection with a proxy contest in which a Fund
is not voting in support of management.
Quorum Requirements
Review on a case-by-case
basis proposals to lower quorum requirements for shareholder meetings below a majority of the shares outstanding.
Advance Notice for Shareholder Proposals
Generally, vote FOR management proposals
related to advance notice period requirements, provided that the period requested is in accordance with applicable law and no material
governance concerns have been identified in connection with the issuer.
Multiple Proposals
Multiple proposals of a similar nature
presented as options to the course of action favored by management may all be voted FOR, provided that support for a single proposal
is not operationally required, no one proposal is deemed superior in the interest of the Fund(s), and each proposal would otherwise
be supported under these Guidelines.
32
Common Stock Authorization
Review proposals to increase the number
of shares of common stock authorized for issuance on a CASE-BY-CASE basis. Except where otherwise indicated, the Agent’s
proprietary approach of determining appropriate thresholds and, for requests above such allowable threshold, applying a company-specific,
qualitative review (e.g., considering rationale and prudent historical usage), will generally be utilized in evaluating
such proposals.
Generally, vote FOR:
| · | Proposals to authorize capital increases within the Agent’s
allowable thresholds or those in excess but meeting Agent’s qualitative standards, but consider on a CASE-BY-CASE basis those
requests failing the Agent’s review for proposals in connection with which a contrary recommendation from the relevant Investment
Professional(s) has been received and is to be utilized (e.g., in support of a merger or acquisition proposal). |
| · | Proposals to authorize capital increases within the Agent’s
allowable thresholds or those in excess but meeting Agent’s qualitative standards, unless the company states that the stock
may be used as a takeover defense. In those cases, consider on a CASE-BY-CASE basis if a contrary recommendation from the relevant
Investment Professional(s) has been received and is to be utilized. |
| · | Proposals to authorize capital increases exceeding the Agent’s
thresholds when a company’s shares are in danger of being delisted or if a company’s ability to continue to operate
as a going concern is uncertain. |
Generally, vote AGAINST:
| · | Proposals to increase the number of authorized shares of a class
of stock if the issuance which the increase is intended to service is not supported under these Guidelines. |
| · | Nonspecific proposals authorizing excessive discretion to a board. |
Consider management proposals to make
changes to the capital structure not otherwise addressed under these Guidelines CASE-BY-CASE, generally voting with the Agent’s
recommendation unless a contrary recommendation has been received from the relevant Investment Professional(s) and is to be utilized.
Dual Class Capital Structures
Generally, vote AGAINST:
| · | Proposals to create or perpetuate dual class capital structures unless
supported by the Agent (e.g., to avert bankruptcy or generate non-dilutive financing, and not designed to increase the voting
power of an insider or significant shareholder). |
| · | Proposals to increase the number of authorized shares of the class
of stock that has superior voting rights in companies that have dual class capital structures. |
However, consider such proposals CASE-BY-CASE
if (1) bundled with favorable proposal(s), (2) approval of such proposal(s) is a condition of such favorable proposal(s),
or (3) part of a recapitalization for which support is recommended by the Agent or relevant
Investment Professional(s).
33
Consider management proposals to eliminate
or make changes to dual class capital structures CASE-BY-CASE, generally voting with the Agent’s recommendation unless a
contrary recommendation has been received from the relevant Investment Professional(s) and is to be utilized.
Generally, vote FOR shareholder proposals
to eliminate dual class capital structures unless the relevant Fund owns a class with superior voting rights.
Stock Distributions: Splits and
Dividends
Generally, vote FOR management proposals
to increase common share authorization for a stock split, provided that the increase in authorized shares falls within the Agent’s
allowable thresholds, but consider on a CASE-BY-CASE basis those proposals exceeding the Agent’s threshold for proposals
in connection with which a contrary recommendation from the relevant Investment Professional(s) has been received and is to be
utilized.
Reverse Stock Splits
Consider on a CASE-BY-CASE basis management
proposals to implement a reverse stock split. In the event the split constitutes a capital increase effectively exceeding the Agent’s
allowable threshold because the request does not proportionately reduce the number of shares authorized, consider management’s
rationale and/or disclosure, generally voting FOR, but generally not supporting additional requests for capital increases on the
same agenda.
Preferred Stock
Review proposals to increase the number
of shares of preferred stock authorized for issuance on a CASE-BY-CASE basis, and except where otherwise indicated, generally utilize
the Agent’s approach for evaluating such proposals. This approach incorporates both qualitative and quantitative measures,
including a review of past performance (e.g., board governance, shareholder returns and historical share usage) and the
current request (e.g., rationale, whether shares are blank check and declawed, and dilutive impact as determined through
the Agent’s proprietary model for assessing appropriate thresholds).
Generally, vote AGAINST proposals authorizing
the issuance of preferred stock or creation of new classes of preferred stock with unspecified voting, conversion, dividend distribution,
and other rights (“blank check” preferred stock), but vote FOR if the Agent or relevant Investment Professional(s)
so recommends because the issuance is required to effect a merger or acquisition proposal.
Generally, vote FOR proposals to issue
or create blank check preferred stock in cases when the company expressly states that the stock will not be used as a takeover
defense. Generally vote AGAINST in cases where the company expressly states that, or fails to disclose whether, the stock may be
used as a takeover defense, but vote FOR if the Agent or relevant Investment Professional(s) so recommends because the issuance
is required to address special circumstances such as a merger or acquisition.
Generally, vote FOR proposals to authorize
or issue preferred stock in cases where the company specifies the voting, dividend, conversion, and other rights of such stock
and the terms of the preferred stock appear reasonable.
34
Vote CASE-BY-CASE on proposals to increase
the number of blank check preferred shares after analyzing the number of preferred shares available for issue given a company’s
industry and performance in terms of shareholder returns.
Shareholder Proposals Regarding
Blank Check Preferred Stock
Generally, vote FOR shareholder proposals
to have blank check preferred stock placements, other than those shares issued for the purpose of raising capital or making acquisitions
in the normal course of business, submitted for shareholder ratification.
Adjustments to Par Value of Common
Stock
Generally, vote FOR management proposals
to reduce the par value of common stock, unless doing so raises other concerns not otherwise supported under these Guidelines.
Preemptive Rights
Review on a CASE-BY-CASE basis shareholder
proposals that seek preemptive rights or management proposals that seek to eliminate them. In evaluating proposals on preemptive
rights, consider the size of a company and the characteristics of its shareholder base.
Debt Restructurings
Review on a CASE-BY-CASE basis proposals
to increase common and/or preferred shares and to issue shares as part of a debt restructuring plan.
Share Repurchase Programs
Generally, vote FOR management proposals
to institute open-market share repurchase plans in which all shareholders may participate on equal terms, but vote AGAINST plans
with terms favoring selected parties. This policy shall also apply to companies incorporated outside the U.S. if they are listed
on a U.S. exchange and treated as a U.S. domestic issuer by the Securities and Exchange Commission (“SEC”).
Generally, vote FOR management proposals
to cancel repurchased shares.
Generally, vote AGAINST proposals for
share repurchase methods lacking adequate risk mitigation or exceeding appropriate volume or duration parameters for the market.
Consider shareholder proposals seeking
share repurchase programs on a CASE-BY-CASE basis, with input from the relevant Investment Professional(s) to be given primary
consideration.
Tracking Stock
Votes on the creation of tracking stock
are determined on a CASE-BY-CASE basis.
| 8. | Executive and Director Compensation |
Except as otherwise provided for herein,
votes with respect to compensation and employee benefit plans, or the issuance of shares in connection with such plans, should
be determined on a CASE-BY-CASE basis, with voting decisions generally based on the Agent’s approach to evaluating such plans,
which includes determination of costs and comparison to an allowable cap, except as otherwise provided herein.
| · | Generally, vote in accordance with the Agent’s recommendations
FOR equity-based plans with costs within such cap and AGAINST those with costs in excess of it, except |
35
that plans above the cap may
be supported if so recommended by the Agent or relevant Investment Professional(s) as a condition to a major transaction such as
a merger.
| · | Generally, vote AGAINST plans if the Agent suggests cost or dilution
assessment may not be possible due to the method of disclosing shares allocated to the plan(s). |
| · | Generally, vote AGAINST equity-based plans whose awards further a
misalignment between CEO pay and performance with regard to shareholder value, including where pay appears unreasonably insulated
from performance conditions and/or awards under the plan are concentrated among named executive officers. |
| · | Generally, vote AGAINST plans with inadequate disclosure regarding
vesting or performance requirements. However, except as otherwise provided herein, consider plans CASE-BY-CASE if the Agent questions
the form or stringency of the vesting or performance criteria. |
| · | Generally, vote FOR plans with costs within the cap if the primary
concerns raised by the Agent pertain to matters that would not result in a negative vote under these Guidelines on a management
say on pay proposal or the relevant board or committee member(s). |
| · | Generally, vote AGAINST plans administered by potential grant recipients. |
| · | Generally, vote AGAINST proposals to eliminate existing shareholder
approval requirements for material plan changes, unless the company has provided a reasonable rationale and/or adequate disclosure
regarding the requested changes. |
| · | Generally vote AGAINST long-term incentive plans that are inadequately
aligned with shareholders because the performance period is too short or they lack an appropriate equity component, except that
such cases will be considered CASE-BY-CASE in connection with executives already holding significant equity positions. |
| · | Generally, vote AGAINST plans that contain an overly liberal change
in control definition (e.g., does not result in actual change in control or results in a change in control but does not
terminate the employment relationship). |
| · | Consider plans CASE-BY-CASE if the Agent raises other considerations
not otherwise provided for herein. |
Management Proposals Seeking Approval
to Reprice Options
Review on a CASE-BY-CASE basis management
proposals seeking approval to reprice, replace, or exchange options, considering factors such as rationale, historic trading patterns,
value-for-value exchange, vesting periods, and replacement option terms. Generally, vote FOR proposals that meet the Agent’s
criteria for acceptable repricing, replacement, or exchange transactions. Generally, vote AGAINST compensation plans that (1) permit
or may permit (e.g., history of repricing and no express prohibition against future repricing) repricing of stock options,
or any form or alternative to repricing, without shareholder approval, (2) include provisions that permit repricing, replacement,
or exchange transactions that do not meet the Agent’s criteria, or (3) give the board sole discretion to approve option
repricing, replacement, or exchange programs.
36
Director Compensation
Votes on stock-based plans for directors
are made on a CASE-BY-CASE basis, with voting decisions generally based on the Agent’s quantitative approach described above
as well as a review of qualitative features of the plan when costs exceed the Agent’s threshold.
Employee Stock Purchase Plans
Votes on employee stock purchase plans,
and capital issuances in support of such plans, should be made on a CASE-BY-CASE basis, with voting decisions generally based on
the Agent’s approach to evaluating such plans.
OBRA-Related Compensation Proposals
Votes on
plans intended to qualify for favorable tax treatment under the provisions of Section 162(m) of OBRA should be evaluated irrespective
of the Agent’s assessment of board independence, provided that the board meets the independence requirements of the
relevant listing exchange and no potential recipient under the plan(s) sits on the committee that exercises discretion over the
related compensation awards. Unless the issuer has provided a compelling rationale, generally vote with
the Agent’s recommendations AGAINST plans that include practices or features not supported under these Guidelines or deliver
excessive compensation that fails to qualify for favorable tax treatment.
Amendments that Place a Cap
on Annual Grants or Amend Administrative Features
Generally, vote FOR plans that
simply amend shareholder-approved plans to include administrative features or place a cap on the annual grants any one participant
may receive to comply with the provisions of Section 162(m) of OBRA.
Amendments to Add Performance-Based
Goals
Generally, vote FOR amendments
to add performance goals to existing compensation plans to comply with the provisions of Section 162(m) of OBRA, unless they are
clearly inappropriate.
Amendments to Increase Shares
and Retain Tax Deductions Under OBRA
Votes on amendments to existing
plans to increase shares reserved and to qualify the plan for favorable tax treatment under the provisions of Section 162(m) should
be evaluated on a CASE-BY-CASE basis, generally voting FOR such plans that do not raise any negative concerns under these Guidelines.
Approval of Cash or Cash-and-Stock
Bonus Plans
Generally, vote FOR cash or
cash-and-stock bonus plans to exempt the compensation from taxes under the provisions of Section 162(m) of OBRA, with primary consideration
given to management’s assessment that such plan meets the requirements for exemption of performance-based compensation. However,
consider CASE-BY-CASE when broader compensation concerns exist.
Shareholder
Proposals Regarding Executive and Director Pay
Unless evidence exists of abuse in
historical compensation practices, and except as otherwise provided for herein, generally vote AGAINST shareholder proposals that
seek to impose new compensation structures or policies.
37
Severance and Termination Payments
Generally, vote FOR shareholder proposals
to have parachute arrangements submitted for shareholder ratification (with “parachutes” defined as compensation arrangements
related to termination that specify change in control events) and provided that the proposal does not include unduly restrictive
or arbitrary provisions such as advance approval requirements.
Generally, vote FOR shareholder proposals
seeking double triggers on change in control cash severance provisions.
Consider on a CASE-BY-CASE basis proposals
seeking a specific treatment (e.g., double trigger or pro-rata) of equity that vests upon change in control. Generally vote
FOR management proposals, unless evidence exists of abuse in historical compensation practices. Generally vote AGAINST shareholder
proposals regarding the treatment of equity if the change in control cash severance provisions are double-triggered and the company
has provided a reasonable rationale regarding the treatment of equity.
Generally vote FOR shareholder proposals
to submit executive severance agreements for shareholder ratification, if such proposals specify change in control events, Supplemental
Executive Retirement Plans, or deferred executive compensation plans, or if ratification is required by the listing exchange.
Review on a CASE-BY-CASE basis all
proposals to approve, ratify, or cancel executive severance or termination arrangements, including those related to executive recruitment
or retention. Generally vote FOR such compensation arrangements if:
| (1) | The primary concerns raised by the Agent would not result in a negative
vote under these Guidelines on a management say on pay proposal or the relevant board or committee member(s); |
| (2) | The issuer has provided adequate rationale and/or disclosure; or |
| (3) | Support is recommended by the Agent or relevant Investment Professional(s)
(e.g., as a condition to a major transaction such as a merger). |
However, vote in accordance with the
Agent’s recommendations AGAINST new or materially amended plans, contracts, or payments that include single trigger change
in control cash severance provisions or do not require an actual change in control in order to be triggered.
Consider on a CASE-BY-CASE basis any
parachute arrangement proposals opposed by the Agent due to single trigger equity acceleration or legacy single trigger change
in control cash severance provisions. Generally vote FOR such proposals, unless: (1) the total payout to the named executive officers
is deemed excessive versus the transaction equity value of the merger, (2) the single-triggered component of the payout is excessive
versus the total payout, or (3) the arrangements contain an overly liberal change in control definition.
Employee Stock Ownership Plans (ESOPs)
Generally, vote FOR proposals that
request shareholder approval in order to implement an ESOP or to increase authorized shares for existing ESOPs, except in cases
when the number of shares allocated to the ESOP is “excessive” (i.e., generally greater than five percent of
outstanding shares).
38
401(k) Employee Benefit Plans
Generally, vote FOR proposals to implement
a 401(k) savings plan for employees.
Holding Periods
Generally, vote AGAINST proposals requiring
mandatory periods for officers and directors to hold company stock.
Advisory Votes on Executive Compensation
(Say on Pay)
Generally, management proposals seeking
ratification of the company’s compensation program will be voted FOR unless the program includes practices or features not
supported under these Guidelines (including those referenced under Section 1. The Board of Directors, Compensation Practices) and
the proposal receives a negative recommendation from the Agent. Unless otherwise provided for herein, proposals not receiving the
Agent’s support due to concerns regarding incentive structures, severance/termination payments, or vesting or performance
criteria not otherwise supported by these Guidelines will be considered on a CASE-BY-CASE basis, factoring in whether the issuer
has made improvements to its overall compensation program, and generally voting FOR if CEO pay appears aligned with performance
and/or the company has provided a reasonable rationale and/or adequate disclosure regarding the matter(s) under consideration.
For say on pay proposals not supported by the Agent and referencing incentive plan concerns:
| (1) | Short-term incentive plans: Proposals will be considered on
a CASE-BY-CASE basis if they cite short-term incentive plans over which the board has exercised discretion to exclude extraordinary
items, and voted AGAINST if treatment of such items has been inconsistent (e.g., exclusion of losses but not gains). |
| (2) | Long-term incentive plans: Proposals will be voted AGAINST
if they cite long-term incentive plans that are inadequately aligned with shareholders because the performance period is too short
or they lack an appropriate equity component (e.g., overly cash-based plans), except that the latter will be considered
CASE-BY-CASE in connection with executives already holding significant equity positions. |
Generally, vote AGAINST proposals when
named executives have material input into setting their own compensation.
Generally, vote AGAINST proposals presented
by issuers subject to Troubled Asset Relief Program (TARP) provisions if there is inadequate discussion of the process for ensuring
that incentive compensation does not encourage excessive risk-taking.
Frequency of Advisory Votes on Executive
Compensation
Generally, support proposals seeking
an annual say on pay and oppose those seeking a less frequent say on pay.
Voting on State Takeover Statutes
Review on a CASE-BY-CASE basis proposals
to opt in or out of state takeover statutes (including control share acquisition statutes, control share cash-out statutes, freezeout
provisions, fair price provisions, stakeholder laws, poison pill endorsements, severance pay and labor contract provisions, anti-greenmail
provisions, and disgorgement provisions).
39
Voting on Reincorporation Proposals
Proposals to change a company’s
state of incorporation should be examined on a CASE-BY-CASE basis, generally supporting management proposals not assessed as a
(1) potential takeover defense or (2) significant reduction of minority shareholder rights that outweigh
the aggregate positive impact, but if so assessed, weighing management’s rationale for the change. Generally, vote
FOR management reincorporation proposals upon which another key proposal, such as a merger transaction, is contingent if the other
key proposal is also supported. Generally, vote AGAINST shareholder reincorporation proposals not also supported by the company.
| 10. | Mergers and Corporate Restructurings |
Input from the relevant Investment
Professional(s) shall be given primary consideration with respect to proposals regarding business combinations, particularly those
between otherwise unaffiliated parties, or other corporate restructurings being considered on behalf of that Fund.
Generally, vote FOR a proposal not
typically supported under these Guidelines if a key proposal, such as a merger transaction, is contingent upon its support and
a vote FOR is accordingly recommended by the Agent or relevant Investment Professional(s).
Mergers and Acquisitions
Votes on mergers and acquisitions should
be considered on a CASE-BY-CASE basis, with voting decisions generally based on the Agent’s approach to evaluating such proposals
if no input is provided by the relevant Investment Professional(s).
Corporate Restructurings
Votes on corporate restructuring proposals,
including demergers, minority squeezeouts, leveraged buyouts, spinoffs, liquidations, dispositions, divestitures, and asset sales,
should be considered on a CASE-BY-CASE basis, with voting decisions generally based on the Agent’s approach to evaluating
such proposals if no input is provided by the relevant Investment Professional(s).
Adjournment
Generally, vote FOR proposals to adjourn
a meeting to provide additional time for vote solicitation when the primary proposal, such as a merger or corporate restructuring,
is also supported. Absent such a proposal, vote FOR adjournment if all other proposals are supported and AGAINST if all others
are opposed. Under any other circumstances, consider on a CASE-BY-CASE basis.
Appraisal Rights
Generally, vote FOR proposals to restore,
or provide shareholders with, rights of appraisal.
Changing Corporate Name
Generally, vote FOR changing the corporate
name.
Approving New Classes or Series
of Shares
Generally, vote FOR the establishment
of new classes or series of shares.
40
Authorizing the Board to Hire and
Terminate Sub-Advisers Without Shareholder Approval
Generally, vote FOR these proposals.
Master-Feeder Structure
Generally, vote FOR the establishment
of a master-feeder structure.
Establish Director Ownership Requirement
Generally, vote AGAINST shareholder
proposals for the establishment of a director ownership requirement.
The matters below should be examined
on a CASE-BY-CASE basis:
| · | Converting Closed-end Fund to Open-end Fund |
| · | Investment Advisory Agreements |
| · | Preferred Stock Proposals |
| · | Changing a Fundamental Restriction to a Nonfundamental Restriction |
| · | Change Fundamental Investment Objective to Nonfundamental |
| · | Disposition of Assets/Termination/Liquidation |
| · | Changes to the Charter Document |
| · | Changing the Domicile of a Fund |
| · | Change in Fund’s Subclassification |
| · | Reimburse Shareholder for Expenses Incurred |
| · | Terminate the Investment Adviser |
| · | Majority Voting Proposals |
| 12. | Social and Environmental Issues |
Boards
of directors and company management are responsible for guiding the corporation in connection with matters that are most often
the subject of shareholder proposals on social and environmental issues: ensuring that the companies they oversee comply with applicable
legal, regulatory and ethical standards, effectively managing risk, and assessing and addressing matters that may have a financial
impact on shareholder value. The Funds will generally vote in accordance with the board’s recommendation
on such proposals unless it appears both that the stewardship noted above has fallen short and the issue is material to the company.
The former may be evidenced by the company’s failure to align its actions and disclosure with market practice and
that of its peers, or the company’s having been subject to significant controversies, litigation, fines, or penalties in
connection with the relevant issue. Such instances will be considered CASE-BY-CASE. The Funds will
generally vote AGAINST shareholder proposals
41
seeking to dictate corporate conduct,
impose excessive costs or restrictions, duplicate policies already substantially in place, or release information that would not
help a shareholder evaluate an investment in the corporation as an economic matter. The Funds may ABSTAIN from voting on shareholder
proposals where application of the Guidelines is unclear. This may include cases where the concerns raised are considered valid
but the policies or actions requested are not deemed appropriate or the issues are not clearly relevant to corporate performance
or are not deemed appropriate for shareholder consideration.
Companies incorporated outside the U.S.
shall generally be subject to the foregoing U.S. Guidelines if they are listed on a U.S. exchange and treated as a U.S. domestic
issuer by the SEC. Where applicable and not provided for otherwise herein, certain U.S. Guidelines may also be applied to companies
incorporated outside the U.S., e.g., companies with a significant base of U.S. operations and employees. However, the following
provide for differing regulatory and legal requirements, market practices, and political and economic systems existing in various
global markets.
Unless otherwise provided for herein,
it shall generally be the policy of the Funds to vote AGAINST global proxy proposals when the Agent recommends voting AGAINST such
proposal because relevant disclosure by the issuer, or the time provided for consideration of such disclosure, is inadequate. For
purposes of these global Guidelines, “AGAINST” shall mean withholding of support for a proposal, resulting in submission
of a vote of AGAINST or ABSTAIN, as appropriate for the given market and level of concern raised by the Agent regarding the issue
or lack of disclosure or time provided.
In connection with practices described
herein that are associated with a firm AGAINST vote, it shall generally be the policy of the Funds to consider them on a CASE-BY-CASE
basis if the Agent recommends their support (1) as the issuer or market transitions to better practices (e.g., having
committed to new regulations or governance codes) or (2) as the more favorable choice when shareholders must choose between
alternate proposals.
Routine Management Proposals
Generally, vote FOR the following and other similar routine
management proposals:
| · | the opening of the shareholder meeting |
| · | that the meeting has been convened under local regulatory requirements |
| · | the agenda for the shareholder meeting |
| · | the election of the chair of the meeting |
| · | the appointment of shareholders to co-sign the minutes of the meeting |
| · | regulatory filings (e.g., to effect approved share issuances) |
| · | the designation of inspector or shareholder representative(s) of
minutes of meeting |
| · | the designation of two shareholders to approve and sign minutes of
meeting |
| · | the allowance of questions |
| · | the publication of minutes |
| · | the closing of the shareholder meeting |
42
Consider proposals seeking authority to
call shareholder meetings on less than 21 days’ notice on a CASE-BY-CASE basis, with voting decisions generally based on
the Agent’s approach to consider whether the issuer has provided clear disclosure of its compliance with any hurdle conditions
for the authority imposed by applicable law and has historically limited its use of such authority to time-sensitive matters.
Discharge of Management/Supervisory
Board Members
Generally, vote FOR management proposals
seeking the discharge of management and supervisory board members, unless the Agent recommends AGAINST due to concern about the
past actions of the company’s auditors or directors or legal action is being taken against the board by other shareholders,
including when the proposal is bundled. Generally do not withhold support from such proposals in connection with remuneration practices
otherwise supported under these Guidelines or as a means of expressing disapproval of broader practices of the issuer or its board.
Director Elections
Unless otherwise provided for herein,
the Agent’s standards with respect to determining director independence shall apply. These standards generally provide that,
to be considered completely independent, a director shall have no material connection to the company other than the board seat.
Agreement with the Agent’s independence
standards shall not dictate that a Fund’s vote shall be cast according to the Agent’s corresponding recommendation.
Further, unless otherwise provided for herein, the application of Guidelines in connection with such standards shall apply only
when the nominee’s level of independence can be ascertained based on available disclosure. These policies generally apply
to director nominees in uncontested elections; votes in contested elections, and votes on director nominees not subject to policies
described herein, should be made on a CASE-BY-CASE basis, with primary consideration in contested elections given to input from
the relevant Investment Professional(s).
For issuers domiciled in Finland, France,
Ireland, the Netherlands, Sweden, or tax haven markets, generally vote AGAINST non-independent directors opposed by the Agent when
the full board serves as the audit committee, or the company does not have an audit committee.
For issuers in all markets, vote AGAINST
non-independent nominees to the audit committee, as well as bundled slates including such nominees, unless the Agent otherwise
recommends support (e.g., due to market practices or requirements). If the slate is bundled and audit committee membership
is unclear or proposed as a separate agenda item, vote FOR if the Agent otherwise recommends support. For Canadian issuers, the
Funds’ U.S. Guidelines with respect to audit committees shall apply. For issuers in all markets, nominees (or slates of nominees)
will be voted AGAINST if opposed by the Agent for failing to disclose audit fees broken down by category. If the Agent opposes
audit committee members because fees for non-audit services (excluding significant, one-time events) exceed 50 percent of total
auditor fees, the provisions under Section 13. Ratification of Auditors and Approval of Auditors’ Fees shall apply.
Generally, vote FOR non-independent
directors when the full board serves as the remuneration (compensation) or nominating committee, or the company does not have a
remuneration or nominating committee, if the board meets the applicable independence requirements of the relevant listing exchange.
Vote FOR non-independent directors who sit on the remuneration or
43
nominating committees if such committee
meets the applicable independence requirements of the relevant listing exchange.
Generally follow the Agent’s
recommendations to vote AGAINST individuals nominated as outside/non-executive directors who do not meet the Agent’s standard
for independence, unless the slate of nominees is bundled and includes independent nominees, in which case the proposal(s) to elect
board members shall be considered on a case-by-case basis.
Generally follow the Agent’s
standards for withholding support (AGAINST or ABSTAIN, as appropriate) from bundled slates or non-independent directors (typically,
but not always, excluding the CEO), as applicable, if the board does not meet the Agent’s independence standards or the board’s
independence cannot be ascertained due to inadequate disclosure.
For issuers in Italy presenting multiple
slates of directors (voto di lista), generally withhold support (AGAINST or ABSTAIN, as appropriate) from all slates until
nominee names are disclosed, and upon disclosure, generally follow the Agent’s standards for assessing which slate is best
suited to represent shareholder interests.
For issuers in Japan, generally follow
the Agent’s recommendations in furtherance of greater board independence and minority shareholder protections, including:
| · | At companies with controlling shareholders,
if the board after the shareholder meeting does not include at least two directors deemed independent under the Agent’s standards,
generally vote AGAINST reelection of top executives. |
| · | At companies with a three-committee structure,
generally vote AGAINST (1) outside director nominees not deemed independent under the Agent’s standards if the board
after the shareholder meeting is not majority independent and (2) non-independent directors on the nominating committee if
the board does not include at least two directors deemed independent under the Agent’s standards. |
| · | At all companies, vote AGAINST the top executive if the board
does not include at least one outside director. |
Consider
on a CASE-BY-CASE basis any nominee whom the Agent cites as having failed to implement a majority-approved shareholder proposal.
Vote FOR if the shareholder proposal has been reasonably addressed. Vote AGAINST if the shareholder proposal is supported under
these Guidelines and the board has not disclosed a credible rationale for not implementing the proposal.
Generally,
withhold support (AGAINST or ABSTAIN, as appropriate) from nominees or slates of nominees opposed by the Agent because they are
presented in a manner not aligned with market best practice and/or regulation, including:
| · | Bundled slates of nominees (e.g., Canada, France, Hong
Kong, or Spain); |
| · | Simultaneous reappointment of retiring directors (e.g.,
South Africa); |
| · | In markets with term lengths capped by regulation or market practice,
nominees whose terms exceed the caps or are not disclosed; or |
| · | Nominees whose names are not disclosed in advance of the meeting
or far enough in advance relative to voting deadlines to make an informed voting decision. |
44
Generally
vote FOR nominees without regard to recommendations that the position of chairman should be separate from that of CEO or otherwise
required to be independent, unless other concerns requiring Case-by-Case consideration
have been raised. The latter would include former CEOs proposed as board chairmen in markets such as the United Kingdom for which
best practice and the Agent recommend against such practice.
When
cumulative or net voting applies, generally vote with the Agent’s recommendation to support nominees asserted by the issuer
to be independent, irrespective of audit committee membership, even if independence disclosure or criteria fall short of Agent’s
standards.
Consider
nominees for whom the Agent has raised concerns regarding scandals or internal controls on a CASE-BY-CASE basis, generally supporting
nominees or slates of nominees unless:
| · | The scandal or shortfall in controls took
place at the company, or an affiliate, for which the nominee is being considered; |
| · | Culpability can be attributed to the nominee
(e.g., nominee manages or audits the relevant function); and |
| · | The nominee has been directly implicated,
with resulting arrest and criminal charge or regulatory sanction. |
Consider non-independent nominees on
a CASE-BY-CASE basis when the Agent has raised concerns regarding diminished shareholder value as evidenced by a significant drop
in share price, generally voting with Agent’s recommendation AGAINST such nominees when few, if any, outside directors are
present on the board and:
| · | The founding family has retained undue influence over the company despite a history of scandal or problematic controls; |
| · | The nominees have engaged in protectionist activities such as introduction of a poison pill or preferential and/or dilutive
share issuances; or |
| · | Evidence exists regarding compliance or accounting shortfalls. |
If
the Agent recommends withholding support due to other material failures or egregious actions, the Funds’ U.S. Guidelines
with respect to such issues shall apply.
Consider
nominees serving on the remuneration committee on a CASE-BY-CASE basis if the Agent recommends withholding support from nominees
in connection with remuneration practices not otherwise supported by these Guidelines, including cases in which the issuer has
not followed market practice by submitting a resolution on executive compensation. For Canadian issuers, the Funds’ U.S.
Guidelines with respect to Section 1. Voting on Director Nominees in Uncontested Elections, Compensation
Practices, shall apply.
For
issuers in markets in which it is common practice for nominees’ attendance records to be disclosed, the Funds’ U.S.
Guidelines with respect to director attendance shall apply. The same two-year attendance policy shall be applied regarding attendance
by directors and statutory auditors of Japanese companies if year-over-year data can be tracked by nominee.
Consider
self-nominated or shareholder-nominated director candidates on a CASE-BY-CASE basis, with voting decisions generally based on the
Agent’s approach to evaluating such candidates, except that (1) an unqualified candidate will generally not be supported
simply to
45
effect
a “protest vote,” (2) a candidate will generally not be supported if the candidate’s agenda is not in line with
the long-term best interests of the company, and (3) cases of multiple self-nominated candidates may be considered as a proxy
contest if similar issues are raised (e.g., potential change in control).
Generally vote FOR nominees without
regard to “over-boarding” issues raised by the Agent unless other concerns requiring Case-by-Case
consideration have been raised.
In
cases where a director holds more than one board seat and corresponding votes, manifested as one seat as a physical person plus
an additional seat as a representative of a legal entity, generally vote with the Agent’s recommendation to withhold support
(AGAINST or ABSTAIN, as appropriate) from the legal entity and vote on the physical person.
Generally,
vote with the Agent’s recommendation to withhold support (AGAINST or ABSTAIN, as appropriate) from nominees for whom support
has become moot since the time the individual was nominated (e.g., due to death, disqualification, or determination not
to accept appointment).
Generally,
vote with the Agent’s recommendation when more candidates are presented than available seats and no other provisions under
these Guidelines apply.
Board Structure
Generally,
vote FOR proposals to fix board size, but vote AGAINST if the Agent opposes due to corporate governance, anti-takeover, or board
independence concerns. Generally, vote FOR proposals seeking a board range if the range is reasonable in the context of market
practice and anti-takeover considerations. Proposed article amendments in this regard shall be considered on a CASE-BY-CASE basis,
with voting decisions generally based on the Agent’s approach to evaluating such proposals. Consider other proposals regarding
board structure or policies on a CASE-BY-CASE basis, voting AGAINST if they promote practices not supported under these Guidelines.
For
Japanese issuers, generally, follow the Agent’s approach to proposals seeking a board structure that would provide greater
independence oversight of management and the board.
Director and
Officer Indemnification and Liability Protection
Generally,
vote in accordance with the Agent’s standards for indemnification and liability protection for officers and directors, voting
AGAINST overly broad provisions.
Independent
Statutory Auditors
With
respect to Japanese companies that have not adopted the three-committee structure, vote AGAINST any nominee to the position of
“independent statutory auditor” whom the Agent considers affiliated, e.g., if the nominee has worked a significant
portion of his career for the company, its main bank, or one of its top shareholders. Where shareholders must vote on multiple
nominees in a single resolution, vote AGAINST all nominees. When multiple slates of statutory auditors are presented, generally
vote with the Agent’s recommendation, typically to support nominees deemed to be more independent and/or aligned with interests
of minority shareholders.
Generally, vote AGAINST incumbent nominees
at companies implicated in scandals or exhibiting poor internal controls.
46
Key Committees
Generally, except where market practice
otherwise dictates, vote AGAINST proposals that permit non-board members to serve on the audit, remuneration (compensation), or
nominating committee, provided that bundled slates, if otherwise acceptable under these Guidelines, may be supported if no slate
nominee serves on the relevant committee(s). If not otherwise addressed under these Guidelines, consider other negative recommendations
from the Agent regarding committee members on a CASE-BY-CASE basis.
Director and Statutory Auditor Remuneration
Consider director compensation plans
on a CASE-BY-CASE basis, with voting decisions generally based on the Agent’s approach to evaluating such proposals, while
also factoring in the merits of the rationale and disclosure provided.
Generally, vote FOR proposals to approve
the remuneration of directors and auditors as long as the amount is not excessive (e.g., significant increases should be
supported by adequate rationale and disclosure), there is no evidence of abuse, the recipient’s
overall compensation appears reasonable, and the board and/or responsible committee meet exchange or market standards for independence.
For European issuers, vote AGAINST
non-executive director remuneration if:
| · | The advance general meeting documents do not specify fees paid to
non-executive directors; |
| · | The company seeks to excessively increase the fees relative to market
or sector practices without providing a reasonable rationale for the increase; or |
| · | It provides for granting of stock options or similarly structured
equity-based compensation. |
For Toronto Stock Exchange (TSX) issuers,
the Agent’s limits with respect to equity awards to non-employee directors shall apply.
Bonus Payments
With respect to Japanese companies,
generally follow the Agent’s guidelines on retirement and annual bonus payments, which include voting FOR retirement bonus
proposals if all payments are for directors or auditors who have served as executives of the company and AGAINST such proposals
if any payments are for outsiders, except when deemed appropriate by the Agent, provided that no payments shall be supported unless
the individual or aggregate amounts are disclosed. In all markets, if issues have been raised regarding a scandal or internal controls,
generally vote AGAINST bonus proposals for retiring directors or continuing directors or auditors when culpability can be attributed
to the nominee (e.g., if a Fund is also voting AGAINST the nominee under criteria herein regarding issues of scandal or
internal controls), unless bundled with bonuses for a majority of directors or auditors a Fund is voting FOR.
Stock Option Plans for Independent
Internal Statutory Auditors
With respect to Japanese companies,
follow the Agent’s guidelines with respect to proposals regarding option grants to independent internal statutory auditors
or other outside parties, generally voting AGAINST such plans.
47
Amendment Procedures for Equity
Compensation Plans and Employee Share Purchase Plans (ESPPs)
For TSX issuers, votes with respect
to amendment procedures for security-based compensation arrangements and ESPPs shall generally be cast in a manner designed to
preserve shareholder approval rights, with voting decisions generally based on the Agent’s recommendation.
Compensation Plans and Shares Reserved
for Equity Compensation Plans
Unless otherwise provided for herein, votes
with respect to equity compensation plans (e.g., option, warrant, restricted stock, or employee share purchase plans or
participation in company offerings such as IPOs or private placements) or awards thereunder, the issuance of shares in connection
with such plans, cash-based plans where appropriate, or related management proposals (e.g., article amendments), should
be determined on a CASE-BY-CASE basis, with voting decisions generally based on the Agent’s approach to evaluating such proposals,
considering quantitative or qualitative factors as appropriate for the market and utilizing the Agent’s methodology, including
classification of a company’s stage of development as growth or mature and the corresponding determination as to reasonability
of the share requests.
Generally, vote AGAINST proposals that:
| · | Exceed Agent’s recommended burn rates or dilution limits, including
cases in which the Agent suggests dilution cannot be fully assessed (e.g., due to inadequate disclosure); |
| · | Provide deep or near-term discounts (or the equivalent, such as dividend
equivalents on unexercised options) to executives or directors, unless discounts to executives are deemed by the Agent to be adequately
mitigated by other requirements such as long-term vesting or performance requirements (e.g., Japan)
or broad-based employee participation otherwise meeting the Agent’s standards (e.g., France); |
| · | Are administered with discretion by potential grant recipients,
unless such discretion is deemed acceptable due to market practice or other mitigating provisions; |
| · | Provide for retirement benefits or equity incentive awards to outside
directors if not in line with market practice (e.g., Australia, Belgium, or The Netherlands); |
| · | Permit financial assistance to executives, directors, subsidiaries,
affiliates, or related parties under conditions not supported by the Agent (e.g., misaligned with shareholders’ interests
and/or posing excessive risk or independence concerns); |
| · | For matching share plans, do not meet the Agent’s standards,
considering holding period, discounts, dilution, participation, purchase price, and performance criteria; |
| · | Provide for vesting upon change in control if deemed to evidence
a potential conflict of interest or anti-takeover device or if the change in control definition is too liberal (e.g., does
not result in actual change in control); |
| · | Provide inadequate disclosure regarding vesting or performance requirements. |
| · | Include vesting or performance periods that do not meet market standards
(or the Agent’s standards where market standards are unclear); |
| · | Permit post-employment vesting or exercise if deemed inappropriate
by the Agent; |
| · | Allow plan administrators to make material amendments without shareholder
approval unless adequate prior disclosure has been provided, with such voting decisions generally based on the Agent’s approach
to evaluating such plans; |
48
| · | Provide for contract or notice periods or severance/termination payments
that exceed market practice, e.g., relative to multiples of annual compensation; |
| · | Promote a pay practice (or combination of practices) not otherwise
supported under these Guidelines that appears to diminish accountability to shareholders and/or has created a misalignment between
CEO pay and performance with regard to shareholder value; or |
| · | Provide for retesting in connection with achievement of performance
hurdles unless the Agent’s analysis indicates that (1) performance targets are adequately increased in proportion to
the additional time available, (2) the retesting is de minimis as a percentage of overall compensation or is acceptable
relative to market practice, or (3) the issuer has committed to cease retesting within a reasonable period of time. |
Generally, vote FOR such plans/awards
or the related issuance of shares that (1) do not suffer from the defects noted above or (2) otherwise meet the Agent’s
tests if the considerations raised by the Agent pertain primarily to vesting provisions, performance hurdles,
discretionary bonuses, recruitment awards, retention incentives, non-compete payments, severance/termination payments, or
incentive structures if:
| (1) | The company has provided adequate disclosure and/or a reasonable
rationale regarding the relevant plan/award, practice, or participation; |
| (2) | The recipient’s overall compensation appears reasonable; |
| (3) | Potential payments or awards are not so significant
(individually or collectively) as to potentially influence an executive’s decision-making (e.g., to enter into a transaction
that will result in a change of control payment) or to effectively act as a poison pill; and |
| (4) | The board and/or responsible committee meet exchange
or market standards for independence. |
Unless otherwise provided for herein,
market practice of the primary country in which a company does business or competes for talent, or in which an employee is serving,
as applicable, shall supersede that of the issuer’s domicile.
Consider proposals in connection with
such plans or the related issuance of shares in other instances on a CASE-BY-CASE basis.
Remuneration Reports (Advisory Votes
on Executive Compensation)
Generally, withhold support (AGAINST
or ABSTAIN as appropriate for specific market and level of concerns identified) from remuneration reports/advisory votes on compensation
that include compensation plans that:
| (1) | Permit practices or features not supported under these Guidelines,
including conditions described under Compensation Plans and Shares Reserved for Equity Compensation Plans above; |
| (2) | Permit retesting excessive relative to market practice (irrespective
of the Agent’s support for the report as a whole); |
| (3) | Cite long-term incentive plans deemed to be inadequately aligned
with shareholders because the performance period is too short or they lack an appropriate equity component (e.g., overly
cash-based plans), except that the latter will be considered CASE-BY-CASE in connection with executives already holding significant
equity positions; |
49
| (4) | Cite equity award valuation methods triggering a negative recommendation
from the Agent; |
| (5) | Include components, metrics, or rationales that have not been disclosed
in line with market practice (although retrospective disclosure may be considered adequate); |
| (6) | For issuers in Australia, permit open market purchase of shares in
support of equity grants in lieu of seeking shareholder approval, but only if the issuer has a history of significant negative
votes when formally seeking approval for such grants; or |
| (7) | Include provisions for retirement benefits or equity incentive awards
to outside directors if not in line with market practice, except that reports will generally be voted FOR if contractual components
are reasonably aligned with market practices on a going-forward basis (e.g., existing obligations related to retirement
benefits or terms contrary to evolving standards would not preclude support for the report). |
Reports receiving the Agent’s
support and not triggering the concerns cited above will generally be voted FOR. Unless otherwise provided for herein, reports
not receiving the Agent’s support due to concerns regarding vesting provisions, performance hurdles,
discretionary bonuses, recruitment awards, retention incentives, non-compete payments, severance/termination payments, or
incentive structures not otherwise supported by these Guidelines shall be considered on a CASE-BY-CASE basis, generally voted FOR
if:
| (1) | The company has provided a reasonable rationale and/or adequate disclosure
regarding the matter(s) under consideration; |
| (2) | The recipient’s overall compensation
appears reasonable; |
| (3) | Potential payments or awards are not so significant
(individually or collectively) as to potentially influence an executive’s decision-making (e.g., to enter into a transaction
that will result in a change of control payment) or to effectively act as a poison pill; and |
| (4) | The board and/or responsible committee meet exchange
or market standards for independence. |
Reports with typically unsupported
features may be voted FOR when the Agent recommends their initial support as the issuer or market transitions to better practices
(e.g., having committed to new regulations or governance codes).
Proposals to Provide an Advisory
Vote on Executive Compensation
For issuers in Canada, generally support
proposals seeking a say on pay, with a preference for an annual vote.
Shareholder Proposals Regarding
Executive and Director Pay
Except as otherwise provided for herein,
the Funds’ U.S. Guidelines with respect to shareholder proposals regarding executive and director pay shall generally apply.
General Share Issuances
Unless otherwise provided for herein,
voting decisions shall generally be based on the Agent’s practice to determine support for general issuance requests (with
or without preemptive rights), or related requests to repurchase and reissue shares, based on their amount relative to currently
issued capital, appropriate volume and duration parameters, and market-specific considerations (e.g., priority right protections
in France, reasonable levels of dilution and discount in Hong
50
Kong). Requests to reissue repurchased
shares will not be supported unless a related general issuance request is also supported.
Consider specific issuance requests on
a Case-by-Case basis based on the proposed use and the company’s rationale.
Generally, vote AGAINST proposals to
issue shares (with or without preemptive rights), convertible bonds, or warrants, to grant rights to acquire shares, or to amend
the corporate charter relative to such issuances or grants when concerns have been identified by the Agent with respect to inadequate
disclosure, inadequate restrictions on discounts, failure to meet the Agent’s standards for general issuance requests, or
authority to refresh share issuance amounts without prior shareholder approval.
Generally, vote AGAINST nonspecific
proposals authorizing excessive discretion to a board.
Increases in Authorized Capital
Unless otherwise provided for herein,
voting decisions should generally be based on the Agent’s approach, as follows. Generally:
| · | Vote FOR nonspecific proposals, including
bundled proposals, to increase authorized capital up to 100 percent over the current authorization unless the increase would leave
the company with less than 30 percent of its new authorization outstanding. |
| · | Vote FOR specific proposals to increase
authorized capital, unless: |
| § | The specific purpose of the increase (such
as a share-based acquisition or merger) does not meet these Guidelines for the purpose being proposed; or |
| § | The increase would leave the company with
less than 30 percent of its new authorization outstanding after adjusting for all proposed issuances. |
| · | Vote AGAINST proposals to adopt unlimited
capital authorizations. |
| · | The Agent’s market-specific exceptions
to the above parameters shall be applied. |
Preferred Stock
Unless otherwise provided for herein,
voting decisions should generally be based on the Agent’s approach, including:
| · | Vote FOR the creation of a new class of
preferred stock or issuances of preferred stock up to 50 percent of issued capital unless the terms of the preferred stock
would adversely affect the rights of existing shareholders. |
| · | Vote FOR the creation/issuance of convertible
preferred stock as long as the maximum number of common shares that could be issued upon conversion meets the Agent’s guidelines
on equity issuance requests. |
| · | Vote AGAINST the creation of (1) a
new class of preference shares that would carry superior voting rights to the common shares or (2) blank check preferred stock,
unless the board states that the authorization will not be used to thwart a takeover bid. |
Poison Pills/Protective Preference
Shares
Generally, vote AGAINST management
proposals in connection with poison pills or anti-takeover activities (e.g., disclosure requirements or issuances, transfers,
or repurchases) that do not meet the Agent’s standards. Generally vote in accordance with Agent’s recommendation to
withhold support from a nominee in connection with poison pill or anti-takeover considerations
51
when responsibility for the actions
can be reasonably attributed to the nominee. Generally DO NOT VOTE AGAINST director remuneration in connection with poison pill
considerations raised by the Agent.
Waiver on Tender-Bid Requirement
Generally, consider proposals on a
CASE-BY-CASE basis seeking a waiver for a major shareholder or concert party from the requirement to make a buyout offer to minority
shareholders, voting FOR when little concern of a creeping takeover exists and the company has provided a reasonable rationale
for the request, and with voting decisions generally based on the Agent’s approach to evaluating such requests.
Approval of Financial Statements
and Director and Auditor Reports
Generally, vote FOR management
proposals seeking approval of financial accounts and reports, unless there is concern about the company’s financial accounts
and reporting, which, in the case of related party transactions, would include concerns raised by the Agent regarding inadequate
disclosure, remuneration arrangements (including severance/termination payments exceeding local standards for multiples of annual
compensation), or consulting agreements with non-executive directors. Unless otherwise provided for herein, reports not receiving
the Agent’s support due to other concerns regarding severance/termination payments not otherwise supported by these Guidelines
shall be considered on a CASE-BY-CASE basis, factoring in the merits of the rationale or disclosure provided and generally voted
FOR if the overall remuneration package and/or program at issue appears reasonable and the board and/or responsible committee meet
exchange or market standards for independence. Generally, vote AGAINST board-issued reports receiving a negative recommendation
from the Agent due to concerns regarding independence of the board or the presence of non-independent directors on the audit committee.
However, generally do not withhold support from such proposals in connection with remuneration practices otherwise supported under
these Guidelines or as a means of expressing disapproval of broader practices of the issuer or its board.
Remuneration of Auditors
Generally, vote FOR proposals to authorize
the board to determine the remuneration of auditors, unless there is evidence of excessive compensation relative to the size and
nature of the company.
Indemnification of Auditors
Generally, vote AGAINST proposals to
indemnify auditors.
Ratification of Auditors and Approval
of Auditors’ Fees
For Canadian issuers, the Funds’
U.S. Guidelines with respect to auditors and auditor fees shall apply.
For other markets, generally, follow
the Agent’s standards for proposals seeking auditor ratification or approval of auditors’ fees, which generally indicate
a vote FOR such proposals if the level of disclosure and independence meet the Agent’s standards. However, if fees for non-audit
services (excluding significant, one-time events) exceed 50 percent of total auditor fees, consider on a CASE-BY-CASE basis, and
vote AGAINST ratification of auditors or approval of auditors’ fees opposed by the Agent if it appears that remuneration
for the non-audit work is so lucrative as to taint the auditor’s independence, including circumstances where no rationale
is provided.
52
In other cases, generally vote FOR
such proposals unless there are material concerns raised by the Agent about the auditor’s practices or independence.
Audit Commission
Consider nominees to the audit commission
on a CASE-BY-CASE basis, with voting decisions generally based on the Agent’s approach to evaluating such candidates.
Allocation of Income and Dividends
With respect to Japanese companies,
consider management proposals concerning allocation of income and the distribution of dividends, including
adjustments to reserves to make capital available for such purposes, on a CASE-BY-CASE basis, generally voting
with the Agent’s recommendations to support such proposals unless:
| · | The dividend payout ratio has been consistently
below 30 percent without adequate explanation; or |
| · | The payout is excessive given the company’s
financial position. |
Generally vote FOR such proposals by
issuers in other markets.
In any markets, in the event management
offers multiple dividend proposals on the same agenda, consider on a CASE-BY-CASE basis, with primary consideration given to input
from the relevant Investment Professional(s) and voting decisions generally based on the Agent’s recommendation if no input
is received.
Stock (Scrip) Dividend Alternatives
Generally, vote FOR most stock (scrip)
dividend proposals, but vote AGAINST proposals that do not allow for a cash option unless management demonstrates that the cash
option is harmful to shareholder value.
Debt Instruments and Issuance Requests
Generally, vote AGAINST proposals authorizing
excessive discretion to a board to issue or set terms for debt instruments (e.g., commercial paper). Generally, vote FOR
debt issuances for companies when the gearing level (current debt-to-equity ratio) is between zero and 100 percent.
Review on a CASE-BY-CASE basis proposals where the issuance of debt will result in the gearing level being greater than 100 percent,
or for which inadequate disclosure precludes calculation of the gearing level, comparing any such proposed debt issuance to industry
and market standards, and with voting decisions generally based on the Agent’s approach to evaluating such requests.
Financing Plans
Generally, vote FOR the adoption
of financing plans if they are in the best economic interests of shareholders.
Related Party Transactions
Consider related party transactions
on a CASE-BY-CASE basis. Generally, vote FOR approval of such transactions unless the agreement requests a strategic move outside
the company’s charter, contains unfavorable or high-risk terms (e.g., deposits without security interest or guaranty),
or is deemed likely to have a negative impact on director independence.
53
Approval of Donations
Generally, vote AGAINST such proposals
unless adequate, prior disclosure of amounts is provided; if so, single- or multi-year authorities may be supported.
Capitalization of Reserves
Generally, vote FOR proposals to capitalize
the company’s reserves for bonus issues of shares or to increase the par value of shares, unless concerns not otherwise supported
under these Guidelines are raised by the Agent.
Investment of Company Reserves
These proposals should generally be
analyzed on a case-by-case basis, with primary consideration given to input from
the relevant Investment Professional(s).
Article and Bylaw Amendments
Review on a CASE-BY-CASE basis all
proposals seeking adoption of, or amendments to, the articles of association, bylaws, or related board policies.
Generally, vote FOR the proposal if:
| · | The change or policy is editorial in nature; |
| · | Shareholder rights are protected; |
| · | There is negligible or positive impact on shareholder value; |
| · | Management provides adequate reasons for the amendments or the Agent
otherwise supports management’s position; |
| · | It seeks to discontinue and/or delist a form of the issuer’s
securities when the relevant Fund does not hold the affected security type; |
| · | Notice or disclosure requirements are reasonable; or |
| · | The company is required to do so by law (if applicable). |
Generally, vote AGAINST the proposal
if:
| · | It removes or lowers quorum requirements for board or shareholder
meetings below levels recommended by the Agent; |
| · | It reduces relevant disclosure to shareholders; |
| · | It seeks to align the articles with provisions of another proposal
not supported by these Guidelines; |
| · | It is not supported under these Guidelines, is presented within a
bundled proposal, and the negative impact, on balance, outweighs any positive impact; or |
| · | It imposes a negative impact on existing shareholder rights, including
rights of the Funds, or diminishes accountability to shareholders to the extent that any positive impact would not be deemed to
be sufficient to outweigh removal or diminution of such rights. |
With respect to article amendments for
Japanese companies:
| · | Generally vote FOR management proposals to amend a company’s
articles to expand its business lines. |
| · | Generally vote FOR management proposals to amend a company’s
articles to provide for an expansion or reduction in the size of the board, unless the expansion/reduction is clearly disproportionate
to the growth/decrease in the scale of the business or raises anti-takeover concerns. |
| · | If anti-takeover concerns exist, generally vote AGAINST management
proposals, |
54
including bundled proposals,
to amend a company’s articles to authorize the Board to vary the annual meeting record date or to otherwise align them with
provisions of a takeover defense.
| · | Generally follow the Agent’s guidelines with respect to management
proposals regarding amendments to authorize share repurchases at the board’s discretion, voting AGAINST proposals unless
there is little to no likelihood of a creeping takeover or constraints on liquidity (free float of shares is low), and where the
company is trading at below book value or is facing a real likelihood of substantial share sales; or where this amendment is bundled
with other amendments which are clearly in shareholders’ interest. |
Other Business
In connection with global proxies,
vote in accordance with the Agent’s market-specific recommendations on management proposals for Other Business, generally
AGAINST.
55
| Item 8. |
Fund Managers of Closed-End Management
Investment Companies. |
(a) (1) Fund Management. The following individuals share responsibility for the day-to-day management of the Fund’s Fund:
Pieter Schop. Pieter Schop is
Senior Investment Manager Equities in the Global Equity Core Team. In his role he combines stock selection and portfolio management
activities. Prior to this position Pieter was a Senior Investment Manager in the European Equity Team. In this team he was a sector
specialist most recently for the Telecom and Cyclical Services sectors. Moreover, he managed a number of segregated mandates. He
started his career at ING Investment Management in 1996. Prior to ING Investment Management he worked at Mercer Ten Pas, a consulting
firm, where Pieter made assessments of key institutional investors. He obtained his masters degree in econometrics at the State
University of Groningen in 1994.
Bert Veldman. Bert Veldman is senior investment
manager Equities in the Global Equity Core Team which he joined in 2006. In his role he combines stock selection and portfolio
management activities. He started his career in 1992 with Nationale-Nederlanden as a financial analyst with responsibilities for
the Japanese and Asian equity portfolios. In 1997 he joined ING IM (Hong Kong) where he managed a portfolio of Asian equities.
In 1999 he then joined ING IM in Singapore. In August 2000 Bert returned back to The Netherlands to join the Japan equity team
of ING IM based in The Hague, and subsequently relocated to Tokyo in 2003. Bert has built up extensive expertise in the Asian regions
and managed several segregated mandates. He has a masters degree in Financial Economics from the ‘Vrije Univerisiteit’
in Amsterdam. Bert holds the Chartered Financial Analyst® designation.
Willem van Dommelen. Willem van Dommelen joined
ING Investment Management in 2002 as Portfolio Manager Institutional clients, where he advised and serviced around 80 Institutional
Clients of ING. In 2004 Willem moved to the Structured Investments department. In the capacity of Senior Investment Manager he
was responsible for the management of a broad range of structured mutual funds and the advice and implementation of hedging activities
for ING affiliates. Currently Willem is Heading the Investment Managers team of the Systematic Beta column in the Structured Investment
Strategy department. Willem obtained his Master’s degree in Economics from Tilburg University in 2002, specializing in accountancy
and investment theory. He holds a RBA degree (registered investment analyst).
Edwin Cuppen, RBA, CAIA. Edwin joined ING Investment
Management in 2007 as an investment manager of Structured Investments. In the capacity of investment manager he is responsible
for managing a range of structured mutual funds and the execution of transactions in derivatives portfolios. Edwin started his
career as a trader in FX forwards and Money Market derivatives with ABN AMRO Bank in 2000 and recently he was a sales advisor in
a broad range of Treasury products for Rabobank International servicing Corporate and Institutional clients. Edwin obtained his
Master's degree in Financial Management from Nyenrode University in Breukelen in 1999, specializing in Corporate Finance and Treasury.
In addition, Edwin holds a RBA-degree (Certified European Financial Analyst) and CAIA designation (Chartered Alternative Investment
Analyst).
(a) (2) (i-iii) Other Accounts Managed
The following table shows the number of accounts and total assets in the accounts managed by the Fund managers of the Sub-Adviser as of February 28, 2013, unless otherwise noted:
|
|
|
|
|
|
|
|
|
|
ING Global Advantage and Premium
Opportunity Fund
(IGA) |
|
|
|
Mutual
Funds
Registered Investment Companies |
|
Trusts, Sep Accts and Stable
Value Other Pooled
Investment Vehicles and
Alternative |
|
Other Accounts, IIM Managed |
| |
Portfolio Manager |
|
Number of Accts /
Total Assets
(rounded to nearest million) |
|
Number of Accts /
Total Assets
(rounded to nearest million) |
|
Number of Accts /
Total Assets
(rounded to nearest million) |
| IIM Portion |
|
Pieter Schop |
|
1 account/$240 million |
|
3 accounts/$6,109 million |
|
0/0 |
|
|
Bert Veldman |
|
1 account/$240 million |
|
3 accounts/$6,109 million |
|
0/0 |
|
|
Willem van Dommelen |
|
10 accounts/$3,112 million |
|
5 accounts/$681 million |
|
0/0 |
|
|
Edwin Cuppen |
|
8 accounts/$2,923 million |
|
5 accounts/$681 million |
|
0/0 |
(a) (2) (iv) Conflicts of Interest
A portfolio manager may be subject to potential conflicts of interest because the portfolio manager is responsible for other accounts in addition to a Fund. These other accounts may include, among others,
other mutual funds, separately managed advisory accounts, commingled trust accounts, insurance separate accounts, wrap fee programs and hedge funds. Potential conflicts may arise out of the implementation of differing investment strategies for the
portfolio manager’s various accounts, the allocation of investment opportunities among those accounts or differences in the advisory fees paid by the portfolio manager’s accounts.
A potential conflict of interest may arise as a result of the portfolio manager’s responsibility for multiple accounts with similar investment guidelines. Under these circumstances, a potential
investment may be suitable for more than one of the portfolio manager’s accounts, but the quantity of the investment available for purchase is less than the aggregate amount the accounts would ideally devote to the opportunity. Similar
conflicts may arise when multiple accounts seek to dispose of the same investment.
A portfolio manager may also manage accounts whose
objectives and policies differ from that of the Fund. These differences may be such that under certain circumstances, trading activity appropriate for one account managed by the portfolio manager may not be appropriate for the Fund. For example, if
an account were to sell a significant position in a security, which could cause the market price of that security to decrease, while the Fund maintained its position in that security.
A potential conflict may arise when a portfolio manager is responsible for accounts that have different advisory fees — the difference in the fees may create an incentive for the portfolio manager to
favor one account over another, for example, in terms of access to particularly appealing investment opportunities. This conflict may be heightened where an account is subject to a performance-based fee.
As part of its compliance program, ING IM has adopted policies and procedures reasonably designed to address the potential conflicts of interest
described above.
Finally, a potential conflict of interest may arise because the investment mandates for certain other accounts, such as
hedge funds, may allow extensive use of short sales, which, in theory, could allow them to enter into short positions in securities where other accounts hold long positions. ING IM has policies and procedures reasonably designed to limit and monitor
short sales by the other accounts to avoid harm to the Fund.
(a) (3) Compensation
For each of the portfolio managers (each a “Portfolio Manager” and collectively the “Portfolio Managers”) of the Portfolios listed
above, compensation consists of (a) fixed base salary; (b) bonus which is based on ING IM performance, one and three year pre-tax performance of the accounts the portfolio managers are primarily and jointly responsible for relative to
account benchmarks and peer universe performance, and revenue growth of the accounts they are responsible for; and, in certain instances, (c) long-term equity awards tied to the performance of the parent company, ING Groep.
The Portfolio Managers for the Portfolios listed above are also eligible to participate in an annual cash incentive plan. The overall design of the
annual incentive plan was developed to tie pay to both performance and cash flows, structured in such a way as to drive performance and
promote retention of top talent. As with base salary compensation, individual target awards are determined and set based on external market data and internal comparators. Investment performance
is measured on both relative and absolute performance in all areas. Relevant indices include the MSCI World Index and the MSCI Europe Index. Relevant peer groups include Morningstar global equity funds in the Netherlands and the rest of Europe. The
measures for each team are outlined on a “scorecard” that is reviewed on an annual basis. These scorecards measure investment performance versus peer groups over one- and three-year periods and year-to-date net cash flow (changes in the
accounts’ net assets not attributable to changes in the value of the accounts’ investments) for all accounts managed by each team. The results for overall ING IM scorecards are calculated on an asset weighted performance basis of the
individual team scorecards.
Investment professionals’ performance measures for bonus determinations are weighted by 25% being
attributable to the overall ING IM performance and 75% attributable to their specific team results (60% investment performance and 15% net cash flow).
Based on job function, internal comparators and external market data, portfolio managers participate in the ING Long-Term Incentive Plan. Plan awards are based on the current year’s performance as
defined by the ING IM component of the annual incentive plan. The awards vest in three years and are paid in a combination of ING restricted stock, stock options and restricted performance units.
Portfolio Managers whose base salary compensation exceeds a particular threshold may participate in ING IM’s deferred compensation plan. The plan
provides an opportunity to invest deferred amounts of compensation in mutual funds, ING IM stock or at an annual fixed interest rate. Deferral elections are done on an annual basis and the amount of compensation deferred is irrevocable.
(a) (4) Ownership of Securities
Ownership:
|
|
|
| Portfolio Manager |
|
Dollar Range of Trust Shares Owned |
| Pieter Schop |
|
None |
| Bert Veldman |
|
None |
| Willem van Dommelen |
|
None |
| Edwin Cuppen |
|
None |
Item 9. Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers
|
Period* |
(a)
TOTAL
NUMBER OF
SHARES (OR UNITS)
PURCHASED |
(b)
AVERAGE PRICE
PAID PER SHARE
(OR UNIT) |
(c)
TOTAL
NUMBER
OF SHARES
(OR
UNITS) PART OF PUBLICLY
ANNOUNCED PLANS OR
PROGRAMS |
(d)*
MAXIMUM
NUMBER
(OR
APPROXIMATE DOLLAR VALUE)
OF SHARES (OR UNITS)
THAT MAY YET
BE PURCHASED UNDER THE
PLANS OR PROGRAMS |
| MARCH 1-31, 2009 |
1,106,116 |
$ 7.44 |
1,106,116 |
8,633,884 |
| APRIL 1-30, 2009 |
0 |
— |
0 |
8,633,884 |
| MAY 1-31, 2009 |
0 |
— |
0 |
8,633,884 |
| JUNE 1-30, 2009 |
0 |
— |
0 |
8,633,884 |
| JULY 1-31, 2009 |
0 |
— |
0 |
8,633,884 |
| AUGUST 1-31, 2009 |
0 |
— |
0 |
8,633,884 |
| SEPTEMBER 1-30, 2009 |
0 |
— |
0 |
8,633,884 |
| OCTOBER 1-31, 2009 |
0 |
— |
0 |
8,633,884 |
| NOVEMBER 1-30, 2009 |
0 |
— |
0 |
8,633,884 |
| DECEMBER 1-31, 2009 |
0 |
— |
0 |
8,633,884 |
| JANUARY 1-31, 2010** |
n/a |
n/a |
n/a |
n/a |
| FEBRUARY 1-28, 2010** |
n/a |
n/a |
n/a |
n/a |
| TOTAL |
1,106,116 |
|
|
|
| ____________________ |
| * |
|
The Registrant’s repurchase program,
which authorized the repurchase of 9,740,000 shares, was announced on December 5, 2008. Any repurchases made by the registrant
pursuant to the program were made through open-market transactions. |
| ** |
|
The repurchase program expired on December 31, 2009 |
Item 10. Submission of Matters to a Vote of Security Holders.
The Board has a Nominating Committee for the purpose of considering
and presenting to the Board candidates it proposes for nomination to fill Independent Trustee vacancies on the Board. The Committee
currently consists of all Independent Trustees of the Board (6 individuals). The Nominating Committee operates pursuant to a Charter
approved by the Board. The primary purpose of the Nominating Committee is to consider and present to the Board the candidates it
proposes for nomination to fill vacancies on the Board. In evaluating candidates, the Nominating Committee may consider a variety
of factors, but it has not at this time set any specific minimum qualifications that must be met. Specific qualifications of candidates
for Board membership will be based on the needs of the Board at the time of nomination.
The Nominating Committee is willing to consider nominations received
from shareholders and shall assess shareholder nominees in the same manner as it reviews its own nominees. A shareholder nominee
for director should be submitted in writing to the Fund’s Secretary. Any such shareholder nomination should include at a
minimum the following information as to each individual proposed for nomination as trustee: such individual’s written consent
to be named in the proxy statement as a nominee (if nominated) and to serve as a trustee (if elected), and all information relating
to such individual that is required to be disclosed in the solicitation of proxies for election of trustees, or is otherwise required,
in each case under applicable federal securities laws, rules and regulations.
The Secretary shall submit all nominations received in a timely manner
to the Nominating Committee. To be timely, any such submission must be delivered to the Fund’s Secretary not earlier than
the 90 day prior to such meeting and not later than the close of business on the later of the 60 day prior to such meeting or the
10 day following the day on which public announcement of the date of the meeting is first made, by either disclosure in a press
release or in a document publicly filed by the Fund with the Securities and Exchange Commission.
Item 11. Controls and Procedures.
(a) Based on our evaluation conducted within 90 days of the filing
date, hereof, the design and operation of the registrant’s disclosure controls and procedures are effective to ensure that
material information relating to the registrant is made known to the certifying officers by others within the appropriate entities,
particularly during the period in which Forms N-CSR are being prepared, and the registrant’s disclosure controls and procedures
allow timely preparation and review of the information for the registrant’s Form N-CSR and the officer certifications of
such Form N-CSR.
(b) There were no significant changes in the registrant’s internal
controls that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits.
(a) (l) Code of Ethics pursuant to Item 2 of Form N-CSR is filed
and attached hereto as EX-99.CODE ETH.
(a) (2) A separate certification for each principal executive officer
and principal financial officer of the registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2) is attached hereto
as EX-99.CERT.
(b) The officer certifications required by Section 906 of the Sarbanes-Oxley
Act of 2002 are attached hereto as EX-99.906CERT.
(3) Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
(Registrant): Voya Global
Advantage and Premium Opportunity Fund
|
|
|
| By |
|
/s/ Shaun P. Mathews |
|
|
Shaun P. Mathews |
|
|
President and Chief Executive Officer |
Date: May 7, 2014
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
|
|
|
| By |
|
/s/ Shaun P. Mathews |
|
|
Shaun P. Mathews President and
Chief Executive Officer |
Date: May 7, 2014
|
|
|
| By |
|
/s/ Todd Modic |
|
|
Todd Modic |
|
|
Senior Vice President and Chief Financial Officer |
Date: May 7, 2014
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