ING Fund. Société d'investissement à Capital Variable. Annual report including audited financial statements as at 31/12/16. RCS Luxembourg N B191.

Transcription

1 ING Fund Société d'investissement à Capital Variable Annual report including audited financial statements as at 31/12/16 RCS Luxembourg N B Database Publishing System: CO-Reporter by CO-Link, Belgium.

2 ING Fund Table of Contents Organisation 3 Management Report 5 Report of the Réviseur d entreprises agréé 8 Combined 10 ING Fund - ING Private Banking Optimal Selection Pure Bonds 13 Statement of net assets 14 Key figures 14 Securities portfolio 15 Statement of operations and changes in net assets 16 ING Fund - ING Private Banking Optimal Selection Pure Equity 17 Statement of net assets 18 Key figures 18 Securities portfolio 20 Statement of operations and changes in net assets 21 ING Fund - ING Private Banking Optimal Selection Balanced 22 Statement of net assets 23 Key figures 23 Securities portfolio 24 Statement of operations and changes in net assets 25 ING Fund - ING Private Banking Optimal Selection Moderate 26 Statement of net assets 27 Key figures 27 Securities portfolio 28 Statement of operations and changes in net assets 29 Notes to the financial statements 30 Unaudited information 36 Page Subscriptions can only be received on the basis of the latest prospectus accompanied by the latest audited financial statements as well as by the latest semi-annual report, if published thereafter. Page 2

3 ING Fund Organisation Registered Office 5, allée Scheffer L-2520 Luxembourg, Grand Duchy of Luxembourg Board of Directors of the Company Chairman Mrs Colette Dierick (until 21 October, 2016) Member of the Executive Committee ING Belgique S.A. Directors Mr Thierry Masset Chief Investment Officer ING Belgique S.A. Mr Sébastien Collard (until 6 December, 2016) Chief Investment Officer ING Luxembourg S.A. Mme Sandrine De Vuyst (since 15 December, 2016) Chief Investment Officer ING Luxembourg S.A. Mr Christian Steeno Head of Product Management Savings & Investments ING Belgique S.A. Mr Piet Van den Hoof Head of Mutual Funds ING Belgique S.A. Mr Philippe Wallez (since 21 October 2016) Managing Director ING Belgique S.A. Management Company ING Solutions Investment Management S.A. (as from July 1, 2016) 48, route d Esch, L-2965 Luxembourg, Grand Duchy of Luxembourg Luxcellence Management Company S.A. (until 30 June 2016) 5, allée Scheffer L-2520 Luxembourg, Grand Duchy of Luxembourg Board of Directors of the Management Company (since 1 July 2016 to 3 November 2016) Chairman Directors Alain Flas Head of Equity Derivatives Sales and Head of PPI, ING Belgium S.A. Benoît Van Den Hove Head of Legal Financial Markets, ING Belgium S.A. Pascal Blackburne Manager Discretionary Asset Management, ING Luxembourg S.A. Page 3

4 ING Fund Organisation (continued) Supervisory Board of the Management Company (since 3 November 2016) Pascal Blackburne (until 14 December 2016) Manager Discretionary Asset Management, ING Luxembourg S.A. Thierry Masset Chief Investment Officer ING Belgium S.A. Eric Chinchon Independent Director Wouter Gesquière (since 14 December 2016) Head of Relationship Management Private Banking Head of Business Development Core Markets ING Luxembourg S.A. Management Board of the Management Company (since 3 November 2016) Frederic de Valkeneer Conducting Officer ING Solutions Investment Management S.A. Sebastien de Villenfagne Conducting Officer ING Solutions Investment Management S.A. Sandrine Jankowski Conducting Officer ING Solutions Investment Management S.A. Investment Manager Depositary and Paying Agent ING Belgique S.A. Avenue Marnix 24 B-1000 Brussels, Belgium ING Luxembourg S.A. 52, route d Esch L-2965 Luxembourg, Grand Duchy of Luxembourg Administration and Domiciliary Agent CACEIS Bank, Luxembourg Branch (as from 1 January 2017) CACEIS Bank Luxembourg S.A. (until 31 December 2016) 5, allée Scheffer L-2520 Luxembourg, Grand Duchy of Luxembourg Global Distributor ING Belgique S.A. Avenue Marnix 24 B-1000 Brussels, Belgium Auditors Deloitte Audit, Société à responsabilité limitée 560, rue de Neudorf L Luxembourg, Grand Duchy of Luxembourg Page 4

5 ING Fund Management Report 2016 was a year of many events having heavy consequences on stock and bondmarkets. Consequently the various compartments moved significantly in terms of positioning as well as in terms of assets under management. The economy ended 2016 stronger than it began. Following a somewhat weaker first quarter, the US economy gained modest traction and, if Trump delivers on his election promises, the economy may well step up a gear in Despite all the political upheaval (Brexit, Italy's constitutional referendum etc.), the European economy didn't do badly either. Unemployment is falling, consumption is rising and investments are beginning to increase. The emerging markets continued to recover in 2016, thanks to rising commodity prices (the first year-on-year increase in four years) and a soft landing in China. Although the Chinese economy slowed slightly, the decline was much less pronounced than had been feared at the beginning of the year. In the financial markets, it was mainly bonds that drove returns in the first half of the year. The bond shortage caused by the European Central Bank's massive bond-buying programme drove the yields on a large number of government bonds to below zero even. The pursuit of yields also led to sharp increases in corporate bond prices. The euphoria in the bond market continued into the summer months, but the tide turned from October onwards. The risk of deflation dissipated steadily, and monetary policy thus reached a turning point. Eurozone inflation has remained low for the time being, but in the US, the rate rose from 0.4% in November 2015 to 1.7% a year later. This prompted the Federal Reserve to hike interest rates in December, with plans of three further increases in the course of In this environment, US bond yields jumped to their highest level in two years, while Germany's ten-year bond yields returned to above zero from the end of October. The stock exchanges started 2016 on the back foot (losing 15% in six weeks) due to concerns over the Chinese economy, but things got steadily better from February onwards, and ultimately the markets ended the year on a plus. In particular, US equities rose sharply, driven by a return to increasing corporate earnings and improved economic prospects. European equities followed suit, recording gains in the last quarter. In the early part of the year, European stock markets were weighed down by political uncertainty and concerns about the banking sector. Emerging market equities initially performed very strongly thanks to a pick-up in commodity prices and the weaker dollar in the first half of the year, but had to give up some of their gains towards the end of the year. The protectionist rhetoric put forth by US President-elect Donald Trump is certainly casting a shadow over the future growth prospects of those countries. The Optimal Selection sub-funds delivered all a positive performance in this environment. In the equity portfolio, it was above all the American funds that performed strongly: the only active fund we hold outperformed the MSCI USA as well as the trackers that we used: they are following various benchmarks, such as the S&P 500 Equally weighted index, the regular S&P500 or the S&P US Dividend Aristocrats. All active & passive funds benefited from a nice recovery from the. As a result the absolute performance derived from these instruments is highly positive. All in all, it was the slice of the portfolio which did best. The European investments had much more of an uphill battle, although quite a number of funds managed to turn their losses into a gain for the year in the last month of the year. However, the year 2016 will not be remembered dearly by the active fund managers as the vast majority of these funds underperformed their relative benchmarks. The position in Japan and emerging markets also made a pleasing contribution to the gains in the equity portfolio. In the bond parts of the Optimal Selection sub-funds, government bond funds posted a very strong performance in the first three quarters. From the fourth quarter onwards, however, bond prices declined in response to rising interest rates. However, the timely switch to much shorter durations helped to limit the impact of that decline on the returns of the Optimal Selection sub-funds. The higher position in corporate (investment grade) bonds also bore fruit, as these funds ended the year with an encouraging result. The position in emerging market bonds (in hard currency) is, for obvious reasons, much smaller, but still made a good contribution to the return. Finally, with the economic recovery being confirmed, inflation is also going up, although moderately. Inflation-linkers funds did perform well, reason why we added some of them as early as in November Page 5

6 ING Fund Management Report (continued) Commodities were also a net contributor in the Optimal Selection blend compartments (Moderate, Balanced). After a weak start into the year, they recovered nicely. The - translation made it an even more positive contributor to the overall performance. Positioning in asset classes: at the beginning of the year, we adopted a cautious equity position in line with ING's investment strategy, allocating greater tactical weight to liquid assets in the portfolio. Therefore, the Optimal Selection equity part in the various sub-funds was scaled back in favour of cash on several occasions. We initiated an increase in the cash component early 2016 by selling our various equity and bonds positions (on a weighted basis). In February, we repeated the process for the European investments, selling part of ishares Euro Total Market Growth. Late October, before the US presidential elections, we increased our equity position again, in exchange for a reduction in bonds. Risk premia in the bonds environment were too low when compared to the Equity equivalent. We also expanded the commodity segment again by building up our position in the GS Quartix passive fund. We initially did so in March, followed by further top-ups in November and December. We reduced our exposure to the Real Estate sector through the partial sale of two property funds, Henderson pan-european Property and ishares Developed Market Property. The weaker prospects of the real estate sector in the wake of rising interest rates were an argument for this reduction. In the equity portfolio, we pursued a more defensive position in the first half of the year. In the US, we scaled down our exposure to smaller-cap companies and typical-value shares, investing the capital released as a result in the Vanguard S&P 500 tracker fund, which tracks the 500 largest companies in the US. In June, we strengthened the defensive character of our investments in US equities by acquiring the SPDR S&P US Dividend Aristocrats tracker fund, which invests in US companies known for their solid (growth in) dividends. In September, we added the SPDR S&P Euro Dividend Aristocrats tracker fund to the portfolio. In Europe we also scaled down our exposure to European industrials somewhat. We reinvested the capital in the UBS L. Eq Europ. Opport. Unconstrained fund, which makes diversified investments in large companies. Later, we added a smart beta fund to the portfolio, Source Goldman Sachs Markets Equity Factor, which tracks a European equity portfolio constructed on the basis of low beta (less volatility), size, value, momentum and quality, depending on market conditions. In terms of the regional positioning of the equity portfolio, we adjusted the composition of the equity portfolio in emerging markets. This was achieved by selling part of the Gam Star China Equity and Franklin TI Asia funds in June. We invested the proceeds of the sale in the Fidelity Emerging Markets fund. The purchase of this fund improved our geographical spread, since in addition to Asian companies (accounting for almost 55%), it also has exposure in other continents. In July, we increased the weight of the emerging market equity portfolio by investing in the ishares Core MSCI Emerging Markets tracker fund, based on the attractive valuations of those countries at the time. In December, we resolved to scale back our emerging market exposure again, given that the recent trend of greater protectionism will not benefit those countries. In the last quarter, we raised our exposure to Japanese equities with the additional purchase of the ishares Nikkei tracker fund. The fact that the yen now tends to represent good value has made the Japanese market attractive again. We also gradually built up our position in the United States. Prompted in part by political uncertainty in Europe, we sold some of our eurozone investments in April and invested the capital released on the US stock exchange. In December, we extended our US position further, this time by selling a portion of the Fidelity Emerging Markets and GAM Star China funds and reinvesting the capital in our various US-exposed products. Page 6

7 ING Fund Management Report (continued) There were two distinct, important shifts in the Optimal Selection bond section last year. During the first six months, we changed the focus from government to corporate (investment grade) bonds. Corporate bonds delivered higher yields than government bonds and, what is more, the asset purchases by the European Central Bank offered the prospect of price gains in this bond class. With this in mind, we built up a well diversified position in the ishares Core Euro Corporate Bonds, NN Renta Fund Euro Credit and Kempen Euro Credit funds in March and April. Together with the L&G fund, among others, these investments assure us of a good spread among European corporate (IG) bonds. From September onwards, we focused primarily on shortening durations. This helped to protect the portfolio against the last quarter's correction in the bond market. In September, we reduced the interest rate sensitivity of European government bonds by switching from the Robeco Euro Government Bond to the Robeco Euro Government Bond Short Duration fund. Although both funds are managed in the same way, the latter's duration is much shorter because of the use of a derivative. The duration of the bond portfolio was cut further by scaling back the position in the Natixis fund. In December, a small portion of the L&G Euro Corporate Fund and NN Euro Credit Plus corporate bond funds was also sold. The proceeds of these transactions were added to the AXA WF Global Inflation Short Duration Bonds fund, which has a much shorter duration. In addition to these two significant adjustments, we also slightly modified the geographical distribution of the bond portfolio. Given the ultra-low yields on European government bonds, the time had come in the early part of the year to extend the geographical spread of the investments in government bonds in the US, among others (by purchasing ishares Year Treasury Bond in January and February) as well as in emerging markets, albeit in hard currency (with the purchase of ishares JP Morgan Emerging Markets in May). In July, we reinforced further the position in emerging market bonds. We reduced our exposure to absolute return funds in the first half of the year. These funds protect bond portfolios from rising interest rates. However, driven by the European Central Bank s ( ECB ) aggressive policy, bond yields primarily trended downwards at the time. The remaining position in absolute return funds did provide a good balance when bond yields rose again slightly in the last quarter. There was also one product switch in the bond portfolio: in January, we sold the Bluebay Investment Grade bond fund, because it no longer met the strict quality requirements imposed by our fund specialists has been a difficult year in the day-to-day management because many unexpected & external events happen during the year, causing a wide volatility in all the compartments performances bear also a few identified risks. In Europe, it is an election year in key European countries and the Brexit negotiations should kick off. In the US, Trump will initiate his term: many question marks are still left following all his speeches so far. Then, it will be another year with major announcements coming from central banks over the world: definitely this will have a major impact on interest rates curves and therefore on equity markets. On the economic side, the cycle is younger in Europe than in the US and fiscal policies on both sides of the ocean will clearly influence future returns on the stockmarkets. In terms of assets under management, the four compartments did increase throughout the year. For Pure Bonds, we went from 526 millions (6/1/16) to 625 millions, for the Moderate compartment from 110 millions to 222 millions, for the Balanced from 120 millions to 215 millions, for Pure Equity from 573 millions to 704 millions. This is both the results of assets collection as well as absolute performance contribution (all compartments delivered a positive performance over the year 2016). At the end of year, the four compartments had a total of 1,768 millions of assets under management (from around 1,348 million early 2016). We do expect the assets to grow harmoniously in 2017 across the four compartments, driven by risk appetite and hopefully asset classes performances. However, one may not exclude that a sudden (unexpected) negative event happen, pushing stockmarkets and/or bondmarkets down. In that perspective, we will keep a conservative style in the management of the various compartments. Also, we will focus on the Alpha generated by the active funds and just the same as in previous years, we will use a mix of both passive and active funds. Page 7

8 Deloitte. Deloitte Audit Societe a responsabilite limitee 560, rue de Neudorf L-2220 Luxembourg BP.1173 L-1011 Luxembourg Tel: REPORT OF THE REVIS D'ENTREPRISES AGREE To the Shareholders of ING Fund 5, allee Scheffer L Luxembourg Following our appointment by the Annual General Meeting of the Shareholders dated 19 April 2016, we have audited the accompanying financial statements of ING Fund (the "Company") and of each of its sub-funds, which comprise the statements of Net Assets and the Securities Portfolio as at 31 December 2016 and the Statement of Operations and Changes in Net Assets for the year then ended and a summary of significant accounting policies and other explanatory notes to the financial statements. Responsibility of the Board of Directors of the Company for the financial statements The Board of Directors of the Company is responsible for the preparation and fair presentation of these financial statements in accordance with Luxembourg legal and regulatory requirements relating to the preparation of the financial statements and for such internal control as the Board of Directors of the Company determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Responsibility of the reviseur d'entreprises agree Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing as adopted for Luxembourg by the Commission de Surveillance du Secteur Financier. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the reviseur d'entreprises agree's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the reviseur d'entreprises agree considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors of the Company, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Societe a responsabilite limltee au capital de RCS Luxembourg B Autolisation d'etablissement Page 8

9 Deloitte. REPORT OF THE REVIS D'ENTREPRISES AGREE (continued) Opinion In our opinion, the financial statements give a true and fair view of the financial position of ING Fund and of each of its sub-funds as at 31 December 2016, and of the results of their operations and changes in their net assets for the year then ended in accordance with Luxembourg legal and regulatory requirements relating to the preparation of the financial statements. Other information The Board of Directors of the Company is responsible for the other information. The other information comprises the information included in the annual report but does not include the financial statements and our report of reviseur d 'entreprises agree thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report this fact. We have nothing to report in this regard. For Deloitte Audit, Cabinet de revision agree Luxembourg, 30 March , rue de Neudorf L-2220 Luxembourg Page 9

10 ING Fund Combined Page 10

11 ING Fund Combined Financial Statements as at 31/12/16 Statement of net assets as at 31/12/16 Expressed in Assets Securities portfolio at market value Note 2 Cost price Unrealised profit on the securities portfolio Cash at bank and liquidities Note 3 Subscriptions receivable Dividends receivable Liabilities Redemptions payable Accrued management fees Note 5 Other liabilities Note 4 Net asset value 1,775,079, ,734,278, ,668,893, ,385, ,974, ,088, , ,227, ,065, ,233, ,928, ,767,851, The accompanying notes form an integral part of these financial statements Page 11

12 ING Fund Combined Statement of operations and changes in net assets from 01/01/16 to 31/12/16 Expressed in Income Net dividends Note 2 Bank interest on cash account Note 2 Expenses Management fees Note 5 Depositary and paying agent fees Note 6 "Taxe d'abonnement" Note 9 Administration fees Note 7 Domiciliation fees Professional fees Bank interest on overdrafts Legal fees Transaction fees Note 10 Other expenses Note 8 Net loss from investments Net realised profit / loss on: - sales of investment securities Note 2 - foreign exchange Net realised loss Movement in net unrealised appreciation / depreciation on: - investments Increase in net assets as a result of operations Dividends paid Subscription capitalisation shares Subscription distribution shares Redemption capitalisation shares Redemption distribution shares Increase in net assets Net assets at the beginning of the year Net assets at the end of the year 9,711, ,711, ,067, ,947, , , , , , , , , ,531, (5,356,417.84) (15,258,914.24) 3,665, (16,949,682.90) 70,654, ,704, (21,077,904.09) 114,933, ,049, (9,739,196.36) (225,557,887.90) 419,312, ,348,539, ,767,851, The accompanying notes form an integral part of these financial statements Page 12

13 ING Fund - ING Private Banking Optimal Selection Pure Bonds Page 13

14 ING Fund - ING Private Banking Optimal Selection Pure Bonds Financial Statements as at 31/12/16 Statement of net assets as at 31/12/16 Expressed in Assets Securities portfolio at market value Note 2 Cost price Unrealised profit on the securities portfolio Cash at bank and liquidities Note 3 Subscriptions receivable Liabilities Redemptions payable Accrued management fees Note 5 Other liabilities Note 4 Net asset value 627,200, ,245, ,888, ,356, ,538, , ,866, , , ,097, ,333, Key figures Year/Period ended as at: 31/12/16 31/12/15 Total Net Assets 625,333, ,452, Class A Class B Capitalisation shares Distribution shares 36, , ,077, , Class S Capitalisation shares Distribution shares , , , , The accompanying notes form an integral part of these financial statements Page 14

15 Quantity ING Fund - ING Private Banking Optimal Selection Pure Bonds Denomination Securities portfolio as at 31/12/16 Expressed in Quotation currency Market value % of net assets Shares/Units of UCITS/UCIS 614,245, Shares/Units in investment funds 614,245, Luxembourg 511,024, ,556 AWF GL INF SH DUR I H (95%) CAP 23,521, ,618 AWF GL SD BD -I- CAP 28,232, ,579,813 BGF BD -I2- CAP 78,396, ,259 BSF FIXED INCOME STRATEGIES FUND 50,026, ,693 GS GL STR IN BD -IS (-HEDGED) DIS 15,642, ,912 KEMPEN INTL LUX O CREDIT FUND -I- CAP 75,228, ,129,666 L G O CORPORATE BD-I ACC 68,975, ,348 NN L CR IC -I- CAP 62,710, ,354 NN LL IB 3M -B- CAP 31,267, ,543 NORDEA 1 EMERG MKT BD-BI-BASE 19,197, ,361 R CAP EU GV BD -2IH - CAP 57,825, France 50,019, ,323 NATIXIS SOUVERAINS O SN 4DEC 50,019, Ireland 43,876, AMUNDI 3-6 M I 12,496, ,060 ISHS GLB CO BD SHS HEDGED ETF 31,380, United States of America 9,324, ,986 ISHARES TR BARCLAYS TREASURY BD 9,324, Total securities portfolio 614,245, The accompanying notes form an integral part of these financial statements Page 15

16 ING Fund - ING Private Banking Optimal Selection Pure Bonds Statement of operations and changes in net assets from 01/01/16 to 31/12/16 Expressed in Income Net dividends Note 2 Expenses Management fees Note 5 Depositary and paying agent fees Note 6 "Taxe d'abonnement" Note 9 Administration fees Note 7 Domiciliation fees Professional fees Bank interest on overdrafts Legal fees Transaction fees Note 10 Other expenses Note 8 Net loss from investments Net realised profit / loss on: - sales of investment securities Note 2 - foreign exchange Net realised profit Movement in net unrealised appreciation / depreciation on: - investments Increase in net assets as a result of operations Dividends paid Subscription capitalisation shares Class A Class S Subscription distribution shares Class B Class S Redemption capitalisation shares Class A Redemption distribution shares Class B Class S Increase in net assets Net assets at the beginning of the year Net assets at the end of the year 2,085, ,085, ,515, ,500, , , , , , , , , , (1,429,687.09) 1,534, ,141, ,246, ,562, ,808, (8,386,986.48) 19,170, ,497, ,672, ,311, ,802, ,508, (951,302.10) (951,302.10) (69,070,039.74) (58,610,983.58) (10,459,056.16) 100,881, ,452, ,333, The accompanying notes form an integral part of these financial statements Page 16

17 ING Fund - ING Private Banking Optimal Selection Pure Equity Page 17

18 ING Fund - ING Private Banking Optimal Selection Pure Equity Financial Statements as at 31/12/16 Statement of net assets as at 31/12/16 Expressed in Assets Securities portfolio at market value Note 2 Cost price Unrealised profit on the securities portfolio Cash at bank and liquidities Note 3 Subscriptions receivable Dividends receivable Liabilities Redemptions payable Accrued management fees Note 5 Other liabilities Note 4 Net asset value 708,160, ,553, ,381, ,171, ,637, , , ,971, , ,900, ,211, ,188, Key figures Year/Period ended as at: 31/12/16 31/12/15 Total Net Assets 704,188, ,867, Class A Class B Capitalisation shares Distribution shares 248, , , , Class S Capitalisation shares Distribution shares , , , , Class T Distribution shares , , The accompanying notes form an integral part of these financial statements Page 18

19 ING Fund - ING Private Banking Optimal Selection Pure Equity Key figures Year/Period ended as at: 31/12/16 31/12/15 Total Net Assets 704,188, ,867, Class U Capitalisation shares , The accompanying notes form an integral part of these financial statements Page 19

20 Quantity ING Fund - ING Private Banking Optimal Selection Pure Equity Denomination Securities portfolio as at 31/12/16 Expressed in Quotation currency Market value % of net assets Shares/Units of UCITS/UCIS 687,553, Shares/Units in investment funds 687,553, Luxembourg 294,242, ,933 AGIF OPE EQUITY GROWTH WT CAP 32,239, ,132,416 BGF M -I2- CAP 32,036, ,681,521 BGF OPEAN VALUE FUND 24,415, ,313 D INV I T EULD -IC-CAP 67,449, ,817,350 FID AMERICA -I-ACC--CAP 48,778, ,320,656 FID EM -I-ACC- CAP 13,647, ,697 FRANKLIN TEMPLETON INV ASIAN SMALLER CO I- Acc- 13,796, ,674 HENDERSON HOR FD VAR PAN EUE EQ -I2- CAP 28,492, ,526 JPMF EU EQ PL-JPM I (PERF) CAP 14,361, ,551 UBS L EQ EO UNC -I-A1- ACC CAP 19,025, Ireland 287,173, ,710,082 DBX SP EW DR ETF 1C 68,792, ,330 GAM STAR FD PLC CHN EQ -INS- CAP 6,424, ,246 ISHS MSC EM LAT SHS ETF 7,007, ,076 ISHS MSCI EM CAP 10,135, ,988 SM GS EQ IN GERMAN CERT 10,389, ,648,221 SPDR SP DIV - ETF 35,651, ,128 SPDR SP US DI ETF 41,080, ,947 SSGA SP EN SEL ETF 6,984, ,481,251 VANGUARD SP500 UCITS ETF 100,708, Germany 106,136, ,455 ISHARES DJ STOXX 50 (DE) DIS 24,858, ,508,443 ISHARES NIKKEI 225 (DE) 38,805, ,029,600 ISHARES STOXX OPE 600 BANKS (DE) 35,047, ,054 ISHARES STOXX OPE 600 OIL & GAS DE 7,425, Total securities portfolio 687,553, The accompanying notes form an integral part of these financial statements Page 20

21 ING Fund - ING Private Banking Optimal Selection Pure Equity Statement of operations and changes in net assets from 01/01/16 to 31/12/16 Expressed in Income Net dividends Note 2 Expenses Management fees Note 5 Depositary and paying agent fees Note 6 "Taxe d'abonnement" Note 9 Administration fees Note 7 Domiciliation fees Professional fees Bank interest on overdrafts Legal fees Transaction fees Note 10 Other expenses Note 8 Net loss from investments Net realised profit / loss on: - sales of investment securities Note 2 - foreign exchange Net realised loss Movement in net unrealised appreciation / depreciation on: - investments Increase in net assets as a result of operations Dividends paid Subscription capitalisation shares Class A Class S Class U Subscription distribution shares Class B Class S Class T Redemption capitalisation shares Class A Class S Redemption distribution shares Class B Class S Increase in net assets Net assets at the beginning of the year Net assets at the end of the year 5,804, ,804, ,474, ,115, , , , , , , , , , (2,669,685.47) (14,963,165.23) 1,652, (15,979,953.00) 42,982, ,002, (8,334,989.80) 69,059, ,831, ,256, ,970, ,096, ,068, ,205, , (8,302,539.03) (4,255,343.79) (4,047,195.24) (105,200,645.72) (86,529,784.43) (18,670,861.29) 112,320, ,867, ,188, The accompanying notes form an integral part of these financial statements Page 21

22 ING Fund - ING Private Banking Optimal Selection Balanced Page 22

23 ING Fund - ING Private Banking Optimal Selection Balanced Financial Statements as at 31/12/16 Statement of net assets as at 31/12/16 Expressed in Assets Securities portfolio at market value Note 2 Cost price Unrealised profit on the securities portfolio Cash at bank and liquidities Note 3 Subscriptions receivable Dividends receivable Liabilities Redemptions payable Accrued management fees Note 5 Other liabilities Note 4 Net asset value 216,502, ,716, ,090, ,626, ,553, , , , , , , ,727, Key figures Year/Period ended as at: 31/12/16 31/12/15 Total Net Assets 215,727, ,279, Class A Class B Capitalisation shares Distribution shares 46, , , , Class S Capitalisation shares Distribution shares , , , Class T Capitalisation shares Distribution shares , The accompanying notes form an integral part of these financial statements Page 23

24 Quantity Denomination ING Fund - ING Private Banking Optimal Selection Balanced Securities portfolio as at 31/12/16 Expressed in Quotation currency Market value % of net assets Shares/Units of UCITS/UCIS 212,716, Shares/Units in investment funds 212,716, Luxembourg 133,217, ,116 AGIF OPE EQUITY GROWTH WT CAP 4,568, ,052 AWF GL INF SH DUR I H (95%) CAP 2,951, ,181 AWF GL SD BD -I- CAP 3,527, ,125 BGF BD -I2- CAP 9,977, ,473 BGF M -I2- CAP 4,539, ,181 BGF OPEAN VALUE FUND 3,501, ,696 BSF FIXED INCOME STRATEGIES FUND 6,365, ,542 D INV I T EULD -IC-CAP 9,495, ,296 FID AMERICA -I-ACC--CAP 6,898, ,385 FID EM -I-ACC- CAP 1,936, ,469 FRANKLIN TEMPLETON INV ASIAN SMALLER CO I- Acc- 1,957, ,908 GS GL STR IN BD -IS (-HEDGED) DIS 2,000, ,778 HENDERSON HOR FD VAR PAN EUE EQ -I2- CAP 4,031, ,640 HENDERSON HORIZON PAN OP.PROP-I2- CAP 3,264, ,932 JPMF EU EQ PL-JPM I (PERF) CAP 2,037, ,995 KEMPEN INTL LUX O CREDIT FUND -I- CAP 9,583, ,040,647 L G O CORPORATE BD-I ACC 8,785, ,992 NN L CR IC -I- CAP 7,985, ,321 NN LL IB 3M -B- CAP 20,932, ,380 NORDEA 1 EMERG MKT BD-BI-BASE 2,376, ,049 R CAP EU GV BD -2IH - CAP 7,356, ,883 STRUCT GSQUARTIX MODIF STR-C- 6,453, ,728 UBS L EQ EO UNC -I-A1- ACC CAP 2,690, Ireland 57,023, AMUNDI 3-6 M I 8,091, ,570 DBX SP EW DR ETF 1C 9,717, ,993 GAM STAR FD PLC CHN EQ -INS- CAP 901, ,028 ISHS DEVELOPED MARKETS PROPERTY YIELD UC 3,200, ,252 ISHS GLB CO BD SHS HEDGED ETF 5,150, ,993 ISHS MSC EM LAT SHS ETF 994, ,398 ISHS MSCI EM CAP 1,432, ,150 SM GS EQ IN GERMAN CERT 1,468, ,868 SPDR SP DIV - ETF 5,036, ,109 SPDR SP US DI ETF 5,803, ,921 SSGA SP EN SEL ETF 987, ,813 VANGUARD SP500 UCITS ETF 14,238, Germany 14,976, ,449 ISHARES DJ STOXX 50 (DE) DIS 3,521, ,244 ISHARES NIKKEI 225 (DE) 5,480, ,982 ISHARES STOXX OPE 600 BANKS (DE) 4,955, ,027 ISHARES STOXX OPE 600 OIL & GAS DE 1,019, France 6,323, ,236 NATIXIS SOUVERAINS O SN 4DEC 6,323, United States of America 1,175, ,330 ISHARES TR BARCLAYS TREASURY BD 1,175, Total securities portfolio 212,716, The accompanying notes form an integral part of these financial statements Page 24

25 ING Fund - ING Private Banking Optimal Selection Balanced Statement of operations and changes in net assets from 01/01/16 to 31/12/16 Expressed in Income Net dividends Note 2 Bank interest on cash account Note 2 Expenses Management fees Note 5 Depositary and paying agent fees Note 6 "Taxe d'abonnement" Note 9 Administration fees Note 7 Domiciliation fees Professional fees Bank interest on overdrafts Legal fees Transaction fees Note 10 Other expenses Note 8 Net loss from investments Net realised profit / loss on: - sales of investment securities Note 2 - foreign exchange Net realised loss Movement in net unrealised appreciation / depreciation on: - investments Increase in net assets as a result of operations Dividends paid Subscription capitalisation shares Class A Class S Class T Subscription distribution shares Class B Class S Class T Redemption capitalisation shares Class A Redemption distribution shares Class B Class S Class T Increase in net assets Net assets at the beginning of the year Net assets at the end of the year 1,022, ,022, ,696, ,313, , , , , , , , , , (673,650.14) (1,384,053.11) 441, (1,616,402.87) 8,446, ,829, (2,164,836.30) 14,373, ,423, ,299, ,650, ,503, ,153, ,852, ,497, (386,024.51) (386,024.51) (25,707,903.63) (13,545,180.91) (6,437,748.52) (5,724,974.20) 93,447, ,279, ,727, The accompanying notes form an integral part of these financial statements Page 25

26 ING Fund - ING Private Banking Optimal Selection Moderate Page 26

27 ING Fund - ING Private Banking Optimal Selection Moderate Financial Statements as at 31/12/16 Statement of net assets as at 31/12/16 Expressed in Assets Securities portfolio at market value Note 2 Cost price Unrealised profit on the securities portfolio Cash at bank and liquidities Note 3 Subscriptions receivable Dividends receivable Liabilities Accrued management fees Note 5 Other liabilities Note 4 Net asset value 223,215, ,763, ,532, ,230, ,245, , , , , , ,602, Key figures Year/Period ended as at: 31/12/16 31/12/15 Total Net Assets 222,602, ,939, Class A Class B Capitalisation shares Distribution shares 24, , , , Class S Capitalisation shares Distribution shares , , , Class T Distribution shares , The accompanying notes form an integral part of these financial statements Page 27

28 Quantity Denomination ING Fund - ING Private Banking Optimal Selection Moderate Securities portfolio as at 31/12/16 Expressed in Quotation currency Market value % of net assets Shares/Units of UCITS/UCIS 219,763, Shares/Units in investment funds 219,763, Luxembourg 161,115, ,105 AGIF OPE EQUITY GROWTH WT CAP 2,384, ,846 AWF GL INF SH DUR I H (95%) CAP 4,758, ,090 AWF GL SD BD -I- CAP 5,662, ,128,849 BGF BD -I2- CAP 15,860, ,772 BGF M -I2- CAP 2,369, ,504 BGF OPEAN VALUE FUND 1,836, ,299 BSF FIXED INCOME STRATEGIES FUND 10,134, ,459 D INV I T EULD -IC-CAP 4,999, ,259 FID AMERICA -I-ACC--CAP 3,607, ,287 FID EM -I-ACC- CAP 1,015, ,472 FRANKLIN TEMPLETON INV ASIAN SMALLER CO I- Acc- 1,026, ,316 GS GL STR IN BD -IS (-HEDGED) DIS 3,146, ,837 HENDERSON HOR FD VAR PAN EUE EQ -I2- CAP 2,103, ,218 HENDERSON HORIZON PAN OP.PROP-I2- CAP 4,013, ,979 JPMF EU EQ PL-JPM I (PERF) CAP 1,068, ,116 KEMPEN INTL LUX O CREDIT FUND -I- CAP 15,228, ,775,817 L G O CORPORATE BD-I ACC 13,958, ,342 NN L CR IC -I- CAP 12,687, ,893 NN LL IB 3M -B- CAP 32,853, ,276 NORDEA 1 EMERG MKT BD-BI-BASE 3,835, ,711 R CAP EU GV BD -2IH - CAP 11,712, ,421 STRUCT GSQUARTIX MODIF STR-C- 5,440, ,872 UBS L EQ EO UNC -I-A1- ACC CAP 1,411, Ireland 38,807, AMUNDI 3-6 M I 7,272, ,979 DBX SP EW DR ETF 1C 5,108, ,958 GAM STAR FD PLC CHN EQ -INS- CAP 472, ,685 ISHS DEVELOPED MARKETS PROPERTY YIELD UC 3,934, ,705 ISHS GLB CO BD SHS HEDGED ETF 6,348, ,418 ISHS MSC EM LAT SHS ETF 510, ,900 ISHS MSCI EM CAP 730, ,500 SM GS EQ IN GERMAN CERT 785, ,143 SPDR SP DIV - ETF 2,641, ,294 SPDR SP US DI ETF 3,044, ,821 SSGA SP EN SEL ETF 501, ,736 VANGUARD SP500 UCITS ETF 7,457, France 10,132, ,992 NATIXIS SOUVERAINS O SN 4DEC 10,132, Germany 7,843, ,834 ISHARES DJ STOXX 50 (DE) DIS 1,846, ,807 ISHARES NIKKEI 225 (DE) 2,874, ,908 ISHARES STOXX OPE 600 BANKS (DE) 2,588, ,251 ISHARES STOXX OPE 600 OIL & GAS DE 533, United States of America 1,862, ,782 ISHARES TR BARCLAYS TREASURY BD 1,862, Total securities portfolio 219,763, The accompanying notes form an integral part of these financial statements Page 28

29 ING Fund - ING Private Banking Optimal Selection Moderate Statement of operations and changes in net assets from 01/01/16 to 31/12/16 Expressed in Income Net dividends Note 2 Expenses Management fees Note 5 Depositary and paying agent fees Note 6 "Taxe d'abonnement" Note 9 Administration fees Note 7 Domiciliation fees Professional fees Bank interest on overdrafts Legal fees Transaction fees Note 10 Other expenses Note 8 Net loss from investments Net realised profit / loss on: - sales of investment securities Note 2 - foreign exchange Net realised loss Movement in net unrealised appreciation / depreciation on: - investments Increase in net assets as a result of operations Dividends paid Subscription capitalisation shares Class A Class S Subscription distribution shares Class B Class S Class T Redemption capitalisation shares Class S Redemption distribution shares Class B Class S Increase in net assets Net assets at the beginning of the year Net assets at the end of the year 798, , ,382, ,018, , , , , , , , , , (583,395.14) (446,260.90) 430, (599,474.07) 5,663, ,063, (2,191,091.51) 12,330, ,814, ,515, ,138, ,424, ,999, ,714, (99,330.72) (99,330.72) (25,579,298.81) (22,632,635.21) (2,946,663.60) 112,662, ,939, ,602, The accompanying notes form an integral part of these financial statements Page 29

30 ING Fund Notes to the financial statements Page 30

31 1- GENERAL INFORMATION ING Fund Notes to the financial statements ING Fund (the Company ) is an investment company organised as a Société Anonyme under the laws of the Grand Duchy of Luxembourg and qualifies as a Société d Investissement à Capital Variable (SICAV). The Company is registered in the Grand Duchy of Luxembourg and qualifies as an undertaking for collective investment pursuant to Part I of the Luxembourg law of 17 December 2010, as amended, relating to undertakings for collective investment (the Law of 2010 ). The Company was incorporated on 29 October 2014 and registered with the Registre de Commerce et des Sociétés (the RCS ) of Luxembourg under number B The articles of incorporation were published on 11 November 2014 in the Mémorial C, Recueil des Sociétés et Associations (the Mémorial ). The articles of incorporation are filed with the the RCS of Luxembourg where they are available for consultation and where copies thereof may be obtained upon request. Copies may also be obtained at the registered office of the Company. The Company qualifies as an Undertaking for Collective Investment in Transferable Securities ( UCITS ) under the Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities. The Company has appointed ING Solutions Investment Management S.A. authorised under chapter 15 of the Law of 2010, to serve as its designated Management Company in accordance with the Law pursuant to a management company agreement dated as at 1 July 2016 (the Management Company Agreement ). Before this date, the function was assumed by Luxcellence Management Company S.A. On 3 November 2016 the Management Company changed its governance structure with the creation of a Supervisory Board and a Management Board replacing the existing Board of Directors. ING Fund is an open-ended collective investment company with an "umbrella" structure comprising different subfunds each may be divided in separate Classes of shares. The specifications of each sub-fund are described in the Prospectus of the Company. The Board of Directors of the Company may, at any time, decide to create additional sub-funds. As at 31 December 2016, the following sub-funds are active: ING Fund - ING Private Banking Optimal Selection Pure Bonds ING Fund - ING Private Banking Optimal Selection Pure Equity ING Fund - ING Private Banking Optimal Selection Balanced ING Fund - ING Private Banking Optimal Selection Moderate Classes A, B, S, T, U, V, W are reserved for investors having a contractual portfolio management agreement with ING Belgique S.A. 2- PRINCIPAL ACCOUNTING METHODS The financial statements are prepared and presented in accordance with the Luxembourg regulations relating to undertakings for collective investment in transferable securities and generally accepted accounting principles and regulations. Currency conversion The combined financial statements are expressed in, the reference currency of the Company. The financial statements have been drawn up in the accounting currency of each sub-fund. Assets and liabilities expressed in currencies other than the accounting currency of the sub-fund are converted into that currency at the exchange rate prevailing on the closing date. Income and expenses expressed in currencies other than the accounting currency of the sub-fund are converted into that currency at the exchange rate prevailing on the transaction date. The various items in the combined statements correspond to the sum of the corresponding items in the financial statements of each sub-fund. Page 31

32 ING Fund Notes to the financial statements (continued) 2- PRINCIPAL ACCOUNTING METHODS (continued) The transactions and acquisition costs denominated in foreign currencies are converted into the accounting currency of each Sub-Fund based on the exchange rate in force on the date of the transaction or acquisition. Securities valuation Units or shares of investments in funds, either listed or not, are valued at their last determined and available net asset value per share/unit. Securities or financial instruments listed on an official stock exchange or on any other regulated market are valued at the last known price. If these securities or money market instruments are traded on several markets, the valuation is made on the basis of the last known price on the main market on which the securities or money market instruments are listed. If there is no relevant quotation or if the quotations are not representative of the fair value, the evaluation will be made in good faith by the Board of Directors of the Company or their delegate. Securities or financial instruments not listed or not traded on a stock exchange or on any other regulated market and securities or financial instruments listed or traded on such a market but whose last known price is not representative, are valued with prudence and in good faith on the basis of their probable realisation value as determined by or under the direction of the Board of Directors of the Company. Any other assets are valued on the basis of their probable realisation value as determined by the Board of Directors of the Company or their delegate using valuation principles, in order to reach a proper and fair valuation of the total assets of each sub-fund. Income Dividends are accounted for on the ex-date. Interest is accrued on a NAV calculation basis. Realised profits and losses on sales of investment securities Realised profits and losses on sales of investments securities are determined on the basis of the average cost of investments sold. Formation expenses The expenses for the constitution of the Company were amortised during a period of 1 year and were charged to the sub-funds which were initially launched. Further incorporated sub-fund will only bear the initial costs relating to their own launching. 3- CASH AT BANK AND LIQUIDITIES In accordance with the investment strategies of the sub-funds, each sub-fund maintains appropriate cash levels in various currencies in its portfolio. 4- OTHER LIABILITIES Other liabilities account includes mainly accruals and payables. 5- MANAGEMENT FEES The Management fees include Management Company fees and Investment management fees, as described below. The Management Company provides investment management services, administrative agency, registrar and transfer agency services and marketing, principal distribution and sales services to the Company, subject to the overall supervision and control of the Board of Directors of the Company. For the collective portfolio management service (excluding compliance monitoring services), the Management Company is entitled to receive remuneration of maximum 0.05 % of the net assets of the Company, with a minimum of 75,000 for the whole Company. This fee is calculated based on the net asset value of each sub-fund and is paid monthly in arrears. Page 32