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UNITED STATES
SECURITIES AND CHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

Investment Company Act file number: 811-21553

ING Global Equity Dividend and Premium Opportunity Fund

(Exact name of registrant as specified in charter)

7337 E. Doubletree Ranch Rd., Scottsdale, AZ		85258
(Address of principal executive offices)		(Zip code)

The Corporation Trust Company, 1209 Orange
Street, Wilmington, DE 19801
(Name and address of agent for service)

Registrant’s telephone number, including area code: 1-800-992-0180

Date of fiscal year end:		February 29
Date of reporting period:		February 29, 2008

 

 

 

Funds

Annual Report

February 29, 2008

 

 

ING Global Equity Dividend and
Premium Opportunity Fund

 

 

 E-Delivery Sign-up – details inside

 

This report is submitted for general information to shareholders of the ING Funds. It is not authorized for distribution to prospective shareholders unless accompanied or preceded by a prospectus which includes details regarding the funds’ investment objectives, risks, charges, expenses and other information. This information should be read carefully.

 

   

TABLE OF CONTENTS

 

 

 

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You will be notified by e-mail when these communications become available on the internet. Documents that are not available on the internet will continue to be sent by mail.

 

 

PROXY VOTING INFORMATION

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies related to portfolio securities is available: (1) without charge, upon request, by calling Shareholder Services toll-free at (800) 992-0180; (2) on the ING Funds’ website at www.ingfunds.com; and (3) on the SEC’s website at www.sec.gov. Information regarding how the Fund voted proxies related to portfolio securities during the most recent 12-month period ended June 30 is available without charge on the ING Funds’ website at www.ingfunds.com and on the SEC’s website at www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS

 

The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the SEC’s website at www.sec.gov. The Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330; and is available upon request from the Fund by calling Shareholder Services toll-free at (800) 992-0180.

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PRESIDENT’S LETTER

 

 

Dear Shareholder,

 

ING Global Equity Dividend and Premium Opportunity Fund (the “Fund”) is a non-diversified, closed-end management investment company traded on the New York Stock Exchange under the symbol “IGD.” The primary objective of the Fund is to provide a high level of income, with a secondary objective of capital appreciation.

 

The Fund seeks to achieve its objectives by investing in a portfolio of global common stocks that have a history of attractive dividend yields and employing an option strategy of writing individual equity call options on a portion of the equity portfolio. The Fund buys out of the money put options on selected indices to partially protect portfolio value from significant market declines and also partially hedges currency exposure to reduce volatility of total return.

 

I am pleased to report that for the fiscal year ended February 29, 2008, the Fund made total monthly distributions of $2.07 per share including a return of capital of $0.12 per share.

 

Based on net asset value (“NAV”), the Fund had a total return of (2.74)% for the fiscal year ended February 29, 2008.⁽¹⁾ This NAV return reflects a decrease in net asset value from $19.98 on February 28, 2007 to $17.39 on February 29, 2008, plus the reinvestment of $2.07 per share in distributions.

 

Based on its share price, the Fund provided a total return of (5.71)% for the fiscal year ended February 29, 2008.⁽²⁾ This share price return reflects a decrease in its share price from $20.55 on February 28, 2007 to $17.34 on February 29, 2008, plus the reinvestment of $2.07 per share in distributions.

 

For more information on the Fund’s performance, please read the Market Perspective and Portfolio Managers’ Report.

 

At ING Funds our mission is to set the standard in helping our clients manage their financial future. We seek to assist you and your financial advisor by offering a range of global investment solutions. We invite you to visit our website at www.ingfunds.com. Here you will find information on our products and services, including current market data and fund statistics on our open- and closed-end funds. You will see that we offer a broad variety of equity, fixed income and multi-asset funds that aim to fulfill a variety of investor needs. We thank you for trusting ING Funds with your investment assets, and we look forward to serving you in the months and years ahead.

 

Sincerely,

 

Shaun P. Mathews

President

ING Funds

April 11, 2008

 

The views expressed in the President’s Letter reflect those of the President as of the date of the letter. Any such views are subject to change at any time based upon market or other conditions and ING Funds disclaims any responsibility to update such views. These views may not be relied on as investment advice and because investment decisions for an ING Fund are based on numerous factors, may not be relied on as an indication of investment intent on behalf of any ING Fund. Reference to specific company securities should not be construed as recommendations or investment advice. International investing does pose special risks including currency fluctuation, economic and political risks not found in investments that are solely domestic.

 

For more complete information, or to obtain a prospectus for any ING fund, please call your Investment Professional or ING Funds Distributor, LLC at (800) 992-0180 or log on to www.ingfunds.com. The prospectus should be read carefully before investing. Consider the fund’s investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this information and other information about the fund. Check with your Investment Professional to determine which funds are available for sale within their firm. Not all funds are available for sale at all firms.

 

 

Market Perspective:  Year Ended February 29, 2008

 

 

In our semi-annual report, we described a tumultuous six months for markets as a serious credit squeeze closed in. Sentiment had improved near the end, but after October 2007 reality set in and as the fiscal year drew to a close, with oil at $100 per barrel, global equities were near to pricing in a recession that many felt was already under way. The MSCI World Index^SM(1) measured in local currencies, including net reinvested dividends (“MSCI” for regions discussed below) lost 10.1% between August and February and 6.3% for the whole fiscal year. In currencies, the dollar’s first half slide against the euro and yen accelerated in the second half due to the European Central Bank’s implacable refusal to reduce euro interest rates in response to deep cuts in the federal funds rate, while the flight from risk strengthened the yen as “carry trades” were unwound. But the pound gave back some of its gains as the UK housing market retrenched. In the six months ended February 29, 2008, the dollar fell 9.8% against the euro (12.7% for the fiscal year), 8.3% against the yen (11.4% for the fiscal year), but rose 1.5% against the pound (down 1.0% for the fiscal year).

 

The development of the credit crisis is now well documented. Financial institutions with large holdings of sub-prime (and not so sub-prime) mortgage backed derivative securities, often opaque and carrying dubiously high credit ratings, faced huge write-downs. Where the purchases had been financed by commercial paper, solvency was even at risk as that market all but seized up.

 

The U.S. Federal Reserve Board’s (the “Fed”) first response to the crisis and resulting economic threats was to reduce the discount rate, (the interest rate at which it will lend to banks), by 0.50% (50 basis points) in August and September and by half that amount in October and December, while pumping liquidity into the overnight money market. Cuts in the federal funds rate matched discount rate reductions after August 2007.

 

But the discount window had a stigma attached to it and as 2007 ended liquidity was still not getting to where it was needed most. Financial institutions were cutting dividends and in a development of historical significance, tapping billions of dollars from sovereign wealth funds based in the Middle-East and Asia.

 

Nervousness lifted somewhat after the Fed announced that it would use a “term auction facility” to add liquidity, where loans would be auctioned and broader forms of collateral accepted. By now, however, the contagion had spread to the monoline insurers, which had added, to their traditional business of guaranteeing municipal bonds, guarantees to asset backed derivative securities. The shares of monolines Ambac and MBIA lost 80% of their value between August 31, 2007 and February 29, 2008.

 

Back in the real economy the housing market was still deteriorating and in January new home sales fell to the lowest level since 1995, with prices dropping at a rate not seen in 35 years. Gross domestic product (“GDP”) growth was reported at a wafer-thin 0.6% annualized, while January payrolls showed the first contraction in four years.

 

Despite inflation stubbornly above 2% there was now no doubt as to where policy needed to be directed. The Federal Open Market Committee (“FOMC”) slashed both the federal funds and discount rates by 0.75% (75 basis points) on January 22, 2008 (albeit looking suspiciously like a reaction to plunging foreign stock markets the day before) and by a further (0.50%) 50 basis points the following week. Congress agreed in February 2008 to spend $117 billion in tax rebates as part of a $168 billion plan to stimulate the economy.

 

The pattern of returns to fixed-income investors reflected the flight to safety. The Lehman Brothers^® Aggregate Bond Index⁽²⁾ (“LBAB Index”) of investment grade bonds returned 5.7% in the second half of our fiscal year (7.3% for the fiscal year), while the Lehman Brothers^® High Yield Bond Index⁽³⁾ returned –1.4% in the second half of our fiscal year (–3.1% for the fiscal year). Treasury Bill yields plunged, while 10-year Note yields fell by less as inflationary concerns persisted.

 

U.S. equities, represented by the Standard & Poor’s 500^® Composite Stock Price Index⁽⁴⁾ (“S&P 500^® Index”) including dividends, returned –8.8% in the six months through February 2008 and –3.6% for the fiscal year. September started brightly enough with investors believing that the Fed had the will and the tools to fix the dislocation in the credit markets and limit the downside. The index actually made a new high on October 9, 2007. But the magnitude of the crisis described above, the sense that this was only the beginning and a parade of earnings disappointments especially among financials, soon weighed on sentiment. S&P 500 companies reported a decline in operating profits for the third quarter, the first fall in more than five years, and would report even worse figures for the fourth. U.S. equities fell 3% on the last

 

Market Perspective:  Year Ended February 29, 2008

 

day of February 2008 as insurance giant AIG declared its biggest ever quarterly loss.

 

Internationally, the MSCI Japan^® Index⁽⁵⁾ slumped 17.1% in the six months through February 29, 2008 (and fell 22.9% for the fiscal year), on fears about global growth and the rising yen. The MSCI Europe ex UK^® Index⁽⁶⁾ lost 13.9% in the six months through February 29, 2008 (and fell 8.5% for the fiscal year). The European Central Bank confined its response to the credit crisis by making vast amounts of liquidity available to the banking system. But there were no interest rate cuts as headline inflation reached 3.2%, the highest in 14 years. In the UK similar inflation worries limited the Bank of England to just two 1/4% rate reductions despite the decline of the formerly exuberant housing market. The relatively large weighting in resilient energy, materials and consumer staples companies moderated losses, however and the MSCI UK^® Index⁽⁷⁾ fell 6.2% in the six months through February 29, 2008 (and fell 2.1% for the fiscal year).

⁽¹⁾ The MSCI World Index^SM is an unmanaged index that measures the performance of over 1,400 securities listed on exchanges in the U.S., Europe, Canada Australia, New Zealand and the Far East.

 

⁽²⁾ The LBAB Index is a widely recognized, unmanaged index of publicly issued investment grade U.S. Government, mortgage-backed, asset-backed and corporate debt securities.

 

⁽³⁾ The Lehman Brothers^® High Yield Bond Index is an unmanaged index that measures the performance of fixed-income securities generally representative of corporate bonds rated below investment grade.

 

⁽⁴⁾ The S&P 500^® Index is an unmanaged index that measures the performance of securities of approximately 500 of the largest companies in the United States.

 

⁽⁵⁾ The MSCI Japan^® Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in Japan.

 

⁽⁶⁾ The MSCI Europe ex UK^® Index is a free float rising adjusted market capitalization index that is designed to measure developed market equity performance in Europe, excluding the UK.

 

⁽⁷⁾ The MSCI UK^® Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in the UK.

 

All indices are unmanaged and investors cannot invest directly in an index.

 

Past performance does not guarantee future results. The performance quoted represents past performance. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The Fund’s performance is subject to change since the period’s end and may be lower or higher than the performance data shown. Please call (800) 992-0180 or log on to www.ingfunds.com to obtain performance data current to the most recent month end.

 

Market Perspective reflects the views of ING’s Chief Investment Risk Officer only through the end of the period, and is subject to change based on market and other conditions.

 

ING Global Equity Dividend and Premium Opportunity Fund

Portfolio Managers’ Report

 

 

Country Allocation
as of February 29, 2008
(as a percent of net assets)

 

Portfolio holdings are subject to change daily.

 

ING Global Equity Dividend and Premium Opportunity Fund (the “Fund”) seeks to provide investors with a high level of income from a portfolio of global common stocks with historically attractive dividend yields and premiums from covered call option writing. Under normal market conditions, the Fund will invest at least 80% of its managed assets in a portfolio of common stocks of dividend paying companies located throughout the world, including the U.S. The Fund is managed by Moudy El Khodr, Nicolas Simar, Kris Hermie, Frank van Etten, Willem van Dommelen, Bas Peeters and Alexander van Eekelen, Portfolio Managers, ING Investment Management Advisors B.V. — the Sub-Adviser.

 

Equity Portfolio Construction: The stock selection process begins with constructing an eligible universe of global common stocks with market capitalizations typically over $1 billion that have a history of paying dividend yields in excess of 3% annually. Through a multi-step screening process of various fundamental factors and fundamental analysis the portfolio managers construct a portfolio generally consisting of 65 to 90 common stocks with a history of attractive dividend yields, and stable or growing dividends that are supported by business fundamentals.

 

The Fund’s Integrated Option Strategy: The Fund’s option strategy is designed to seek gains and stability of returns over a market cycle by selling covered calls on individual securities and by buying puts on both local and regional indices. To generate premiums, the Fund writes covered call options on a substantial portion of the common stocks held in the Fund’s portfolio, a strategy known as covered call option writing.

 

Writing covered call options involves granting the buyer the right to purchase certain common stock at a particular price (the “strike price”) either at a particular time or during a particular span of time. If the purchaser exercises a covered call option sold by the Fund, either the common stock will be called away from the Fund and the Fund will receive payment equal to the strike price in addition to the original premium received, or the Fund will pay the purchaser the difference between the cash value of the common stock and the strike price of the option. The payment received for the common stock may be lower than the market value of the common stock at that time.

 

Once the underlying portfolio is constructed, the specific securities and percentage of each underlying security to be used for covered call option writing is determined based on stock outlook, market opportunities and option price volatility.

 

The Fund seeks to sell covered call options that are generally short-term (between 10 days and three months until expiration) and at- or near-the-money. The Fund typically maintains its covered call positions until expiration, but it retains the option to buy back the covered call options and sell new covered call options.

 

Top Ten Holdings
as of February 29, 2008

(as a percent of net assets)

 

ENI S.p.A.			2.0	%
Total SA			2.0	%
Aviva PLC			2.0	%
Enel S.p.A.			2.0	%
Fortis			2.0	%
Royal Dutch Shell PLC			2.0	%
Telecom Italia S.p.A. RNC			2.0	%
British American Tobacco PLC			1.6	%
United Utilities PLC			1.6	%
AT&T, Inc.			1.6	%

 

Portfolio holdings are subject to change daily.

 

 

ING Global Equity Dividend and Premium Opportunity Fund

Portfolio Managers’ Report

 

The Fund may seek, and during the reporting period sought, to partially hedge against significant market declines by buying out-of-the-money put options on related indices, such as the Standard and Poor’s 500^® Composite Stock Price Index (“S&P 500^® Index”), the Financial Times Stock Exchange 100 Index (“FTSE 100”), the Nikkei All Stock Index (“Nikkei”), the Dow Jones Euro Stoxx 50 (Price) Index (“EuroStoxx50”) or any other broad-based global or regional securities index with an active derivatives market. The Fund generally invests in out-of-the-money puts that expire in 20 to 125 trading days. A portion of the premiums generated from the covered call strategy is used to buy put protection. Also, the Fund may seek to, and during the reporting period sought to, partially hedge the foreign currency risk inherent in its international equity holdings. Such currency hedges are implemented either by selling the international currencies forward or by buying out-of-the-money puts on international currencies versus the U.S. Dollar.

 

Performance: Based on its share price as of February 29, 2008, the Fund provided a total return of (5.71)% for the fiscal year ended February 29, 2008. This return reflects a decrease in its share price from $20.55 on February 28, 2007 to $17.34 on February 29, 2008, plus the reinvestment of $2.07 per share in distributions. Based on net asset value (“NAV”), the Fund had a total return of (2.74)% for the fiscal year ended February 29, 2008. The Morgan Stanley Capital International (“MSCI”) World^sm Index and the Chicago Board Options Exchange (“CBOE”) BuyWrite Monthly Index (“BXM Index”) returned (0.53)% and 0.60%, respectively, for the same period. During the period, the Fund made total monthly distributions of $2.07 per share including a return of capital of $0.12 per share. As of February 29, 2008, the Fund had 97,252,472 shares outstanding.

 

Market review: The equity portfolio of the Fund uses the MSCI World^SM Index as its reference index to reflect the strategic emphasis of the Fund. The reference index returned (0.53%) over the reporting period. The first six months were positive but earlier gains were lost as the credit crisis intensified and global growth prospects deteriorated in the latter half of the period.

 

Equity Portfolio: For the fiscal year, the Fund’s underlying equity portfolio underperformed its reference index; the value orientation of the Fund’s high-dividend strategy was out of favor in a market focusing on stocks with stable growth characteristics. From March to May the equity portfolio tracked a rising market fairly closely. In June and July however, the U.S.-induced sub-prime mortgage crisis hurt results due to the Fund’s overweight in financials. The equity portfolio captured most of the market’s rebound of August and September, but underperformed in the final months of 2007 as the global credit crisis escalated. The portfolio fared relatively well in the broad global equity market sell-off in the opening months of 2008.

 

The bulk of the shortfall was attributable to sector allocation. The largest detractor was an overweight position in the weak financial sector. Underweighting the strong materials and industrial sectors also detracted. Overweighting utilities and telecommunication services — and at times energy — added value. Security selection yielded a modestly negative result, with adverse outcomes in utilities, healthcare, industrials and materials sectors being substantially compensated by positive selection results in consumer staples, telecommunication services and real estate.

 

Option Portfolio: The option strategy of the Fund is designed to dampen NAV return volatility and seeks to enhance potential capital gains. The Fund sells covered calls on a portion of the securities and uses some of the proceeds to purchase out-of-the-money puts on local and regional indices, for protection against significant market declines. All options were implemented in the over-the-counter market to enable the Fund to profit from the greater flexibility and liquidity available there compared to the listed options markets. Option activities in aggregate contributed to results for the period.

 

At or near-the-money calls were written on 65-70% of the individual equity holdings. The coverage ratio expressed was generally 30-35% of the market value of the Fund. The Fund differentiated coverage ratios among individual stocks to benefit from the wide dispersion of stock volatility. The substantial increase in equity market volatility during the year resulted in higher premiums. As the Fund did not reduce the coverage ratio, the total amount of option premium collected rose. In the first few months of the fiscal year, the majority of written calls expired in-the-money. During down-markets, as in August and November 2007 and January 2008, most calls written expired out-of-the-money. Over the year, the total call premium received exceeded the total settlements at expiry, thereby contributing to performance.

 

ING Global Equity Dividend and Premium Opportunity Fund

Portfolio Managers’ Report

 

The Fund’s equity index put options provided protection during sharp market declines. The put strategy proved especially valuable when markets contracted sharply in August 2007 and January 2008. The Fund actively rolled parts of the equity index put option portfolio in those months to realize gains.

 

A significant part of the Fund’s international investments is directly exposed to currency risk. The Fund purchases foreign currency options to provide partial insurance against a sharp rise of the U.S. dollar. Although implied volatility in the foreign exchange markets increased during the year, the Fund was able to hedge a significant part of the risk at low cost. Periods in which the U.S. dollar strengthened resulted in an increase in the value of the forex put options. Part of this profit was locked in during the first half of January.

 

Current Strategy and Outlook: High-dividend strategies are designed to dampen volatility versus the broader market across an investment cycle. As the reporting year drew to a close, the weakness first seen in the financial sector spread to other cyclically-sensitive sectors. We believe this more broadly-based weakness may benefit the Fund’s relative performance in coming months, as a higher dividend yield could provide a defense against a drop in share price. Continued elevated market volatility is expected to benefit the level of call premiums the Fund should receive, while allowing significant upside potential when markets do recover, given the Fund’s relatively low coverage ratio.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The Shareholders and Board of Trustees

ING Global Equity Dividend and Premium Opportunity Fund

 

We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of ING Global Equity Dividend and Premium Opportunity Fund, as of February 29, 2008, 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 in the two-year period then ended and the period from March 30, 2005 (commencement of operations) to February 28, 2006. These financial statements and financial highlights are the responsibility of management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of February 29, 2008, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the ING Global Equity Dividend and Premium Opportunity Fund as of February 29, 2008, and the results of its operations, the changes in its net assets, and the financial highlights for the periods specified in the first paragraph above, in conformity with U.S. generally accepted accounting principles.

 

 

Boston, Massachusetts

April 29, 2008

STATEMENT OF ASSETS AND LIABILITIES as of February 29, 2008

 

 

See Accompanying Notes to Financial Statements

STATEMENT OF OPERATIONS for the year ended February 29, 2008

 

 

See Accompanying Notes to Financial Statements

STATEMENTS OF CHANGES IN NET ASSETS

 

 

See Accompanying Notes to Financial Statements

ING Global Equity Dividend and Premium Opportunity Fund

Financial Highlights

 

Selected data for a share of beneficial interest outstanding throughout each period.

 

 

 

 

See Accompanying Notes to Financial Statements

NOTES TO FINANCIAL STATEMENTS as of February 29, 2008

 

 

NOTE 1 — ORGANIZATION

 

ING Global Equity Dividend and Premium Opportunity Fund (the “Fund”) is a non-diversified, closed-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Fund is organized as a Delaware statutory trust. The primary investment objective for the Fund is to provide a high level of income. Capital appreciation is a secondary investment objective. The Fund seeks to achieve its investment objectives by investing in a portfolio of global common stocks that have a history of attractive dividend yields and utilizing an integrated options strategy.

 

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES

 

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

 

 

Securities and assets for which market quotations are not readily available (which may include certain restricted securities that are subject to limitations as to their sale) are valued at their fair values as determined in good faith by or under the supervision of the Fund’s Board of Trustees (“Board”), in accordance with methods that are specifically authorized by the Board. Securities traded on exchanges, including foreign exchanges, which close earlier than the time that the Fund calculates its net asset value (“NAV”) may also be valued at their fair values as determined in good faith by or under the supervision of the Fund’s Board, in accordance with methods that are specifically authorized by the Board. The value of a foreign security traded on an exchange outside the United States is generally based on its price on the principal foreign exchange where it trades as of the time the Fund determines its NAV or if the foreign exchange closes prior to the time the Fund determines its NAV, the most recent closing price of the foreign security on its principal exchange. Trading in certain non-U.S. securities may not take place on all days on which the NYSE Euronext (“NYSE”) is open. Further, trading takes place in various foreign markets on days on which the NYSE is not open. Consequently, the calculations of the Fund’s NAV may not take place contemporaneously with the determination of the prices of securities held by the Fund in foreign securities markets. Further, the value of the Fund’s assets may be significantly affected by foreign trading on days when a shareholder cannot purchase or redeem shares of the Fund. In calculating the Fund’s NAV, foreign securities denominated in foreign currency are converted to U.S. dollar equivalents. If an event occurs after the time at which the market for foreign securities held by the Fund closes but before the time that the Fund’s NAV is calculated, such event may cause the closing price on the foreign exchange to not represent a readily available reliable market value quotation for such securities at the time the Fund determines its NAV. In such a case, the Fund will use the fair value of such securities as determined under the Fund’s valuation procedures. Events after the close of trading on a foreign market that could require the Fund to fair value some or all of its foreign securities include, among others, securities trading in the U.S. and other markets, corporate announcements, natural and other disasters, and political and other events. Among other elements of analysis in the determination of a security’s fair value, the Board has authorized the use of one or more independent research services to assist with such determinations. An independent research service may use statistical analyses and

NOTES TO FINANCIAL STATEMENTS as of February 29, 2008 (continued)

 

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (continued)

 

quantitative models to help determine fair value as of the time the Fund calculates its NAV. There can be no assurance that such models accurately reflect the behavior of the applicable markets or the effect of the behavior of such markets on the fair value of securities, or that such markets will continue to behave in a fashion that is consistent with such models. Unlike the closing price of a security on an exchange, fair value determinations employ elements of judgment. Consequently, the fair value assigned to a security may not represent the actual value that the Fund could obtain if it were to sell the security at the time of the close of the NYSE. Pursuant to procedures adopted by the Board, the Fund is not obligated to use the fair valuations suggested by any research service, and valuation recommendations provided by such research services may be overridden if other events have occurred or if other fair valuations are determined in good faith to be more accurate. Unless an event is such that it causes the Fund to determine that the closing prices for one or more securities do not represent readily available reliable market value quotations at the time the Fund determines its NAV, events that occur between the time of the close of the foreign market on which they are traded and the close of regular trading on the NYSE will not be reflected in the Fund’s NAV. Investments in securities maturing in 60 days or less from date of acquisition are valued at amortized cost which approximates market value.

 

Options that are traded over-the-counter will be valued using one of three methods: (1) dealer quotes; (2) industry models with objective inputs; or (3) by using a benchmark arrived at by comparing prior-day dealer quotes with the corresponding change in the underlying security. Exchange traded options will be valued using the last reported sale. If no last sale is reported, exchange traded options will be valued using an industry accepted model such as “Black Scholes.” Options on currencies purchased by the Fund are valued using industry models with objective inputs.

 

 

 

Although the net assets and the market values are presented at the foreign exchange rates at the end of the day, the Fund does not isolate the portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gains or losses from investments. For securities, which are subject to foreign withholding tax upon disposition, liabilities are recorded on the Statement of Assets and Liabilities for the estimated tax withholding based on the securities current market value. Upon disposition, realized gains or losses on such securities are recorded net of foreign withholding tax. Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at period end, resulting from changes in the exchange rate. Foreign security and currency transactions may involve certain considerations and risks not typically associated with investing in U.S. companies and U.S. government securities. These risks include, but

NOTES TO FINANCIAL STATEMENTS as of February 29, 2008 (continued)

 

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (continued)

 

are not limited to, revaluation of currencies and future adverse political and economic developments which could cause securities and their markets to be less liquid and prices more volatile than those of comparable U.S. companies and U.S. government securities.

 

 

The tax treatment and characterization of the Fund’s distributions may vary significantly from time to time depending on whether the Fund has gains or losses on the call options written on its portfolio versus gains or losses on the equity securities in the portfolio. The Fund’s distributions will normally reflect past and projected net investment income, and may include income from dividends and interest, capital gains and/or a return of capital. The final composition of the tax characteristics of the distributions cannot be determined with certainty until after the end of the year, and will be reported to shareholders at that time. The amount of monthly distributions will vary, depending on a number of factors. As portfolio and market conditions change, the rate of dividends on the common shares will change. There can be no assurance that the Fund will be able to declare a dividend in each period.

 

NOTES TO FINANCIAL STATEMENTS as of February 29, 2008 (continued)

 

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (continued)

 

 

 

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 an investment management agreement (“Management Agreement”), a fee, payable monthly, based on an annual rate of 1.05% of the Fund’s average daily managed assets. For the first five years of the Fund’s existence, the Investment Adviser will contractually waive a portion of its fee equivalent to 0.20% of the Fund’s managed assets. Beginning in the sixth year, the fee waiver will decline each year by 0.05% until it is eliminated in the ninth year. 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 29, 2008, there were no preferred shares outstanding.

 

The Investment Adviser entered into a sub-advisory agreement (“Sub-Advisory Agreement”) with ING Investment Management Advisors B.V. (“IIMA”), an indirect, wholly-owned subsidiary of ING Groep N.V. (“ING Groep”), domiciled in The Hague, The Netherlands. Subject to policies as the Board or the Investment Adviser might determine, IIMA manages the Fund’s assets in accordance with the Fund’s investment objectives, policies and limitations.

 

The Investment Adviser has also retained ING Investment Management Co. (“ING IM” or “Consultant”), a Connecticut corporation, 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.

 

ING Funds Services, LLC, a Delaware limited liability company, (the “Administrator”) 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. The Investment Adviser, IIMA, ING IM and the Administrator are indirect, wholly-owned subsidiaries of ING Groep. ING Groep is one of the largest financial services organizations in the world, and offers an array of banking, insurance and asset management services to both individuals and institutional investors.

NOTES TO FINANCIAL STATEMENTS as of February 29, 2008 (continued)

 

NOTE 4 — OTHER TRANSACTIONS WITH AFFILIATED AND RELATED PARTIES

 

As of February 29, 2008, the Fund had the following amounts recorded in payable to affiliates on the accompanying Statement of Assets and Liabilities:

 

 

The Fund has adopted a Retirement Policy (“Policy”) covering all Independent Trustees of the Fund. Benefits under this Policy are based on an annual rate as defined in the Policy agreement and are recorded as trustee fees in the financial statements.

 

The Fund places a portion of its transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were:

 

 

NOTE 5 — PURCHASES AND SALES OF INVESTMENT SECURITIES

 

The cost of purchases and proceeds from sales of investments for the year ended February 29, 2008, excluding short-term securities, were $1,443,850,671 and $1,530,536,500, respectively.

 

NOTE 6 — TRANSACTIONS IN WRITTEN OPTIONS

 

Written option activity for the Fund for the year ended February 29, 2008 was as follows:

 

 

NOTE 7 — CONCENTRATION OF INVESTMENT RISKS

 

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.

 

Non-Diversified. The Fund is classified as a “non-diversified” investment company under the 1940 Act, which means that the Fund may invest a greater proportion of its assets in the securities of a smaller number of issuers. If the Fund invests a relatively high percentage of its assets in obligations of a limited number of issuers, the Fund will be more at risk to any single corporate, economic, political or regulatory event that impacts one or more of those issuers. Conversely, even though classified as non-diversified, the Fund may actually maintain a portfolio that is highly diversified with a large number of issuers. In such an event, the Fund would benefit less from appreciation in a single corporate issuer than if it had greater exposure to that issuer.

 

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 8 — PAID-IN CAPITAL ADJUSTMENT

 

In conjunction with the issuance of initial shares, the Fund, based on best estimates, accrued approximately $3,400,000 associated with offering cost. As of the year ended February 28, 2007, the Fund actually incurred a total of $2,110,382 related to offering costs. Therefore, the difference between the amount accrued and the amount actually incurred for offering costs was $1,289,618 for the Fund. This amount represents an over-accrual of estimated offering costs and the reversal of such accrual has been recognized as an adjustment to paid-in capital on the accompanying

NOTES TO FINANCIAL STATEMENTS as of February 29, 2008 (continued)

 

NOTE 8 — PAID-IN CAPITAL ADJUSTMENT (continued)

 

Statements of Changes in Net Assets for the year ended February 28, 2007.

 

NOTE 9 — CAPITAL SHARES

 

Transactions in capital shares and dollars were as follows:

 

 

 

NOTE 10 — SECURITIES LENDING

 

Under an agreement with BNY, the Fund can lend its securities to approved brokers, dealers and other financial institutions. Loans are collateralized by cash and U.S. government securities. The collateral must be in an amount equal to at least 105% of the market value of non-U.S. securities loaned and 102% of the market value of U.S. securities loaned. The cash collateral received is invested in approved investments as defined in the Securities Lending Agreement with BNY (the “Agreement”). The securities purchased with cash collateral received are reflected in the Portfolio of Investments. Generally, in the event of counterparty default, the Fund has the right to use the collateral to offset losses incurred. The Agreement contains certain guarantees by BNY in the event of counterparty default and/or a borrower’s failure to return a loaned security; however there would be a potential loss to the Fund in the event the Fund is delayed or prevented from exercising their right to dispose of the collateral. The Fund bears the risk of loss with respect to the investment of collateral. Engaging in securities lending could have a leveraging effect, which may intensify the credit, market and other risks associated with investing in the Fund. As of February 29, 2008, the Fund did not have any securities on loan.

 

NOTE 11 — 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. generally accepted accounting principles 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, 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.

 

The following permanent tax differences have been reclassified as of the Fund’s tax year ended December 31, 2007:

 

 

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, 2008. The tax composition of dividends and distributions as of the Fund’s most recent tax year-ends were as follows:

 

 

 

The tax-basis components of distributable earnings as of the tax year ended December 31, 2007 were:

 

 

The Fund’s major tax jurisdictions are federal and Arizona. The earliest tax year that remains subject to examination by these jurisdictions is the Fund’s initial tax year of 2005.

 

NOTE 12 — OTHER ACCOUNTING PRONOUNCEMENTS

 

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48

NOTES TO FINANCIAL STATEMENTS as of February 29, 2008 (continued)

 

NOTE 12 — OTHER ACCOUNTING PRONOUNCEMENTS (continued)

 

(“FIN 48”), “Accounting for Uncertainty in Income Taxes.” This standard defines the threshold for recognizing the benefits of tax-return positions in the financial statements as “more-likely-than-not” to be sustained upon challenge by the taxing authority and requires measurement of a tax position meeting the more-likely-than-not criterion, based on the largest benefit that is more than 50 percent likely to be realized. FIN 48 was effective for fiscal years beginning after December 15, 2006, with early application permitted if no interim financial statements have been issued. Acknowledging the unique issues that FIN 48 presents for investment companies that calculate NAVs, the SEC indicated that they would not object if a fund implemented FIN 48 in its NAV calculation as late as its last NAV calculation in the first required financial statement reporting period for its fiscal year beginning after December 15, 2006. At adoption, companies must adjust their financial statements to reflect only those tax positions that are more likely-than-not to be sustained as of the adoption date. Management of the Fund has analyzed the tax positions of the Fund. Upon adoption of FIN 48, we identified no uncertain tax positions that have not met the more likely-than-not standard.

 

On September 15, 2006, the FASB issued Statement of Financial Accounting Standards No. 157 (“SFAS No. 157”), “Fair Value Measurements.” The new accounting statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (“GAAP”), and expands disclosures about fair value measurements. SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). SFAS No. 157 also stipulates that, as a market-based measurement, fair value should be determined based on the assumptions that market participants would use in pricing the asset or liability, and establishes a fair value hierarchy that distinguishes between (a) market participant assumptions developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (b) the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. As of February 29, 2008, management of the Fund is currently assessing the potential impact, in addition to expanded financial statement disclosure, that may result from adopting SFAS No. 157.

 

On March 19, 2008, the FASB issued Statement of Financial Accounting Standards No. 161 (“SFAS No. 161”), “Disclosure about Derivative Instruments and Hedging Activities.” This new accounting statement requires enhanced disclosures about an entity’s derivative and hedging activities. Entities are required to provide enhanced disclosures about (a) how and why an entity invests in derivatives, (b) how derivatives are accounted for under Statement 133, and (c) how derivatives affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 also requires enhanced disclosures regarding credit-risk-related contingent features of derivative instruments.

 

SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. As of February 29, 2008, management of the Fund is currently assessing the impact of the expanded financial statement disclosures that will result from adopting SFAS No. 161.

 

NOTE 13 — INFORMATION REGARDING TRADING OF ING’S U.S. MUTUAL FUNDS

 

As discussed in earlier supplements that were previously filed with the SEC, ING Investments, the adviser to the ING Funds, has reported to the Boards of Directors/Trustees (the “Boards”) of the ING Funds that, like many U.S. financial services companies, ING Investments and certain of its U.S. affiliates have received informal and formal requests for information since September 2003 from various governmental and self-regulatory agencies in connection with investigations related to mutual funds and variable insurance products. ING Investments has advised the Boards that it and its affiliates have cooperated fully with each request.

 

In addition to responding to regulatory and governmental requests, Investments reported that management of U.S. affiliates of ING Groep N.V., including ING Investments (collectively, “ING”), on their own initiative, have conducted, through independent special counsel and a national accounting firm, an extensive internal review of

NOTES TO FINANCIAL STATEMENTS as of February 29, 2008 (continued)

 

NOTE 13 — INFORMATION REGARDING TRADING OF ING’S U.S. MUTUAL FUNDS (continued)

 

trading in ING insurance, retirement, and mutual fund products. The goal of this review was to identify any instances of inappropriate trading in those products by third parties or by ING investment professionals and other ING personnel. ING’s internal review related to mutual fund trading is now substantially completed. ING has reported that, of the millions of customer relationships that ING maintains, the internal review identified several isolated arrangements allowing third parties to engage in frequent trading of mutual funds within ING’s variable insurance and mutual fund products, and identified other circumstances where frequent trading occurred, despite measures taken by ING intended to combat market timing. ING further reported that each of these arrangements has been terminated and fully disclosed to regulators. The results of the internal review were also reported to the independent members of the Boards.

 

ING Investments has advised the Boards that most of the identified arrangements were initiated prior to ING’s acquisition of the businesses in question in the U.S. ING Investments further reported that the companies in question did not receive special benefits in return for any of these arrangements, which have all been terminated.

 

Based on the internal review, ING Investments has advised the Boards that the identified arrangements do not represent a systemic problem in any of the companies that were involved.

 

Despite the extensive internal review conducted through independent special counsel and a national accounting firm, there can be no assurance that the instances of inappropriate trading reported to the Boards are the only instances of such trading respecting the ING Funds.

 

ING Investments reported to the Boards that ING is committed to conducting its business with the highest standards of ethical conduct with zero tolerance for noncompliance. Accordingly, ING Investments advised the Boards that ING management was disappointed that its voluntary internal review identified these situations. Viewed in the context of the breadth and magnitude of its U.S. business as a whole, ING management does not believe that ING’s acquired companies had systemic ethical or compliance issues in these areas. Nonetheless, ING Investments reported that given ING’s refusal to tolerate any lapses, it has taken the steps noted below, and will continue to seek opportunities to further strengthen the internal controls of its affiliates.

 

 

Other Regulatory Matters

 

The New York Attorney General (the “NYAG”) and other federal and state regulators are also conducting broad inquiries and investigations involving the insurance industry. These initiatives currently focus on, among other things, compensation and other sales incentives; potential conflicts of interest; potential anti-competitive activity; reinsurance; marketing practices (including suitability); specific product types (including group annuities and indexed annuities); fund selection for investment products and brokerage sales; and disclosure. It is likely that the scope of these industry investigations will further broaden before they conclude. ING has received formal and informal requests in connection with such investigations, and is cooperating fully with each request.

 

Other federal and state regulators could initiate similar actions in this or other areas of ING’s businesses. These regulatory initiatives may result in new legislation and regulation that could significantly affect the financial services industry, including businesses in which ING is engaged. In light of these and other developments, ING continuously reviews whether modifications to its business practices are appropriate. At this time, in light of the current regulatory factors, ING U.S. is actively engaged in reviewing whether any modifications in our practices are appropriate for the future.

 

There can be no assurance that these matters, or the adverse publicity associated with them, will not result

NOTES TO FINANCIAL STATEMENTS as of February 29, 2008 (continued)

 

NOTE 13 — INFORMATION REGARDING TRADING OF ING’S U.S. MUTUAL FUNDS (continued)

 

in increased fund redemptions, reduced sale of fund shares, or other adverse consequences to ING Funds.

 

NOTE 14 — SUBSEQUENT EVENT

 

Dividends: Subsequent to February 29, 2008, the Fund paid dividends of:

 

PORTFOLIO OF INVESTMENTS

ING Global Equity Dividend and Premium Opportunity Fund

as of February 29, 2008

 

 

See Accompanying Notes to Financial Statements

PORTFOLIO OF INVESTMENTS

ING Global Equity Dividend and Premium Opportunity Fund

as of February 29, 2008 (continued)

 

 

See Accompanying Notes to Financial Statements

PORTFOLIO OF INVESTMENTS

ING Global Equity Dividend and Premium Opportunity Fund

as of February 29, 2008 (continued)

 

 

 

Gross Unrealized Appreciation		$	56,639,266
Gross Unrealized Depreciation			(202,472,494	)
Net Unrealized Depreciation		$	(145,833,228	)

 

 

Written Call Options