Investment Approach

The Portfolio consists primarily of senior, secured floating rate corporate loans that are expected to generate increased returns in the event that short-term interest rates rise.

The Fund’s investment strategy is based on ING Investment Management Co.’s (the “Sub-Advisor”) belief that Senior Loans represent an attractive opportunity for investors in general, and are particularly attractive at the time of the Fund’s launch for the following reasons:

• Interest rates are at historically low levels.

• Fundamental credit risk has improved.

• Senior Loans typically outperform fixed-rate bonds when interest rates rise.

• Senior Loans have a low historical correlation with other asset classes.

• The Senior Loan asset class has generated attractive historical returns.

Senior Loans

Senior Loans are extensions of credit made to corporations and other entities to finance acquisitions, refinance existing debt, support business expansion, and for other general business purposes. They are called “senior” loans because they are generally secured by a borrower’s assets pursuant to a first priority or “senior” lien, and they are first in priority in receiving payments when a borrower is servicing its debts. They can also be called “floating rate loans” because the interest paid on such loans changes as certain market interest rates change. The collateral packages pledged by the borrower can include working capital assets (such as accounts receivable and inventory), tangible fixed assets (such as real property, buildings and equipment), intangible assets (such as trademarks and patent rights) and security interests in shares of stock of the borrower’s subsidiaries and affiliates.

Senior Loans rank at the most senior part of a borrower’s capital structure and have the following attributes: (i) Senior Loans are generally secured or benefit from another form of structural seniority relative to other obligations of the borrower; (ii) Senior Loans are generally protected by covenants that limit the ability of the borrower to take actions adverse to the interests of the holders of the Senior Loans; (iii) the default rate on Senior Loans is historically lower than that of unsecured or subordinated debt; and (iv) Senior Loans have generally received greater recoveries than unsecured or subordinated debt in the case of default.

Senior Loans have historically provided steady returns through multiple credit and interest rate cycles, with the Senior Loan Index having shown positive returns every year since its inception, with the exception of 2008. Currently, LIBOR (being the base rate for most Senior Loans) is near all time low levels which, in the opinion of the Sub-Advisor, limits the downside yield risk of an investment in Senior Loans and makes the current environment an attractive entry point for an investment in the asset class.

The Sub-Advisor will seek to invest in a broadly diversified portfolio composed primarily of Senior Loans that exhibit the highest relative value within the asset class. The Sub-Advisor will generally seek to make investments in Senior Loans and other debt obligations of borrowers that have (i) significant levels of asset and/or cash flow coverage; (ii) a protective capital structure, with adequate subordinated debt cushion; (iii) strong senior management; and (iv) attractive market positioning.

Up to 20% of Total Assets of the Fund may be exposed to senior, unsecured floating rate loans and notes, second lien floating rate loans and notes, corporate debt securities, short-term debt obligations, money market obligations, and equity securities that are incidental to investments in loans.