ING FUNDS TRUST, N-1A, 1998-07-24

ING FUNDS TRUST
N-1A, 1998-07-24

Previous: ING FUNDS TRUST, N-8A, 1998-07-24

Next: KANAKARIS COMMUNICATIONS INC, SB-2, 1998-07-24

<PAGE> 1
As Filed with the Securities and Exchange Commission on July 23, 1998

Registration Nos. 33- and 811-

================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

----------------------

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/

Pre-Effective Amendment No. / /
--

Post-Effective Amendment No. / /
--

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/

Amendment No. / /

ING FUNDS TRUST
(Exact Name of Registrant as Specified in Charter)

237 Park Avenue, 9th Floor
New York, NY 10017

------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (800) 221-3780

Steven R. Howard, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
(Name and Address of Agent for Service)

Approximate date of proposed public offering: As soon as practicable after
the effective date of the Registration Statement.

It is proposed that this filing will become effective (check appropriate
box):

/ / Immediately upon filing pursuant to / / One (date) pursuant to
paragraph (b) paragraph (b)

/ / 60 days after filing pursuant to / / One (date) pursuant to
paragraph (a)(1) paragraph (a)(1)

/ / 75 days after filing pursuant to / / On (date) pursuant to
paragraph (a)(2) paragraph (a)(2) of Rule 485.

<PAGE> 2
If appropriate, check the following box:

[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

Title of Securities Being Registered: Shares of Beneficial Interest, par
value $0.001.

---------------

The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

- --------------------------------------------------------------------------------

Total Pages: ____
Exhibit Index: ____

<PAGE> 3
ING FUNDS TRUST

Registration Statement on Form N-1A

CROSS REFERENCE SHEET
Pursuant to Rule 495(a)
under the Securities Act of 1933

N-1A Item No. Location
- ------------- --------

Part A Prospectus Caption
- ------ ------------------

Item 1. Cover Page .............................. Cover Page

Item 2. Synopsis ................................ Fund Expenses: Fee Table

Item 3. Condensed Financial
Information ............................. Not Applicable

Item 4. General Description of
Registrant .............................. The Funds; The Investment
Policies and Practices of
the Funds; Description of
Securities and Investment
Practices; Investment
Restrictions

Item 5. Management of the Fund .................. Management of the Funds;
Purchase of Fund Shares;
Other Information

Item 5A. Management's Discussion of Fund
Performance ............................. Not Applicable

Item 6. Capital Stock and Other
Securities .............................. Dividends, Distributions
and Federal Income Tax;
Other Information

Item 7. Purchase of Securities
Being Offered ........................... Fund Share Valuation;
Pricing of Fund Shares;
Purchase of Shares;
Exchange of Fund Shares

Item 8. Redemption or Repurchase ................ Redemption of Fund Shares;
Redemptions (Part B)

Item 9. Legal Proceedings ....................... Not Applicable
<PAGE> 4
2

Part B Statement of Additional
- ------ Information Caption
-----------------------

Item 10. Cover Page...................... Cover Page

Item 11. Table of Contents............... Table of Contents

Item 12. General Information
and History.................... Not Applicable

Item 13. Investment Objective and
Policies....................... Investment Policies;
Investment Restrictions

Item 14. Management of the Registrant.... Management

Item 15. Control Persons and
Principal Holders of
Securities..................... Management

Item 16. Investment Advisory and
Other Services................. Management; Other
Information: Custodian,
Transfer Agent and Dividend
Disbursing Agent; Independent
Auditors

Item 17. Brokerage Allocation............ Portfolio Transactions

Item 18. Capital Stock and Other
Securities..................... Other Information:
Capitalization; Voting

Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered.................. Purchase of Fund Shares
(Part A); Additional Purchase
and Redemption Information;
Redemption of Fund Shares
(Part A); Determination of Net
Asset Value

Item 20. Tax Status...................... Dividends, Distributions, and
Federal Income Tax (Part A)
and Taxation (Part B)

Item 21. Underwriters.................... Management

Item 22. Calculation of Performance
Data........................... Other Information: Yields and
Performance Information
<PAGE> 5
3

Item 23. Financial Statements ............................. Not Applicable

PART C

Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of this Registration Statement.
<PAGE> 6
ING FUNDS TRUST

-----------

PROSPECTUS
SEPTEMBER __, 1998

-----------

Large Cap Growth Fund
Growth and Income Fund
Mid Cap Equity Fund
Small Cap Equity Fund

Balanced Fund

Global Brand Names Fund
International Equity Fund
Emerging Markets Equity Fund
European Equity Fund

Tax Efficient Equity Fund
ING Best Ideas Fund
Global IT Fund
Real Estate Fund
<PAGE> 7
ING FUNDS TRUST
[ADDRESS]

General & Account Information: (800) [ ]

ING MUTUAL FUNDS MANAGEMENT COMPANY--Investment Manager
("IMFC" or the "Manager")

ING FUNDS DISTRIBUTOR, INC.--Distributor and Principal Underwriter
("IFD" or the "Distributor")

This prospectus describes thirteen funds (each, a "Fund" or,
collectively, the "Funds"), managed by ING Mutual Fund Management Company, a
[Delaware] corporation. The Manager is a wholly owned subsidiary of ING Groep
N.V. ("ING Group"). The Funds and their objectives are:

Each of the Large Cap Growth Fund, Mid Cap Equity Fund, Small Cap
Equity Fund, International Equity Fund, Emerging Markets Equity Fund, European
Equity Fund, ING Best Ideas Fund and Global IT Fund seek to provide investors
with long-term capital appreciation.

Each of the Growth and Income Fund, the Balanced Fund, the Global Brand
Names Fund and the Real Estate Fund seek to provide investors with total return.

The Tax Efficient Equity Fund seeks to provide taxable investors with a
total return on an after-tax basis.

There can be no assurance that the Funds' investment objectives will be
achieved.

<TABLE>
<CAPTION>
Money Market Funds Fixed Income Funds
------------------ ------------------
<S> <C>
U.S. Treasury Money Market Fund Intermediate Corporate Bond Fund
Money Market Fund High Yield Bond Fund
International Fixed Income Fund
Federal Tax-Exempt Bond Fund
Mortgage Income Fund
</TABLE>

Each Fund offers four different classes of shares--Class A shares,
Class B shares, Class C shares and Class X Shares. The different classes of
shares represent investments in the same portfolio of securities but are subject
to different sales charges and expenses. These alternatives permit investors to
<PAGE> 8
choose the most beneficial method of purchasing shares given the amount of the
purchase, the length of time the investor expects to hold shares, and other
circumstances. When you purchase shares of the Funds, be sure to specify the
class of shares of the Fund(s) you wish to purchase. If you do not choose, your
investment will be made in the Class A shares. See "Purchase of Fund Shares."

SHARES OF THE TRUST ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY ING GROUP OR ITS AFFILIATES, AND ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY AND MAY INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS
OF PRINCIPAL. THE NET ASSET VALUE OF THE FUNDS WILL FLUCTUATE FROM TIME TO TIME.

This Prospectus sets forth concisely the information a prospective
investor should know before investing in the Funds and should be read and
retained for information about each Fund.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

September __, 1998
<PAGE> 9
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
HIGHLIGHTS.........................................................................1

FUND EXPENSES......................................................................7

THE FUNDS.........................................................................24

THE INVESTMENT POLICIES AND PRACTICES OF THE FUNDS................................25

MANAGEMENT OF THE FUNDS...........................................................30

FUND SHARE VALUATION..............................................................43

PRICING OF FUND SHARES............................................................43

MINIMUM PURCHASE REQUIREMENTS.....................................................43

PURCHASE OF FUND SHARES...........................................................44

INDIVIDUAL RETIREMENT ACCOUNTS....................................................52

REDEMPTION OF FUND SHARES.........................................................52

EXCHANGE OF FUND SHARES...........................................................56

DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAX...................................59

DESCRIPTION OF SECURITIES AND INVESTMENT PRACTICES................................61

INVESTMENT RESTRICTIONS...........................................................74

RISKS OF INVESTING IN THE FUNDS...................................................74

OTHER INFORMATION.................................................................79
</TABLE>
<PAGE> 10
HIGHLIGHTS

INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS

This Prospectus describes thirteen funds managed by IMFC. Each Fund has
a distinct investment objective and policies. There can be no assurance that the
Funds' investment objectives will be achieved.

THE FUNDS:

Mid-Cap Equity Fund. The Mid-Cap Equity Fund seeks to provide investors
with long-term capital appreciation. Under normal market conditions, the Fund
will invest at least 65% of its total assets in equity securities of
medium-sized companies (i.e., companies with market capitalizations falling
within the Russell Mid Cap Index at the time of acquisition). Such companies are
typically well established but have not reached full maturity, and may offer
significant growth potential.

Balanced Fund. The Balanced Fund seeks to provide investors with high
total return. The Fund invests in a combination of common stocks and fixed
income securities. The Fund primarily invests in large capitalization equity
securities, intermediate-maturity fixed income securities and money market
instruments.

The average maturity of the fixed income securities in the Fund will,
under normal circumstances, be approximately five years, although this will vary
with changing market conditions.

Global Brand Names Fund. The Global Brand Names Fund is a
non-diversified fund that seeks to provide investors with long-term total
return. Under normal conditions, the Fund will invest at least 65% of its total
assets globally in equity securities of companies, which, in the Sub-Adviser's
opinion, have well established brand names or are recognized globally. The
companies in which the Fund invests either have leading market positions or, in
the Sub-Adviser's opinion have the potential to achieve leading market positions
in the foreseeable future.
<PAGE> 11
International Equity Fund. The International Equity Fund seeks to
provide investors with long-term capital appreciation. Under normal
circumstances, at least 65% of the Fund's assets will be invested in equity
securities of issuers organized or having a majority of their assets in or
deriving a majority of their operating income in at least seven different
countries, outside of the United States.

European Equity Fund. The European Equity Fund seeks to provide
investors with long-term capital appreciation. Under normal market conditions,
the Fund will invest at least 65% of its total assets in the equity securities
of European issuers. The Fund's Sub-Adviser considers European issuers to be
companies the securities of which are principally traded in the European capital
markets; that derive at least 50% of their total revenue from either goods
produced or services rendered in countries located in Europe, regardless of
where the securities of such companies are principally traded; or that are
organized under the laws of and have a principal office in a European country.

Tax Efficient Equity Fund. The Tax Efficient Equity Fund seeks to
provide taxable investors with a high total return on an after-tax basis. The
Fund will attempt to achieve this objective by seeking to provide a high
long-term after-tax total return through managing its portfolio in a manner that
will defer the realization of accrued capital gains and minimize dividend
income. In attempting to achieve its investment objective, the Fund under normal
circumstances will invest at least 80% of its net assets in a widely diversified
portfolio of equity securities and instruments whose returns depend upon stock
market prices. The Fund may invest up to 10% of its total assets in foreign
securities.

ING Best Ideas Fund. The ING Best Ideas Fund is a non-diversified fund
that seeks long-term capital appreciation. Under normal conditions, the Fund
will invest at least 65% of its total assets in 30 to 40 equity securities.

Global IT Fund. The Global IT Fund seeks to provide investors with
long-term capital appreciation. Under normal market conditions, the Fund will
invest at least 65% of its total assets in the common stocks of informational
technology companies. Informational technology companies are those companies
with primary business operations in either the information technology or
software industries, science and service related areas.

2
<PAGE> 12
Real Estate Fund. The Real Estate Fund is a non-diversified Fund that
seeks to provide investors with long-term total return and income as a secondary
consideration. Under normal market conditions, the Fund will invest at least 65%
of its total assets in the equity securities of issuers that are principally
engaged in the real estate industry.

All Funds

All Funds may also use various investment strategies and techniques
when a Sub-Adviser determines that such use is appropriate in an effort to meet
the Fund's objective.

For additional information concerning the investment policies,
practices and risk consideration of the Funds, see "The Investment Policies and
Practices of the Funds" and "Risks of Investing in the Funds" in this
Prospectus.

RISKS OF INVESTING IN THE FUNDS

General. The price per share of each Fund will fluctuate with changes
in value of the investments held by such Fund. Additionally, there can be no
assurance that the Funds will achieve their investment objectives or be
successful in preventing or minimizing the risk of loss that is inherent in
investing in particular types of investment products.

Equity Securities. Investments in equity securities in general are
subject to market risks that may cause their prices to fluctuate over time. The
value of convertible equity securities is also affected by prevailing interest
rates, the credit quality of the issuer and any call provisions. Fluctuations in
the value of equity securities in which a Fund invests will cause the net asset
value of the Funds to fluctuate.

Investments in mid- and small-capitalization companies involve greater
risk than is customarily associated with larger, more established companies due
to the greater business risks of small size, limited markets and financial
resources, narrow product lines and the frequent lack of depth of management.
The securities of smaller companies are often traded over-the-counter and may
not be traded in volumes typical on a national securities exchange.
Consequently, the securities of smaller companies may have limited market
stability and may be subject to more abrupt or erratic market movements than
securities of larger, more established growth companies or the market averages
in general.

Investment in issuers that are principally engaged in real estate,
including REITs, may subject a Fund to risks similar to those associated with
the direct ownership of real estate (in addition to securities market risks).
These companies are sensitive to factors such as changes in real estate values
and property taxes, interest rates, cash flow of underlying real estate assets,
supply and demand, and the management skill and creditworthiness of the issuer.
REITs may also be affect by tax and regulatory requirements.

3
<PAGE> 13
Foreign Securities. Investments in securities of issuers in any foreign
country involve special risk considerations not typically associated with
investing in U.S. companies. These risks are often heightened for investments in
developing or emerging markets.

Non-diversified investment companies. The Global Brand Names Fund, the
ING Best Ideas Fund and the Real Estate Fund are classified as non-diversified
investment companies under the Investment Company Act of 1940 (the "1940 Act"),
which means that each Fund is not limited by the 1940 Act in the proportion of
its assets that it may invest in the obligations of a single issuer. The
investment of a large percentage of a Fund's assets in the securities of a small
number of issuers may cause that Fund's share price to fluctuate more than that
of a diversified investment company.

Concentration. The Global IT Fund and Real Estate Fund "concentrate"
(for purposes of the 1940 Act) their assets in securities related to a
particular sector or industry. As a result, each Fund may be subject to greater
market fluctuation than a fund which has securities representing a broader range
of investment alternatives.

For additional information concerning the risks of investing in the
Funds, see "Risks of Investing in the Funds" in this Prospectus.

MANAGEMENT OF THE FUNDS

As Manager of the Funds, IMFC has overall responsibility, subject to
the supervision of the Board of Trustees, for engaging sub-advisers and for
monitoring and evaluating the management of the assets of each Fund by the
Sub-Advisers. IMFC also provides certain administrative services necessary for
the Funds' operations including: (i) coordination of the services performed by
the Funds' transfer agent, custodian, independent accountants and legal counsel;
regulatory compliance, including the compilation of information for documents
such as reports to, and filings with, the SEC and state securities commissions;
and preparation of proxy statements and shareholder reports for the Funds; (ii)
general supervision relative to the compilation of data required for the
preparation of periodic reports distributed to the Funds' Officers and Board of
Trustees; and (iii) furnishing office space and certain facilities required for
conducting the business of the Funds. Pursuant to a Management Agreement, the
Trust currently pays the Manager for its services a monthly fee at an annual
rate. See "Fund Expenses--Fee Table" and "Management of the Trust--The Manager"
in this Prospectus. All of the Sub-Advisers are subsidiaries of ING Group, are
affiliates of each other, the Manager and Distributor.

Baring Asset Management Limited ("BAM") serves as sub-adviser to the
Large Cap Growth Fund. Furman Selz Capital Management ("FSCM") serves as
sub-adviser to the Mid-Cap Equity Fund, Small Cap Equity Fund, Balanced Fund and
ING Best Ideas Fund. ING Investment Management LLC, ("IIM") serves as
sub-adviser to Growth and Income Fund. ING Investment Management Advisors,
("IIMA") serves as sub-adviser to the European Equity Fund, Global Brand Names
Fund, Global IT Fund and Real Estate Fund. Delta Asset Management ("DELTA"), a
division of FSCM, serves as sub-adviser to the Tax Efficient Equity Fund. Baring
International Investment Limited ("BIIL") serves as the sub-adviser to the
International Equity Fund and the Emerging Markets Equity Fund. BAM, BIIL, FSCM,
Delta, IIMA and IIM may be referred to herein individually as a "Sub-Adviser"
and collectively as the "Sub-Advisers." For

4
<PAGE> 14
their services, the Sub-Advisers receive a fee based on the respective Funds'
average day net assets. See "Management of the Funds--the Sub-Advisers" in this
Prospectus.

The Sub-Advisers have full investment discretion and make all
determinations with respect to the investment of each Fund's assets and the
purchase and sale of portfolio securities consistent with the investment
objectives, policies, and restrictions for such Fund. The Sub-Advisers are
compensated by the Manager (and not the Trust).

The Distributor distributes the Funds' shares and may be reimbursed for
certain of its distribution-related expenses. First Data Investors Services
Group acts as the Funds' Transfer Agent and, pursuant to an agreement with IMFC,
the Funds' fund accounting agent.

CLASS SHARES

The Funds offer investors a choice among multiple classes of shares
with different sales charges and expenses. These alternatives permit choosing
the most beneficial method of purchasing shares given the amount of the
purchase, the length of time the investor expects to hold the shares, and other
circumstances.

CLASS A SHARES. Generally, an investor who purchases Class A shares
pays a 5.5% sales charge at the time of purchase. As a result, Class A shares
are not subject to any charges when they are redeemed (except for sales at net
asset value in excess of $1 million which may be subject to a contingent
deferred sales charge). The initial sales charge may be reduced or waived for
certain purchases. Class A shares are also subject to an annual Rule 12b-1 fee
of 0.50% of average daily net assets attributable to Class A shares. This fee is
lower than the other classes having Rule 12b-1 fees and therefore Class A shares
have lower expenses and pay higher dividends. See "Purchase of Fund
Shares--Class A Shares."

CLASS B SHARES. Class B Shares are sold without an initial sales
charge, but are subject to a contingent deferred sales charge of 5.00% if
redeemed within [ ] years of purchase, with declining charges for redemptions
thereafter up to [ ] years after purchase. Class B shares are also subject to a
higher annual Rule 12b-1 fee than Class A shares--1.00% of the Fund's average
daily net assets attributable to Class B shares. However, after [ ] years, Class
B shares automatically will be converted to Class A shares at no charge to the
investor, resulting in a lower Rule 12b-1 fee thereafter. Class B shares provide
the benefit of putting all dollars to work from the time of investment, but will
have a higher expense ratio and pay lower dividends than Class A shares due to
the higher Rule 12b-1 fee and any other class specific expenses. See "Purchase
of Fund Shares--Class B and X Shares."

CLASS C SHARES. Class C shares are sold without an initial sales
charge, are subject to a higher annual Rule 12b-1 fee than the Class A
shares--1.00% of the Fund's average daily net assets attributable to Class C
shares. Class C Shares provide the benefit of putting all dollars to work from
the time of investment, but will have a higher expense ratio and pay lower
dividends than Class A shares due to the higher Rule 12b-1 fee and any other
class specific expenses. While Class C shares do not convert to Class A shares,
they are subject to a lower contingent deferred sales charge (1.00%) and do not
have to be held for as long a time (one year) as Class B or X shares to avoid
paying a contingent deferred sales charge. See "Purchase of Fund Shares--Class C
Shares."

5
<PAGE> 15
CLASS X SHARES. Class X shares are sold without an initial sales
charge. In addition, investors purchasing Class X shares will receive, as a
bonus, additional shares having a value equal to 2.50% of the amount invested
("Bonus Shares"). The Distributor has undertaken to pay for Bonus Shares as part
of its services to the Funds. Shares purchased by the reinvestment of dividends
or capital gains distributions are not eligible for Bonus Shares. Class X shares
are subject to a contingent deferred sales charge of 5.00% if redeemed within
[ ] years, with declining charges for redemptions thereafter up to [ ] years
after purchase. Class X shares are also subject to a higher annual Rule 12b-1
fee than Class A shares--1.00% of the Fund's average daily net assets
attributable to Class X shares. However, after [ ] years, Class X shares
automatically will be converted to Class A shares at no charge to the investor,
resulting in a lower Rule 12b-1 fee thereafter. Class X shares provide the
benefit of putting all dollars to work from the time of investment, but will
have a higher expense ratio and pay lower dividends than Class A shares due to
the higher Rule 12b-1 fee and any other class specific expenses. See "Purchase
of Fund Shares--Class X Shares." Class X shares are currently only offered to
certain Qualified purchasers (including, but not limited to, IRAs, Roth IRAs,
Education IRAs, SEP IRAs, SIMPLE IRAs and 403(b)(7) plans).

In selecting which class of shares to purchase, you should consider,
among other things, the length of time you expect to hold your investment, the
amount of any applicable sales charge (whether imposed at the time of purchase
or redemption) and Rule 12b-1 fees, as noted above, whether you qualify for any
reduction or waiver of any applicable sales charge (e.g., if you are exempt from
the sales charge, you must invest in Class A shares), the various exchange
privileges among the different classes of shares and the fact that Class B and X
shares automatically convert to Class A shares after [___] years.

6
<PAGE> 16
FUND EXPENSES

The purpose of the following table is to assist the shareholder in
understanding the various costs and expenses that an investor in each Fund will
bear, either directly or indirectly. Each Fund's costs and expenses are based
upon estimates of the Fund's operating expenses for the Fund's first fiscal
year:

FEE TABLE

<TABLE>
<CAPTION>
Large Cap Growth Fund Growth & Income Fund
----------------------------- ---------------------------------------------------
Class A Class B Class C Class X Class A Class B Class C Class X
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on 5.50% NONE NONE NONE 5.50% NONE NONE NONE
Purchases (as a percentage of
offering price)
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering price)
Maximum Contingent Deferred Sales NONE 5.00% NONE 5.00% NONE 5.00% NONE 5.00%
Load (as a percentage of redemption
proceeds)
Redemption Fees(3) NONE NONE NONE NONE NONE NONE NONE NONE
Exchange Fees NONE NONE NONE NONE NONE NONE NONE NONE
ANNUAL FUND OPERATING EXPENSE
(as a percentage of average
net assets)
Management Fees (after waivers)*
12b-1 Fees 0.50% 1.00% 1.00% 1.00% 0.50% 1.00% 1.00% 1.00%
Other Expenses** [____]% [____]% [____]% [____]% [____]% [____]% [____]% [____]%
TOTAL PORTFOLIO OPERATING EXPENSES
(after waivers)*** [____]% [____]% [____]% [____]% [____]% [____]% [____]% [____]%
</TABLE>

- --------

(1) Under certain circumstances, purchases of Class A shares not subject to
an initial sales charge will be subject to a contingent deferred sales
charge ("CDSC") if redeemed within 12 months of the calendar month of
purchase. For an additional discussion of the Class A CDSC, see this
Prospectus under "Purchase of Fund Shares."

(2) If you purchase Class B or X shares, you do not pay an initial sales
charge but you may incur a CDSC if you redeem some or all of your Class
B or X shares before the end of the [ ] year after which you purchased
such shares. The CDSC is [ ]%, [ ]%, [ ]%, [ ]%, [ ]%, [ ] % and [ ]%
for redemptions occurring in years one through [ ], respectively. No
CDSC is charged after the [ ] year. If you purchase Class C shares, you
do not pay an initial sales charge but you may incur a CDSC if you
redeem some or all of your Class C shares within 12 months of the
calendar month of purchase. For a discussion of the Class B, X and C
CDSC, see this Prospectus under "Purchase of Fund Shares."

(3) As a result of distribution fees, a long-term investor in the Fund may
pay more than the economic equivalent of the maximum front-end sales
charge permitted by the rules of the National Association of Securities
Dealers, Inc.

* Management Fees consisting of investment advisory fees (before waivers)
would be ___% and ___%, respectively. The fee waivers reflected in the
table are voluntary and may be modified or terminated at any time
without the Funds' consent.

** Certain Service Organizations may receive fees from a Fund in amounts
up to an annual rate of [0.25%] of the daily net asset value of the
Fund shares owned by the shareholders with whom the Service
Organization has a servicing relationship.

*** Total Portfolio Operating Expenses (before waivers) would be ___% and
___%, respectively.

7
<PAGE> 17
EXPENSE EXAMPLES:

Full Redemption. You would have paid the following expenses on a $1,000
investment, assuming a hypothetical 5% annual return and full redemption of your
shares at the end of each period shown below:

<TABLE>
<CAPTION>
Large Cap Growth Fund 1 Year 3 Years
- --------------------- ------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Class X Shares

Growth & Income Fund 1 Year 3 Years
- -------------------- ------ -------
Class A Shares
Class B Shares
Class C Shares
Class X Shares
</TABLE>

No Redemption. You would have paid the following expenses on a $1,000
investment, assuming a hypothetical 5% annual return and no redemption of your
shares at the end of each period shown below:

<TABLE>
<CAPTION>
Large Cap Growth Fund 1 Year 3 Years
- --------------------- ------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Class X Shares

Growth & Income Fund Income 1 Year 3 Years
- --------------------------- ------ -------
Class A Shares
Class B Shares
Class C Shares
Class X Shares
</TABLE>

(*) Expense examples for purchase of Class X shares of the Funds
reflect the shareholder's receipt of additional "bonus shares." For a discussion
of the issuance of "bonus shares," see this Prospectus under "Purchase of Fund
Shares:
Purchase of Class X Shares."

The above tables are provided to assist you in understanding the
various costs and expenses that you would bear directly or indirectly as an
investor in the Fund(s). THE EXAMPLES PROVIDED SHOULD NOT BE CONSIDERED AS A
REPRESENTATION OF THE FUNDS' PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN. IN ADDITION, WHILE THE EXAMPLES ASSUME A 5%
ANNUAL RETURN, EACH FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN
ACTUAL RETURN THAT IS GREATER OR LESS THAN 5%.

8
<PAGE> 18
FEE TABLE

<TABLE>
<CAPTION>
Mid Cap Equity Fund Small Cap Equity Fund
----------------------------- ---------------------------------------------------
Class A Class B Class C Class X Class A Class B Class C Class X
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on 5.50% NONE NONE NONE 5.50% NONE NONE NONE
Purchases (as a percentage of
offering price)
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering price)
Maximum Contingent Deferred Sales NONE 5.00% NONE 5.00% NONE 5.00% NONE 5.00%
Load (as a percentage of redemption
proceeds)
Redemption Fees(3) NONE NONE NONE NONE NONE NONE NONE NONE
Exchange Fees NONE NONE NONE NONE NONE NONE NONE NONE
ANNUAL FUND OPERATING EXPENSE
(as a percentage of average
net assets)
Management Fees (after waivers)*
12b-1 Fees 0.50% 1.00% 1.00% 1.00% 0.50% 1.00% 1.00% 1.00%
Other Expenses** [____]% [____]% [____]% [____]% [____]% [____]% [____]% [____]%
TOTAL PORTFOLIO OPERATING EXPENSES
(after waivers)*** [____]% [____]% [____]% [____]% [____]% [____]% [____]% [____]%
</TABLE>

- --------

*** Total Portfolio Operating Expenses (before waivers) would be ___% and
___%, respectively.

9
<PAGE> 19
EXPENSE EXAMPLES:

Full Redemption. You would have paid the following expenses on a $1,000
investment, assuming a hypothetical 5% annual return and full redemption of your
shares at the end of each period shown below:

<TABLE>
<CAPTION>
Mid Cap Equity Fund 1 Year 3 Years
- ------------------- ------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Class X Shares

Small Cap Equity Fund 1 Year 3 Years
- --------------------- ------ -------
Class A Shares
Class B Shares
Class C Shares
Class X Shares
</TABLE>

No Redemption. You would have paid the following expenses on a $1,000
investment, assuming a hypothetical 5% annual return and no redemption of your
shares at the end of each period shown below:

<TABLE>
<CAPTION>
Mid Cap Equity Fund 1 Year 3 Years
- ------------------- ------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Class X Shares

Small Cap Equity Fund 1 Year 3 Years
- --------------------- ------ -------
Class A Shares
Class B Shares
Class C Shares
Class X Shares
</TABLE>

10
<PAGE> 20
FEE TABLE

<TABLE>
<CAPTION>
Balanced Fund Global Brand Names Fund
----------------------------------------- ----------------------------------------
Class A Class B Class C Class X Class A Class B Class C Class X
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on 5.50% NONE NONE NONE 5.50% NONE NONE NONE
Purchases (as a percentage of
offering price)
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering price)
Maximum Contingent Deferred Sales NONE 5.00% NONE 5.00% NONE 5.00% NONE 5.00%
Load (as a percentage of redemption
proceeds)
Redemption Fees(3) NONE NONE NONE NONE NONE NONE NONE NONE
Exchange Fees NONE NONE NONE NONE NONE NONE NONE NONE
ANNUAL FUND OPERATING EXPENSE
(as a percentage of average
net assets)
Management Fees (after waivers)*
12b-1 Fees 0.50% 1.00% 1.00% 1.00% 0.50% 1.00% 1.00% 1.00%
Other Expenses** [____]% [____]% [____]% [____]% [____]% [____]% [____]% [____]%
TOTAL PORTFOLIO OPERATING EXPENSES
(after waivers)*** [____]% [____]% [____]% [____]% [____]% [____]% [____]% [____]%
</TABLE>

- --------

*** Total Portfolio Operating Expenses (before waivers) would be ___% and
___%, respectively.

11
<PAGE> 21
EXPENSE EXAMPLES:

Full Redemption. You would have paid the following expenses on a $1,000
investment, assuming a hypothetical 5% annual return and full redemption of your
shares at the end of each period shown below:

<TABLE>
<CAPTION>
Balanced Fund 1 Year 3 Years
- ------------- ------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Class X Shares

Global Brand Names Fund 1 Year 3 Years
- ----------------------- ------ -------
Class A Shares
Class B Shares
Class C Shares
Class X Shares
</TABLE>

No Redemption. You would have paid the following expenses on a $1,000
investment, assuming a hypothetical 5% annual return and no redemption of your
shares at the end of each period shown below:

<TABLE>
<CAPTION>
Balanced Fund 1 Year 3 Years
- ------------- ------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Class X Shares

Global Brand Names Fund 1 Year 3 Years
- ----------------------- ------ -------
Class A Shares
Class B Shares
Class C Shares
Class X Shares
</TABLE>

12
<PAGE> 22
FEE TABLE

<TABLE>
<CAPTION>
International Equity Fund Emerging Markets Equity Fund
----------------------------------------- ----------------------------------------
Class A Class B Class C Class X Class A Class B Class C Class X
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on 5.50% NONE NONE NONE 5.50% NONE NONE NONE
Purchases (as a percentage of
offering price)
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering price)
Maximum Contingent Deferred Sales NONE 5.00% NONE 5.00% NONE 5.00% NONE 5.00%
Load (as a percentage of redemption
proceeds)
Redemption Fees(3) NONE NONE NONE NONE NONE NONE NONE NONE
Exchange Fees NONE NONE NONE NONE NONE NONE NONE NONE
ANNUAL FUND OPERATING EXPENSE
(as a percentage of average
net assets)
Management Fees (after waivers)*
12b-1 Fees 0.50% 1.00% 1.00% 1.00% 0.50% 1.00% 1.00% 1.00%
Other Expenses** [____]% [____]% [____]% [____]% [____]% [____]% [____]% [____]%
TOTAL PORTFOLIO OPERATING EXPENSES
(after waivers)*** [____]% [____]% [____]% [____]% [____]% [____]% [____]% [____]%
</TABLE>

- --------

*** Total Portfolio Operating Expenses (before waivers) would be ___% and
___%, respectively.

13
<PAGE> 23
EXPENSE EXAMPLES:

Full Redemption. You would have paid the following expenses on a $1,000
investment, assuming a hypothetical 5% annual return and full redemption of your
shares at the end of each period shown below:

<TABLE>
<CAPTION>
International Equity Fund 1 Year 3 Years
- ------------------------- ------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Class X Shares

Emerging Markets Equity Fund 1 Year 3 Years
- ---------------------------- ------ -------
Class A Shares
Class B Shares
Class C Shares
Class X Shares
</TABLE>

No Redemption. You would have paid the following expenses on a $1,000
investment, assuming a hypothetical 5% annual return and no redemption of your
shares at the end of each period shown below:

<TABLE>
<CAPTION>
International Equity Fund 1 Year 3 Years
- ------------------------- ------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Class X Shares

Emerging Markets Equity Fund 1 Year 3 Years
- ---------------------------- ------ -------
Class A Shares
Class B Shares
Class C Shares
Class X Shares
</TABLE>

14
<PAGE> 24
FEE TABLE

<TABLE>
<CAPTION>
European Equity Fund Tax Efficient Equity Fund
----------------------------------------- ----------------------------------------
Class A Class B Class C Class X Class A Class B Class C Class X
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on 5.50% NONE NONE NONE 5.50% NONE NONE NONE
Purchases (as a percentage of
offering price)
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering price)
Maximum Contingent Deferred Sales NONE 5.00% NONE 5.00% NONE 5.00% NONE 5.00%
Load (as a percentage of redemption
proceeds)
Redemption Fees(3) NONE NONE NONE NONE NONE NONE NONE NONE
Exchange Fees NONE NONE NONE NONE NONE NONE NONE NONE
ANNUAL FUND OPERATING EXPENSE
(as a percentage of average
net assets)
Management Fees (after waivers)*
12b-1 Fees 0.50% 1.00% 1.00% 1.00% 0.50% 1.00% 1.00% 1.00%
Other Expenses** [____]% [____]% [____]% [____]% [____]% [____]% [____]% [____]%
TOTAL PORTFOLIO OPERATING EXPENSES
(after waivers)*** [____]% [____]% [____]% [____]% [____]% [____]% [____]% [____]%
</TABLE>

- --------

*** Total Portfolio Operating Expenses (before waivers) would be ___% and
___%, respectively.

15
<PAGE> 25
EXPENSE EXAMPLES:

Full Redemption. You would have paid the following expenses on a $1,000
investment, assuming a hypothetical 5% annual return and full redemption of your
shares at the end of each period shown below:

<TABLE>
<CAPTION>
European Equity Fund 1 Year 3 Years
- -------------------- ------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Class X Shares

Tax Efficient Equity Fund 1 Year 3 Years
- ------------------------- ------ -------
Class A Shares
Class B Shares
Class C Shares
Class X Shares
</TABLE>

No Redemption. You would have paid the following expenses on a $1,000
investment, assuming a hypothetical 5% annual return and no redemption of your
shares at the end of each period shown below:

<TABLE>
<CAPTION>
European Equity Fund 1 Year 3 Years
- -------------------- ------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Class X Shares

Tax Efficient Equity Fund 1 Year 3 Years
- ------------------------- ------ -------
Class A Shares
Class B Shares
Class C Shares
Class X Shares
</TABLE>

16
<PAGE> 26
FEE TABLE

<TABLE>
<CAPTION>
ING Best Ideas Fund Global IT Fund
----------------------------------------- -----------------------------------------
Class A Class B Class C Class X Class A Class B Class C Class X
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on 5.50% NONE NONE NONE 5.50% NONE NONE NONE
Purchases (as a percentage of
offering price)
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering price)
Maximum Contingent Deferred Sales NONE 5.00% NONE 5.00% NONE 5.00% NONE 5.00%
Load (as a percentage of redemption
proceeds)
Redemption Fees(3) NONE NONE NONE NONE NONE NONE NONE NONE
Exchange Fees NONE NONE NONE NONE NONE NONE NONE NONE
ANNUAL FUND OPERATING EXPENSE
(as a percentage of average
net assets)
Management Fees (after waivers)*
12b-1 Fees 0.50% 1.00% 1.00% 1.00% 0.50% 1.00% 1.00% 1.00%
Other Expenses** [____]% [____]% [____]% [____]% [____]% [____]% [____]% [____]%
TOTAL PORTFOLIO OPERATING EXPENSES
(after waivers)*** [____]% [____]% [____]% [____]% [____]% [____]% [____]% [____]%

</TABLE>

- --------

*** Total Portfolio Operating Expenses (before waivers) would be ___% and
___%, respectively.

17
<PAGE> 27
EXPENSE EXAMPLES:

Full Redemption. You would have paid the following expenses on a $1,000
investment, assuming a hypothetical 5% annual return and full redemption of your
shares at the end of each period shown below:

<TABLE>
<CAPTION>
ING Best Ideas Fund 1 Year 3 Years
- ------------------- ------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Class X Shares

Global IT Fund 1 Year 3 Years
- -------------- ------ -------
Class A Shares
Class B Shares
Class C Shares
Class X Shares
</TABLE>

No Redemption. You would have paid the following expenses on a $1,000
investment, assuming a hypothetical 5% annual return and no redemption of your
shares at the end of each period shown below:

<TABLE>
<CAPTION>
ING Best Ideas Fund 1 Year 3 Years
- ------------------- ------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Class X Shares

Global IT Fund 1 Year 3 Years
- -------------- ------ -------
Class A Shares
Class B Shares
Class C Shares
Class X Shares
</TABLE>

18
<PAGE> 28
FEE TABLE

<TABLE>
<CAPTION>
Real Estate Fund
Class A Class B Class C Class X
------- ------- ------- -------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on 5.50% NONE NONE NONE
Purchases (as a percentage of
offering price)
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering price)
Maximum Contingent Deferred Sales NONE 5.00% NONE 5.00%
Load (as a percentage of
redemption proceeds)
Redemption Fees(3) NONE NONE NONE NONE
Exchange Fees NONE NONE NONE NONE
ANNUAL FUND OPERATING EXPENSE
(as a percentage of average
net assets)
Management Fees (after waivers)*
12b-1 Fees 0.50% 1.00% 1.00% 1.00%
Other Expenses** [____]% [____]% [____]% [____]%
TOTAL PORTFOLIO OPERATING EXPENSES
(after waivers)*** [____]% [____]% [____]% [____]%
</TABLE>

- --------

*** Total Portfolio Operating Expenses (before waivers) would be ___% and
___%, respectively.

19
<PAGE> 29
EXPENSE EXAMPLES:

Full Redemption. You would have paid the following expenses on a $1,000
investment, assuming a hypothetical 5% annual return and full redemption of your
shares at the end of each period shown below:

<TABLE>
<CAPTION>
Real Estate Fund 1 Year 3 Years
- ---------------- ------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Class X Shares
</TABLE>

No Redemption. You would have paid the following expenses on a $1,000
investment, assuming a hypothetical 5% annual return and no redemption of your
shares at the end of each period shown below:

<TABLE>
<CAPTION>
Real Estate Fund 1 Year 3 Years
- ---------------- ------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Class X Shares
</TABLE>

THE FUNDS

Each Fund is a separate investment fund or portfolio, commonly known as
a mutual fund. The Funds are portfolios of a Delaware business trust organized
under the laws of the State of Delaware as an open-end management investment
company on July ___, 1998. The Trust's Board of Trustees oversees the overall
management of the Funds and elects the officers of each Fund.

20
<PAGE> 30
THE INVESTMENT POLICIES AND PRACTICES OF THE FUNDS

Large Cap Growth Fund. The Large Cap Growth Fund seeks to provide
investors with long-term capital appreciation. Under normal market conditions,
the Fund will invest at least 65% of its total assets in equity securities of
large companies, i.e., companies with market capitalizations of more than $1
billion at the time of acquisition ("Large Companies") which, in the
Sub-Adviser's opinion, possess growth potential. Any remaining assets may be
invested in fixed income securities, money market securities or in equity
securities that the Fund's Sub-Adviser believes are appropriate in light of the
Fund's objective. Equity securities include common stock, preferred stock,
warrants or rights to subscribe to common stock and, in general, any security
that is convertible into or exchangeable for common stock. Fixed income
securities must be rated investment grade or better, i.e., rated at least BBB by
Standard & Poor's Rating Group ("S&P") or Baa by Moody's Investor Services
("Moody's"), or have an equivalent rating from another nationally recognized
statistical rating organization ("NRSRO"), or if unrated, will be determined to
be of comparable quality by the Sub-Adviser. Debt securities rated BBB or Baa
lack outstanding investment characteristics, and have speculative
characteristics as well. Money market securities must be rated in one of the top
two rating categories by an NRSRO or, if not rated, determined to be of
comparable quality by the Fund's Sub-Adviser.

Growth and Income Fund. The Growth and Income Fund seeks to provide
investors with long-term total return. Under normal market conditions, the Fund
intends to invest at least 65% of its total assets in equity securities. As a
general matter, the Fund expects these investments to earn income. Any remaining
assets may be invested in fixed income securities, money market securities or
equity securities that the Fund's Sub-Adviser believes are appropriate in light
of the Fund's objective. Equity securities include common stock, preferred
stock, warrants or rights to subscribe to common stock and, in general, any
security that is convertible into or exchangeable for common stock. Fixed income
securities must be rated investment grade or better, i.e., rated at least BBB by
S&P or Baa by Moody's, or have an equivalent rating from another NRSRO, or if
unrated, will be determined to be of comparable quality by the Sub-Adviser. Debt
securities rated BBB or Baa lack outstanding investment characteristics, and
have speculative characteristics as well. Money market securities must be rated
in one of the top two rating categories by an NRSRO or, if not rated, determined
to be of comparable quality by the Fund's Sub-Adviser.

Mid-Cap Equity Fund. The Mid-Cap Equity Fund seeks to provide investors
with long-term capital appreciation. Under normal market conditions, the Fund
will invest at least 65% of its total assets in equity securities of issuers
with market capitalizations falling within the Russell Mid-Cap Index at the time
of acquisition. Such companies are typically well established but have not
reached full maturity, and may offer significant growth potential. The
Sub-Adviser will seek to identify companies which, in its opinion, will
experience accelerating earnings, increased institutional ownership or strong
price appreciation relative to their industries and broad market averages.

All of the equity securities in which the Fund invests are traded on
registered exchanges or on the over-the-counter market in the United States.
Equity securities include common stock, preferred stock, warrants and rights to
subscribe to common stock and, in general, any security that is convertible into
or exchangeable for common stock.

21
<PAGE> 31
Any remaining assets may be invested in equity securities of larger,
more established companies, fixed income securities or money market securities
that the Fund's Sub-Adviser believes are appropriate in light of the Fund's
objective. Fixed income securities will only be purchased if they are rated A or
better by S&P or Moody's or have an equivalent rating from another NRSRO, or if
unrated, will be determined to be of comparable quality by the Sub-Adviser. Debt
securities rated A possess many favorable investment characteristics. Money
market securities, certificates of deposit, banker's acceptances and commercial
paper will only be purchased if they have been given one of the two top ratings
by an NRSRO, or if not rated, determined to be of comparable quality by the
Sub-Adviser.

Small Cap Equity Fund. The Small Cap Equity Fund seeks to provide
investors with long-term capital appreciation. Under normal market conditions,
the Fund will invest at least 65% of its total assets in the equity securities
of smaller companies (i.e., companies with market capitalizations falling within
the Russell 2000 at the time of acquisition). Any remaining assets may be
invested in fixed income securities, equity securities of larger more
established companies or money market securities that the Fund's Sub- Adviser
believes are appropriate in light of the Fund's objective. Equity securities
include common stock, preferred stock, warrants and rights to subscribe to
common stock and, in general, any security that is convertible into or
exchangeable for common stock. Fixed income securities must be rated investment
grade or better, i.e., rated at least BBB by S&P or Baa by Moody's, or have an
equivalent rating from another NRSRO, or if unrated, will be determined to be of
comparable quality by the Sub-Adviser. Debt securities rated BBB or Baa lack
outstanding investment characteristics, and have speculative characteristics as
well. Money market securities must be rated in one of the two top rating
categories by an NRSRO or, if not rated, determined to be of comparable quality
by the Fund's Sub-Adviser.

Balanced Fund. The Balanced Fund seeks to provide investors with high
total return. The Fund primarily invests in large capitalization equity
securities, intermediate-maturity fixed income securities and money market
instruments. Equity securities include common stock, preferred stock, warrants
and rights to subscribe to common stock and, in general, any security that is
convertible into or exchangeable for common stock. Fixed income securities rated
BBB or Baa generally lack outstanding investment characteristics, and may have
speculative characteristics as well. Money market securities must be rated in
one of the top two rating categories by an NRSRO, or if not rated, determined to
be of comparable quality by the Fund's Sub-Adviser.

The average maturity of the fixed income securities in the Fund will,
under normal circumstances, be approximately five years, although this will vary
with changing market conditions.

Any remaining assets may be invested in fixed income securities, money
market securities or in equity securities that the Fund's Sub-Adviser believes
are appropriate in light of the Fund's objective. Equity securities include
common stock, preferred stock, warrants or rights to subscribe to common stock
and, in general, any security that is convertible into or exchangeable for
common stock. Fixed income securities must be rated investment grade or better,
i.e., rated at least BBB by S&P or Baa by Moody's, or have an equivalent rating
from another nationally recognized statistical rating organization ("NRSRO"), or
if unrated, will be determined to be of comparable quality by the Sub-Adviser.
Debt securities rated BBB or Baa lack outstanding investment characteristics,
and have speculative characteristics as well. Money market securities must be
rated in one of the top two rating categories by an NRSRO or, if not rated,
determined to be of comparable quality by the Fund's Sub-Adviser.

International Equity Fund. The International Equity Fund seeks to
provide investors with long-term capital appreciation. Under normal
circumstances, at least 65% of the Fund's assets will be invested in

22
<PAGE> 32
equity securities of issuers organized or having a majority of their assets in
or deriving a majority of their operating income in at least seven different
countries, outside of the United States. The Fund will invest in a broad range
of equity securities. Any remaining assets may be invested in debt securities
such as U.S. or foreign government or corporate bonds, equity securities of
issuers with a majority of their operating income from abroad or money market
securities that the Fund's Sub-Adviser believes are appropriate in light of the
Fund's objective. Equity securities include common stock, preferred stock,
warrants and rights to subscribe to common stock and, in general, any security
that is convertible into or exchangeable for common stock. Fixed income
securities must be rated AA+ by S&P or Aa-2 by Moody's, or have an equivalent
rating from another NRSRO, or if unrated, will be determined to be of comparable
quality by the Sub-Adviser. Money market securities must be rated in one of the
two top rating categories by an NRSRO or, if not rated, determined to be of
comparable quality by the Fund's Sub-Adviser.

The Fund may purchase securities in any foreign country, developed and
underdeveloped, or emerging market countries. With respect to certain countries,
investments by an investment company may only be made through investments in
closed-end investment companies that in turn are authorized to invest in the
securities of such countries.

Emerging Markets Equity Fund. The Emerging Markets Equity Fund seeks to
provide investors with long-term capital appreciation. The Emerging Markets
Equity Fund seeks to provide long-term capital appreciation by investing
primarily in a diversified portfolio of equity securities of emerging market
issuers. Under normal market conditions, the Fund will invest at least 65% of
its total assets in the equity securities of emerging market issuers. Under
normal conditions, the Fund maintains investments in at least seven emerging
market countries and does not invest more than 25% of its total assets in any
one emerging market country. For these purposes, the Fund defines an emerging
market country as any country the economy and market of which the World Bank or
the United Nations considers to be emerging or developing or any country
determined by the Sub-Adviser to have emerging economies or developing markets.
The Fund's Sub-Adviser considers emerging market issues to be companies the
securities of which are principally traded in the capital markets of emerging
market countries: that derive at least 50% of their total revenue from either
goods produced or services rendered in emerging market countries, regardless of
where the securities of such companies are principally traded; or that are
organized under the laws of and have a principal office in an emerging market
country. Any remaining assets may be invested in fixed income securities,
including debt securities rated below investment grade and equity securities,
regardless of whether they constitute emerging market securities, that the
Fund's Sub-Adviser believes are appropriate in light of the Fund's objective.
Equity securities include common stock, preferred stock, warrants or rights to
subscribe to common stock and, in general, any security convertible into or
exchangeable for common stock. Certain emerging markets are closed in whole or
in part to equity investments by foreigners. The Fund may be able to invest in
such markets solely or primarily through investment vehicles, such as closed-end
investment companies, authorized by such emerging market country's government.
See "Description of Securities and Investment Practices--Closed-End Investment
Companies." Debt Securities rated below investment grade are considered to have
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal.

23
<PAGE> 33
European Equity Fund. The European Equity Fund seeks to provide
investors with long-term capital appreciation. There can be no assurance that
the Fund's investment objective will be achieved. Under normal market
conditions, the Fund will invest at least 65% of its total assets in the equity
securities of European issuers. The Fund's Sub-Adviser considers European
issuers to be companies the securities of which are principally traded in the
European capital markets; that derive at least 50% of their total revenue from
either goods produced or services rendered in countries located in Europe,
regardless of where the securities of such companies are principally traded; or
that are organized under the laws of and have a principal office in a European
country. Any remaining assets may be invested in fixed income securities, equity
securities or money market securities that the Fund's Sub-Adviser believes are
appropriate in light of the Fund's objective. Equity securities include common
stock, preferred stock, warrants and rights to subscribe to common stock and, in
general, any security that is convertible into or exchangeable for common stock.
Fixed income securities must be rated investment grade or better, i.e., rated at
least BBB by S&P or Baa by Moody's, or have an equivalent rating from another
NRSRO, or if unrated, will be determined to be of comparable quality by the
Sub-Adviser. Debt securities rated BBB or Baa lack outstanding investment
characteristics, and have speculative characteristics as well. Money market
securities must be rated in one of the two top rating categories by an NRSRO or,
if not rated, determined to be of comparable quality by the Fund's Sub-Adviser.

Tax Efficient Equity Fund. The Tax Efficient Equity Fund seeks to
provide taxable investors with a high total return on an after-tax basis. There
can be no assurance that the Fund's investment objective will be achieved. The
Fund will attempt to achieve this objective by seeking to provide a high
long-term after-tax total return through managing its portfolio in a manner that
will defer the realization of accrued capital gains and minimize dividend
income. In attempting to achieve its investment objective, the Fund under normal
circumstances will invest at least 80% of its net assets in a widely diversified
portfolio of equity securities and instruments whose returns depend upon stock
market prices. An emphasis will be placed on lower-dividend or non-dividend
paying common stocks of companies which the Sub-Adviser believes to have
superior appreciation potential. Any remaining assets may be invested in fixed
income securities that the Fund's Sub-Adviser believes are appropriate in light
of the Fund's objective. Equity securities include common stock, preferred
stock, warrants or rights to subscribe to common stock and, in general, any
security that is convertible into or exchangeable for common stock. Fixed income
securities must be rated investment grade or better, i.e., rated at least BBB by
S&P or Baa by Moody's, or have an equivalent rating from another NRSRO, or if
unrated, will be determined to be of comparable quality by the Sub-Adviser. Debt
securities rated BBB or Baa lack outstanding investment characteristics, and
have speculative characteristics as well. Money market securities must be rated
in one of the top two rating categories by an NRSRO or, if not rated, determined
to be of comparable quality by the Fund's Sub-Adviser. The Fund may invest up to
10% of its total assets in foreign securities.

ING Best Ideas Fund. The Fund is a non-diversified fund that seeks
long-term growth of capital. Under normal conditions, the Fund will invest 65%
of its total assets in 30 to 40 equity securities.

Any remaining assets may be invested in fixed income securities, money
market securities or in equity securities that the Fund's Sub-Adviser believes
are appropriate in light of the Fund's objective. Equity securities include
common stock, preferred stock, warrants or rights to subscribe to common stock
and, in general, any security that is convertible into or exchangeable for
common stock. Fixed income securities must be rated A or better by S&P or
Moody's, or have an equivalent rating from another nationally recognized
statistical rating organization ("NRSRO"), or if unrated, will be determined to
be of comparable quality by the Sub-Adviser. Money market securities must be
rated in one of the top two rating categories by an NRSRO or, if not rated,
determined to be of comparable quality by the Fund's Sub-Adviser.

Global IT Fund. The Global IT Fund seeks to provide investors with
long-term capital appreciation. Under normal market conditions, the Fund will
invest at least 65% of its total assets in the common stocks of information
technology companies. Information technology companies are those companies with
primary business operations in either the information technology or software
industries, and services or science

24
<PAGE> 34
related areas. Current income is incidental to the Fund's investment objective.

The Sub-Adviser believes that because of rapid advances in information
technology and science, investment in companies with business operations in
these areas will offer substantial opportunities for long-term capital
appreciation. Of course, swings in investor psychology or significant trading by
large institutional investors can result in significant price fluctuations and
stock price declines.

The information technology area has exhibited and continue to
demonstrate rapid growth, both through increasing demand for existing products
and services and the broadening of the technology market. In general, the stocks
of large capitalized companies that are well established in the information
technology market can be expected to grow with the market and will frequently be
found in the Fund's portfolio. The expansion of technology and science areas,
however, also provides a favorable environment for investment in small to medium
capitalized companies. The Fund's investment policy is not limited to any
minimum capitalization requirement and the Fund may hold securities without
regard to the capitalization of the issuer. The Sub-Adviser's overall stock
selection for the Fund is not based on the capitalization or size of the company
but rather on an assessment of the company's fundamental prospects. The
Sub-Adviser anticipates, however, that a portion of the Fund's holdings will be
invested in newly issued securities being sold in the secondary market.

Any remaining assets may be invested in activities other than the
information technology area, such as convertible stocks, preferred stocks, fixed
income securities, warrants, foreign securities and money market instruments
that the Fund's Sub-Adviser believes are appropriate in light of the Fund's
objective. Fixed income securities must be rated investment grade or better,
i.e., rated at least BBB by S&P or Baa by Moody's, or have an equivalent rating
from another NRSRO, or if unrated, will be determined to be of comparable
quality by the Sub-Adviser. Debt securities rated BBB or Baa lack outstanding
investment characteristics, and have speculative characteristics as well. Money
market securities must be rated in one of the top two rating categories by an
NRSRO, or if not rated, determined to be of comparable quality by the Fund's
Sub-Adviser.

Real Estate Fund. The Real Estate Fund is a non-diversified Fund that
seeks to provide investors with long-term total return and income as a secondary
consideration. Under normal market conditions, the Fund will invest at least 65%
of its total assets in the equity securities of issuers that are principally
engaged in the real estate industry. In selecting investments for the Fund, the
Fund's Sub-Adviser will select companies whose business it is to own, operate,
develop and manage real estate. Any remaining assets may be invested in equity
securities of companies not engaged in such activities, fixed income securities
or money market securities that the Fund's Sub-Adviser believes are appropriate
in light of the Fund's objective. Fixed income securities must be rated
investment grade or better, i.e., rated at least BBB by S&P or Baa by Moody's,
or have an equivalent rating from another NRSRO, or if unrated, will be
determined to be of comparable quality by the Sub-Adviser. Debt securities rated
BBB or Baa lack outstanding investment characteristics, and have speculative
characteristics as well. Money market

25
<PAGE> 35
securities must be rated in one of the top two rating categories by an NRSRO or,
if not rated, determined to be of comparable quality by the Fund's Sub-Adviser.

All Funds

There can be no assurance that the Funds will achieve their investment
objectives.

All Funds may use various investment strategies and techniques when the
Sub-Adviser determines that such use is appropriate in an effort to meet a
Fund's investment objective including: writing "covered" put and call equity
options, and purchasing options; purchasing and selling stock index; interest
rate, and other futures contracts; purchasing options on stock index futures
contracts and futures contracts based upon other financial instruments; entering
into foreign currency transactions and options and forward contracts on foreign
currencies; entering into repurchase agreements or reverse repurchase
agreements; investing up to 15% of net assets in illiquid securities; and
lending portfolio securities to brokers, dealers, banks, or other recognized
institutional borrowers of securities.

In order to meet liquidity needs or for temporary defensive purposes,
the Funds may invest up to 100% of their assets in the types of securities which
in the Sub-Adviser's opinion are appropriate as referenced in the Section
"Description of Securities and Investment Practices" in this Prospectus. To the
extent the Funds are engaged in temporary or defensive investments, a Fund will
not be pursuing its investment objective.

The SEC currently requires a Fund to invest at least 65% of its total
assets in investments that are consistent with its name (i.e. The Large Cap
Growth Fund must invest at least 65% of its total assets in large capitalization
issuers). To the extent the SEC increases the percentage of a Fund's assets that
must be invested in investments that are consistent with its name, each Fund
reserve the right to change, without shareholder approval, the percentage
required to be invested by the Fund from 65% of total assets to the percentage
required by the SEC or to change the name of the Fund.

The types of securities and investment practices used by the funds are
described in greater detail at "DESCRIPTION OF SECURITIES AND INVESTMENT
PRACTICES."

MANAGEMENT OF THE FUNDS

The business and affairs of each Fund are managed under the direction
of the Board of Trustees. Additional information about the Trustees, as well as
the Funds' executive officers, may be found in the SAI under the heading
"MANAGEMENT--Trustees and Officers."

THE MANAGER: ING MUTUAL FUND MANAGEMENT COMPANY

IMFC, [address], serves as the manager of the Funds. IMFC serves as the
Manager to the Funds pursuant to a Management Agreement with the Trust. IMFC was
formed on _________, 1998, as a ___________ corporation and is a wholly owned
subsidiary of ING Groep, N.V. ("ING Group"). IMFC is registered with the SEC as
an investment adviser. IMFC has no prior experience as an investment adviser to
an investment company.

26
<PAGE> 36
Under the Management Agreement, IMFC has overall responsibility,
subject to the supervision of the Board of Trustees, for engaging sub-advisers
and for monitoring and evaluating the management of the assets of each Fund by
the Sub-Adviser. The Manager is also responsible for monitoring and evaluating
the Sub-Advisers on a periodic basis, and will consider their performance
records with respect to the investment objectives and policies of each Fund. The
Manager may, if appropriate, recommend that the Trustees consider a change in a
Sub-Adviser, although the Manager does not expect to recommend frequent changes
in Sub-Advisers as a matter of operating procedure for the Funds. IMFC also
provides certain administrative services necessary for the Funds' operations
including: (i) coordination of the services performed by the Funds' transfer
agent, custodian, independent accountants and legal counsel; regulatory
compliance, including the compilation of information for documents such as
reports to, and filings with, the SEC and state securities commissions; and
preparation of proxy statements and shareholder reports for the Funds; (ii)
general supervision relative to the compilation of data required for the
preparation of periodic reports distributed to the Funds' Officers and Board of
Trustees; and (iii) furnishing office space and certain facilities required for
conducting the business of the Funds.

Pursuant to the Management Agreement, the Manager is authorized to
exercise full investment discretion and make all determinations with respect to
the investment of a Fund's assets and the purchase and sale of portfolio
securities for one or more Funds in the event that at any time no Sub-Adviser is
engaged to manage the assets of a Fund. The Management Agreement may be
terminated without penalty by the vote of the Board of Trustees or the
shareholders of the Fund, or by the Manager, upon 60 days' written notice by the
Board and will terminate automatically if assigned as that term is described in
the Investment Company Act of 1940.

The Trust pays the Manager for its services under the Management
Agreement a fee, payable monthly, based on the average daily net assets of each
Fund at the following annual rates on the average daily net assets of each of
the Funds:

<TABLE>
<CAPTION>
Management
Fund: Fee
- ----- ---
<S> <C>
Large Cap Growth Fund

Growth and Income Fund

Mid Cap Equity Fund

Small Cap Equity Fund

Balance Fund

Global Brand Names Fund

International Equity Fund

Emerging Markets Equity Fund

European Equity Fund
</TABLE>

27
<PAGE> 37
Tax Efficient Equity Fund

ING Best Ideas Fund

Real Estate Fund

Global IT Fund

THE SUB-ADVISERS:

The Manager has entered into Sub-Advisory Agreements with the
Sub-Advisers. Under the Agreements, the Sub-Advisers have full investment
discretion and make all determinations with respect to the investment of a
Fund's assets and the purchase and sale of portfolio securities and other
investments. The Sub-Advisory Agreement may be terminated without penalty by the
Manager, [the Board of Trustees] or the shareholders of a Fund, or by the
Sub-Adviser, on 60 days' written notice by any party to a Sub-Advisory Agreement
and will terminate automatically if assigned as that term is described in the
1940 Act.

BARING ASSET MANAGEMENT, INC. The Manager has retained BAM, a
Massachusetts corporation, located at 125 High Street, Boston MA, 02110 to act
as sub-adviser to the Large Cap Growth Fund. BAM is registered under the
Investment Advisers Act of 1940 and provides investment management services to
clients located around the world. BAM is a wholly owned subsidiary of Baring
Asset Management Holdings Limited ("BAMHL"). BAMHL, a global company registered
in England and Wales, is the parent of the world-wide group of investment
management companies that operate under the collective name Baring Asset
Management (the "BAM Group"). BAMHL is a wholly owned indirect subsidiary of ING
Group a publicly traded company based in the Netherlands with worldwide
insurance and banking subsidiaries and is affiliated with the Manager.

The BAM Group provides global investment management services and
maintains major investment offices in Boston, London, Hong Kong and Tokyo, and
together with its predecessor corporation was founded in 1762. The BAM Group
provides advisory services to institutional investors, offshore investment
companies, insurance companies and private clients. As of December 31, 1997, the
BAM Group managed approximately $36.1 billion of assets.

The Large Cap Growth Fund is managed by a team of 12 investment
professionals led by Mr. William Braman. Mr. Braman has been an investment
professional with BAM since 1982 and has 21 years of investment experience. The
team has an average of 19 years investment experience.

Pursuant to the Sub-Advisory Agreements, the Manager (not the Trust)
pays to BAM a monthly fee based on the average daily net assets of the Fund at
the annual rate of ___% of the average daily net assets.

The figures below show past performance of BAM in managing accounts
with investment objectives, policies, styles and techniques substantially
similar though not identical to those of the Large Cap Growth Fund. The table
shows the total returns for a composite of the actual performance of large cap
growth accounts managed by BAM for various periods ended June 30, 1998, as
adjusted for the projected annual expenses for the Large Cap Growth Fund's Class
A and C Shares during its initial fiscal period as set forth in the Fee Table in
this Prospectus. The performance is not necessarily representative of the past

28
<PAGE> 38
performance of the above referenced team or any individual of the team.
Information presented is based on performance data provided by BAM. The past
performance does not represent the Large Cap Growth Fund's performance, as it is
newly organized and has no performance record of its own. Class B and X shares
have different expenses than Class A and C shares and depending on the time of
the shareholder's redemption, the past performance calculated below may be
higher or lower than that shown for Class A and C. Included for comparison
purposes are performance figures of the S&P 500 Index, an unmanaged market
index. The performance shown below is calculated in accordance with AIMR.

The composite is made up of unregistered accounts that are not subject
to diversification and other requirements that apply to mutual funds under
applicable securities, tax and other laws that, if applicable, may have
adversely affected performance. As a result, portfolio management strategies
used on the composite and those used on the Large Cap Growth Fund may vary in
some respects. The information should not be considered a prediction of the
future performance of the Large Cap Growth Fund. The actual performance may be
higher or lower than that shown.

Annualized Rates of Return for
Periods Ending June 30, 1998

<TABLE>
<CAPTION>
BAM
Class A Class C S&P 500 Index
------- ------- --------------
<S> <C> <C> <C>
1 Year % % %
3 Years % % %
5 Years % % %
10 Years % % %
</TABLE>

BARING INTERNATIONAL INVESTMENT LIMITED ("BIIL"). The Manager has
retained BIIL located at 155 Bishopsgate, London to act as sub-adviser to the
International Equity Fund. BIIL is registered under the Investment Advisor's
Act of 1940 and provides investment management services to clients located
around the world. BIIL is a wholly owned subsidiary of Baring Asset Management
Holdings Limited ("BAMHL"). BAMHL, a company registered in England and Wales,
is the parent of the world-wide group of investment management companies that
operate under the collective name Baring Asset Management (the "BAM Group").
BAMHL is a wholly owned indirect subsidiary of ING Group, a publicly traded
company based in the Netherlands with worldwide insurance and banking
subsidiaries and is affiliated with the Manager.

The BAM Group provides global investment management services and
maintains major investment offices in Boston, London, Hong Kong and Tokyo, and
together with its predecessor corporation was founded in 1762. The BAM Group
provides advisory services to institutional investors, offshore investment
companies, insurance companies and private clients. As of December 31, 1997,
The BAM Group managed approximately $36.1 billion of assets.

The International Equity Fund is managed by a team of six investment
professionals led by Messrs. James Williams and William Haze in conjunction with
the regional equity teams of the Sub-Adviser. The average experience of the team
is 23 years. Mr. Williams has been an investment professional with BIIL and its
affiliates since 1975 and has 25 years of investment experience. Mr. Haze has
been an investment professional with BIIL since ____ and has ___ years of
investment experience.

The Emerging Markets Equity Fund is managed by a team of 32 investment
professionals led by Ms. Nancy Curtin and Mr. Matt Linsey. Ms. Curtin has been
an investment professional with BIIL since 1992 and has 14 years of investment
experience. Mr. Linsey has been an investment professional with ____ since
________ and has __ years of investment experience.

29
<PAGE> 39
Pursuant to the Sub-Advisory Agreements, the Manager (not the Trust)
pays to BIIL a monthly fee based on the average daily net assets of the
International Equity Fund and Emerging Markets Equity Fund at the annual rate of
___% and ___% of the average daily net assets, respectively.

The figures below show past performance of BIIL in managing accounts
with investment objectives, policies, styles and techniques substantially
similar though not identical to those of the International Equity Funds and
Emerging Markets Equity Fund. The performance is not necessarily representative
of the past performance of the above referenced teams or any individual of the
teams. Information presented is based on performance data provided by BIIL. The
past performance does not represent the International Equity Fund and Emerging
Markets Equity Fund's performance, as each is newly organized and has no
performance record of its own. The table shows the total returns for a composite
of the actual performance of international equity and emerging markets accounts
managed by BIIL for various periods ended June 30, 1998, as adjusted for the
projected annual expenses for the International Equity Fund and Emerging Market
Fund's Class A and C Shares during their initial fiscal period as set forth in
the Fee Table in this Prospectus. Class B and X shares have different expenses
than Class A and C shares and depending on the time of the Shareholder's
redemption, the past performance calculated below may be higher or lower than
that shown for Class A and C. Included for comparison purposes are performance
figures of the MSCI EAFE Index and MSCI EMF Index, each an unmanaged market
index. The performance shown below is calculated in accordance with AIMR.

The composites are made up of unregistered accounts that are not
subject to diversification and other requirements that apply to mutual funds
under applicable securities, tax and other laws that, if applicable, may have
adversely affected performance. As a result, portfolio management strategies
used on the composite and those used on the International Equity Fund and
Emerging Market Fund may vary in some respects. The information should not be
considered a prediction of the future performance of the International Equity
Fund and Emerging Market Fund. The actual performance may be higher or lower
than that shown.

Annualized Rates of Return for
Periods Ending June 30, 1998

International Equity Composite
<TABLE>
<CAPTION>
BIIL
---------------------------
Class A Class C MSCI EAFE Index
------- ------- ---------------
<S> <C> <C> <C>
1 Year % % %
3 Years % % %
5 Years % % %
10 Years % % %
Since Inception % % %
[DATE]
</TABLE>

30
<PAGE> 40
Emerging Markets Equity Composite
<TABLE>
<CAPTION>
BIIL
Class A Class C MSCI EMF Index
------- ------- --------------
<S> <C> <C> <C>
1 Year % % %
3 Years % % %
5 Years % % %
10 Years % % %
Since Inception % % %
[DATE]
</TABLE>

ING INVESTMENT MANAGEMENT ADVISORS ("IIMA"). The Manager has retained
IIMA located at Schenkkade 65, 2595 AS The Hague, to act as Sub-Adviser to the
ING Global Brand Names Fund, European Equity Fund, and Global IT Fund. IIMA is
registered under the Investment Advisers Act of 1940. IIMA is a company
organized to manage investments and provide investment advice on a world-wide
basis to entities affiliated with ING Group. IIMA operates under the collective
management of ING Investment Management which has investments under management
of $___ at June 30, 1998. The following investment advisory professionals work
within ING Investment Management and are officers of IIMA.

Herman Kleeven is responsible for the day-to-day operations of the
Global Brand Names Fund. Mr. Kleeven has been employed by IIMA and its
affiliates since 1997 and has investment experience of six years. Before joining
IIMA, Mr. Kleeven __________________________________.

The European Equity Fund is managed by a team of eight investment
professionals led by Adrian van Tiggelen. The average experience of the team is
7 years. Mr. van Tiggelen has been employed by IIMA and its affiliates since
1989 and has nine years investment experience.

Guy Uding is responsible for the day-to-day operations of the Global IT
Fund. Mr. Uding has been employed by IIMA and its affiliates since 1995 and has
three years investment experience.

Pursuant to the Sub-Advisory Agreement, the Manager (not the Trust)
pays to IIMA a monthly fee based on the average daily net assets of the Fund at
the following annual rates based on the average daily net assets:

31
<PAGE> 41
<TABLE>
<CAPTION>
Fund Investment Advisory Fee
- ---- -----------------------
<S> <C>
Global Brand Names Fund %
European Equity Fund %
Global IT Fund %
</TABLE>

The figures below show past performance of IIMA in managing two pooled
accounts with investment objectives, policies, styles and techniques
substantially similar though not identical to those of the European Equity Fund
and Global IT Fund. The performance is not necessarily representative of the
past performance of the above-referenced teams, individuals or any individuals
of a team. Information presented is based on performance data provided by IIMA.
The past performance does not represent the European Equity Fund and the Global
IT Fund's performance, as each is newly organized and has no performance record
of its own. The table shows the actual total returns for two pooled accounts,
one with a European equity mandate and one with an information technology
mandate managed by IIMA for various periods ended June 30, 1998, as adjusted for
the projected annual expenses for the European Equity Fund and Global IT Fund's
Class A and C shares during their initial fiscal period as set forth in the Fee
Table in this Prospectus. Class B and X shares have different expenses than
Class A and C shares and depending on the time of the Shareholder's redemption,
the past performance calculated below may be higher or lower than that shown for
Class A and C. Included for comparison purposes are performance figures of the
FT Europe and MSCI High Tech Index, an unmanaged market index.

The pooled accounts are not U.S. registered investment companies and
are not subject to diversification and other requirements that apply to mutual
funds under applicable securities, tax and other laws that, if applicable, may
have adversely affected performance. As a result, portfolio management
strategies used on the pooled accounts and those used on the European Equity
Fund and Global IT Fund may vary in some respects. The information should not be
considered a prediction of the future performance of the European Equity Fund
and the Global IT Fund. The actual performance may be higher or lower than that
shown.

Annualized Rates of Return for
Periods Ending June 30, 1998

European Equity Pooled Account
<TABLE>
<CAPTION>
IIMA
-----------------------
Class A Class C FT Europe Index
------- ------- ---------------
<S> <C> <C> <C>
1 Year % % %
3 Years % % %
5 Years % % %
10 Years % % %
Since Inception % % %
[DATE]
</TABLE>

32
<PAGE> 42
Global IT Pooled Account
<TABLE>
<CAPTION>
IIMA
------------------------
Class A Class C MSCI High Tech Index
------- ------- --------------------
<S> <C> <C> <C>
1 Year % % %
3 Years % % %
5 Years % % %
10 Years % % %
Since Inception % % %
[DATE]
</TABLE>

ING INVESTMENT MANAGEMENT, LLC. The Adviser has retained IIM, located
at 5780 Powers Ferry Road, N.W. Suite 300, Atlanta, Georgia 30327 to act as
sub-adviser to the Growth & Income Fund. IIM is a Delaware limited liability
corporation which is engaged in the business of providing investment advice to
portfolios which as of December 31, 1997, were valued at approximately $22
billion. IIM is a wholly owned subsidiary of ING Group and is affiliated with
the Manager. IIM is registered with the SEC as an investment adviser. IIM is
also a sub-adviser to other registered investment companies.

The Growth and Income Fund is managed by a team of six investment
professionals led by Mr. David Kushner. The average experience of the team is 10
years. Mr. Kushner has been employed by IIM as an investment professional since
1996. Prior to that _________________________________________________.

Pursuant to the Sub-Advisory Agreement, the Manager (not the Trust)
pays to IIM a monthly fee based on the average daily net assets of the Fund at
the annual rate of ____% based on the average daily net assets.

The figures below show past performance of IIM in managing a pooled
account with investment objectives, policies, styles and techniques
substantially similar though not identical to those of the Growth and Income
Fund. The performance is not necessarily representative of the past performance
of the above-referenced team or any individual of the team. Information
presented is based on performance data provided by IIM. The past performance
does not represent the Growth and Income Fund's performance, as it is newly
organized and has no performance record of its own. The table shows the actual
total returns for a pooled account managed by ING IM for various periods ended
June 30, 1998, as adjusted for the projected annual expenses for the Growth and
Income Fund's Class A and C Shares during

33
<PAGE> 43
its initial fiscal period as set forth in the Fee Table in this Prospectus.
Class B and X shares have different expenses than Class A and C shares and
depending on the time of the Shareholder's redemption, the past performance
calculated below may be higher or lower than that shown for Class A and C.
Included for comparison purposes are performance figures of the S&P 500 Index,
an unmanaged market index.

The pooled account is not a U.S. registered investment company and is
not subject to diversification and other requirements that apply to U.S. mutual
funds under applicable securities, tax and other laws that, if applicable, may
have adversely affected performance. As a result, portfolio management
strategies used on the pooled account and those used on the Growth and Income
Fund may vary in some respects. The information should not be considered a
prediction of the future performance of the Growth and Income Fund. The actual
performance may be higher or lower than that shown.

Annualized Rates of Return for
Periods Ending June 30, 1998

<TABLE>
<CAPTION>
IIM
------------------------
Class A Class C S&P 500 Index
------- ------- -------------
<S> <C> <C> <C>
1 Year % % %
3 Years % % %
5 Years % % %
10 Years % % %
Since Inception % % %
[DATE]
</TABLE>

FURMAN SELZ CAPITAL MANAGEMENT LLC. The Manager has retained FSCM,
located at 230 Park Avenue, New York, NY 10169, to act as sub-adviser to the Mid
Cap Equity Fund, Balanced Fund and the ING Best Ideas Fund. FSCM is a Delaware
limited liability company which is engaged in the business of providing
investment advice to institutional and individual clients which, as of December
31, 1997, were valued at approximately $10 billion. FSCM is a wholly owned
subsidiary of ING Group and is affiliated with the Manager. FSCM is registered
with the SEC as an investment adviser. FSCM is also sub-adviser to other
registered investment companies.

The Mid Cap Equity Fund is managed by a team of four investment
professionals led by Messrs. Matthew Price and David Campbell. The average
experience of the team is 18 years. Messrs. Price and Campbell have been
investment professionals with FSCM since 1990 and each has over 20 years of
experience.

The Balanced Fund is managed by a team of four investment professionals
with an average of 16 years of investment experience. Mr. Robert Schonbrunn and
Alan Segars are responsible for the fixed income portion of the Fund. Adrian
Jones and Michael Kass are responsible for the equity portion of the Balanced
Fund. Mr. Jones has been an investment professional with FSCM since 1996 and
has 10 years experience. Mr. Kass has been an investment professional with FSCM
since 1996 and has 11 years experience. Prior to 1996 __________.

34
<PAGE> 44
Mr. Schonbrunn has been an investment professional with FSCM since 1985 and has
31 years experience. Mr. Segars has been an investment professional with FSCM
since 1985 and has 29 years experience. Messrs. Kass and Jones are also
responsible for the day-to-day management of the ING Best Ideas Fund.

Pursuant to the Sub-Advisory Agreement, the Manager (not the Trust)
pays to FSCM a monthly fee based on the average daily net assets of the Fund at
the following annual rates based on the average daily net assets:

<TABLE>
<CAPTION>
Fund Investment Advisory Fee
- ---- -----------------------
<S> <C>
Mid Cap Equity Fund %

Balanced Fund %

ING Best Ideas Fund %
</TABLE>

The figures below show past performance of FSCM in managing accounts
with investment objectives, policies, styles and techniques substantially
similar though not identical to those of the Balanced Fund and the ING Best
Ideas Fund. The performance is intended to be representative of the past
performance of the above referenced individuals working as a team. Information
presented is based on performance data provided by FSCM. The past performance
does not represent the Balanced Fund or the ING Best Ideas Fund's performance,
as each is newly organized and has no performance record of its own. The table
shows the total returns for a composite of the estimated performance of balanced
wrap accounts and best ideas wrap accounts managed by FSCM for various periods
ended June 30, 1998, as adjusted for the projected annual expenses for the
Balanced and ING Best Ideas Funds' Class A and C Shares during their initial
fiscal period as set forth in the Fee Table in this Prospectus*. Class B and X
shares have different expenses than Class A and C shares and depending on the
time of the Shareholder's redemption, the past performance calculated below may
be higher or lower than that shown for Class A and C. Included for comparison
purposes are performance figures of the _________ and __________ Index, each an
unmanaged market index.

The composites are made up of unregistered accounts that are not
subject to diversification and other requirements that apply to mutual funds
under applicable securities, tax and other laws that, if applicable, may have
adversely affected performance. As a result, portfolio management strategies
used on the composite and those used on the Balanced Fund and the Best Ideas
Fund may vary in some respects. The information should not be considered a
prediction of the future performance of the Balanced Fund. The actual
performance may be higher or lower than that shown. The performance shown below
is calculated in accordance with AIMR.

- --------
*The wrap account performance was adjusted for estimated transaction costs such
as brokerage and custody cost at estimated wrap account performance.

35
<PAGE> 45
<TABLE>
<CAPTION>
Balanced Wrap Accounts 50% Lehman Aggregate
Fixed Income
FSCM
-----------------------
Class A Class C and 50% S&P 500 Index
------- ------- ---------------------
<S> <C> <C> <C>
1 Year % % %
2 Years % % %
</TABLE>

<TABLE>
<CAPTION>
Best Ideas Wrap Accounts

FSCM
-----------------------
Class A Class C S&P 500 Index
------- ------- ---------------------
<S> <C> <C> <C>
1 Year % % %
2 Years % % %
</TABLE>

DELTA ASSET MANAGEMENT ("DELTA"). The Manager has retained Delta,
located at 333 South Grand Avenue, Los Angeles, California 90071 to act as
sub-adviser to the Tax Efficient Equity Fund. Delta is a division of Furman Selz
Capital Management LLC.

Mr. Bob Sandroni and Carl Goldsmith are responsible for the day-to-day
operations of the Tax Efficient Equity Fund. Messrs. Sandroni and Goldsmith have
been investment professionals with Delta since 1991 and each has over 20 years
of experience.

Pursuant to the Sub-Advisory Agreement, the Manager (not the Trust)
pays to Delta a monthly fee based on the average daily net assets of the Fund at
the annual rate of ____% based on the average daily net assets.

THE DISTRIBUTOR

IFD acts as the Distributor. IFD is located at ______________________.
As Distributor, ING FS sells shares of each Fund on behalf of the Trust.

FUND ACCOUNTANT AND TRANSFER AGENT

IMFC has retained First Data Investors Services Group ("First Data") to
act as the Funds' fund accounting agent. First Data is located at 4400 Computer
Drive, Westborough, Massachusetts 01581. For its services as fund accounting
agent, First Data receives a fee from IMFC (and not the Funds), payable monthly,
based upon the average daily net assets of the Funds.

36
<PAGE> 46
Pursuant to a Transfer Agency Agreement between the Trust and First
Data, First Data serves as the Trust's transfer agent.

DISTRIBUTION EXPENSES

Pursuant to a Plan of Distribution adopted by each Fund under Rule
12b-1 under the 1940 Act, each Fund pays the Distributor an annual fee of 0.50%
of average net assets attributable to that Fund's Class A shares, 1.00% of
average net assets attributable to that Fund's Class B, and 1.00% of average net
asset of that Fund's Class X and C shares. While all of Class A's Rule 12b-1 fee
constitutes a "distribution fee," only 0.75% of Class B, X, and C's fees
constitute distribution fees.

The higher distribution fee attributable to Class B, X, and C shares is
designed to permit an investor to purchase such shares through registered
representatives of the Distributor and other broker-dealers without the
assessment of an initial sales charge and at the same time to permit the
Distributor to compensate its registered representatives and other
broker-dealers in connection with the sale of such shares. The distribution fee
for all classes may be used by the Distributor for the purpose of financing any
activity which is primarily intended to result in the sale of shares of the
applicable Fund. For example, such distribution fee may be used by the
Distributor: (a) to compensate broker-dealers, including Investors and its
registered representatives, for their sale of Fund shares, including the
implementation of various incentive programs with respect to broker-dealers,
banks, and other financial institutions, and (b) to pay other advertising and
promotional expenses in connection with the distribution of Fund shares. These
advertising and promotional expenses include, by way of example but not by way
of limitation, costs of prospectuses for other than current shareholders;
preparation and distribution of sales literature; advertising of any type;
expenses of branch offices provided jointly by the Distributor and affiliated
companies; and compensation paid to and expenses incurred by officers, employees
or representatives of the Distributor or of other broker-dealers, banks, or
other financial institutions, including travel, entertainment, and telephone
expenses.

A portion of the Rule 12b-1 fee equal to 0.25% of the average net
assets of each Fund attributable to the Class B, X and C shares constitutes a
shareholder servicing fee designed to compensate the Distributor for the
provision of certain services to shareholders. The services provided may include
personal services provided to shareholders, such as answering shareholder
inquiries regarding the Funds and providing reports and other information, and
services related to the maintenance of shareholder accounts. The Distributor may
use the Rule 12b-1 fee to make payments to qualifying broker-dealers and
financial institutions that provide such services.

SERVICE ORGANIZATIONS

37
<PAGE> 47
laws, as well as changes in either Federal or state regulations relating to the
permissible activities of banks and their subsidiaries or affiliates, could
prevent a bank Service Organization from continuing to perform all or part of
its servicing activities. If a bank were prohibited from so acting, its
shareholder clients would be permitted to remain shareholders of the Funds and
alternative means for continuing the servicing of such shareholders would be
sought. It is not expected that shareholders would suffer any adverse financial
consequences as a result of any of these occurrences.

OTHER EXPENSES

Each Fund bears all costs of its operations other than expenses
specifically assumed by the Manager. The costs borne by the Funds include legal
and accounting expenses; Trustees' fees and expenses; insurance premiums;
custodian and transfer agent fees and expenses; expenses incurred in acquiring
or disposing of the Funds' portfolio securities; expenses of registering and
qualifying the Funds' shares for sale with the SEC and with various state
securities commissions; expenses of obtaining quotations on the Funds' portfolio
securities and pricing of the Funds' shares; expenses of maintaining the Funds'
legal existence and of shareholders' meetings; and expenses of preparation and
distribution to existing shareholders of reports, proxies and prospectuses.
Expenses of the Funds directly attributable to the Fund are charged to that
Fund; other expenses are allocated proportionately among all of the Funds in
relation to the net assets of each Fund.

PORTFOLIO TRANSACTIONS

Pursuant to the Sub-Advisory Contracts, the Sub-Adviser places orders
for the purchase and sale of portfolio investments for the Funds' accounts with
brokers or dealers selected by it in its discretion. In effecting purchases and
sales of equity and debt securities for the account of the Funds, the
Sub-Adviser will seek the best execution of the Funds' orders. Purchase or sale
of equity securities will generally involve the payment of a commission to a
broker-dealer who executes the transaction on behalf of a Fund. Purchases and
sales of portfolio debt securities for the Funds are generally placed by the
Sub-Adviser with primary market makers for these securities on a net basis,
without any brokerage commission being paid by the Funds. Trading of portfolio
debt securities does, however, involve transaction costs. Transactions with
dealers serving as primary market makers reflect the spread between the bid and
asked prices. As permitted by Section 28(e) of the Securities Exchange Act of
1934, the Sub-Adviser may cause a Fund to pay a broker-dealer which provides
"brokerage and research services" (as defined in the Act) to the Sub-Adviser an
amount of disclosed commissions for executing a securities transaction for the
Funds in excess of the commissions another broker-dealer would have charged if
the Sub-Adviser believes the commission paid is reasonable in relation to the
value of the brokerage and research services received by the Sub-Adviser.
Broker-dealers are selected on the basis of a variety of factors such as
reputation, capital strength, size and difficulty of order, sale of Fund shares
and research provided to the Sub-Adviser. The Sub-Adviser may allocate purchase
and sales orders for portfolio securities to broker-dealers that are affiliated
with the Manager, the Sub-Adviser or Distributor in agency transactions, if the
Sub-Adviser believes the quality of the transaction and commissions are
comparable to what they would be with other qualified brokerage firms.

38
<PAGE> 48
FUND SHARE VALUATION

The net asset value per share of the Funds is calculated at 4:00 p.m
(Eastern time), Monday through Friday, on each day the New York Stock Exchange
is open for business (a "Business Day") The net asset value per share of each
class is computed by dividing the value of the net assets of each class (i.e.,
the value of the assets less the liabilities) by the total number of outstanding
shares of each class. All expenses, including fees paid to the Manager, the
Administrator and the Distributor, are accrued daily and taken into account for
the purpose of determining the net asset value. Expenses directly attributable
to a Fund are charged to the Fund; other expenses are allocated proportionately
among each Fund within the Trust in relation to the net assets of each Fund, or
on another reasonable basis. These general expenses (e.g., liability insurance
premiums) are allocated among the Funds based on each Fund's relative net asset
value. Within each class, the expenses are allocated proportionately based on
the net assets of each class, except class specific expenses which are allocated
directly to the respective class.

Securities listed on an exchange or over-the-counter are valued on the
basis of the last sale prior to the time the valuation is made. If there has
been no sale since the immediately previous valuation, then the average of the
last bid and asked prices is used. Quotations are taken from the exchange where
the security is primarily traded. Portfolio securities which are primarily
traded on foreign exchanges may be valued with the assistance of pricing
services and are generally valued at the preceding closing values of such
securities on their respective exchanges, except that when an occurrence
subsequent to the time a foreign security is valued is likely to have changed
such value, then the fair value of those securities will be determined by
consideration of other factors by or under the direction of the Board of
Trustees. Securities for which market quotations are not readily available are
valued at fair value as determined in good faith by or at the direction of the
Board of Trustees. Notwithstanding the above, bonds and other fixed-income
securities are valued by using market quotations and may be valued on the basis
of prices provided by a pricing service approved by the Board of Trustees. All
assets and liabilities initially expressed in foreign currencies will be
converted into U.S. dollars at the mean between the bid and asked prices of such
currencies against U.S. dollars as last quoted by any major bank.

With respect to options contracts entered into by a Fund, the premium
received is recorded as an asset and equivalent liability, and thereafter the
liability is adjusted to the market value of the option determined in accordance
with the preceding paragraph. The premium paid for an option purchased by the
Fund is recorded as an asset and subsequently adjusted to market value.

PRICING OF FUND SHARES

Orders for the purchase of shares will be executed at the net asset
value per share (the "public offering price") next determined after an order has
been received.

MINIMUM PURCHASE REQUIREMENTS

The minimum initial investment in a Fund is [$2,000], including an IRA
investment. Any subsequent investments must be at least $50, including an IRA
investment. All initial investments should be accompanied by a completed
Purchase Application. A Purchase Application accompanies this Prospectus. A
separate application is required for an IRA. The Funds reserve the right to
reject any purchase order.

39
<PAGE> 49
PURCHASE OF FUND SHARES

All funds received are invested in full and fractional shares of the
appropriate Fund. Certificates for shares are not issued. First Data serves as
Transfer Agent pursuant to a Transfer Agent Agreement dated July __, 1998. The
Trust reserves the right to reject any purchase. First Data maintains records of
each shareholder's holdings of Fund shares, and each shareholder receives a
statement of transactions, holdings and dividends.

All investments may be made using any of the following methods.

Through the Fund by Mail. A completed Account Application together with
a check payable to ING Funds Trust should be forwarded to ING Funds Trust,
[address]. Purchases made by check in any Fund are not permitted to be redeemed
until payment of the purchase has been collected, which may take up to fifteen
calendar days. Third party and foreign checks will not be accepted. Please
include the Fund name and your account number on all checks.

Through an Authorized Broker, Investment Adviser or Service
Organization. Shares are available to new and existing shareholders through
authorized brokers, Investment Advisers and Service Organizations. Authorized
brokers, Investment Advisers and Service Organizations may impose additional
requirements and charges for the services rendered.

Please contact your broker or Service Organization for instructions on
purchasing shares through their organization.

By Wire. Investments may be made directly through the use of wire
transfers of Federal funds. Contact your bank and request it to wire Federal
funds to the applicable Fund. In most cases, your bank will either be a member
of the Federal Reserve Banking System or have a relationship with a bank that
is. Your bank will normally charge you a fee for handling the transaction. To
purchase shares by a Federal funds wire, please first contact ING Fund Services
at 1-800-ING-INFORMATION for wiring instructions and to obtain a fund account
number. An application must be sent for overnight delivery to:

ING Funds Trust
c/o ___________________
[Address]

HOW TO PURCHASE ADDITIONAL SHARES

The minimum investment for subsequent purchases is $50.

Additional shares may be purchase directly through the Fund through any
dealer who has entered into an agreement with the Fund. Direct investments may
be made by mail or by wiring payment to the Fund.

40
<PAGE> 50

By Mail: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose and sent to the Fund at the above address.

By Wire: To insure prompt credit to his account, an investor or his dealer
should call ING Fund Services Inc. at 1-800-ING-INFORMATION prior to sending a
wire to receive a reference number for the wire. The following wire instructions
should be used:

Bank Name
City, State
Beneficiary Bank ABA/Routing #:
Beneficiary Account Number:
Beneficiary Account Name:
Account Number:
OBI:

PURCHASE PLANS

ING offers various purchase plans that make investing in additional shares
of the Funds more convenient than by mail or wire. The following are the plans
offered and the features of the plans. Please contact ING Fund Services, Inc. at
1-800-ING-INFO for the appropriate authorization form. All purchase plans
listed will not be offered to shareholders of Class X.

ING AUTO-ASSET ACCUMULATOR PLAN

This plan permits you to purchase Fund shares (minimum of $___ and maximum
of $______ per transaction) at regular intervals selected by you. Fund shares
are purchased by transferring funds from the bank account designated by you.
Only an account maintained at a domestic financial institution which is an
Automated Clearing House member may be so designated. To establish an Auto-Asset
Accumulator Plan account, you must file an authorization form with the Transfer
Agent. You may obtain the necessary authorization form by calling 1-800-
ING-INFO. You may cancel your participation in this Privilege or change the
amount of purchase at any time by mailing written notification to ING Fund
Service, P.O. Box ______________, and the notification will be effective three
business days following receipt. The Fund may modify or terminate this Privilege
at any time or charge a service fee. No such fee currently is contemplated.

ING DIRECTED FEDERAL DEPOSIT PLAN

ING Directed Federal Deposit Plan enables you to purchase Fund shares
(minimum of and maximum of $___ per transaction) by having Federal salary,
Social Security, or certain veterans', military or other payments from the
Federal government automatically deposited into your Fund account. You may
deposit as much of such payments as you elect. To enroll in this Plan you must
file with the Transfer Agent a completed Directed Deposit Sign-Up Form for each
type of payment that you desire to include in this Privilege. The appropriate
form may be obtained by calling 1-800-ING-INFO. Death or legal incapacity
will terminate your participation in this Privilege. You may elect at any time
to terminate

41
<PAGE> 51
your participation by notifying in writing the appropriate Federal agency. The
Fund may terminate your participation upon 30 days' notice to you.

ING SCHEDULED PAYROLL INVESTMENT PROGRAM

ING Scheduled Payroll Investment Program permits you to purchase Fund
shares (minimum of $___ per transaction) automatically on a regular basis.
Depending upon your employer's direct deposit program, you may have part or all
of you paycheck transferred to your existing ING account electronically through
the Automated Clearing House system at each pay period. To establish a ING
Scheduled Payroll Investment Program account, you must file an authorization
form with you employer's payroll department. Your employer must complete the
reverse side of the form and return it to ING Fund Services. You may obtain the
necessary authorization form by calling 1-800-ING-INFO. You may change the
amount of purchase or cancel the authorization only by written notification to
your employer. It is the sole responsibility of your employer, not the
Distributor, ING Funds Trust, the Transfer Agent or any other person, to arrange
for transactions under the ING Scheduled Payroll Investment Program. The Fund
may modify or terminate this Privilege at any time or charge a service fee. No
such fee currently is contemplated.

ING NO MINIMUM ASSET ESCALATOR PLAN

ING No Minimum Asset Escalator Plan enables you to purchase Fund share
without regard to the Fund's minimum initial investment requirements though
Purchases, Direct Deposit or Payroll Savings Plan. To establish this Plan, you
must supply the necessary information on the Account Application and file the
required authorization form(s) with the Transfer Agent. For more information
concerning this Program, or to request the necessary authorization form(s),
please call toll free 1-800-ING-INFO. You may terminate your participation in
the this Program at any time by discontinuing your participation in Auto-Asset
Accumulator Plan, Directed Federal Deposit Plan and ING Scheduled Payroll
Investment Program, as the case may be, as provided under the terms of such
Privilege(s). The Fund may modify or terminate this Program at any time.
Investors who wish to purchase Fund shares through this Plan in conjunction with
a ING sponsored retirement plan may do so only for IRA's, SEP-IRAs and IRA
"Rollover Accounts."

ALTERNATIVE PURCHASE ARRANGEMENTS

Each Fund offers investors the choice between multiple classes of shares
which offer differing sales charges and bear different expenses. These
alternatives permit an investor to choose the more beneficial method of
purchasing shares given the amount of the purchase, the length of time the
investor expects to hold the shares, and other circumstances. The "Highlights"
section of the Prospectus contains a summary of these alternative purchase
arrangements. A broker-dealer may receive different levels of compensation
depending on which class of shares is sold. The Distributor may also provide
additional compensation to dealers in connection with selling shares of the
Funds or for their own company-sponsored sales programs. Additional compensation
or assistance may be provided to dealers and includes payment or reimbursement
for educational, training and sales conferences or programs for their employees.
In some cases, this compensation may only be available to dealers whose
representatives have sold or are expected to sell significant amounts of shares.
The Distributor will make these payments from its own resources and none of the
aforementioned additional compensation is paid for by the applicable Fund or its
shareholders.

42
<PAGE> 52
CLASS A SHARES--INITIAL SALES CHARGE ALTERNATIVE

The public offering price of Class A shares is determined once daily, by
adding a sales charge to the net asset value per share of the shares next
calculated after receipt of the purchase order. The sales charges and
broker-dealer concessions, which vary with the size of the purchase, are shown
in the following table.

<TABLE>
<CAPTION>
SALES CHARGE AS
SALES CHARGE AS PERCENTAGE OF THE
PERCENTAGE OF THE NET AMOUNT BROKER DEALER
AMOUNT OF SALE OFFERING PRICE INVESTED CONCESSION
- -------------- -------------- -------- ----------
<S> <C> <C> <C>
Less than $100,000 .............. 5.500% % %

$100,000 but less than $250,000 . % % %

$250,000 but less than $500,000 . % % %

$500,000 but less than $1,000,000 % % %

$1,000,000 or more* ............. -0- -0- %
</TABLE>

- --------------

* The Fund imposes a contingent deferred sales charge in connection with
certain purchases of Class A shares of $1,000,000 or more. See
"Redemption--Contingent Deferred Sales Charge."

The above scale applies to purchase of Class A shares by the following:
(1) Any individual, his or her spouse, and their children under the age of 21,
and any of such persons' tax-qualified plans (provided there is only one
participant); (2) A trustee or fiduciary of a single trust estate or single
fiduciary account; and (3) Any organized group, provided that the purchase is
made by means which result in economy of sales effort or expenses, whether the
purchases are made through a central administrator, through a single
broker-dealer or by other means and the group has a tax identification number.
An organized group does not include clients of an investment adviser.

Rights of Accumulation. The initial sales charge for your investment in
Fund shares may also be reduced by aggregating the amount of such investment
with the current value of all Fund shares currently owned by you at the time of
your current purchase.

Letter of Intent ("LOI"). You may reduce the initial sales charge rate
that applies to your purchases of Class A shares by meeting the terms of an
LOI--a non-binding commitment to invest a certain amount within a thirteen-month
period from your initial purchase. The total amount of your intended purchases
of Class A, B, C and X shares will determine the reduced sales charge rate for
Class A shares purchased during that period. This can include purchases made up
to 90 days before the date of the LOI. Of the LOI amount, 5% will be held in
escrow to cover additional sales charges which may be due if your total
investments over the LOI period are not sufficient to qualify for a sales charge
reduction.

43
<PAGE> 53
parent company) or the Sub-Adviser, and any retirement plans established by such
entities for their employees; (3) accounts with respect to which any person
described in (2) above acts as a custodian on behalf of a minor (including
Uniform Gift to Minors Act and Uniform Transfer to Minors Act accounts); (4)
present employees (and their parents, spouses and dependent children) of the
Transfer Agent and the Funds' or the Trust's legal counsel and administrator;
(5) dealers that have a sales agreement with the Distributor, if they purchase
shares for their own accounts or for retirement plans for their employees; (6)
employees and registered representatives (and their parents, spouses and
dependent children) of dealers or financial institutions that have entered into
sales arrangements with such dealers (and are identified to the Distributor) or
with the Distributor; the purchaser must certify to the Distributor at the time
of purchase that the purchase is for the purchaser's own account (or for the
benefit of such employee's parents, spouse, parents of spouse, or minor
children); (7) dealers, brokers, registered investment advisers or third-party
administrators or consultants that have entered into an agreement with the
Distributor providing specifically for the use of Fund shares in investment
products or services made available to their clients (those clients may be
charged a transaction fee by their dealer, broker or adviser for the purchase or
sale of Fund shares); (8) employees (and their parents, spouses and dependent
children) of firms providing the Funds, the Trust or their affiliates with
regular legal, actuarial, auditing, underwriting, claims, administrative,
computer support, marketing, office or other services; and (9) any sub-adviser
of the Funds or the Trust.

Additionally, no sales charge is imposed on the following transactions:
(1) shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which a Fund is a party; (2) shares
purchased by the reinvestment of loan repayments by a participant in a
retirement plan; (3) shares purchased by the reinvestment of distributions
received from a Fund; (4) shares purchased and paid for with the proceeds of
shares redeemed in the prior 180 days from a mutual fund on which an initial
sales charge or CDSC was paid (other than a mutual fund managed by the Manager
or any of its affiliates); (5) purchases by a defined contribution plan under
section 401(a) of the Code (including 401(k) plans) with at least 25 eligible
employees; (6) purchases by a 403(b)(7) plan subject to the Employee Retirement
Income Security Act of 1974, as amended; (7) purchases by former participants in
a qualified retirement plan, where a portion of the plan was invested in the
Company; (8) purchases by non-qualified deferred compensation plans; and (9)
purchases under arrangements between the Distributor and organizations which
make recommendations to or permit group solicitations of its employees, members
or participants.

In order for the above sales charge reductions or waivers to be effective,
the Transfer Agent must be notified of the reduction or waiver request when the
purchase order is placed. The Transfer Agent may require evidence of your
qualification for such reductions or waivers. Additional information about the
above sales charge reductions or waivers can be obtained from the ING Fund
Services by calling 1-800-ING-INFO.

Conversion from Class B or X Shares. Class B or X shares will
automatically be converted to Class A shares (at net asset value) after [ ]
years.

Rule 12b-1 Fees. For each Fund, Class A shares are subject to a Rule 12b-1
fee payable at an annual rate of 0.50% of the average daily net assets of the
Fund attributable to such shares. For additional information, see
"Management--Distribution Expenses."

44
<PAGE> 54
Deferred Sales Charges. Although there is no initial sales charge on
purchases of Class A shares of $1,000,000 or more, the Distributor pays
broker-dealers out of its own assets, a fee of up to 1% of the offering price of
such shares. If these shares are redeemed within 12 months, the redemption
proceeds will be reduced by 1.00%. For additional information, see
"Redemption--Contingent Deferred Sales Charge."

CLASS B AND X SHARES--CONTINGENT DEFERRED SALES CHARGE ALTERNATIVES

CLASS B SHARES. The public offering price of Class B shares is the net
asset value of the applicable Fund's shares. Such shares are sold without an
initial sales charge so that the Fund receives the full amount of the investor's
purchase. However, a contingent deferred sales charge ("CDSC") will be imposed
if shares are redeemed within [ ] years of purchase. The Class B CDSC will not
apply to redemptions of shares purchased by the reinvestment of dividends or
capital gains distributions and may be waived under certain circumstances
described below. The Class B CDSC will be assessed on the lesser of the net
asset value of the shares at the time of redemption or the original amount
invested. The Class B CDSC is not imposed on the amount of any increase in your
account value over the initial amount invested. The Class B CDSC is paid to the
Distributor to reimburse expenses incurred in providing distribution-related
services to the Fund in connection with the sale of Class B shares.

To determine whether the Class B CDSC applies to a redemption, the Fund
redeems shares in the following order: (1) shares acquired by reinvestment of
dividends and capital gains distributions; (2) shares held for over ____ years;
and (3) shares in the order they were purchased (such that shares held the
longest are redeemed first). The amount of the Class B CDSC will depend on the
number of years since the time you invested and the dollar amount being
redeemed, according to the following schedule:

<TABLE>
<CAPTION>
Redemption During: Class B CDSC:
<S> <C>
lst year after purchase
2nd year after purchase
3rd year after purchase
4th year after purchase
5th year after purchase
6th year after purchase
</TABLE>

In the table, a "year" is a 12-month period. All purchases are considered
to have been made on the first business day of the month in which the purchase
was made.

Waiver of Class B CDSC. The Class B CDSC will be waived in the following
cases if shares are redeemed and the Transfer Agent is notified: (1) redemptions
following death or post-purchase disability (as defined by Section 72(m)(7) of
the Code); (2) the portion of a mandated minimum distribution from an IRA,
SIMPLE IRA or an individual type 403(b)(7) or other qualified plan equal to the
percentage of your plan assets held in Class B shares of the Fund; (3)
reinvested dividends and capital gains and (4) a Systematic Withdrawal Plan of
10% with a minimum distribution of $500 per month with an initial account of
$20,000 or greater.

45
<PAGE> 55
For additional information, see "Redemption--Contingent Deferred Sales
Charge." In addition, Class B shares are subject to higher annual Rule 12b-1
fees as described below.

Proceeds from the CDSC are paid to the Distributor and are used to defray
its expenses related to providing distribution-related services to the
applicable Fund in connection with the sale of Class B shares, such as the
payment of compensation to selected broker-dealers, and for selling such shares.
The combination of the CDSC and the Rule 12b-1 fee enables the Fund to sell such
shares without deduction of a sales charge at the time of purchase. Although
such shares are sold without an initial sales charge, the Distributor pays a
dealer concession equal to % of the amount invested to broker-dealers who sell
Class B shares.

Rule 12b-1 Fees. Class B shares are subject to a Rule 12b-1 fee payable at
an annual rate of 1.00% of the average daily net assets of the Fund attributable
to such shares. The higher Rule 12b-1 fee will cause Class B shares to have a
higher expense ratio and to pay lower dividends than Class A shares. For
additional information about this fee, see "Management--Distribution Expenses."

CLASS X SHARES. Class X shares are currently only offered to certain
"Qualified" purchasers (including, but not limited to, IRAs, Roth IRAs,
Education IRAs, SEP IRAs, SIMPLE IRAs and 403(b)(7) plans). Any request for
"Non-Qualified" purchases of Class X shares up to $[ ] will normally be
considered as a purchase request for Class B shares or declined. Any request for
"Non-Qualified" purchases of Class X shares above $[ ] will be considered as a
purchase request for Class A shares or declined. Because it is more advantageous
for an investor to purchase Class A shares for amounts in excess of $1,000,000,
a request to purchase Class X shares for $1,000,000 or more will normally be
considered as a purchase request for Class A shares or declined.

The public offering price of Class X shares is the net asset value of the
applicable Fund's shares. In addition, investors purchasing Class X shares will
receive, as a bonus, additional shares having a value equal to 2.50% of the
amount invested ("Bonus Shares"). The Distributor has undertaken to pay for
Bonus Shares as part of its services to the Funds. The Distributor expects to
recover costs associated with its purchases of Bonus Shares through fees
received under the Class X Distribution and Service Plan discussed below. Shares
purchased by the reinvestment of dividends or capital gains distributions are
not eligible for Bonus Shares.

Although Class X shares are sold without an initial sales charge, if Class
X shares are redeemed within [ ] years of their purchase, a CDSC ("Class X
CDSC") will be deducted from the redemption proceeds. The Class X CDSC will not
apply to redemptions of Bonus Shares or shares purchased by the reinvestment of
dividends or capital gains distributions and may be waived under certain
circumstances described below. The Class X CDSC will be assessed on the lesser
of the NAV of the shares at the time of redemption or the original amount
invested. The Class X CDSC is not imposed on the amount of any increase in your
account value over the initial amount invested. The Class X CDSC is paid to the
Distributor to reimburse expenses incurred in providing distribution-related
services to the Fund in connection with the sale of Class X shares. Although
Class X shares are sold without an initial sales charge, the Distributor
normally pays a sales commission of __% (and may pay up to __%) of the purchase
price of Class X shares to the dealer from its own resources at the time of the
sale. During the initial offering period of the Class X shares, the Distributor
intends to pay a ___% up-front sales

46
<PAGE> 56
commission to the dealer. The Distributor has assigned its right to receive any
Class X CDSC, as well as any distribution and service fee to an unaffiliated
third party that provides funding for up-front sales commission payments.

To determine whether the Class X CDSC applies to a redemption, the Fund
redeems shares in the following order: (1) shares acquired by reinvestment of
dividends and capital gains distributions; (2) shares (including Bonus Shares)
held for over __ years; (3) shares (not including Bonus Shares) in the order
they were purchased (such that shares held the longest are redeemed first); and
(4) Bonus Shares in the order they were acquired (such that Bonus Shares held
the longest are redeemed first). The amount of the Class X CDSC will depend on
the number of years since the time you invested and the dollar amount being
redeemed, according to the following schedule:

<TABLE>
<CAPTION>
Redemption During: Class X CDSC:
<S> <C>
lst year after purchase
2nd year after purchase
3rd year after purchase
4th year after purchase
5th year after purchase
6th year after purchase
</TABLE>

In the table, a "year" is a 12-month period. All purchases are considered
to have been made on the first business day of the month in which the purchase
was made.

Waiver of Class X CDSC. The Class X CDSC will be waived in the following
cases if shares are redeemed and the Transfer Agent is notified: (1) redemptions
following death or post-purchase disability (as defined by Section 72(m)(7) of
the Code); (2) the portion of a mandated minimum distribution from an IRA,
SIMPLE IRA or an individual type 403(b)(7) plan equal to the percentage of your
plan assets held in Class X shares of the Fund; (3) reinvested dividends and
capital gains and (4) a Systematic Withdrawal Plan of 10% per year with a
minimum distribution of $500 per month with an initial account of $20,000 or
greater.

Conversion to Class A Shares. [ ] years after you purchase Class B or X
shares of a Fund, those shares will automatically convert to Class A shares of
that Fund. This conversion feature relieves Class B and X shareholders of the
higher asset-based distribution charges that applies to these shares. The
conversion is based on the relative net asset value, and no sales load or other
charge is imposed. At the time of conversion, a portion of the Class B or Class
X shares, as applicable, purchased through the reinvestment of dividends or
capital gains ("Dividend Shares") will also convert to Class A shares. The
portion of Dividend Shares that will convert is determined by the ratio of your
converting Class B or X non-Dividend Shares to your total Class B or X
non-Dividend Shares. Under Section 1036 of the Code, the automatic conversion of
Class X shares will not result in a gain or loss to the Fund or to affected
shareholders.

CLASS C SHARES--LEVEL SALES CHARGE ALTERNATIVE

47
<PAGE> 57
The public offering price of Class C shares is the net asset value of such
shares. Class C shares are sold without an initial sales charge so that the
applicable Fund receives the full amount of the investor's purchase. While Class
C shares do not convert to Class A shares, they are subject to a lower
contingent deferred sales charge (1.00%) and do not have to be held for as long
a time (one year) as Class B or X shares to avoid paying a contingent deferred
sales charge. For additional information, see "Redemption--Contingent Deferred
Sales Charge." In addition, Class C shares are subject to higher annual Rule
12b-1 fees as described below. Class C shares do not convert to Class A shares.

Proceeds from the CDSC are paid to the Distributor and are used to defray
its expenses related to providing distribution-related services to the
applicable Fund in connection with the sale of Class C shares, such as the
payment of compensation to selected broker-dealers, and for selling Class C
shares. The combination of the CDSC and the Rule 12b-1 fee enables the Fund to
sell the Class C shares without deduction of a sales charge at the time of
purchase. Although Class C shares are sold without an initial sales charge, the
Distributor pays a dealer concession equal to 1.00% of the amount invested to
broker-dealers who sell Class C shares at the time the shares are sold and an
annual fee of 1.00% of the amount invested that begins to accrue one year after
the shares are sold.

Rule 12b-1 Fees. For each Fund, Class C shares are subject to a Rule 12b-1
fee payable at an annual rate of 1.00% of the average daily net assets of the
Fund attributable to such shares. The higher Rule 12b-1 fee will cause Class C
shares to have a higher expense ratio and to pay lower dividends than Class A
shares. For additional information about this fee, see "Management--Distribution
Expenses."

INDIVIDUAL RETIREMENT ACCOUNTS

The Funds may be used as a funding medium for IRAs. In addition, an IRA
may be established through a custodial account with_____________. Completion of
a special application is required in order to create such an account, and the
minimum initial investment for an IRA is $[2,000]. Contributions to IRAs are
subject to prevailing amount limits set by the Internal Revenue Service. For
more information and IRA information, call the Funds at 1- 800-ING-INFO.
Additional account level fees may be imposed for IRA accounts.

REDEMPTION OF FUND SHARES

Shareholders may redeem their shares, in whole or in part, on each day the
Fund is valued. Shares will be redeemed without charge (except any applicable
contingent deferred sales charge) at the net asset value next determined after a
redemption request in good order has been received and accepted by the
applicable Fund. See "DETERMINATION OF NET ASSET VALUE" in the SAI.

A redemption may be a taxable transaction on which gain or loss may be
recognized.

48
<PAGE> 58
the shares are redeemed, dividends on the shares will continue to accrue and be
payable and the shareholder will be entitled to exercise all other beneficial
rights of ownership.

Once the shares are redeemed, a Fund will ordinarily send the proceeds by
check to the shareholder at the address of record on the next business day. The
Funds may, however, take up to seven days to make payment. This will not be the
customary practice. Also, if the New York Stock Exchange is closed (or when
trading is restricted) for any reason other than the customary weekend or
holiday closing or if an emergency condition as determined by the SEC merits
such action, the Funds may suspend redemptions or postpone payment dates. No
interest or additional dividends will be earned on amounts represented by
uncashed redemption checks or misapplied wire payments.

SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the ING Funds Trust, ING Fund Distributors, and their agents by
verifying the signature of each investor seeking to redeem, transfer, or
exchange shares of ING Funds. Examples of when signature guarantees are required
are: (1) redemptions by mail in excess of $50,000; (2) redemptions by mail if
the proceeds are to be paid to someone other than the name(s) in which the
account is registered; (3) written redemptions requesting proceeds to be sent by
wire to other than the bank of record for the account; (4) redemptions
requesting proceeds to be sent to a new address or an address that has been
changed within the past 30 days; (5) requests to transfer the registration of
shares to another owner; (6) telephone exchange and telephone redemption
authorization forms; (7) changes in previously designated wiring instructions;
and (8) written redemptions or exchanges of shares previously reported as lost,
whether or not the redemption amount is under $50,000 or the proceeds are to be
sent to the address of record. These requirements may be waived or modified upon
notice to shareholders.

Acceptable guarantors include banks, broker-dealers, credit unions,
national securities exchanges, savings associations and any other organization,
provided that such institution or organization qualifies as an "eligible
guarantor institution" as that term is defined in rules adopted by the
Securities and Exchange Commission ("SEC"), and further provided that such
guarantor institution is listed in one of the reference guides contained in the
Transfer Agent's current Signature Guarantee Standards and Procedures, such as
certain domestic banks, credit unions, securities dealers, or securities
exchanges. The Transfer Agent will also accept signatures with either: (1) a
signature guarantees with a medallion stamp of the STAMP Program, or (2) a
signature guaranteed with a medallion stamp of the NYSE Medallion Signature
Program, provided that in either event, the amount of the transaction involved
does not exceed the surety coverage amount indicated on the medallion. For
information regarding whether a particular institution or organization qualifies
as an "eligible guarantor institution," an investor should contact ING Fund
Services.

Redemption Methods. To ensure acceptance of your redemption request, it is
important to follow the procedures described below. Although the Funds have no
present intention to do so, the Funds reserve the right to refuse or to limit
the frequency of any telephone or wire redemptions. Of course, it may be
difficult to place orders by telephone during periods of severe market or
economic change, and a shareholder should consider alternative methods of
communications, such as couriers. The Funds may modify or terminate their
services and provisions at any time. If the Funds terminate any particular
service, they will do so only after giving written notice to shareholders.
Redemption by mail will always be available to shareholders.

49
<PAGE> 59
You may redeem your shares using any of the following methods:

Through an Authorized Broker, Investment Adviser or Service Organization.
You may redeem your shares by contacting your Authorized Broker or Investment
Adviser or Service Organization and instructing him or her to redeem your
shares. He or she will then contact ING Fund Services and place a redemption
trade on your behalf.

By Mail. You may redeem your shares by sending a letter directly to ING
Fund Services. To be accepted, a letter requesting redemption must include: (i)
the Fund name and account registration from which you are redeeming shares; (ii)
your account number; (iii) the amount to be redeemed and (iv) the signatures of
all registered owners. A signature guarantee may be required as indicated in the
beginning of this section. Corporations, partnerships, trusts or other legal
entities will be required to submit additional documentation.

By Telephone. You may redeem your shares by calling the Funds at
1-800-ING-INFO. You should be prepared to give the telephone representative the
following information: (i) your account number, social security number and
account registration; (ii) the Fund name from which you are redeeming shares;
and (iii) the amount to be redeemed. The conversation may be recorded to protect
you and the Funds. Telephone redemptions are available only if the shareholder
so indicates by checking the "yes" box on the Purchase Application and may only
be sent to the address of record or preassigned wire instructions. The Funds
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine. If the Funds fail to employ such reasonable procedures,
they may be liable for any loss, damage or expense arising out of any telephone
transactions purporting to be on a shareholder's behalf. In order to assure the
accuracy of instructions received by telephone, the Funds require some form of
personal identification prior to acting upon instructions received by telephone,
record telephone instructions and provide written confirmation to investors of
such transactions. Telephone redemptions will be suspended for a period of 10
days following a telephone address change.

You may instruct the Funds to send your redemption proceeds via a wire
transmission to your personal bank. Your instructions should include: (i) your
account number, social security number and account registration; (ii) the Fund
name from which you are redeeming shares; and (iii) the amount to be redeemed.
Wire redemptions can be made only if the "yes" box has been checked in the
"Telephone Redemption Authorization" section on your Purchase Application, and
you have attached a copy of a voided check or a letter summarizing the wiring
instructions of the account where proceeds are to be wired. Your bank may charge
you a fee for receiving a wire payment on your behalf.

Check Writing. A check redemption ($100 minimum, no maximum) feature is
available. Checks are free and a Checkwriting Authorization and Signature Card
may be obtained from the Fund by contacting ING Fund Services at
1-800-ING-INFORMATION. It is not possible to use a check to close out your
account since additional shares accrue daily. Checks will be issued upon receipt
of a properly completed Authorization and Signature Card. Checks will be mailed
by the Transfer Agent by first class mail.

50
<PAGE> 60
[ The above-mentioned redemption services may not be available for clients
of Authorized Brokers, Investment Advisers or Service Organizations or for IRAs.
These clients should contact their representative.

SYSTEMATIC WITHDRAWAL PLAN

An owner of $100,000 or more of a Fund may elect to have periodic
redemptions from his or her account to be paid on a monthly, quarterly,
semi-annual or annual basis. The minimum periodic payment is $50. A sufficient
number of shares to make the scheduled redemption will normally be redeemed on
the fifth or twentieth day of the selected month(s). Depending on the size of
the payment requested and fluctuation in the net asset value, if any, of the
shares redeemed, redemptions for the purpose of making such payments may reduce
or even exhaust the account. A shareholder may request that these payments be
sent to a predesignated bank or other designated party. Capital gains and
dividend distributions paid to the account will automatically be reinvested at
net asset value on the distribution payment date.

ING "BANK TO BANK" TRANSFER PLAN

You may request by telephone that redemption proceeds (maximum $500 per
day) be transferred between your Fund account and your bank account. Only a bank
account maintained in a domestic financial institution which is an Automated
Clearing House member may be designated. Redemption proceeds will be on deposit
in your account at an Automated Clearing House member bank ordinarily two days
after receipt of the redemption request. Holders of jointly registered Fund or
bank accounts may redeem through the [ ] for transfer to their bank
account not more than $250,000 within any 30-day period.

REDEMPTION IN KIND

All redemptions of shares of the Funds shall be made in cash, except that
the commitment to redeem shares in cash extends only to redemption requests made
by each shareholder of a Fund during any 90-day period of up to the lesser of
$250,000 or 1% of the net asset value of that Fund at the beginning of such
period. This commitment is irrevocable without the prior approval of the SEC and
is a fundamental policy of the Funds that may not be changed without shareholder
approval. In the case of redemption requests by shareholders in excess of such
amounts, the Board of Trustees reserves the right to have the Funds make
payment, in whole or in part, in securities or other assets, in case of an
emergency or any time a cash distribution would impair the liquidity of a Fund
to the detriment of the existing shareholders. In this event, the securities
would be valued in the same manner as the securities of that Fund are valued. If
the recipient were to sell such securities he or she may receive more or less
than the value of such securities as determined above, and might incur brokerage
charges.

51
<PAGE> 61
EXCHANGE OF FUND SHARES

The Funds offer several convenient ways to exchange shares in one Fund for
shares in the SAME CLASS of another Fund in the Trust. Before engaging in an
exchange transaction, a shareholder should read carefully the Prospectus
describing the Fund into which the exchange will occur, which is available
without charge and can be obtained by writing to ING Funds Trust, [address], or
by calling the Funds at 1-800-ING-INFO. A shareholder may not exchange shares of
one Fund for shares of another Fund if the new Fund is not qualified for sale in
the state of the shareholder's residence. The minimum amount for an initial and
subsequent exchange is $__. The Trust may terminate or amend the terms of the
exchange privilege at any time upon at least 60 days' prior written notice to
shareholders of any modification or termination of the exchange privilege.

A new account opened by exchange must be established with the same
name(s), address and social security number as the existing account. All
exchanges will be made based on the net asset value next determined following
receipt of the request by a Fund in good order, plus any applicable sales
charge.

An exchange is taxable as a sale of a security on which a gain or loss may
be recognized. Shareholders will receive written confirmation of the exchange
following completion of the transaction.

EXCHANGE BY MAIL

To exchange Fund shares by mail, simply send a letter of instruction to
the Fund. The letter of instruction must include: (i) your account number; (ii)
the Fund from and the Fund into which you wish to exchange your investment;
(iii) the dollar or share amount you wish to exchange; and (iv) the signatures
of all registered owners or authorized parties.

EXCHANGE BY TELEPHONE

To exchange Fund shares by telephone or if you have any questions simply
call the Funds at 1-800-ING- INFO. You should be prepared to give the telephone
representative the following information: (i) your account number, social
security or tax identification number and account registration; (ii) the name of
the Fund from and the Fund into which you wish to transfer your investment; and
(iii) the dollar or share amount you wish to exchange. Telephone exchanges are
available unless the shareholder specifically declines this option on the
Purchase Application. Telephone exchanges will be suspended for a period of ten
days following a telephone address change. See "REDEMPTION OF FUND SHARES--By
Telephone" for a discussion of telephone transactions generally.

AUTO-EXCHANGE PRIVILEGE

52
<PAGE> 62
with a sales load. See "Shareholder Services" in the Statement of Additional
Information. The right to exercise this Privilege may be modified or canceled by
the Fund or the Transfer Agent. You may modify or cancel your exercise of this
Privilege at any time by mailing written notification to the ING Fund Services,
P.O. Box _____, __________. The Fund may charge a service fee for the use of
this Privilege. No such fee currently is contemplated. For more information
concerning this Privilege and the funds in the ING Family of Funds eligible to
participate in this Privilege, or to obtain a Auto-Exchange Authorization Form,
please call toll free 1-800-ING-INFO.

ING AUTOMATIC DIVIDEND DIRECTION OPTION

This option enables you to invest automatically dividends or dividends and
capital gain distributions, if any, paid by the Fund in shares of another Fund
in the Trust of which you are a shareholder. Shares of the other fund will be
purchased at the then-current net asset value; however, a sales load may be
charged with respect to investments in shares of a fund sold with a sales load.
If you are investing in a fund that charges a sales load, you may qualify for
share prices which do not include the sales load or which reflect a reduced
sales load. If you are investing in a fund that charges a contingent deferred
sales charge, if any, applicable to the purchased shares. See "Shareholder
Services" in the Statement of Additional Information. ING Automatic Dividend
Direction Option permits you to transfer electronically dividends or dividends
and capital gain distributions, if any, from the Fund to a designated bank
account. Only an account maintained at a domestic financial institution which is
an Automated Clearing House member may be so designated. Banks may charge a fee
for this service.

CONTINGENT DEFERRED SALES CHARGE

CLASS A

Each Fund imposes a contingent deferred sales charge ("CDSC") on Class A
shares in certain circumstances. Under the CDSC arrangement, for sales of shares
of $1,000,000 or more (including right of accumulation and statements of
intention (see "Purchase of Fund Shares")), the front-end sales charge ("FESC")
will not be imposed (although the Distributor intends to pay its registered
representatives and other dealers that sell Fund shares, out of its own assets,
a fee of up to 1% of the offering price of such sales except on purchases exempt
from the FESC). However, if such shares are redeemed within twelve months after
their purchase date (the "CDSC Period"), the redemption proceeds will be reduced
by the 1.00% CDSC.

The CDSC will be applied to the net asset value of such shares at the time
of redemption. The CDSC will not be applied to shares acquired through
reinvestment of income dividends or capital gain distributions or shares held
for longer than the applicable CDSC Period. In determining which shares to
redeem, unless instructed otherwise, shares that are not subject to the CDSC and
having a higher Rule 12b-1 fee will be redeemed first, shares not subject to the
CDSC having a lower Rule 12b-1 fee will be redeemed next, and shares subject to
the CDSC then will be redeemed in the order purchased.

53
<PAGE> 63
gains and for a Systematic Withdrawal Plan of 10% per year where the minimum
distribution is $500 per month with an initial account of $20,000 or greater.
Shares of the Fund that are acquired in exchange for shares of another Fund that
were subject to a CDSC will remain subject to the CDSC that applied to the
shares of the other Fund.

CLASS B, X, AND C SHARES

The CDSC on Class B, X, and C shares will be calculated on the net asset
value of the shares at the time of redemption. No charge will be assessed on
shares derived from reinvestment of dividends or capital gains distributions or
on shares held for longer than the applicable CDSC Period.

Upon any request for redemption of shares of any class of shares that
imposes a CDSC, it will be assumed, unless otherwise requested, that shares
subject to no CDSC will be redeemed first in the order purchased and all
remaining shares that are subject to a CDSC will be redeemed in the order
purchased. With respect to the redemption of shares subject to no CDSC where the
shareholder owns more than one class of shares, those shares with the highest
Rule 12b-1 fee will be redeemed in full prior to any redemption of shares with a
lower Rule 12b-1 fee.

The CDSC does not apply to: (1) redemption of shares when a Fund exercises
its right to liquidate accounts which are less than the minimum account size;
(2) redemptions following death or post-purchase disability (as defined by
Section 72(m)(7) of the Code); (3) the portion of a mandated minimum
distribution from an IRA, SIMPLE IRA or an individual type 403(b)(7) plan equal
to the percentage of your plan assets held in the applicable Class of shares of
the Fund; (4) reinvested dividends and capital gains and (5) a Systematic
Withdrawal Plan of 10% per year where the minimum distribution is $500 per month
with an initial account of $20,000 or greater.

As an illustration of CDSC calculations, assume that Shareholder X
purchases on Year 1/Day 1 100 shares at $10 per share. Assume further that, on
Year 2/Day 1, Shareholder X purchased an additional 100 shares at $12 per share.
Finally, assume that, on Year 3/Day 1, Shareholder X wishes to redeem shares
worth $1,300, and that the net asset value per share as of the close of business
on such day is $13. To effect Shareholder X's redemption request, 100 shares at
$13 per share (totaling $1,300) would be redeemed. The CDSC would be waived in
connection with the redemption of that number of shares equal in value (at the
time of redemption) to $220 (10% of $1,000--the purchase amount of the shares
purchased by Shareholder X on Year 1/Day 1--plus 10% of $1,200-- the purchase
amount of the shares purchased by Shareholder X on Year 2/Day 1). In addition,
no CDSC would apply to the $400 in capital appreciation on Shareholder X's
shares ($2,600 Year 3 value minus $2,200 purchase cost of shares). If a
shareholder exchanges shares subject to a CDSC for Class B, X, or C shares of a
different Fund, the transaction will not be subject to a CDSC. However, when
shares acquired through the exchange are redeemed, the shareholder will be
treated as if no exchange took place for the purpose of determining the CDSC
Period and applying the CDSC.

54
<PAGE> 64
DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAX

Each Fund intends to qualify and elect to be treated as a regulated
investment company and intends to continue to qualify to be treated as a
regulated investment company for each taxable year pursuant to the provisions of
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). By
so qualifying and electing, each Fund generally will not be subject to Federal
income tax to the extent that it distributes investment company taxable income
and net realized capital gains in the manner required under the Code.

Each Fund intends to distribute to its shareholders substantially all of
its investment company taxable income (which includes, among other items,
dividends and interest and the excess, if any, of net short-term capital gains
(generally including any net option premium income) over net long-term capital
losses). The Funds will declare distributions of such income daily and pay those
dividends quarterly. Each Fund intends to distribute, at least annually,
substantially all net capital gains (the excess of net long-term capital gains
over net short-term capital losses). In determining amounts of capital gains to
be distributed, any capital loss carryovers from prior years will be applied
against capital gains.

The amount declared each day as a dividend may be based on projections of
estimated monthly net investment income and may differ from the actual
investment income determined in accordance with generally accepted accounting
principles. An adjustment will be made to the dividend each month to account for
any difference between the projected and actual monthly investment income.

For all distributions, the shareholder may elect in writing, not less than
five full business days prior to the record date, to receive such distributions
in cash. Dividends declared in, and attributable to, the preceding period will
be paid within five business days after the end of the period. Unless the
shareholder chooses to receive dividend and/or capital gain distributions in
cash, distributions will be automatically reinvested in additional shares of the
respective Fund at net asset value. If you elect to receive distributions in
cash and checks (1) if returned and marked as "undeliverable" or (2) remain
uncashed for six months, your cash election will be changed automatically and
your future dividend and capital gains distributions will be reinvested in the
Fund at the per share net asset value determined as of the date of payment of
the distribution. In addition, any undeliverable checks or checks that remain
uncashed for six months will be canceled and will be reinvested in the Fund at
the per share net asset value determined as of the date of cancellation.

Investors who redeem all or a portion of Fund shares prior to a dividend
payment date will be entitled on the next dividend payment date to all dividends
declared but unpaid on those shares at the time of their redemption.

Distributions of net investment company taxable income (regardless of
whether derived from dividends, interest or short-term capital gains) generally
will be taxable to shareholders as ordinary income. Distributions of net
long-term capital gains designated by a Fund as capital gain distributions will
be taxable as long-term capital gains, regardless of how long a shareholder has
held his Fund shares. This is true for distributions from net gains on
securities held for more than one year, but not more than 18 months, and from
net gains on securities held more than 18 months. Distributions are taxable in
the same manner whether received in additional shares or in cash.

55
<PAGE> 65
Earnings of the Funds not distributed on a timely basis in accordance with
a calendar year distribution requirement are subject to a nondeductible 4%
excise tax. To prevent imposition of this tax, each Fund intends to comply with
this distribution requirement.

A distribution will be treated as paid on December 31 of the calendar year
if it is declared by a Fund during October, November, or December of that year
to shareholders of record in such a month and paid by a Fund during January of
the following calendar year. Such distributions will be treated as received by
shareholders (and therefore taxable) in the calendar year in which the
distributions are declared, rather than the calendar year in which the
distributions are received.

Special tax rules may apply to a Fund's acquisition of financial futures
contracts, forward contracts, and options on futures contracts. Such rules may,
among other things, affect whether gains and losses from such transactions are
considered to be short-term or long-term, may have the effect of deferring
losses and/or accelerating the recognition of gains or losses, and, for purposes
of qualifying as a regulated investment company, may limit the extent to which a
Fund may be able to engage in such transactions.

Foreign exchange gains and losses realized by a Fund in connection with
certain transactions involving foreign currency denominated debt securities or
payables or receivables denominated in a foreign currency are subject to Section
988 of the Code which causes such gains and losses to be treated as ordinary
income and losses rather than capital gains and losses and may affect the
amount, timing and character of distributions to shareholders.

If a Fund invests in certain "passive foreign investment companies"
("PFICs") which do not distribute their income on a regular basis, it could be
subject to Federal income tax (and possibly additional interest charges) on a
portion of any "excess distribution" or gain from the disposition of such shares
even if it distributes such income to its shareholders. If the Fund elects to
treat the PFIC as a "qualified electing Fund" ("QEF") and the PFIC furnishes the
Fund certain financial information in the required form, the Fund would instead
be required to include in income each year a portion of the ordinary earnings
and net capital gains of the QEF, regardless of whether received, and such
amounts would be subject to the various distribution requirements described
above.

It is expected that dividends and interest from non-U.S. sources received
by a Fund will be subject to non-U.S. withholding taxes. Such withholding taxes
may be reduced or eliminated under the terms of applicable United States income
tax treaties, and the Fund intends to undertake any procedural steps required to
claim the benefits of such treaties. With respect to any non-U.S. taxes
(including withholding taxes) actually paid by the Fund, if more than 50% in
value of the Fund's total assets at the close of any taxable year consists of
stocks or securities of any non-U.S. corporations, the Fund may elect to treat
any non-U.S. taxes paid by it as paid by its shareholders. If the Fund does not
make the election permitted under Section 853, any foreign taxes paid or accrued
will represent an expense to the Fund which will reduce its investment company
taxable income. Absent this election, shareholders will not be able to claim
either a credit or a deduction for their pro rata portion of such taxes paid by
the Fund, nor will shareholders be required to treat as part of the amounts
distributed to them their pro rata portion of such taxes paid.

56
<PAGE> 66
In the event a Fund makes the election described above to pass through
non-U.S. taxes to shareholders, shareholders will be required to include in
income (in addition to any distributions received) their proportionate portion
of the amount of non-U.S. taxes paid by the Fund and will be entitled to claim
either a credit or deduction for their portion of such taxes in computing their
U.S. Federal income tax liability. Availability of such a credit or deduction is
subject to certain limitations. Shareholders will be informed each year in which
the Fund makes the election regarding the amount and nature of foreign taxes to
be included in their income for U.S. Federal income tax purposes.

A Fund's distributions with respect to a given taxable year may exceed the
current and accumulated earnings and profits of that Fund available for
distribution. In that event, distributions in excess of such earnings and
profits would be characterized as a return of capital to shareholders for
Federal income tax purposes, thus reducing each shareholder's cost basis in his
Fund shares. Distributions in excess of a shareholder's cost basis in his shares
would be treated as a gain realized from a sale of such shares.

Any gain or loss realized by a shareholder upon the sale or other
disposition of shares of a Fund, or upon receipt of a distribution in complete
liquidation of a Fund, generally will be a capital gain or loss which will be
long-term or short-term generally depending upon the shareholder's holding
period of the shares. A loss realized by a shareholder on a redemption, sale, or
exchange of shares of a Fund with respect to which capital gain dividends have
been paid will be characterized as a long-term capital loss to the extent of
such capital gain dividends.

The Funds may be required to withhold for Federal income tax ("backup
withholding") 31% of the distributions and the proceeds of redemptions payable
to shareholders who fail to provide a correct taxpayer identification number or
to make required certifications, or where a Fund or shareholder has been
notified by the Internal Revenue Service that the shareholder is subject to
backup withholding. Most corporate shareholders and certain other shareholders
specified in the Code are exempt from backup withholding. Backup withholding is
not an additional tax. Any amounts withheld may be credited against the
shareholder's U.S. Federal income tax liability.

Shareholders will be notified annually by the Funds as to the Federal tax
status of distributions made by the Funds in which they invest. Depending on the
residence of the shareholder for tax purposes, distributions also may be subject
to state and local taxes, including withholding taxes. Foreign shareholders may,
for example, be subject to special withholding requirements. Special tax
treatment, including a penalty on certain pre-retirement distributions, is
accorded to accounts maintained as IRAs. Shareholders should consult their own
tax advisers as to the Federal, state and local tax consequences of ownership of
shares of the Funds in their particular circumstances.

DESCRIPTION OF SECURITIES AND INVESTMENT PRACTICES

The following is a description of investment practices of the Funds and
the securities in which they may invest:

57
<PAGE> 67
interest and principal component parts of such obligations known as STRIPS which
generally differ in their interest rates and maturities. U.S. Treasury bills,
which have original maturities of up to one year, notes, which have maturities
ranging from one year to 10 years, and bonds, which have original maturities of
10 to 30 years, are direct obligations of the United States Government.

U.S. Government Securities (All Funds). U.S. Government securities are
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. U.S. Government securities include debt securities issued or
guaranteed by U.S. Government-sponsored enterprises and federal agencies and
instrumentalities. Some types of U.S. Government securities are supported by the
full faith and credit of the United States Government or U.S. Treasury
guarantees, such as mortgage-backed certificates guaranteed by the Government
National Mortgage Association ("GNMA"). Other types of U.S. Government
securities, such as obligations of the Student Loan Marketing Association,
provide recourse only to the credit of the agency or instrumentality issuing the
obligation. In the case of obligations not backed by the full faith and credit
of the United States Government, the investor must look to the agency issuing or
guaranteeing the obligation for ultimate repayment.

Commercial Paper (All Funds). Commercial paper includes short-term
unsecured promissory notes, variable rate demand notes and variable rate master
demand notes issued by both domestic and foreign bank holding companies,
corporations and financial institutions and United States Government agencies
and instrumentalities, subject to the rating requirements specified for each
Fund.

Corporate Debt Securities (All Funds). The Funds may purchase corporate
debt securities, subject to the rating and quality requirements specified with
respect to each Fund. The Funds may invest in both rated commercial paper and
rated corporate debt obligations of foreign issuers that meet the same quality
criteria applicable to investments by the Funds in commercial paper and
corporate debt obligations of domestic issuers. These investments, therefore,
are not expected to involve significant additional risks as compared to the
risks of investing in comparable domestic securities. Generally, all foreign
investments carry with them both opportunities and risks not applicable to
investments in securities of domestic issuers, such as risks of foreign
political and economic instability, adverse movements in foreign exchange rates,
the imposition or tightening of exchange controls or other limitations on
repatriation of foreign capital, changes in foreign governmental attitudes
toward private investment (possibly leading to nationalization, increased
taxation or confiscation of foreign assets) and added difficulties inherent in
obtaining and enforcing a judgment against a foreign issuer of securities should
it default.

Mortgage-Related Securities (All Funds). The Funds are permitted to invest
in mortgage-related securities subject to the rating and quality requirements
specified with respect to each such Fund. Mortgage pass-through securities are
securities representing interests in "pools" of mortgages in which payments of
both interest and principal on the securities are made monthly, in effect,
"passing through" monthly payments made by the individual borrowers on the
mortgage loans which underlie the securities (net of fees paid to the issuer or
guarantor of the securities). Early repayment of principal on mortgage
pass-through securities (arising from prepayments of principal due to sale of
the underlying property, refinancing, or foreclosure, net of fees and costs
which may be incurred) may expose a Fund to a lower rate of return upon
reinvestment of principal. Also, if a security subject to prepayment has been
purchased at a premium, in the event of prepayment the value of the premium
would be lost. Like other fixed-income securities, when interest rates rise, the
value of mortgage-related securities generally will decline; however,

58
<PAGE> 68
when interest rates decline, the value of mortgage-related securities with
prepayment features may not increase as much as other fixed-income securities.
In recognition of this prepayment risk to investors, the Public Securities
Association (the "PSA") has standardized the method of measuring the rate of
mortgage loan principal prepayments. The PSA formula, the Constant Prepayment
Rate or other similar models that are standard in the industry will be used by
the Funds in calculating maturity for purposes of investment in mortgage-related
securities. The inverse relation between interest rates and value of fixed
income securities will be more pronounced with respect to investments by the
Fund in mortgage-related securities, the value of which may be more sensitive to
interest rate changes.

Payment of principal and interest on some mortgage pass-through securities
(but not the market value of the securities themselves) may be guaranteed by the
full faith and credit of the U.S. Government (in the case of securities
guaranteed by GNMA or guaranteed by agencies or instrumentalities of the U.S.
Government (in the case of securities guaranteed by the Federal National
Mortgage Association ("FNMA") or the Federal Home Loan Mortgage Corporation
("FHLMC"), which are supported only by the discretionary authority of the U.S.
Government to purchase the agency's obligations). Mortgage pass-through
securities created by non-governmental issuers (such as commercial banks,
savings and loan institutions, private mortgage insurance companies, mortgage
bankers and other secondary market issuers) may be supported in various forms of
insurance or guarantees issued by governmental entities.

Collateralized Mortgage Obligations ("CMOs") are hybrid instruments with
characteristics of both mortgage-backed bonds and mortgage pass-through
securities. Similar to a bond, interest and prepaid principal on a CMO are paid,
in most cases, semi-annually. CMOs may be collateralized by whole mortgage loans
but are more typically collateralized by portfolios of mortgage pass-through
securities guaranteed by GNMA, FHLMC or FNMA. CMOs are structured in multiple
classes, with each class bearing a different stated maturity or interest rate.
The inverse relation between interest rates and value of fixed income securities
will be more pronounced with respect to investments by the Fund in
mortgage-related securities, the value of which may be more sensitive to
interest rate changes.

Asset-Backed Securities (Growth and Income Fund, Balanced Fund and
Emerging Markets Equity Fund). These Funds are permitted to invest in
asset-backed securities, subject to the rating and quality requirements
specified with respect to each such Fund. Through the use of trusts and special
purpose subsidiaries, various types of assets, primarily home equity loans and
automobile and credit card receivables, are being securitized in pass-through
structures similar to the mortgage pass-through structures described above.
Consistent with the Funds' investment objectives, policies and quality
standards, a Fund may invest in these and other types of asset-backed securities
which may be developed in the future.

Asset-backed securities involve certain risks that are not posed by
mortgage-related securities, resulting mainly from the fact that asset-backed
securities do not usually contain the benefit of a complete security interest in
the related collateral. For example, credit card receivables generally are
unsecured and the debtors are entitled to the protection of a number of state
and Federal consumer credit laws, some of which may reduce the ability to obtain
full payment. In the case of automobile receivables, due to various legal and
economic factors, proceeds from repossessed collateral may not always be
sufficient to support payments on these securities. The risks associated with
asset-backed securities are often reduced by the addition of credit enhancements
such as a letter of credit from a bank, excess collateral or a third-party
guarantee.

59
<PAGE> 69
Common Stocks (All Funds). Common stock represents the residual ownership
interest in the issuer after all of its obligations and preferred stocks are
satisfied. Common stock fluctuates in price in response to many factors,
including historical and prospective earnings of the issuer, the value of its
assets, general economic conditions, interest rates, investor perceptions and
market volatility.

Preferred Stocks (All Funds). Preferred stock has a preference over common
stock in liquidation and generally in dividends as well, but is subordinated to
the liabilities of the issuer in all respects. Preferred stock may or may not be
convertible into common stock. As a general rule, the market value of preferred
stock with a fixed dividend rate and no conversion element varies inversely with
interest rates and perceived credit risk. Because preferred stock is junior to
debt securities and other obligations of the issuer, deterioration in the credit
quality of the issuer will cause greater changes in the value of a preferred
stock than in a more senior debt security with similar stated yield
characteristics.

Real Estate Investment Trusts (All Funds). The Real Estate Fund will
invest in shares of real estate investment trusts ("REITs"). REITs pool
investors' funds for investment primarily in income producing real estate or
real estate related loans or interests. Under the Internal Revenue Code of 1986
(the "Code"), a REIT is not taxed on income it distributes to its shareholders
if it complies with several requirements relating to its organization,
ownership, assets, and income and a requirement that it generally distribute to
its shareholders at least 95% of its taxable income (other than net capital
gains) for each taxable year. REITs can generally be classified as Equity REITs,
Mortgage REITs, and Hybrid REITs. Equity REITs, which invest the majority of
their assets directly in real property, derive their income primarily from
rents. Equity REITs can also realize capital gains by selling properties that
have appreciated in value. Mortgage REITs, which invest the majority of their
assets in real estate mortgages, derive their income primarily from interest
payments. Hybrid REITs combine the characteristics of both Equity REITs and
Mortgage REITs.

Depositary Receipts (All Funds). American Depositary Receipts ("ADRs") are
U.S. dollar-denominated receipts generally issued by domestic banks, which
evidence the deposit with the bank of the common stock of a foreign issuer and
which are publicly traded on exchanges or over-the-counter in the United States.

These Funds may each invest in both sponsored and unsponsored ADR
programs. There are certain risks associated with investments in unsponsored ADR
programs. Because the non-U.S. company does not actively participate in the
creation of the ADR program, the underlying agreement for service and payment
will be between the depository and the shareholder. The company issuing the
stock underlying the ADR pays nothing to establish the unsponsored facility, as
fees for ADR issuance and cancellation are paid by brokers. Investors directly
bear the expenses associated with certificate transfer, custody and dividend
payment.

In an unsponsored ADR program, there also may be several depositories with
no defined legal obligations to the non-U.S. company. The duplicate depositories
may lead to marketplace confusion because there would be no central source of
information to buyers, sellers and intermediaries. The efficiency of
centralization gained in a sponsored program can greatly reduce the delays in
delivery of dividends and annual reports. In addition, with respect to all ADRs
there is always the risk of loss due to currency fluctuations.

60
<PAGE> 70
Investments in ADRs involve certain risks not typically involved in purely
domestic investments, including future foreign political and economic
developments, and the possible imposition of foreign governmental laws or
restrictions applicable to such investments. Securities of foreign issuers
through ADRs are subject to different economic, financial, political and social
factors. Individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, capital reinvestment, resources, self-sufficiency and balance of
payments position. With respect to certain countries, there is the possibility
of expropriation of assets, confiscatory taxation, political or social
instability or diplomatic developments which could adversely affect the value of
the particular ADR. There may be less publicly available information about a
foreign company than about a U.S. company, and there may be less governmental
regulation and supervision of foreign stock exchanges, brokers and listed
companies. In addition, such companies may use different accounting and
financial standards (and certain currencies may become unavailable for transfer
from a foreign currency), resulting in a Fund's possible inability to convert
proceeds realized upon the sale of portfolio securities of the affected foreign
companies immediately into U.S. currency. The Global Equity, and European Equity
Funds may also invest in European Depository Receipts (EDRs) and Global
Depositary Receipts (GDRs). EDRs are receipts issued in bearer form by a
European financial institution and traded in European securities' markets. GDRs
are receipts issued globally. EDRs are designed for trading in European Markets
and GDRs are designed for trading in non-U.S. securities markets. Investments in
EDRs and GDRs involve similar risks as ADRs.

Investment in Foreign Securities (All Funds). These Funds may each invest
in securities of foreign governmental and private issuers. Investments in
foreign securities involve certain considerations that are not typically
associated with investing in domestic securities. There may be less publicly
available information about a foreign issuer than about a domestic issuer.
Foreign issuers also are not generally subject to uniform accounting, auditing
and financial reporting standards comparable to those applicable to domestic
issuers. In addition, with respect to certain foreign countries, interest may be
withheld at the source under foreign income tax laws, and there is a possibility
of expropriation or confiscatory taxation, political or social instability or
diplomatic developments that could adversely affect investments in securities of
issuers located in those countries.

Convertible and Exchangeable Securities (All Funds). The Funds are
permitted to invest in convertible and exchangeable securities, subject to the
rating and quality requirements specified with respect to each such Fund.
Convertible securities generally offer fixed interest or dividend yields and may
be converted either at a stated price or stated rate for common or preferred
stock. Exchangeable securities may be exchanged on specified terms for common or
preferred stock. Although to a lesser extent than with fixed income securities
generally, the market value of convertible securities tends to decline as
interest rates increase and, conversely, tends to increase as interest rates
decline. In addition, because of the conversion or exchange feature, the market
value of convertible or exchangeable securities tends to vary with fluctuations
in the market value of the underlying common or preferred stock. Debt securities
that are convertible into or exchangeable for preferred or common stock are
liabilities of the issuer but are generally subordinated to senior debt of the
issuer.

61
<PAGE> 71
Eurodollar certificates of deposit and time deposits, promissory notes and
medium-term deposit notes. The Funds will not invest in any obligations of their
affiliates, as defined under the 1940 Act.

Each Fund limits its investment in United States bank obligations to
obligations of United States banks (including foreign branches). Each Fund
limits its investment in foreign bank obligations to United States
dollar-denominated obligations of foreign banks (including United States
branches of foreign banks) which in the opinion of the Sub-Adviser, are of an
investment quality comparable to obligations of United States banks which may be
purchased by the Funds. There is no limitation on the amount of the Funds'
assets which may be invested in obligations of foreign banks meeting the
conditions set forth herein.

Fixed time deposits may be withdrawn on demand by the investor, but may be
subject to early withdrawal penalties which vary depending upon market
conditions and the remaining maturity of the obligation. There are no
contractual restrictions on the right to transfer a beneficial interest in a
fixed time deposit to a third party, although there is no market for such
deposits. Investments in fixed time deposits subject to withdrawal penalties
maturing in more than seven days may not exceed 15% of the value of the net
assets of the Funds.

Obligations of foreign banks involve somewhat different investment risks
than those affecting obligations of United States banks, including the
possibilities that their liquidity could be impaired because of future political
and economic developments, that the obligations may be less marketable than
comparable obligations of United States banks, that a foreign jurisdiction might
impose withholding taxes on interest income payable on those obligations, that
foreign deposits may be seized or nationalized, that foreign governmental
restrictions such as exchange controls may be adopted which might adversely
affect the payment of principal and interest on those obligations and that the
selection of those obligations may be more difficult because there may be less
publicly available information concerning foreign banks, or that the accounting,
auditing and financial reporting standards, practices and requirements
applicable to foreign banks may differ from those applicable to United States
banks. Foreign banks are not subject to examination by any United States
Government agency or instrumentality.

Investments in Eurodollar and Yankee dollar obligations involve additional
risks. Most notably, there generally is less publicly available information
about foreign companies; there may be less governmental regulation and
supervision; they may use different accounting and financial standards; and the
adoption of foreign governmental restrictions may adversely affect the payment
of principal and interest on foreign investments. In addition, not all foreign
branches of United States banks are supervised or examined by regulatory
authorities as are United States banks, and such branches may not be subject to
reserve requirements.

STRIPS and Zero Coupon Securities (All Funds). Each Fund may invest in
separately traded principal and interest components of securities backed by the
full faith and credit of the United States Treasury. The principal and interests
components of United States Treasury bonds with remaining maturities of longer
than ten years are eligible to be traded independently under the Separate
Trading of Registered Interest and Principal of Securities ("STRIPS") program.
Under the STRIPS program, the principal and interest components are separately
issued by the United States Treasury at the request of depository financial
institutions, which then trade the component parts separately. The interest
component of STRIPS may be more volatile than that of United States Treasury
bills with comparable maturities. The Funds will not actively trade in STRIPS.

62
<PAGE> 72
The Funds may invest in zero coupon securities. A zero coupon security
pays no interest to its holder during its life and is sold at a discount to its
face value at maturity. The market prices of zero coupon securities generally
are more volatile than the market prices of securities that pay interest
periodically and are more sensitive to changes in interest rates than non-zero
coupon securities having similar maturities and credit qualities.

Variable rate demand obligations (All Funds). Variable rate demand
obligations have a maturity of five to twenty years but carry with them the
right of the holder to put the securities to a remarketing agent or other entity
on short notice, typically seven days or less. Generally, the remarketing agent
will adjust the interest rate every seven days (or at other intervals
corresponding to the notice period for the put), in order to maintain the
interest rate at the prevailing rate for securities with a seven-day maturity.
The remarketing agent is typically a financial intermediary that has agreed to
perform these services. Variable rate master demand obligations permit a Fund to
invest fluctuating amounts at varying rates of interest pursuant to direct
arrangements between the Funds, as lender, and the borrower. Because the
obligations are direct lending arrangements between the Funds and the borrower,
they will not generally be traded, and there is no secondary market for them,
although they are redeemable (and thus immediately repayable by the borrower) at
principal amount, plus accrued interest, at any time. The borrower also may
prepay up to the full amount of the obligation without penalty. While master
demand obligations, as such, are not typically rated by credit rating agencies,
if not so rated, a Fund may, under its minimum rating standards, invest in them
only if, in the opinion of the Sub-Adviser, they are of an investment quality
comparable to other debt obligations in which the Funds may invest and are
within the credit quality policies, guidelines and procedures established by the
Board of Trustees. See the STATEMENT OF ADDITIONAL INFORMATION for further
details on variable rate demand obligations and variable rate master demand
obligations.

Other Open-End Mutual Funds (All Funds). Each Fund may invest in shares of
other open-end, management investment companies, subject to the limitations of
the 1940 Act and subject to such investments being consistent with the overall
objective and policies of the Fund making such investment, provided that any
such purchases will be limited to short-term investments in shares of other
investment companies. The purchase of securities of other mutual funds results
in duplication of expenses such that investors indirectly bear a proportionate
share of the expenses of such mutual funds including operating costs, and
investment advisory and administrative fees.

Closed-End Investment Companies (All Funds). The Fund may invest in
securities issued by closed-end investment companies which principally invest in
securities in which the Fund invests. Under the 1940 Act, the Fund's investment
in such securities, subject to certain exceptions, currently is limited to (i)
3% of the total voting stock of any one investment company, (ii) 5% of the
Fund's total assets with respect to any one investment company and (iii) 10% of
the Fund's total assets in the aggregate. Investments in the securities of other
investment companies may involve duplication of advisory fees and certain other
expenses.

Options on Securities (All Funds). The Funds may purchase put and call
options and write covered put and call options on securities in which each Fund
may invest directly and that are traded on registered domestic securities
exchanges or that result from separate, privately negotiated transactions (i.e.,
over-the-counter (OTC) options). The writer of a call option, who receives a
premium, has the obligation,

63
<PAGE> 73
upon exercise, to deliver the underlying security against payment of the
exercise price during the option period. The writer of a put, who receives a
premium, has the obligation to buy the underlying security, upon exercise, at
the exercise price during the option period.

The Funds may write put and call options on securities only if they are
covered, and such options must remain covered as long as the Fund is obligated
as a writer. A call option is covered if a Fund owns the underlying security
covered by the call or has an absolute and immediate right to acquire that
security without additional cash consideration (or for additional cash
consideration if the underlying security is held in a segregated account by its
custodian) upon conversion or exchange of other securities held in its
portfolio. A put option is covered if a Fund maintains cash, U.S. Treasury bills
or other high grade short-term obligations with a value equal to the exercise
price in a segregated account with its custodian.

The principal reason for writing put and call options is to attempt to
realize, through the receipt of premiums, a greater current return than would be
realized on the underlying securities alone. In return for the premium received
for a call option, the Funds forego the opportunity for profit from a price
increase in the underlying security above the exercise price so long as the
option remains open, but retain the risk of loss should the price of the
security decline. In return for the premium received for a put option, the Funds
assume the risk that the price of the underlying security will decline below the
exercise price, in which case the put would be exercised and the Fund would
suffer a loss. The Funds may purchase put options in an effort to protect the
value of a security it owns against a possible decline in market value.

Writing of options involves the risk that there will be no market in which
to effect a closing transaction. An exchange-traded option may be closed out
only on an exchange that provides a secondary market for an option of the same
series. OTC options are not generally terminable at the option of the writer and
may be closed out only by negotiation with the holder. There is also no
assurance that a liquid secondary market on an exchange will exist. In addition,
because OTC options are issued in privately negotiated transactions exempt from
registration under the Securities Act of 1933, there is no assurance that the
Funds will succeed in negotiating a closing out of a particular OTC option at
any particular time. If a Fund, as covered call option writer, is unable to
effect a closing purchase transaction in the secondary market or otherwise, it
will not be able to sell the underlying security until the option expires or it
delivers the underlying security upon exercise.

The staff of the SEC has taken the position that purchased options not
traded on registered domestic securities exchanges and the assets used as cover
for written options not traded on such exchanges are generally illiquid
securities. However, the staff has also opined that, to the extent a mutual fund
sells an OTC option to a primary dealer that it considers creditworthy and
contracts with such primary dealer to establish a formula price at which the
fund would have the absolute right to repurchase the option, the fund would only
be required to treat as illiquid the portion of the assets used to cover such
option equal to the formula price minus the amount by which the option is
in-the-money. Pending resolution of the issue, the Funds will treat such options
and, except to the extent permitted through the procedure described in the
preceding sentence, assets as subject to each such Fund's limitation on
investments in securities that are not readily marketable.

Dollar Roll Transactions (Growth and Income, Balanced Fund and Emerging
Market Fund). The Funds may enter into dollar roll transactions wherein the Fund
sells fixed income securities, typically

64
<PAGE> 74
mortgage-backed securities, and makes a commitment to purchase similar, but not
identical, securities at a later date from the same party. Like a forward
commitment, during the roll period no payment is made for the securities
purchased and no interest or principal payments on the security accrue to the
purchaser, but a Fund assumes the risk of ownership. A Fund is compensated for
entering into dollar roll transactions by the difference between the current
sales price and the forward price for the future purchase, as well as by the
interest earned on the cash proceeds of the initial sale. Like other when-issued
securities or firm commitment agreements, dollar roll transactions involve the
risk that the market value of the securities sold by the Funds may decline below
the price at which a Fund is committed to purchase similar securities. In the
event the buyer of securities under a dollar roll transaction becomes insolvent,
the Funds' use of the proceeds of the transaction may be restricted pending a
determination by the other party, or its trustee or receiver, whether to enforce
the Funds' obligation to repurchase the securities. The Funds will engage in
roll transactions for the purpose of acquiring securities for its portfolio and
not for investment leverage.

Swap Agreements (Growth and Income, Balanced Fund and Emerging Markets
Equity Fund). To manage its exposure to different types of investments, the
Funds may enter into interest rate, currency and mortgage (or other asset) swap
agreements and may purchase and sell interest rate "caps," "floors" and
"collars." In a typical interest rate swap agreement, one party agrees to make
regular payments equal to a floating interest rate on a specified amount (the
"notional principal amount") in return for payments to a fixed interest rate on
the same amount for a specified period. If a swap agreement provides for payment
in different currencies, the parties may also agree to exchange the notional
principal amount. Mortgage swap agreements are similar to interest rate swap
agreements, except that the notional principal amount is tied to a reference
pool of mortgages. In a cap or floor, one party agrees, usually in return for a
fee, to make payments under particular circumstances. For example, the purchaser
of an interest rate cap has the right to receive payments to the extent a
specified interest rate exceeds an agreed upon level; the purchaser of an
interest rate floor has the right to receive payments to the extent a specified
interest rate falls below an agreed upon level. A collar entitles the purchaser
to receive payments to the extent a specified interest rate falls outside an
agreed upon range.

Swap agreements may involve leverage and may be highly volatile; depending
on how they are used, they may have a considerable impact on the Fund's
performance. Swap agreements involve risks depending upon the counterparties
creditworthiness and ability to perform as well as the Fund's ability to
terminate its swap agreements or reduce its exposure through offsetting
transactions. The Sub-Advisers monitor the creditworthiness of counterparties to
these transactions and intends to enter into these transactions only when they
believe the counterparties present minimal credit risks and the income expected
to be earned from the transaction justifies the attendant risks.

Short Selling (Emerging Markets Equity Fund). The Fund may sell a security
it does not own in anticipation of a decline in the market value of that
security (short sales). To complete such a transaction, the Fund must borrow the
security to make delivery to the buyer. The Fund then is obligated to replace
the security borrowed by purchasing it at market price at the time of
replacement. The price at such time may be more or less than the price at which
the security was sold by the Fund. Until the security is replaced, the Fund is
required to pay to the lender any dividends or interest which accrue during the
period of the loan. To borrow the security, the Fund also may be required to pay
a premium, which would increase the cost of the security sold. The proceeds of
the short sale will be retained by the broker, to the extent necessary to meet
margin requirements, until the short position is closed out. Until the Fund

65
<PAGE> 75
replaces a borrowed security, the Fund will maintain daily a segregated account
with the Fund's custodian, liquid assets, at such a level that (i) the amount
deposited in the account plus the amount deposited with the broker as collateral
will equal the current value of the security sold short and (ii) the amount
deposited in the segregated account plus the amount deposited with the broker as
collateral will not be less than the market value of the security at the time it
was sold short. The Fund will incur a loss as a result of the short sale if the
price of the security increases between the date of the short sale and the date
on which the Fund replaces the borrowed security. The Fund will realize a gain
if the security declines in price between those dates. This result is the
opposite of what one would expect from a cash purchase of a long position in a
security. The amount of any gain will be decreased, and the amount of any loss
increased, by the amount of any premium, dividends or interest the Fund may be
required to pay in connection with a short sale. No more than 25% of the Fund's
net assets will be, when added together: (i) deposited as collateral for the
obligation to replace securities borrowed to effect short sales; and (ii)
allocated to segregated accounts in connection with short sales. Short sales
against-the-box are not subject to this 25% limit.

In a short sale "against-the-box," the Fund enters into a short sale of a
security which the Fund owns or has the right to obtain at no added cost. Not
more than 25% of the Fund's net assets (determined at the time of the short sale
against-the-box) may be subject to such sales.

Futures, Related Options and Options on Stock Indices (All Funds). The
Funds may attempt to reduce the risk of investment in equity securities by
hedging a portion of its portfolio through the use of certain futures
transactions, options on futures traded on a board of trade and options on stock
indices traded on national securities exchanges. The Funds may hedge a portion
of its portfolio by purchasing such instruments during a market advance or when
the Sub-Adviser anticipates an advance. In attempting to hedge a portfolio, the
Funds may enter into contracts for the future delivery of securities and futures
contracts based on a specific security, class of securities or an index,
purchase or sell options on any such futures contracts, and engage in related
closing transactions. The Funds will use these instruments primarily as a hedge
against changes resulting from market conditions in the values of securities
held in its portfolio or which it intends to purchase.

A stock index assigns relative weighing to the common stocks in the index,
and the index generally fluctuates with changes in the market values of these
stocks. A stock index futures contract is an agreement in which one party agrees
to deliver to the other an amount of cash equal to a specific dollar amount
times the difference between the value of a specific stock index at the close of
the last trading day of the contract and the price at which the agreement is
made. The Funds will sell stock index futures only if the amount resulting from
the multiplication of the then current level of the indices upon which such
futures contracts are based, and the number of futures contracts which would be
outstanding, do not exceed one-third of the value of the Fund's net assets.

When a futures contract is executed, each party deposits with a broker or
in a segregated custodial account up to 5% of the contract amount, called the
"initial margin," and during the term of the contract, the amount of the deposit
is adjusted based on the current value of the futures contract by payments of
variation margin to or from the broker or segregated account.

66
<PAGE> 76
trading day during the option period, the option writer delivers the futures
position, as well as any balance in the writer's futures margin account. If it
is exercised on the last trading day, the option writer delivers to the option
holder cash in an amount equal to the difference between the option exercise
price and the closing level of the relevant index on the date the option
expires. In the case of options on stock indexes, the holder of the option pays
a premium and receives the right, upon exercise of the option at a specified
price during the option period, to receive cash equal to the dollar amount of
the difference between the closing price of the relevant index and the option
exercise price times a specified multiple, called the "multiplier."

During a market decline or when the Sub-Adviser anticipates a decline, the
Funds may hedge a portion of its portfolio by selling futures contracts or
purchasing puts on such contracts or on a stock index in order to limit exposure
to the decline. This provides an alternative to liquidation of securities
positions and the corresponding costs of such liquidation. Conversely, during a
market advance or when the Sub-Adviser anticipates an advance, each Fund may
hedge a portion of its portfolio by purchasing futures, options on these futures
or options on stock indices. This affords a hedge against a Fund not
participating in a market advance at a time when it is not fully invested and
serves as a temporary substitute for the purchase of individual securities which
may later be purchased in a more advantageous manner. Each Fund will sell
options on futures and on stock indices only to close out existing positions.

Interest Rate Futures Contracts (All Funds). The Funds may, to a limited
extent, enter into interest rate futures contracts--i.e., contracts for the
future delivery of securities or index-based futures contracts--that are, in the
opinion of the Sub-Adviser, sufficiently correlated with the Fund's portfolio.
These investments will be made primarily in an attempt to protect a Fund against
the effects of adverse changes in interest rates (i.e., "hedging"). When
interest rates are increasing and portfolio values are falling, the sale of
futures contracts can offset a decline in the value of a Fund's current
portfolio securities. The Funds will engage in such transactions primarily for
bona fide hedging purposes.

Options on Interest Rate Futures Contracts (All Funds). The Funds may
purchase put and call options on interest rate futures contracts, which give a
Fund the right to sell or purchase the underlying futures contract for a
specified price upon exercise of the option at any time during the option
period. Each Fund may also write (sell) put and call options on such futures
contracts. For options on interest rate futures that a Fund writes, such Fund
will receive a premium in return for granting to the buyer the right to sell to
the Fund or to buy from the Fund the underlying futures contract for a specified
price at any time during the option period. As with futures contracts, each Fund
will purchase or sell options on interest rate futures contracts primarily for
bona fide hedging purposes.

Foreign Exchange Contracts (Global Equity Fund and Emerging Markets Equity
Fund). Changes in foreign currency exchange rates will affect the U.S. dollar
values of securities denominated in currencies other than the U.S. dollar. The
rate of exchange between the U.S. dollar and other currencies fluctuates in
response to forces of supply and demand in the foreign exchange markets. These
forces are affected by the international balance of payments and other economic
and financial conditions, government intervention, speculation and other
factors. When investing in foreign securities, the Funds usually effects
currency exchange transactions on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign exchange market. The Funds incur foreign exchange
expenses in converting assets from one currency to another.

67
<PAGE> 77
The Funds may enter into foreign currency forward contracts or currency
futures for the purchase or sale of foreign currency to "lock in" the U.S.
dollar price of the securities denominated in a foreign currency or the U.S.
dollar value of interest and dividends to be paid on such securities, or to
hedge against the possibility that the currency of a foreign country in which
the Fund has investments may suffer a decline against the U.S. dollar. The Funds
may choose to lock in the price of securities or dividends or interest to be
received in a currency other than the U.S. dollar when the Sub-Adviser believes
that doing so is in the best interest of the Fund. In addition, when the
Sub-Adviser believes that the currency of a particular country (the "hedged
currency") may suffer a substantial decline against the U.S. dollar or against a
major foreign currency, such as the Deutschemark or the European Currency Unit,
it may enter into a forward or futures contract to sell, for a fixed amount of
U.S. dollars or such currency, as the case may be, the amount of that currency
approximating the value of some or all of the Funds' portfolio securities
denominated in the hedged currency (called a "short" position). The Fund may
attempt to accomplish objectives similar to those described above with respect
to forward and futures contracts for currency by means of purchasing put or call
options traded on exchanges. A forward currency contract is an obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time for the contract. This method of attempting to hedge the
value of the Funds' portfolio securities against a decline in the value of a
currency does not eliminate fluctuations in the underlying prices of the
securities. Although the strategy of engaging in foreign currency transactions
could reduce the risk of loss due to a decline in the value of the hedged
currency, it could also limit the potential gain from an increase in the value
of the currency. The Funds do not intend to maintain a net exposure to such
contracts where the fulfillment of the Funds' obligations under such contracts
would obligate the Funds to deliver an amount of foreign currency in excess of
the value of the Fund's portfolio securities or other assets denominated in the
currency. The Funds will not enter into these contracts for speculative purposes
and will not enter into non-hedging currency contracts. These contracts involve
a risk of loss if the Sub-Adviser fail to predict currency values correctly.

"When-Issued" and "Forward Commitment" Transactions (All Funds). The Funds
may purchase securities on a when-issued and delayed-delivery basis and may
purchase or sell securities on a forward commitment basis. When-issued or
delayed-delivery transactions arise when securities are purchased by a Fund with
payment and delivery taking place in the future in order to secure what is
considered to be an advantageous price and yield to the Fund at the time of
entering into the transaction. A forward commitment transaction is an agreement
by a Fund to purchase or sell securities at a specified future date. When a Fund
engages in these transactions, the Fund relies on the buyer or seller, as the
case may be, to consummate the sale. Failure to do so may result in the Fund
missing the opportunity to obtain a price or yield considered to be
advantageous. When-issued and delayed-delivery transactions and forward
commitment transactions may be expected to occur a month or more before delivery
is due. However, no payment or delivery is made by a Fund until it receives
payment or delivery from the other party to the transaction. A separate account
containing only liquid assets such as cash, U.S. Government securities, or other
liquid high grade debt obligations equal to the value of purchase commitments
will be maintained until payment is made. Such securities have the effect of
leverage on the Funds and may contribute to volatility of a Fund's net asset
value. For further information, see the SAI.

Loans of Portfolio Securities (All Funds). To increase current income,
each Fund may lend its portfolio securities in an amount up to 33-1/3% of each
such Fund's total assets to brokers, dealers and

68
<PAGE> 78
financial institutions, provided certain conditions are met, including the
condition that each loan is secured continuously by collateral maintained on a
daily mark-to-market basis in an amount at least equal to the current market
value of the securities loaned. These transactions involve a loan by the
applicable Fund and are subject to the same risks as repurchase agreements. For
further information, see the SAI.

Repurchase Agreements (All Funds). The Funds may enter into repurchase
agreements with any bank and broker-dealer which, in the opinion of the
Trustees, presents a minimal risk of bankruptcy. Under a repurchase agreement a
Fund acquires securities and obtains a simultaneous commitment from the seller
to repurchase the securities at a specified time and at an agreed upon yield.
The agreements will be fully collateralized and the value of the collateral,
including accrued interest, marked-to-market daily. The agreements may be
considered to be loans made by the purchaser, collateralized by the underlying
securities. If the seller should default on its obligation to repurchase the
securities, a Fund may experience a loss of income from the loaned securities
and a decrease in the value of any collateral, problems in exercising its rights
to the underlying securities and costs and time delays in connection with the
disposition of securities. The Funds may not invest more than 15% of its net
assets in repurchase agreements maturing in more than seven business days or in
securities for which market quotations are not readily available. For more
information about repurchase agreements, see "Investment Policies" in the SAI.

Borrowing (All Funds). The Fund may borrow up to 33 1/2 of its net assets
to purchase securities and for temporary purposes. Leveraging by means of
borrowing will exaggerate the effect of any increase or decrease in the value of
portfolio securities on the Funds net asset value; money borrowed will be
subject to interest and other costs (which may include commitment fees and/or
the cost of maintaining minimum average balances), which may or may not exceed
the income received from the securities purchased with borrowed funds. The use
of borrowing tends to result in a faster than average movement, up or down, in
the net asset value of the Fund's shares. The Fund also may be required to
maintain minimum average balances in connection with such borrowing or to pay a
commitment or other fee to maintain a line of credit; either of these
requirements would increase the cost of borrowing over the stated interest rate.

Reverse Repurchase Agreements (All Funds). The Funds may also enter into
reverse repurchase agreements. Pursuant to a reverse repurchase agreement, a
Fund will sell portfolio securities and agree to repurchase them from the buyer
at a particular date and price. Whenever a Fund enters into a reverse repurchase
agreement, it will establish a segregated account in which it will maintain
liquid assets in an amount at least equal to the repurchase price marked to
market daily (including accrued interest), and will subsequently monitor the
account to ensure that such equivalent value is maintained. The Fund pays
interest on amounts obtained pursuant to reverse repurchase agreements. Reverse
repurchase agreements are considered to be borrowings by a Fund under the 1940
Act.

Portfolio Turnover. The Funds generally will not engage in the trading of
securities for the purpose of realizing short-term profits, but each Fund will
adjust its portfolio as it deems advisable in view of prevailing or anticipated
market conditions or fluctuations in interest rates to accomplish its respective
investment objective. For example, each Fund may sell portfolio securities in
anticipation of an adverse market movement. Other than for tax purposes,
frequency of portfolio turnover will not be a limiting factor if a Fund
considers it advantageous to purchase or sell securities. The Funds do not
anticipate that the respective annual portfolio turnover rates will exceed the
following: Large Cap Growth Fund 100%; Growth And Income Fund 100%; Mid Cap
Equity Fund 100%; Small Cap Equity Fund 100%;Balanced

69
<PAGE> 79
Fund 100%; Global Brand Names Fund 100%;International Equity Fund 200%; Emerging
Markets Equity Fund 200%; European Equity Fund 100%; Tax Efficient Equity Fund
50%; ING Best Ideas Fund, 100%; Global IT Fund 60%; and Real Estate Fund 100%. A
high rate of portfolio turnover involves correspondingly greater transaction
expenses than a lower rate, which expenses must be borne by each Fund and its
shareholders.

INVESTMENT RESTRICTIONS

(1) No Fund may borrow money or pledge or mortgage its assets, except that
a Fund may borrow from banks up to 33-1/3% of the current value of its net
assets for temporary or emergency purposes and those borrowings may be secured
by the pledge of not more than 15% of the current value of that Fund's net
assets (but investments may not be purchased by a Fund while any such borrowings
exist).

(2) No Fund may make loans, except loans of portfolio securities except
that a Fund may enter into repurchase agreements with respect to its portfolio
securities and may purchase the types of debt instruments described in this
Prospectus.

The foregoing investment restrictions and those described in the SAI as
fundamental are policies of each Fund which may be changed only when permitted
by law and approved by the holders of a majority of the applicable Fund's
outstanding voting securities as described under "OTHER INFORMATION--Voting."

As a matter of nonfundamental policy of the Funds, which can be changed by
approval of a majority of the Board of Trustees, no Fund may invest more than
15% of the aggregate value of its net assets in investments which are illiquid
or not readily marketable (including repurchase agreements having maturities of
more than seven calendar days, time deposits having maturities of more than
seven calendar days, and securities of foreign issuers that are not listed on a
recognized domestic or foreign securities exchange).

It is the intention of the Funds, unless otherwise indicated, that with
respect to the Funds' policies that are the result of the application of law the
Funds will take advantage of the flexibility provided by rules or
interpretations of the SEC currently in existence or promulgated in the future
or changes to such laws.

If a percentage restriction on investment policies or the investment or
use of assets set forth in this Prospectus is adhered to at the time a
transaction is effected, later changes in percentage resulting from changing
asset values will not be considered a violation.

RISKS OF INVESTING IN THE FUNDS

CERTAIN RISK CONSIDERATIONS

70
<PAGE> 80
that a Fund will achieve its investment objective or be successful in preventing
or minimizing the risk of loss that is inherent in investing in particular types
of investment products. In order to attempt to minimize that risk, the
Sub-Adviser monitors developments in the economy, the securities markets, and
with each particular issuer. Also, as noted earlier, each diversified Fund
(i.e., all funds except the Global Brand Names Fund, ING Best Ideas Fund and
Real Estate Fund) is managed within certain limitations that restrict the amount
of the Fund's investment in any single issuer.

Equity Securities. Investments in equity securities in general are subject
to market risks that may cause their prices to fluctuate over time. The value of
convertible equity securities is also affected by prevailing interest rates, the
credit quality of the issuer and any call provisions. Fluctuations in the value
of equity securities in which a Fund invests will cause the net asset value of
the Fund to fluctuate.

Real Estate Securities. While the Real Estate Fund will not invest in real
estate directly, the Fund may be subject to risks similar to those associated
with the direct ownership of real estate (in addition to securities markets
risks) because of its policy of concentration in the securities of companies in
the real estate industry. These risks include declines in the value of real
estate, risks related to general and local economic conditions, dependency on
management skill, heavy cash flow dependency, possible lack of availability of
mortgage funds, overbuilding, extended vacancies of properties, increased
competition, increases in property taxes and operating expenses, changes in
zoning laws, losses due to costs resulting from the clean-up of environmental
problems, liability to third parties for damages resulting from environmental
problems, casualty or condemnation losses, limitations on rents, changes in
neighborhood values and in the appeal of properties to tenants and changes in
interest rates.

In addition to these risks, Equity REITs may be affected by changes in the
value of the underlying property owned by the trusts, while Mortgage REITs may
be affected by the quality of any credit they extend. Further, Equity REITs and
Mortgage REITs are dependent upon management skills and generally may not be
diversified. Equity REITs and Mortgage REITs are also subject to heavy cash flow
dependency, defaults by borrowers and self-liquidation. In addition, Equity
REITs and Mortgage REITs could possibly fail to qualify for tax-free
pass-through of income under the Code or to maintain their exemptions from
registration under the 1940 Act. The above factors may also adversely affect a
borrower's or a lessee's ability to meet its obligations to the REIT. In the
event of a default by a borrower or lessee, the REIT may experience delays in
enforcing its rights as a mortgagee or lessor and may incur substantial costs
associated with protecting its investments. In addition to the foregoing risks,
certain "special purpose" REITs in which the Fund invests may invest their
assets in specific real estate sectors, such as hotel REITs, nursing home REITs
or warehouse REITs, and are therefore subject to the risks associated with
adverse developments in any such sectors.

71
<PAGE> 81
Foreign Securities. Investing in the securities of issuers in any foreign
country including ADR's and EDR's involves special risks and considerations not
typically associated with investing in U.S. companies. These include differences
in accounting, auditing and financial reporting standards; generally higher
commission rates on foreign portfolio transactions; the possibility of
nationalization, expropriation or confiscatory taxation; adverse changes in
investment or exchange control regulations (which may include suspension of the
ability to transfer currency from a country); and political instability which
could affect U.S. investments in foreign countries. Additionally, foreign
securities and dividends and interest payable on those securities may be subject
to foreign taxes, including taxes withheld from payments on those securities.
Foreign securities often trade with less frequency and volume than domestic
securities and, therefore, may exhibit greater price volatility. Additional
costs associated with an investment in foreign securities may include higher
custodial fees than apply to domestic custodial arrangements and transaction
costs of foreign currency conversions. Changes in foreign exchange rates also
will affect the value of securities denominated or quoted in currencies other
than the U.S. dollar. The Funds' investments may be affected either unfavorably
or favorably by fluctuations in the relative rates of exchange between the
currencies of different nations, by exchange control regulations and by
indigenous economic and political developments. See the SAI for further
information about foreign securities.

Fixed Income Securities. The market value of a Fund's fixed income
investments will change in response to interest rate changes and other factors.
During periods of falling interest rates, the values of outstanding fixed income
securities generally rise. Conversely, during periods of rising interest rates,
the values of such securities generally decline. Securities with longer
maturities are subject to greater fluctuations in value than securities with
shorter maturities. Changes by an NRSRO in the rating of any fixed income
security and in the ability of an issuer to make payments of interest and
principal also affect the value of these investments. Changes in the value of a
Fund's securities will not affect cash income derived from these securities but
will affect the Fund's net asset value.

Securities rated BBB or Baa by an NRSRO (investment grade bonds) are
deemed by these rating services to have speculative characteristics.

Securities held by a Fund that are guaranteed by the U.S. Government, its
agencies or instrumentalities guarantee only the payment of principal and
interest on the guaranteed securities, and do not guarantee the securities'
yield or value or the yield or value of a Fund's shares.

72
<PAGE> 82
decline. Investors should note that because of the volatility of the market
value of the underlying security, the loss from investing in futures
transactions is potentially unlimited. In addition, a Fund has no control over
the time when it may be required to fulfill its obligation as a writer of the
option. Once a Fund has received an exercise notice, it cannot effect a closing
transaction in order to terminate its obligation under the option and must
deliver the underlying securities at the exercise price.

The Funds' successful use of stock index futures contracts, options on
such contracts and options on indices depends upon the ability of the
Sub-Adviser to predict the direction of the market and is subject to various
additional risks. The correlation between movements in the price of the futures
contract and the price of the securities being hedged is imperfect and the risk
from imperfect correlation increases in the case of stock index futures as the
composition of the Funds' portfolios diverge from the composition of the
relevant index. Such imperfect correlation may prevent the Funds from achieving
the intended hedge or may expose the Funds to risk of loss. In addition, if the
Funds purchase futures to hedge against market advances before they can invest
in common stock in an advantageous manner and the market declines, the Funds
might create a loss on the futures contract. Particularly in the case of options
on stock index futures and on stock indices, the Funds' ability to establish and
maintain positions will depend on market liquidity. The successful utilization
of options and futures transactions requires skills different from those needed
in the selection of the Funds' portfolio securities. The Funds believe that the
Sub-Adviser possesses the skills necessary for the successful utilization of
such transactions.

The Funds are permitted to engage in bona fide hedging transactions (as
defined in the rules and regulations of the Commodity Futures Trading
Commission) without any quantitative limitations. Futures and related option
transactions which are not for bona fide hedging purposes may be used provided
the total amount of the initial margin and any option premiums attributable to
such positions does not exceed 5% of each Fund's liquidating value after taking
into account unrealized profits and unrealized losses, and excluding any
in-the-money option premiums paid. The Funds will not market, and are not
marketing, themselves as commodity pools or otherwise as vehicles for trading in
futures and related options. The Funds will segregate liquid assets such as
cash, U.S. Government securities or other liquid high grade debt obligations to
cover the futures and options.

Risks of Techniques Involving Leverage. Utilization of leveraging involves
special risks and may involve speculative investment techniques. Certain Funds
may borrow for other than temporary or emergency purposes, lend their
securities, enter reverse repurchase agreements, and purchase securities on a
when issued or forward commitment basis. In addition, certain Funds may engage
in dollar roll transactions. Each of these transactions involve the use of
"leverage" when cash made available to the Fund through the investment technique
is used to make additional portfolio investments. The Funds use these investment
techniques only when the Sub-Adviser believes that the leveraging and the
returns available to the Fund from investing the cash will provide shareholders
a potentially higher return.

Leverage exists when a Fund achieves the right to a return on a capital
base that exceeds the investment the Fund has invested. Leverage creates the
risk of magnified capital losses which occur when losses affect an asset base,
enlarged by borrowings or the creation of liabilities, that exceeds the equity
base of the Fund. Leverage may involve the creation of a liability that requires
the Fund to pay interest (for instance, reverse repurchase agreements) or the
creation of a liability that does not entail any interest costs (for instance,
forward commitment transactions).

73
<PAGE> 83
The risks of leverage include a higher volatility of the net asset value
of a Fund's shares and the relatively greater effect on the net asset value of
the shares caused by favorable or adverse market movements or changes in the
cost of cash obtained by leveraging and the yield obtained from investing the
cash. So long as a Fund is able to realize a net return on its investment
portfolio that is higher than interest expense incurred, if any, leverage will
result in higher current net investment income being realized by such Fund than
if the Fund were not leveraged. On the other hand, interest rates change from
time to time as does their relationship to each other depending upon such
factors as supply and demand, monetary and tax policies and investor
expectations. Changes in such factors could cause the relationship between the
cost of leveraging and the yield to change so that rates involved in the
leveraging arrangement may substantially increase relative to the yield on the
obligations in which the proceeds of the leveraging have been invested. To the
extent that the interest expense involved in leveraging approaches the net
return on a Fund's investment portfolio, the benefit of leveraging will be
reduced, and, if the interest expense on borrowings were to exceed the net
return to shareholders, such Fund's use of leverage would result in a lower rate
of return than if the Fund were not leveraged. Similarly, the effect of leverage
in a declining market could be a greater decrease in net asset value per share
than if a Fund were not leveraged. In an extreme case, if a Fund's current
investment income were not sufficient to meet the interest expense of
leveraging, it could be necessary for such Fund to liquidate certain of its
investments at an inappropriate time. The use of leverage may be considered
speculative.

Non-diversified investment companies. The Global Brand Names Fund, the ING
Best Ideas Fund and the Real Estate Fund are classified as non-diversified
investment companies under the Investment Company Act of 1940 (The "1940 Act"),
which means that each Fund is not limited by the 1940 Act in the proportion of
its assets that it may invest in the obligations of a single issuer. The
investment of a large percentage of a Fund's assets in the securities of a small
number of issuers may cause that Fund's share price to fluctuate more than that
of a diversified investment company.

Concentration. The Global IT Fund and Real Estate Fund "concentrate" (for
purposes of the 1940 Act) their assets in securities related to a particular
sector or industry, which means that at least 25% of its assets will be invested
in these assets at all times. As a result, each Fund may be subject go greater
market fluctuation than a fund which has securities representing a broader range
of investment alternatives.

Risks Associated with Year 2000 and the European Monetary Union ("EMU").
Like other mutual funds, financial and business organizations and individuals
around the world, the Funds could be adversely affected if the computer systems
used by the Funds or their service providers and counter parties do not properly
process and calculate date-related information and data from and after January
1, 2000. The Funds are assessing and formulating responses to these potential
problems with the Manager and all other major service providers and counter
parties. There can be no assurance that the Funds' actions will be sufficient to
avoid any adverse impact.

The Funds that invest in securities of European issuers are also taking
steps to ensure that there will be no accommodations necessary for the Fund to
prepare for the upcoming EMU conversion. The EMU is scheduled to begin on
January 1, 1999 and will ultimately result in the replacement of certain
European currencies with the "Euro." At this time, there can be no assurance
that these steps will be sufficient to avoid adverse impact on the Fund.

74
<PAGE> 84
OTHER INFORMATION

CAPITALIZATION

ING Funds Trust was organized as a Delaware business trust on July __,
1998 and currently consists of [20] separately managed portfolios, each of which
is divided into Class A, B, C, and X shares. The Board of Trustees may establish
additional portfolios in the future. The capitalization of the Funds consists
solely of an unlimited number of shares of beneficial interest with a par value
of $0.001 each. When issued, shares of the Funds are fully paid, non-assessable
and freely transferable.

VOTING

Shareholders have the right to vote in the election of Trustees and on any
and all matters on which, by law or under the provisions of the Declaration of
Trust, they may be entitled to vote. The Funds are not required to hold regular
annual meetings of shareholders and do not intend to do so.

The Declaration of Trust provides that the holders of not less than
two-thirds of the outstanding shares of the Funds may remove a person serving as
Trustee either by declaration in writing or at a meeting called for such
purpose. The Trustees are required to call a meeting for the purpose of
considering the removal of a person serving as Trustee if requested in writing
to do so by the holders of not less than 10% of the outstanding shares of the
Funds and in connection with such meeting to comply with the shareholders'
communications provisions of Section 16(c) of the Act. See "OTHER
INFORMATION--Voting Rights" in the SAI.

Shares entitle their holders to one vote per share (with proportionate
voting for fractional shares). As used in the Prospectus, the phrase "vote of a
majority of the outstanding shares" of a Fund (or the Funds) means the vote of
the lesser of: (1) 67% of the shares of a Fund (or the Funds) present at a
meeting if the holders of more than 50% of the outstanding shares are present in
person or by proxy; or (2) more than 50% of the outstanding shares of a Fund (or
the Funds).

PERFORMANCE INFORMATION

A Fund may, from time to time, include its yield and total return in
advertisements or reports to shareholders or prospective investors. The methods
used to calculate the yield and total return of the Funds is mandated by the
SEC.

Quotations of average annual total return for a Fund will be expressed in
terms of the average annual compounded rate of return of a hypothetical
investment in that Fund over periods of 1, 5 and 10 years (up to the life of
that Fund), reflect the deduction of a proportional share of Fund expenses (on
an annual basis), and assume that all dividends and distributions are reinvested
when paid.

75
<PAGE> 85
Fund's investment objectives and policies, characteristics and quality of the
Funds and the market conditions during the time period indicated, and should not
be considered to be representative of what may be achieved in the future. For a
description of the methods used to determine yield and total return for Funds,
see the SAI.

ACCOUNT SERVICES

All transactions in shares of the Funds will be reflected in a monthly
statement for each shareholder. In those cases where a Service Organization or
its nominee is the shareholder of record of shares purchased for its customer,
the Funds have been advised that the statement may be transmitted to the
customer at the discretion of the Service Organization.

First Data acts as the Funds' transfer agent. The Funds compensate First
Data, pursuant to a Services Agreement, for providing personnel and facilities
to perform [dividend disbursing and] transfer agency-related services for the
Funds. The Funds' custodian is ________.

CUSTODIAN

acts as the Funds' Custodian. Pursuant to the Custodian Agreement,
the Custodian is responsible for holding each Fund's cash and portfolio
securities. The Custodian may enter into sub-custodian agreements with certain
qualified banks.

Rules adopted under the 1940 Act permit investment companies to maintain
their securities and cash in the custody of certain eligible foreign banks and
depositories. The Global Brand Names Fund, International Equity Fund, Emerging
Markets Equity Fund, European Equity Fund, Global IT Fund and Real Estate Fund
portfolios of non-United States securities are held by sub-custodians which are
approved by the Trustees or a foreign custody manager appointed by the Trustees
in accordance with these rules. The Board has appointed the Custodian as its
foreign custody manager. The determination to place assets with a particular
foreign sub-custodian is made pursuant to these rules which require a
consideration of a number of factors including, but not limited to, the
reliability and financial stability of the sub-custodian; the sub-custodian's
practices, procedures and internal controls; and the reputation and standing of
the sub-custodian in its national market.

COUNSEL

Paul, Weiss, Rifkind, Wharton & Garrison serves as counsel for the Trust
and from time to time provides advice to the Advisers.

76
<PAGE> 86
SHAREHOLDER INQUIRIES

All shareholder inquiries should be directed to the Funds at ____________.

General and Account Information: (800) [ ]

77
<PAGE> 87
APPENDIX

DESCRIPTION OF MOODY'S BOND RATINGS:

Excerpts from Moody's description of its four highest bond ratings are
listed as follows: Aaa--judged to be the best quality and they carry the
smallest degree of investment risk; Aa--judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally know as
high grade bonds; A--possess many favorable investment attributes and are to be
considered as "upper medium grade obligations"; Baa--considered to be medium
grade obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. This group is the lowest which
qualifies for investment grade. Other Moody's bond descriptions include:
Ba--judged to have speculative elements, their future cannot be considered as
well assured; B--generally lack characteristics of the desirable investment;
Caa--are of poor standing. Such issues may be in default or there may be present
elements of danger with respect to principal or interest; Ca--speculative in a
high degree, often in default; C--lowest rated class of bonds, regarded as
having extremely poor prospects.

Moody's also supplies numerical indicators 1, 2 and 3 to rating
categories. The modifier 1 indicates that the security is in the higher end of
its rating category; the modifier 2 indicates a mid-range ranking; and modifier
3 indicates a ranking toward the lower end of the category.

DESCRIPTION OF S&P'S BOND RATINGS:

Excerpts from S&P's description of its four highest bond ratings are
listed as follows: AAA--highest grade obligations, in which capacity to pay
interest and repay principal is extremely strong; AA--also qualify as high grade
obligations, having a very strong capacity to pay interest and repay principal,
and differs from AAA issues only in a small degree; A--regarded as upper medium
grade, having a strong capacity to pay interest and repay principal, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories;
BBB--regarded as having an adequate capacity to pay interest and repay
principal. Whereas it normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in this category
than in higher rated categories. This group is the lowest which qualifies for
investment grade. BB, B, CCC, CC--predominantly speculative with respect to
capacity to pay interest and repay principal in accordance with terms of the
obligations; BB indicates the highest grade and CC the lowest within the
speculative rating categories.

S&P applies indicators "+," no character, and "-" to its rating
categories. The indicators show relative standing within the major rating
categories.

DESCRIPTION OF MOODY'S RATINGS OF NOTES AND VARIABLE RATE DEMAND INSTRUMENTS:

Moody's ratings for state and municipal short-term obligations will be
designated Moody's Investment Grade or MIG. Such ratings recognize the
differences between short-term credit and long-term

78
<PAGE> 88
risk. Short-term ratings on issues with demand features (variable rate demand
obligations) are differentiated by the use of the VMIG symbol to reflect such
characteristics as payment upon periodic demand rather than fixed maturity dates
and payments relying on external liquidity.

MIG 1/VMIG 1: This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.

MIG 2/VMG 2: This denotes high quality. Margins of protection are ample
although not as large as in the preceding group.

DESCRIPTION OF MOODY'S TAX-EXEMPT COMMERCIAL PAPER RATINGS:

Moody's commercial paper ratings are opinions of the ability of issuers to
repay punctually promissory obligations which have an original maturity not
exceeding nine months. Moody's makes no representation that such obligations are
exempt from registration under the Securities Act of 1933, nor does it represent
that any specific note is a valid obligation of a rated issuer or issued in
conformity with any applicable law. The following designations, all judged to be
investment grade, indicate the relative repayment ability of rated issuers of
securities in which the Trust may invest.

PRIME-1: Issuers rated Prime-1 (or supporting institutions) have a
superior ability for repayment of senior short-term promissory obligations.

PRIME-2: Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term promissory obligations.

DESCRIPTION OF S&P'S RATINGS FOR MUNICIPAL BONDS:

INVESTMENT GRADE

AAA: Debt rated "AAA" has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.

AA: Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small degree.

A: Debt rated "A" has strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB: Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

79
<PAGE> 89
SPECULATIVE GRADE

BB, B, CCC, CC: Debt rated in these categories is regarded as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions.

CI: The "CI" rating is reserved for income bonds on which no interest is
being paid.

D: Debt rated "D" is in default, and payment of interest and/or repayment
of principal is in arrears.

PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.

DESCRIPTION OF S&P'S RATINGS FOR INVESTMENT GRADE MUNICIPAL NOTES AND SHORT-TERM
DEMAND OBLIGATIONS:

SP-1: Issues carrying this designation have a very strong or strong
capacity to pay principal and interest. Those issues determined to possess
overwhelming safety characteristics will be given a plus (+) designation.

SP-2: Issues carrying this designation have a satisfactory capacity to pay
principal and interest.

DESCRIPTION OF S&P'S RATINGS FOR DEMAND OBLIGATIONS AND TAX-EXEMPT COMMERCIAL
PAPER:

An S&P commercial paper rating is a current assessment of the likelihood
of timely repayment of debt having an original maturity of no more than 365
days. The two rating categories for securities in which the Trust may invest are
as follows:

A-1: This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics will be denoted with a plus (+) designation.

A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1."

<PAGE> 90
ING FUNDS TRUST

-----------

PROSPECTUS
SEPTEMBER __, 1998

-----------

Intermediate Corporate Bond Fund
High Yield Bond Fund
International Fixed Income Fund
Mortgage Income Fund

Federal Tax-Exempt Bond Fund
<PAGE> 91
ING FUNDS TRUST

[ADDRESS]

General & Account Information: (800) [ ]

ING MUTUAL FUNDS MANAGEMENT COMPANY--Investment Manager
("IMFC" or the "Manager")

ING FUNDS DISTRIBUTOR, INC.--Distributor, Principal Underwriter and Sponsor
("IFD" or the "Distributor")

This prospectus describes five funds (each, a "Fund" or, collectively, the
"Funds"), managed by ING Mutual Funds Management Company, a Delaware
corporation. The Manager is a wholly-owned subsidiary of ING Groep N.V. ("ING
Group"). The Funds and their objectives are:

The Intermediate Corporate Bond Fund seeks to provide investors with a
high level of current income consistent with the preservation of capital and
liquidity.

The High Yield Bond Fund seeks to provide investors with high current
income and, secondarily, total return when consistent with the primary
objective.

The International Fixed Income Fund is a non-diversified fund that seeks
to provide investors with high total return.

The Mortgage Income Fund seeks to provide investors with long-term income
consistent with preservation of capital.

The Federal Tax-Exempt Bond Fund seeks to provide investors with a high
level of current income that is exempt from federal income taxes, consistent
with preservation of capital.

There can be no assurance that the Funds' investment objectives will be
achieved.

Shares of the Funds are sold to the public by the Distributor as an
investment vehicle for individuals, institutions, corporations and fiduciaries.
The Funds are separate investment funds of ING Funds Trust (the "Trust"), a
Delaware business trust and registered management investment company.
Investments in shares of the Funds involve risks, including loss of principal.
The Trust also offers the following money market ("Money Market Funds") and
equity funds ("Equity Funds") under separate prospectuses:
<PAGE> 92
<TABLE>
<CAPTION>
Money Market Funds Equity Funds
- ------------------ ------------
<S> <C>
U.S. Treasury Money Market Fund Large Cap Growth Fund
Money Market Fund Growth and Income Fund
Mid Cap Equity Fund
Small Cap Equity Fund

Balanced Fund

Global Brand Name Fund
International Equity Fund
Emerging Markets Fund
European Equity Fund

Tax Efficient Equity Fund
ING Best Ideas Fund
Global IT Fund
Real Estate Fund
</TABLE>

Each Fund offers four different classes of shares--Class A shares, Class B
shares, Class C shares and Class X Shares. The different classes of shares
represent investments in the same portfolio of securities but are subject to
different sales charges and expenses. These alternatives permit investors to
choose the most beneficial method of purchasing shares given the amount of the
purchase, the length of time the investor expects to hold shares, and other
circumstances. When you purchase shares of the Funds, be sure to specify the
class of shares of the Fund(s) you wish to purchase. If you do not choose, your
investment will be made in the Class A shares. See "Purchase of Fund Shares."

SHARES OF THE TRUST ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ING GROUP OR ITS AFFILIATES, AND ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY AND MAY INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS
OF PRINCIPAL. THE NET ASSET VALUE OF THE FUNDS WILL FLUCTUATE FROM TIME TO TIME.

This Prospectus sets forth concisely the information a prospective
investor should know before investing in the Funds and should be read and
retained for information about each Fund.

A Statement of Additional Information (the "SAI"), dated September __,
1998, containing additional and more detailed information about the Funds, has
been filed with the Securities and Exchange Commission ("SEC") and is hereby
incorporated by reference into this Prospectus. It is available without charge
and can be obtained by writing or calling the Funds at the address and
information number printed above.
<PAGE> 93
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

September __, 1998
<PAGE> 94
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
HIGHLIGHTS .............................................................. 1

FUND EXPENSES ........................................................... 5

THE FUNDS ............................................................... 10

THE INVESTMENT POLICIES AND PRACTICES OF THE FUNDS ...................... 10

MANAGEMENT OF THE FUNDS ................................................. 14

FUND SHARE VALUATION .................................................... 22

PRICING OF FUND SHARES .................................................. 22

MINIMUM PURCHASE REQUIREMENTS ........................................... 22

PURCHASE OF FUND SHARES ................................................. 23

INDIVIDUAL RETIREMENT ACCOUNTS .......................................... 31

REDEMPTION OF FUND SHARES ............................................... 31

EXCHANGE OF FUND SHARES ................................................. 34

DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAX ......................... 37

DESCRIPTION OF SECURITIES AND INVESTMENT PRACTICES ...................... 40

INVESTMENT RESTRICTIONS ................................................. 54

RISKS OF INVESTING IN THE FUNDS ......................................... 55

OTHER INFORMATION ....................................................... 60
</TABLE>
<PAGE> 95
HIGHLIGHTS

INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS

This Prospectus describes five funds managed by IMFC. Each Fund has a
distinct investment objective and policies.

There can be no assurance that the Funds' investment objectives will be
achieved.

THE FUNDS:

Intermediate Corporate Bond Fund. The Intermediate Corporate Bond Fund
seeks to provide investors with a high level of current income consistent with
the preservation of capital and liquidity. Under normal market conditions, the
Fund will invest at least 65% of its total assets in corporate debt securities.
The Fund will normally invest at least 80% of its assets in securities rated BBB
or better by an NRSRO and will seek to maintain a minimum average portfolio
quality rating of "BBB." Fixed income securities downgraded to below BBB
subsequent to purchase may be retained in the portfolio when deemed by the
Fund's Sub-Adviser to be in the best interest of Fund shareholders. For purposes
of this Prospectus, a "bond" is defined as a debt instrument with a fixed
interest rate. The dollar-weighted average maturity of the Intermediate Fund
will generally range between three and ten years.

High Yield Bond Fund. The High Yield Bond Fund seeks to provide investors
with current income and total return. Under normal market conditions, the Fund
intends to invest at least 80% of its total assets in high yield (high risk)
bonds.

International Fixed Income Fund. The International Fixed Income Fund is a
non-diversified fund that seeks to provide investors with high total return.
Under normal market conditions, the Fund will invest at least 65% of its total
assets in fixed income securities of international issuers located in at least
three different countries outside of the United States. Under normal conditions,
the Sub-Adviser expects that the Fund generally will be invested in at least six
different countries, although the Fund may at times invest all of its assets in
a single country.

Federal Tax-Exempt Bond Fund. The Federal Tax-Exempt Bond Fund seeks to
provide investors with a high level of current income that is exempt from
federal income taxes, consistent with preservation of capital. Under normal
market conditions, the Fund will invest at least 80% of its net assets in
municipal securities the interest of which is exempt from federal income taxes
(collectively "Municipal Securities".) The issuers of these securities can be
located in all fifty states, the District of Columbia, Puerto Rico, and other
U.S. territories and possessions. Under normal conditions, the Fund will invest
at least 80% of its net assets in securities the interest on which is not a
preference item for purposes of the federal alternative minimum tax. Although
the Sub-Adviser has no present intention of doing so, up to 20% of the Fund's
total assets may be
<PAGE> 96
invested in taxable debt securities for defensive purposes or when sufficient
tax exempt securities considered appropriate by the Advisers are not available
for purchase.

All Funds may also use various investment strategies and techniques when
the Sub-Adviser determines that such use is appropriate in an effort to meet a
Fund's objective.

For additional information concerning the investment policies, practices
and risk consideration of the Funds, see "The Investment Policies and Practices
of the Funds" and "Risks of Investing in the Funds" in this Prospectus.

RISKS OF INVESTING IN THE FUNDS

General. The price per share of each Fund will fluctuate with changes in
value of the investments held by such Fund. Additionally, there can be no
assurance that the Funds will achieve their investment objectives or be
successful in preventing or minimizing the risk of loss that is inherent in
investing in particular types of investment products.

Foreign Securities. Investments in securities of issuers in any foreign
country involves special risk considerations not typically associated with
investing in U.S. companies.

Non-diversified investment companies. The International Fixed Income Fund
is classified as a non-diversified investment company under the Investment
Company Act of 1940 (the "1940 Act"), which means that the Fund is not limited
by the 1940 Act in the proportion of its assets that it may invest in the
obligations of a single issuer. The investment of a large percentage of a Fund's
assets in the securities of a small number of issuers may cause the Fund's share
price to fluctuate more than that of a diversified investment company.

High Yield Securities. The High Yield Bond Fund will invest primarily in
high yield bonds. Certain high yield bonds carry particular market risks and may
experience greater volatility in market value. Changes in interest rates, the
market's perception of the issuers and the creditworthiness of the parties
involved may significantly affect the value of these bonds. Some of these
securities may have a structure that makes their reaction to interest rates and
other factors difficult to predict, causing their value to be highly volatile.
These bonds also may be subject to prepayment risk.

For additional information concerning the risks of investing in the Funds,
see "Risks of Investing in the Funds" in this Prospectus.

2
<PAGE> 97
MANAGEMENT OF THE FUNDS

As Manager of the Funds, IMFC has overall responsibility, subject to the
supervision of the Board of Trustees, for engaging sub-advisers and for
monitoring and evaluating the management of the assets of each Fund by the
Sub-Advisers. IMFC also provides certain administrative services necessary for
the Funds' operations including: (i) coordination of the services performed by
the Funds' transfer agent, custodian, independent accountants and legal counsel;
regulatory compliance, including the compilation of information for documents
such as reports to, and filings with, the SEC and state securities commissions;
and preparation of proxy statements and shareholder reports for the Funds; (ii)
general supervision relative to the compilation of data required for the
preparation of periodic reports distributed to the Funds' Officers and Board of
Trustees; and (iii) furnishing office space and certain facilities required for
conducting the business of the Funds. Pursuant to a Management Agreement, the
Trust currently pays the Manager for its services a monthly fee at an annual
rate. See "Fund Expenses--Fee Table" and "Management of the Trust--The Manager"
in this Prospectus. All of the sub-advisers are subsidiaries of ING Group and
are affiliates of each other and the Manager and Distributor.

Baring International Investment Limited ("BIIM") serves as sub-Adviser to
the International Fixed Income Fund. Furman Selz Capital Management LLC ("FSCM")
serves as sub-adviser to the Federal Tax-Exempt Bond Fund. ING Investment
Management, LLC ("IIM") serves as sub-Adviser to the Intermediate Corporate Bond
Fund, High Yield Bond Fund and Mortgage Income Fund. BAM, FSCM and IIM may be
referred to herein individually as a "Sub-Adviser" and collectively as the
"Sub-Advisers." For their services, the Sub-Advisers receive a fee based on the
respective Funds' average day net assets. See "Management of the Funds--the
Sub-Advisers" in this Prospectus.

CLASS SHARES

The Funds offer investors a choice among multiple classes of shares with
different sales charges and expenses. These alternatives permit choosing the
most beneficial method of purchasing shares given the amount of the purchase,
the length of time the investor expects to hold the shares, and other
circumstances.

CLASS A SHARES. Generally, an investor who purchases Class A shares pays a
5.5% sales charge at the time of purchase. As a result, Class A shares are not
subject to any charges when they are redeemed (except for sales at net asset
value in excess of $1 million which may be subject to a contingent deferred
sales charge). The initial sales charge may be reduced or waived for certain
purchases. Class A shares are also subject to an annual Rule 12b-1 fee of 0.50%
of average daily net assets attributable to Class A shares. This fee is lower

3
<PAGE> 98
than the other classes having Rule 12b-1 fees and therefore Class A shares have
lower expenses and pay higher dividends. See "Purchase of Fund Shares--Class A
Shares."

CLASS B SHARES. Class B Shares are sold without an initial sales charge,
but are subject to a contingent deferred sales charge of 5.00% if redeemed
within [ ] years of purchase, with declining charges for redemptions thereafter
up to [ ] years after purchase. Class B shares are also subject to a higher
annual Rule 12b-1 fee than Class A shares--1.00% of the Fund's average daily net
assets attributable to Class B shares. However, after [ ] years, Class B shares
automatically will be converted to Class A shares at no charge to the investor,
resulting in a lower Rule 12b-1 fee thereafter. Class B shares provide the
benefit of putting all dollars to work from the time of investment, but will
have a higher expense ratio and pay lower dividends than Class A shares due to
the higher Rule 12b-1 fee and any other class specific expenses. See "Purchase
of Fund Shares--Class B and X Shares."

CLASS C SHARES. Class C shares are sold without an initial sales charge,
are subject to a higher annual Rule 12b-1 fee than the Class A shares--1.00% of
the Fund's average daily net assets attributable to Class C shares. Class C
Shares provide the benefit of putting all dollars to work from the time of
investment, but will have a higher expense ratio and pay lower dividends than
Class A shares due to the higher Rule 12b-1 fee and any other class specific
expenses. While Class C shares do not convert to Class A shares, they are
subject to a lower contingent deferred sales charge (1.00%) and do not have to
be held for as long a time (one year) as Class B or X shares to avoid paying a
contingent deferred sales charge. See "Purchase of Fund Shares--Class C Shares."

CLASS X SHARES. Class X shares are sold without an initial sales charge.
In addition, investors purchasing Class X shares will receive, as a bonus,
additional shares having a value equal to 2.50% of the amount invested ("Bonus
Shares"). The Distributor has undertaken to pay for Bonus Shares as part of its
services to the Funds. Shares purchased by the reinvestment of dividends or
capital gains distributions are not eligible for Bonus Shares. Class X shares
are subject to a contingent deferred sales charge of 5.00% if redeemed within [
] years, with declining charges for redemptions thereafter up to [ ] years after
purchase. Class X shares are also subject to a higher annual Rule 12b-1 fee than
Class A shares--1.00% of the Fund's average daily net assets attributable to
Class X shares. However, after [ ] years, Class X shares automatically will be
converted to Class A shares at no charge to the investor, resulting in a lower
Rule 12b-1 fee thereafter. Class X shares provide the benefit of putting all
dollars to work from the time of investment, but will have a higher expense
ratio and pay lower dividends than Class A shares due to the higher Rule 12b-1
fee and any other class specific expenses. See "Purchase of Fund Shares--Class X
Shares." Class X shares are currently only offered to certain Qualified
purchasers (including, but not limited to, IRAs, Roth IRAs, Education IRAs, SEP
IRAs, SIMPLE IRAs and 403(b)(7) plans).

In selecting which class of shares to purchase, you should consider, among
other things, the length of time you expect to hold your investment, the amount
of any applicable sales charge (whether imposed at the time of purchase or
redemption) and Rule 12b-1 fees, as noted above, whether you qualify for any
reduction or waiver of any applicable sales charge (e.g., if you are exempt from
the sales charge, you must invest in Class A shares), the various exchange
privileges among the different classes of shares and the fact that Class B and X
shares automatically convert to Class A shares after [___] years.

4
<PAGE> 99
FUND EXPENSES

FEE TABLE

<TABLE>
<CAPTION>
Intermediate Corporate Bond Fund High Yield Bond Fund
---------------------------------------- -------------------------------------------
Class A Class B Class C Class X Class A Class B Class C Class X
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on 5.50% NONE NONE NONE 5.50% NONE NONE NONE
Purchases (as a percentage of
offering price)
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering price)
Maximum Contingent Deferred Sales NONE 5.00% NONE 5.00% NONE 5.00% NONE 5.00%
Load (as a percentage of redemption
proceeds)
Redemption Fees(3) NONE NONE NONE NONE NONE NONE NONE NONE
Exchange Fees NONE NONE NONE NONE NONE NONE NONE NONE
ANNUAL FUND OPERATING EXPENSE
(as a percentage of average net assets)
Management Fees (after waivers)*
12b-1 Fees 0.50% 1.00% 1.00% 1.00% 0.50% 1.00% 1.00% 1.00%
Other Expenses** [____]% [____]% [____]% [____]% [____]% [____]% [____]% [____]%
TOTAL PORTFOLIO OPERATING EXPENSES
(after waivers)*** [____]% [____]% [____]% [____]% [____]% [____]% [____]% [____]%
</TABLE>

- --------

(1) Under certain circumstances, purchases of Class A shares not subject to an
initial sales charge will be subject to a contingent deferred sales charge
("CDSC") if redeemed within 12 months of the calendar month of purchase.
For an additional discussion of the Class A CDSC, see this Prospectus
under "Purchase of Fund Shares."

(2) If you purchase Class B or X shares, you do not pay an initial sales
charge but you may incur a CDSC if you redeem some or all of your Class B
or X shares before the end of the [ ] year after which you purchased such
shares. The CDSC is [ ]%, [ ]%, [ ]%, [ ]%, [ ]%, [ ] % and [ ]% for
redemptions occurring in years one through [ ], respectively. No CDSC is
charged after the [ ] year. If you purchase Class C shares, you do not pay
an initial sales charge but you may incur a CDSC if you redeem some or all
of your Class C shares within 12 months of the calendar month of purchase.
For a discussion of the Class B, X and C CDSC, see this Prospectus under
"Purchase of Fund Shares."

(3) As a result of distribution fees, a long-term investor in the Fund may pay
more than the economic equivalent of the maximum front-end sales charge
permitted by the rules of the National Association of Securities Dealers,
Inc.

** Certain Service Organizations may receive fees from a Fund in amounts up
to an annual rate of [0.25%] of the daily net asset value of the Fund
shares owned by the shareholders with whom the Service Organization has a
servicing relationship.

*** Total Portfolio Operating Expenses (before waivers) would be ___% and
___%, respectively.

5
<PAGE> 100
EXPENSE EXAMPLES:

Full Redemption. You would have paid the following expenses on a $1,000
investment, assuming a hypothetical 5% annual return and full redemption of your
shares at the end of each period shown below:

<TABLE>
<CAPTION>
Intermediate Corporate Bond Fund 1 Year 3 Years
- -------------------------------- ------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Class X Shares
</TABLE>

<TABLE>
<CAPTION>
High Yield Bond Fund 1 Year 3 Years
- -------------------- ------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Class X Shares
</TABLE>

No Redemption. You would have paid the following expenses on a $1,000
investment, assuming a hypothetical 5% annual return and no redemption of your
shares at the end of each period shown below:

<TABLE>
<CAPTION>
Intermediate Corporate Bond Fund 1 Year 3 Years
- -------------------------------- ------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Class X Shares
</TABLE>

<TABLE>
<CAPTION>
High Yield Bond Fund 1 Year 3 Years
- -------------------- ------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Class X Shares
</TABLE>

(*) Expense examples for purchase of Class X shares of the Funds reflect
the shareholder's receipt of additional "bonus shares." For a discussion of the
issuance of "bonus shares," see this Prospectus under "Purchase of Fund Shares:
Purchase of Class X Shares."

The above tables are provided to assist you in understanding the various
costs and expenses that you would bear directly or indirectly as an investor in
the Fund(s). THE EXAMPLES PROVIDED SHOULD NOT BE CONSIDERED AS A REPRESENTATION
OF THE FUNDS' PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS
THAN THOSE SHOWN. IN ADDITION, WHILE THE EXAMPLES ASSUME A 5% ANNUAL RETURN,
EACH FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN THAT
IS GREATER OR LESS THAN 5%.

6
<PAGE> 101
FEE TABLE

<TABLE>
<CAPTION>
Intermediate Corporate Bond Fund High Yield Bond Fund
----------------------------------------- ---------------------------------------------
Class A Class B Class C Class X Class A Class B Class C Class X
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on 5.50% NONE NONE NONE 5.50% NONE NONE NONE
Purchases (as a percentage of
offering price)
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering price)
Maximum Contingent Deferred Sale NONE 5.00% NONE 5.00% NONE 5.00% NONE 1.00%
Load (as a percentage of redemption
proceeds)
Redemption Fees(3) NONE NONE NONE NONE NONE NONE NONE NONE
Exchange Fees NONE NONE NONE NONE NONE NONE NONE NONE
ANNUAL FUND OPERATING EXPENSE
(as a percentage of average net assets)
Management Fees (after waivers)*
12b-1 Fees 0.50% 1.00% 1.00% 1.00% 0.50% 1.00% 1.00% 1.00%
Other Expenses** [____]% [____]% [____]% [____]% [____]% [____]% [____]% [____]%
TOTAL PORTFOLIO OPERATING EXPENSE
(after waivers)*** [____]% [____]% [____]% [____]% [____]% [____]% [____]% [____]%
</TABLE>

- --------

(1) Under certain circumstances, purchases of Class A shares not subject to an
initial sales charge will be subject to a contingent deferred sales charge
("CDSC") if redeemed within 12 months of the calendar month of purchase.
For an additional discussion of the Class A CDSC, see this Prospectus
under "Purchase of Fund Shares."

(2) If you purchase Class B or X shares, you do not pay an initial sales
charge but you may incur a CDSC if you redeem some or all of your Class B
or X shares before the end of the [ ] year after which you purchased such
shares. The CDSC is [ ]%, [ ]%, [ ]%, [ ]%, [ ]%, [ ] % and [ ]% for
redemptions occurring in years one through [ ], respectively. No CDSC is
charged after the [ ] year. If you purchase Class C shares, you do not pay
an initial sales charge but you may incur a CDSC if you redeem some or all
of your Class C shares within 12 months of the calendar month of purchase.
For a discussion of the Class B, X and C CDSC, see this Prospectus under
"Purchase of Fund Shares."

(3) As a result of distribution fees, a long-term investor in the Fund may pay
more than the economic equivalent of the maximum front-end sales charge
permitted by the rules of the National Association of Securities Dealers,
Inc.

** Certain Service Organizations may receive fees from a Fund in amounts up
to an annual rate of [0.25%] of the daily net asset value of the Fund
shares owned by the shareholders with whom the Service Organization has a
servicing relationship.

*** Total Portfolio Operating Expenses (before waivers) would be ___% and
___%, respectively.

7
<PAGE> 102
EXPENSE EXAMPLES:

Full Redemption. You would have paid the following expenses on a $1,000
investment, assuming a hypothetical 5% annual return and full redemption of your
shares at the end of each period shown below:

<TABLE>
<CAPTION>
International Fixed Income Fund 1 Year 3 Years
- ------------------------------- ------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Class X Shares
</TABLE>

<TABLE>
<CAPTION>
Mortgage Income Fund 1 Year 3 Years
- -------------------- ------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Class X Shares
</TABLE>

No Redemption. You would have paid the following expenses on a $1,000
investment, assuming a hypothetical 5% annual return and no redemption of your
shares at the end of each period shown below:

<TABLE>
<CAPTION>
International Fixed Income Fund 1 Year 3 Years
- ------------------------------- ------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Class X Shares
</TABLE>

<TABLE>
<CAPTION>
Mortgage Income Fund 1 Year 3 Years
- -------------------- ------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Class X Shares
</TABLE>

(*) Expense examples for purchase of Class X shares of the Funds reflect
the shareholder's receipt of additional "bonus shares." For a discussion of the
issuance of "bonus shares," see this Prospectus under "Purchase of Fund Shares:
Purchase of Class X Shares."

The above tables are provided to assist you in understanding the various
costs and expenses that you would bear directly or indirectly as an investor in
the Fund(s). THE EXAMPLES PROVIDED SHOULD NOT BE CONSIDERED AS A REPRESENTATION
OF THE FUNDS' PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS
THAN THOSE SHOWN. IN ADDITION, WHILE THE EXAMPLES ASSUME A 5% ANNUAL RETURN,
EACH FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN THAT
IS GREATER OR LESS THAN 5%.

8
<PAGE> 103
FEE TABLE

<TABLE>
<CAPTION>
Federal Tax Exempt Bond Fund
-------------------------------------------------
Class A Class B Class C Class X
------- ------- ------- -------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a .... 5.50% NONE NONE NONE
percentage of offering price)
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering price)
Maximum Contingent Deferred Sales Load (as a NONE 5.00% NONE 5.00%
percentage of redemption proceeds)
Redemption Fees(3) ............................... NONE NONE NONE NONE
Exchange Fees .................................... NONE NONE NONE NONE
ANNUAL FUND OPERATING EXPENSE
(as a percentage of average net assets)
Management Fees (after waivers)*
12b-1 Fees ....................................... 0.50% 1.00% 1.00% 1.00%
Other Expenses** ................................. [____]% [____]% [____]% [____]%
TOTAL PORTFOLIO OPERATING EXPENSES
(after waivers)*** ............................... [____]% [____]% [____]% [____]%
</TABLE>

- --------

(1) Under certain circumstances, purchases of Class A shares not subject to an
initial sales charge will be subject to a contingent deferred sales charge
("CDSC") if redeemed within 12 months of the calendar month of purchase.
For an additional discussion of the Class A CDSC, see this Prospectus
under "Purchase of Fund Shares."

(2) If you purchase Class B or X shares, you do not pay an initial sales
charge but you may incur a CDSC if you redeem some or all of your Class B
or X shares before the end of the [ ] year after which you purchased such
shares. The CDSC is [ ]%, [ ]%, [ ]%, [ ]%, [ ]%, [ ] % and [ ]% for
redemptions occurring in years one through [ ], respectively. No CDSC is
charged after the [ ] year. If you purchase Class C shares, you do not pay
an initial sales charge but you may incur a CDSC if you redeem some or all
of your Class C shares within 12 months of the calendar month of purchase.
For a discussion of the Class B, X and C CDSC, see this Prospectus under
"Purchase of Fund Shares."

(3) As a result of distribution fees, a long-term investor in the Fund may pay
more than the economic equivalent of the maximum front-end sales charge
permitted by the rules of the National Association of Securities Dealers,
Inc.

** Certain Service Organizations may receive fees from a Fund in amounts up
to an annual rate of [0.25%] of the daily net asset value of the Fund
shares owned by the shareholders with whom the Service Organization has a
servicing relationship.

*** Total Portfolio Operating Expenses (before waivers) would be ___% and
___%, respectively.

9
<PAGE> 104
EXPENSE EXAMPLES:

Full Redemption. You would have paid the following expenses on a $1,000
investment, assuming a hypothetical 5% annual return and full redemption of your
shares at the end of each period shown below:

<TABLE>
<CAPTION>
Federal Tax-Exempt Bond Fund 1 Year 3 Years
- ---------------------------- ------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Class X Shares
</TABLE>

No Redemption. You would have paid the following expenses on a $1,000
investment, assuming a hypothetical 5% annual return and no redemption of your
shares at the end of each period shown below:

<TABLE>
<CAPTION>
Federal Tax-Exempt Bond Fund 1 Year 3 Years
- ---------------------------- ------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Class X Shares
</TABLE>

(*) Expense examples for purchase of Class X shares of the Funds reflect
the shareholder's receipt of additional "bonus shares." For a discussion of the
issuance of "bonus shares," see this Prospectus under "Purchase of Fund Shares:
Purchase of Class X Shares."

The above tables are provided to assist you in understanding the various
costs and expenses that you would bear directly or indirectly as an investor in
the Fund(s). THE EXAMPLES PROVIDED SHOULD NOT BE CONSIDERED AS A REPRESENTATION
OF THE FUNDS' PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS
THAN THOSE SHOWN. IN ADDITION, WHILE THE EXAMPLES ASSUME A 5% ANNUAL RETURN,
EACH FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN THAT
IS GREATER OR LESS THAN 5%.

THE FUNDS

Each Fund is a separate investment fund or portfolio, commonly known as a
mutual fund. The Funds are portfolios of a Delaware business trust organized
under the laws of the State of Delaware as an open-end management investment
company on July ___, 1998. The Trust's Board of Trustees oversees the overall
management of the Funds and elects the officers of each Fund.

THE INVESTMENT POLICIES AND PRACTICES OF THE FUNDS

The Intermediate Corporate Bond Fund. The Intermediate Corporate Bond Fund
seeks to provide investors with a high level of current income consistent with
the preservation of capital and liquidity. Under normal market conditions, the
Fund will invest at least 65% of its total assets in corporate debt securities.
The Fund will normally invest at least 80% of its net assets in securities rated
BBB or better by an NRSRO or, if not rated, determined to be of comparable
quality by the Fund's Sub-Adviser at the time of purchase and will

10
<PAGE> 105
seek to maintain a minimum average portfolio quality rating of "BBB." A
description of security ratings is contained in an Appendix to this Prospectus.
For purposes of this Prospectus, a "bond" is defined as a debt instrument with a
fixed interest rate. The dollar-weighted average maturity of the Intermediate
Corporate Bond Fund will generally range between three and ten years. Any
remaining assets may be invested in convertible securities, preferred stocks and
debt of foreign issuers, Government Securities and money market instruments that
the Fund's Sub-Adviser believes are appropriate in light of the Fund's
objective. Money-market instruments must be rated in one of the top two rating
categories by an NRSRO or, if not rated, determined to be of comparable quality
by the Fund's Sub-Adviser.

High Yield Bond Fund. The High Yield Bond Fund seeks to provide investors
with high current income, and, secondarily, total return when consistent with
the primary objective. Under normal market conditions, the Fund intends to
invest at least 80% of its total assets in high yield bonds (except when
maintaining a temporary defensive position). Any remaining assets may be
invested in investment grade bonds, debt of foreign issuers, bank loans, payment
in kind ("PIK") securities, common and preferred stocks, Government Securities
and money market instruments that the Fund's Sub-Adviser believes are
appropriate in light of the Fund's objective. High yield bonds, which are high
risk bonds are debt securities that are not rated by a NRSRO or are rated below
investment grade by a NRSRO such as Ba or lower by Moody's Investors Services,
Inc. ("Moody's") or BB or lower by Standard & Poor's Rating Group ("S&P"). A
description of security ratings is contained in an Appendix to this Prospectus.
The Fund defines high yield bonds to include: fixed, variable, floating rate and
deferred interest debt obligations, zero coupon bonds, pay-in-kind bonds; asset
and mortgage-backed debt obligations; structured debt obligations; and
convertible bonds. In evaluating the quality of a particular high yield bond for
investment in the Fund, the Sub-Adviser does not rely exclusively on ratings
assigned by the NRSROs. The Sub-Adviser will utilize a security's credit rating
as simply one indication of an issuer's creditworthiness and will principally
rely upon its own analysis of any security. However, the Sub-Adviser does not
have restrictions on the rating level of the securities in the Funds' portfolio
and may purchase and hold securities in default. Any remaining assets may be
invested in investment grade bonds, debt securities of foreign issuers, common
and preferred stocks, Government Securities, PIK securities and money market
instruments that the Fund's Sub-Adviser believes are appropriate in light of the
Fund's objective.

The Fund will not purchase any common stocks if, after such purchase, more
than 20% of the value of its total assets would be invested in common stocks.
This 20% limit includes common stocks in order to attempt to achieve either a
combination of its primary and secondary goals, in which case the common stocks
will be dividend-paying, or to achieve its secondary goal, in which case the
common stocks may not pay dividends.

The Fund cannot assure a specific rate of return or yield, or that
principal will be protected. However, through the cautious selection and
supervision of its portfolio, the Manager will strive to achieve the Fund's
objective.

International Fixed Income Fund. The International Fixed Income Fund is a
non-diversified fund that seeks to provide investors with high total return.
Under normal circumstances, the Fund invests at least 65% of its total assets in
investment grade fixed income securities.

11
<PAGE> 106
The Fund strives to take maximum advantage of financial and economic
developments and currency fluctuations.

Fixed income securities consist of: (i) securities issued or guaranteed by
foreign governments, their political subdivisions, agencies or instrumentalities
(sovereign debt); (ii) corporate bonds and debentures rated in the highest four
rating categories by an NRSRO; (iii) obligations of supranational entities; (iv)
repurchase agreements involving such securities; (v) loan participations; (vi)
short-term commercial paper of U.S. or foreign issuers rated in the highest two
rating categories by an NRSRO; and (vii) swaps.

Any remaining Fund assets may be invested in: (i) securities denominated
in U.S. dollars or foreign currencies which are rated below investment grade;
(ii) obligations issued or guaranteed as to principal and interest by the U.S.
Government or its agencies and instrumentalities; (iii) obligations
(certificates of deposit, time deposits, and bankers' acceptances) of commercial
banks, savings and loan institutions, and U.S. and foreign branches of foreign
banks that have total assets of $500 million or more as shown on their last
published financial statements at the time of investment; (iv) mortgage-backed
securities rated in the highest there rating categories by an NRSRO; (v)
asset-backed securities rated in the highest three rating categories by an
NRSRO; (vi) receipts; (vii) GICs; and (viii) BICs. The Fund may invest or hold a
portion of its assets in U.S. dollars and foreign currencies, including
multinational currency units. Normally, a portion of the Fund's total assets is
held in U.S. dollars.

There are no restrictions on the average maturity of the Fund or on the
maturity of any single instrument. Maturities may vary widely depending on the
Advisor's assessment of interest rate trends and other economic and market
factors.

The Fund is non-diversified for purposes of the 1940 Act, which means that
it is not limited by the 1940 Act in the proportion of its assets that it may
invest in the obligations of a single issuer.

Mortgage Income Fund. The Mortgage Income Fund seeks to provide investors
with long-term income consistent with preservation of capital. Under normal
market conditions, the Fund will invest at least 65% of its total assets in
mortgage-backed securities. Any remaining assets may be invested in fixed income
securities including, but not limited to, U.S. Government Securities, corporate
bonds, notes and debentures, asset-backed securities and money market
instruments that the Fund's Sub-Advisor believes are appropriate in light of the
Fund's objective. The Fund's investments will be rated at least A by Moody's or
S&P or similarly rated by another NRSRO or if non-rated, they are, in the view
of the Sub-Adviser, of comparable quality. A description of security ratings is
contained in an Appendix to this Prospectus.

The Fund may vary the proportion of its holdings of long- and short-term
debt securities in order to reflect its assessment of prospective changes in
interest rates even if such action may adversely affect current income. For
example, if in the opinion of the Sub-Adviser, interest rates generally are
expected to decline, the Fund may sell its shorter term securities and purchase
longer term securities in order to benefit from greater expected relative price
appreciation; the securities sold may have a higher current yield than those
being purchased. The success of this strategy will depend on the Sub-Adviser's
ability to forecast changes in interest rates. Moreover, the Fund intends to
manage its portfolio actively by taking advantage of trading opportunities such
as sales of fund securities and purchases of higher yielding securities of
similar quality due to distortions in normal yield differentials.

12
<PAGE> 107
Mortgage-backed securities are securities that directly or indirectly
represent a participation in, or are secured by and payable from, mortgage loans
secured by real property. There are currently three basic types of
mortgage-backed securities: (i) those issued or guaranteed by the U.S.
Government or one of its agencies or instrumentalities, such as GNMA, Federal
National Mortgage Association ("FXFNMA") and Federal Home Loan Mortgage
Corporation ("FHLMC"); (ii) those issued by private issuers that represent an
interest in or are collateralized by mortgage-backed securities issued or
guaranteed by the U.S. Government or one of its agencies or instrumentalities;
and (iii) those issued by private issuers that represent an interest in or are
collateralized by whole mortgage loans or mortgage-backed securities without a
government guarantee but usually having some form of private credit enhancement.
See "Private Mortgage Pass-Through Securities" below. The Fund may invest in
adjustable rate and fixed rate mortgage securities.

The Fund may invest in mortgage-backed securities and other derivative
mortgage products, including those representing an undivided ownership interest
in a pool of mortgages, e.g., GNMA, FNMA and FHLMC certificates where the U.S.
Government or its agencies or instrumentalities guarantees the payment of
interest and principal of these securities. These guarantees do not extend to
the yield or value of the securities or the Fund's shares. These certificates
are in most cases pass-through instruments, through which the holder receives a
share of all interest and principal payments from the mortgages underlying the
certificate, net of certain fees. The value of these securities is likely to
vary inversely with fluctuations in interest rates.

Federal Tax-Exempt Bond Fund. The Federal Tax-Exempt Bond Fund seeks to
provide investors with a high level of current income that is exempt from
federal income taxes, consistent with preservation of capital. Under normal
circumstances, at least 80% of its net assets in Municipal Securities the
interest of which is exempt from federal income taxes (collectively "Municipal
Securities"), based on opinions from bond counsel for the issuers. The issuers
of these securities can be located in all fifty states, the District of
Columbia, Puerto Rico, and other U.S. territories and possessions. Under normal
conditions, the Fund will invest at least 80% of its net assets in securities
the interest on which is not a preference item for purposes of the federal
alternative minimum tax. Although the Sub-Adviser has no present intention of
doing so, up to 20% of all assets in the Fund can be invested in taxable debt
securities for defensive purposes or when sufficient tax exempt securities
considered appropriate by the Sub-Adviser are not available for purchase.

The Fund may purchase the following types of municipal obligations, but
only if such securities, at the time of purchase, either have the requisite
rating, or, if not rated, are of comparable quality as determined by the
Sub-Adviser: (i) municipal bonds rated A or better by S&P or by Moody's, and the
Fund may invest up to 10% of its total assets in municipal bonds rated BBB by
S&P or Baa by Moody's; (ii) municipal notes rated at least SP-1 by S&P or MIG-1
or VMIG-1 by Moody's; and (iii) tax-exempt commercial paper rated at least A-1
by S&P or Prime-1 by Moody's. Bonds rated BBB by S&P or Baa by Moody's have
speculative characteristics.

Not more than 25% of Fund assets will be invested in (a) Municipal
Securities whose issuers are located in the same state and (b) Municipal
Securities the interest on which is derived from revenues of similar type
projects. This restriction does not apply to Municipal Securities in any of the
following categories: public housing authorities; general obligations of states
and localities; state and local housing finance authorities, or municipal
utilities systems.

13
<PAGE> 108
There could be economic, business, or political developments which might
affect all Municipal Securities of a similar type. To the extent that a
significant portion of the Fund's assets are invested in Municipal Securities
payable from revenues on similar projects, the Fund will be subject to the
peculiar risks presented by such projects to a greater extent than it would be
if the Fund's assets were not so invested.

The Fund will typically maintain a dollar-weighted average Fund maturity
of three to ten years. However, when the Sub-Adviser determines that market
conditions so warrant, the Fund can maintain an average weighted maturity of
less than three years.

The Fund may invest in variable and floating rate obligations, may
purchase securities on a "when-issued" basis, and reserves the right to engage
in transactions involving standby commitments. The Fund may also purchase other
types of tax-exempt instruments as long as they are of a quality equivalent to
the long-term bond or commercial paper ratings stated above. Although permitted
to do so, the Fund has no present intent to invest in repurchase agreements or
to purchase securities subject to the federal alternative minimum tax. The Fund
will not invest more than 15% of its net assets in illiquid securities.

The taxable securities in which the Fund may invest consist of U.S.
Treasury obligations; obligations issued or guaranteed by the U.S. Government or
by its agencies or instrumentalities whether or not backed by the full faith and
credit of the U.S. Government; instruments of U.S. commercial banks or savings
and loan institutions (not including foreign branches of U.S. banks or U.S.
branches of foreign banks) which are members of the Federal Reserve System or
the Federal Deposit Insurance Corporation and which have total assets of $1
billion or more as shown on their last published financial statements at the
time of investment; and repurchase agreements involving any of such obligations.

All Funds

There can be no assurance that the Funds will achieve their investment
objectives.

The SEC currently requires a Fund to invest at least 65% of its total
assets in investments that are consistent with its name. To the extent the SEC
increases the percentage of a Fund's assets that must be invested in investments
that are consistent with its name, each Fund reserves the right to change,
without shareholder approval, the percentage required to be invested by the Fund
from 65% of total assets to the percentage required by the SEC or to change the
name of the Fund.

In order to meet liquidity needs, or for temporary defensive purposes, the
Funds may invest up to 100% of their assets in the types of securities which, in
the Sub-Adviser's opinion, are appropriate for investment by the Fund as
referenced in the section entitled "Description of Securities and Investment
Practices" in this Prospectus. To the extent the Funds are engaged in temporary
or defensive investments, a Fund will not be pursuing its investment objective.

The types of securities and investment practices used by the funds are
described in greater detail at "DESCRIPTION OF SECURITIES AND INVESTMENT
PRACTICES."

MANAGEMENT OF THE FUNDS

The business and affairs of each Fund are managed under the direction of
the Board of Trustees. Additional information about the Trustees, as well as the
Funds' executive officers, may be found in the SAI under the heading
"MANAGEMENT--Trustees and Officers."

14
<PAGE> 109
THE MANAGER: ING MUTUAL FUND COMPANY

IMFC, [address], serves as the manager of the Funds. IMFC serves as the
Manager to the Funds pursuant to a Management Agreement with the Trust. IMFC was
formed on _________, 1998, as a ___________ corporation and is a wholly-owned
subsidiary of ING Group, N.V. ("ING Group"). IMFC is registered with the SEC as
an investment adviser. IMFC has no prior experience as an investment adviser to
an investment company.

Under the Management Agreement, IMFC has overall responsibility, subject
to the supervision of the Board of Trustees, for engaging sub-advisers and for
monitoring and evaluating the management of the assets of each Fund by the
Sub-Adviser. The Manager is also responsible for monitoring and evaluating the
Sub-Advisers on a periodic basis, and will consider their performance records
with respect to the investment objectives and policies of each Fund. The Manager
may, if appropriate, recommend that the Trustees consider a change in a
Sub-Adviser, although the Manager does not expect to recommend frequent changes
in Sub-Advisers as a matter of operating procedure for the Funds. IMFC also
provides certain administrative services necessary for the Funds' operations
including: (i) coordination of the services performed by the Funds' transfer
agent, custodian, independent accountants and legal counsel; regulatory
compliance, including the compilation of information for documents such as
reports to, and filings with, the SEC and state securities commissions; and
preparation of proxy statements and shareholder reports for the Funds; (ii)
general supervision relative to the compilation of data required for the
preparation of periodic reports distributed to the Funds' Officers and Board of
Trustees; and (iii) furnishing office space and certain facilities required for
conducting the business of the Funds.

Pursuant to the Management Agreement, the Manager is authorized to
exercise full investment discretion and make all determinations with respect to
the investment of a Fund's assets and the purchase and sale of portfolio
securities for one or more Funds in the event that at any time no Sub-Adviser is
engaged to manage the assets of a Fund. The Management Agreement may be
terminated without penalty by the vote of the Board of Trustees or the
shareholders of the Fund upon 60 days' written notice by the Board, or by the
Manager and will terminate automatically if assigned as that term is described
in the Investment Company Act of 1940.

The Trust pays the Manager for its services under the Management Agreement
a fee, payable monthly, based on the average daily net assets of each Fund at
the following annual rates on the average daily net assets of each Fund:

<TABLE>
<CAPTION>
Management
Fee
-----------
<S> <C>
Fund:

Intermediate Corporate Bond Fund

High Yield Bond Fund

International Fixed Income Fund

Mortgage Income Fund

Federal Tax-Exempt Bond Fund
</TABLE>

15
<PAGE> 110
THE SUB-ADVISERS:

BARING INTERNATIONAL INVESTMENT LIMITED. (BIIL) The Manager has retained
BIIL located at 155 Bishopsgate, London to act as sub-adviser to the
International Fixed Income Fund. BIIL is registered under the Investment
Advisor's Act of 1940 and provides investment management services to clients
located around the world. BIIL is a wholly owned subsidiary of Baring Asset
Management Holdings Limited ("BAMHL"). BAMHL, a company registered in England
and Wales, is the parent of the world-wide group of investment management
companies that operate under the collective name Baring Asset Management. BAMHL
is a wholly owned indirect subsidiary of ING Group a publicly traded company
based in the Netherlands with worldwide insurance and banking subsidiaries and
is affiliated with the Manager.

Baring Asset Management provides global investment management services and
maintains major investment offices in Boston, London, Hong Kong and Tokyo, and
together with its predecessor corporation was founded in 1762. Baring Asset
Management provides advisory services to institutional investors, offshore
investment companies, insurance companies and private clients. As of December
31, 1997, Baring Asset Management managed approximately $36.1 billion of assets.

The Intermediate Fixed Income Fund is managed by a team of 12 investment
professionals, lead by Mr. Paul Thursby. The team has an average of investment
experience of 17 years. Mr. Thursby has been an investment professional with BAM
and BIIM since 1981 and has 18 years of investment experience.

Pursuant to the Sub-Advisory Agreements, the Manager (not the Trust) pays
to BIIM a monthly fee based on the average daily net assets of the Fund at the
annual rate of ___% of the average daily net assets.

The figures below show past performance of BIIM in managing accounts with
investment objectives, policies, styles and techniques substantially similar
though not identical to those of the International Fixed Income Fund. The
performance is not necessarily representative of the past performance of the
above-referenced team or any individual of the team. Information presented is
based on performance data provided by BIIM. The past performance does not
represent the International Fixed Income Fund's performance, as it is newly
organized and has no performance record of its own. The table shows the total
returns for a composite of the actual performance of international fixed income
accounts managed by BIIM for various periods ended March 30, 1998, as adjusted
for the projected annual expenses for the International Fixed Income Fund's
Class A and C shares during its initial fiscal period as set forth in the Fee
Table in this Prospectus. Class B and X shares have different expenses than
Class A and C shares and depending on the time of the Shareholder's redemption,
the past performance calculated below may be higher or lower than that shown for
Class A and C. Included for comparison purposes are performance figures of the
Salomon Government Bond Non-U.S. Dollar Index, an unmanaged market index. The
performance shown below is calculated in accordance with AIMR.

16
<PAGE> 111
The composite is made up of unregistered accounts that are not subject to
diversification and other requirements that apply to mutual funds under
applicable securities, tax and other laws that, if applicable, may have
adversely affected performance. As a result, portfolio management strategies
used on the composite and those used on the International Fixed Income Fund may
vary in some respects. The information should not be considered a prediction of
the future performance of the International Fixed Income Fund. The actual
performance may be higher or lower than that shown.

Annualized Rates of Return for
Periods Ending June 30, 1998

BIIM SWGWBI
--------------------- ex-U.S.$
Class A Class B Index
------- ------- -----
<S> <C> <C> <C>
1 Year % % %
3 Years % % %
5 Years % % %
10 Years % % %
Since Inception
[DATE] % % %
</TABLE>

ING INVESTMENT MANAGEMENT, LLC. The Manager has retained IIM, located at
5780 Powers Ferry Road, N.W. Suite 300, Atlanta, Georgia 30327 to act as
sub-adviser to the Intermediate Corporate Bond Fund, High Yield Bond Fund and
the Mortgage Income Fund. IIM is a Delaware limited liability corporation which
is engaged in the business of providing investment advice to portfolios which,
as of December 31, 1997, were valued at $22 billion. IIM is a wholly owned
subsidiary of ING Group and is affiliated with the Manager. IIM is registered
with the SEC as an investment adviser. IIM is also a sub-adviser to other
registered investment companies.

The Intermediate Corporate Bond Fund is managed by a team of four
investment professionals led by Mr. Bob Bowman. Mr. Bowman has been employed by
IIM as a ____________________ since ____________.

The High Yield Bond Fund is managed by a team of five investment
professionals led by Mr. Fred Smith. Mr. Smith has been employed by IIM as a
____________________ since _____________.

The Mortgage Income Fund is managed by a team of three professionals led
by Mr. Michael Stevens. Mr. Stevens has been employed by IIM as a
____________________ since ________ and has 21 years of investment experience.

Pursuant to the Sub-Advisory Agreement, the Manager (not the Trust) pays
to IIM a monthly fee based on the average daily net assets of the Fund at the
following annual rates of the average daily net assets:

17
<PAGE> 112
<TABLE>
<CAPTION>
Fund Investment Advisory Fee
- ---- -----------------------
<S> <C>
High Yield Bond Fund %

Mortgage Income Fund %
</TABLE>

FURMAN SELZ CAPITAL MANAGEMENT LLC. The Manager has retained FSCM, located
at 230 Park Avenue, New York, NY 10169, to act as sub-adviser to the Federal
Tax-Exempt Bond Fund. FSCM is a Delaware limited liability company which is
engaged in the business of providing investment advice to institutional and
individual clients which, as of December 31, 1997, were valued at approximately
$10 billion. FSCM is a [wholly owned] subsidiary of ING Group and is affiliated
with the Manager. FSCM is registered with the SEC as an investment adviser. FSCM
is also sub-adviser to other registered investment companies.

The figures below show past performance of IIM in managing accounts with
investment objectives, policies, styles and techniques substantially similar
though not identical to those of the ING Intermediate Corporate Bond Fund.

Messrs. Robert Schonbrunn and Alan Segars are responsible for the
day-to-day operations of the Federal Tax-Exempt Bond Fund. Mr. Schonbrunn has
been an investment professional with FSCM since 1985 and has 31 years of
experience. Mr. Segars has been an investment professional with FSCM since 1985
and has 29 years of experience.

Pursuant to the Sub-Advisory Agreement, the Manager (not the Trust) pays
to FSCM a monthly fee based on the average daily net assets of the Fund at the
annual rate of ___% of the average daily net assets.

The figures below show past performance of FSCM in managing accounts with
investment objectives, policies, styles and techniques substantially similar
though not identical to those of the Federal Tax Exempt Bond Fund. Information
presented is based on performance data provided by FSCM. The past performance
does not represent the Federal Tax Exempt Bond Fund's performance, as it is
newly organized and has no performance record of its own. The table shows the
total returns for a composite of the actual performance of federal tax exempt
accounts managed by FSCM for various periods ended June 30, 1998, as adjusted
for the projected annual expenses for the Federal Tax Exempt Bond Fund's Class A
and C Shares during its initial fiscal period as set forth in the Fee Table in
this Prospectus. Class B and X shares have different expenses than Class A and C
shares and depending on the time of the Shareholders redemption, the past
performance calculated below may be higher or lower than that shown for Class A
and C. Included for comparison purposes are performance figures of the Lehman 7
year G.O. Municipals Index, an unmanaged market index. The performance shown
below is calculated in accordance with AIMR.

The composite is made up of unregistered accounts that are not subject to
diversification and other requirements that apply to mutual funds under
applicable securities, tax and other laws that, if applicable, may have
adversely affected performance. As a result, portfolio management strategies
used on the composite and those used on the Federal Tax Exempt Bond Fund may
vary in some respects. The information should not be considered a prediction of
the future performance of the Federal Tax Exempt Bond Fund. The actual
performance may be higher or lower than that shown.

18
<PAGE> 113
Annualized Rates of Return for
Periods Ending June 30, 1998

<TABLE>
<CAPTION>
FSCM Lehman 7 Year
---------------------- G.O. Municipals
Class A Class B Index
------- ------- ---------------
<S> <C> <C> <C>
1 Year % % %
3 Years % % %
5 Years % % %
10 Years % % %
Since Inception
[DATE] % % %
</TABLE>

THE DISTRIBUTOR

IFD acts as Distributor. IFD is located at ______________________. As
Distributor, IFD sells shares of each Fund on behalf of the Trust.

FUND ACCOUNTANT AND TRANSFER AGENT

First Data Investors Services Group ("First Data") acts as the Funds'
Transfer Agent and, pursuant to an agreement with IMFC, the Funds' fund
accounting agent.

DISTRIBUTION EXPENSES

Pursuant to a Plan of Distribution adopted by each Fund under Rule 12b-1
under the 1940 Act, each Fund pays the Distributor an annual fee of 0.50% of
average net assets attributable to that Fund's Class A shares, 1.00% of average
net assets attributable to that Fund's Class B, and 1.00% of average net asset
of that Fund's Class X and C shares. While all of Class A's Rule 12b-1 fee
constitutes a "distribution fee," only 0.75% of Class B, X, and C's fees
constitute distribution fees.

19
<PAGE> 114
and distribution of sales literature; advertising of any type; expenses of
branch offices provided jointly by the Distributor and affiliated companies; and
compensation paid to and expenses incurred by officers, employees or
representatives of the Distributor or of other broker-dealers, banks, or other
financial institutions, including travel, entertainment, and telephone expenses.

A portion of the Rule 12b-1 fee equal to 0.25% of the average net assets
of each Fund attributable to the Class B, X and C shares constitutes a
shareholder servicing fee designed to compensate the Distributor for the
provision of certain services to shareholders. The services provided may include
personal services provided to shareholders, such as answering shareholder
inquiries regarding the Funds and providing reports and other information, and
services related to the maintenance of shareholder accounts. The Distributor may
use the Rule 12b- 1 fee to make payments to qualifying broker-dealers and
financial institutions that provide such services.

SERVICE ORGANIZATIONS

Various banks, trust companies, broker-dealers (other than the
Distributor) or other financial organizations (collectively, "Service
Organizations") also may provide administrative services for the Funds, such as
maintaining shareholder accounts and records at a fee of up to an annual rate of
0.25% of Fund average daily net assets serviced. The Glass-Steagall Act and
other applicable laws provide that, among other things, banks may not engage in
the business of underwriting, selling or distributing securities. There is
currently no precedent prohibiting banks from performing administrative and
shareholder servicing functions as Service Organizations. However, judicial or
administrative decisions or interpretations of such laws, as well as changes in
either Federal or state regulations relating to the permissible activities of
banks and their subsidiaries or affiliates, could prevent a bank Service
Organization from continuing to perform all or part of its servicing activities.
If a bank were prohibited from so acting, its shareholder clients would be
permitted to remain shareholders of the Funds and alternative means for
continuing the servicing of such shareholders would be sought. It is not
expected that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences.

OTHER EXPENSES

PORTFOLIO TRANSACTIONS

20
<PAGE> 115
effecting purchases and sales of equity and debt securities for the account of
the Funds, the Sub-Adviser will seek the best execution of the Funds' orders.
Purchases and sales of portfolio debt securities for the Funds are generally
placed by the Sub-Adviser with primary market makers for these securities on a
net basis, without any brokerage commission being paid by the Funds. Trading of
portfolio debt securities does, however, involve transaction costs. Transactions
with dealers serving as primary market makers reflect the spread between the bid
and asked prices. As permitted by Section 28(e) of the Securities Exchange Act
of 1934, the Adviser may cause a Fund to pay a broker-dealer which provides
"brokerage and research services" (as defined in the Act) to the Sub-Adviser an
amount of disclosed commissions for executing a securities transaction for the
Funds in excess of the commissions another broker-dealer would have charged if
the Sub-Adviser believes the commission paid is reasonable in relation to the
value of the brokerage and research services received by the Sub-Adviser.
Broker-dealers are selected on the basis of a variety of factors such as
reputation, capital strength, size and difficulty of order, sale of Fund shares
and research provided to the Sub-Adviser. The Sub-Adviser may allocate purchase
and sales orders for portfolio securities to broker-dealers that are affiliated
with the Manager, the Sub-Adviser or Distributor in agency transactions, if the
Sub-Adviser believes the quality of the transaction and commissions are
comparable to what they would be with other qualified brokerage firms.

FUND SHARE VALUATION

The net asset value per share of the Funds is calculated at 4:00 p.m.
(Eastern time), Monday through Friday, on each day the New York Stock Exchange
are open for business (a "Business Day"). The net asset value per share of each
class is computed by dividing the value of the net assets of each class (i.e.,
the value of the assets less the liabilities) by the total number of outstanding
shares of each class. All expenses, including fees paid to the Manager, the
Administrator and the Distributor, are accrued daily and taken into account for
the purpose of determining the net asset value. Expenses directly attributable
to a Fund are charged to the Fund; other expenses are allocated proportionately
among each Fund within the Trust in relation to the net assets of each Fund, or
on another reasonable basis. These general expenses (e.g., liability insurance
premiums) are allocated among the Funds based on each Fund's relative net asset
value. Within each class, the expenses are allocated proportionately based on
the net assets of each class, except class specific expenses which are allocated
directly to the respective class.

21
<PAGE> 116
With respect to options contracts entered into by a Fund, the premium
received is recorded as an asset and equivalent liability, and thereafter the
liability is adjusted to the market value of the option determined in accordance
with the preceding paragraph. The premium paid for an option purchased by the
Fund is recorded as an asset and subsequently adjusted to market value.

PRICING OF FUND SHARES

Orders for the purchase of shares will be executed at the net asset value
per share (the "public offering price") next determined after an order has been
received.

MINIMUM PURCHASE REQUIREMENTS

The minimum initial investment in a Fund is [$2,000], including an IRA
investment. Any subsequent investments must be at least $50, including an IRA
Investment. All initial investments should be accompanied by a completed
Purchase Application. A Purchase Application accompanies this Prospectus. A
separate application is required for an IRA. The Funds reserve the right to
reject any purchase order.

PURCHASE OF FUND SHARES

All investments may be made using any of the following methods.

Through the Fund by Mail. A completed Account Application together with a
check payable to ING Funds Trust should be forwarded to ING Funds Trust,
[address]. Purchases made by check in any Fund are not permitted to be redeemed
until payment of the purchase has been collected, which may take up to fifteen
calendar days. Third party and foreign checks will not be accepted. Please
include the Fund name and your account number on all checks.

Through an Authorized Broker, Investment Adviser or Service Organization.
Shares are available to new and existing shareholders through Investment
Advisers and Authorized Service Organizations. Authorized brokers, investment
advisers and Service Organizations may impose additional requirements and
charges for the services rendered.

Please contact your broker or Service Organization for instructions on
purchasing shares through their organization.

22
<PAGE> 117
a member of the Federal Reserve Banking System or have a relationship with a
bank that is. Your bank will normally charge you a fee for handling the
transaction. To purchase shares by a Federal funds wire, please first contact
ING Fund Services at 1-800-ING-INFO for wiring instructions and to obtain a fund
account number. An application must be sent for overnight delivery to:

ING Funds Trust
c/o ___________________
[Address]]

HOW TO PURCHASE ADDITIONAL SHARES

The minimum investment for subsequent purchases is $50.

Additional shares may be purchased directly through the Fund through any
dealer who has entered into an agreement with The Fund. Direct investments may
be made by mail or by wiring payment to the Fund.

By Wire: To insure prompt credit to his account, an investor or his dealer
should call ING Fund Services Inc. at 1-800-ING-INFO prior to sending a wire to
receive a reference number for the wire. The following wire instructions should
be used:

Bank Name
City, State
Beneficiary Bank ABA/Routing #:
Beneficiary Account Number:
Beneficiary Account Name:
Account Number:
OBI:

PURCHASE PLANS

ING offers various purchase plans that make investing in additional shares
of the Funds more convenient than by mail or wire. The following are the plans
offered and the features of the plans. Please contact ING Fund Services, Inc. at
1-800-ING INFO for the appropriate authorization form. All purchase plans listed
will not be offered to shareholders of Class X.

ING AUTO-ASSET ACCUMULATION PLAN

This Plan permits you to purchase Fund shares (minimum of $___ and maximum
of $______ per transaction) at regular intervals selected by you. Fund shares
are purchased by transferring funds from the bank account designated by you.
Only an account maintained at a domestic financial institution which is an
Automated Clearing House member may be so designated. To establish an ING
Auto-Asset Accumulation

23
<PAGE> 118
account, you must file an authorization form with the Transfer Agent. You may
obtain the necessary authorization form by calling 1-800-ING-INFO. You may
cancel your participation in this Privilege or change the amount of purchase at
any time by mailing written notification to ING Fund Services, P.O. Box
______________, and the notification will be effective three business days
following receipt. The Fund may modify or terminate this Privilege at any time
or charge a service fee. No such fee currently is contemplated.

ING DIRECTED FEDERAL DEPOSIT PLAN

ING Directed Deposit Plan enables you to purchase Fund shares (minimum of
$____ and maximum of $___ per transaction) by having Federal salary, Social
Security, or certain veterans', military or other payments from the Federal
government automatically deposited into your Fund account. You may deposit as
much of such payments as you elect. To enroll in this Plan you must file with
the Transfer Agent a completed Directed Federal Deposit Sign-Up Form for each
type of payment that you desire to include in this Privilege. The appropriate
form may be obtained by calling 1-800-ING-INFO. Death or legal incapacity will
terminate your participation in this Privilege. You may elect at any time to
terminate your participation by notifying in writing the appropriate Federal
agency. The Fund may terminate your participation upon 30 days' notice to you.

ING SCHEDULED PAYROLL INVESTMENT PROGRAM

ING Schedule Payroll Investment Program permits you to purchase Fund
shares (minimum of $___ per transaction) automatically on a regular basis.
Depending upon your employer's direct deposit program, you may have part or all
of your paycheck transferred to your existing ING account electronically through
the Automated Clearing House system at each pay period. To establish an ING
Scheduled Payroll Investment Program account, you must file an authorization
form with your employer's payroll department. Your employer must complete the
reverse side of the form and return it to ING Fund Services, Inc. [address]. You
may obtain the necessary authorization form by calling 1-800-ING-INFO. You may
change the amount of purchase or cancel the authorization only by written
notification to your employer. It is the sole responsibility of your employer,
not the Distributor, ING Funds Trust, the Fund, the Transfer Agent or any other
person, to arrange for transactions under the ING Scheduled Payroll Investment
Program. The Fund may modify or terminate this Privilege at any time or charge a
service fee. No such fee currently is contemplated.

ING NO MINIMUM ASSET ESCALATOR PLAN

The ING No Minimum Assets Escalator Plan enables you to purchase Fund
shares without regard to the Fund's minimum initial investment requirements
through Auto-Assets Accumulation Plan, Directed Federal Deposit Plan or ING
Scheduled Payroll Investment Program. To establish this account, you must supply
the necessary information on the Account Application and file the required
authorization form(s) with the Transfer Agent. For more information concerning
this Program, or to request the necessary authorization form(s), please call
toll free 1-800-ING-INFO. You may terminate your participation in this Program
at any time by discontinuing your participation in Auto-Asset Accumulator Plan,
Directed Federal Deposit Plan or ING Scheduled Payroll Investment Program, as
the case may be, as provided under the terms of such Privilege(s). The Fund may
modify or terminate this Program at any time. Investors who wish to purchase
Fund shares through the Step Program in conjunction with an ING sponsored
retirement plan may do so only for IRA's, SEP-IRAs and IRA "Rollover Accounts."

24
<PAGE> 119
ALTERNATIVE PURCHASE ARRANGEMENTS

CLASS A SHARES--INITIAL SALES CHARGE ALTERNATIVE

<TABLE>
<CAPTION>
SALES CHARGE AS
SALES CHARGE AS PERCENTAGE OF THE
PERCENTAGE OF THE NET AMOUNT BROKER-DEALER
AMOUNT OF SALE OFFERING PRICE INVESTED CONCESSION
- -------------- -------------- -------- ----------

<S> <C> <C> <C>
Less than $100,000 5.500% % %

$100,000 but less than $250,000............ % % %

$250,000 but less than $500,000 % % %

$500,000 but less than $1,000,000 % % %

$1,000,000 or more*........................ -0- -0- %
</TABLE>

- --------------

* The Fund imposes a contingent deferred sales charge in connection with
certain purchases of Class A shares of $1,000,000 or more. See
"Redemption--Contingent Deferred Sales Charge."

25
<PAGE> 120
Rights of Accumulation. The initial sales charge for your investment in
Fund shares may also be reduced by aggregating the amount of such investment
with the current value of all Fund shares currently owned by you at the time of
your current purchase.

Waiver of All Class A Sales Charges. No sales charge is imposed on sales
of Class A shares for the following investors: (1) the Manager, its parent
company, any affiliate or subsidiary of the parent company; (2) present or
former officers, directors, trustees and employees (and their parents, spouses
and dependent children) of the Fund, the Manager (including, its parent company
or any affiliate or subsidiary of the parent company) or the Sub-adviser, and
any retirement plans established by such entities for their employees; (3)
accounts with respect to which any person described in (2) above acts as a
custodian on behalf of a minor (including Uniform Gift to Minors Act and Uniform
Transfer to Minors Act accounts); (4) present employees (and their parents,
spouses and dependent children) of the Transfer Agent and the Funds' or the
Trust's legal counsel and administrator; (5) dealers that have a sales agreement
with the Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees; (6) employees and registered
representatives (and their parents, spouses and dependent children) of dealers
or financial institutions that have entered into sales arrangements with such
dealers (and are identified to the Distributor) or with the Distributor; the
purchaser must certify to the Distributor at the time of purchase that the
purchase is for the purchaser's own account (or for the benefit of such
employee's parents, spouse, parents of spouse, or minor children); (7) dealers,
brokers, registered investment advisers or third-party administrators or
consultants that have entered into an agreement with the Distributor providing
specifically for the use of Fund shares in investment products or services made
available to their clients (those clients may be charged a transaction fee by
their dealer, broker or adviser for the purchase or sale of Fund shares); (8)
employees (and their parents, spouses and dependent children) of firms providing
the Funds, the Trust or their affiliates with regular legal, actuarial,
auditing, underwriting, claims, administrative, computer support, marketing,
office or other services; and (9) any sub-adviser of the Funds or the Trust.

26
<PAGE> 121
arrangements between the Distributor and organizations which make
recommendations to or permit group solicitations of its employees, members or
participants.

Conversion from Class B or X Shares. Class B or X shares will
automatically be converted to Class A shares (at net asset value) after [ ]
years.

Deferred Sales Charges. Although there is no initial sales charge on
purchases of Class A shares of $1,000,000 or more, the Distributor pays
broker-dealers out of its own assets, a fee of up to 1% of the offering price of
such shares. If these shares are redeemed within 12 months, the redemption
proceeds will be reduced by 1.00%. For additional information, see
"Redemption--Contingent Deferred Sales Charge."

CLASS B AND X SHARES--CONTINGENT DEFERRED SALES CHARGE ALTERNATIVES

27
<PAGE> 122
<TABLE>
<CAPTION>
Redemption During: Class B CDSC:
------------------ -------------
<S> <C>
lst year after purchase
2nd year after purchase
3rd year after purchase
4th year after purchase
5th year after purchase
6th year after purchase
</TABLE>

In the table, a "year" is a 12-month period. All purchases are considered
to have been made on the first business day of the month in which the purchase
was made.

For additional information, see "Redemption--Contingent Deferred Sales
Charge." In addition, Class B shares are subject to higher annual Rule 12b-1
fees as described below.

CLASS X SHARES. Class X shares are currently only offered to certain
"Qualified" purchasers (including, but not limited to, IRAs, Roth IRAs,
Education IRAs, SEP IRAs, SIMPLE IRAs and 403(b)(7) plans). Any request for
"Non-Qualified" purchases of Class X shares up to $[ ] will normally be
considered as a purchase request for Class B shares or declined. Any request for
"Non-Qualified" purchases of Class X shares above $[ ] will be
considered as a purchase request for Class A shares or declined. Because it is
more advantageous for an investor to purchase Class A shares for amounts in
excess of $1,000,000, a request to purchase Class X shares for $1,000,000 or
more will normally be considered as a purchase request for Class A shares or
declined.

28
<PAGE> 123

Although Class X shares are sold without an initial sales charge, if Class
X shares are redeemed within [ ] years of their purchase, a CDSC ("Class X
CDSC") will be deducted from the redemption proceeds. The Class X CDSC will not
apply to redemptions of Bonus Shares or shares purchased by the reinvestment of
dividends or capital gains distributions and may be waived under certain
circumstances described below. The Class X CDSC will be assessed on the lesser
of the NAV of the shares at the time of redemption or the original amount
invested. The Class X CDSC is not imposed on the amount of any increase in your
account value over the initial amount invested. The Class X CDSC is paid to the
Distributor to reimburse expenses incurred in providing distribution-related
services to the Fund in connection with the sale of Class X shares. Although
Class X shares are sold without an initial sales charge, the Distributor
normally pays a sales commission of __% (and may pay up to %) of the purchase
price of Class X shares to the dealer from its own resources at the time of the
sale. During the initial offering period of the Class X shares, the Distributor
intends to pay a __% up-front sales commission to the dealer. The Distributor
has assigned its right to receive any Class X CDSC, as well as any distribution
and service fee to an unaffiliated third party that provides funding for
up-front sales commission payments.

<TABLE>
<CAPTION>
Redemption During: Class X CDSC:
------------------ -------------
<S> <C>
lst year after purchase
2nd year after purchase
3rd year after purchase
4th year after purchase
5th year after purchase
6th year after purchase
</TABLE>

In the table, a "year" is a 12-month period. All purchases are considered
to have been made on the first business day of the month in which the purchase
was made.

29
<PAGE> 124
defined by Section 72(m)(7) of the Code); (2) the portion of a mandated minimum
distribution from an IRA, SIMPLE IRA or an individual type 403(b)(7) plan equal
to the percentage of your plan assets held in Class X shares of the Company; (3)
reinvested dividends and capital gains and (4) a Systematic Withdrawal Plan of
10% per year with a minimum distribution of $500 per month with an initial
account of $20,000 or greater.

CLASS C SHARES--LEVEL SALES CHARGE ALTERNATIVE

The public offering price of Class C shares is the net asset value of such
shares. Class C shares are sold without an initial sales charge so that the
applicable Fund receives the full amount of the investor's purchase. While Class
C shares do not convert to Class A shares, they are subject to a lower
contingent deferred sales charge (1.00%) and do not have to be held for as long
a time (one year) as Class B or X shares to avoid paying a contingent deferred
sales charge. For additional information, see "Redemption--Contingent Deferred
Sales Charge." In addition, Class C shares are subject to higher annual Rule
12b-1 fees as described below. Class C shares do not convert to Class A shares.

Proceeds from the CDSC are paid to the Distributor and are used to defray
its expenses related to providing distribution-related services to the
applicable Fund in connection with the sale of Class C shares, such as the
payment of compensation to selected broker-dealers, and for selling Class C
shares. The combination of the CDSC and the Rule 12b-1 fee enables the Fund to
sell the Class C shares without deduction of a sales charge at the time of
purchase. Although Class C shares are sold without an initial sales charge, the
Distributor pays a dealer concession equal to 1.00% of the amount invested to
broker-dealers who sell Class C shares at the time the shares are sold and an
annual fee of 1.00% of the amount invested that begins to accrue one year after
the shares are sold.

INDIVIDUAL RETIREMENT ACCOUNTS

30
<PAGE> 125
prevailing amount limits set by the Internal Revenue Service. For more
information and IRA information, call the Funds at 1-800-ING-INFO. Additional
account level fees may be imposed for IRA accounts.

REDEMPTION OF FUND SHARES

A redemption may be a taxable transaction on which gain or loss may be
recognized.

Where the shares to be redeemed have been purchased by check, the
redemption request will be returned if the purchasing check has not cleared,
which may take up to 15 calendar days. Shareholders may avoid this delay by
investing through wire transfers of Federal funds. During the period prior to
the time the shares are redeemed, dividends on the shares will continue to
accrue and be payable and the shareholder will be entitled to exercise all other
beneficial rights of ownership.

Once the shares are redeemed, a Fund will ordinarily send the proceeds by
check to the shareholder at the address of record on the next business day. The
Funds may, however, take up to seven days to make payment. This will not be the
customary practice. Also, if the New York Stock Exchange is closed (or when
trading is restricted) for any reason other than the customary weekend or
holiday closing or if an emergency condition as determined by the SEC merits
such action, the Funds may suspend redemptions or postpone payment dates. No
interest to or additional dividends will be earned on amounts represented by
uncashed redemption checks or misapplied wire payments.

SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the ING Funds Trust, ING Fund Distributors, and their agents by
verifying the signature of each investor seeking to redeem, transfer, or
exchange shares of an ING Fund. Examples of when signature guarantees are
required are: (1) redemptions by mail in excess of $50,000; (2) redemptions by
mail if the proceeds are to be paid to someone other than the name(s) in which
the account is registered; (3) written redemptions requesting proceeds to be
sent by wire to other than the bank of record for the account; (4) redemptions
requesting proceeds to be sent to a new address or an address that has been
changed within the past 30 days; (5) requests to transfer the registration of
shares to another owner; (6) telephone exchange and telephone redemption
authorization forms; (7) changes in previously designated wiring instructions;
and (8) written redemptions or exchanges of shares previously reported as lost,
whether or not the redemption amount is under $50,000 or the proceeds are to be
sent to the address of record. These requirements may be waived or modified upon
notice to shareholders.

31
<PAGE> 126
signatures with either: (1) a signature guaranteed with a medallion stamp of the
STAMP Program, or (2) a signature guaranteed with a medallion stamp of the NYSE
Medallion Signature Program, provided that in either event, the amount of the
transaction involved does not exceed the surety coverage amount indicated on the
medallion. For information regarding whether a particular institution or
organization qualifies as an "eligible guarantor institution," an investor
should contact ING Fund Services, Inc.

You may redeem your shares using any of the following methods:

By Mail. You may redeem your shares by sending a letter directly to ING
Fund Services [address]. To be accepted, a letter requesting redemption must
include: (i) the Fund name and account registration from which you are redeeming
shares; (ii) your account number; (iii) the amount to be redeemed and (iv) the
signatures of all registered owners. A signature guarantee may be required as
indicated in the beginning of this section. Corporations, partnerships, trusts
or other legal entities will be required to submit additional documentation.

32
<PAGE> 127
Wire redemptions can be made only if the "yes" box has been checked in the
"Telephone Redemption Authorization" section on your Purchase Application, and
you have attached a copy of a voided check or a letter summarizing the wiring
instructions of the account where proceeds are to be wired. Your bank may charge
you a fee for receiving a wire payment on your behalf.

The above-mentioned redemption services may not be available for clients
of authorized brokers, Investment Advisers or Service Organizations or for IRAs.
These clients should contact their representative.

SYSTEMATIC WITHDRAWAL PLAN

ING "BANK TO BANK" TRANSFER PLAN

You may request by telephone that redemption proceeds (maximum $150,000
per day) be paid by check and mailed to your address. You may telephone
redemption instructions by calling 1-800-ING-INFO. The Telephone Redemption
Privilege is granted automatically unless you refuse it. You may request by
telephone that redemption proceeds (minimum $500 per day) be transferred between
your Fund account and your bank account. Only a bank account maintained in a
domestic financial institution which is an Automated Clearing House member may
be designated. Redemption proceeds will be on deposit in your account at an
Automated Clearing House member bank ordinarily two days after receipt of the
redemption request. Holders of jointly registered Fund or bank accounts may
redeem through the [ ] for transfer to their bank account not more than
$250,000 within any 30-day period.

Redemption in Kind. All redemptions of shares of the Funds shall be made
in cash, except that the commitment to redeem shares in cash extends only to
redemption requests made by each shareholder of a Fund during any 90-day period
of up to the lesser of $250,000 or 1% of the net asset value of that Fund at the
beginning of such period. This commitment is irrevocable without the prior
approval of the SEC and is a fundamental policy of the Funds that may not be
changed without shareholder approval. In the case of redemption requests by
shareholders in excess of such amounts, the Board of Trustees reserves the right
to have the Funds make payment, in whole or in part, in securities or other
assets, in case of an emergency or any time a cash distribution would impair the
liquidity of a Fund to the detriment of the existing shareholders. In this
event, the securities would be valued in the same manner as the securities of
that Fund are valued. If the recipient were to sell such securities he or she
may receive more or less than the value of such securities as determined above,
and might incur brokerage charges.

33
<PAGE> 128
EXCHANGE OF FUND SHARES

The Funds offer several convenient ways to exchange shares in one Fund for
shares in the SAME CLASS of another Fund in the Trust. Before engaging in an
exchange transaction, a shareholder should read carefully the Prospectus
describing the Fund into which the exchange will occur, which is available
without charge and can be obtained by writing to ING Funds Trust, [address], or
by calling the Funds at 1-800-ING-INFO. A shareholder may not exchange shares
of one Fund for shares of another Fund if the new Fund is not qualified for sale
in the state of the shareholder's residence. The minimum amount for an initial
and subsequent exchange is $__. The Trust may terminate or amend the terms of
the exchange privilege at any time upon at least 60 days' prior written notice
to shareholders of any modification or termination of the exchange privilege.

An exchange is taxable as a sale of a security on which a gain or loss may
be recognized. Shareholders will receive written confirmation of the exchange
following completion of the transaction.

Exchange by Mail. To exchange Fund shares by mail, simply send a letter of
instruction to the Fund. The letter of instruction must include: (i) your
account number; (ii) the Fund from and the Fund into which you wish to exchange
your investment; (iii) the dollar or share amount you wish to exchange; and (iv)
the signatures of all registered owners or authorized parties.

Exchange by Telephone. To exchange Fund shares by telephone or if you have
any questions simply call the Funds at 1-800-ING-INFO. You should be prepared to
give the telephone representative the following information: (i) your account
number, social security or tax identification number and account registration;
(ii) the name of the Fund from and the Fund into which you wish to transfer your
investment; and (iii) the dollar or share amount you wish to exchange. Telephone
exchanges are available unless the shareholder specifically declines this option
on the Purchase Application. Telephone exchanges will be suspended for a period
of ten days following a telephone address change. See "REDEMPTION OF FUND
SHARES--By Telephone" for a discussion of telephone transactions generally.

AUTO-EXCHANGE PRIVILEGE

Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares of the
Fund, in shares of certain other funds in the ING Family of Funds of which you
are a shareholder. The amount you designate, which can be expressed either in
terms of a specific dollar or share amount ($100 minimum), will be exchanged
automatically on the first and/or fifteenth day of the month according to the
schedule you have selected. Shares will be exchanged at the then-current net
asset value; however, a sales load may be charged with respect to exchanges into
funds sold with a sales load. See "Shareholder Services" in the Statement of
Additional Information. The right to exercise this Privilege may be modified or
canceled by the Fund or the Transfer Agent. You may modify or cancel your
exercise of this Privilege at any time by mailing written notification to the
ING Fund Services, P.O. Box _____, __________. The Fund may charge a service fee
for the use of this Privilege. No such fee currently

34
<PAGE> 129
is contemplated. For more information concerning this Privilege and the funds in
the ING Family of Funds eligible to participate in this Privilege, or to obtain
an Auto-Exchange Authorization Form, please call toll free 1-800-ING-
INFORMATION.

ING AUTOMATIC DIVIDEND DIRECTION OPTION

This option enables you to invest automatically dividends or dividends and
capital gain distributions, if any, paid by the Fund in shares of another Fund
in the Trust of which you are a shareholder. Shares of the other fund will be
purchased at the then-current net asset value; however, a sales load may be
charged with respect to investments in shares of a fund sold with a sales load.
If you are investing in a fund that charges a sales load, you may qualify for
share prices which do not include the sales load or which reflect a reduced
sales load. If you are investing in a fund that charges a contingent deferred
sales charge, the shares purchased will be subject on redemption to the
contingent deferred sales charge, if any, applicable to the purchased shares.
See "Shareholder Services" in the Statement of Additional Information. ING
Automatic Dividend Direction Option permits you to transfer electronically
dividends or dividends and capital gain distributions, if any, from the Fund to
a designated bank account. Only an account maintained at a domestic financial
institution which is an Automated Clearing House member may be so designated.
Banks may charge a fee for this service.

CONTINGENT DEFERRED SALES CHARGE

CLASS A

The CDSC will be applied to the lesser of (a) the net asset value of
shares subject to the CDSC at the time of purchase, or (b) the net asset value
of such shares at the time of redemption. No charge will be imposed on amounts
representing an increase in share value due to capital appreciation. The CDSC
will not be applied to shares acquired through reinvestment of income dividends
or capital gain distributions or shares held for longer than the applicable CDSC
Period. In determining which shares to redeem, unless instructed otherwise,
shares that are not subject to the CDSC and having a higher Rule 12b-1 fee will
be redeemed first, shares not subject to the CDSC having a lower Rule 12b-1 fee
will be redeemed next, and shares subject to the CDSC then will be redeemed in
the order purchased.

Each Fund will waive the CDSC in the event of a shareholder's death or
disability, as defined in Section 72(m)(7) of the Code (if satisfactory evidence
is provided to the Fund), and for the tax-qualified retirement plans (excluding
IRAs, SEPs, 403(b) plans, and 457 plans). Shares of the Fund that are acquired
in exchange for shares of another Fund that were subject to a CDSC will remain
subject to the CDSC that applied to the shares of the other Fund.

35
<PAGE> 130
CLASS B, X, AND C SHARES

The CDSC on Class B, X, and C shares will be calculated on an amount equal
to the lesser of the net asset value of the shares at the time of purchase or
their net asset value at the time of redemption. No charge will be imposed on
amounts representing an increase in share value due to capital appreciation. In
addition, no charge will be assessed on shares derived from reinvestment of
dividends or capital gains distributions or on shares held for longer than the
applicable CDSC Period.

The CDSC does not apply to: (1) redemption of shares when a Fund exercises
its right to liquidate accounts which are less than the minimum account size;
(2) the death or post-purchase disability, as defined in Section 72(m)(7) of the
Code (if satisfactory evidence is provided to the Fund); (3) the portion of a
mandated minimum distribution from an IRA, SIMPLE IRA or an individual type
403(b)(7) plan equal to the percentage of your plan assets held in Class X
shares of the Fund; (4) reinvested dividends and capital gains and (5) a
Systematic Withdrawal Plan of 10% per year where the minimum distribution is
$500 per month with an initial account of $20,000 or greater.

As an illustration of CDSC calculations, assume that Shareholder X
purchases on Year 1/Day 1 100 shares at $10 per share. Assume further that, on
Year 2/Day 1, Shareholder X purchased an additional 100 shares at $12 per share.
Finally, assume that, on Year 3/Day 1, Shareholder X wishes to redeem shares
worth $1,300, and that the net asset value per share as of the close of business
on such day is $13. To effect Shareholder X's redemption request, 100 shares at
$13 per share (totaling $1,300) would be redeemed. The CDSC would be waived in
connection with the redemption of that number of shares equal in value (at the
time of redemption) to $220 (10% of $1,000--the purchase amount of the shares
purchased by Shareholder X on Year 1/Day 1--plus 10% of $1,200--the purchase
amount of the shares purchased by Shareholder X on Year 2/Day 1). In addition,
no CDSC would apply to the $400 in capital appreciation on Shareholder X's
shares ($2,600 Year 3 value minus $2,200 purchase cost of shares). If a
shareholder exchanges shares subject to a CDSC for Class B, X, or C shares of a
different Fund, the transaction will not be subject to a CDSC. However, when
shares acquired through the exchange are redeemed, the shareholder will be
treated as if no exchange took place for the purpose of determining the CDSC
Period and applying the CDSC.

DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAX

36
<PAGE> 131
Each Fund intends to distribute to its shareholders substantially all of
its investment company taxable income (which includes, among other items,
dividends and interest and the excess, if any, of net short-term capital gains
(generally including any net option premium income) over net long-term capital
losses). The Funds will declare distributions of such income daily and pay those
dividends monthly. Each Fund intends to distribute, at least annually,
substantially all net capital gains (the excess of net long-term capital gains
over net short-term capital losses). In determining amounts of capital gains to
be distributed, any capital loss carryovers from prior years will be applied
against capital gains.

Earnings of the Funds not distributed on a timely basis in accordance with
a calendar year distribution requirement are subject to a nondeductible 4%
excise tax. To prevent imposition of this tax, each Fund intends to comply with
this distribution requirement.

A distribution, including an exempt interest dividend, will be treated as
paid on December 31 of the calendar year if it is declared by a Fund during
October, November, or December of that year to shareholders of record in such a
month and paid by a Fund during January of the following calendar year. Such
distributions will be treated as received by shareholders (and therefore
taxable) in the calendar year in which the distributions are declared, rather
than the calendar year in which the distributions are received.

37
<PAGE> 132
Special tax rules may apply to a Fund's acquisition of financial futures
contracts, forward contracts, and options on futures contracts. Such rules may,
among other things, affect whether gains and losses from such transactions are
considered to be short-term or long-term, may have the effect of deferring
losses and/or accelerating the recognition of gains or losses, and, for purposes
of qualifying as a regulated investment company, may limit the extent to which a
Fund may be able to engage in such transactions.

In the event a Fund makes the election described above to pass through
non-U.S. taxes to shareholders, shareholders will be required to include in
income (in addition to any distributions received) their proportionate portion
of the amount of non-U.S. taxes paid by the Fund and will be entitled to claim
either a credit or deduction for their portion of such taxes in computing their
U.S. Federal income tax liability. Availability of such a credit or deduction is
subject to certain limitations. Shareholders will be informed each year in which
the Fund makes the election regarding the amount and nature of foreign taxes to
be included in their income for U.S. Federal income tax purposes.

38
<PAGE> 133
The Funds may be required to withhold for Federal income tax ("backup
withholding") 31% of the distributions and the proceeds of redemptions payable
to shareholders who fail to provide a correct taxpayer identification number or
to make required certifications, or where a Fund or shareholder has been
notified by the Internal Revenue Service that the shareholder is subject to
backup withholding. Most corporate shareholders and certain other shareholders
specified in the Code are exempt from backup withholding. Backup withholding is
not an additional tax. Any amounts withheld may be credited against the
shareholder's U.S. Federal income tax liability.

FEDERAL TAX-EXEMPT BOND FUND

Provided that the Federal Tax-Exempt Bond Fund complies with applicable
requirements of the Code, dividends derived from interest on Municipal
Securities will constitute exempt-interest dividends and, except as discussed
below, will not be subject to Federal income tax. Some portion of the
exempt-interest dividends paid by the Fund will be treated as an item of "tax
preference" for purposes of the alternative minimum tax if the Fund invests in
certain types of municipal obligations (see discussion below).

Under the Code, interest on certain types of Municipal Securities is
designated as an item of tax preference for purposes of the alternative minimum
tax on individuals and corporations. Therefore, if the Fund were to invest in
such types of obligations, shareholders would be required to treat as an item of
tax preference that part of the distributions by the Fund that is derived from
interest income on such obligations.

Exempt-interest dividends received by corporations which hold shares of
the Fund may result in or increase liability for the corporate alternative
minimum tax.

Entities or persons who are "substantial users" (or persons related to
"substantial users") as defined in the Code, of facilities financed by Municipal
Securities issued for certain private activities should consult their tax
advisers before purchasing shares of the Fund.

Exempt-interest dividends and other distributions paid by the Fund are
includable in the tax base for determining the taxability of social security or
railroad retirement benefits. Interest on debt incurred to purchase or carry
shares in the Fund may not be deductible for Federal income tax purposes.

Depending on the residence of the Fund's shareholders for tax purposes,
distributions may also be subject to state and local taxes. Shareholders are
required to report the amount of tax-exempt interest received each year,
including exempt-interest dividends, on their Federal tax returns. Shareholders
should consult their own tax advisers as to the Federal, state or local tax
consequences of ownership of the Fund shares in their particular circumstances.

39
<PAGE> 134
DESCRIPTION OF SECURITIES AND INVESTMENT PRACTICES

The following is a description of investment practices of the Funds and
the securities in which they may invest:

U.S. Treasury Obligations (All Funds). The Funds may invest in U.S.
Treasury obligations, which are backed by the full faith and credit of the
United States Government as to the timely payment of principal and interest.
U.S. Treasury obligations consist of bills, notes, and bonds and separately
traded interest and principal component parts of such obligations known as
STRIPS which generally differ in their interest rates and maturities. U.S.
Treasury bills, which have original maturities of up to one year, notes, which
have maturities ranging from one year to 10 years, and bonds, which have
original maturities of 10 to 30 years, are direct obligations of the United
States Government.

Mortgage-Backed Securities (All Funds). Mortgaged-backed securities are
securities that directly or indirectly represent a participation in, or are
secured by and payable from, mortgage loans secured by real property. There are
currently three basic types of mortgage-backed securities: (i) those issued or
guaranteed

40
<PAGE> 135
by the U.S. Government or one of its agencies or instrumentalities, such as
GNMA, Federal National Mortgage Association (FNMA) and Federal Home Loan
Mortgage Corporation (FHLMC); (ii) those issued by private issuers that
represent an interest in or are collateralized by mortgage-backed securities
issued or guaranteed by the U.S. Government or one of its agencies or
instrumentalities; and (iii) those issued by private issuers that represent an
interest in or are collateralized by whole mortgage loans or mortgage-backed
securities without a government guarantee but usually having some form of
private credit enhancement. See "Private Mortgage Pass-Through Securities"
below. The Funds may invest in adjustable rate and fixed rate mortgage
securities.

The Funds may invest in mortgage-backed securities and other derivative
mortgage products, including those representing an undivided ownership interest
in a pool of mortgages, e.g., GNMA, FNMA and FHLMC certificates where the U.S.
Government or its agencies or instrumentalities guarantees the payment of
interest and principal of these securities. These guarantees do not extend to
the yield or value of the securities or the Fund's shares. See "Investment
Objective and Policies--Mortgage-Backed Securities--Non-Agency Mortgage-Backed
Securities" in the SAI. These certificates are in most cases pass-through
instruments, through which the holder receives a share of all interest and
principal payments from the mortgages underlying the certificate, net of certain
fees. The value of these securities is likely to vary inversely with
fluctuations in interest rates.

Mortgage-backed securities are subject to the risk that the principal on
the underlying mortgage loans may be prepaid at any time. Although the extent of
prepayments on a pool of mortgage loans depends on various economic and other
factors, as a general rule prepayments on fixed rate mortgage loans will
increase during a period of falling interest rates and decrease during a period
of rising interest rates. Accordingly, amounts available for reinvestment by the
Fund are likely to be greater during a period of declining interest rates and,
as a result, likely to be reinvested at lower interest rates than during a
period of rising interest rates. Mortgage-backed securities may decrease in
value as a result of increases in interest rates and may benefit less than other
fixed income securities from declining interest rates because of the risk of
prepayment. During periods of rising interest rates, the rate of prepayment of
mortgages underlying mortgage-backed securities can be expected to decline,
extending the projected average maturity of mortgage-backed securities. A
decline in the rate of repayment may effectively change a security which was
considered short- or intermediate-term at the time of purchase into a long-term
security. Long-term securities generally fluctuate more widely in response to
changes in interest rates than short- or intermediate-term securities.

Collateralized Mortgage Obligations and Multiclass Pass-Through Securities
(All Funds). A collateralized mortgage obligation (CMO) is a security issued by
a corporation or U.S. Government agency or instrumentality which is backed by a
portfolio of mortgages or mortgage-backed securities. The issuer's obligation to
make interest and principal payments is secured by the underlying portfolio of
mortgages or mortgage-backed securities. Multiclass pass-through securities are
equity interests in a trust composed of mortgages or mortgage-backed securities.
Payments of principal of and interest on the underlying mortgage assets, and any
reinvestment income thereon, provide the funds to pay debt service on the CMOs
or make scheduled distributions on the multiclass pass-through securities. CMOs
may be issued by agencies or instrumentalities of the U.S. Government, or by
private originators of, or investors in, mortgage loans, including depository
institutions, mortgage banks, investment banks and special purpose subsidiaries
of the foregoing. The issuer of a series of CMOs may elect to be treated as a
Real Estate Mortgage Investment Conduit (REMIC). All future references to CMOs
include securities issued by REMICs and multiclass pass-through securities.

41
<PAGE> 136
In a CMO, a series of bonds or certificates is issued in multiple classes.
Each class of CMOs, often referred to as a tranche, is issued at a specific
fixed or floating coupon rate and has a stated maturity or final distribution
date. Principal prepayments on the underlying mortgage assets may cause the CMOs
to be retired substantially earlier than their stated maturities or final
distribution dates. Interest is paid or accrues on classes of the CMOs on a
monthly, quarterly or semi-annual basis. The principal of and interest on the
underlying mortgage assets may be allocated among the several classes of a CMO
series in a number of different ways. Generally, the purpose of the allocation
of the cash flow of a CMO to the various classes is to obtain a more predictable
cash flow to the individual tranches than exists with the underlying collateral
of the CMO. As a general rule, the more predictable the cash flow is on a CMO
tranche, the lower the anticipated yield will be on that tranche at the time of
issuance relative to prevailing market yields on mortgage-backed securities.
Certain classes of CMOs may have priority over others with respect to the
receipt of prepayments.

In reliance on rules and interpretations of the Commission, the Funds'
investments in certain qualifying CMOs and REMICs are not subject to the 1940
Act's limitation on acquiring interests in other investment companies. See
"Investment Objective and Policies--Mortgage-Backed Securities--Collateralized
Mortgage Obligations" in the SAI.

Stripped Mortgage-Backed Securities (All Funds except Federal Tax-Exempt
Bond Fund). The Funds may invest in mortgage-backed security strips (MBS strips)
(i) issued by the U.S. Government or its agencies or instrumentalities or (ii)
issued by private originators of, or investors in, mortgage loans, including
depository institutions, mortgage banks, investment banks and special purpose
subsidiaries of the foregoing (derivative multiclass mortgage securities). MBS
strips are usually structured with two classes that receive different
proportions of the interest and principal distributions on a pool of mortgage
assets. A common type of stripped mortgage security will have one class
receiving some of the interest and most of the principal from the mortgage
assets, while the other class will receive most of the interest and the
remainder of the principal. In the most extreme case, one class will receive all
of the interest (the interest-only or IO class), while the other class will
receive all of the principal (the principal-only or PO class). The yields to
maturity on IOs and POs are sensitive to the expected or anticipated rate of
principal payments (including prepayments) on the related underlying mortgage
assets, and principal payments may have a material effect on yield to maturity.
If the underlying mortgage assets experience greater than anticipated
prepayments of principal, the Funds may not fully recoup its initial investment
in IOs. Conversely, if the underlying mortgage assets experience less than
anticipated prepayments of principal, the yield on POs could be materially
adversely affected. See "Investment Objective and Policies--Mortgage-Backed
Securities" in the SAI. Derivative mortgage-backed securities such as MBS strips
are highly sensitive to changes in prepayment and interest rates.

Private Mortgage Pass-Through Securities (All Funds except Federal
Tax-Exempt Bond Fund). Private mortgage pass-through securities are structured
similarly to the GNMA, FNMA and FHLMC mortgage pass-through securities and are
issued by originators of and investors in mortgage loans, including depository
institutions, mortgage banks, investment banks and special purpose subsidiaries
of the foregoing. These securities usually are backed by a pool of conventional
fixed rate or adjustable rate mortgage loans. Since private mortgage
pass-through securities typically are not guaranteed by an entity having the
credit status of GNMA, FNMA and FHLMC, such securities generally are structured
with one or more types of credit enhancement.

42
<PAGE> 137
Real Estate Investment Trusts (All Funds). The Funds will invest primarily
in shares of real estate investment trusts ("REITs"). REITs pool investors'
funds for investment primarily in income producing real estate or real estate
related loans or interests. Under the Internal Revenue Code of 1986 (the
"Code"), a REIT is not taxed on income it distributes to its shareholders if it
complies with several requirements relating to its organization, ownership,
assets, and income and a requirement that it generally distribute to its
shareholders at least 95% of its taxable income (other than net capital gains)
for each taxable year. REITs can generally be classified as Equity REITs,
Mortgage REITs, and Hybrid REITs. Equity REITs, which invest the majority of
their assets directly in real property, derive their income primarily from
rents. Equity REITs can also realize capital gains by selling properties that
have appreciated in value. Mortgage REITs, which invest the majority of their
assets in real estate mortgages, derive their income primarily from interest
payments. Hybrid REITs combine the characteristics of both Equity REITs and
Mortgage REITs.

Adjustable Rate Securities (High Yield Bond Fund and Mortgage Income
Fund). The Funds are permitted to invest in adjustable rate or floating rate
debt securities, including corporate securities, securities issued by U.S.
Government agencies and mortgage-backed securities, whose interest rate is
calculated by reference to a specified index such as the constant maturity
Treasury rate, the T-bill rate or LIBOR (London Interbank Offered Rate) and is
reset periodically. Adjustable rate securities allow the Funds to participate in
increases in interest rates through these periodic adjustments. The value of
adjustable or floating rate securities will, like other debt securities,
generally vary inversely with changes in prevailing interest rates. The value of
adjustable or floating rate securities is unlikely to rise in periods of
declining interest rates to the same extent as fixed rate instruments of similar
maturities. In periods of rising interest rates, changes in the coupon will lag
behind changes in the market rate resulting in a lower net asset value until the
coupon resets to market rates.

Structured Securities (High Yield Bond Fund). The Fund may invest in
structured notes and/or preferred stocks, the value of which is linked to
currencies, interest rates, other commodities, indices or other financial
indicators. The securities differ from other securities in which the Fund may
invest in several ways. For example, the coupon, dividend and/or redemption
amount at maturity may be increased or decreased depending on the value of the
underlying instrument.

Investment in structured securities involves certain risks. In addition to
the credit risk of the issuer and the normal risks of changes in interest rates,
the redemption amount may increase or decrease as a result of price changes in
the underlying instrument. Further, in the case of certain structured
securities, the coupon and/or dividend may be reduced to zero, and any further
declines in the value of the underlying instrument may then reduce the
redemption amount payable at maturity. Finally, structured securities may have
more volatility than the price of the underlying instrument.

Asset-Backed Securities (All Funds except Federal Tax-Exempt Fund). These
Funds are permitted to invest in asset-backed securities, subject to the rating
and quality requirements specified with respect to each such Fund. Through the
use of trusts and special purpose subsidiaries, various types of assets,
primarily home equity loans and automobile and credit card receivables, are
being securitized in pass-through structures similar to the mortgage
pass-through structures described above. Consistent with the Funds' investment
objectives, policies and quality standards, a Fund may invest in these and other
types of asset-backed securities which may be developed in the future.

43
<PAGE> 138
Asset-backed securities involve certain risks that are not posed by
mortgage-related securities, resulting mainly from the fact that asset-backed
securities do not usually contain the benefit of a complete security interest in
the related collateral. For example, credit card receivables generally are
unsecured and the debtors are entitled to the protection of a number of state
and Federal consumer credit laws, some of which may reduce the ability to obtain
full payment. In the case of automobile receivables, due to various legal and
economic factors, proceeds from repossessed collateral may not always be
sufficient to support payments on these securities. The risks associated with
asset-backed securities are often reduced by the addition of credit enhancements
such as a letter of credit from a bank, excess collateral or a third-party
guarantee.

Preferred Stocks (All Funds except Federal Tax-Exempt Fund). Preferred
stock has a preference over common stock in liquidation and generally in
dividends as well, but is subordinated to the liabilities of the issuer in all
respects. Preferred stock may or may not be convertible into common stock. As a
general rule, the market value of preferred stock with a fixed dividend rate and
no conversion element varies inversely with interest rates and perceived credit
risk. Because preferred stock is junior to debt securities and other obligations
of the issuer, deterioration in the credit quality of the issuer will cause
greater changes in the value of a preferred stock than in a more senior debt
security with similar stated yield characteristics.

American Depository Receipts (International Fixed Income Fund). American
Depository Receipts are U.S. dollar-denominated receipts generally issued by
domestic banks, which evidence the deposit with the bank of the common stock of
a foreign issuer and which are publicly traded on exchanges or over-the-counter
in the United States.

The Fund may each invest in both sponsored and unsponsored ADR programs.
There are certain risks associated with investments in unsponsored ADR programs.
Because the non-U.S. company does not actively participate in the creation of
the ADR program, the underlying agreement for service and payment will be
between the depository and the shareholder. The company issuing the stock
underlying the ADR pays nothing to establish the unsponsored facility, as fees
for ADR issuance and cancellation are paid by brokers. Investors directly bear
the expenses associated with certificate transfer, custody and dividend payment.

Investments in ADRs involve certain risks not typically involved in purely
domestic investments, including future foreign political and economic
developments, and the possible imposition of foreign governmental laws or
restrictions applicable to such investments. Securities of foreign issuers
through ADRs are subject to different economic, financial, political and social
factors. Individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, capital reinvestment, resources, self-sufficiency and balance of
payments position. With respect to certain countries, there is the possibility
of expropriation of assets, confiscatory taxation, political or social
instability or diplomatic developments which could adversely affect the value of
the particular ADR. There may be less publicly available information about a
foreign company than about a U.S. company, and there may be less governmental
regulation and supervision of foreign stock exchanges, brokers and listed

44
<PAGE> 139
companies. In addition, such companies may use different accounting and
financial standards (and certain currencies may become unavailable for transfer
from a foreign currency), resulting in a Fund's possible inability to convert
proceeds realized upon the sale of portfolio securities of the affected foreign
companies immediately into U.S. currency. The Fund may also invest in European
Depository Receipts (EDRs), which are receipts issued in bearer form by a
European financial institution and traded in European securities' markets.
Investments in EDRs involve similar risks as ADRs.

Investment in Foreign Securities (International Fixed Income Fund and High
Yield Bond Fund). The Fund may each invest in securities of foreign governmental
and private issuers. Investments in foreign securities involve certain
considerations that are not typically associated with investing in domestic
securities. There may be less publicly available information about a foreign
issuer than about a domestic issuer. Foreign issuers also are not generally
subject to uniform accounting, auditing and financial reporting standards
comparable to those applicable to domestic issuers. In addition, with respect to
certain foreign countries, interest may be withheld at the source under foreign
income tax laws, and there is a possibility of expropriation or confiscatory
taxation, political or social instability or diplomatic developments that could
adversely affect investments in securities of issuers located in those
countries.

Securities of Foreign Governments and Supranational Organizations
(International Fixed Income Fund). The Fund may invest in U.S.
dollar-denominated debt securities issued by foreign governments, their
political subdivisions, governmental authorities, agencies and instrumentalities
and supranational organizations. A supranational organization is an entity
designated or supported by the national government of one or more countries to
promote economic reconstruction or development. Examples of supranational
organizations include, among others, the International Bank for Reconstruction
and Development (World Bank), the European Economic Community, the European Coal
and Steel Community, the European Investment Bank, the Inter-American
Development Bank, the Asian Development Bank, and the African Development Bank.
The Fund may also invest in "quasi-government securities" which are debt
obligations issued by entities owned by either a national, state or equivalent
government or are obligations of such a government jurisdiction which are not
backed by its full faith and credit and general taxing powers.

Investing in foreign government and quasi-government securities involves
considerations and possible risks not typically associated with investing in
obligations issued by the U.S. Government. The values of foreign investments are
affected by changes in governmental administration or economic or monetary
policy (in the U.S. or other countries) or changed circumstances in dealings
between countries. In addition, investments in foreign countries could be
affected by other factors not present in the United States, including
expropriation, confiscatory taxation and lack of uniform accounting and auditing
standards.

Convertible and Exchangeable Securities (All Funds except Federal
Tax-Exempt Fund). The Funds are permitted to invest in convertible and
exchangeable securities, subject to the rating and quality requirements
specified with respect to each such Fund. Convertible securities generally offer
fixed interest or dividend yields and may be converted either at a stated price
or stated rate for common or preferred stock. Exchangeable securities may be
exchanged on specified terms for common or preferred stock. Although to a lesser
extent than with fixed income securities generally, the market value of
convertible securities tends to decline as interest rates increase and,
conversely, tends to increase as interest rates decline. In addition, because of
the conversion or exchange feature, the market value of convertible or
exchangeable securities tends to vary with fluctuations in the market value of
the underlying common or preferred stock. Debt securities that are

45
<PAGE> 140
convertible into or exchangeable for preferred or common stock are liabilities
of the issuer but are generally subordinated to senior debt of the issuer.

Domestic and Foreign Bank Obligations (All Funds). These obligations
include but are not restricted to certificates of deposit, commercial paper,
Yankee dollar certificates of deposit, bankers' acceptances, Eurodollar
certificates of deposit and time deposits, promissory notes and medium-term
deposit notes. The Funds will not invest in any obligations of their affiliates,
as defined under the 1940 Act.

46
<PAGE> 141
of Securities ("STRIPS") program. Under the STRIPS program, the principal and
interest components are separately issued by the United States Treasury at the
request of depository financial institutions, which then trade the component
parts separately. The interest component of STRIPS may be more volatile than
that of United States Treasury bills with comparable maturities. The Funds will
not actively trade in STRIPS.

The Funds may invest in zero coupon securities. A zero coupon security
pays no interest to its holder during its life and is sold at a discount to its
face value at maturity. The market prices of zero coupon securities generally
are more volatile than the market prices of securities that pay interest
periodically and are more sensitive to changes in interest rates than non-zero
coupon securities having similar maturities and credit qualities.

Municipal Commercial Paper (Intermediate Corporate Bond Fund and Federal
Tax-Exempt Bond Fund). Municipal commercial paper is a debt obligation with a
stated maturity of one year or less which is issued to finance seasonal working
capital needs or as short-term financing in anticipation of longer-term debt.
Investments in municipal commercial paper are limited to commercial paper which
is rated at the date of purchase at least: (i) "P-1" by Moody's or A-1 by S&P,
or (ii) in a comparable rating category by any two of the NRSROs that have rated
commercial paper or (iii) in a comparable rating category by only one such
organization if it is the only organization that has rated the commercial paper
or (iv) if not rated, is, in the opinion of the Sub-Adviser, of comparable
investment quality and within the credit quality policies and guidelines
established by the Board of Trustees.

Issuers of municipal commercial paper rated "P-1" have a "superior
capacity for repayment of short-term promissory obligations." The "A-1" rating
for commercial paper under the S&P classification indicates that the "degree of
safety regarding timely payment is either overwhelming or very strong." See the
Appendix for a more complete description of securities ratings.

Municipal Notes (Intermediate Corporate Bond Fund and Federal Tax-Exempt
Bond Fund). Municipal notes are generally sold as interim financing in
anticipation of the collection of taxes, a bond sale or receipt of other
revenue. Municipal notes generally have maturities at the time of issuance of
one year or less. Investments in municipal notes are limited to notes which are
rated at the date of purchase: (i) MIG 1 or VMIG 1 by Moody's or SP-1 by S&P or
(ii) in a comparable rating category by only one such organization, if it is the
only organization that has rated the notes, or (iii) if not rated, are, in the
opinion of the Sub-Adviser, of comparable investment quality and within the
credit quality policies and guidelines established by the Board of Trustees.

Notes rated "MIG 1" and "VMIG 1" are judged to be of the "best quality"
and carry the smallest amount of investment risk.

Municipal Bonds (Intermediate Corporate Bond Fund and Federal Tax-Exempt
Bond Fund). Municipal bonds generally have a maturity at the time of issuance of
more than one year. Municipal bonds may be issued to raise money for various
public purposes--such as constructing public facilities and making loans to
public institutions. There are generally two types of municipal bonds: general
obligation bonds and revenue bonds. General obligation bonds are backed by the
taxing power of the issuing municipality and are considered the safest type of
municipal bond. Revenue bonds are backed by the revenues of a project or
facility--tolls from a toll road, for example. Certain types of municipal bonds
are issued to obtain funding for privately operated

47
<PAGE> 142
facilities. Industrial development revenue bonds (which are private activity
bonds) are a specific type of revenue bond backed by the credit and security of
a private user, and therefore investments in these bonds have more potential
risk. Investments in municipal bonds are limited to bonds which are rated at the
time of purchase "A" or better by a NRSRO. The Federal Tax-Exempt Bond Fund may
invest up to 10% of its total assets in municipal bonds rated BBB by S&P or Baa
by Moody's. Bonds rated BBB by S&P or Baa by Moody's have speculative
characteristics.

Floating Rate Instruments (Intermediate Corporate Bond Fund and Federal
Tax-Exempt Bond Fund). Certain municipal obligations which the Funds may
purchase have a floating or variable rate of interest. Such obligations bear
interest at rates which are not fixed, but which vary with changes in specified
market rates or indices, such as a Federal Reserve composite index. Such
obligations may carry a demand or "put" feature which would permit the holder to
tender them back to the issuer (or to a third party) at par value prior to
maturity. The Funds' Sub-Adviser will monitor on an ongoing basis the earning
power, cash flow and other liquidity ratios of the issuers of such obligations,
and will similarly monitor the ability of an issuer of a demand instrument to
pay principal and interest on demand. A Fund's right to obtain payment at par on
a demand instrument could be affected by events occurring between the date the
Fund elects to demand payment and the date payment is due, which may affect the
ability of the issuer of the instrument to make payment when due.

Variable rate demand obligations (All Funds). Variable rate demand
obligations have a maturity of five to twenty years but carry with them the
right of the holder to put the securities to a remarketing agent or other entity
on short notice, typically seven days or less. Generally, the remarketing agent
will adjust the interest rate every seven days (or at other intervals
corresponding to the notice period for the put), in order to maintain the
interest rate at the prevailing rate for securities with a seven-day maturity.
The remarketing agent is typically a financial intermediary that has agreed to
perform these services. Variable rate master demand obligations permit a Fund to
invest fluctuating amounts at varying rates of interest pursuant to direct
arrangements between the Funds, as lender, and the borrower. Because the
obligations are direct lending arrangements between the Funds and the borrower,
they will not generally be traded, and there is no secondary market for them,
although they are redeemable (and thus immediately repayable by the borrower) at
principal amount, plus accrued interest, at any time. The borrower also may
prepay up to the full amount of the obligation without penalty. While master
demand obligations, as such, are not typically rated by credit rating agencies,
if not so rated, a Fund may, under its minimum rating standards, invest in them
only if, in the opinion of the Sub-Adviser, they are of an investment quality
comparable to other debt obligations in which the Funds may invest and are
within the credit quality policies, guidelines and procedures established by the
Board of Trustees. See the SAI for further details on variable rate demand
obligations and variable rate master demand obligations.

48
<PAGE> 143
Closed-End Investment Companies (All Funds). Each Fund may invest in
securities issued by closed-end investment companies which principally invest in
securities in which the Fund invests. Under the 1940 Act, a Fund's investment in
such securities, subject to certain exceptions, currently is limited to (i) 3%
of the total voting stock of any one investment company, (ii) 5% of the Fund's
total assets with respect to any one investment company and (iii) 10% of the
Fund's total assets in the aggregate. Investments in the securities of other
investment companies may involve duplication of advisory fees and certain other
expenses.

Options on Securities (All Funds except Federal Tax-Exempt Bond Fund). The
Funds may purchase put and call options and write covered put and call options
on securities in which each Fund may invest directly and that are traded on
registered domestic securities exchanges or that result from separate, privately
negotiated transactions (i.e., over-the-counter (OTC) options). The writer of a
call option, who receives a premium, has the obligation, upon exercise, to
deliver the underlying security against payment of the exercise price during the
option period. The writer of a put, who receives a premium, has the obligation
to buy the underlying security, upon exercise, at the exercise price during the
option period.

49
<PAGE> 144
to a primary dealer that it considers creditworthy and contracts with such
primary dealer to establish a formula price at which the fund would have the
absolute right to repurchase the option, the fund would only be required to
treat as illiquid the portion of the assets used to cover such option equal to
the formula price minus the amount by which the option is in-the-money. The
Funds will treat such options and, except to the extent permitted through the
procedure described in the preceding sentence, assets as subject to each such
Fund's limitation on investments in securities that are not readily marketable.

Dollar Roll Transactions (All Funds except Federal Tax-Exempt Bond Fund).
The Funds may enter into dollar roll transactions wherein the Fund sells fixed
income securities, typically mortgage-backed securities, and makes a commitment
to purchase similar, but not identical, securities at a later date from the same
party. Like a forward commitment, during the roll period no payment is made for
the securities purchased and no interest or principal payments on the security
accrue to the purchaser, but a Fund assumes the risk of ownership. A Fund is
compensated for entering into dollar roll transactions by the difference between
the current sales price and the forward price for the future purchase, as well
as by the interest earned on the cash proceeds of the initial sale. Like other
when-issued securities or firm commitment agreements, dollar roll transactions
involve the risk that the market value of the securities sold by the Funds may
decline below the price at which a Fund is committed to purchase similar
securities. In the event the buyer of securities under a dollar roll transaction
becomes insolvent, the Funds' use of the proceeds of the transaction may be
restricted pending a determination by the other party, or its trustee or
receiver, whether to enforce the Funds' obligation to repurchase the securities.
The Funds will engage in roll transactions for the purpose of acquiring
securities for its portfolio and not for investment leverage.

Swap Agreements (All Funds except Federal Tax-Exempt Bond Fund). To manage
its exposure to different types of investments, the Funds may enter into
interest rate, currency and mortgage (or other asset) swap agreements and may
purchase and sell interest rate "caps," "floors" and "collars." In a typical
interest rate swap agreement, one party agrees to make regular payments equal to
a floating interest rate on a specified amount (the "notional principal amount")
in return for payments to a fixed interest rate on the same amount for a
specified period. If a swap agreement provides for payment in different
currencies, the parties may also agree to exchange the notional principal
amount. Mortgage swap agreements are similar to interest rate swap agreements,
except that the notional principal amount is tied to a reference pool of
mortgages. In a cap or floor, one party agrees, usually in return for a fee, to
make payments under particular circumstances. For example, the purchaser of an
interest rate cap has the right to receive payments to the extent a specified
interest rate exceeds an agreed upon level; the purchaser of an interest rate
floor has the right to receive payments to the extent a specified interest rate
falls below an agreed upon level. A collar entitles the purchaser to receive
payments to the extent a specified interest rate falls outside an agreed upon
range.

50
<PAGE> 145
Futures, Related Options and Options on Stock Indices (International Fixed
Income Fund). The Fund may attempt to reduce the risk of investments by hedging
a portion of its portfolio through the use of certain futures transactions,
options on futures traded on a board of trade and options on stock indices
traded on national securities exchanges. The Funds may hedge a portion of its
portfolio by purchasing such instruments during a market advance or when the
Sub-Adviser anticipates an advance. In attempting to hedge a portfolio, the
Funds may enter into contracts for the future delivery of securities and futures
contracts based on a specific security, class of securities or an index,
purchase or sell options on any such futures contracts, and engage in related
closing transactions. The Funds will use these instruments primarily as a hedge
against changes resulting from market conditions in the values of securities
held in its portfolio or which it intends to purchase.

In the case of options on stock index futures, the holder of the option
pays a premium and receives the right, upon exercise of the option at a
specified price during the option period, to assume the option writer's position
in a stock index futures contract. If the option is exercised by the holder
before the last trading day during the option period, the option writer delivers
the futures position, as well as any balance in the writer's futures margin
account. If it is exercised on the last trading day, the option writer delivers
to the option holder cash in an amount equal to the difference between the
option exercise price and the closing level of the relevant index on the date
the option expires. In the case of options on stock indexes, the holder of the
option pays a premium and receives the right, upon exercise of the option at a
specified price during the option period, to receive cash equal to the dollar
amount of the difference between the closing price of the relevant index and the
option exercise price times a specified multiple, called the "multiplier."

During a market decline or when the Sub-Adviser anticipates a decline, the
Fund may hedge a portion of its portfolio by selling futures contracts or
purchasing puts on such contracts or on a stock index in order to limit exposure
to the decline. This provides an alternative to liquidation of securities
positions and the corresponding costs of such liquidation. Conversely, during a
market advance or when the Sub-Adviser anticipates an advance, the Fund may
hedge a portion of its portfolio by purchasing futures, options on these futures
or options on stock indices. This affords a hedge against the Fund not
participating in a market advance at a time when it is not fully invested and
serves as a temporary substitute for the purchase of individual securities which
may later be purchased in a more advantageous manner. The Fund will sell options
on futures and on stock indices only to close out existing positions.

51
<PAGE> 146
Interest Rate Futures Contracts (All Funds except Federal Tax-Exempt Bond
Fund). The Funds may, to a limited extent, enter into interest rate futures
contracts--i.e., contracts for the future delivery of securities or index-based
futures contracts--that are, in the opinion of the Sub-Adviser, sufficiently
correlated with the Fund's portfolio. These investments will be made primarily
in an attempt to protect a Fund against the effects of adverse changes in
interest rates (i.e., "hedging"). When interest rates are increasing and
portfolio values are falling, the sale of futures contracts can offset a decline
in the value of a Fund's current portfolio securities. The Funds will engage in
such transactions primarily for bona fide hedging purposes.

Options on Interest Rate Futures Contracts (All Funds except Federal
Tax-Exempt Bond Fund). The Funds may purchase put and call options on interest
rate futures contracts, which give a Fund the right to sell or purchase the
underlying futures contract for a specified price upon exercise of the option at
any time during the option period. Each Fund may also write (sell) put and call
options on such futures contracts. For options on interest rate futures that a
Fund writes, such Fund will receive a premium in return for granting to the
buyer the right to sell to the Fund or to buy from the Fund the underlying
futures contract for a specified price at any time during the option period. As
with futures contracts, each Fund will purchase or sell options on interest rate
futures contracts primarily for bona fide hedging purposes.

Foreign Exchange Contracts (International Fixed Income Fund). Changes in
foreign currency exchange rates will affect the U.S. dollar values of securities
denominated in currencies other than the U.S. dollar. The rate of exchange
between the U.S. dollar and other currencies fluctuates in response to forces of
supply and demand in the foreign exchange markets. These forces are affected by
the international balance of payments and other economic and financial
conditions, government intervention, speculation and other factors. When
investing in foreign securities, the Fund usually effects currency exchange
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign exchange market. The Fund incurs foreign exchange expenses in converting
assets from one currency to another.

The Fund may enter into foreign currency forward contracts or currency
futures for the purchase or sale of foreign currency to "lock in" the U.S.
dollar price of the securities denominated in a foreign currency or the U.S.
dollar value of interest and dividends to be paid on such securities, or to
hedge against the possibility that the currency of a foreign country in which
the Fund has investments may suffer a decline against the U.S. dollar. A forward
currency contract is an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days from the date of the contract
agreed upon by the parties, at a price set at the time for the contract. This
method of attempting to hedge the value of the Fund's portfolio securities
against a decline in the value of a currency does not eliminate fluctuations in
the underlying prices of the securities. Although the strategy of engaging in
foreign currency transactions could reduce the risk of loss due to a decline in
the value of the hedged currency, it could also limit the potential gain from an
increase in the value of the currency. The Fund does not intend to maintain a
net exposure to such contracts where the fulfillment of the Fund's obligations
under such contracts would obligate the Fund to deliver an amount of foreign
currency in excess of the value of the Fund's portfolio securities or other
assets denominated in the currency. The Fund will not enter into these contracts
for speculative purposes and will not enter into non-hedging currency contracts.
These contracts involve a risk of loss if the Sub-Adviser fail to predict
currency values correctly.

"When-Issued" and "Forward Commitment" Transactions (All Funds). The Funds
may purchase securities on a when-issued and delayed-delivery basis and may
purchase or sell securities on a forward

52
<PAGE> 147
commitment basis. When- issued or delayed-delivery transactions arise when
securities are purchased by a Fund with payment and delivery taking place in the
future in order to secure what is considered to be an advantageous price and
yield to the Funds at the time of entering into the transaction. A forward
commitment transaction is an agreement by a Fund to purchase or sell securities
at a specified future date. When a Fund engages in these transactions, the Fund
relies on the buyer or seller, as the case may be, to consummate the sale.
Failure to do so may result in the Fund missing the opportunity to obtain a
price or yield considered to be advantageous. When-issued and delayed-delivery
transactions and forward commitment transactions may be expected to occur a
month or more before delivery is due. However, no payment or delivery is made by
a Fund until it receives payment or delivery from the other party to the
transaction. A separate account containing only liquid assets such as cash,
equity securities, U.S. Government securities, or other liquid assets equal to
the value of purchase commitments will be maintained until payment is made. Such
securities have the effect of leverage on the Funds and may contribute to
volatility of a Fund's net asset value. For further information, see the
SAI.

Loans of Portfolio Securities (All Funds). To increase current income,
each Fund may lend its portfolio securities in an amount up to 33 1/3% of each
such Fund's total assets to brokers, dealers and financial institutions,
provided certain conditions are met, including the condition that each loan is
secured continuously by collateral maintained on a daily mark-to-market basis in
an amount at least equal to the current market value of the securities loaned.
These transactions involve a loan by the applicable Fund and are subject to the
same risks as repurchase agreements. For further information, see the SAI.

Reverse Repurchase Agreements (All Funds). Pursuant to a reverse
repurchase agreement, a Fund will sell portfolio securities and agree to
repurchase them from the buyer at a particular date and price. Whenever a Fund
enters into a reverse repurchase agreement, it will establish a segregated
account in which it will maintain liquid assets in an amount at least equal to
the repurchase price marked to market daily (including accrued interest), and
will subsequently monitor the account to ensure that such equivalent value is
maintained. The Fund pays interest on amounts obtained pursuant to reverse
repurchase agreements. Reverse repurchase agreements are considered to be
borrowings by a Fund under the 1940 Act.

53
<PAGE> 148
Portfolio Turnover. The Funds generally will not engage in the trading of
securities for the purpose of realizing short-term profits, but each Fund will
adjust its portfolio as it deems advisable in view of prevailing or anticipated
market conditions or fluctuations in interest rates to accomplish its respective
investment objective. For example, each Fund may sell portfolio securities in
anticipation of an adverse market movement. Other than for tax purposes,
frequency of portfolio turnover will not be a limiting factor if a Fund
considers it advantageous to purchase or sell securities. The Funds do not
anticipate that the respective annual portfolio turnover rates will exceed the
following: Intermediate Corporate Bond Fund 300%; High Yield Bond Fund 150%;
International Fixed Income Fund 150%; Mortgage Income Fund 200%; and Federal
Tax-Exempt Bond Fund 75%. A high rate of portfolio turnover involves
correspondingly greater transaction expenses than a lower rate, which expenses
must be borne by each Fund and its shareholders.

INVESTMENT RESTRICTIONS

(1) No Fund may borrow money or pledge or mortgage its assets, except that
a Fund may borrow from banks up to 33 1/3% of the current value of its net
assets for temporary or emergency purposes and those borrowings may be secured
by the pledge of not more than 15% of the current value of that Fund's net
assets (but investments may not be purchased by a Fund while any such borrowings
exist).

If a percentage restriction on investment policies or the investment or
use of assets set forth in this Prospectus are adhered to at the time a
transaction is effected, later changes in percentage resulting from changing
values will not be considered a violation.

54
<PAGE> 149
RISKS OF INVESTING IN THE FUNDS

CERTAIN RISK CONSIDERATIONS

General. The price per share of each of the Funds will fluctuate with
changes in value of the investments held by the Fund. For example, the value of
a Fund's shares will generally fluctuate inversely with the movements in
interest rates. Shareholders of a Fund should expect the value of their shares
to fluctuate with changes in the value of the securities owned by the Fund.
There is, of course, no assurance that a Fund will achieve its investment
objective or be successful in preventing or minimizing the risk of loss that is
inherent in investing in particular types of investment products. In order to
attempt to minimize that risk, the Sub-Adviser monitors developments in the
economy, the securities markets, and with each particular issuer. Also, as noted
earlier, each diversified Fund (i.e. all funds except the International Fixed
Income Fund) is managed within certain limitations that restrict the amount of
the Fund's investment in any single issuer.

Risk Factors Regarding Foreign Securities. Investments by a Fund in
foreign securities, whether denominated in U.S. dollars or foreign currencies,
may entail all of the risks set forth below. Investments by a Fund in ADRs, EDRs
or similar securities also may entail some or all of the risks described below.

Currency Risk. The value of the Funds' foreign investments will be
affected by changes in currency exchange rates. The U.S. dollar value of a
foreign security decreases when the value of the U.S. rises against the foreign
currency in which the security is denominated, and increases when the value of
the U.S. dollar falls against such currency

Political and Economic Risk. The economies of many of the countries
in which the Funds may invest may not be as developed as the United States
economy and may be subject to significantly different forces. Political or
social instability, expropriation or confiscatory taxation and limitations on
the removal of funds or other assets could severely affect the value of the
Funds' investments.

Regulatory Risk. Foreign companies are not registered with the
Securities and Exchange Commission and are generally not subject to the
regulatory controls imposed on United States issuers and, as a consequence,
there is generally less publicly available information about foreign securities
than is available about domestic securities. Foreign companies are not subject
to uniform accounting, audition and financial reporting standards, practices and
requirements comparable to those applicable to domestic companies. Income from
foreign securities owned by the Funds may be reduced by a withholding tax at the
source, which tax would reduce dividend income payable to the Fund's
shareholders.

Market Risk. The securities markets in many of the countries in
which the Funds invests will have substantially less trading volume than the
major United States markets. As a result, the securities of some foreign
companies may be less liquid and experience more price volatility than
comparable domestic securities. Increased custodian costs as well as
administrative costs (such as the need to use foreign custodians) may be
associated with the maintenance of assets in foreign jurisdictions. There is
generally less government regulation and supervision of foreign stock exchanges,
brokers and issuers which may make it difficult to enforce contractual
obligations. In addition, transaction costs in foreign securities markets are
likely to be higher, since brokerage commission rates in foreign countries are
likely to be higher than in the United States.

55
<PAGE> 150
Portfolio Turnover. Any particular security will be sold, and the
proceeds reinvested, whenever such action is deemed prudent from the viewpoint
of a Fund's investment objectives, regardless of the holding period of that
security. Each Fund's historical portfolio turnover rates are included in the
Financial Highlights tables herein. A higher rate of portfolio turnover may
result in higher transaction costs, including brokerage commissions. Also, to
the extent that higher portfolio turnover results in a higher rate of net
realized capital gains to a fund, the portion of the Fund's distributions
constituting taxable capital gains may increase. See "Dividends, Distributions
and Tax Matters."

Securities rated BBB or Baa by an NRSRO (investment grade bonds) are
deemed by these rating services to have speculative characteristics.

High Yield Bond Market (High Yield Bond Fund). The High Yield Bond Fund
normally invests at least 65% of its total assets in high yield, high risk
bonds. Changes in interest rates, the market's perception of the issuers and the
creditworthiness of the parties involved may significantly affect the value of
these bonds. Some of these securities may have a structure that makes their
reaction to interest rates and other factors difficult to predict, causing their
value to be highly volatile. These bonds also may be subject to prepayment risk.
During periods of declining interest rates, prepayment of loans and mortgages
underlying these securities tend to accelerate. Accordingly, any prepayments on
these securities held by the Fund reduces our ability to maintain positions in
high-yielding, mortgage-backed securities and reinvest the principal at
comparable yields.

Certain high yield bonds carry particular market risks. Zero coupon,
deferred interest and payment-in-kind ("PIK") bonds, which are issued at deep
discounts, may experience greater volatility in market value. Asset and
mortgage-backed securities, including collateralized mortgage obligations, in
addition to greater volatility, may carry prepayment risks.

In seeking to achieve the Fund's investment objective, there will be
times, such as during periods of rising interest rates, when depreciation and
realization of capital losses on securities in the Fund's portfolio will be
unavoidable. Moreover, medium- and lower-rated securities and non-rated
securities of comparable quality may be subject to wider fluctuations in yield
and market values than higher-rated securities under certain market conditions.
Such fluctuations after a security is acquired do not affect the cash income
received from that security but will be reflected in the net asset value of the
Fund.

56
<PAGE> 151
The secondary market for high yield securities may be less liquid than the
markets for higher quality securities and, as such, may have an adverse effect
on the market prices of certain securities. The limited liquidity of the market
may also adversely affect the ability of the Fund to arrive at a fair value for
certain high yield securities at certain times and could make it difficult for
the Fund to sell certain securities. In addition, new laws and potential new
laws may have an adverse effect upon the value of high yield securities and a
concomitant negative impact upon the net asset value of a share of the Fund.

The Fund may buy high yield, fixed income securities during an initial
underwriting. These securities involve special risks because they are new
issues. Advisers will carefully review their credit and other characteristics.
The Fund has no arrangement with its underwriter or any other person concerning
the acquisition of these securities.

Risks of Options and Futures Contracts. One risk involved in the purchase
and sale of futures and options is that a Fund may not be able to effect closing
transactions at a time when it wishes to do so. Positions in futures contracts
and options on futures contracts may be closed out only on an exchange or board
of trade that provides an active market for them, and there can be no assurance
that a liquid market will exist for the contract or the option at any particular
time. To mitigate this risk, each Fund will ordinarily purchase and write
options only if a secondary market for the options exists on a national
securities exchange or in the over-the-counter market. Another risk is that
during the option period, if a Fund has written a covered call option, it will
have given up the opportunity to profit from a price increase in the underlying
securities above the exercise price in return for the premium on the option
(although the premium can be used to offset any losses or add to a Fund's
income) but, as long as its obligation as a writer continues, such Fund will
have retained the risk of loss should the price of the underlying security
decline. Investors should note that because of the volatility of the market
value of the underlying security, the loss from investing in futures
transactions is potentially unlimited. In addition, a Fund has no control over
the time when it may be required to fulfill its obligation as a writer of the
option. Once a Fund has received an exercise notice, it cannot effect a closing
transaction in order to terminate its obligation under the option and must
deliver the underlying securities at the exercise price.

57
<PAGE> 152
related option transactions which are not for bona fide hedging purposes may be
used provided the total amount of the initial margin and any option premiums
attributable to such positions does not exceed 5% of each Fund's liquidating
value after taking into account unrealized profits and unrealized losses, and
excluding any in-the-money option premiums paid. The Funds will not market, and
are not marketing, themselves as commodity pools or otherwise as vehicles for
trading in futures and related options. The Funds will segregate liquid assets
such as cash, U.S. Government securities or other liquid high grade debt
obligations to cover the futures and options.

The risks of leverage include a higher volatility of the net asset value
of a Fund's shares and the relatively greater effect on the net asset value of
the shares caused by favorable or adverse market movements or changes in the
cost of cash obtained by leveraging and the yield obtained from investing the
cash. So long as a Fund is able to realize a net return on its investment
portfolio that is higher than interest expense incurred, if any, leverage will
result in higher current net investment income being realized by such Fund than
if the Fund were not leveraged. On the other hand, interest rates change from
time to time as does their relationship to each other depending upon such
factors as supply and demand, monetary and tax policies and investor
expectations. Changes in such factors could cause the relationship between the
cost of leveraging and the yield to change so that rates involved in the
leveraging arrangement may substantially increase relative to the yield on the
obligations in which the proceeds of the leveraging have been invested. To the
extent that the interest expense involved in leveraging approaches the net
return on a Fund's investment portfolio, the benefit of leveraging will be
reduced, and, if the interest expense on borrowings were to exceed the net
return to shareholders, such Fund's use of leverage would result in a lower rate
of return than if the Fund were not leveraged. Similarly, the effect of leverage
in a declining market could be a greater decrease in net asset value per share
than if a Fund were not leveraged. In an extreme case, if a Fund's current
investment income were not sufficient to meet the interest expense of
leveraging, it could be necessary for such Fund to liquidate certain of its
investments at an inappropriate time. The use of leverage may be considered
speculative.

Non-diversified investment companies. The International Fixed Income Fund
is classified as a non-diversified investment company under the 1940 Act, which
means that the Fund is not limited by the 1940 Act in the proportion of its
assets that it may invest in the obligations of a single issuer. The investment
of a large

58
<PAGE> 153
percentage of the Fund's assets in the securities of a small number of issuers
may cause the Fund's share price to fluctuate more than that of a diversified
investment company.

Mortgage-Backed Securities. Mortgage-backed securities are subject to the
risk that the principal on the underlying mortgage loans may be prepaid at any
time. Although the extent of prepayments on a pool of mortgage loans depends on
various economic and other factors, as a general rule prepayments on fixed rate
mortgage loans will increase during a period of falling interest rates and
decrease during a period of rising interest rates. Accordingly, amounts
available for reinvestment by the Fund are likely to be greater during a period
of declining interest rates and, as a result, likely to be reinvested at lower
interest rates than during a period of rising interest rates. Mortgage-backed
securities may decrease in value as a result of increases in interest rates and
may benefit less than other fixed income securities from declining interest
rates because of the risk of prepayment. During periods of rising interest
rates, the rate of prepayment of mortgages underlying mortgage-backed securities
can be expected to decline, extending the projected average maturity of
mortgage-backed securities. A decline in the rate of repayment may effectively
change a security which was considered short- or intermediate-term at the time
of purchase into a long-term security. Long-term securities generally fluctuate
more widely in response to changes in interest rates than short- or
intermediate-term securities.

OTHER INFORMATION

CAPITALIZATION

ING Funds Trust was organized as a Delaware business trust on July __,
1998 and currently consists of 20 separately managed portfolios, each of which
is divided into Class A, B, C, and X shares. The Board of Trustees may establish
additional portfolios in the future. The capitalization of the Funds consists
solely of an unlimited number of shares of beneficial interest with a par value
of $0.001 each. When issued, shares of the Funds are fully paid, non-assessable
and freely transferable.

59
<PAGE> 154
VOTING

PERFORMANCE INFORMATION

Performance information for a Fund may be compared to various unmanaged
indices, such as those indices prepared by Lipper Analytical Services,
Morningstar, Standard & Poor's 500 Stock Index, the Russell 2000 Index, the Dow
Jones Industrial Average and other entities or organizations which track the
performance of investment companies. Any performance information should be
considered in light of the Fund's investment objectives and policies,
characteristics and quality of the Funds and the market conditions during the
time period indicated, and should not be considered to be representative of what
may be achieved in the future. For a description of the methods used to
determine yield and total return for Funds, see the SAI.

ACCOUNT SERVICES

60
<PAGE> 155
First Data Investors Services Group acts as the Funds' Transfer Agent and,
pursuant to an agreement with IMFC, the Funds' fund accounting agent. The Funds'
custodian is ________.

CUSTODIAN

__________ acts as the Funds' Custodian. Pursuant to the Custodian
Agreement, the Custodian is responsible for holding each Fund's cash and
portfolio securities. The Custodian may enter into sub-custodian agreements with
certain qualified banks.

Rules adopted under the 1940 Act permit investment companies to maintain
their securities and cash in the custody of certain eligible foreign banks and
depositories. The Global Brand Fund, Global Equity Fund, Emerging Markets Fund
and the European Equity Fund's portfolio of non-United States securities are
held by sub-custodians which are approved by the Trustees or a foreign custody
manager appointed by the Trustees in accordance with these rules. The Board has
appointed the Custodian as its foreign custody manager. The determination to
place assets with a particular foreign sub-custodian is made pursuant to these
rules which require a consideration of a number of factors including, but not
limited to, the reliability and financial stability of the sub-custodian; the
sub-custodian's practices, procedures and internal controls; and the reputation
and standing of the sub-custodian in its national market.

COUNSEL

Paul, Weiss, Rifkind, Wharton & Garrison serves as counsel for the Trust
and from time to time provides advice to the Advisers.

SHAREHOLDER INQUIRIES

All shareholder inquiries should be directed to the Funds at ____________.

General and Account Information: (800) [ ]

61
<PAGE> 156
APPENDIX

DESCRIPTION OF MOODY'S BOND RATINGS:

Excerpts from Moody's description of its four highest bond ratings are
listed as follows: Aaa - judged to be the best quality and they carry the
smallest degree of investment risk; Aa - judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally know as
high grade bonds; A - possess many favorable investment attributes and are to be
considered as "upper medium grade obligations"; Baa considered to be medium
grade obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. This group is the lowest which
qualifies for investment grade. Other Moody's bond descriptions include: Ba -
judged to have speculative elements, their future cannot be considered as well
assured; B - generally lack characteristics of the desirable investment; Caa -
are of poor standing. Such issues may be in default or there may be present
elements of danger with respect to principal or interest; Ca - speculative in a
high degree, often in default; C - lowest rated class of bonds, regarded as
having extremely poor prospects.

DESCRIPTION OF S&P'S BOND RATINGS:

Excerpts from S&P's description of its four highest bond ratings are
listed as follows: AAA - highest grade obligations, in which capacity to pay
interest and repay principal is extremely strong; AA - also qualify as high
grade obligations, having a very strong capacity to pay interest and repay
principal, and differs from AAA issues only in a small degree; A - regarded as
upper medium grade, having a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories; BBB - regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories. This group is the lowest which
qualifies for investment grade. BB, B, CCC, CC - predominantly speculative with
respect to capacity to pay interest and repay principal in accordance with terms
of the obligations; BB indicates the highest grade and CC the lowest within the
speculative rating categories.

S&P applies indicators "+," no character, and "-" to its rating
categories. The indicators show relative standing within the major rating
categories.

DESCRIPTION OF MOODY'S RATINGS OF NOTES AND VARIABLE RATE DEMAND INSTRUMENTS:

Moody's ratings for state and municipal short-term obligations will be
designated Moody's Investment Grade or MIG. Such ratings recognize the
differences between short-term credit and long-term risk. Short-term ratings on
issues with demand features (variable rate demand obligations) are
differentiated by the use of the

62
<PAGE> 157
VMIG symbol to reflect such characteristics as payment upon periodic demand
rather than fixed maturity dates and payments relying on external liquidity.

MIG 2/VMG 2: This denotes high quality. Margins of protection are ample
although not as large as in the preceding group.

DESCRIPTION OF MOODY'S TAX-EXEMPT COMMERCIAL PAPER RATINGS:

PRIME-1: Issuers rated Prime-1 (or supporting institutions) have a
superior ability for repayment of senior short-term promissory obligations.

PRIME-2: Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term promissory obligations.

DESCRIPTION OF S&P'S RATINGS FOR MUNICIPAL BONDS:

INVESTMENT GRADE

AAA: Debt rated "AAA" has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.

AA: Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small degree.

63
<PAGE> 158
SPECULATIVE GRADE

CI: The "CI" rating is reserved for income bonds on which no interest is
being paid.

D: Debt rated "D" is in default, and payment of interest and/or repayment
of principal is in arrears.

PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.

DESCRIPTION OF S&P'S RATINGS FOR INVESTMENT GRADE MUNICIPAL NOTES AND SHORT-TERM
DEMAND OBLIGATIONS:

SP-2: Issues carrying this designation have a satisfactory capacity to pay
principal and interest.

DESCRIPTION OF S&P'S RATINGS FOR DEMAND OBLIGATIONS AND TAX-EXEMPT COMMERCIAL
PAPER:

A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1."

64
<PAGE> 159
ING FUNDS TRUST

-----------

PROSPECTUS
SEPTEMBER __, 1998

-----------

U.S. Treasury Money Market Fund
Money Market Fund

<PAGE> 160
ING FUNDS TRUST
[ADDRESS]

General & Account Information: (800) [ ]

ING MUTUAL FUNDS MANAGEMENT COMPANY - Investment Manager
("IMFC" or the "Manager")
ING FUND DISTRIBUTOR INC. - Distributor, Principal Underwriter and Sponsor
("IFD" or the "Distributor")

This prospectus describes two funds (each, a "Fund" or, collectively,
the "Funds"), managed by ING Mutual Funds Management Company, a [Delaware]
corporation. The Manager is a wholly-owned subsidiary of ING Groep N.V. ("ING
Group"). The Funds and their objectives are:

The U.S. Treasury Money Market Fund seeks to provide investors with a
high level of current income as is consistent with liquidity, maximum safety of
principal and the maintenance of a stable $1.00 net asset value. The Fund seeks
to achieve its objective by investing in U.S. Treasury Securities.

The Money Market Fund seeks to provide investors with a high level of
current income consistent with preservation of capital and liquidity and the
maintenance of a stable $1.00 net asset value. The Fund seeks to achieve its
objective by investing in high quality, short-term obligations.

<TABLE>
<CAPTION>
Equity Funds Fixed Income Funds
------------ ------------------
<S> <C> <C>
Large Cap Growth Fund Intermediate Corporate Bond Fund
Growth and Income Fund High Yield Bond Fund
Tax Efficient Equity Fund International Fixed Income Fund
Mid Cap Equity Fund Federal Tax Exempt Bond Fund
Small Cap Equity Fund Mortgage Income Fund
International Equity Fund
Balanced Fund
Global IT Fund
ING Best Ideas Fund
Emerging Markets Equity Fund
European Equity Fund
Real Estate Fund
</TABLE>
<PAGE> 161
Each Fund offers four different classes of shares -- Class A shares,
Class B shares, Class C shares and Class X. The different classes of shares
represent investments in the same portfolio of securities but are subject to
different sales charges and expenses. These alternatives permit investors to
choose the most beneficial method of purchasing shares given the amount of the
purchase, the length of time the investor expects to hold shares, and other
circumstances. When you purchase shares of the Funds, be sure to specify the
class of shares of the Fund(s) you wish to purchase. If you do not choose, your
investment will be made in the Class A shares. See "Purchase of Fund Shares."

AN INVESTMENT IN SHARES OF THE TRUST IS NEITHER INSURED NOR GUARANTEED
BY THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE FUNDS WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.

This Prospectus sets forth concisely the information a prospective
investor should know before investing in the Funds and should be read and
retained for information about each Fund.

September __, 1998
<PAGE> 162
Table of Contents

<TABLE>
<CAPTION>
<S> <C>
HIGHLIGHTS........................................................................1

FUND EXPENSES.....................................................................4

THE FUNDS.........................................................................7

THE INVESTMENT POLICIES AND PRACTICES OF THE FUNDS................................7

MANAGEMENT OF THE FUNDS...........................................................8

FUND SHARE VALUATION.............................................................12

PRICING OF FUND SHARES...........................................................13

MINIMUM PURCHASE REQUIREMENTS....................................................13

PURCHASE OF FUND SHARES..........................................................13

INDIVIDUAL RETIREMENT ACCOUNTS...................................................20

EXCHANGE OF FUND SHARES..........................................................23

DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAX..................................26

DESCRIPTION OF SECURITIES AND INVESTMENT PRACTICES...............................28

INVESTMENT RESTRICTIONS..........................................................33

RISKS OF INVESTING IN THE FUNDS..................................................34

OTHER INFORMATION................................................................34
</TABLE>
<PAGE> 163
HIGHLIGHTS

INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS

This Prospectus describes two money market funds managed by ING Mutual
Funds Management Company ("IMFC") and sub-advised by IIM. Each Fund has a
distinct investment objective and policies.

THE FUNDS:

U.S. Treasury Money Market Fund. The investment objective of the U.S.
Treasury Money Market Fund is to provide investors with as high a level of
current income as is consistent with liquidity, maximum safety of principal, and
the maintenance of a stable $1.00 net asset value per share. The Fund seeks to
achieve its objective by investing in U.S. Treasury securities. The Fund invests
in direct short-term obligations of the United States Treasury, which are backed
by the full faith and credit of the United States Government. The U.S. Treasury
Money Market Fund may also purchase securities on a "when-issued" basis and
purchase or sell them on a "forward commitment" basis.

Money Market Fund. The investment objective of the Money Market Fund is
to provide investors with a high level of current income consistent with
preservation of capital and liquidity and the maintenance of a stable $1.00 net
asset value per share. The Fund seeks to achieve its objective by investing in
high quality, U.S. dollar-denominated short-term obligations which are
determined by the Sub-Adviser to present minimal credit risks.

The Fund will invest in obligations permitted to be purchased under
Rule 2a-7 of the Investment Company Act of 1940 (the "1940 Act") including, but
not limited to, (1) obligations of the U.S. Government or its agencies or
instrumentalities; (2) commercial paper, loan participation interests,
medium-term notes, and other promissory notes, including floating or variable
rate obligations; and (3) the following domestic, Yankeedollar and Eurodollar
obligations: certificates of deposit, time deposits, bankers' acceptances,
commercial paper, bearer deposit notes and other promissory notes, including
floating or variable rate obligations issued by U.S. or foreign bank holding
companies and their bank subsidiaries, branches and agencies. The Fund may also
purchase securities on a "when-issued" basis and purchase or sell them on a
"forward commitment" basis. The Money Market Fund may also invest in variable
rate master demand obligations, which are unsecured demand notes that permit the
indebtedness thereunder to vary, and provide for periodic adjustments in the
interest rate.

The Fund may also enter into repurchase agreements, may purchase
mortgage-backed securities, and may borrow up to 10% of its net assets to
purchase securities and up to 25% of its net assets for temporary purposes.

Portfolio investments of each Fund are valued based on the amortized
cost valuation method pursuant to Rule 2a-7 under the 1940 Act. Obligations in
which the Funds invest generally have remaining maturities of 397 days or less,
although upon satisfying certain conditions of Rule 2a-7, the Funds may, to the
extent otherwise permissible, invest in instruments subject to repurchase
agreements and certain variable and floating rate obligations that bear longer
final maturities. The dollar-weighted average portfolio maturity of each Fund
will not exceed 90 days. See the SAI for an explanation of the amortized cost
valuation method.

RISKS OF INVESTING IN THE FUNDS

The Funds attempt to maintain the net asset value of their shares at a
constant $1.00 per share, although there can be no assurance that the Funds will
always be able to do so. The Funds may not achieve as high a level of current
income as other funds that do not limit their investments to the high quality
securities in which the Funds invest.

MANAGEMENT OF THE FUNDS

As Manager of the Funds, IMFC has overall responsibility, subject to
the supervision of the Board of Trustees, for engaging sub-advisers and for
monitoring and evaluating the management of the assets of each Fund by the
Sub-Adviser. Pursuant to a Management Agreement, the Trust currently pays the
Adviser for its services a monthly fee at an annual rate. See the fee table
under "Management of the Trust--The Adviser." The Sub-Advisor is a subsidiary of
ING Group and is an affiliate of the Distributor.

ING Investment Management, LLC ("IIM") serves as sub-adviser to the
Funds. IIM may be referred to herein as "Sub- Adviser." For its services, the
Sub-Adviser receives a fee from the Manager based on the respective Funds'
average daily net assets. See "Management of the Funds--the Sub-Advisers"in this
Prospectus.

The Sub-Adviser has full investment discretion and makes all
determinations with respect to the investment of each Fund's assets and the
purchase and sale of portfolio securities consistent with the investment
objectives, policies, and restrictions for such Fund. The Sub-Adviser is
compensated by the Adviser (and not the Trust).

CLASS SHARES

2
<PAGE> 165
CLASS A SHARES. Class A shares are offered at net asset value without a
sales charge. Class A shares are subject to an annual Rule 12b-1 fee of 0.50% of
average daily net assets attributable to Class A shares. This fee is lower than
the other classes having Rule 12b-1 fees and therefore Class A shares have lower
expenses and pay higher dividends. See "Purchase of Fund Shares--Class A
Shares."

CLASS B SHARES. Class B Shares are subject to a contingent deferred
sales charge of 5.00% if redeemed within [ ] years of purchase, with declining
charges for redemptions thereafter up to [ ] years after purchase. Class B
shares are also subject to a higher annual Rule 12b-1 fee than Class A
shares--1.00% of the Fund's average daily net assets attributable to Class B
shares. However, after [ ] years, Class B shares automatically will be converted
to Class A shares at no charge to the investor, resulting in a lower Rule 12b-1
fee thereafter. Class B shares provide the benefit of putting all dollars to
work from the time of investment, but will have a higher expense ratio and pay
lower dividends than Class A shares due to the higher Rule 12b-1 fee and any
other class specific expenses. See "Purchase of Fund Shares--Class B and X
Shares."

CLASS C SHARES. Class C shares are sold without an initial sales charge
and are subject to a higher annual Rule 12b-1 fee than the Class A shares--1.00%
of the Fund's average daily net assets attributable to Class C shares. Class C
shares and provide the benefit of putting all dollars to work from the time of
investment, but will have a higher expense ratio and pay lower dividends than
Class A shares due to the higher Rule 12b-1 fee and any other class specific
expenses. While Class C shares do not convert to Class A shares, they are
subject to a lower contingent deferred sales charge (1.00%) and do not have to
be held for as long a time (one year) as Class B or X shares to avoid paying a
contingent deferred sales charge. See "Purchase of Fund Shares--Class C Shares."

CLASS X SHARES. Class X shares are sold without an initial sales
charge. In addition, investors purchasing Class X shares will receive, as a
bonus, additional shares having a value equal to 2.50% of the amount invested
("Bonus Shares"). The Distributor has undertaken to pay for Bonus Shares as part
of its services to the Funds. Shares purchased by the reinvestment of dividends
or capital gains distributions are not eligible for Bonus Shares. Class X shares
are subject to a contingent deferred sales charge of 5.00% if redeemed within [
] years, with declining charges for redemptions thereafter up to [ ] years after
purchase. Class X shares are also subject to a higher annual Rule 12b-1 fee than
Class A shares--1.00% of the Fund's average daily net assets attributable to
Class X shares. However, after [ ] years, Class X shares automatically will be
converted to Class A shares at no charge to the investor, resulting in a lower
Rule 12b-1 fee thereafter. Class X shares provide the benefit of putting all
dollars to work from the time of investment, but will have a higher expense
ratio and pay lower dividends than Class A shares due to the higher Rule 12b-1
fee and any other class specific expenses. See "Purchase of Fund Shares--Class X
Shares." Class X shares are currently only offered to certain Qualified
purchasers (including, but not limited to, IRAs, Roth IRAs, Education IRAs, SEP
IRAs, SIMPLE IRAs and 403(b)(7) plans).

In selecting which class of shares to purchase, you should consider,
among other things, (1) the length of time you expect to hold your investment,
(2) the amount of any applicable sales charge (whether imposed at the time of
purchase or redemption) and Rule 12b-1 fees, as noted above, (3) whether you
qualify for any reduction or waiver of any applicable sales charge (e.g., if you
are exempt from the sales charge, you must invest in Class A shares), (4) the
various exchange privileges among the different classes of shares and (5) the
fact that Class B and X shares automatically convert to Class A shares after
[___] years.

3
<PAGE> 166
FUND EXPENSES

FEE TABLE

<TABLE>
<CAPTION>
U.S. Treasury Money Market Fund Money Market Fund
----------------------------------------- ----------------------------------------
Class A Class B Class C Class X Class A Class B Class C Class X
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on NONE NONE NONE NONE NONE NONE NONE NONE
Purchases (as a percentage of
offering price)
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering price)
Maximum Contingent Deferred Sales NONE 5.00% NONE 5.00% NONE 5.00% NONE 5.00%
Load (as a percentage of redemption
proceeds)
Redemption Fees(3) NONE NONE NONE NONE NONE NONE NONE NONE
Exchange Fees NONE NONE NONE NONE NONE NONE NONE NONE
ANNUAL FUND OPERATING EXPENSE
(as a percentage of average
net assets)
Management Fees (after waivers)*
12b-1 Fees .50% 1.00% 1.00% 1.00% .50% 1.00% 1.00% 1.00%
Other Expenses** ____% ____% ____% ____% ____% ____% ____% ____%
TOTAL PORTFOLIO OPERATING EXPENSES
(after waivers)*** ____% ____% ____% ____% ____% ____% ____% ____%
</TABLE>

- --------

(1) Purchases of Class A shares not subject to an initial sales charge but
will be subject to a contingent deferred sales charge ("CDSC") if
redeemed within 12 months of the calendar month of purchase. For an
additional discussion of the Class A CDSC, see this Prospectus under
"Purchase of Fund Shares."

* Management Fees consisting of investment advisory fees (before waivers)
would be .__% and ___%, respectively. The fee waivers reflected in the
table are voluntary and may be modified or terminated at any time
without the Funds' consent.

*** Total Portfolio Operating Expenses (before waivers) would be ___% and
___%, respectively.

4
<PAGE> 167
EXPENSE EXAMPLES:

Full Redemption. You would have paid the following expenses on a $1,000
investment, assuming a hypothetical 5% annual return and full redemption of your
shares at the end of each period shown below:

<TABLE>
<CAPTION>
U.S. Treasury Money Market Fund 1 Year 3 Years
- ------------------------------- ------ -------
<S> <C> <C>
Class A Shares

Class B Shares

Class C Shares

Class X Shares

Money Market Fund
- -----------------

Class A Shares

Class B Shares

Class C Shares

Class X Shares
</TABLE>

No Redemption. You would have paid the following expenses on a $1,000
investment, assuming a hypothetical 5% annual return and no redemption of your
shares at the end of each period shown below:

<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
U.S. Treasury Money Market Fund
- -------------------------------

Class A Shares

Class B Shares

Class C Shares

Class X Shares

Money Market Fund
- -----------------

Class A Shares

Class B Shares

Class C Shares

Class X Shares
</TABLE>

5
<PAGE> 168
(*) Expense examples for purchase of Class X shares of the Funds
reflect the shareholder's receipt of additional "bonus shares." For a discussion
of the issuance of "bonus shares," see this Prospectus under "Purchase of Fund
Shares: Purchase of Class X Shares."

6
<PAGE> 169
THE FUNDS

THE INVESTMENT POLICIES AND PRACTICES OF THE FUNDS

Each Fund follows its own investment policies and practices, including
certain investment restrictions. The "Investment Restrictions" section of the
SAI contains specific investment restrictions (the "Investment Restrictions")
which govern each Fund's investments. The Investment Restrictions and each
Fund's investment objective are fundamental policies which may not be changed
without a majority vote of shareholders of the affected Fund. Except for the
objectives and those restrictions specifically identified as fundamental, all
other investment policies and practices described in this Prospectus and in the
SAI are not fundamental, and may therefore be changed by the Board of Trustees
without shareholder approval.

The Sub-Adviser selects investments and makes investment decisions
based on the investment objective and policies of each Fund.

U.S. Treasury Money Market Fund. In selecting debt securities for the
Fund, the Sub-Adviser seeks to select those instruments that appear best
calculated to achieve the Fund's investment objective within the credit and risk
tolerances established for the Fund. In accordance with those policies, the Fund
invests in direct short-term obligations of the United States Treasury, which
are backed by the full faith and credit of the United States Government. The
U.S. Treasury Money Market Fund may also purchase securities on a "when-issued"
basis and purchase and sell them on a "forward commitment" basis.

Money Market Fund. In selecting debt securities for the Fund, the
Sub-Adviser seeks to select those instruments that appear best calculated to
achieve the Fund's investment objective within the credit and risk tolerances
established for the Fund. In accordance with those policies, the Fund will
invest in obligations permitted to be purchased under Rule 2a-7 of the
Investment Company Act of 1940 (the "1940 Act") including, but not limited to,
(1) obligations of the U.S. Government or its agencies or instrumentalities; (2)
commercial paper, loan participation interests, medium-term notes, and other
promissory notes, including floating or variable rate obligations; and (3) the
following domestic, Yankeedollar and Eurodollar obligations: certificates of
deposit, time deposits, bankers' acceptances, commercial paper, bearer deposit
notes and other promissory notes, including floating or variable rate
obligations issued by U.S. or foreign bank holding companies and their

7
<PAGE> 170
bank subsidiaries, branches and agencies. The Fund will invest only in issuers
or instruments that at the time of purchase (1) have received the highest
short-term rating by at least two nationally recognized statistical rating
organizations ("NRSROs"), such as "A-1" by Standard & Poor's Corporation ("S&P")
and "P-1" by Moody's Investors Service, Inc. ("Moody's"); (2) are single rated
and have received the highest short-term rating by a NRSRO; or (3) are unrated,
but are determined to be of comparable quality by the Sub-Adviser pursuant to
guidelines approved by the Fund's Board of Trustees. The may also purchase
securities on a "when-issued" basis and purchase or sell them on a "forward
commitment" basis.

The Fund may also invest in variable rate master demand obligations,
which are unsecured demand notes that permit the indebtedness thereunder to
vary, and provide for periodic adjustments in the interest rate. Because master
demand obligations are direct lending arrangements between the Fund and the
issuer, they are not normally traded. There is no secondary market for the
notes; however, the period of time remaining until payment of principal and
accrued interest can be recovered under a variable rate master demand obligation
generally will not exceed seven days. To the extent this period is exceeded, the
obligation in question would be considered illiquid. Issuers of variable rate
master demand obligations must satisfy the same criteria as set forth for other
promissory notes (e.g., commercial paper). The Fund will invest in variable rate
master demand obligations only when such obligations are determined by the
Sub-Adviser, pursuant to guidelines established by the Board of Trustees, to be
of comparable quality to rated issuers or instruments eligible for investment by
the Fund. In determining dollar-weighted average portfolio maturity, a variable
rate master demand obligation will be deemed to have a maturity equal to the
shorter of the period of time remaining until the next readjustment of the
interest rate or the period of time remaining until the principal amount can be
recovered from the issuer on demand.

In managing the Fund, the Sub-Adviser employs a number of professional
money management techniques, including varying the composition of investments
and the average maturity of the portfolio based upon the Sub-Adviser's
assessment of the relative values of the various money market securities and
future interest rate patterns. These assessments will change in response to
changing economic and money market conditions and to shifts in fiscal and
monetary policy. The Sub-Adviser also seeks to improve yield by taking advantage
of yield disparities that regularly occur in the money markets. For example,
market conditions frequently result in similar securities trading at different
prices. Also, there are frequently differences in the yield between the various
types of money market securities. The Fund seeks to enhance yield by purchasing
and selling securities based upon these yield disparities.

The types of securities and investment practices used by the Funds are
described in greater detail at "DESCRIPTION OF SECURITIES AND INVESTMENT
PRACTICES."

MANAGEMENT OF THE FUNDS

The business and affairs of each Fund are managed under the direction
of the Board of Trustees. The Trustees are _____________________. Additional
information about the Trustees, as well as the Funds'

8
<PAGE> 171
executive officers, may be found in the SAI under the heading "MANAGEMENT--
Trustees and Officers."

THE MANAGER: ING MUTUAL FUND COMPANY

IMFC, [address], serves as the manager of the Funds. IMFC serves as the
Manager to the Funds pursuant to a Management Agreement with the Trust. IMFC was
formed on _________, 1998, as a Delaware corporation and is a wholly-owned
subsidiary of ING Groep, N.V. ("ING Group"). IMFC is registered with the SEC as
an investment adviser. IMFC has no prior experience as an investment adviser to
an investment company.

Under the Management Agreement, IMFC has overall responsibility,
subject to the supervision of the Board of Trustees, for engaging sub-advisers
and for monitoring and evaluating the management of the assets of each Fund by
the Sub-Adviser. The Manager is also responsible for monitoring and evaluating
the Sub-Advisers on a periodic basis, and will consider their performance
records with respect to the investment objectives and policies of each Fund. The
Manager may, if appropriate, recommend that the Trustees consider a change in a
Sub-Adviser, although the Manager does not expect to recommend frequent changes
in Sub-Advisers as a matter of operating procedure for the Funds. IMFC also
provides certain administrative services necessary for the Funds' operations
including: (i) coordination of the services performed by the Funds' transfer
agent, custodian, independent accountants and legal counsel; regulatory
compliance, including the compilation of information for documents such as
reports to, and filings with, the SEC and state securities commissions; and
preparation of proxy statements and shareholder reports for the Funds; (ii)
general supervision relative to the compilation of data required for the
preparation of periodic reports distributed to the Funds' Officers and Board of
Trustees; and (iii) furnishing office space and certain facilities required for
conducting the business of the Funds.

<TABLE>
<CAPTION>
Investment
Advisory
Fund: Fee
- ----- ---
<S> <C>
U.S. Treasury Money Market Fund
Money Market Fund
</TABLE>

9
<PAGE> 172
THE SUB-ADVISER: ING INVESTMENT MANAGEMENT, LLC

The Manager has retained ING IM, located at 5780 Powers Ferry Road,
N.W. Suite 300, Atlanta, Georgia 30327 to act as sub-adviser to the Funds. The
Sub-Adviser is a limited liability corporation incorporated in Delaware which is
engaged in the business of providing investment advice to affiliated insurance
companies possessing portfolios which, as of December 31, 1997, were valued at
$12 billion. The Sub-Adviser is a wholly-owned subsidiary of ING Groep and is
affiliated with the Adviser. The Sub-Adviser is registered with the SEC as an
investment adviser. The Sub-Adviser is also a sub-adviser to other registered
investment companies.

The Manager has entered into a Sub-Advisory Agreement with the
Sub-Adviser. Under the Agreement, the Sub-Adviser has full investment discretion
and makes all determinations with respect to the investment of a Fund's assets
and the purchase and sale of portfolio securities and other investments. The
Sub-Advisory Agreement may be terminated without penalty by the Manager, [the
Board of Trustees] or the shareholders of a Fund, or by the Sub-Adviser, on 60
days' written notice by any party to a Sub-Advisory Agreement and will terminate
automatically if assigned as that term is described in the 1940 Act.

Under the Sub-Advisory Agreement, the Manager (and not the Trust) pays
ING IM a fee, payable monthly, based on the average daily net assets of the
Funds at the following annual rates of the average daily net assets of the Fund:

<TABLE>
<CAPTION>
Investment
Sub-Advisory
Fund Fee
- ---- ---
<S> <C>
U.S. Treasury Money Market Fund
Money Market Fund
</TABLE>

[Performance for Similar Accounts to Come]

THE DISTRIBUTOR

IFD acts as Distributor. IFD is located at ______________________. As
Distributor, IFD sells shares of each Fund on behalf of the Trust.

FUND ACCOUNTANT AND TRANSFER AGENT

IMFC has retained First Data Investors Services Group P.O. Box ("First
Data") to act as the Funds' fund accounting agent. For its services as fund
accounting agent, First Data receives a fee from IMFC (and not the Funds),
payable monthly, based upon the average daily net assets of the Funds.

Pursuant to a Transfer Agency Agreement between the Trust and First
Data, First Data serves as the Trust's transfer agent.

10
<PAGE> 173
DISTRIBUTION EXPENSES

Pursuant to a Plan of Distribution adopted by each Fund under Rule
12b-1 under the 1940 Act, each Fund pays the Distributor an annual fee of 0.50%
of average net assets attributable to that Fund's Class A shares, 1.00% of
average net assets attributable to that Fund's Class B, and 1.00% of average net
asset of the at Funds' Class X and C shares. While all of Class A's Rule 12b-1
fee constitutes a "distribution fee," only 0.75% of Class B, X, and C's fees
constitute distribution fees.

SERVICE ORGANIZATIONS

11
<PAGE> 174
sought. It is not expected that shareholders would suffer any adverse financial
consequences as a result of any of these occurrences.

OTHER EXPENSES

Each Fund bears all costs of its operations other than expenses
specifically assumed by the Administrator or the Manager. The costs borne by the
Funds include legal and accounting expenses; Trustees' fees and expenses;
insurance premiums; custodian and transfer agent fees and expenses; expenses
incurred in acquiring or disposing of the Funds' portfolio securities; expenses
of registering and qualifying the Funds' shares for sale with the SEC and with
various state securities commissions; expenses of obtaining quotations on the
Funds' portfolio securities and pricing of the Funds' shares; expenses of
maintaining the Funds' legal existence and of shareholders' meetings; and
expenses of preparation and distribution to existing shareholders of reports,
proxies and prospectuses. Expenses of the Funds directly attributable to the
Fund are charged to that Fund; other expenses are allocated proportionately
among all of the Funds in relation to the net assets of each Fund.

PORTFOLIO TRANSACTIONS

Pursuant to the Sub-Advisory Contracts, the Sub-Adviser places orders
for the purchase and sale of portfolio investments for the Funds' accounts with
brokers or dealers selected by it in its discretion. In effecting purchases and
sales of equity and debt securities for the account of the Funds, the
Sub-Adviser will seek the best execution of the Funds' orders. Purchases and
sales of portfolio debt securities for the Funds are generally placed by the
Sub-Adviser with primary market makers for these securities on a net basis,
without any brokerage commission being paid by the Funds. Trading of portfolio
debt securities does, however, involve transaction costs. Transactions with
dealers serving as primary market makers reflect the spread between the bid and
asked prices. As permitted by Section 28(e) of the Securities Exchange Act of
1934, the Manager may cause a Fund to pay a broker-dealer which provides
"brokerage and research services" (as defined in the Act) to the Sub-Adviser an
amount of disclosed commissions for executing a securities transaction for the
Funds in excess of the commissions another broker-dealer would have charged if
the Sub-Adviser believes the commission paid is reasonable in relation to the
value of the brokerage and research services received by the Sub-Adviser.
Broker-dealers are selected on the basis of a variety of factors such as
reputation, capital strength, size and difficulty of order, sale of Fund shares
and research provided to the Sub-Adviser. The Sub-Adviser may allocate purchase
and sales orders for portfolio securities to broker-dealers that are affiliated
with the Manager, the Sub-Adviser or Distributor, if the Sub-Adviser believes
the quality of the transaction and commissions are comparable to what they would
be with other qualified brokerage firms.

FUND SHARE VALUATION

The net asset value per share of the Funds is calculated at 12:00 noon
(Eastern time). Monday through Friday, on each day the New York Stock Exchange
and the New York Federal Reserve Bank are open for business (a "Business Day"),
which excludes the following business holidays: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas Day. The
net asset value per share of each class is computed by dividing the value of the
net assets of each class (i.e., the value of the assets less the liabilities) by
the total number of outstanding shares of each class. All expenses, including
fees paid to the Manager, the Administrator and the Distributor, are accrued
daily and taken into account for the purpose of determining the

12
<PAGE> 175
net asset value. Expenses directly attributable to a Fund are charged to the
Fund; other expenses are allocated proportionately among each Fund within the
Trust in relation to the net assets of each Fund, or on another reasonable
basis. These general expenses (e.g., liability insurance premiums) are allocated
among the Funds based on each Fund's relative net asset value. Within each
class, the expenses are allocated proportionately based on the net assets of
each class, except class specific expenses which are allocated directly to the
respective class.

The Funds use the amortized cost method to value their portfolio
securities and seek to maintain a constant net asset value of $1.00 per share,
although there may be circumstances under which this goal cannot be achieved.
The amortized cost method involves valuing a security at its cost and amortizing
any discount or premium over the period until maturity, regardless of the impact
of fluctuating interest rates on the market value of the security. There can be
no assurances that at all times the Funds' price per share can be maintained.
However, the Board of Trustees has established procedures designed to stabilize,
to the extent reasonably possible, the $1.00 per share price of each Fund. See
the SAI for a more complete description of the amortized cost method.

PRICING OF FUND SHARES

Orders for the purchase of shares will be executed at the net asset
value per share (the "public offering price") next determined after an order has
been received.

MINIMUM PURCHASE REQUIREMENTS

The minimum initial investment in a Fund is [$2,000]; including an IRA
investment. Any subsequent investments must be at least $50, including an IRA
investment. All initial investments should be accompanied by a completed
Purchase Application. A Purchase Application accompanies this Prospectus. A
separate application is required for an IRA. The Funds reserve the right to
reject any purchase order.

PURCHASE OF FUND SHARES

All investments may be made using any of the following methods.

13
<PAGE> 176
Through an Authorized Broker, Investment Adviser or Service
Organization. Shares are available to new and existing shareholders through
authorized brokers, investment advisers and Service Organizations. Authorized
brokers, Investment Advisers and Service Organizations may impose additional
requirements and charges for the services rendered.

Please contact your broker or Service Organization for instructions on
purchasing shares through their organization.

By Wire. Investments may be made directly through the use of wire
transfers of Federal funds. Contact your bank and request it to wire Federal
funds to the applicable Fund. In most cases, your bank will either be a member
of the Federal Reserve Banking System or have a relationship with a bank that
is. Your bank will normally charge you a fee for handling the transaction. To
purchase shares by a Federal funds wire, please first contact ING Fund Services
at 1-800-ING-INFO for wiring instructions and to obtain a fund account number.
An application must be sent for overnight delivery to:

ING Funds Trust
c/o ___________________
[Address]

HOW TO PURCHASE ADDITIONAL SHARES

The minimum investment for subsequent purchases is $50.

By Mail: Investors must indicate their account number and the name of
the Fund being purchased. The remittance slip from a confirmation statement
should be used for this purpose and sent to the Fund at the above address.

By Wire: To insure prompt credit to his account, an investor or his
dealer should call ING Fund Services Inc. at 1- 800-ING-INFO prior to sending a
wire to receive a reference number for the wire. The following wire instructions
should be used:

Bank Name
City, State
Beneficiary Bank ABA/Routing #:
Beneficiary Account Number:
Beneficiary Account Name:
Account Number:
OBI:

14
<PAGE> 177
PURCHASE PLANS

ING offers various purchase plans that make investing in additional
shares of the Funds more convenient than by mail or wire. The following are the
plans offered and the features of the plans. Please contact ING Fund Services,
Inc. at 1-800-ING-INFO for the appropriate authorization form. All purchase
plans listed will not be offered to shareholders of Class X.

ING AUTO-ASSET ACCUMULATOR PLAN

This plan permits you to purchase Fund shares (minimum of $___ and
maximum of $______ per transaction) at regular intervals selected by you. Fund
shares are purchased by transferring funds from the bank account designated by
you. Only an account maintained at a domestic financial institution which is an
Automated Clearing House member may be so designated. To establish an Auto-Asset
Accumulator Plan account, you must file an authorization form with the Transfer
Agent. You may obtain the necessary authorization form by calling
1-800-ING-INFO. You may cancel your participation in this Privilege or change
the amount of purchase at any time by mailing written notification to ING Fund
Service, P.O. Box ______________, and the notification will be effective three
business days following receipt. The Fund may modify or terminate this Privilege
at any time or charge a service fee. No such fee currently is contemplated.

ING DIRECTED FEDERAL DEPOSIT PLAN

ING Directed Federal Deposit Plan enables you to purchase Fund shares
(minimum of $___ and maximum of $___ per transaction) by having Federal salary,
Social Security, or certain veterans', military or other payments from the
Federal government automatically deposited into your Fund account. You may
deposit as much of such payments as you elect. To enroll in this Plan you must
file with the Transfer Agent a completed Directed Deposit Sign-Up Form for each
type of payment that you desire to include in this Privilege. The appropriate
form may be obtained by calling 1-800-ING-INFO. Death or legal incapacity will
terminate your participation in this Privilege. You may elect at any time to
terminate your participation by notifying in writing the appropriate Federal
agency. The Fund may terminate your participation upon 30 days' notice to you.

ING SCHEDULED PAYROLL INVESTMENT PROGRAM

ING Scheduled Payroll Investment Program permits you to purchase Fund
shares (minimum of $___ per transaction) automatically on a regular basis.
Depending upon your employer's direct deposit program, you may have part or all
of you paycheck transferred to your existing ING account electronically through
the Automated Clearing House system at each pay period. To establish a ING
Scheduled Payroll Investment Program account, you must file an authorization
form with your employer's payroll department. Your employer must complete the
reverse side of the form and return it to ING Fund Services, Inc. [address]. You
may obtain the necessary authorization form by calling 1-800-ING-INFO. You may
change the amount of purchase or cancel the authorization only by written
notification to your employer. It is the sole responsibility of your employer,
not the Distributor, ING Funds Trust, the Transfer Agent or any other person, to
arrange for transactions under the ING Scheduled Payroll Investment Program. The
Fund may modify or terminate this Privilege at any time or charge a service fee.
No such fee currently is contemplated.

15
<PAGE> 178
ING NO MINIMUM ASSET ESCALATOR PLAN

ING No Minimum Asset Escalator Plan enables you to purchase Fund shares
without regard to the Fund's minimum initial investment requirements through
purchases in the Auto-Asset Accumulation Plan, Directed Federal Deposit or
Scheduled Payroll Investment Plan. To establish this Plan, you must supply the
necessary information on the Account Application and file the required
authorization form(s) with the Transfer Agent. For more information concerning
this Program, or to request the necessary authorization form(s), please call
toll free 1-800-ING-INFO. You may terminate your participation in the this
Program at any time by discontinuing your participation in Auto-Asset
Accumulator Plan, Directed Federal Deposit Plan and ING Scheduled Payroll
Investment Program, as the case may be, as provided under the terms of such
Privilege(s). The Fund may modify or terminate this Program at any time.
Investors who wish to purchase Fund shares through this Plan in conjunction with
a ING sponsored retirement plan may do so only for IRA's, SEP-IRAs and IRA
"Rollover Accounts."

ALTERNATIVE PURCHASE ARRANGEMENTS

Each Fund offers investors the choice between multiple classes of
shares which offer differing sales charges and bear different expenses. These
alternatives permit an investor to choose the more beneficial method of
purchasing shares given the amount of the purchase, the length of time the
investor expects to hold the shares, and other circumstances. The "Highlights"
section of the Prospectus contains a summary of these alternative purchase
arrangements. A broker-dealer may receive different levels of compensation
depending on which class of shares is sold. The Distributor may also provide
additional compensation to dealers in connection with selling shares of the
Funds or for their own company-sponsored sales programs. Additional compensation
or assistance may be provided to dealers and includes payment or reimbursement
for educational, training and sales conferences or programs for their employees.
In some cases, this compensation may only be available to dealers whose
representatives have sold or are expected to sell significant amounts of shares.
The Distributor will make these payments from its own resources and none of the
aforementioned additional compensation is paid for by the applicable Fund or its
shareholders.

CLASS A SHARES

Class A shares are offered at net asset value without a sales charge.
For each Fund, Class A shares are subject to a Rule 12b-1 fee payable at an
annual rate of 0.50% of the average daily net assets of the Fund attributable to
such shares.
For additional information, see "Management--Distribution Expenses."

CLASS B AND X SHARES--CONTINGENT DEFERRED SALES CHARGE ALTERNATIVES

16
<PAGE> 179
circumstances described below. The Class B CDSC will be assessed on the lesser
of the net asset value of the shares at the time of redemption or the original
amount invested. The Class B CDSC is not imposed on the amount of any increase
in your account value over the initial amount invested. The Class B CDSC is paid
to the Distributor to reimburse expenses incurred in providing
distribution-related services to the Fund in connection with the sale of Class B
shares.

<TABLE>
<CAPTION>
Redemption During: Class B CDSC:
<S> <C> <C>
lst year after purchase
2nd year after purchase
3rd year after purchase
4th year after purchase
5th year after purchase
6th year after purchase
</TABLE>

In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first business day of the month in which the
purchase was made.

Waiver of Class B CDSC. The Class B CDSC will be waived in the
following cases if shares are redeemed and the Transfer Agent is notified: (1)
redemptions following death or post-purchase disability (as defined by Section
72(m)(7) of the Code); (2) the portion of a mandated minimum distribution from
an IRA, SIMPLE IRA or an individual type 403(b)(7) plan or other qualified plan
equal to the percentage of your plan assets held in Class B shares of the Fund;
(3) reinvested dividends and capital gains; and (4) a Systematic Withdrawal Plan
of 10% per year while the minimum distribution is $500 per month with an initial
account of $20,000 or greater.

For additional information, see "Redemption--Contingent Deferred Sales
Charge." In addition, Class B shares are subject to higher annual Rule 12b-1
fees as described below.

Proceeds from the CDSC are paid to the Distributor and are used to
defray its expenses related to providing distribution-related services to the
applicable Fund in connection with the sale of Class B shares, such as the
payment of compensation to selected broker-dealers, and for selling such shares.
The combination of the CDSC and the Rule 12b-1 fee enables the Fund to sell such
shares without deduction of a sales charge at the time of purchase. Although
such shares are sold without an initial sales charge, the Distributor pays a
dealer concession equal to % of the amount invested to broker-dealers who sell
Class B shares.

17
<PAGE> 180
Class B shares to have a higher expense ratio and to pay lower dividends than
Class A shares. For additional information about this fee, see
"Management--Distribution Expenses."

The public offering price of Class X shares is the net asset value of
the applicable Fund's shares. In addition, investors purchasing Class X shares
will receive, as a bonus, additional shares having a value equal to 2.50% of the
amount invested ("Bonus Shares"). The Distributor has undertaken to pay for
Bonus Shares as part of its services to the Funds. The Distributor expects to
recover costs associated with its purchases of Bonus Shares through fees
received under the Class X Distribution and Service Plan discussed below. Shares
purchased by the reinvestment of dividends or capital gains distributions are
not eligible for Bonus Shares.

Although Class X shares are sold without an initial sales charge, if
Class X shares are redeemed within [ ] years of their purchase, a CDSC ("Class X
CDSC") will be deducted from the redemption proceeds. The Class X CDSC will not
apply to redemptions of Bonus Shares or shares purchased by the reinvestment of
dividends or capital gains distributions and may be waived under certain
circumstances described below. The Class X CDSC will be assessed on the lesser
of the NAV of the shares at the time of redemption or the original amount
invested. The Class X CDSC is not imposed on the amount of any increase in your
account value over the initial amount invested. The Class X CDSC is paid to the
Distributor to reimburse expenses incurred in providing distribution-related
services to the Fund in connection with the sale of Class X shares. Although
Class X shares are sold without an initial sales charge, the Distributor
normally pays a sales commission of % (and may pay up to %) of the purchase
price of Class X shares to the dealer from its own resources at the time of the
sale. During the initial offering period of the Class X shares, the Distributor
intends to pay a ___% up-front sales commission to the dealer. The Distributor
has assigned its right to receive any Class X CDSC, as well as any distribution
and service fee to an unaffiliated third party that provides funding for
up-front sales commission payments.

<TABLE>
<CAPTION>
Redemption During: Class X CDSC:
<S> <C> <C>
lst year after purchase
</TABLE>

18
<PAGE> 181
<TABLE>
<S> <C>
2nd year after purchase
3rd year after purchase
4th year after purchase
5th year after purchase
6th year after purchase
</TABLE>

In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first business day of the month in which the
purchase was made.

Waiver of Class X CDSC. The Class X CDSC will be waived in the
following cases if shares are redeemed and the Transfer Agent is notified: (1)
redemptions following death or post-purchase disability (as defined by Section
72(m)(7) of the Code); (2) the portion of a mandated minimum distribution from
an IRA, SIMPLE IRA or an individual type 403(b)(7) plan equal to the percentage
of your plan assets held in Class X shares of the Fund; (3) reinvested dividends
and capital gains; and (4) a Systematic Withdrawal Plan of 10% per year while
the minimum distribution is $500 per month with an initial account of $20,000 or
greater.

CLASS C SHARES--LEVEL SALES CHARGE ALTERNATIVE

The public offering price of Class C shares is the net asset value of
such shares. Class C shares are sold without an initial sales charge so that the
applicable Fund receives the full amount of the investor's purchase. While Class
C shares do not convert to Class A shares, they are subject to a lower
contingent deferred sales charge (1.00%) and do not have to be held for as long
a time (one year) as Class B or X shares to avoid paying a contingent deferred
sales charge. For additional information, see "Redemption--Contingent Deferred
Sales Charge." In addition, Class C shares are subject to higher annual Rule
12b-1 fees as described below. Class C shares do not convert to Class A shares.

Proceeds from the CDSC are paid to the Distributor and are used to
defray its expenses related to providing distribution-related services to the
applicable Fund in connection with the sale of Class C shares, such as the
payment of compensation to selected broker-dealers, and for selling Class C
shares. The combination of the CDSC and the Rule 12b-1 fee enables the Fund to
sell the Class C shares without deduction of a sales charge at the time of
purchase. Although Class C shares are sold without an initial sales charge, the
Distributor pays a dealer concession equal to 1.00% of the amount invested to
broker-dealers who sell Class C shares at the time the shares are sold and an
annual fee of 1.00% of the amount invested that begins to accrue one year after
the shares are sold.

19
<PAGE> 182
Rule 12b-1 Fees. For each Fund, Class C shares are subject to a Rule
12b-1 fee payable at an annual rate of 1.00% of the average daily net assets of
the Fund attributable to such shares. The higher Rule 12b-1 fee will cause Class
C shares to have a higher expense ratio and to pay lower dividends than Class A
shares. For additional information about this fee, see "Management--Distribution
Expenses."

INDIVIDUAL RETIREMENT ACCOUNTS

The Funds may be used as a funding medium for IRAs. In addition, an IRA
may be established through a custodial account with_____________. Completion of
a special application is required in order to create such an account, and the
minimum initial investment for an IRA is $[2,000]. Contributions to IRAs are
subject to by the Internal Revenue Service. For more information and IRA
information, call the Funds at 1-800-ING-INFO. Additional account level fees
may be imposed for IRA accounts.

REDEMPTION OF FUND SHARES

Shareholders may redeem their shares, in whole or in part, on each day
the Fund is valued. Shares will be redeemed without charge (except any
applicable contingent deferred sales charge) at the net asset value next
determined after a redemption request in good order has been received and
accepted by the applicable Fund. See "DETERMINATION OF NET ASSET VALUE" in the
SAI.

A redemption may be a taxable transaction on which gain or loss may be
recognized.

Once the shares are redeemed, a Fund will ordinarily send the proceeds
by check to the shareholder at the address of record on the next business day.
The Funds may, however, take up to seven days to make payment. This will not be
the customary practice. Also, if the New York Stock Exchange is closed (or when
trading is restricted) for any reason other than the customary weekend or
holiday closing or if an emergency condition as determined by the SEC merits
such action, the Funds may suspend redemptions or postpone payment dates. No
interest to or additional dividends will be earned on amounts represented by
uncashed redemption checks or misapplied wire payments.

20
<PAGE> 183
previously designated wiring instructions; and (8) written redemptions or
exchanges of shares previously reported as lost, whether or not the redemption
amount is under $50,000 or the proceeds are to be sent to the address of record.
These requirements may be waived or modified upon notice to shareholders.

Redemption Methods. To ensure acceptance of your redemption request, it
is important to follow the procedures described below. Although the Funds have
no present intention to do so, the Funds reserve the right to refuse or to limit
the frequency of any telephone or wire redemptions. Of course, it may be
difficult to place orders by telephone during periods of severe market or
economic change, and a shareholder should consider alternative methods of
communications, such as couriers. The Funds may modify or terminate their
services and provisions at any time. If the Funds terminate any particular
service, they will do so only after giving written notice to shareholders.
Redemption by mail will always be available to shareholders.

You may redeem your shares using any of the following methods:

Through an Authorized Broker, Investment Adviser or Service
Organization. You may redeem your shares by contacting your Authorized Broker or
Investment Adviser or Service Organization and instructing him or her to redeem
your shares. He or she will then contact ING Fund Services and place a
redemption trade on your behalf.

21
<PAGE> 184
to employ such reasonable procedures, they may be liable for any loss, damage or
expense arising out of any telephone transactions purporting to be on a
shareholder's behalf. In order to assure the accuracy of instructions received
by telephone, the Funds require some form of personal identification prior to
acting upon instructions received by telephone, record telephone instructions
and provide written confirmation to investors of such transactions. Telephone
redemptions will be suspended for a period of 10 days following a telephone
address change.

Check Writing. A check redemption ($100 minimum, no maximum) feature is
available. Checks are free and a Checkwriting Authorization and Signature Card
may be obtained from the Fund by contacting ING Fund Services at 1-800-ING-
INFO. It is not possible to use a check to close out your account since
additional shares accrue daily. Checks will be issued upon receipt of a properly
completed Authorization and Signature Card. Checks will be mailed by the
Transfer Agent by first class mail.

The above-mentioned redemption services may not be available for
clients of Authorized Brokers, Investment Advisers or Service Organizations or
for IRAs. These clients should contact their representative.

SYSTEMATIC WITHDRAWAL PLAN

ING "BANK TO BANK" TRANSFER PLAN

You may request by telephone that redemption proceeds (minimum $500 per
day) be transferred between your Fund account and your bank account. Only a bank
account maintained in a domestic financial institution which is an Automated
Clearing House member may be designated. Redemption proceeds will be on deposit
in your account at an Automated Clearing House member bank ordinarily two days
after receipt of the redemption request. Holders of jointly registered Fund or
bank accounts may redeem through the [ ] for transfer to their bank account not
more than $250,000 within any 30-day period.

22
<PAGE> 185
REDEMPTION IN KIND

All redemptions of shares of the Funds shall be made in cash, except
that the commitment to redeem shares in cash extends only to redemption requests
made by each shareholder of a Fund during any 90-day period of up to the lesser
of $250,000 or 1% of the net asset value of that Fund at the beginning of such
period. This commitment is irrevocable without the prior approval of the SEC and
is a fundamental policy of the Funds that may not be changed without shareholder
approval. In the case of redemption requests by shareholders in excess of such
amounts, the Board of Trustees reserves the right to have the Funds make
payment, in whole or in part, in securities or other assets, in case of an
emergency or any time a cash distribution would impair the liquidity of a Fund
to the detriment of the existing shareholders. In this event, the securities
would be valued in the same manner as the securities of that Fund are valued. If
the recipient were to sell such securities he or she may receive more or less
than the value of such securities as determined above, and might incur brokerage
charges.

EXCHANGE OF FUND SHARES

The Funds offer several convenient ways to exchange shares in one Fund
for shares in the SAME CLASS of another Fund in the Trust. Before engaging in an
exchange transaction, a shareholder should read carefully the Prospectus
describing the Fund into which the exchange will occur, which is available
without charge and can be obtained by writing to ING Funds Trust, [address], or
by calling the Funds at 1-800-ING-INFO. A shareholder may not exchange shares of
one Fund for shares of another Fund if the new Fund is not qualified for sale in
the state of the shareholder's residence. The minimum amount for an initial and
subsequent exchange is $__. The Trust may terminate or amend the terms of the
exchange privilege at any time upon at least 60 days' prior written notice to
shareholders of any modification or termination of the exchange privilege.

An exchange is taxable as a sale of a security on which a gain or loss
may be recognized. Shareholders will receive written confirmation of the
exchange following completion of the transaction.

EXCHANGE BY MAIL

EXCHANGE BY TELEPHONE

To exchange Fund shares by telephone or if you have any questions
simply call the Funds at (800) ING-INFO. You should be prepared to give the
telephone representative the following information: (i) your account number,
social security or tax identification number and account registration; (ii) the
name of

23
<PAGE> 186
the Fund from and the Fund into which you wish to transfer your investment; and
(iii) the dollar or share amount you wish to exchange. Telephone exchanges are
available unless the shareholder specifically declines this option on the
Purchase Application. Telephone exchanges will be suspended for a period of ten
days following a telephone address change. See "REDEMPTION OF FUND SHARES--By
Telephone" for a discussion of telephone transactions generally.

AUTO-EXCHANGE PRIVILEGE

Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares of the
Fund, in shares of certain other funds in the ING Family of Funds of which you
are a shareholder. The amount you designate, which can be expressed either in
terms of a specific dollar or share amount ($100 minimum), will be exchanged
automatically on the first and/or fifteenth day of the month according to the
schedule you have selected. Shares will be exchanged at the then-current net
asset value; however, a sale load may be charged with respect to exchanges into
funds sold with a sales load. See "Shareholder Services" in the SAI. The right
to exercise this Privilege may be modified or canceled by the Fund or the
Transfer Agent. You may modify or cancel your exercise of this Privilege at any
time by mailing written notification to the ING Fund Services, P.O. Box _____,
__________. The Fund may charge a service fee for the use of this Privilege. No
such fee currently is contemplated. For more information concerning this
Privilege and the funds in the ING Family of Funds eligible to participate in
this Privilege, or to obtain a Auto- Exchange Authorization Form, please call
toll free 1-800-ING-INFO.

ING AUTOMATIC DIVIDEND DIRECTION OPTION

This option enables you to invest automatically dividends or dividends
and capital gain distributions, if any, paid by the Fund in shares of another
Fund in the Trust of which you are a shareholder. Shares of the other fund will
be purchased at the then-current net asset value; however, a sales load may be
charged with respect to investments in shares of a fund sold with a sales load.
If you are investing in a fund that charges a sales load, you may qualify for
share prices which do not include the sales load or which reflect a reduced
sales load. If you are investing in a fund that charges a contingent deferred
sales charge, if any, applicable to the purchased shares. See "Shareholder
Services" in the SAI. ING Automatic Dividend Direction Option permits you to
transfer electronically dividends or dividends and capital gain distributions,
if any, from the Fund to a designated bank account. Only an account maintained
at a domestic financial institution which is an Automated Clearing House member
may be so designated. Banks may charge a fee for this service.

CONTINGENT DEFERRED SALES CHARGE

CLASS A

24
<PAGE> 187
dealers that sell Fund shares, out of its own assets, a fee of up to 1% of the
offering price of such sales except on purchases exempt from the FESC). However,
if such shares are redeemed within twelve months after their purchase date (the
"CDSC Period"), the redemption proceeds will be reduced by the 1.00% CDSC.

The CDSC will be applied to the net asset value of such shares at the
time of redemption. The CDSC will not be applied to shares acquired through
reinvestment of income dividends or capital gain distributions or shares held
for longer than the applicable CDSC Period. In determining which shares to
redeem, unless instructed otherwise, shares that are not subject to the CDSC and
having a higher Rule 12b-1 fee will be redeemed first, shares not subject to the
CDSC having a lower Rule 12b-1 fee will be redeemed next, and shares subject to
the CDSC then will be redeemed in the order purchased.

Each Fund will waive the CDSC in the event of a shareholder's death or
post-purchase disability, as defined in Section 72(m)(7) of the Code (if
satisfactory evidence is provided to the Fund), for tax-qualified retirement
plans (excluding IRAs, SEPs, 403(b) plans, and 457 plans), reinvested dividends
and capital gains and for a Systematic Withdrawal Plan of 10% per year where the
minimum distribution is $500 per month with an initial account of $20,000 or
greater. Shares of the Fund that are acquired in exchange for shares of another
Fund that were subject to a CDSC will remain subject to the CDSC that applied to
the shares of the other Fund.

CLASS B, X, AND C SHARES

The CDSC on Class B, X, and C shares will be calculated on the net
asset value of the shares at the time of redemption. No charge will be assessed
on shares derived from reinvestment of dividends or capital gains distributions
or on shares held for longer than the applicable CDSC Period.

The CDSC does not apply to: (1) redemption of shares when a Fund
exercises its right to liquidate accounts which are less than the minimum
account size; (2) redemptions following death or post-purchase disability (as
defined by Section 72(m)(7) of the Code); (3) the portion of a mandated minimum
distribution from an IRA, SIMPLE IRA or an individual type 403(b)(7) plan equal
to the percentage of your plan assets held in Class X shares of the Fund; (4)
reinvested dividends and capital gains and (5) a Systematic Withdrawal Plan of
10% per year while the minimum distribution is $500 per month with an initial
account of $20,000 or greater.

25
<PAGE> 188
CDSC would be waived in connection with the redemption of that number of shares
equal in value (at the time of redemption) to $220 (10% of $1,000--the purchase
amount of the shares purchased by Shareholder X on Year 1/Day 1--plus 10% of
$1,200--the purchase amount of the shares purchased by Shareholder X on Year
2/Day 1). In addition, no CDSC would apply to the $400 in capital appreciation
on Shareholder X's shares ($2,600 Year 3 value minus $2,200 purchase cost of
shares). If a shareholder exchanges shares subject to a CDSC for Class B, X, or
C shares of a different Fund, the transaction will not be subject to a CDSC.
However, when shares acquired through the exchange are redeemed, the shareholder
will be treated as if no exchange took place for the purpose of determining the
CDSC Period and applying the CDSC.

DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAX

Each Fund intends to distribute to its shareholders substantially all
of its investment company taxable income (which includes, among other items,
dividends and interest and the excess, if any, of net short-term capital gains
(generally including any net option premium income) over net long-term capital
losses). The Funds will declare distributions of such income daily and pay those
dividends monthly. Each Fund intends to distribute, at least annually,
substantially all net capital gains (the excess of net long-term capital gains
over net short-term capital losses). In determining amounts of capital gains to
be distributed, any capital loss carryovers from prior years will be applied
against capital gains.

The amount declared each day as a dividend may be based on projections
of estimated monthly net investment income and may differ from the actual
investment income determined in accordance with generally accepted accounting
principles. An adjustment will be made to the dividend each month to account for
any difference between the projected and actual monthly investment income.

For all distributions, the shareholder may elect in writing, not less
than five full business days prior to the record date, to receive such
distributions in cash. Dividends declared in, and attributable to, the preceding
period will be paid within five business days after the end of the period.
Unless the shareholder chooses to receive dividend and/or capital gain
distributions in cash, distributions will be automatically reinvested in
additional shares of the respective Fund at net asset value. If you elect to
receive distributions in cash and checks (1) if returned and marked as
"undeliverable" or (2) remain uncashed for six months, your cash election will
be changed automatically and your future dividend and capital gains
distributions will be reinvested in the Fund at the per share net asset value
determined as of the date of payment of the distribution. In addition, any
undeliverable checks or checks that remain uncashed for six months will be
canceled and will be reinvested in the Fund at the per share net asset value
determined as of the date of cancellation.

Investors who redeem all or a portion of Fund shares prior to a
dividend payment date will be entitled on the next dividend payment date to all
dividends declared but unpaid on those shares at the time of their redemption.

26
<PAGE> 189
Distributions of net investment company taxable income (regardless of
whether derived from dividends, interest or short-term capital gains) generally
will be taxable to shareholders as ordinary income. Distributions of net
long-term capital gains designated by a Fund as capital gain distributions will
be taxable as long-term capital gains, regardless of how long a shareholder has
held his Fund shares. This is true for distributions from net gains on
securities held for more than one year, but not more than 18 months, and from
net gains on securities held more than 18 months. The Funds do not anticipate
realizing a substantial amount of net long-term capital gains. Distributions are
taxable in the same manner whether received in additional shares or in cash.

Earnings of the Funds not distributed on a timely basis in accordance
with a calendar year distribution requirement are subject to a nondeductible 4%
excise tax. To prevent imposition of this tax, each Fund intends to comply with
this distribution requirement.

A distribution, including exemptive interest dividend, will be treated
as paid on December 31 of the calendar year if it is declared by a Fund during
October, November, or December of that year to shareholders of record in such a
month and paid by a Fund during January of the following calendar year. Such
distributions will be treated as received by shareholders (and therefore
taxable) in the calendar year in which the distributions are declared, rather
than the calendar year in which the distributions are received.

A Fund's distributions with respect to a given taxable year may exceed
the current and accumulated earnings and profits of that Fund available for
distribution. In that event, distributions in excess of such earnings and
profits would be characterized as a return of capital to shareholders for
Federal income tax purposes, thus reducing each shareholder's cost basis in his
Fund shares. Distributions in excess of a shareholder's cost basis in his shares
would be treated as a gain realized from a sale of such shares.

Shareholders will be notified annually by the Funds as to the Federal
tax status of distributions made by the Funds in which they invest. Depending on
the residence of the shareholder for tax purposes, distributions also may be
subject to state and local taxes, including withholding taxes. Foreign
shareholders may, for example, be subject to special withholding requirements.
Special tax treatment, including a penalty on certain pre-retirement
distributions, is accorded to accounts maintained as IRAs. Shareholders should
consult their own

27
<PAGE> 190
tax advisers as to the Federal, state and local tax consequences of ownership of
shares of the Funds in their particular circumstances.

DESCRIPTION OF SECURITIES AND INVESTMENT PRACTICES

U.S. Treasury Obligations (Both Funds). Each Fund may invest in U.S.
Treasury obligations, whose principal and interest are backed by the full faith
and credit of the United States Government. U.S. Treasury obligations consist of
bills, notes and bonds, and separately traded interest and principal component
parts of such obligations known as STRIPS, which generally differ in their
interest rates and maturities. U.S. Treasury bills, which have original
maturities of up to one year, notes, which have maturities ranging from two
years to 10 years, and bonds, which have original maturities of 10 to 30 years,
are direct obligations of the United States Government.

U.S. Government Securities (Money Market Fund Only). U.S. Government
securities are obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. U.S. Government securities include debt
securities issued or guaranteed by U.S. Government-sponsored enterprises and
federal agencies and instrumentalities. Some types of U.S. Government securities
are supported by the full faith and credit of the United States Government or
U.S. Treasury guarantees, such as mortgage-backed certificates guaranteed by the
Government National Mortgage Association ("GNMA"). Other types of U.S.
Government securities, such as obligations of the Student Loan Marketing
Association, provide recourse only to the credit of the agency or
instrumentality issuing the obligation. In the case of obligations not backed by
the full faith and credit of the United States Government, the investor must
look to the agency issuing or guaranteeing the obligation for ultimate
repayment.

Commercial Paper (Money Market Fund Only). Commercial paper includes
short-term unsecured promissory notes, variable rate demand notes and variable
rate master demand notes issued by both domestic and foreign bank holding
companies, corporations and financial institutions and United States Government
agencies and instrumentalities. All commercial paper purchased by the Fund is,
at the time of investment (1) given the highest short-term rating by at least
two nationally recognized statistical rating organizations ("NRSROs"), such as
"A-1" by Standard & Poor's Corporation ("S&P") and "P-1" by Moody's Investors
Service, Inc. ("Moody's"); (2) single rated and given the highest short-term
rating by a NRSRO; or (3) unrated, but determined to be of comparable quality by
the Manager pursuant to guidelines approved by the Fund's Board of Trustees.

Corporate Debt Securities (Money Market Fund Only). The Fund may
purchase corporate debt securities, subject to the rating and quality
requirements specified above. The Fund may invest in both rated commercial paper
and rated corporate debt obligations of foreign issuers that meet the same
quality criteria applicable to investments by the Fund in commercial paper and
corporate debt obligations of domestic issuers. These investments, therefore,
are not expected to involve significant additional risks as compared to the
risks of investing in comparable domestic securities. Generally, all foreign
investments carry with them both opportunities and risks not applicable to
investments in securities of domestic issuers, such as risks of foreign
political and economic instability, adverse movements in foreign exchange rates,
the imposition or tightening of exchange controls or other limitations on
repatriation of foreign capital, changes in foreign governmental attitudes
toward private investment (possibly leading to nationalization, increased
taxation, or confiscation of

28
<PAGE> 191
foreign assets) and added difficulties inherent in obtaining and enforcing a
judgment against a foreign issuer of securities should it default.

Domestic and Foreign Bank Obligations (Money Market Fund Only). These
obligations include but are not limited to certificates of deposit, commercial
paper, Yankeedollar certificates of deposit, bankers' acceptances, Eurodollar
certificates of deposit and time deposits, promissory notes and medium-term
deposit notes. The Fund will not invest in any obligations of its affiliates, as
defined under the 1940 Act.

The Fund limits its investment in United States bank obligations to
obligations of United States banks (including foreign branches). The Fund limits
its investment in foreign bank obligations to United States dollar-denominated
obligations of foreign banks (including United States branches of foreign banks)
which, in the opinion of the Manager, are of an investment quality comparable to
obligations of United States banks which may be purchased by the Fund. There is
no limitation on the amount of the Fund's assets which may be invested in
obligations of foreign banks meeting the conditions set forth herein.

Fixed time deposits may be withdrawn on demand by the investor, but may
be subject to early withdrawal penalties which vary depending upon market
conditions and the remaining maturity of the obligation. There are no
contractual restrictions on the right to transfer a beneficial interest in a
fixed time deposit to a third party, although there is no market for such
deposits. Investments in fixed time deposits subject to withdrawal penalties
maturing from two days through seven days may not exceed 10% of the value of the
total assets of the Fund.

Obligations of foreign banks involve somewhat different investment
risks than those affecting obligations of the United States banks, including the
possibilities that their liquidity could be impaired because of future political
and economic developments, that the obligations may be less marketable than
comparable obligations of United States banks, that a foreign jurisdiction might
impose withholding taxes on interest income payable on those obligations, that
foreign deposits may be seized or nationalized, that foreign governmental
restrictions, such as exchange controls, may be adopted which might adversely
affect the payment of principal and interest on those obligations, that the
selection of those obligations may be more difficult because there may be less
publicly available information concerning foreign banks, or that the accounting,
auditing and financial reporting standards, practices and requirements
applicable to foreign banks may differ from those applicable to United States
banks. Foreign banks are not subject to examination by any United States
Government agency or instrumentality.

Investments in Eurodollar and Yankeedollar obligations involve
additional risks. Most notably, there generally is less publicly available
information about foreign companies; there may be less governmental regulation
and supervision; they may use different accounting and financial standards; and
the adoption of foreign governmental restrictions may adversely affect the
payment of principal and interest on foreign investments. In addition, not all
foreign branches of United States banks are supervised or examined by regulatory
authorities as are United States banks, and such branches may not be subject to
reserve requirements.

STRIPS and Zero Coupon Securities (Both Funds). Each Fund may invest in
separately traded principal and interest components of securities backed by the
full faith and credit of the United States Treasury. The principal and interest
components of United States Treasury bonds with remaining maturities of longer
than ten years are eligible to be traded independently under the Separate
Trading of Registered Interest and Principal

29
<PAGE> 192
of Securities ("STRIPS") program. Under the STRIPS program, the principal and
interest components are separately issued by the United States Treasury at the
request of depository financial institutions, which then trade the component
parts separately. The interest component of STRIPS may be more volatile than
that of United States Treasury bills with comparable maturities. In accordance
with Rule 2a-7, the Fund's investments in STRIPS are limited to those with
maturity components not exceeding 13 months (397 days).

Each Fund may invest in zero coupon securities. A zero coupon security
pays no interest to its holder during its life and is sold at a discount to its
face value at maturity. The market prices of zero coupon securities generally
are more volatile than the market prices of securities that pay interest
periodically and are more sensitive to changes in interest rates than non-zero
coupon securities having similar maturities and credit qualities.

Variable Rate Demand Obligations (Money Market Fund Only). Variable
rate demand obligations have a maturity of 397 days or less, but carry with them
the right of the holder to put the securities to a remarketing agent or other
entity on short notice, typically seven days or less. Generally, the remarketing
agent will adjust the interest rate every seven days (or at other intervals
corresponding to the notice period for the put), in order to maintain the
interest rate at the prevailing rate for securities with a seven-day maturity.
The remarketing agent is typically a financial intermediary that has agreed to
perform these services. Variable rate master demand obligations permit the Fund
to invest fluctuating amounts at varying rates of interest pursuant to direct
arrangements between the Fund, as lender, and the borrower. Because the
obligations are direct lending arrangements between the Fund and the borrower,
they will not generally be traded, and there is no secondary market for them,
although they are redeemable (and thus immediately repayable by the borrower) at
principal amount, plus accrued interest, at any time. The borrower also may
prepay up to the full amount of the obligation without penalty. While master
demand obligations, as such, are not typically rated by credit rating agencies,
if not so rated, the Fund may, under its minimum rating standards, invest in
them only if, in the opinion of the Manager, they are of an investment quality
comparable to other debt obligations in which the Fund may invest and are within
the credit quality policies, guidelines and procedures established by the Fund's
Board of Trustees. See the SAI for further details on variable rate demand
obligations and variable rate master demand obligations.

Mortgage-Backed Securities/Mortgage Pass-Through Securities (Money
Market Fund Only). Many mortgage-backed securities are mortgage pass-through
securities, which are securities representing interests in "pools" of mortgages
in which payments of both interest and principal on the securities are made
periodically, in effect "passing through" periodic payments made by the
individual borrowers on the residential mortgage loans which underlie the
securities (net of fees paid to the issuer or guarantor of the securities and
possibly others). Such instruments differ from typical bonds because principal
is repaid monthly over the term of the loan rather than returned in a lump sum
at maturity.

Timely payment of principal and interest on some mortgage pass- through
securities may be guaranteed by the full faith and credit of the U.S.
Government, as in the case of securities guaranteed by the Government National
Mortgage Association, or "GNMA," or guaranteed by agencies or instrumentalities
of the U.S. Government, as in the case of securities guaranteed by the Federal
National Mortgage Association ("FNMA") or the Federal Home Loan Mortgage
Corporation ("FHLMC"), which are supported only by the discretionary authority
of the U.S. Government to purchase the agency's obligations and not by the full
faith and credit of the U.S. Government. For

30
<PAGE> 193
more information on GNMA certificates and FNMA and FHLMC mortgage-backed
obligations, see "Mortgage-Backed Securities" in the SAI.

Other Mortgage-Backed Securities (Money Market Fund Only). The Fund may
purchase mortgage-backed securities issued by financial institutions such as
commercial banks, savings and loan associations, mortgage banks, and securities
broker-dealers (or affiliates of such institutions established to issue these
securities) in the form of either collateralized mortgage obligations ("CMOs")
or mortgage-backed bonds. CMOs are obligations fully collateralized directly or
indirectly by a pool of mortgages on which payments of principal and interest
are dedicated to payment of principal and interest on the CMOs. Payments are
passed through to the holders, although not necessarily on a pro rata basis, on
the same schedule as they are received. Mortgage-backed bonds are general
obligations of the issuer fully collateralized directly or indirectly by a pool
of mortgages. The mortgages serve as collateral for the issuer's payment
obligations on the bonds but interest and principal payments on the mortgages
are not passed through either directly (as with GNMA certificates and FNMA and
FHLMC pass-through securities) or on a modified basis (as with CMOs).
Accordingly, a change in the rate of prepayments on the pool of mortgages could
change the effective maturity of a CMO but not that of a mortgage-backed bond
(although, like many bonds, mortgage-backed bonds can provide that they are
callable by the issuer prior to maturity).

Although the mortgage-related securities securing these obligations may
be subject to a government guarantee or third-party support, the obligation
itself is not so guaranteed. Therefore, if the collateral securing the
obligation is insufficient to make payment on the obligation, a holder could
sustain a loss.

Risk Of Mortgage-Backed Securities (Money Market Fund Only). Although
mortgage loans constituting a pool of mortgages, such as those underlying GNMA
certificates, may have maturities of up to 30 years, the actual average life of
a mortgage-backed security typically will be substantially less because the
mortgages will be subject to normal principal amortization and may be prepaid
prior to maturity. In the case of mortgage pass-through securities such as GNMA
certificates or FNMA and FHLMC mortgage-backed obligations, or modified
pass-through securities such as collateralized mortgage obligations issued by
various financial institutions, early repayment of principal arising from
prepayments of principal on the underlying mortgage loans due to the sale of the
underlying property, the refinancing of the loan, or foreclosure may expose a
Series to a lower rate of return upon reinvestment of the principal. Prepayment
rates vary widely and may be affected by changes in market interest rates. In
periods of falling interest rates, the rate of prepayment tends to increase,
thereby shortening the actual average life of the mortgage-backed security.

Conversely, when interest rates are rising, the rate of prepayment
tends to decrease, thereby lengthening the actual average life of the
mortgage-backed security. Accordingly, it is not possible to accurately predict
the average life of a particular pool. Reinvestment of prepayments may occur at
higher or lower rates than the original yield on the certificates. Therefore,
the actual maturity and realized yield on pass-through or modified pass-through
mortgage-backed securities will vary based upon the prepayment experience of the
underlying pool of mortgages.

With respect to GNMA certificates, although GNMA guarantees timely
payment even if homeowners delay or default, tracking the "pass-through"
payments may, at times, be difficult. Expected payments may be delayed due to
the delays in registering the newly traded paper securities. The custodian's
policies for crediting missed payments while errant receipts are tracked down
may vary. Other mortgage-backed securities such as those of FHLMC and FNMA trade
in book-entry form and are not subject to this risk of delays in timely payment
of income.

31
<PAGE> 194
Other Mutual Funds (Money Market Fund Only). The Fund may invest in
shares of other open-end management investment companies, subject to the
limitations of the 1940 Act and subject to such investments being consistent
with the overall objective and policies of the Fund, provided that any such
purchases will be limited to short-term investments in shares of unaffiliated
investment companies, and will not, in the aggregate, exceed 10% of the Fund's
net assets. The purchase of securities of other mutual funds results in
duplication of expenses such that investors indirectly bear a proportionate
share of the expenses of such mutual funds including operating costs and
investment advisory and administrative fees.

"When-Issued" and "Forward Commitment" Transactions (Both Funds). Each
Fund may purchase securities on a when-issued and delayed-delivery basis and may
purchase or sell securities on a forward commitment basis. When-issued or
delayed-delivery transactions arise when securities are purchased by a Fund with
payment and delivery taking place in the future in order to secure what is
considered to be an advantageous price and yield to the Fund at the time of
entering into the transaction. A forward commitment transaction is an agreement
by a Fund to purchase or sell securities at a specified future date. When a Fund
engages in these transactions, the Fund relies on the buyer or seller, as the
case may be, to consummate the sale. Failure to do so may result in the Fund
missing the opportunity to obtain a price or yield considered to be
advantageous. When-issued and delayed-delivery transactions and forward
commitment transactions may be expected to occur a month or more before delivery
is due. However, no payment or delivery is made by a Fund until it receives
payment or delivery from the other party to the transaction. A separate account
containing only liquid assets, such as cash, U.S. Government securities, or
other liquid assets equal to the value of purchase commitments will be
maintained until payment is made. Such transactions have the effect of leverage
on the Funds and may contributed to volatility of a Fund's net asset value. For
further information, see the SAI.

Loans of Portfolio Securities (Both Funds). To increase current income,
each Fund may lend its portfolio securities in an amount up to 33% of each such
Fund's total assets to brokers, dealers and financial institutions, provided
certain conditions are met, including the condition that each loan is secured
continuously by collateral maintained on a daily mark-to-market basis in an
amount at least equal to the current market value of the securities loaned.
These transactions involve a loan by the applicable Fund and are subject to the
same risks as repurchase agreements. For further information, see the SAI.

Repurchase Agreements (Money Market Fund Only). The Money Market Fund
may enter into repurchase agreements with any bank or broker-dealer which, in
the opinion of the Board of Trustees, presents a minimal risk of bankruptcy.
Under a repurchase agreement, the Fund acquires securities and obtains a
simultaneous commitment from the seller to repurchase the securities at a
specified time and at an agreed-upon yield. The agreements will be fully
collateralized and the value of the collateral, including accrued interest,
marked-to-market daily. The agreements may be considered to be loans made by the
purchaser, collateralized by the underlying securities. If the seller should
default on its obligation to repurchase the securities, the Fund may experience
a loss of income from the loaned securities and a decrease in the value of any
collateral, problems in exercising its rights to the underlying securities and
costs and time delays in connection with the disposition of such securities. The
Fund may invest up to 100% of its net assets in repurchase agreements maturing
in seven days or less; however, the Fund may not invest more than 10% of its net
assets in repurchase agreements maturing in more than seven business days or in
securities for which market quotations are not readily available. For more
information about repurchase agreements, see "Investment Policies" in the
SAI.

32
<PAGE> 195
Reverse Repurchase Agreements (Both Funds). Each Fund may also enter
into reverse repurchase agreements to avoid selling securities during
unfavorable market conditions to meet redemptions. Pursuant to a reverse
repurchase agreement, a Fund will sell portfolio securities and agree to
repurchase them from the buyer at a particular date and price. Whenever a Fund
enters into a reverse repurchase agreement, it will establish a segregated
account in which it will maintain liquid assets in an amount at least equal to
the repurchase price marked-to-market daily (including accrued interest), and
will subsequently monitor the account to ensure that such equivalent value is
maintained. The Funds pay interest on amounts obtained pursuant to reverse
repurchase agreements. Reverse repurchase agreements are considered to be
borrowings by a Fund under the 1940 Act.

Borrowing (Money Market Fund Only). The Fund may borrow up to 10% of
its net assets to purchase securities and up to 25% of its net assets for
temporary purposes. Leveraging by means of borrowing will exaggerate the effect
of any increase or decrease in the value of portfolio securities on the Funds
net asset value; money borrowed will be subject to interest and other costs
(which may include commitment fees and/or the cost of maintaining minimum
average balances), which may or may not exceed the income received from the
securities purchased with borrowed funds. The use of borrowing tends to result
in a faster than average movement, up or down, in the net asset value of the
Fund's shares. The Fund also may be required to maintain minimum average
balances in connection with such borrowing or to pay a commitment or other fee
to maintain a line of credit; either of these requirements would increase the
cost of borrowing over the stated interest rate.

Reverse repurchase agreements, short sales of securities, and short
sales of securities against the box will be included as borrowing subject to the
borrowing limitations described above. Securities purchased on a when-issued or
delayed delivery basis will not be subject to the Fund's borrowing limitations
to the extent that the Fund establishes and maintains liquid assets in a
segregated account with the Trust's custodian equal to the Fund's obligations
under the when-issued or delayed delivery arrangement.

INVESTMENT RESTRICTIONS

(1) No Fund may borrow money or pledge or mortgage its assets, except
that a Fund may borrow from banks up to [5%] of the current value of its net
assets for temporary or emergency purposes and those borrowings may be secured
by the pledge of not more than [5%] of the current value of that Fund's net
assets (but investments may not be purchased by a Fund while any such borrowings
exist).

33
<PAGE> 196
As a matter of nonfundamental policy of the Funds, which can be changed
by approval of a majority of the Board of Trustees, no Fund may invest more than
10% of the aggregate value of its net assets in investments which are illiquid
or not readily marketable (including repurchase agreements having maturities of
more than seven calendar days, time deposits having maturities of more than
seven calendar days, and securities of foreign issuers that are not listed on a
recognized domestic or foreign securities exchange).

Fund diversification tests are measured at the time of initial
purchases, and are calculated as specified in Rule 2a-7 of the Investment
Company Act of 1940, as amended (the "1940 Act") which may allow the Fund to
exceed limits specified in this Prospectus for certain securities subject to
guarantees or demand features. The Fund will be deemed to satisfy the maturity
requirements described in this Prospectus to the extent the Funds satisfy Rule
2a-7 maturity requirements.

It is the intention of the Funds, unless otherwise indicated, that with
respect to the Funds' policies that are the result of the application of law
(for example, Rule 2a-7 of the 1940 Act) the Funds will take advantage of the
flexibility provided by rules or interpretations of the SEC currently in
existence or promulgated in the future or changes to such laws.

RISKS OF INVESTING IN THE FUNDS

CERTAIN RISK CONSIDERATIONS

The Funds attempt to maintain a constant net asset value of $1.00 per
share, although there can be no assurance that they will always be able to do
so. The Funds may not achieve as high a level of current income as other funds
that do not limit their investment to the high quality securities in which the
Funds invest.

There is, of course, no assurance that a Fund will achieve its
investment objective or be successful in preventing or minimizing the risk of
loss that is inherent in investing in particular types of investment products.
In order to attempt to minimize that risk, the Sub-Adviser monitors developments
in the economy, the securities markets, and with each particular issuer. Also,
as noted earlier, each diversified Fund is managed within certain limitations
that restrict the amount of the Fund's investment in any single issuer.

OTHER INFORMATION

CAPITALIZATION

ING Funds Trust was organized as a Delaware business trust on July __,
1998 and currently consists of [17] separately managed portfolios, each of which
is divided into Class A, B, C, and X shares. The Board of Trustees may establish
additional portfolios in the future. The capitalization of the Funds consists
solely of an unlimited number of shares of beneficial interest with a par value
of $0.001 each. When issued, shares of the Funds are fully paid, non-assessable
and freely transferable.

VOTING

34
<PAGE> 197
Shareholders have the right to vote in the election of Trustees and on
any and all matters on which, by law or under the provisions of the Declaration
of Trust, they may be entitled to vote. The Funds are not required to hold
regular annual meetings of shareholders and do not intend to do so.

PERFORMANCE INFORMATION [TO BE UPDATED]

Quotations of "yield" for a Fund will be based on the investment income
per share during a particular 7 day period (including dividends and interest),
less expenses accrued during the period ("net investment income"), and will be
computed by dividing net investment income by the maximum public offering price
per share on the last day of the period.

Quotations of yield reflect only a Fund's performance during the
particular period on which the calculations are based. Yield for a Fund will
vary based on changes in market conditions, the level of interest rates and the
level of that Fund's expenses, and no reported performance figure should be
considered an indication of performance which may be expected in the future.

Quotations of average annual total return for a Fund will be expressed
in terms of the average annual compounded rate of return of a hypothetical
investment in that Fund over periods of 1, 5 and 10 years (up to the life of
that Fund), reflect the deduction of a proportional share of Fund expenses (on
an annual basis), and assume that all dividends and distributions are reinvested
when paid.

Performance information for a Fund may be compared to various unmanaged
indices, such as those indices prepared by Lipper Analytical Services,
Morningstar and other entities or organizations which track the performance of
investment companies. Any performance information should be considered in light
of the Fund's investment objectives and policies, characteristics and quality of
the Funds and the market conditions during the time period indicated, and should
not be considered to be representative of what may be achieved

35
<PAGE> 198
in the future. For a description of the methods used to determine yield and
total return for Funds, see the SAI.

ACCOUNT SERVICES

First Data acts as the Funds' transfer agent. The Funds compensate
First Data, pursuant to a Services Agreement, for providing personnel and
facilities to perform [dividend disbursing and] transfer agency-related services
for the Funds. The Funds' custodian is ________.

SHAREHOLDER INQUIRIES

All shareholder inquiries should be directed to the Funds at
____________.

General and Account Information: (800) [ ]

36
<PAGE> 199

STATEMENT OF ADDITIONAL INFORMATION

ING Funds Trust

________, Pennsylvania ________
General and Account Information: (800) __________

ING MUTUAL FUNDS MANAGEMENT COMPANY, Investment Manager
("IMFC" or the "Manager")

ING FUNDS DISTRIBUTOR, INC., Distributor and Principal Underwriter
("IFD" or the "Distributor")

This Statement of Additional Information ("SAI") describes the
shares of 20 funds (each, a "Fund" or, collectively, the "Funds") managed by
IMFC. Each Fund is a portfolio of ING Funds Trust (the "Trust"). The Funds are:

<TABLE>
<CAPTION>
Equity Funds Bond Funds Money Market Funds
- ------------ ---------- ------------------
<S> <C> <C>
Large Cap Growth Fund Intermediate Corporate Bond U.S. Treasury Money
Growth and Income Fund Fund Market Fund
Mid Cap Equity Fund High Yield Corporate Bond Fund Money Market Fund
Small Cap Equity Fund International Fixed Income Fund
Balanced Fund Mortgage Income Fund
Global Brand Names Fund Federal Tax-Exempt Bond Fund
International Equity Fund
Emerging Markets Equity
Fund
European Equity Fund
Tax Efficient Equity Fund
ING Best Ideas Fund
Global IT Fund
Real Estate Fund
</TABLE>

<PAGE> 200
The SAI is not a prospectus and is only authorized for
distribution when preceded or accompanied by the prospectus for shares of the
Funds dated ______ __, 1998 (the "Prospectus"). This SAI contains additional and
more detailed information than that set forth in the Prospectus and should be
read in conjunction with the Prospectus. The Prospectus may be obtained without
charge by writing or calling the Funds at the address and information number
printed above.

_____ __, 1998

<PAGE> 201
INVESTMENT POLICIES

The Prospectus discusses the investment objectives of the
Funds and the policies to be employed to achieve those objectives. This section
contains supplemental information concerning certain types of securities and
other instruments in which the Funds may invest, the investment policies and
portfolio strategies that the Funds may utilize, and certain risks attendant to
such investments, policies and strategies.

COMMERCIAL PAPER (All Funds except U.S. Treasury Money Market
Fund). Commercial paper includes short-term unsecured promissory notes, variable
rate demand notes and variable rate master demand notes issued by domestic and
foreign bank holding companies, corporations and financial institutions and
similar taxable instruments issued by government agencies and instrumentalities.
All commercial paper purchased by the Money Market Fund is, at the time of
investment, (i) rated in one of the two highest rating categories by at least
two nationally recognized statistical rating organizations ("NRSROs"), (ii)
issued or guaranteed as to principal and interest by issuers having an existing
debt security rating in one of the two highest rating categories by a least two
NRSROs, or (iii) securities which, if not rated or single rated, are, in the
opinion of the Fund's Sub-Adviser, of an investment quality comparable to rated
commercial paper in which the Fund may invest. See "Variable Rate Demand
Obligations and Floating Rate Instruments."

CORPORATE DEBT SECURITIES (All Funds except U.S. Treasury
Money Market Fund). Fund investment in these securities is limited to corporate
debt securities (corporate bonds, debentures, notes and similar corporate debt
instruments) which meet the rating criteria established for each Fund.

The ratings of Standard & Poor's Corporation, Moody's
Investors Service, Inc., and other NRSROs represent their respective opinions as
to the quality of the obligations they undertake to rate. Ratings, however, are
general and are not absolute standards of quality. Consequently, obligations
with the same rating, maturity and interest rate may have different market
prices. After purchase by a Fund, a security may cease to be rated or its rating
may be reduced below the minimum required for purchase by the Fund. Neither
event will require a sale of such security by the Fund. However, each Fund's
Sub-Adviser will consider such event in its determination of whether the Fund
should continue to hold the security. To the extent the ratings given by an
NRSRO may change as a result of changes in such organizations or their rating
systems, the Sub-Adviser will attempt to use comparable ratings as standards for
investments in accordance with the investment policies contained in the
Prospectus and in this SAI.

It is possible that unregistered securities purchased by a
Fund in reliance upon Rule 144A under the Securities Act of 1933 could have the
effect of increasing the level of the Fund's illiquidity to the extent that
qualified institutional buyers become, for a period, uninterested in purchasing
these securities.

REPURCHASE AGREEMENTS (All Funds except the U.S. Treasury
Money Market Fund). The Funds may invest in securities subject to repurchase
agreements with
<PAGE> 202
2

U.S. banks or broker-dealers. Such agreements may be considered to be loans by
the Funds for purposes of the Investment Company Act of 1940, as amended (the
"1940 Act"). A repurchase agreement is a transaction in which the seller of a
security commits itself at he time of the sale to repurchase that security from
the buyer at a mutually agreed upon time and price. The repurchase price exceeds
the sale price, reflecting an agreed-upon interest rate effective for the period
the buyer owns the security subject to repurchase. The agreed-upon rate is
unrelated to the interest rate on that security. Each Fund's Sub-Adviser will
monitor the value of the underlying security at the time the transaction is
entered into and at all times during the term of the repurchase agreement to
ensure that the value of the security always equals or exceeds the repurchase
price. In the event of default by the seller under the repurchase agreement, the
Funds may have problems in exercising their rights to the underlying securities
and may incur costs and experience time delays in connection with the
disposition of such securities.

BORROWING (All Funds). The Fund may borrow from banks up to 33
1/3% of the current value of its net assets for temporary or emergency purposes
and those borrowings may be secured by the pledge of not more than 15% of the
current value of that Fund's net assets (but investments may not be purchased by
a Fund while any such borrowings exist).

REVERSE REPURCHASE AGREEMENTS (All Funds). A Fund may borrow
funds by selling portfolio securities to financial institutions such as banks
and broker/dealers and agreeing to repurchase them at a mutually specified date
and price ("reverse repurchase agreements"). Reverse repurchase agreements
involve the risk that the market value of the securities sold by a Fund may
decline below the repurchase price. A Fund will pay interest on amounts obtained
pursuant to a reverse repurchase agreement. While reverse repurchase agreements
are outstanding, a Fund will maintain in a segregated account, other liquid
assets (as determined by the Board) of an amount at least equal to the market
value of the securities, plus accrued interest, subject to the agreement.

VARIABLE RATE DEMAND OBLIGATIONS AND FLOATING RATE INSTRUMENTS
(All Funds). The Funds may acquire variable rate demand obligations. The
Intermediate Bond and Federal Tax-Exempt Bond Funds may acquire floating rate
instruments as described in the Prospectus. Variable and floating rate
instruments are frequently not rated by credit rating agencies; however, unrated
variable and floating rate instruments purchased by a Fund will be determined by
the Sub-Adviser to be of comparable quality at the time of purchase to rated
instruments eligible for purchase by the Funds. In making such determinations,
the Sub-Adviser will consider the earning power, cash flows and other liquidity
ratios of the issuers of such instruments (such issuers include financial,
merchandising, investment banking, bank holding and other companies) and will
continuously monitor their financial condition. There may not be an active
secondary market with respect to a particular variable or floating rate
instrument purchased by a Fund. The absence of such an active secondary market
could make it difficult for a Fund to dispose of the variable or floating rate
instrument involved. In the event the issuer of the instrument defaulted on its
payment obligations, a Fund could, for this or other reasons, suffer a loss to
the extent of the default. Variable and floating rate instruments may be secured
by bank letters of credit, guarantees or lending commitments.
<PAGE> 203
3

Instruments having variable or floating interest rates or
demand features may be deemed to have remaining maturities as follows: (a) a
U.S. Government security with a variable rate of interest readjusted no less
frequently than every 762 days may be deemed to have a maturity equal to the
period remaining until the next readjustment of the interest rate; (b) an
instrument with a floating rate of interest, the principal amount of which is
scheduled on the face of the instrument to be paid in 397 days or less with
respect to the Money Market Funds or five to twenty years with respect to the
Non-Money Market Funds, may be deemed to have a maturity equal to one day; (c)
an instrument with a variable rate of interest, the principal amount of which is
scheduled on the face of the investment to be paid in more than 397 days, and
that is subject to a demand feature may be deemed to have a maturity equal to
the longer of the period remaining until the next readjustment of the interest
rate or the period remaining until the principal amount can be recovered through
demand; (d) an instrument with a variable rate of interest, the principal amount
of which is scheduled to be paid in 397 days or less with respect to the Money
Market Funds or five to twenty years with respect to the Non-Money Market Funds,
may be deemed to have a maturity equal to the earlier of the period remaining
until the next readjustment of the interest rate or the period remaining until
the principal amount can be recovered through demand; and (e) an instrument with
a floating rate of interest, the principal amount of which is scheduled to be
paid in more than 397 days, that is subject to a demand feature, may be deemed
to have a maturity equal to the period remaining until the principal amount can
be recovered through demand.

DOLLAR ROLL TRANSACTIONS (Growth and Income, Balanced,
Emerging Markets Equity, Intermediate Corporate Bond, High Yield Bond,
International Fixed Income and Mortgage Income Funds). In connection with their
ability to purchase securities on a when-issued or forward commitment basis, the
Funds may enter into "dollar rolls" in which the Funds sell securities for
delivery in the current month and simultaneously contracts with the same
counterparty to repurchase similar (same type, coupon and maturity) but not
identical securities on a specified future date. The Funds give up the right to
receive principal and interest paid on the securities sold. However, the Funds
would benefit to the extent of any difference between the price received for the
securities sold and the lower forward price for the future purchase plus any fee
income received. Unless such benefits exceed the income and capital appreciation
that would have been realized on the securities sold as part of the dollar roll,
the use of this technique will diminish the investment performance of the Funds
compared with what such performance would have been without the use of dollar
rolls. The Funds will hold and maintain in a segregated account until the
settlement date liquid assets in an amount equal to the value of the when-issued
or forward commitment securities. The benefits derived from the use of dollar
rolls may depend, among other things, upon the Sub-Advisers' ability to predict
interest rates correctly. There is no assurance that dollar rolls can be
successfully employed. In addition, the use of dollar rolls by the Funds while
remaining substantially fully invested increases the amount of a Fund's assets
that are subject to market risk to an amount that is greater than the Fund's net
asset value, which could result in increased volatility of the price of the
Fund's shares.

LOANS OF PORTFOLIO SECURITIES (All Funds). The Funds may lend
their portfolio securities to brokers, dealers and financial institutions,
provided: (1) the loan
<PAGE> 204
4

is secured continuously by collateral consisting of U.S. Government securities
or cash or letters of credit maintained on a daily mark-to-market basis in an
amount at least equal to the current market value of the securities loaned; (2)
the Funds may at any time call the loan and obtain the return of the securities
loaned within five business days; (3) the Funds will receive any interest or
dividends paid on the loaned securities; and (4) the aggregate market value of
securities loaned will not at any time exceed one-third of the total assets of a
particular Fund.

The Funds will earn income for lending their securities
because cash collateral pursuant to these loans will be invested in short-term
money market instruments. In connection with lending securities, the Funds may
pay reasonable finders, administrative and custodial fees. Loans of securities
involve a risk that the borrower may fail to return the securities or may fail
to provide additional collateral.

MORTGAGE-RELATED SECURITIES. (All Funds except U.S. Treasury
Money Market Fund). To the extent permitted by the Funds' policies, the Funds
may invest in mortgage-backed securities, including those which represent
undivided ownership interests in pools of mortgages. The U.S. Government or the
issuing agency or instrumentality guarantees the payment of interest on and
principal of these securities. However, the guarantees do not extend to the
yield or value of the securities nor do the guarantees extend to the yield or
value of a Fund's shares. Consistent with the Funds' respective investment
objective and policies, mortgages backing the securities which may be purchased
by the Funds include conventional thirty-year fixed-rate mortgages, graduated
payment mortgages, fifteen-year mortgages, adjustable rate mortgages and balloon
payment mortgages. A balloon payment mortgage-backed security is an amortized
mortgage security with installments of principal and interest, the last
installment of which is predominantly principal. All of these mortgages can be
used to create pass-through securities. A pass-through security is formed when
mortgages are pooled together and undivided interests in the pool or pools are
sold. The cash flow from the mortgages is passed through to the holders of the
securities in the form of periodic payments of interest, principal and
prepayments (net of a service fee). Prepayments occur when the holder of an
undivided mortgage prepays the remaining principal before the mortgage's
scheduled maturity date. As a result of the pass-through of prepayments of
principal on the underlying securities, mortgage-backed securities are often
subject to more rapid prepayment of principal then their stated maturity would
indicate. The remaining expected average life of a pool of mortgage loans
underlying a mortgage-backed security is a prediction of when the mortgage loans
will be repaid and is based upon a variety of factors, such as the demographic
and geographic characteristics of the borrowers and the mortgaged properties,
the length of time that each of the mortgage loans has been outstanding, the
interest rates payable on the mortgage loans and the current interest rate
environment.

During periods of declining interest rates, prepayment of
mortgages underlying mortgage-backed securities can be expected to accelerate.
When mortgage obligations are prepaid, the Funds reinvest the prepaid amounts in
securities, the yields of which reflect interest rates prevailing at that time.
Therefore, a Fund's ability to maintain a portfolio of high-yielding
mortgage-backed securities will be adversely affected to the extent that
prepayments of mortgages are reinvested in securities which have lower yields
than the
<PAGE> 205
5

prepaid mortgages. Moreover, prepayments of mortgages which underlie securities
purchased at a premium generally will result in capital losses.

GNMA CERTIFICATES. (All Funds except U.S. Treasury Money
Market Fund). Certificates of the Government National Mortgage Association (GNMA
Certificates) are mortgage-backed securities which evidence an undivided
interest in a pool or pools of mortgages. GNMA Certificates that the Funds may
purchase are the "modified pass-through" type, which entitle the holder to
receive timely payment of all interest and principal payments due on the
mortgage pool, net of fees paid to the "issuer" and GNMA, regardless of whether
or not the mortgagor actually makes the payment. The GNMA Certificates will
represent a pro rata interest in one or more pools of the following types of
mortgage loans: (i) fixed rate level payment mortgage loans; (ii) fixed rate
graduated payment mortgage loans; (iii) fixed rate growing equity mortgage
loans; (iv) fixed rate mortgage loans secured by manufactured (mobile) homes;
(v) mortgage loans on multifamily residential properties under construction;
(vi) mortgage loans on completed multifamily projects; (vii) fixed rate mortgage
loans as to which escrowed funds are used to reduce the borrower's monthly
payments during the early years of the mortgage loans ("buydown" mortgage
loans); (viii) mortgage loans that provide for adjustments in payments based on
periodic changes in interest rates or in other payment terms of the mortgage
loans; and (ix) mortgage-backed serial notes. All of these mortgage loans will
be FHA Loans or VA Loans and, except as otherwise specified above, will be
fully-amortizing loans secured by first liens on one- to four-family housing
units. Legislative changes may be proposed from time to time in relation to the
Department of Housing and Urban Development which, if adopted, could alter the
viability of investing in GNMAs.

FNMA CERTIFICATES. (All Funds except U.S. Treasury Money
Market Fund). FNMA is a federally chartered and privately owned corporation
organized and existing under the Federal National Mortgage Association Charter
Act. FNMA provides funds to the mortgage market primarily by purchasing home
mortgage loans from local lenders, thereby replenishing their funds for
additional lending. FNMA acquires funds to purchase home mortgage loans from
many capital market investors that may not ordinarily invest in mortgage loans
directly.

Each FNMA Certificate will entitle the registered holder
thereof to receive amounts, representing such holder's pro rata interest in
scheduled principal payments and interest payments (at such FNMA Certificate's
pass-through rate, which is net of any servicing and guarantee fees on the
underlying mortgage loans), and any principal prepayments on the mortgage loans
in the pool represented by such FNMA Certificate and such holder's proportionate
interest in the full principal amount of any foreclosed or otherwise finally
liquidated mortgage loan. The full and timely payment of principal and interest
on each FNMA Certificate will be guaranteed by FNMA, which guarantee is not
backed by the full faith and credit of the U.S. Government.

Each FNMA Certificate will represent a pro rata interest in
one or more pools of FHA Loans, VA Loans or conventional mortgage loans (i.e.,
mortgage loans that are not insured or guaranteed by any governmental agency) of
the following types: (i) fixed rate
<PAGE> 206
6

level payment mortgage loans; (ii) fixed rate growing equity mortgage loans;
(iii) fixed rate graduated payment mortgage loans; (iv) variable rate California
mortgage loans; (v) other adjustable rate mortgage loans; and (vi) fixed rate
mortgage loans secured by multifamily projects.

FHLMC SECURITIES (All Funds except U.S. Treasury Money Market
Fund). The Federal Home Loan Mortgage Corporation (FHLMC) was created in 1970
through enactment of Title III of the Emergency Home Finance Act of 1970 (FHLMC
Act). Its purpose is to promote development of a nationwide secondary market in
conventional residential mortgages.

The FHLMC issues two types of mortgage pass-through
securities, mortgage participation certificates (PCs) and guaranteed mortgage
certificates (GMCs). PCs resemble GNMA Certificates in that each PC represents a
pro rata share of all interest and principal payments made and owned on the
underlying pool. The FHLMC guarantees timely monthly payment of interest on PCs
and the ultimate payment of principal.

GMCs also represent a pro rata interest in a pool of
mortgages. However, these instruments pay interest semi-annually and return
principal once a year in guaranteed minimum payments. The expected average life
of these securities is approximately ten years.

FHLMC CERTIFICATES (All Funds except U.S. Treasury Money
Market Fund). FHLMC is a corporate instrumentality of the United States created
pursuant to the FHLMC Act. The principal activity of FHLMC consists of the
purchase of first lien, conventional, residential mortgage loans and
participation interests in such mortgage loans and the resale of the mortgage
loans so purchased in the form of mortgage securities, primarily FHLMC
Certificates.

FHLMC guarantees to each registered holder of the FHLMC
Certificate the timely payment of interest at the rate provided for by such
FHLMC Certificate, whether or not received. FHLMC also guarantees to each
registered holder of a FHLMC Certificate ultimate collection of all principal on
the related mortgage loans, without any offset or deduction, but does not,
generally, guarantee the timely payment of scheduled principal. FHLMC may remit
the amount due on account of its guarantee of collection of principal at any
time after default on an underlying mortgage loan, but not later than 30 days
following (i) foreclosure sale, (ii) payment of a claim by any mortgage insurer
or (iii) the expiration of any right of redemption, whichever occurs later, but
in any event no later than one year after demand has been made upon the
mortgagor for accelerated payment of principal. The obligations of FHLMC under
its guarantee are obligations solely of FHLMC and are not backed by the full
faith and credit of the U.S. Government.

FHLMC Certificates represent a pro rata interest in a group of
mortgage loans (a FHLMC Certificate group) purchased by FHLMC. The mortgage
loans underlying the FHLMC Certificates will consist of fixed rate or adjustable
rate mortgage loans with original terms to maturity of between ten and thirty
years, substantially all of which are secured by first liens on one- to
four-family residential properties or multifamily projects. Each
<PAGE> 207
7

mortgage loan must meet the applicable standards set forth in the FHLMC Act. An
FHLMC Certificate group may include whole loans, participation interests in
whole loans and undivided interests in whole loans and participations comprising
another FHLMC Certificate group.

The market value of mortgage securities, like other
securities, will generally vary inversely with changes in market interest rates,
declining when interest rates rise and rising when interest rates decline.
However, mortgage securities, while having comparable risk of decline during
periods of rising rates, usually have less potential for capital appreciation
than other investments of comparable maturities due to the likelihood of
increased prepayments of mortgages as interest rates decline. In addition, to
the extent such mortgage securities are purchased at a premium, mortgage
foreclosures and unscheduled principal prepayments generally will result in some
loss of the holders' principal to the extent of the premium paid. On the other
hand, if such mortgage securities are purchased at a discount, an unscheduled
prepayment of principal will increase current and total returns and will
accelerate the recognition of income which when distributed to shareholders will
be taxable as ordinary income.

NON-AGENCY MORTGAGE-BACKED SECURITIES (All Funds except U.S.
Treasury Money Market Fund). Certain non-agency private entities also issue
mortgage-backed securities. Other than lacking the guarantee by the full faith
and credit of the United States, the mortgage-backed securities issued by
private issuers generally have characteristics and risks comparable to those
issued by GNMA, as discussed above. Some mortgage-backed securities issued by
non-agency private issuers may be supported by a pool of mortgages not
acceptable to the agency issuers and thus may carry greater risks. Consistent
with the Funds' respective investment objective and policies, the Funds may
invest in these mortgage-backed securities issued by non-agency private issuers
if they are rated at least A by Moody's Investors Service, Inc. (Moody's) or
Standard & Poor's Ratings Group (S&P).

ADJUSTABLE RATE MORTGAGE SECURITIES (All Funds except U.S.
Treasury Money Fund). Adjustable rate mortgage securities (ARMS) are
pass-through mortgage securities collateralized by mortgages with adjustable
rather than fixed rates. Generally, ARMs have a specified maturity date and
amortize principal over their life. In periods of declining interest rates,
there is a reasonable likelihood that ARMs will experience increased rates of
prepayment of principal. However, the major difference between ARMs and fixed
rate mortgage securities is that the interest rate and the rate of amortization
of principal of ARMs can and do change in accordance with movements in a
particular, pre-specified, published interest rate index.

The amount of interest on an ARM is calculated by adding a
specified amount, the "margin," to the index, subject to limitations on the
maximum and minimum interest that can be charged to the mortgagor during the
life of the mortgage or to maximum and minimum changes to that interest rate
during a given period. Because the interest rate on ARMs generally moves in the
same direction as market interest rates, the market value of ARMs tends to be
more stable than that of long-term fixed rate securities.
<PAGE> 208
8

There are two main categories of indices which serve as
benchmarks for periodic adjustments to coupon rates on ARMS: those based on U.S.
Treasury securities and those derived from a calculated measure such as a cost
of funds index or a moving average of mortgage rates. Commonly utilized indices
include the one-year and five-year constant maturity Treasury Note rates, the
three-month Treasury Bill rate, the 180-day Treasury Bill rate, rates on
longer-term Treasury securities, the 11th District Federal Home Loan Bank Cost
of Funds, the National Median Cost of Funds, the one-month or three-month London
Interbank Offered Rate (LIBOR), the prime rate of a specific bank, or commercial
paper rates. Some indices, such as the one-year constant maturity Treasury Note
rate, closely mirror changes in market interest rate levels. Others, such as the
11th District Home Loan Bank Cost of Funds index (often related to ARMs issued
by FNMA), tend to lag changes in market rate levels and tend to be somewhat less
volatile.

COLLATERALIZED MORTGAGE OBLIGATIONS (All Funds except U.S.
Treasury Money Market Fund). Certain issuers of collateralized mortgage
obligations (CMOs), including certain CMOs that have elected to be treated as
Real Estate Mortgage Investment Conduits (REMICs), are not considered investment
companies pursuant to a rule recently adopted by the Securities and Exchange
Commission (Commission), and the Funds may invest in the securities of such
issuers without the limitations imposed by the 1940 Act, on investments by the
Funds in other investment companies. In addition, in reliance on an earlier
Commission interpretation, a Fund's investments in certain other qualifying
CMOs, which cannot or do not rely on the rule, are also not subject to the
limitation of the 1940 Act on acquiring interests in other investment companies.
In order to be able to rely on the Commission's interpretation, these CMOs must
be unmanaged, fixed asset issuers, that (a) invest primarily in mortgage-backed
securities, (b) do not issue redeemable securities, (c) operate under general
exemptive orders exempting them from all provisions of the 1940 Act and (d) are
not registered or regulated under the 1940 Act as investment companies. To the
extent that a Fund selects CMOs or REMICs that cannot rely on the rule or do not
meet the above requirements, the Fund may not invest more than 10% of its assets
in all such entities and may not acquire more than 3% of the voting securities
of any single such entity.

OTHER ASSET-BACKED SECURITIES (All Funds except Federal
Tax-Exempt Bond Fund and all Equity Funds except Growth and Income, Balanced
Fund, and U.S. Treasury Money Market Funds). In general, the collateral
supporting asset-backed securities is of short maturity than mortgage loans and
is less likely to experience unexpected levels of prepayments. As with
mortgage-related securities, asset-backed securities are often backed by a pool
of assets representing the obligations of a number of different parties and use
similar credit enhancement techniques.

REAL ESTATE SECURITIES (Real Estate, Emerging Markets Equity,
Balanced, Intermediate Corporate Bond, High Yield Bond, International Fixed
Income, Mortgage Income, and Federal Tax-Exempt Bond Funds). The Funds may
invest in REITs and other real estate industry operating companies ("REOCs").
For purposes of a Fund's investments, an REOC is a company that derives at least
50% of its gross revenues or net profits from either (1) the ownership,
development, construction, financing, management or sale of commercial,
industrial or residential real estate, or (2) products or services related to
<PAGE> 209
9

the real estate industry, such as building supplies or mortgage servicing.
Investing in REITs involves certain unique risks in addition to those risks
associated with investing in the real estate industry in general. Although the
Funds will not invest directly in real estate, the fund may invest in equity
securities of issuers primarily engaged in or related to the real estate
industry. Therefore, an investment in REITs is subject to certain risks
associated with the direct ownership of real estate and with the real estate
industry in general. These risks include, among others: possible declines in the
value of real estate; risks related to general and local economic conditions;
possible lack of availability of mortgage funds; overbuilding; extended
vacancies of properties; increases in competition, property taxes and operating
expenses; changes in zoning laws; costs resulting from the clean-up of, and
liability to third parties for damages resulting from, environmental problems;
casualty or condemnation losses; uninsured damages from floods, earthquakes or
other natural disasters; limitations on and variations in rents; and changes in
interest rates. To the extent that assets underlying the REITs' investments are
concentrated geographically, by property type or in certain other respects, the
REITs may be subject to certain of the foregoing risks to a greater extent.
Equity REITs may be affected by changes in the value of the underlying property
owned by the REITs, while mortgage REITs may be affected by the quality of any
credit extended. REITs are dependent upon management skills, are not
diversified, are subject to heavy cash flow dependency, default by borrowers and
self-liquidation. REITs are also subject to the possibilities of failing to
qualify for tax free pass-through of income under the U.S. Internal Revenue Code
and failing to maintain their exemptions from registration under the 1940 Act.

REITs (especially mortgage REITs) are also subject to interest
rate risks. When interest rates decline, the value of a REIT's investment in
fixed rate obligations can be expected to rise. Conversely, when interest rates
rise, the value of a REIT's investment in fixed rate obligations can be expected
to decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on a REIT's investment in such loans will gradually
align themselves to reflect changes in market interest rates, causing the value
of such investments to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.

Investing in REITs involves risks similar to those associated
with investing in small capitalization companies. REITs may have limited
financial resources, may trade less frequently and in a limited volume and may
be subject to more abrupt or erratic price movements than larger company
securities.

Investments in mortgage-related securities involve certain
risks. In periods of declining interest rates, prices of fixed income securities
tend to rise. However, during such periods, the rate of prepayment of mortgages
underlying mortgage-related securities tends to increase, with the result that
such prepayments must be reinvested by the issuer at lower rates. In addition,
the value of such securities may fluctuate in response to the market's
perception of the creditworthiness of the issuers of mortgage-related securities
owned by the Fund. Because investments in mortgage-related securities are
interest sensitive, the ability of the issuer to reinvest or to reinvest
favorably in underlying mortgages may be limited by government regulation or tax
policy. For example, action by the Board of Governors of the Federal Reserve
System to limit the growth of the nation's money supply may cause interest
<PAGE> 210
10

rates to rise and thereby reduce the volume of new residential mortgages.
Additionally, although mortgages and mortgage-related securities are generally
supported by some form of government or private guarantees and/or insurance,
there is no assurance that private guarantors or insurers will be able to meet
their obligations.

FOREIGN SECURITIES (International Equity, Tax Efficient
Equity, Emerging Markets Equity, European Equity, International Fixed Income and
Global Brand Names Funds). As described in the Prospectus, changes in foreign
exchange rates will affect the value of securities denominated or quoted in
currencies other than the U.S. dollar.

Since Funds may invest in securities denominated in currencies
other than the U.S. dollar, and since those Funds may temporarily hold funds in
bank deposits or other money market investments denominated in foreign
currencies, a Fund may be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rate between such currencies and the
dollar. Changes in foreign currency exchange rates will influence values within
the Fund from the perspective of U.S. investors. Changes in foreign currency
exchange rates may also affect the value of dividends and interest earned, gains
and losses realized on the sale of securities, and net investment income and
gains, if any, to be distributed to shareholders by the Fund. The rate of
exchange between the U.S. dollar and other currencies is determined by the
forces of supply and demand in the foreign exchange markets. These forces are
affected by the international balance of payments and other economic and
financial conditions, government intervention, speculation and other factors.

The Funds may enter into foreign currency exchange contracts
in order to protect against uncertainty in the level of future foreign exchange
rates. A forward foreign currency exchange contract involves an obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. These contracts are entered into in the
interbank market conducted between currency traders (usually large commercial
banks) and their customers. Forward foreign currency exchange contracts may be
bought or sold to protect a Fund against a possible loss resulting from an
adverse change in the relationship between foreign currencies and the U.S.
dollar, or between foreign currencies. Although such contracts are intended to
minimize the risk of loss due to a decline in the value of the hedged currency,
at the same time, they tend to limit any potential gain which might result
should the value of such currency increase.

LOWER RATED SECURITIES. (Emerging Markets Equity and High
Yield Corporate Bond Funds). Lower-rated securities are lower-rated bonds
commonly referred to as junk bonds or high-yield/high-risk securities. These
securities are rated Baa or lower by Moody's Investors Service, Inc. (Moody's)
or BBB or lower by Standard & Poor's Corporation (S&P). As described in the
Prospectus, certain of the Funds may invest in lower rated and unrated
securities of comparable quality subject to the restrictions stated in the
Prospectus.

Growth of High-Yield High-Risk Bond Market. The widespread
expansion of government, consumer and corporate debt within the U.S. economy has
made the corporate
<PAGE> 211
11

sector more vulnerable to economic downturns or increased interest rates.
Further, an economic downtown could severely disrupt the market for lower-rated
bonds and adversely affect the value of outstanding bonds and the ability of the
issuers to repay principal and interest. The market for lower-rated securities
may be less active, causing market price volatility and limited liquidity in the
secondary market. This may limit the Funds' ability to sell such securities at
their market value. In addition, the market for these securities may be
adversely affected by legislative and regulatory developments. Credit quality in
the junk bond market can change suddenly and unexpectedly, and even recently
issued credit ratings may not fully reflect the actual risks imposed by a
particular security.

Sensitivity to Interest Rate and Economic Changes. Lower rated
bonds are very sensitive to adverse economic changes and corporate developments.
During an economic downturn or substantial period of rising interest rates,
highly leveraged issuers may experience financial stress that would adversely
affect their ability to service their principal and interest payment
obligations, to meet projected business goals, and to obtain additional
financing. If the issuer of a bond defaulted on its obligations to pay interest
or principal or entered into bankruptcy proceedings, the Fund may incur losses
or expenses in seeking recovery of amounts owed to it. In addition, periods of
economic uncertainty and change can be expected to result in increased
volatility of market prices of high-yield, high-risk bonds and the Fund's net
asset value.

Payment Expectations. High-yield, high-risk bonds may contain
redemption or call provisions. If an issuer exercised these provisions in a
declining interest rate market, the Fund would have to replace the security with
a lower yielding security, resulting in a decreased return for investors.
Conversely, a high-yield, high-risk bond's value will decrease in a rising
interest rate market, as will the value of the Fund's assets. If the Fund
experiences significant unexpected net redemptions, this may force it to sell
high-yield, high-risk bonds without regard to their investment merits, thereby
decreasing the asset base upon which expenses can be spread and possibly
reducing the Fund's rate of return.

Liquidity and Valuation. There may be a little trading in the
secondary market for particular bonds, which may affect adversely the Fund's
ability to value accurately or dispose of such bonds. Adverse publicity and
investor perception, whether or not based on fundamental analysis, may decrease
the values and liquidity of high-yield, high-risk bonds, especially in a thin
market.

Illiquid Securities (All Funds). Each Fund has adopted a
non-fundamental policy with respect to investments in illiquid securities.
Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933, as amended ("Securities Act"),
securities that are otherwise not readily marketable and repurchase agreements
having a maturity of longer than seven days. Securities that have not been
registered under the Securities Act are referred to as private placements or
restricted securities and are purchased directly from the issuer or in the
secondary market. Mutual funds do not typically hold a significant amount of
these restricted or other illiquid securities because of the potential for
delays on resale and uncertainty in valuation. Limitations on resale may have an
adverse effect on the marketability of portfolio securities and a mutual fund
might be unable to dispose of restricted or other illiquid securities promptly
or at reasonable prices and might thereby experience difficulty satisfying
redemptions within seven days. A mutual fund might also have to register such
restricted securities in order to dispose of them resulting in additional
expense and delay. Adverse market conditions could impede such a public offering
of securities.

In recent years, however, a large institutional market has
developed for certain securities that are not registered under the Securities
Act, including repurchase agreements, commercial paper, foreign securities,
municipal securities and corporate bonds and notes. Institutional investors
depend on either an efficient institutional market in which the unregistered
security can be readily resold or on the issuer's ability to honor a demand for
repayment. The fact that there are contractual or legal restrictions on resale
to the general public or to certain institutions may not be indicative of the
liquidity of such investments.

Each Fund may also invest in restricted securities issued
under Section 4(2) of the Securities Act, which exempts from registration
"transactions by an issuer not involving any public offering." Section 4(2)
instruments are restricted in the sense that they can only be resold through the
issuing dealer and only to institutional investors; they cannot be resold to the
general public without registration. Restricted securities issued under Section
4(2) of the Securities Act will be treated as illiquid and subject to the Fund's
investment restriction on illiquid securities.

The Commission has adopted Rule 144A, which allows a broader
institutional trading market for securities otherwise subject to restrictions on
resale to the general public. Rule 144A establishes a "safe harbor" from the
registration requirements of the Securities Act applicable to resales of certain
securities to qualified institutional buyers. It is the intent of the Funds to
invest, pursuant to procedures established by the Board of Trustees and subject
to applicable investment restrictions, in securities eligible for resale under
Rule 144A which are determined to be liquid based upon the trading markets for
the securities.

Pursuant to guidelines set forth by and under the supervision
of the Board of Trustees, as applicable, the Sub-Adviser will monitor the
liquidity of restricted securities in a Fund's portfolio. In reaching liquidity
decisions, the Sub-Adviser will consider, among other things, the following
factors: (1) the frequency of trades and quotes for the security over the course
of six months or as determined in the discretion of the Sub-Adviser; (2) the
number of dealers wishing to purchase or sell the security and the number of
other potential purchasers over the course of six months or as determined in the
discretion of the Sub-Adviser; (3) dealer undertakings to make a market in the
security; (4) the nature of the security and the marketplace in which it trades
(e.g., the time needed to dispose of the security, the method of soliciting
offers and the mechanics of the transfer); and (5) other factors, if any, which
the Sub-Adviser deems relevant. Rule 144A securities which are determined to be
liquid based upon their trading markets will not, however, be required to be
included among the securities considered to be illiquid for purposes of
Investment Restriction No. 9. Investments in Rule 144A securities could have the
effect of increasing Fund illiquidity.

OPTIONS ON SECURITIES (All Funds except U.S. Treasury Money
Market, Money Market and Federal Tax-Exempt Bond Funds). Each Fund may write
(sell) "covered" call options on securities as long as it owns the underlying
securities subject to the option or an option to purchase the same underlying
securities, having an exercise price equal to or less than the exercise price of
the "covered" option, or will establish and maintain for the term of the option
a segregated account consisting of cash or other liquid securities ("eligible
securities") to the extent required by applicable regulation in connection with
the optioned securities. A Fund may write "covered" put options provided that,
as long as the Fund is obligated as a writer of a put option, the Fund will own
an option to sell the underlying securities subject to the option, having an
exercise price equal to or greater than
<PAGE> 212
12

the exercise price of the "covered" option, or it will deposit and maintain in a
segregated account eligible securities having a value equal to or greater than
the exercise price of the option. A call option gives the purchaser the right to
buy, and the writer the obligation to sell, the underlying security at the
exercise price during or at the end of the option period. A put option gives the
purchaser the right to sell, and the writer has the obligation to buy, the
underlying security at the exercise price during or at the end of the option
period. The premium received for writing an option will reflect, among other
things, the current market price of the underlying security, the relationship of
the exercise price to such market price, the price volatility of the underlying
security, the option period, supply and demand and interest rates. The Funds may
write or purchase spread options, which are options for which the exercise price
may be a fixed dollar spread or yield spread between the security underlying the
option and another security that is used as a bench mark. The exercise price of
an option may be below, equal to or above the current market value of the
underlying security at the time the option is written. The buyer of a put who
also owns the related security is protected by ownership of a put option against
any decline in that security's price below the exercise price less the amount
paid for the option. The ability to purchase put options allows a Fund to
protect capital gains in an appreciated security it owns, without being required
to actually sell that security. At times a Fund would like to establish a
position in a security upon which call options are available. By purchasing a
call option, a Fund is able to fix the cost of acquiring the security, this
being the cost of the call plus the exercise price of the option. This procedure
also provides some protection from an unexpected downturn in the market because
a Fund is only at risk for the amount of the premium paid for the call option
which it can, if it chooses, permit to expire.

During the option period the covered call writer gives up the
potential for capital appreciation above the exercise price should the
underlying asset rise in value, and the secured put writer retains the risk of
loss should the underlying security decline in value. For the covered call
writer, substantial appreciation in the value of the underlying asset would
result in the security being "called away." For the secured put writer,
substantial depreciation in the value of the underlying security would result in
the security being "put to" the writer. If a covered call option expires
unexercised, the writer realizes a gain in the amount of the premium received.
If the covered call option writer has to sell the underlying security because of
the exercise of a call option, it realizes a gain or loss from the sale of the
underlying security, with the proceeds being increased by the amount of the
premium.

If a secured put option expires unexercised, the writer
realizes a gain from the amount of the premium. If the secured put writer has to
buy the underlying security because of the exercise of the put option, the
secured put writer incurs an unrealized loss to the extent that the current
market value of the underlying security is less than the exercise price of the
put option. However, this would be offset in whole or in part by gain from the
premium received.

OVER-THE-COUNTER OPTIONS (All Funds except U.S. Treasury Money
Market, Money Market and Federal Tax-Exempt Bond Funds). As indicated in the
prospectus (see "Description of Securities and Investment Practices"), each Fund
may deal in over-the-counter traded options ("OTC options"). OTC options differ
from exchange traded
<PAGE> 213
13

options in several respects. They are transacted directly with dealers and not
with a clearing corporation, and there is a risk of nonperformance by the dealer
as a result of the insolvency of such dealer or otherwise, in which event a Fund
may experience material losses. However, in writing options the premium is paid
in advance by the dealer. OTC options are available for a greater variety of
securities, and a wider range of expiration dates and exercise prices, than are
exchange traded options. Since there is no exchange, pricing is normally done by
reference to information from market makers, which information is carefully
monitored by the investment manager and verified in appropriate cases.

A writer or purchaser of a put or call option can terminate it
voluntarily only by entering into a closing transaction. In the case of OTC
options, there can be no assurance that a continuous liquid secondary market
will exist for any particular option at any specific time. Consequently, a Fund
may be able to realize the value of an OTC option it has purchased only by
exercising it or entering into a closing sale transaction with the dealer that
issued it. Similarly, when a Fund writes an OTC option, it generally can close
out that option prior to its expiration only by entering into a closing purchase
transaction with the dealer to which the Fund originally wrote it. If a covered
call option writer cannot effect a closing transaction, it cannot sell the
underlying security until the option expires or the option is exercised.
Therefore, a covered call option writer of an OTC option may not be able to sell
an underlying security even though it might otherwise be advantageous to do so.
Likewise, a secured put writer of an OTC option may be unable to sell the
securities pledged to secure the put for other investment purposes while it is
obligated as a put writer. Similarly, a purchaser of such put or call option
might also find it difficult to terminate its position on a timely basis in the
absence of a secondary market.

The Funds understand the position of the staff of the
Securities and Exchange Commission ("SEC") to be that purchased OTC options and
the securities used as "cover" for written OTC options are illiquid securities.
The investment manager disagrees with this position and has found the dealers
with which it engages in OTC options transactions generally agreeable to and
capable of entering into closing transactions. The Funds have adopted procedures
for engaging in OTC options for the purpose of reducing any potential adverse
effect of such transactions upon the liquidity of the Funds' portfolios. A brief
description of such procedures is set forth below.

A Fund will only engage in OTC options transactions with
dealers approved by the investment manager pursuant to procedures adopted by the
Fund's Board of Trustees. The investment manager believes that the approved
dealers should be able to enter into closing transactions if necessary and,
therefore, present minimal credit risks to a Fund. The investment manager will
monitor the creditworthiness of the approved dealers on an ongoing basis. A Fund
currently will not engage in OTC options transactions if the amount invested by
the Fund in OTC options, plus a "liquidity charge" related to OTC options
written by the Fund, plus the amount invested by the Fund in illiquid
securities, would exceed 15% of the Fund's net assets. The "liquidity charge"
referred to above is computed as described below.

The Funds anticipate entering into agreements with dealers to
which a Fund sells OTC options. Under these agreements a Fund would have the
absolute right to
<PAGE> 214
14

repurchase the OTC options from the dealer at any time at a price no greater
than a price established under the agreements (the "Repurchase Price"). The
"liquidity charge" referred to above for a specific OTC option transaction will
be the Repurchase Price related to the OTC option less the intrinsic value of
the OTC option. The intrinsic value of an OTC call option for such purposes will
be the amount by which the current market value of the underlying security
exceeds the exercise price. In the case of an OTC put option, intrinsic value
will be the amount by which the exercise price exceeds the current market value
of the underlying security. If there is no such agreement requiring a dealer to
allow the Fund to repurchase a specific OTC option written by the Fund, the
"liquidity charge" will be the current market value of the securities serving as
"cover" for such OTC option.

OPTIONS ON SECURITIES INDICES (All Funds except U.S. Treasury
Money Market, Money Market and Federal Tax-Exempt Bond Funds). Each Fund also
may purchase and write call and put options on securities indices in an attempt
to hedge against market conditions affecting the value of securities that the
Fund owns or intends to purchase, and not for speculation. Through the writing
or purchase of index options, a Fund can achieve many of the same objectives as
through the use of options on individual securities. Options on securities
indices are similar to options on a security except that, rather than the right
to take or make delivery of a security at a specified price, an option on a
securities index gives the holder the right to receive, upon exercise of the
option, an amount of cash if the closing level of the securities index upon
which the option is based is greater than, in the case of a call, or less than,
in the case of a put, the exercise price of the option. This amount of cash is
equal to the difference between the closing price of the index and the exercise
price of the option. The writer of the option is obligated, in return for the
premium received, to make delivery of this amount. Unlike security options, all
settlements are in cash and gain or loss depends upon price movements in the
market generally (or in a particular industry or segment of the market), rather
than upon price movements in individual securities. Price movements in
securities that the Fund owns or intends to purchase will probably not correlate
perfectly with movements in the level of an index since the prices of such
securities may be affected by somewhat different factors and, therefore, the
Fund bears the risk that a loss on an index option would not be completely
offset by movements in the price of such securities.

When a Fund writes an option on a securities index, it will
segregate and mark-to-market eligible securities to the extent required by
applicable regulation. In addition, where the Fund writes a call option on a
securities index at a time when the contract value exceeds the exercise price,
the Fund will segregate and mark-to-market, until the option expires or is
closed out, cash or cash equivalents equal in value to such excess.

Each Fund may also purchase and sell options on other
appropriate indices, as available, such as foreign currency indices. Options on
a securities index involve risks similar to those risks relating to transactions
in financial futures contracts described above. Also, an option purchased by a
Fund may expire worthless, in which case the fund would lose the premium paid
therefor.
<PAGE> 215
15

FOREIGN CURRENCY OPTIONS (All Funds except U.S. Treasury Money
Market, Money Market and Federal Tax-Exempt Bond Funds). Each Fund may engage in
foreign currency options transactions. A foreign currency option provides the
option buyer with the right to buy or sell a stated amount of foreign currency
at the exercise price at a specified date or during the option period. A call
option gives its owner the right, but not the obligation, to buy the currency,
while a put option gives its owner the right, but not the obligation, to sell
the currency. The option seller (writer) is obligated to fulfill the terms of
the option sold if it is exercised. However, either seller or buyer may close
its position during the option period in the secondary market for such options
any time prior to expiration.

A call rises in value if the underlying currency appreciates.
Conversely, a put rises in value if the underlying currency depreciates. While
purchasing a foreign currency option can protect the Fund against an adverse
movement in the value of a foreign currency, it does not limit the gain which
might result from a favorable movement in the value of such currency. For
example, if a Fund were holding securities denominated in an appreciating
foreign currency and had purchased a foreign currency put to hedge against a
decline in the value of the currency, it would not have to exercise its put.
Similarly, if the Fund has entered into a contract to purchase a security
denominated in a foreign currency and had purchased a foreign currency call to
hedge against a rise in value of the currency but instead the currency had
depreciated in value between the date of purchase and the settlement date, the
Fund would not have to exercise its call but could acquire in the spot market
the amount of foreign currency needed for settlement.

FOREIGN CURRENCY FUTURES TRANSACTIONS (All Funds except U.S.
Treasury Money Market, Money Market and Federal Tax-Exempt Bond Funds). As part
of its financial futures transactions, each Fund may use foreign currency
futures contracts and options on such futures contracts. Through the purchase or
sale of such contracts, a Fund may be able to achieve many of the same
objectives as through forward foreign currency exchange contracts more
effectively and possibly at a lower cost.

Unlike forward foreign currency exchange contracts, foreign
currency futures contracts and options on foreign currency futures contracts are
standardized as to amount and delivery period and are traded on boards of trade
and commodities exchanges. It is anticipated that such contracts may provide
greater liquidity and lower cost than forward foreign currency exchange
contracts.

CONVERTIBLE SECURITIES (All Funds except Federal Tax-Exempt
Bond, U.S. Treasury Money Market and Money Market Funds). Convertible securities
may be converted at either a stated price or stated rate into underlying shares
of common stock and, therefore, are deemed to be equity securities for purposes
of the Funds' management policies. Convertible securities have characteristics
similar to both fixed-income and equity securities. Convertible securities
generally are subordinated to other similar but non convertible securities of
the same issuer, although convertible bonds, as corporate debt obligations,
enjoy seniority in right of payment to all equity securities, and convertible
preferred stock is senior to common stock, of the same issuer. Because of the
subordination
<PAGE> 216
16

feature, however, convertible securities typically have lower ratings than
similar non convertible securities.

Although to a lesser extent than with fixed-income securities,
the market value of convertible securities tends to decline as interest rates
increase and, conversely, tends to increase as interest rates decline. In
addition, because of the conversion feature, the market value of convertible
securities tends to vary with fluctuations in the market value of the underlying
common stock. A unique feature of convertible securities is that as the market
price of the underlying common stock declines, convertible securities tend to
trade increasingly on a yield basis, and so may not experience market value
declines to the same extent as the underlying common stock. When the market
price of the underlying common stock increases, the prices of the convertible
securities tend to rise as a reflection of the value of the underlying common
stock. While no securities investments are without risk, investments in
convertible securities generally entail less risk than investments in common
stock of the same issuer.

Convertible securities are investments that provide for a
stable stream of income with generally higher yields than common stocks. There
can be no assurance of current income because the issuers of the convertible
securities may default on their obligations. A convertible security, in addition
to providing fixed income, offers the potential for capital appreciation through
the conversion feature, which enables the holder to benefit from increases in
the market price of the underlying common stock. There can be no assurance of
capital appreciation, however, because securities prices fluctuate. Convertible
securities, however, generally offer lower interest or dividend yields than
non-convertible securities of similar quality because of the potential for
capital appreciation.

CLOSED-END INVESTMENT COMPANIES (Emerging Markets Equity, High
Yield Bond and Federal Tax-Exempt Bond Funds). The Fund may invest in securities
issued by closed-end investment companies. Under the Investment Company Act of
1940, as amended (the "1940 Act"), the Fund's investment in such securities,
subject to certain exceptions, currently is limited to (i) 3% of the total
voting stock of any one investment company, (ii) 5% of the Fund's total assets
with respect to any one investment company and (iii) 10% of the Fund's total
assets in the aggregate. Investments in the securities of other investment
companies may involve duplication of advisory fees and certain other expenses.

FOREIGN GOVERNMENT OBLIGATIONS; SECURITIES OF SUPRANATIONAL
ENTITIES (International Fixed Income, International Equity, Tax Efficient
Equity, Emerging Markets Equity, Global Brand Names and European Equity Funds
only). A Fund may invest in obligations issued or guaranteed by one or more
foreign governments or any of their political subdivisions, agencies or
instrumentalities that are determined by the Manager to be of comparable quality
to the other obligations in which the Fund may invest. Such securities also
include debt obligations of supranational entities. Supranational entities
include international organizations designated or supported by governmental
entities to promote economic reconstruction or development and international
banking institutions and related government agencies. Examples include the
International
<PAGE> 217
17

Bank for Reconstruction and Development (the World Bank), the European Coal and
Steel Community, the Asian Development Bank and the InterAmerican Development
Bank.

U.S. GOVERNMENT SECURITIES (All Funds). U.S. Government
securities include: (i) U.S. Treasury obligations, which differ only in their
interest rates, maturities and times of issuance as follows: U.S. Treasury bills
(maturity of one year or less), U.S. Treasury notes (maturities of one to ten
years) and U.S. Treasury bonds (generally maturities of greater than ten years);
and (ii) obligations issued or guaranteed by U.S. Government agencies and
instrumentalities that are supported by the full faith and credit of the United
States (such as securities issued by Farmers Home Administration, the Government
National Mortgage Association ("GNMA"), the Department of Housing and Urban
Development, the Export-Import Bank, the General Services Administration and the
Maritime Administration and certain securities issued by the Federal Housing
Administration and the Small Business Administration). The maturities of U.S.
Government securities usually range from three months to 30 years. The U.S.
Treasury Money Market Fund will generally invest only in U.S. Treasury
obligations.

Securities issued by GNMA ("GNMA Certificates") differ in
certain respects from other U.S. Government securities, which normally provide
for periodic payment of interest in fixed amounts with principal payments at
maturity or specified call dates. GNMA Certificates are mortgage-backed
securities representing part ownership of a pool of mortgage loans. These loans
- -- issued by lenders such as mortgage bankers, commercial banks and savings and
loan-associations -- are either insured by the Federal Housing Administration or
guaranteed by the Veterans Administration. A "pool" or group of such mortgages
is assembled and, after being approved by GNMA, is offered to investors through
securities dealers. Once approved by GNMA, the timely payment of interest and
principal on each mortgage is guaranteed by the full faith and credit of the
United States. GNMA Certificates also differ from other U.S. Government
securities in that principal is paid back monthly by the borrower over the term
of the loan rather than returned in a lump sum at maturity. GNMA Certificates
are called "pass-through" securities because interest and principal payments
(including pre-payments) are passed through to the holder of the Certificate.
Upon receipt, principal payments are used by the Portfolio to purchase
additional U.S. Government securities.

WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES (All Funds). The
Funds may purchase securities on a when-issued or delayed-delivery basis. For
example, delivery of and payment for these securities can take place a month or
more after the date of the transaction. The securities so purchased are subject
to market fluctuation during this period and no income accrues to the Fund until
settlement takes place. To facilitate such acquisitions, the Funds will maintain
with the custodian a separate account with a segregated portfolio of liquid
assets in an amount at least equal to the value of such commitments. On the
delivery dates for such transactions, each Fund will meet obligations from
maturities or sales of the securities held in the separate account and/or from
cash flow. While the Funds normally enter into these transactions with the
intention of actually receiving or delivering the securities, they may sell
these securities before the settlement date or enter into new commitments to
extend the delivery date into the future, if the Sub-Adviser or
<PAGE> 218
18

Portfolio Sub-Advisers consider such action advisable as a matter of investment
strategy. Such securities have the effect of leverage on the Funds and may
contribute to volatility of a Fund's net asset value.

INTEREST RATE FUTURES CONTRACTS (All Funds except Federal
Tax-Exempt Bond, U.S. Treasury Money Market, and Money Market Funds). The Funds
may purchase and sell interest rate futures contracts ("futures contracts") as a
hedge against changes in interest rates. A futures contract is an agreement
between two parties to buy and sell a security for a set price on a future date.
Future contracts are traded on designated "contracts markets" which, through
their clearing corporations, guarantee performance of the contracts. Currently,
there are futures contracts based on securities such as long-term U.S. Treasury
bonds, U.S. Treasury notes, GNMA Certificates and three-month U.S. Treasury
bills.

Generally, if market interest rates increase, the value of
outstanding debt securities declines (and vice versa). Entering into a futures
contract for the sale of securities has an effect similar to the actual sale of
securities, although sale of the futures contract might be accomplished more
easily and quickly. For example, if a Fund holds long-term U.S. Government
securities and the Sub-Adviser anticipates a rise in long-term interest rates,
it could, in lieu of disposing of its portfolio securities, enter into futures
contracts for the sale of similar long-term securities. If rates increased and
the value of a Fund's portfolio securities declined, the value of a Fund's
futures contracts would increase, thereby protecting the Fund by preventing its
net asset value from declining as much as it otherwise would have. Similarly,
entering into futures contracts for the purchase of securities has an effect
similar to actual purchase of the underlying securities, but permits the
continued holding of securities other than the underlying securities. For
example, if the Sub-Adviser expects long-term interest rates to decline, a Fund
might enter into futures contracts for the purchase of long-term securities, so
that it could gain rapid market exposure that may offset anticipated increases
in the cost of securities it intends to purchase, while continuing to hold
higher-yielding short-term securities or waiting for the long-term market to
stabilize. Futures transactions may fail as hedging techniques where price
movements of the underlying securities do not follow price movements of the
portfolio securities subject to the hedge. The loss with respect to futures
transactions is potentially unlimited. Also, the Funds may be unable to control
losses by closing its position where a liquid secondary market does not exist.

INVESTMENT RESTRICTIONS

The Funds have adopted investment restrictions numbered 1
through 8 as fundamental policies, which cannot be changed without approval by
the holders of a majority (as defined in the 1940 Act) of the Fund's outstanding
voting shares. Investment restriction number 9 is not a fundamental policy and
may be changed by vote of a majority of a Fund's board members at any time. None
of the Funds may:
<PAGE> 219
19

Each Fund, except as indicated, may not:

(1) Borrow money, except to the extent permitted under the
1940 Act (which currently limits borrowing to no more than 33-1/3% of the value
of a Fund's total assets). For purposes of this Investment Restriction, the
entry into options, forward contracts, futures contracts, including those
relating to indices, and options on futures contracts or indices shall not
constitute borrowing.

(2) Issue senior securities, except insofar as a Fund may be
deemed to have issued a senior security in connection with any repurchase
agreement or any permitted borrowing;

(3) Make loans, except loans of portfolio securities and
except that a Fund may enter into repurchase agreements with respect to its
portfolio securities and may purchase the types of debt instruments described in
its Prospectus or the SAI;

(4) Invest in companies for the purpose of exercising control
or management;

(5) Purchase, hold or deal in real estate, or oil, gas or
other mineral leases or exploration or development programs, but a Fund may
purchase and sell securities that are secured by real estate or issued by
companies that invest or deal in real estate or real estate investment trusts.

(6) Engage in the business of underwriting securities of other
issuers, except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the Securities Act of 1933;

(7) Purchase securities on margin, except that a Fund may
obtain such short-term credits as may be necessary for the clearance of
purchases and sales of securities;

(8) Purchase a security if, as a result, more than 25% of the
value of its total assets would be invested in securities of one or more issuers
conducting their principal business activities in the same industry, provided
that (a) this limitation shall not apply to obligations issued or guaranteed by
the U.S. Government or its agencies and instrumentalities; (b) wholly-owned
finance companies will be considered to be in the industries of their parents;
(c) utilities will be divided according to their services. For example, gas, gas
transmission, electric and gas, electric, and telephone will each be considered
a separate industry; and (d) the Global IT Fund and the Real Estate Fund will
concentrate their investments as described in the Prospectus;

(9) Invest more than 15%, 10% in the case of the Money Market
Funds, of the value of its net assets in investments which are illiquid
(including repurchase agreements having maturities of more than seven calendar
days, variable and floating rate demand and
<PAGE> 220
20

master demand notes not requiring receipt of principal note amount within seven
days' notice and securities of foreign issuers which are not listed on a
recognized domestic or foreign securities exchange);

In addition, all Funds except for the Global Brand Names
Funds, ING Best Ideas Fund, Real Estate Fund and International Fixed Income Fund
are diversified funds. As such, each will not, with respect to 75% of its total
assets, invest more than 5% of its total assets in the securities of any one
issuer (except for U.S. Government securities) or purchase more than 10% of the
outstanding voting securities of any one issuer. The Money Market Funds may
invest up to 25% of its total assets in the first tier securities of a single
issuer for a period of up to three business days after the acquisition thereof
provided that the Fund may not invest in the securities of more than one issuer
in accordance with this provision at any time. For the Money Market Funds,
______________________

If a percentage limitation is satisfied at the time of
investment, a later increase or decrease in such percentage resulting from a
change in the value of a Fund's investments will not constitute a violation of
such limitation, except that any borrowing by a Fund that exceeds the
fundamental investment limitations stated above must be reduced to meet such
limitations within the period required by the 1940 Act (currently three days).
Otherwise, a Fund may continue to hold a security even though it causes the Fund
to exceed a percentage limitation because of fluctuation in the value of the
Fund's assets.

MANAGEMENT

Trustees and Officers

The principal occupations of the Trustees and executive
officers of the Funds for the past five years are listed below. The address of
each, unless otherwise indicated, is ____________, Pennsylvania ______. Trustees
deemed to be "interested persons" of the Funds for purposes of the 1940 Act are
indicated by an asterisk.

John J. Pileggi, Sole Trustee, Chairman of the Board of
Trustees and President, 39 years old. ____________________________. Director of
Furman Selz LLC since 1994; Senior Managing Director of Furman Selz LLC
(1992-1994); Managing Director of Furman Selz LLC (1984-1992). Mr. Pileggi is
considered to be an "interested person" of the Trust as defined in the 1940 Act.

Trustees of the Funds not affiliated with ING or IFD receive
from the Funds an annual retainer of $_____ and a fee of $___ for each Board of
Trustees meeting and $___ for each Board committee meeting of the Funds attended
and are reimbursed for all out-of-pocket expenses relating to attendance at such
meetings. Trustees who are affiliated with ING or IFD do not receive
compensation from the Funds.

Investment Manager

<PAGE> 221
21

ING Mutual Funds Management Company ("IMFC"), ___________,
Pennsylvania _______, acts as the investment adviser to the Funds. IMFC is a
wholly owned subsidiary of ING Group N.V. ("ING Group"). Under the Management
Agreement, IMFC has overall responsibility, subject to the supervision of the
Board of Trustees, for engaging sub-advisers and for monitoring and evaluating
the management of the assets of each Fund by the Sub-Adviser. The Manager is
also responsible for monitoring and evaluating the Sub-Advisers on a periodic
basis, and will consider their performance records with respect to the
investment objectives and policies of each Fund. The Manager may, if
appropriate, recommend that the Trustees consider a change in a Sub-Adviser,
although the Manager does not expect to recommend frequent changes in
Sub-Advisers as a matter of operating procedure for the Funds. IMFC also
provides certain administrative services necessary for the Funds' operations
including: (i) coordination of the services performed by the Funds' transfer
agent, custodian, independent accountants and legal counsel; regulatory
compliance, including the compilation of information for documents such as
reports to, and filings with, the SEC and state securities commissions; and
preparation of proxy statements and shareholder reports for the Funds; (ii)
general supervision relative to the compilation of data required for the
preparation of periodic reports distributed to the Funds' Officers and Board
of Trustees; and (iii) furnishing office space and certain facilities required
for conducting the business of the Funds.

Pursuant to the Management Agreement, the Manager is
authorized to exercise full investment discretion and make all determinations
with respect to the investment of a Fund's assets and the purchase and sale of
portfolio securities for one or more Funds in the event that at any time no
Sub-Adviser is engaged to manage the assets of a Fund. The Management Agreement
may be terminated without penalty by the vote of the Board of Trustees or the
shareholders of the Fund upon 60 days' written notice by the Board, or by the
Manager and will terminate automatically if assigned as that term is described
in the Investment Company Act of 1940.

The Management Agreement provides that the investment manager
shall not be liable for any error of judgment or mistake of law or for any loss
suffered by the Funds in connection with its performance of services pursuant to
the Management Agreement, except loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the investment adviser in the
performance of its obligations under the Advisory Agreement.

Sub-Advisers

ING Investment Management, LLC ("IIM") serves as Sub-Adviser
to the two Money Market Funds and the Intermediate Corporate Bond, High Yield
Bond, Mortgage Income, and Growth and Income Funds. Located in Atlanta, Georgia,
IIM is a limited liability corporation incorporated in Delaware which is engaged
in the business of providing investment advice to affiliated insurance companies
possessing portfolios which, as of December 31, 1997, were valued at $22
billion.

Baring International Investment Limited ("BIIL") serves as
Sub-Adviser to the International Fixed Income, International Equity and Emerging
Markets Funds. Located in London, BIIL is a wholly-owned subsidiary of Baring
Asset Management Holdings Limited, the parent of the worldwide group of
investment management companies that operate under the collective name, Baring
Asset Management. As of December 31, 1997, Baring Asset Management managed
approximately $36.1 billion of assets.

Furman Selz Capital Management LLC ("FSCM") serves as
Sub-Adviser to the Federal Tax-Exempt Bond, Mid Cap Equity, Small Cap Equity,
Balanced, and the ING Best Ideas Funds. Located in New York, FSCM is a Delaware
limited liability company
<PAGE> 222
22

which is engaged in the business of providing investment advice to institutional
and individual clients which, as of December 31, 1997, were valued at $10
billion.

Baring Asset Management, Inc. ("BAM") serves as Sub-Adviser to
the Large Cap Growth Fund. Located in Boston, Massachusetts, BAM is a
wholly-owned subsidiary of Baring Asset Management Holdings Limited, the parent
of the worldwide group of investment management companies that operate under the
collective name, Baring Asset Management. As of December 31, 1997, Baring Asset
Management managed approximately $36.1 billion of assets.

ING Investment Management Sub-Advisers ("IIMA"), serves as
Sub-Adviser to the ING Brand Names, European Equity, Global IT, and Real Estate
Funds. Located in __________, IIMA is _________________________________________.

Delta Asset Management ("Delta") serves as Sub-Adviser to the
Tax Efficient Equity Fund. Located in __________, Delta is a division of Furman
Selz Capital Management and is a ________ corporation which is engaged in the
business of _____________ .

Distribution of Fund Shares

ING Funds Distributor, Inc. ("IFD"), __________, Pennsylvania
_____, serves as Distributor and Principal Underwriter of the Funds. IFD also
serves as administrator and distributor of other mutual funds. As distributor,
IFD acts as the Funds' agent to underwrite, sell and distribute shares in a
continuous offering.

Bookkeeping and Pricing Agent

Pursuant to an agreement with IMFC, First Data Investors
Services Group ("First Data") acts as the Funds' fund accounting agent. As fund
accounting agent, First Data will maintain the financial accounts and records of
the Funds and compute the net asset value and certain other financial
information of the Funds.
<PAGE> 223
23

Service Organizations

The Funds may also contract with banks, trust companies,
broker-dealers (other than IFD) or other financial organizations ("Service
Organizations") to provide certain administrative services with respect to the
Funds for a fee paid at an annual rate of up to 0.25% of daily net Fund assets
serviced. Services provided by Service Organizations may include among other
things: transfer agency and sub-transfer agency services; sub-custodian
services; aggregating and processing purchase and redemption orders; processing
sub-accounting services; and shareholder communications.

Some Service Organizations may impose additional or different
conditions on their clients, such as requiring their clients to invest more than
the minimum initial or subsequent investments specified by the Funds or charging
a direct fee for servicing. If imposed, these fees would be in addition to any
amounts which might be paid to the Service Organization by the Funds. Each
Service Organization has agreed to transmit to its clients a schedule of any
such fees. Shareholders using Service Organizations are urged to consult them
regarding any sch fees or conditions.

The Glass-Steagall Act and other applicable laws, among other
things, prohibit banks from engaging in the business of underwriting, selling or
distributing securities. There currently is no precedent prohibiting banks from
performing administrative and shareholder servicing functions as Service
Organizations. However, judicial or administrative decisions or interpretations
of such laws, as well as changes in either Federal or state statutes or
regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, could prevent a bank from continuing to perform all
or a part of its servicing activities. In addition, state securities laws on
this issue may differ from the interpretations of federal law expressed herein
and banks and financial institutions may be required to register as dealers
pursuant to state law. If a bank were prohibited from so acting, its shareholder
clients would be permitted to remain shareholders of the Funds and alternative
means for continuing the servicing of such shareholders would be sought. In that
event, changes in the operation of the Funds might occur and a shareholder
serviced by such a bank might no longer be able to avail itself to any services
then being provided by the bank. It is not expected that shareholders would
suffer any adverse financial consequences as a result of any of these
occurrences.

DETERMINATION OF NET ASSET VALUE

As indicated under "Fund Share Valuation" in the applicable
Prospectus, the Money Market Funds use the amortized cost method to determine
the value of its portfolio securities pursuant to Rule 2a-7 under the 1940 Act.
The amortized cost method involves valuing a security at its cost and amortizing
any discount or premium over the period until maturity regardless of the impact
of fluctuating interest rates on the market value of the
<PAGE> 224
24

security. While this method provides certainty in valuation, it may result in
periods during which the value, as determined by amortized cost, is higher or
lower than the price which the Fund would receive if the security were sold.
During these periods, the yield to a shareholder may differ somewhat from that
which could be obtained from a similar fund which utilizes a method of valuation
based upon market prices. Thus, during periods of declining interest rates, if
the use of the amortized cost method resulted in lower value of a Fund's
portfolio on a particular day, a prospective investor in the Fund would be able
to obtain a somewhat higher yield than would result from an investment in a fund
utilizing solely market values and existing Fund shareholders would receive
correspondingly less income. The converse would apply during periods of rising
interest rates.

Rule 2a-7 provides that in order to value its portfolio using
the amortized cost method, the Money Market Funds must maintain a
dollar-weighted average portfolio maturity of 90 days or less, purchase
securities having remaining maturities of 397 days or less and invest only in
U.S. dollar denominated eligible securities determined by the Trust's Board of
Trustees to be of minimal credit risks and which (1) have received the highest
short-term rating by at least two Nationally Recognized Statistical Rating
Organizations ("NRSROs"), such as "A-1" by Standard & Poor's and "P-1" by
Moody's; (2) are single rated and have received the highest short-term rating by
a NRSRO; or (3) are unrated, but are determined to be of comparable quality by
the Sub-Adviser or the Sub-Adviser pursuant to guidelines approved by the Board
and subject to the ratification of the Board.

In addition, the Funds will not invest more than 5% of their
total assets in the securities (including the securities collateralizing a
repurchase agreement) of, or subject to puts issued by, a single issuer, except
that, the Funds may invest in U.S. Government securities or repurchase
agreements that are collateralized by U.S. Government securities without any
such limitation, and the limitation with respect to puts does not apply to
unconditional puts if no more than 10% of a Fund's total assets are invested in
securities issued or guaranteed by the issuer of the unconditional put. The
Money Market Funds may invest up to 25% of its total assets in the first tier
securities of a single issuer for a period of up to three business days after
the acquisition thereof provided that the Fund may not invest in the securities
of more than one issuer in accordance with this provision at any time.
Investments in rated securities not rated in the highest category by at least
two rating organizations (or one rating organization if the instrument was rated
by only one such organization), and unrated securities not determined by the
Board of Trustees to be comparable to those rated in the highest rating
category, will be limited to 5% of a Fund's total assets, with investment in any
one such issuer being limited to no more than the greater of 1% of a Fund's
total assets or $1,000,000.

Pursuant to Rule 2a-7, the Board of Trustees is also required
to establish procedures designed to stabilize, to the extent reasonably
possible, the price per share of the Funds, as computed for the purpose of sales
and redemptions at $1.00. Such procedures include review of the Fund's portfolio
holdings by the Board of Trustees, at such intervals as it may deem appropriate,
to determine whether the net asset value of the Funds calculated by using
available market quotations deviates from $1.00 per share based on amortized
cost. The extent of any deviation will be examined by the Board of Trustees. If
such deviation
<PAGE> 225
25

exceeds 1/2 of 1%, the Board of Trustees will promptly consider what action, if
any, will be initiated. In the event the Board of Trustees determines that a
deviation exists which may result in material dilution or other unfair results
to investors or existing shareholders, the Board of Trustees will take such
corrective action as it regards as necessary and appropriate, which may include
selling portfolio instruments prior to maturity to realize capital gains or
losses or to shorten average portfolio maturity, withholding dividends or
establishing a net asset value per share by using available market quotations.

The Non-Market Funds value their portfolio securities in
accordance with the procedures described in the Prospectus.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

The Prospectus contains a description of how investors may buy
shares of the Funds and states whether the Funds offer more than one class of
shares. This SAI contains additional information which may be of interest to
investors. Class A Shares are generally sold with a sales charge payable at the
time of purchase (with the exception of the Money Market Fund which charges no
sales charge). The prospectuses contain a table of applicable sales charges.
Certain purchases of Class A shares may be exempt from a sales charge. Class B
and X shares may be subject to a contingent deferred sales charge (CDSC) payable
upon redemption within a specified period after purchase. The prospectuses
contain a table of applicable CDSCs. Class B and X shares will automatically
convert into Class Institutional Shares which are not subject to sales charges
or a CDSC are available only to certain investors. Class C shares are offered
without an initial sales charge.

The Funds may sell shares without a sales charge or CDSC
pursuant to several different Special Purchase Plans.

The obligation of each Fund to redeem its shares when called
upon to do so by the shareholder is mandatory with certain exceptions. The Funds
will pay in cash all redemption requests by any shareholder of record, limited
in amount during any 90-day period to the lesser of 250,000 or 1% of the net
asset value of a Fund at the beginning of such period. When redemption requests
exceed such amount, however, the Funds reserve the right to make part or all of
the payment in the form of readily marketable securities or other assets of the
Fund. An example of when this might be done is in case of emergency, such as in
those situations enumerated in the following paragraph, or at any time a cash
distribution would impair the liquidity of the Fund to the detriment of the
existing shareholders. Any securities being so distributed would be valued in
the same manner as the portfolio of the Fund is valued. If the recipient sold
such securities, he or she probably would incur brokerage charges.

Redemption of shares, or payment, may be suspended at times
(a) when the Exchange is closed for other than customary weekend or holiday
closings, (b) when trading on said Exchange is restricted, (c) when an emergency
exists, as a result of which disposal
<PAGE> 226
26

by a Fund of securities owned by it is not reasonably practicable, or it is not
reasonably practicable for a Fund fairly to determine the value of its net
assets, or during any other period when the Securities and Exchange Commission,
by order, so permits; provided that applicable rules and regulations of the
Securities and Exchange Commission shall govern as to whether the conditions
prescribed in (b) or (c) exist. The Exchange is not open for business on the
following holidays (nor on the nearest Monday or Friday if the holiday falls on
a weekend), on which the Funds will not redeem shares: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.
<PAGE> 227
27

PORTFOLIO TRANSACTIONS

Investment decisions for the Funds and for the other
investment advisory clients of the Sub-Adviser are made with a view to achieving
their respective investment objectives. Investment decisions are the product of
many factors in addition to basic suitability for the particular client
involved. Thus, a particular security may be bought or sold for certain clients
even though it could have been bought or sold for other clients at the same
time. Likewise, a particular security may be bought for one or more clients when
one or more clients are selling the security. In some instances, one client may
sell a particular security to another client. It also sometimes happens that two
or more clients simultaneously purchase or sell the same security, in which
event each day's transactions in such security are, insofar as possible,
averaged as to price and allocated between such clients in a manner which in the
Sub-Adviser's opinion is equitable to each and in accordance with the amount
being purchased or sold by each. There may be circumstances when purchases or
sales of portfolio securities for one or more clients will have an adverse
effect on other clients.

The Funds have no obligation to deal with any dealer or group
of dealers in the execution of transactions in portfolio securities. Subject to
policies established by the Funds' Boards of Trustees, the Sub-Adviser is
primarily responsible for portfolio decisions and the placing of portfolio
transactions. In placing orders, it is the policy of the Funds to obtain the
best results taking into account the broker-dealer's general execution and
operational facilities, the type of transaction involved and other factors such
as the dealer's risk in positioning the securities. While the Sub-Adviser
generally seeks reasonably
<PAGE> 228
28

competitive spreads or commissions, the Funds will not necessarily be paying the
lowest spread or commission available. The reasonableness of such spreads or
brokerage commissions will be evaluated by comparing spreads or commissions
among brokers or dealers in consideration of the factors listed immediately
above and research services described below.

Purchases and sales of securities will often be principal
transactions in the case of debt securities and equity securities traded
otherwise than on an exchange. The purchase or sale of equity securities will
frequently involve the payment of a commission to a broker-dealer who effects
the transaction on behalf of a Fund. Debt securities normally will be purchased
or sold from or to issuers directly or to dealers serving as market makers for
the securities at a net price. Generally, money market securities are traded on
a net basis and do not involve brokerage commissions. Under the 1940 Act,
persons affiliated with the Funds or the Sponsor are prohibited from dealing
with the Funds as a principal in the purchase and sale of securities except in
limited situations permitted by SEC regulations, unless a permissive order
allowing such transactions is obtained from the SEC.

The cost of executing portfolio securities transactions for
the Money Market Funds primarily consists of dealer spreads and underwriting
commissions. Under the 1940 Act, persons affiliated with the Funds or the
Sponsor are prohibited from dealing with the Funds as a principal in the
purchase and sale of securities unless a permissive order allowing such
transactions is obtained from the SEC.

The Sub-Adviser may, in circumstances in which two or more
broker-dealers are in a position to offer comparable results, give preference to
a dealer which has provided statistical or other research services to the
Sub-Adviser. By allocating transactions in this manner, the Sub-Adviser is able
to supplement its research and analysis with the views and information of
securities firms. These items, which in some cases may also be purchased for
cash, include such matters as general economic and security market reviews,
industry and company reviews, evaluations of securities and recommendations as
to the purchase and sale of securities. Some of these services are of value to
the Sub-Adviser in advising various of its clients (including the Funds),
although not all of these services are necessarily useful and of value in
managing the Funds. The management fee paid by the Funds is not reduced because
the Sub-Adviser and its affiliates receive such services.

As permitted by Section 28(e) of the Securities Exchange Act
of 1934 (the "Act"), the Sub-Adviser may cause the Funds to pay a broker-dealer
which provides "brokerage and research services" (as defined in the Act) to the
Sub-Adviser an amount of disclosed commission for effecting a securities
transaction for the Funds in excess of the commission which another
broker-dealer would have charged for effecting that transaction.

Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. and subject to seeking the most
favorable price and execution available and such other policies as the Trustees
may determine, the Sub-Adviser may consider sales of shares of the Funds as a
factor in the selection of broker-dealers to execute portfolio transactions for
the Funds.
<PAGE> 229
29

Portfolio Turnover

Changes may be made in the portfolio consistent with the
investment objectives and policies of the Funds whenever such changes are
believed to be in the best interests of the Funds and their shareholders. It is
anticipated that the annual portfolio turnover rate normally will not exceed the
amounts stated in the Funds' Prospectuses and financial statements. Portfolio
turnover rate is, in general, the percentage computed by taking the lesser of
purchases or sales of portfolio securities (excluding securities with a maturity
date of one year or less at the time of acquisition) for the period and dividing
it by the monthly average of the market value of such securities during the
period.

For purposes of this calculation, portfolio securities exclude
all securities having a maturity when purchased of one year or less.

TAXATION

The Funds intend to qualify and elect annually to be treated
as regulated investment companies under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"). To qualify as a regulated investment
company, a Fund must (a) distribute to shareholders at least 90% of its
investment company taxable income (which includes, among other items, dividends,
taxable interest and the excess of net short-term capital gains over net
long-term capital losses); (b) derive in each taxable year at least 90% of its
gross income from dividends, interest, payments with respect to securities loans
and gains from the sale or other disposition of stock, securities or foreign
currencies or other income derived with respect to its business of investing in
such stock, securities or currencies; and (c) diversify its holdings so that, at
the end of each quarter of the taxable year, (i) at least 50% of the market
value of the Fund's assets is represented by cash and cash items (including
receivables), U.S. Government securities, the securities of other regulated
investment companies and other securities, with such other securities of any one
issuer limited for the purposes of this calculation to an amount not greater
than 5% of the value of the Fund's total assets and not greater than 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its total assets is invested in the securities of any one issuer (other
than U.S. Government securities or the securities of other regulated investment
companies). In addition, a Fund earning tax-exempt interest must, in each year,
distribute at least 90% of its net tax-exempt income. By meeting these
requirements, the Funds generally will not be subject to Federal income tax on
its investment company taxable income and net capital gains which are
distributed to shareholders. If the Funds do not meet all of these Code
requirements, they will be taxed as ordinary corporations and their
distributions will be taxed to shareholders as ordinary income.
<PAGE> 230
30

Amounts, other than tax-exempt interest, not distributed on a
timely basis in accordance with a calendar year distribution requirement are
subject to a nondeductible 4% excise tax. To prevent imposition of the excise
tax, each Fund must distribute for each calendar year an amount equal to the sum
of (1) at least 98% of its ordinary income (excluding any capital gains or
losses) for the calendar year, (2) at least 98% of the excess of its capital
gains over capital losses (adjusted for certain ordinary losses) for the
one-year period ending October 31 of such year, and (3) all ordinary income and
capital gain net income (adjusted for certain ordinary losses) for previous
years that were not distributed during such years. A distribution, including an
"exempt-interest dividend," will be treated as paid on December 31, of a
calendar year if it is declared by a Fund during October, November or December
of that year to shareholders of record on a date in such a month and paid by the
Fund during January of the following year. Such distributions will be taxable to
shareholders in the calendar year in which the distributions are declared,
rather than the calendar year in which the distributions are received.

Some Funds may invest in stocks of foreign companies that are
classified under the Code as passive foreign investment companies ("PFICs"). In
general, a foreign company is classified as a PFIC under the Code if at least
one-half of its assets constitutes investment-type assets or 75% or more of its
gross income is investment-type income. Under the PFIC rules, an "excess
distribution" received with respect to PFIC stock is treated as having been
realized ratably over the period during which the Fund held the PFIC stock. A
Fund itself will be subject to tax on the portion, if any, of the excess
distribution that is allocated to the Fund's holding period in prior taxable
years (and an interest factor will be added to the tax, as if the tax had
actually been payable in such prior taxable years) even though the Fund
distributes the corresponding income to shareholders. Excess distributions
include any gain from the sale of PFIC stock as well as certain distributions
from a PFIC. All excess distributions are taxable as ordinary income.

A Fund may be able to elect alternative tax treatment with
respect to PFIC stock. Under an election that currently may be available, a Fund
generally would be required to include in its gross income its share of the
earnings of a PFIC on a current basis, regardless of whether any distributions
are received from the PFIC. If this election is made, the special rules,
discussed above, relating to the taxation of excess distributions, would not
apply. In addition, other elections may become available that would affect the
tax treatment of PFIC stock held by a Fund. Each Fund's intention to qualify
annually as a regulated investment company may limit its elections with respect
to PFIC stock.

Because the application of the PFIC rules may affect, among
other things, the character of gains, the amount of gain or loss and the timing
of the recognition of income with respect to PFIC stock, as well as subject a
Fund itself to tax on certain income from PFIC stock, the amount that must be
distributed to shareholders and that will be taxed to shareholders as ordinary
income or long-term capital gain may be increased or decreased substantially as
compared to a Fund that did not invest in PFIC stock. Investors should consult
their own tax advisors in this regard.
<PAGE> 231
31

Distributions of investment company taxable income generally
are taxable to shareholders as ordinary income. Distributions from certain of
the Funds may be eligible for the dividends-received deduction available to
corporations. To the extent dividends received by a Fund are attributable to
foreign corporations, a corporation that owns shares will not be entitled to the
dividends-received deduction with respect to its pro rata portion of such
dividends, since the dividends-received deduction is generally available only
with respect to dividends paid by domestic corporations. Proposed legislation,
if enacted, would reduce the dividends-received deduction from 70 to 50 percent.

Distributions of net long-term capital gains, if any,
designated by the Funds as long-term capital gain dividends are taxable to
shareholders as long-term capital gain, regardless of the length of time the
Funds' shares have been held by a shareholder. All distributions are taxable to
the shareholder in the same manner whether reinvested in additional shares or
received in cash. Shareholders will be notified annually as to the Federal tax
status of distributions.

Distributions by a Fund reduce the net asset value of the
Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution, nevertheless, would be taxable to
the shareholder as ordinary income or capital gain as described above, even
though, from an investment standpoint, it may constitute a partial return of
capital. In particular, investors should be careful to consider the tax
implications of buying shares just prior to a distribution by the Funds. The
price of shares purchased at that time includes the amount of the forthcoming
distribution. Those purchasing just prior to a distribution will receive a
distribution which nevertheless generally will be taxable to them.

Upon the taxable disposition (including a sale or redemption)
of shares of a Fund, a shareholder may realize a gain or loss depending upon his
basis in his shares. Such gain or loss generally will be treated as capital gain
or loss if the shares are capital assets in the shareholders' hands. Such gain
or loss will be long-term or short-term, generally depending upon the
shareholder's holding period for the shares. However, a loss realized by a
shareholder on the disposition of Fund shares with respect to which capital gain
dividends have been paid will, to the extent of such capital gain dividends, be
treated as long-term capital loss if such shares have been held by the
shareholder for six months or less. A loss realized on the redemption, sale or
exchange of Fund shares will be disallowed to the extent an exempt interest
dividend was received with respect to those shares if the shares have been held
by the shareholder for six months or less. Further, a loss realized on a
disposition will be disallowed to the extent the shares disposed of are replaced
(whether by reinvestment of distributions or otherwise) within a period of 61
days beginning 30 days before and ending 30 days after the shares are disposed
of. In such a case, the basis of the shares acquired will be adjusted to reflect
the disallowed loss. Shareholders receiving distributions in the form of
additional shares will have a cost basis for Federal income tax purposes in each
share received equal to the net asset value of a share of the Funds on the
reinvestment date.

The taxation of equity options is governed by Code section
1234. Pursuant to Code section 1234, the premium received by a Fund for selling
a put or call option is not
<PAGE> 232
32

included in income at the time of receipt. If the option expires, the premium is
short-term capital gain to the Fund. If the Fund enters into a closing
transaction, the difference between the amount paid to close out its position
and the premium received is short-term capital gain or loss. If a call option
written by a Fund is exercised, thereby requiring the Fund to sell the
underlying security, the premium will increase the amount realized upon the sale
of such security and any resulting gain or loss will be a capital gain or loss,
and will be long-term or short-term depending upon the holding period of the
security. With respect to a put or call option that is purchased by a Fund, if
the option is sold any resulting gain or loss will be a capital gain or loss,
and will be long-term or short-term, depending upon the holding period of the
option. If the option expires, the resulting loss is a capital loss and is
long-term or short-term, depending upon the holding period of the option. If the
option is exercised, the cost of the option, in the case of a call option, is
added to the basis of the purchased security and in the case of a put option,
reduces the amount realized on the underlying security in determining gain or
loss.

Certain of the options, futures contracts, and forward foreign
currency exchange contracts that several of the Funds may invest in are
so-called "section 1256 contracts." With certain exceptions, gains or losses on
section 1256 contracts generally are considered 60% long-term and 40% short-term
capital gains or losses ("60/40"). Also, section 1256 contracts held by a Fund
at the end of a taxable year (and, generally, for purposes of the 4% excise tax,
on October 31 of each year) are "marked-to market" with the result that
unrealized gains or losses are treated as though they were realized and the
resulting gain or loss is treated as 60/40 gain or loss. Investors should
consult their own tax advisors in this regard.

Generally, the hedging transactions undertaken by a Fund may
result in "straddles" for Federal income tax purposes. The straddle rules may
affect the character of gains (or losses) realized by a Fund. In addition,
losses realized by a Fund on a position that is part of a straddle may be
deferred under the straddle rules, rather than being taken into account in
calculating the taxable income for the taxable year in which such losses are
realized. Because only a few regulations implementing the straddle rules have
been promulgated, the tax consequences to a Fund of hedging transactions are not
entirely clear. Hedging transactions may increase the amount of short-term
capital gain realized by a Fund which is taxed as ordinary income when
distributed to stockholders.

A Fund may make one or more of the elections available under
the Code which are applicable to straddles. If a Fund makes any of the
elections, the amount, character and timing of the recognition of gains or
losses from the affected straddle positions will be determined under the rules
according to the election(s) made. The rules applicable under certain of the
elections may operate to accelerate the recognition of gains or losses from the
affected straddle positions.

Because application of the straddle rules may affect the
character of gains or losses, defer losses and/or accelerate the recognition of
gains or losses from the affected straddle positions, the amount which must be
distributed to shareholders and which will be taxed to shareholders as ordinary
income or long-term capital gain may be increased or
<PAGE> 233
33

decreased substantially as compared to a Fund that did not engage in such
hedging transactions. Investors should consult their own tax advisors in this
regard.

Certain requirements that must be met under the Code in order
for a Fund to qualify as a regulated investment company, may limit the extent to
which a Fund will be able to engage in transactions in options, futures, and
forward contracts.

Under the Code, gains or losses attributable to fluctuations
in exchange rates which occur between the time a Fund accrues interest,
dividends or other receivables, or accrues expenses or other liabilities
denominated in a foreign currency, and the time the Fund actually collects such
receivables, or pays such liabilities, generally are treated as ordinary income
or ordinary loss. Similarly, on disposition of debt securities denominated in a
foreign currency and on disposition of certain options and forward and futures
contracts, gains or losses attributable to fluctuations in the value of foreign
currency between the date of acquisition of the security or contract and the
date of disposition also are treated as ordinary gain or loss. These gains or
losses, referred to under the Code as "section 988" gains or losses, may
increase, decrease, or eliminate the amount of a Fund's investment company
taxable income to be distributed to its shareholders as ordinary income.
Investors should consult their own tax advisors in this regard.

Income received by a Fund from sources within foreign
countries may be subject to withholding and other similar income taxes imposed
by the foreign country. If more than 50% of the value of a Fund's total assets
at the close of its taxable year consists of securities of foreign corporations,
the Fund will be eligible and intends to elect to "pass-through" to its
shareholders the amount of such foreign taxes paid by the Fund. Pursuant to this
election, a shareholder would be required to include in gross income (in
addition to taxable dividends actually received) his pro rata share of the
foreign taxes paid by a Fund and would be entitled either to deduct his pro rata
share of foreign taxes in computing his taxable income or to use it as a foreign
tax credit against his U.S. Federal income tax liability, subject to
limitations. No deduction for foreign taxes may be claimed by a shareholder who
does not itemize deductions, but such a shareholder may be eligible to claim the
foreign tax credit (see below). Each shareholder will be notified within 60 days
after the close of a Fund's taxable year whether the foreign taxes paid by a
Fund will "pass-through" for that year and, if so, such notification will
designate (a) the shareholder's portion of the foreign taxes paid to each such
country, and (b) the portion of the dividend which represents income derived
from foreign sources.

Generally, a credit for foreign taxes is subject to the
limitation that it may not exceed the shareholder's U.S. tax attributable to his
total foreign source taxable income. For this purpose, if a Fund makes the
election described in the preceding paragraph, the source of the Fund's income
flows through to its shareholders. With respect to a Fund, gains from the sale
of securities will be treated as derived from U.S. sources and certain currency
fluctuations gains, including fluctuation gains from foreign
currency-denominated debt securities, receivables and payables, will be treated
as ordinary income derived from U.S. sources. The limitation on the foreign tax
credit is applied separately to foreign source passive income (as defined for
purposes of the foreign tax credit) including foreign source
<PAGE> 234
34

passive income of a Fund. The foreign tax credit may offset only 90% of the
alternative minimum tax imposed on corporations and individuals, and foreign
taxes generally may not be deducted in computing alternative minimum taxable
income.

The Funds are required to report to the Internal Revenue
Service ("IRS") all distributions except in the case of certain exempt
shareholders. All such distributions generally are subject to withholding of
Federal income tax at a rate of 31% ("backup withholding") in the case of
non-exempt shareholders if (1) the shareholder fails to furnish the Funds with
and to certify the shareholder's correct taxpayer identification number or
social security number, (2) the IRS notifies the Funds or a shareholder that the
shareholder has failed to report properly certain interest and dividend income
to the IRS and to respond to notices to that effect, or (3) when required to do
so, the shareholder fails to certify that he is not subject to backup
withholding. If the withholding provisions are applicable, any such
distributions, whether reinvested in additional shares or taken in cash, will be
reduced by the amounts required to be withheld. Backup withholding is not an
additional tax. Any amount withheld may be credited against the shareholder's
U.S. Federal income tax liability. Investors may wish to consult their tax
Sub-Advisers about the applicability of the backup withholding provisions.

The foregoing discussion relates only to Federal income tax
law as applicable to U.S. persons (i.e., U.S. citizens and residents and U.S.
corporations, partnerships, trusts and estates). Distributions by the Funds also
may be subject to state and local taxes and their treatment under state and
local income tax laws may differ from Federal income tax treatment.
Distributions of a Fund which are derived from interest on obligations of the
U.S. Government and certain of its agencies and instrumentalities may be exempt
from state and local income taxes in certain states. Shareholders should consult
their tax Sub-Advisers with respect to particular questions of Federal, state
and local taxation. Shareholders who are not U.S. persons should consult their
tax Sub-Advisers regarding U.S. and foreign tax consequences of ownership of
shares of the Funds including the likelihood that distributions to them would be
subject to withholding of U.S. tax at a rate of 30% (or at a lower rate under a
tax treaty).

Federal Tax-Exempt Bond Fund. This Fund intends to manage its
portfolio so that it will be eligible to pay "exempt-interest dividends" to
shareholders. The Fund will so qualify if, at the close of each quarter of its
taxable year, at least 50% of the value of its total assets consists of state,
municipal, and certain other securities, the interest on which is exempt from
the regular Federal income tax. To the extent that the Fund's dividends
distributed to shareholders are derived from such interest income and are
designated as exempt-interest dividends by the Fund, they will be excludable
from a shareholder's gross income for Federal income tax purposes.
Exempt-interest dividends, however, must be taken into account by shareholders
in determining whether their total incomes are large enough to result in
taxation of up to 85% of their Social Security benefits and certain railroad
retirement benefits. The Fund will inform shareholders annually as to the
portion of the distributions from the Fund which constitute except-interest
dividends. In addition, for corporate shareholders of the Fund, exempt interest
dividends may comprise part or all of an adjustment to alternative minimum
taxable income. Exempt-interest dividends that are
<PAGE> 235
35

attributable to certain private activity bonds, while not subject to the regular
Federal income tax, may constitute an item of tax preference for purposes of the
alternative minimum tax.

To the extent that the Fund's dividends are derived from its
investment company taxable income (which includes interest on its temporary
taxable investments and the excess of net short-term capital gain over net
long-term capital loss), they are considered ordinary (taxable) income for
Federal income tax purposes. Such dividends will not qualify for the
dividends-received deduction for corporations. Distributions, if any, of net
long-term capital gains (the excess of net long-term capital gain over net
short-term capital loss) designated by a Fund as long-term capital gain
dividends are taxable to shareholders as long-term capital gain regardless of
the length of time the shareholder has owned shares of the Fund.

OTHER INFORMATION

Capitalization

The Trust is a Delaware business trust established under a
Declaration of Trust dated July __, 1998 and currently consists of twenty
separately managed portfolios, all of which are discussed in this SAI. Each
portfolio is comprised of four different classes of shares -- Class A shares,
Class B shares, Class C shares and Class X shares.

The capitalization of the Funds consists solely of an
unlimited number of shares of beneficial interest with a par value of $0.001
each. The Board of Trustees may establish additional Funds (with different
investment objectives and fundamental policies) at any time in the future.
Establishment and offering of additional Funds will not alter the rights of the
shareholders. When issued, shares are fully paid, non-assessable, redeemable and
freely transferable. Shares do not have preemptive rights or subscription
rights. In any liquidation of a Fund, each shareholder is entitled to receive
his pro rata share of the net assets of that Fund.

In the event of a liquidation or dissolution of the Funds or
an individual Fund, shareholders of a particular Fund would be entitled to
receive the assets available for distribution belonging to such Fund, and a
proportionate distribution, based upon the relative net asset values of the
respective Funds, of any general assets not belonging to any particular Fund
which are available for distribution. Shareholders of a Fund are entitled to
participate in the net distributable assets of the particular Fund involved in
liquidation, based on the number of shares of the Fund that are held by each
shareholder.

Voting Rights

Under the Declaration of Trust, the Funds are not required to
hold annual meetings of each Fund's shareholders to elect Trustees or for other
purposes. It is not anticipated that the Funds will hold shareholders' meetings
unless required by law or the Declaration of Trust. In this regard, the Trust
will be required to hold a meeting to elect
<PAGE> 236
36

Trustees to fill any existing vacancies on the Board if, at any time, fewer than
a majority of the Trustees have been elected by the shareholders of the Funds.
In addition, the Declaration of Trust provides that the holders of not less than
two-thirds of the outstanding shares of the Funds may remove persons serving as
Trustee either by declaration in writing or at a meeting called for such
purpose. The Trustees are required to call a meeting for the purpose of
considering the removal of persons serving as Trustee if requested in writing to
do so by the holders of not less than 10% of the outstanding shares of the
Funds. To the extent required by applicable law, the Trustees shall assist
shareholders who seek to remove any person serving as Trustee.

The Funds' shares do not have cumulative voting rights, so
that the holder of more than 50% of the outstanding shares may elect the entire
Board of Trustees, in which case the holders of the remaining shares would not
be able to elect any Trustees.

Shareholders of all of the Funds, as well as those of any
other investment portfolio now or hereafter offered by the Fund, will vote
together in the aggregate and not separately on a Fund-by-Fund basis, except as
otherwise required by law or when permitted by the Board of Trustees. Rule 18f-2
under the 1940 Act provides that any matter required to be submitted to the
holders of the outstanding voting securities of an investment company such as
the Funds shall not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of each Fund
affected by the matter. A Fund is affected by a matter unless it is clear that
the interests of each Fund in the matter are substantially identical or that the
matter does not affect any interest of the Fund. Under the Rule, the approval of
an investment advisory agreement or any change in a fundamental investment
policy would be effectively acted upon with respect to a Fund only if approved
by a majority of the outstanding shares of such Fund. However, the Rule also
provides that the ratification of the appointment of independent auditors, the
approval of principal underwriting contracts and the election of trustees may be
effectively acted upon by shareholders of the Funds voting together in the
aggregate without regard to a particular Fund.

Custodian, Transfer Agent and Dividend Disbursing Agent

_______ acts as custodian of the Trust's assets. First Data
acts as transfer agent for the Funds. The Adviser compensates First Data for
providing personnel and facilities to perform transfer agency related services
for the Trust at a rate intended to represent the cost of providing such
services. The Trustees of the Funds have reviewed and approved custodial
arrangements for securities held outside of the United States in accordance with
Rule 17f-5 of the 1940 Act.

Yield and Performance Information

The Funds may, from time to time, include their yields,
effective yields, tax equivalent yields and average annual total returns in
advertisements or reports to shareholders or prospective investors.
<PAGE> 237
37

Current yields for the Money Market Funds will be based on the
change in the value of a hypothetical investment (exclusive of capital changes
such as gains or losses from the sale of securities and unrealized appreciation
and depreciation) over a particular seven-day period, less a pro rata share of
each Fund's expenses accrued over that period (the "base period"), and stated as
a percentage of the investment at the start of the base period (the "base period
return"). The base period return is then annualized by multiplying by 365/7,
with the resulting yield figure carried to at least the nearest hundredth of one
percent. "Effective yield" for each Money Market Fund assumes that all dividends
received during the base period have been reinvested. Calculation of "effective
yield" begins with the same "base period return" used in the calculation of
yield, which is then annualized to reflect weekly compounding pursuant to the
following formula:

Effective Yield = [(Base Period Return +1) [(RAISED TO THE (365/7) POWER]] - 1.

Quotations of yield for the Non-Money Market Funds will be
based on the investment income per share earned during a particular 30-day
period, less expenses accrued during a period ("net investment income") and will
be computed by dividing net investment income by the maximum offering price per
share on the last day of the period, according to the following formula:

a-b 6
YIELD = 2[( ---- +1 ) -1]
cd

where a = dividends and interest earned during the period, b =
expenses accrued for the period (net of any reimbursements), c = the average
daily number of shares outstanding during the period that were entitled to
receive dividends, and d = the maximum offering price per share on the last day
of the period.

Quotations of the tax-equivalent yield for the Federal
Tax-Exempt Bond Fund will be calculated according to the following formula:

TAX EQUIVALENT YIELD = ( E )
------
1-p

E = Tax-Exempt yield
p = stated income tax rate

Quotations of average annual total return will be expressed in
terms of the average annual compounded rate of return of a hypothetical
investment in a Fund over periods of 1, 5 and 10 years (up to the life of the
Fund), calculated pursuant to the following formula:

n
P(l+T) = ERV
<PAGE> 238
38

(where P = a hypothetical initial payment of $1,000, T = the
average annual total return, n = the number of years, and ERV = the ending
redeemable value of a hypothetical $1,000 payment made at the beginning of the
period). All total return figures will reflect a proportional share of Fund
expenses (net of certain reimbursed expenses) on an annual basis, and will
assume that all dividends and distributions are reinvested when paid.

Quotations of yield and total return will reflect only the
performance of a hypothetical investment in the Funds during the particular time
period shown. Yield and total return for the Funds will vary based on changes in
the market conditions and the level of a Fund's expenses, and no reported
performance figure should be considered an indication of performance which may
be expected in the future.

In connection with communicating its yields or total return to
current or prospective shareholders, the Funds also may compare these figures to
the performance of other mutual funds tracked by mutual fund rating services or
to other unmanaged indices which may assume reinvestment of dividends but
generally do not reflect deductions for administrative and management costs.

Performance information for the Funds may be compared, in
reports and promotional literature, to: (i) the Standard & Poor's 500 Stock
Index, Dow Jones Industrial Average, or other unmanaged indices so that
investors may compare the Funds' results with those of a group of unmanaged
securities widely regarded by investors as representative of the securities
markets in general; (ii) other groups of mutual funds tracked by Lipper
Analytical Services, a widely used independent research firm which ranks mutual
funds by overall performance, investment objectives, and assets, or tracked by
other services, companies, publications, or persons who rank mutual funds on
overall performance or other criteria; and (iii) the Consumer Price Index
(measure for inflation) to assess the real rate of return from an investment of
dividends but generally do not reflect deductions for administrative and
management costs and expenses.

Investors who purchase and redeem shares of the Funds through
a customer account maintained at a Service Organization may be charged one or
more of the following types of fees as agreed upon by the Service Organization
and the investor, with respect to the customer services provided by the Service
Organization: account fees (a fixed amount per month or per year); transaction
fees (a fixed amount per transaction processed); compensating balance
requirements (a minimum dollar amount a customer must maintain in order to
obtain the services offered); or account maintenance fees (a periodic charge
based upon a percentage of the assets in the account or of the dividends paid on
those assets). Such fees will have the effect of reducing the yield and average
annual total return of the Funds for those investors. Investors who maintain
accounts with the Trust as transfer agent will not pay these fees.

Independent Accountants
<PAGE> 239
39

_________________ serves as the independent accountants for
the Funds. _________________ provides audit services, tax return preparation and
assistance and consultation in connection with review of SEC filings.
___________________ address is_______________________________________________
_________________________________________.

Registration Statement

This SAI and the Prospectus do not contain all the information
included in the Funds' Registration Statement filed with the SEC under the
Securities Act of 1933 with respect to the securities offered hereby, certain
portions of which have been omitted pursuant

to the rules and regulations of the SEC. The Registration Statement, including
the exhibits filed therewith, may be examined at the office of the SEC in
Washington, D.C.

Statements contained herein and in the Prospectus as to the
contents of any contract or other documents referred to are not necessarily
complete, and, in each instance, reference is made to the copy of such contract
or other documents filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.

<PAGE> 240

TABLE OF CONTENTS

Page

STATEMENT OF ADDITIONAL INFORMATION........................................ 1

INVESTMENT POLICIES........................................................ 1
COMMERCIAL PAPER.................................................. 1
CORPORATE DEBT SECURITIES......................................... 1
REPURCHASE AGREEMENTS............................................. 1
BORROWING......................................................... 2
REVERSE REPURCHASE AGREEMENTS..................................... 2
VARIABLE RATE DEMAND OBLIGATIONS AND FLOATING RATE
INSTRUMENTS.............................................. 2
DOLLAR ROLL TRANSACTIONS.......................................... 3
LOANS OF PORTFOLIO SECURITIES..................................... 4
MORTGAGE-RELATED SECURITIES ISSUED BY U.S. GOVERNMENT
AGENCIES AND INSTRUMENTALITIES........................... 4
GNMA CERTIFICATES................................................. 5
FNMA CERTIFICATES................................................. 5
FHLMC SECURITIES.................................................. 6
FHLMC CERTIFICATES................................................ 6
NON-AGENCY MORTGAGE-BACKED SECURITIES............................. 7
ADJUSTABLE RATE MORTGAGE SECURITIES............................... 7
COLLATERALIZED MORTGAGE OBLIGATIONS............................... 8
OTHER ASSET-BACKED SECURITIES..................................... 8
REAL ESTATE INVESTMENT TRUSTS..................................... 8
FOREIGN SECURITIES................................................ 10
OPTIONS ON SECURITIES............................................. 10
OVER-THE-COUNTER OPTIONS.......................................... 11
OPTIONS ON SECURITIES INDICES..................................... 13
FOREIGN CURRENCY OPTIONS.......................................... 13
FOREIGN CURRENCY FUTURES TRANSACTIONS............................. 14
CONVERTIBLE SECURITIES............................................ 14
CLOSED-END INVESTMENT COMPANIES................................... 15
FOREIGN GOVERNMENT OBLIGATIONS; SECURITIES OF
SUPRANATIONAL ENTITIES................................... 15
U.S. GOVERNMENT SECURITIES........................................ 15
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES....................... 16
INTEREST RATE FUTURES CONTRACTS................................... 16

INVESTMENT RESTRICTIONS.................................................... 17

MANAGEMENT................................................................. 19
Trustees and Officers............................................. 19
<PAGE> 241
Page
----

Investment Manager.............................................. 20
Distribution of Fund Shares..................................... 21
Administrator, Bookkeeping and Pricing Agent.................... 21
Service Organizations........................................... 22

DETERMINATION OF NET ASSET VALUE......................................... 23

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION........................... 24
REDEMPTION...................................................... 24
REINVESTMENT PRIVILEGE.......................................... 25

PORTFOLIO TRANSACTIONS................................................... 26
Portfolio Turnover.............................................. 27

TAXATION ................................................................ 28

OTHER INFORMATION........................................................ 34
Capitalization.................................................. 34
Voting Rights................................................... 34
Custodian, Transfer Agent and Dividend Disbursing Agent......... 35
Yield and Performance Information............................... 35
Independent Accountants......................................... 37
Registration Statement.......................................... 37
<PAGE> 242
4

PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) (1) Financial Statement included in Part A: None

(2) Financial Information incorporated by reference in Part B:
None

(b) Exhibits:

<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------

<S> <C> <C>
*1 -- Declaration of Trust.

*2 -- By-Laws of Registrant.

3 -- None.

4 -- None.

*5(a) -- Management Agreement between Registrant and ING Mutual Funds
Management Company.

*5(b) -- Form of Sub-Advisory Agreement between the Manager and the Sub-
Advisers.

*6 -- Distribution Agreement between Registrant and the Distributor.

7 -- None.

*8 -- Custodian Agreement between Registrant and the Custodian.

*9(a) -- Transfer Agency Agreement between Registrant and Transfer Agent.

*9(b) -- Service Organization Agreement between Registrant and Participating
Organizations.

*10 -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison, counsel to
Registrant.

*11 -- Consent of Independent Accountants.

12 -- None.

*l3 -- Subscription Agreement

14 -- None.

*l5(a) -- Rule l2b-l Distribution Plan.
</TABLE>
<PAGE> 243
5
<TABLE>
<S> <C> <C>
*15(b) -- Rule 12b-1 Shareholder Servicing Agreement between Registrant and
Distributor.

*15(c) -- Distributor's Selected Dealer Agreement.

*l6 -- Schedule for Computation of Performance Quotations.

*17 -- Financial Data Schedules

*18 -- Rule 18F-3 Plan

Other Exhibits

*(A) -- Power of Attorney
</TABLE>

* To be filed by Amendment.

Item 25. Persons Controlled by or under Common Control with Registrant.

None.

Item 26. Number of Holders of Securities at July 23, 1998.

None.

Item 27. Indemnification.

Reference is made to Article IV of Registrants By-Laws and
paragraphs 9 and 10 of the Distribution Contract.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be permitted to
trustees, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant
understands that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling person of
the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such issue.

The Registrant will purchase an insurance policy insuring its
officers and trustees against liabilities, and certain costs of
defending claims against such officers and trustees, to the extent
such officers and trustees are not found to have committed conduct
constituting
<PAGE> 244
6

willful misfeasance, bad faith, gross negligence or reckless
disregard in the performance of their duties. The insurance policy
also insures the Registrant against the cost of indemnification
payments to officers under certain circumstances.

Section 4 of the Management Agreement between Registrant and
Manager, Section 9 of the Management Agreement between Registrant
and Manager and Section 9 of the Distribution Contract between
Registrant and Distributor limit the liability of Manager, and the
Distributor to liabilities arising from willful misfeasance, bad
faith or gross negligence in the performance of their respective
duties or from reckless disregard by them of their respective
obligations and duties under the agreements.

The Registrant hereby undertakes that it will apply the
indemnification provisions of its Declaration of Trust, By-Laws,
Management Agreement and Distribution Contract in a manner
consistent with Release No. 11330 of the Securities and Exchange
Commission under the 1940 Act so long as the interpretations of
Section 17(h) and 17(i) of such Act remain in effect and are
consistently applied.

Item 28. Business and Other Connections
of Investment Adviser

To be provided by Amendment.

Item 29. Principal Underwriter

(a) Officers and Directors

Name and Positions and Positions and
Principal Business Offices with Offices with
Address Registrant Underwriter
------- ---------- -----------
To be provided by Amendment.

(b) Not applicable.

Item 30. Location of Accounts and Records

All accounts, books and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the
rules thereunder are maintained at the offices of the Manager.

Item 31. Management Services

Not applicable.

Item 32. Undertakings
<PAGE> 245
7

(a) Registrant undertakes to call a meeting of shareholders
for the purpose of voting upon the removal of a Trustee
if requested to do so by the holders of at least 10% of
the Registrant's outstanding shares.

(b) Registrant undertakes to provide the support to
shareholders specified in Section 16(c) of the 1940 Act
as though that Section applied to the Registrant.
<PAGE> 246
8

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, and State of New York, on July 23,
1998.

ING FUNDS TRUST
(Registrant)

By: /s/ John J. Pileggi
---------------------
John J. Pileggi
Sole Trustee
<PAGE> 247
9

Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.

Signature Title Date
- --------- ----- ----

/s/ John J. Pileggi July 23, 1998
- ------------------------------ -----------------
John J. Pileggi
Sole Trustee