ing fixed income managed accounts intermediate strategy

ING Fixed Income Managed AccountsIntermediate Strategy

For financial professional use only. Not for inspection by, distribution or quotation to, the general public.

Separately Managed AccountQuarter ending March 31, 2012

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CAID #2324

FOR FINANCIAL PROFESSIONAL USE ONLY. Not for inspection by, distribution or quotation to, the general public. 2

Bank of America Corporation (“Bank of America”) is a financial holding company that, through its subsidiaries and affiliated companies, provides banking and investment products and other financial services .

Merrill Lynch, Pierce, Fenner & Smith Incorporated is a wholly-owned subsidiary of Bank of America Corporation, and a registered broker-dealer and member of FINRA and SIPC.

Investment products provided by Merrill Lynch, Pierce, Fenner & Smith, Incorporated:

The views and opinions expressed in this presentation are not necessarily those of Bank of America Corporation; Merrill Lynch, Pierce, Fenner & Smith Incorporated; or any affiliates.

Nothing discussed or suggested in these materials should be construed as permission to supersede or circumvent any Bank of America, Merrill Lynch, Pierce, Fenner & Smith Incorporated policies, procedures, rules, and guidelines.

Merrill Lynch, Pierce, Fenner & Smith Incorporated are not tax or legal advisors. Clients should consult a personal tax or legal advisor prior to making any tax or legal related investment decisions.

For Investment Professional Use Only

Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value


Managed Accounts Fixed Income Investment Team

Karen CronkSenior Portfolio [email protected]

Jeff BoundyPortfolio [email protected]

Toby TolinoPortfolio [email protected]

Richard C. KilbrideHead of Fixed Income for Managed Accounts

[email protected]

Portfolio Managers

Rachael CamargoPortfolio [email protected]

Portfolio Specialist

David HandyCredit [email protected]

Analyst


Intermediate SMA Investment Objectives

Objective

– Seeks to provide total return while preserving capital, largely through the use of Treasuries, Agencies and Corporate credit securities of 1-10 year maturities

Strategy

– Diversified top-down, theme driven investment approach: returns come from numerous sources Interest rate and yield curve positioning Sector allocations Relative value security analysis Proprietary research generates original ideas

– Buy Discipline Top-down bond selection based on economic and interest rate outlook Holdings adjusted as outlook is revisited and environment changes

– Sell Discipline Evaluate credit quality continuously and sell deteriorating credits Sell bonds that exceed their relative value Sell bonds that are no longer consistent with the macro outlook

Risk Control– Measured portfolio duration shifts based on long-term economic outlook– Preference for liquid bonds from well-established corporations and government agencies– Little exposure to extremely rate-sensitive bonds with high durations or structured products


Investment Grade Investment Process

Formation of Market View

Economic Analysis and Understanding

Portfolio Construction

On

-go

ing

Eva

lua

tion

of

Re

lativ

e V

alu

e a

nd

Ma

cro

Vie

ws

Interest Rates, Yield Curve and Sector Outlook

Yield Curve Positioning

Sector Allocation

Industry Selection

Relative Value/ Fundamental Research

Specific Security Selection


Investment Process Critical Decisions

Interest rate trend determines duration

– Strongest driver of investment grade fixed income performance

– Measured portfolio maturity shifts based on long-term economic outlook

Yield curve

– Strategy based on expectations of government policy, economic growth and inflation

– Portfolio holdings are adjusted based on anticipated yield curve shape

Sector

– Relative value assessments: across governments, mortgages and corporates

– Provides opportunity to lower risk through diversification and increases total return potential

Industry

– Industry financial outlook relative to overall macroeconomic outlook

– Stack ranking firms within industries

Issue selection

– Credit worthiness and relative value

– Process largely limited liquid investment grade bonds


Interest Rate Trend Determines Duration

Measured maturity/duration shifts based on long-term economic outlook

Limit maturity/duration shifts to generally to 20% of client benchmark

Weekly formal evaluation of investment outlook

Disciplined Interest Rate Anticipation

Financial EconomyReal Economy

Investment Outlook

Negative Neutral Positive

> Growth

> Savings

> Fiscal Policy

> Demographics

> Real Rates

> Capital Flows

> Inflation

> Monetary Policy

> Rates higher > Rates stable > Rates lower

Duration Range

-20% +20%Benchmark Duration


The Active Duration Decision

3.0

3.5

4.0

4.5

Dec-00 Jan-01 Feb-01 Mar-01 Apr-01 May-01 Jun-01 Jul-01 Aug-01 Sep-01 Oct-01 Nov-01 Dec-01

Du

rati

on

(ye

ars)

4.0%

4.5%

5.0%

5.5%

Yie

ld

ING duration

Benchmark duration

10-Yr T-note yield

ING Investment Management Duration: Representative account in ING Intermediate Fixed Income Strategy.Benchmark Duration: Lehman Intermediate Government Corporate Index (constant at 3.7 years). Data source: Bloomberg. We deem this to be a reliable source but accuracy and completeness cannot be guaranteed. Data in this chart are as of December 31, 2001. This portfolio was selected as a representative portfolio in order to demonstrate our investment process. ING Investment Management did not use performance-based criteria in its selection. Duration is dynamic and subject to change at any time. The duration variations of other client portfolios may differ from the portfolio illustrated here. Past performance is not indicative of future results.

(left scale)

(left scale)

(right scale)

Profit from changes in market interest rates–examples of duration adjustments

Historical example indicative of investment process that seeks total return from anticipating interest rate environment.

ING Investment Management added interest rate risk (duration) early in the period and took off the trade later in the period.


Yield Curve Decision

Implementation of duration

Yield curve strategy based on fundamental outlook for:

– Federal Reserve Policy

– Treasury Supply

– Economic Growth

– Inflation

“Bullet” structures generally have a yield advantage over “barbell” or “blanket” structures

Source of performance data: Bloomberg, Inc; used with permission. We deem this to be a reliable source but cannot guarantee accuracy and completeness. Past performance is no guarantee of future results. This has been prepared by ING Investment Management for informational purposes. Nothing contained herein should be construed as (i) an offer to sell or solicitation of an offer to buy any security or (ii) a recommendation as to the advisability of investing in, purchasing or selling any security. Any opinions expressed herein reflect our judgment at this date and are subject to change.

Cost of Barbell is a lower yield

Total returns for six month period 12/04 – 6/05: bullet two-year U.S. Treasury = 0.723%Barbelled identical duration combination of three-month bill and five-year U.S. Treasury = 1.26%, or 0.54% better.

In a flattening, Barbell can outperform

Yie

ld %

Average Portfolio Maturity(years)

6/05

12/04

Yie

ld %

Average Portfolio Maturity(years)

X Barbell

Bullet

For Illustrative Purposes Only


Sector Decision

High quality sectors

– U.S. Treasuries

– Federal agencies

– Investment-grade corporates

– Mortgage-backed

– Asset-backed

Multiple sector approach

– Lowers risk through diversification

– Increases total return potential

Representative Sector Allocation* (%)

*The actual asset allocation of portfolios may vary depending on investor objectives, respective strategy and market conditions

Cash -7%

Treasury -23%

Agency -17%

Corporates -53%

March 2012Cash -

6%

Treasury -26%

Agency -11%

Corporates -57%

March 2011

Cash -10%

Treasury -15%

Agency -18%

Corporates -57%

March 2010


Industry Selection

Assessment of industry fundamentals based on economic environment and industry strength

– Some industries can be significant holdings, while others may be totally avoided

Stack-ranking approach

– Bias to selecting strongest players in each industry

– May drill deeper down in strongest industries

– Function of economic and industry outlook

We believe the above named issuers are examples of the strongest companies in their particular industry based on their fundamentals of financial strength. Nothing contained herein should be construed as (i) an offer to sell or solicitation of an offer to buy any security or (ii) a recommendation as to the advisability of investing in, purchasing or selling any security. Any opinions expressed herein reflect our judgment at this date and are subject to change. These holdings may not reflect the actual holdings of other Fixed Income portfolios managed by ING Investment Management . Past performance is not indicative of future results.


ModelPortfolio

Seasoned Judgment

Issue Selection

Relative ValueScreening

Fundamental Research

Joint Review

Screening Procedures

Process for All Investment Grade Strategies

Bond market is OTC: efficient execution

can add value

Systems, Compliance and Technology


Managed Account Customization

To the extent that we can, we want our investment approach to address a clients risk tolerances and reward expectations

– Distinct from only an “off the shelf” product approach, we want to customize a solution for a “consultative sale” if practical

Typically, these approaches work by constraining our “one contract” platform product to the specific requirements desired

The guidelines can be constrained to fit specific investment needs; for example:– Short –Term MA

Shorter bond maturities held in the portfolio that target a duration range of 1 and 5 years

– Government Only MA

Excludes all corporate credit within the portfolio and has an average AAA quality rating


Model Portfolio as of March 31, 2012

ISSUE CPN MTY YTM MKT VALUE RTG ISSUE CPN MTY YTM MKT VALUE RTG

US TREASURY N/B 0.880 11/30/2016 0.94 105,038,628 AAA UNITED PARCEL SERVICE 3.130 1/15/2021 2.49 12,458,752 AA-

FANNIE MAE 0.380 3/16/2015 0.61 87,189,215 AA+ CATERPILLAR INC 1.380 5/27/2014 0.63 12,456,755 A

CASH 3/31/2012 39,382,000 NR WALT DISNEY COMPANY/THE 1.130 2/15/2017 1.40 12,438,005 A

US TREASURY N/B 0.250 12/15/2014 0.46 37,067,004 AAA AMERICAN EXPRESS CREDIT 2.380 3/24/2017 2.26 12,431,308 A-

GENERAL ELEC CAP CORP 4.380 9/16/2020 3.57 18,962,944 AA CISCO SYSTEMS INC 4.950 2/15/2019 2.33 12,428,318 A+

PEPSICO INC 5.000 6/1/2018 2.03 18,644,662 A TOYOTA MOTOR CREDIT CORP 2.050 1/12/2017 1.64 12,414,497 A+

FANNIE MAE 1.630 10/26/2015 0.80 18,566,754 AA+ TRANSOCEAN INC 4.950 11/15/2015 2.77 12,411,307 BBB-

NOVARTIS CAPITAL CORP 2.900 4/24/2015 0.77 18,501,610 AA- 3M COMPANY 1.380 9/29/2016 1.20 12,405,010 AA-

JPMORGAN CHASE & CO 5.130 9/15/2014 2.06 18,300,310 A DIRECTV HOLDINGS/FING 3.550 3/15/2015 1.57 12,321,850 BBB-

AMERICAN INTL GROUP 5.850 1/16/2018 4.10 12,919,896 BBB+ BERKSHIRE HATHAWAY FIN 5.400 5/15/2018 2.16 12,312,127 AA-

MERRILL LYNCH & CO 6.880 4/25/2018 4.70 12,796,342 A- VERIZON COMMUNICATIONS 3.500 11/1/2021 3.14 12,236,084 A-

BANK OF NOVA SCOTIA 2.550 1/12/2017 1.87 12,535,929 AA- VODAFONE GROUP PLC 4.150 6/10/2014 0.95 12,210,892 A-

TIME WARNER CABLE INC 5.000 2/1/2020 3.39 12,509,700 BBB NEWMONT MINING CORP 3.500 3/15/2022 3.81 12,054,302 BBB+

GOLDMAN SACHS GROUP INC 1.070 9/29/2014 2.98 12,483,444 A AT&T INC 1.600 2/15/2017 1.63 11,947,053 A-

ROYAL BANK OF CANADA 1.150 3/13/2015 1.15 12,472,247 AA- TOTAL 2.14 4.25 1.50 622,359,163 AA-

INTEL CORP 1.950 10/1/2016 1.28 12,462,219 A+ BC INT GOV/CREDIT 3.05 4.34 1.45 AA1/AA2

This is a sample Intermediate Fixed Income portfolio. One account was selected by our portfolio managers as a representative account that best represents this investment style. ING Investment Management did not use performance-based criteria in determining which account to include. These holdings represent only a sample portfolio and may not reflect the actual holdings of other Intermediate Fixed Income portfolios managed by ING Investment Management . The performance of other Intermediate Fixed Income portfolios may be better or worse than that of this sample portfolio. Past performance is not indicative of future results.


Portfolio Characteristics as of March 31, 2012

*For information purposes only and not a recommendation to purchase or sell any security.It should not be assumed that securities held in the future will be profitable or will equal the performance of the securities mentioned herein. One account was selected by our portfolio managers as a representative account that generally best represents this investment management style. Actual holdings of other Intermediate Fixed Income portfolios managed by ING Investment Management may differ. ING Investment Management did not use performance-based criteria in determining which account to include. The performance of other Intermediate Fixed Income portfolios may be better or worse than that of this sample portfolio. The information contained herein is as of the above date, unless otherwise noted.

Portfolio Characteristics Portfolio Index

Average Maturity 4.3 4.3Average Duration 3.92 yrs 3.95 yrsYield to Maturity 1.5% 1.5%Average Coupon 2.1% 3.1%

Sector Allocation Portfolio Index

CASH 6% 0%TREASURY 23% 55%AGENCY 17% 13%CORP 54% 28%MTG 0% 0%SUPRA 0% 4%

Ten Largest Holdings(3) Coupon % Maturity Weight

US TREASURY N/B 0.88 11/30/2016 17.0%

FANNIE MAE 0.38 3/16/2015 14.0%

CASH 0.00 7.0%

US TREASURY N/B 0.25 12/15/2014 6.0%

GENERAL ELEC CAP CORP 4.38 9/16/2020 3.0%

FANNIE MAE 1.63 10/26/2015 3.0%

PEPSICO INC 5.00 6/1/2018 3.0%

SANOFI 2.63 3/29/2016 3.0%

JPMORGAN CHASE & CO 5.13 9/15/2014 3.0%

AMERICAN INTL GROUP 5.85 1/16/2018 2.0%


* Preliminary returns. Index= Merrill Lynch Corp & Govt 1-10 Yr. One cannot invest directly in an index.The performance information shown is calculated by Merrill Lynch and taken unmodified from the Merrill Consults profile for ING Intermediate Fixed Income. Gross returns are presented before the wrap fee is deducted. Returns include the reinvestment of income. Net performance is shown after the this strategy in compliance with GIPS standards. Index source: FactSet. Index return source: Factset. We deem this to be a reliable source, but accuracy and completeness cannot be guaranteed. Gross of Fee returns are “Pure Gross” and do not reflect the deduction of transaction costs associated with investment. ING Investment Management calculates its own performance results for guarantee accuracy and completeness. Indices are unmanaged and one cannot invest directly in an index.

Past performance does not guarantee or indicate future results.

Annualized Total Returns(1)

Annual Returns

ING Intermediate Fixed Income Merrill Lynch as of March 31, 2012

ING IFI(Gross)

ING IFI(Net) Index

2011 5.3% 4.0% 5.9%

2010 5.6% 2.4% 6.0%

2009 4.7% 3.4% 5.7%

2008 5.6% 4.3% 4.1%

2007 8.2% 6.9% 7.4%

2006 4.1% 2.8% 4.1%

2005 2.5% 1.2% 1.6%

2004 2.5% 1.2% 2.9%

2003 4.1% 2.8% 4.2%

2002 10.6% 9.3% 9.7%

1.1% 1.1%

6.1%

5.7% 5.8%

5.4% 5.4%

0.8% 0.8%

4.8%

4.4% 4.5%

4.1% 4.1%

0.7% 0.7%

6.2% 6.1%

5.6%

5.2% 5.2%

0%

1%

2%

3%

4%

5%

6%

7%

QTD YTD 1 year 3 Year 5 Year 7 Year 10 Year

Gross Net Style Index*


Appendix


Richard C. KilbrideHead of Fixed Income for Managed AccountsYears of investment experience: 32Rick Kilbride joined ING Investment Management’s predecessor firm Furman Selz in 2001 as head of fixed income. Upon integration into ING Investment Management he assumed responsibility for the investment grade managed account business. Previously, he spent 12 years at Merrill Lynch, most recently leading an investment team managing leveraged loans and high-yield bonds. He also was the London-based managing director of Merrill’s global institutional separate account fixed income portfolio management business. Before that, he was responsible for Merrill's initial efforts to build a U.S. institutional fixed income separate account presence, served as chief investment strategist of its captive insurance company, and was the asset-liability manager of Merrill Lynch Bank and Trust. He served on the board of directors of that bank for five years. Previously, he was a vice president in Paine Webber's institutional fixed income sales and trading business and began his career as an analyst on General Motors’ New York treasury staff. Rick holds a B.A. from Colorado College (where he has also taught) and an M.B.A. from the Amos Tuck School at Dartmouth College. He is a member of the CFA Institute and the New York Society of Security Analysts.

Karen CronkSenior Portfolio ManagerYears of investment experience: 27

Karen Cronk is a Senior Portfolio Manager providing leadership in the determination of portfolio strategy and structure. She is also responsible for implementing the portfolio construction and trading strategies. Additionally, she manages the fixed income group’s analytics and modeling. Karen joined ING Investment Management’s predecessor firm in February of 1995. Previously, Karen was a senior portfolio manager at Bankers Trust with responsibility for managing short-term portfolios, focusing on the goals and guidelines of institutional accounts, including pension plans, corporate treasuries, endowments and public funds. While at Bankers Trust, Karen was a leader in the design and development of a customized client reporting system. Previously, she was the operations manager of a short-term management group at Chemical Bank. Karen is a graduate of Villanova University with a B.A. in economics, and has an M.B.A. in finance from New York University.

Fixed Income Investment Management Team


Portfolio ManagerYears of investment experience: 34

Jeff Boundy

Portfolio ManagerYears of investment experience: 12

Jeff Boundy is Portfolio Manager with the Fixed Income Managed Accounts team, managing the municipal bond sectors, a role he has held since 2004. The strategies include 13 state-specific strategies, 23 state preferred programs as well as a national approach. Jeff has over 31 years of experience in equity and fixed income trading and operations. Since joining ING Investment Management’ predecessor firm in 1996, he has held a variety of trading and operational responsibilities. Previously, he was with Morgan Stanley Asset Management. He received a B.B.A. from Baruch College.

Toby Tolino

Toby Tolino is a Portfolio Manager in the Fixed Income Managed Account group with trading and municipal portfolio management responsibilities. Toby joined ING Investment Management in 2000 and has experience in trading, operations and middle office management. In his prior role, Toby managed a team of Senior Portfolio Management Assistants (PMAs) supporting more than ten Portfolio Managers who ran portfolios in all asset classes. He was also responsible for ING Investment Management’s outsourcing relationship for the SMA back office operations. Prior to heading Middle Office, Toby led the NY Fixed Income PMA team and has served in various other operational roles. Toby currently attends CUNY and holds the Series 7 license.



Credit AnalystYears of investment experience: 6

David Handy

David Handy joined ING Investment Management in 2010 as a Credit Analyst for the Fixed Income Managed Accounts team. David is responsible for credit monitoring, fundamental analysis and quantitative measurement for investment grade taxable bonds. He also performs risk analytics and portfolio modeling. Previously David was a portfolio analyst at Citi Global Wealth Management in the Strategic Asset Allocation group and was responsible for portfolio modeling and risk analysis. David also worked at the US Department of Treasury for the Trouble Asset Relief Program and also at the Office of Economic Policy. David holds a B.A. in mathematics and economics from Kenyon College and an M.B.A. in quantitative finance from New York University. He has passed the three levels of the CFA exam, is a member of the CFA Institute and the New York Society of Analysts.

Portfolio SpecialistYears of investment experience: 11


Rachael Camargo

Rachael Camargo is a Portfolio Specialist within ING Investment Management’s Multi-Asset Strategies and Solutions team. She is responsible for driving asset growth and retention activities for traditional asset allocation products, portable alpha strategies and customized solutions with ING’s distribution, external parties and key clients. Rachael manages the business and commercial aspects of the investment team in partnership with product management, sales and client service groups. Previously, Rachael was responsible for the firm’s fundamental equity strategies, including Large-Cap Core, 130/30, and sector-specific portfolios such as global natural resources, technology and financials. Her experience also extends to closed-end funds from concept through launch. Rachael joined ING Investment Management in 2001. Prior to joining ING, she worked at Grey Global Group and Wechsler Ross & Partners. She received a B.F.A. from Carnegie Mellon University and an M.B.A. from New York University’s Stern School of Business. Additionally, she holds the Series 7 and 66 licenses with FINRA.


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This information is proprietary and cannot be reproduced or distributed. Certain information may be received from sources ING Investment Management (“ING IM”) considers reliable; ING IM does not represent that such information is accurate or complete. Certain statements contained herein may constitute "projections," "forecasts" and other "forward-looking statements" which do not reflect actual results and are based primarily upon applying retroactively a hypothetical set of assumptions to certain historical financial data. Actual results, performance or events may differ materially from those in such statements due to, among other things, (i) general economic conditions, in particular economic conditions in ING IM's core markets, (ii) performance of financial markets, including emerging markets, (iii) the frequency and severity of insured loss events, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) interest rate levels, (vii) currency exchange rates (viii) general competitive factors, (ix) changes in laws and regulations, (x) changes in the policies of governments and/or regulatory authorities, (xi) conclusions with regard to purchase accounting assumptions and methodologies, (xii) ING IM's ability to achieve projected operational synergies. Any opinions, projections, forecasts and forward looking statements presented herein are valid only as of the date of this document and are subject to change. Nothing contained herein should be construed as (i) an offer to buy any security or (ii) a recommendation as to the advisability of investing in, purchasing or selling any security. ING IM assumes no obligation to update any forward-looking information.

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