As filed with the Securities and Exchange Commission on April 28, 2000
Registration No. 333-70093
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT No. 1
TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
A. Exact name of trust: EQUITY SECURITIES TRUST, SERIES 21, SIGNATURE SERIES,
GABELLI ENTERTAINMENT & MEDIA TRUST II
B. Name of depositor: ING FUNDS DISTRIBUTOR, INC.
C. Complete address of depositor's principal executive offices:
ING FUNDS DISTRIBUTOR, INC.
1475 Dunwoody Drive
West Chester, Pennsylvania 19380
D. Name and complete address of agent for service:
PETER J. DeMARCO Copy of comments to:
Senior Vice President MICHAEL R. ROSELLA, ESQ.
ING Funds Distributor, Inc. Battle Fowler LLP
1475 Dunwoody Drive 75 East 55th Street
West Chester, Pennsylvania 19380 New York, NY 10022
(212) 856-6858
It is proposed that this filing become effective (check appropriate box)
|_| immediately upon filing pursuant to paragraph (b) of Rule 485
|x| on April 29, 2000 pursuant to paragraph (b)
|_| 60 days after filing pursuant to paragraph (a)
|_| on ( date ) pursuant to paragraph (a) of Rule 485
================================================================================
The Registrant filed a Rule 24f-2 Notice for its fiscal year ended December 31,
1999 on or about March 29, 2000.
935894.1
<PAGE>
- --------------------------------------------------------------------------------
LOGO
- --------------------------------------------------------------------------------
EQUITY SECURITIES TRUST
SERIES 21
SIGNATURE SERIES, GABELLI ENTERTAINMENT & MEDIA TRUST II
The Trust is a unit investment trust designated Equity Securities Trust, Series
21, Signature Series, Gabelli Entertainment & Media Trust II. The Sponsor is ING
Funds Distributor, Inc. (successor to Reich & Tang Distributors, Inc.). The
Trust consists of a fixed, diversified portfolio of publicly traded equity
securities of entertainment and media companies in the United States and
throughout the world. The portfolio will be purchased by the Trust based upon
the recommendations of the portfolio consultant, Gabelli Funds, Inc. The Trust
seeks to provide capital appreciation. Current income is a secondary objective
of the Trust. The Sponsor cannot assure that the Trust will achieve these
objectives. The minimum purchase is 100 Units.
This Prospectus consists of two parts. Part A contains the Summary of Essential
Information including summary material relating to the Trust, the Portfolio and
the Statement of Financial Condition of the Trust. Part B contains more detailed
general information about the Trust. Part A may not be distributed unless
accompanied by Part B. Please read and retain both parts of this Prospectus for
future reference.
================================================================================
================================================================================
The Securities and Exchange Commission has not approved or disapproved
these securities or passed upon the adequacy of this Prospectus. Any
representation to the contrary is a criminal offense.
PROSPECTUS DATED APRIL 30, 2000
939832.2
<PAGE>
THE TRUST
OBJECTIVES. The Trust seeks to provide investors with capital appreciation.
Current income is a secondary objective of the Trust. There is no guarantee that
the objectives of the Trust will be achieved.
PORTFOLIO SELECTION. The Trust seeks to achieve its objectives by investing
primarily in a portfolio of the equity securities of entertainment and media
companies based both in the United States and throughout the world. These equity
securities include the common stocks of both domestic and foreign companies and
foreign equity securities in the form of American Depository Receipts (ADRs) or
Global Depository Receipts (GDRs). As used herein, the term "Securities" means
the equity securities of the companies initially deposited in the Trust and
contracts and funds for the purchase of such companies, and any additional
securities acquired and held by the Trust pursuant to the provisions of the
Indenture.
DESCRIPTION OF PORTFOLIO.* The Portfolio contains 37 issues of common stock (of
which 28 are of domestic issuers), 5 ADRs and 1 GDR. The percentages of the
Portfolio by country of organization or principal place of business of the
issuers are as follows: Brazil 3.49%, Canada 13.99%, Italy 3.54%, Japan 2.16%,
Mexico 2.89%, Spain 2.59% and United States 71.34%. 100% of the issues are
represented by the Sponsor's contracts to purchase. 67.7% of the Portfolio is
listed on the New York Stock Exchange, 3.58% on the American Stock Exchange and
28.72% on the Nasdaq.
The Trust is concentrated in the entertainment and media industries and the
communications industry. A trust is considered to be "concentrated" in a
particular category or industry when the securities in that category or that
industry constitute 25% or more of the total assets of the portfolio.
RISK CONSIDERATIONS. Unitholders can lose money by investing in this Trust. The
value of the units and the Securities can each decline in value. An investment
in Units of the Trust should be made with an understanding of the following
risks:
o For common stocks, the risk that the financial condition of the
issuers of the Securities may become impaired or that the general
condition of the stock market may worsen (both of which may contribute
directly to a decrease in the value of the Securities and thus in the
value of the Units).
o For ADRs, the additional risks associated with government, economic,
monetary and fiscal policies, inflation and interest rates, economic
expansion or contraction, and global or regional political, economic
or banking crises.
o Since the portfolio of the Trust is fixed and "not managed", in
general the Sponsor can only sell securities under certain
extraordinary circumstances, at the Trust's termination or in order to
meet redemptions. As a result, the price at which each security is
sold may not be the highest price it attained during the life of the
Trust.
o When cash or a letter of credit is deposited with instructions to
purchase securities in order to create additional units, an increase
in the price of a particular security between the time of deposit and
the time that securities are purchased will cause the units to be
comprised of less of that security and more of the remaining
securities. In addition, brokerage fees incurred in purchasing the
Securities will be an expense of the Trust.
- --------------------
* For changes in the Trust Portfolio from January 1, 2000 to March 15, 2000
see Schedule A on page A-6 which reflects the content or "makeup" of the
Trust as of March 15, 2000.
939832.2
A-2
<PAGE>
o A decline in the value of the Securities during the initial offering
period may require additional Securities to be sold in order to
reimburse the Sponsor for organization costs. This would result in a
decline in the value of the Units.
PUBLIC OFFERING PRICE. The Public Offering Price per 100 units of the Trust is
calculated by:
o dividing the aggregate value of the underlying securities and cash
held in the Trust by the number of units outstanding;
o adding a sales charge of 3.95% (4.112% of the net amount invested);
and
o multiplying the result by 100.
The price of a single unit, or any multiple thereof, is calculated by dividing
the Public Offering Price per 100 units by 100 and multiplying by the number of
units. The Public Offering Price per Unit will vary on a daily basis in
accordance with fluctuations in the aggregate value of the underlying Securities
and each investors purchase price will be computed as of the date the units are
purchased.
DISTRIBUTIONS. Distributions of dividends received, less expenses, will be made
by the Trust on the last business day of every June and December. The final
distribution will be made within a reasonable period of time after the Trust
terminates.
MARKET FOR UNITS. Unitholders may sell their units to the Sponsor or the Trustee
at any time, without fee or penalty. The Sponsor intends to repurchase units
from unitholders throughout the life of the Trust at prices based upon the
market value of the underlying Securities. However, the Sponsor is not obligated
to maintain a market and may stop doing so without prior notice for any business
reason. If a market is not maintained a Unitholder will be able to redeem his
Units with the Trustee at the same price. The existence of a liquid trading
market for these Securities may depend on whether dealers will make a market in
these Securities. There can be no assurance of the making or the maintenance of
a market for any of the Securities contained in the portfolio of the Trust or of
the liquidity of the Securities in any markets made. The price at which the
Securities may be sold to meet redemptions and the value of the Units will be
adversely affected if trading markets for the Securities are limited or absent.
TERMINATION. The Trust will terminate in approximately two years. At that time
investors may choose one of the following three options with respect to their
terminating distribution:
o receive the distribution in-kind if they own at least 2,500 Units;
o receive cash upon the liquidation of their pro rata share of the
Securities; or
o reinvest in a subsequent series of the Equity Securities Trust (if one
is offered) at a reduced sales charge.
REINVESTMENT PLAN. Unitholders may elect to automatically reinvest their
distributions, if any (other than the final distribution in connection with the
termination of the Trust) into additional units of the Trust. Investors
purchasing additional units of the Trust by automatically reinvesting their
distributions will not be assessed a sales charge. See "Reinvestment Plan" in
Part B for details on how to enroll in the Reinvestment Plan.
939832.2
A-3
<PAGE>
SUMMARY OF ESSENTIAL INFORMATION
As of December 31, 1999:
<TABLE>
<S> <C> <C>
Initial Date of Deposit: January 26, 1999 Rollover Notification Date: January 19, 2002 or
Aggregate Value of Securities: $13,069,133 another date as determined by the Sponsor.
Number of Units: 809,435 Minimum Value of Trust: The Trust may be
Fractional Undivided Interest in Trust: 1/809,435 terminated if the value of the Trust is less than 40% of
Public Offering Price per 100 Units: the aggregate value of the Securities at the completion
Net Assets of the Trust...................$ 13,059,957 of the Deposit Period.
Divided By 809,435 Units (times 100) ..... $ 1,613.47 Mandatory Termination Date: The earlier of
Plus Sales Charge of 3.95% of Public February 1, 2002 or the disposition of the last Security
Offering Price......................... $ 66.30 in the Trust.
Public Offering Price +................... $1,679.77 CUSIP Numbers: Cash: 294762 43 0
Sponsor's Repurchase Price And Trustee: The Chase Manhattan Bank
Redemption Price Per 100 Units ++: $ 1,613.47 Trustee's Fee: $.86 per 100 Units outstanding
Evaluation Time: 4:00 p.m. New York Time. Other Fees and Expenses: $.13 per 100 Units outstanding
Minimum Income or Principal Distribution: $1.00 Sponsor: ING Funds Distributor, Inc.
per 100 Units Sponsor's Supervisory Fee: Maximum of $.30 per 100
Percentage of Foreign Securities, American Units outstanding (see "Trust Expenses and Charges" in
Depository Receipts and Global Depository Part B).
Receipts: 28.66% Portfolio Consultant: Gabelli Funds, LLC.
Liquidation Period: Beginning 7 days prior to the Record Dates: Fifteenth day of June and December
Mandatory Termination Date. Distribution Dates: Last business day of June and
December
</TABLE>
- -----------------------
+ On the Initial Date of Deposit there will be no cash in the Income or
Principal Accounts. Anyone purchasing Units after such date will have
included in the Public Offering Price a pro rata share of any cash in such
Accounts.
++ As of the close of the initial offering period, the Sponsor's Repurchase
Price and Redemption Price per 100 Units for the Trust will be reduced to
reflect the payment of the organization costs to the Sponsor.
939832.2
A-4
<PAGE>
FINANCIAL AND STATISTICAL INFORMATION
Selected data for each Unit outstanding for the periods listed below:
<TABLE>
<CAPTION>
Distributions of
Units Net Asset Value** Distributions of Income During Principal During the
Period Ended Outstanding Per 100 Units the Period (per 100 Units) Period (Per 100 Units)
- ------------ ----------- ------------- -------------------------- ---------------------
<S> <C> <C> <C> <C>
December 31, 1999 809,435 $1,613.47 $2.75 --
</TABLE>
- --------------------
** Net Asset Value per Unit is calculated by dividing net assets as disclosed
in the "Statement of Net Assets" by the number of Units outstanding as of
the date of the Statement of Net Assets. See Note 5 of Notes to Financial
Statements for a description of the components of Net Assets.
939832.2
A-5
<PAGE>
Schedule A
<TABLE>
<CAPTION>
# Shares Description Market Value % Portfolio
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 3,566 AT HOME CORP. $ 100,962.38 0.77829%
2 3,211 AT&T CORP. 163,761.00 1.26238%
3 3,421 BELL ATLANTIC CORP. 191,789.81 1.47845%
4 1,916 CABLEVISION SYSTEMS CORP. CL-A 112,804.50 0.86958%
5 3,637 CISCO SYSTEMS, INC. 468,718.38 3.61321%
6 24,507 CITIZENS UTILITIES CO. 376,795.13 2.90460%
7 5,642 COMSAT CORP. 92,035.13 0.70947%
8 3,224 MOTOROLA 484,406.00 3.73414%
9 3,884 GENERAL MOTORS CORP.-CLASS H 467,051.00 3.60035%
10 5,356 GRUPO TELIVISA S.A. 388,979.50 2.99852%
11 2,507 HARCOURT GENERAL, INC. 86,491.50 0.66674%
12 2,828 INTEL CORP. 339,890.25 2.62011%
13 2,239 INTUIT INC. 112,089.94 0.86407%
14 9,542 LORAL SPACE & COMMUNICATIONS LTD. 109,733.00 0.84590%
15 3,548 LUCENT TECHNOLOGIES INC. 238,824.75 1.84103%
16 3,849 NEW YORK TIMES CO. 163,582.50 1.26101%
17 3,179 NIPPON TELEGRAPH & TELEPHONE CORP. 209,615.31 1.61586%
18 6,773 NORTEL NETWORKS CORP. 816,146.50 6.29142%
19 3,681 NTL, INC. 378,222.75 2.91560%
20 14,448 PAXSON COMMUNICATIONS CORP. 137,256.00 1.05806%
21 19,773 ROGERS COMMUNICATIONS, INC. 617,906.25 4.76325%
22 13,249 SEAGRAM COMPANY LTD. 819,781.88 6.31945%
23 17,824 SUN MICROSYSTEMS, INC. 1,572,968.00 12.12553%
24 7,150 AT&T CORP-LIBERTY MEDIA CL A 371,353.13 2.86265%
25 3,198 TELECOM ITALIA SP A 503,685.00 3.88275%
26 4,154 TELEFONICA S.A. 345,560.88 2.66382%
27 2,224 TELEPHONE AND DATA SYSTEMS, INC. 226,848.00 1.74870%
28 5,269 TELESP CELLULAR PARTICIPACOES S.A. 253,570.63 1.95470%
29 8,911 TELESP PARTICIPACOES S.A. 284,595.06 2.19386%
30 9,157 THE WALT DISNEY CO. 319,922.69 2.46619%
31 5,932 TIME WARNER, INC. 509,781.25 3.92975%
32 7,400 TRIBUNE CO. 252,062.50 1.94307%
33 10,520 USA NETWORKS, INC. 213,030.00 1.64218%
34 10,577 VIACOM, INC.-CLASS A 548,681.88 4.22962%
35 4,007 WESTERN WIRELESS CORP. 216,378.00 1.66799%
36 4,007 VOICESTREAM WIRELESS CORP. 477,083.44 3.67769%
37 707 NEIMAN-MARCUS GROUP CLASS B 15,907.50 0.12263%
------------------------------------
TOTALS $12,972,363.88 100.00000%
</TABLE>
939832.2
A-6
<PAGE>
Report of Independent Auditors
The Sponsor, Trustee and Certificateholders of
Equity Securities Trust, Series 21,
Signature Series, Gabelli Entertainment and Media Trust II
We have audited the accompanying statement of net assets of Equity Securities
Trust, Series 21, Signature Series, Gabelli Entertainment and Media Trust II,
including the portfolio, as of December 31, 1999 and the related statement of
operations, and changes in net assets and financial highlights for the period
from January 26, 1999 (date of deposit) to December 31, 1999. These financial
statements and financial highlights are the responsibility of the Trustee. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of the securities
owned by correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Equity
Securities Trust, Series 21, Signature Series, Gabelli Entertainment and Media
Trust II at December 31, 1999, the results of its operations, changes in its net
assets and financial highlights for the period from January 26, 1999 (date of
deposit) to December 31, 1999, in conformity with accounting principles
generally accepted in the United States.
/s/ ERNST & YOUNG LLP
New York, New York
April 15, 2000
<PAGE>
Equity Securities Trust
Series 21, Signature Series
Gabelli Entertainment and Media Trust II
Portfolio
December 31, 1999
<TABLE>
<CAPTION>
Number
Portfolio of Percentage Cost of Market
No. Shares Name of Issuer of Trust (1) Securities (2) Value (3)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Broadcasting Industry (4.25%)
1 5,536 Grupo Telivisa S.A. - GDR* 2.89% $ 153,519 $ 377,832
2 14,938 Paxson Communications Corp.* 1.36 135,883 177,389
------------------------------
289,402 555,221
Cable Industry (11.30%)
3 1,979 Cablevision Systems Corp. - Class A* 1.14 136,214 149,415
4 3,023 NTL Inc.* 2.89 199,913 377,119
5 20,444 Rogers Communications, Inc.* 3.87 305,085 505,989
6 6,133 Time Warner Inc. 3.40 404,459 444,259
------------------------------
1,045,671 1,476,782
Communication Equipment Industry (16.20%)
7 3,759 Cisco Systems, Inc.* 3.08 202,815 402,683
8 5,795 General Instrument Corp.* 3.77 206,972 492,575
9 2,922 Intel Corp. 1.84 193,281 240,517
10 3,667 Lucent Technologies Inc. 2.10 202,653 274,337
11 7,002 Nortel Networks Corp. 5.41 218,864 707,202
------------------------------
1,024,585 2,117,314
Software Industry (13.19%)
12 3,685 At Home Corp.* 1.21 222,432 157,994
13 2,314 Intuit Corp.* 1.06 70,628 138,695
14 18,429 Sun Microsystems, Inc.* 10.92 501,082 1,427,096
------------------------------
794,142 1,723,785
Entertainment Industry (17.55%)
15 7,391 AT&T Corp. - Liberty Media Cl-A 3.21 203,506 419,439
16 729 Neiman-Marcus Group - Class B 0.15 18,762 19,637
17 13,697 Seagram Company Ltd. 4.71 648,750 615,509
18 9,467 The Walt Disney Co. 2.12 322,892 276,910
19 5,438 USA Networks, Inc.* 2.30 200,411 300,449
20 10,935 Viacom Inc. - Class A* 5.06 454,440 660,884
------------------------------
1,848,761 2,292,828
</TABLE>
<PAGE>
Equity Securities Trust
Series 21, Signature Series
Gabelli Entertainment and Media Trust II
Portfolio (continued)
December 31, 1999
<TABLE>
<CAPTION>
Number
Portfolio of Percentage Cost of Market
No. Shares Name of Issuer of Trust(1) Securities(2) Value (3)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Publishing Industry (5.52%)
21 2,590 Harcourt General, Inc. 0.80 $ 106,849 $ 104,248
22 3,978 New York Times Co. 1.50 130,407 195,419
23 7,650 Tribune Co. 3.22 252,594 421,228
------------------------------
489,850 720,895
Satellite Industry (5.66%)
24 5,832 Comsat Corp. 0.89 191,343 115,911
25 4,014 General Motors Corp.--Class H* 2.94 202,198 385,344
26 9,864 Loral Space & Communications Ltd.* 1.83 203,654 239,819
------------------------------
597,195 741,074
Telecommunications Industry (17.93%)
27 3,319 AT&T Corp. 1.29 194,685 168,439
28 3,536 Bell Atlantic Corp. 1.66 199,751 217,685
29 25,338 Citizens Utilities Co.* 2.75 207,846 359,483
30 3,285 Nippon Telegraph & Telephone Corp. - ADR 2.16 141,095 282,921
31 3,306 Telecom Italia SpA - ADR 3.54 319,498 462,840
32 4,294 Telefonica S.A - ADR* 2.59 188,578 338,421
33 2,298 Telephone and Data Systems, Inc. 2.22 124,984 289,548
34 9,213 Telesp Participacoes S.A - ADR 1.72 173,093 225,143
------------------------------
1,549,530 2,344,480
Wireless Communications (8.40%)
35 5,447 Telesp Cellular Participacoes S.A - ADR 1.77 111,249 230,817
36 4,142 Western Wireless Corp.* 2.12 66,946 276,479
37 4,142 Voicestream Wireless Corp.* 4.51 57,262 589,458
------------------------------
235,457 1,096,754
------------------------------
100.00% $7,874,593 $13,069,133
==============================
See accompanying footnotes to portfolio and notes to financial statements.
</TABLE>
<PAGE>
Equity Securities Trust
Series 21, Signature Series
Gabelli Entertainment and Media Trust II
Footnotes to Portfolio
1 Based on the market value of the securities in the Trust.
2. See "Tax Status" in Part B of this Prospectus for a statement of the Federal
tax consequences to a Certificateholder upon the sale or redemption of a
security.
3. At December 31, 1999, the net unrealized appreciation of all the securities
was comprised of the following:
Gross unrealized appreciation $ 5,442,481
Gross unrealized depreciation (247,941)
------------------
Net unrealized appreciation $ 5,194,540
==================
*Non-income producing security.
The accompanying notes form an integral part of the financial statements.
<PAGE>
Equity Securities Trust
Series 21, Signature Series
Gabelli Entertainment and Media Trust II
Statement of Net Assets
December 31, 1999
Investments in securities, at market value (cost $7,874,593) $ 13,069,133
Other assets
Dividends receivable 2,091
Cash 5,759
----------------
Total other assets 7,850
----------------
Liabilities
Payable for securities purchased 17,026
----------------
Total liabilities 17,026
----------------
Excess of liabilities over total other assets (9,176)
----------------
Net assets (809,435 units of fractional undivided
interest outstanding, $16.13 per unit) $ 13,059,957
================
The accompanying notes form an integral part of the financial statements.
<PAGE>
Equity Securities Trust
Series 21, Signature Series
Gabelli Entertainment and Media Trust II
Statement of Operations
For the period from January 26, 1999 (date of deposit)
to December 31, 1999
Investment income
Dividends $ 35,154
Expenses
Trustee's fees 9,860
Surveillance fee 2,252
---------------
Total expenses 12,112
---------------
Net investment income 23,042
---------------
Realized and unrealized (loss)
Realized gain on investments 90,318
Unrealized appreciation on investments 5,194,540
---------------
Net gain on investments 5,284,858
---------------
Net increase in net assets resulting from operations $ 5,307,900
===============
The accompanying notes form an integral part of the financial statements.
<PAGE>
Equity Securities Trust
Series 21, Signature Series
Gabelli Entertainment and Media Trust II
Statement of Changes in Net Assets
For the period from January 26, 1999 (date of deposit)
to December 31, 1999
Operations
Net investment income $ 23,042
Realized gain on investments 90,318
Unrealized appreciation on investments 5,194,540
---------------
Net increase in net assets resulting from operations 5,307,900
---------------
Distributions to Certificateholders
Investment income 22,230
Redemptions
Interest 645
Principal 401,025
---------------
Total distributions and redemptions 423,900
---------------
Total increase 4,884,000
Value of additional units acquired during the
offering period to Certificateholders 8,025,689
Net assets
Beginning of period (date of deposit) 150,268
---------------
End of period (including undistributed net investment income
of $167) $ 13,059,957
===============
The accompanying notes form an integral part of the financial statements.
<PAGE>
Equity Securities Trust
Series 21, Signature Series
Gabelli Entertainment and Media Trust II
Financial Highlights
For the period from January 26, 1999 (date of deposit)
to December 31, 1999
Selected data for a unit of the Trust outstanding:*
Net asset value, beginning of period** (date of deposit) $ 9.59
------------
Interest income .09
Expenses (.03)
------------
Net investment income .06
------------
Net gain or loss on investments (1) 6.53
------------
Total from investment operations 6.59
------------
Less distributions
to Certificateholders
Income .05
------------
Total distributions .05
------------
Net asset value, end of period** $ 16.13
============
(1) Net gain or loss on investments is a result of changes in outstanding units
since January 26, 1999 and the dates of net gain and loss on investments.
* Unless otherwise stated, based upon average units outstanding during the year
of 412,551 ([809,435 + 15,666]/2) for 1999.
** Based upon actual units outstanding.
The accompanying notes form an integral part of the financial statements.
<PAGE>
Equity Securities Trust
Series 21, Signature Series
Gabelli Entertainment and Media Trust II
Notes to Financial Statements
December 31, 1999
1. Organization
Equity Securities Trust, Series 21, Signature Series, Gabelli Entertainment and
Media Trust II (the "Trust") was organized on January 26, 1999 by Reich & Tang
Distributors, Inc. under the laws of the State of New York by a Trust Indenture
and Agreement, and is registered under the Investment Company Act of 1940. The
objective of the Trust is to provide capital appreciation. Current income is a
secondary objective of the Trust.
Effective February 9, 2000, ING Funds Distributor, Inc. ("ING") has become the
successor sponsor to certain unit investment trusts previously sponsored by
Reich & Tang. As successor sponsor, ING has assumed all of the obligations and
rights of Reich & Tang, the previous sponsor.
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Trust in preparation of its financial statements. The policies
are in conformity with generally accepted accounting principles ("GAAP"). The
preparation of financial statements in accordance with GAAP requires management
to make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual amounts could differ from those
estimates. Dividend income is recognized as of the ex-dividend date.
<PAGE>
Equity Securities Trust
Series 21, Signature Series
Gabelli Entertainment and Media Trust II
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Security Valuation
Investments are carried at market value which is determined by The Chase
Manhattan Bank. The market value of the portfolio is based upon the bid prices
for the stocks at the end of the year, which approximates the fair value of the
security at that date, except that the market value on the date of deposit
represents the cost to the Trust based on the offering prices for investments at
that date. The difference between cost and market value is reflected as
unrealized appreciation (depreciation) of investments. Securities transactions
are recorded on the trade date. Realized gains (losses) from securities
transactions are determined on the basis of average cost of the securities sold
or redeemed.
3. Income Taxes
No provision for federal income taxes has been made in the accompanying
financial statements because the Trust intends to continue to qualify for the
tax treatment applicable to Grantor Trusts under the Internal Revenue Code.
Under existing law, if the Trust so qualifies, it will not be subject to federal
income tax on net income and capital gains that are distributed to unitholders.
4. Trust Administration
The Chase Manhattan Bank (the "Trustee") has custody of assets and
responsibility for the accounting records and financial statements of the Trust
and is responsible for establishing and maintaining a system of internal control
related thereto. The Trustee is also responsible for all estimates of expenses
and accruals reflected in the Trust's financial statements.
The Trust Indenture and Agreement provides for dividend distributions once a
month.
The Trust Indenture and Agreement further requires that proceeds received from
the disposition of securities, other than those securities sold in connection
with the redemption of units, be distributed to Certificateholders.
<PAGE>
Equity Securities Trust
Series 21, Signature Series
Gabelli Entertainment and Media Trust II
Notes to Financial Statements (continued)
4. Trust Administration (continued)
The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. For the period ended December 31, 1999, 32,472 units were redeemed.
The Trust pays an annual fee for trustee services rendered by the Trustee of
$.86 per 100 units outstanding. A maximum fee of $.30 per 100 units outstanding
is paid to the Sponsor. For the period ended December 31, 1999, the "Trustee's
Fees" amounted to $9,860. Trustee fees also include other expenses of
professional, printing and miscellaneous fees.
5. Net Assets
At December 31, 1999, the net assets of the Trust represented the interest of
Certificateholders as follows:
<TABLE>
<S> <C>
Original cost to Certificateholders $ 150,268
Less initial gross underwriting commission 34,524
--------------------
115,744
Cost of additional units acquired during the offering period
to Certificateholders 8,025,689
Accumulated cost of securities sold (266,840)
Net unrealized appreciation 5,194,540
Undistributed net investment income 167
Distributions in excess of proceeds from investments (9,343)
--------------------
$ 13,059,957
====================
</TABLE>
The original cost to Certificateholder, less initial gross underwriting
commission, represents the aggregate initial public offering price net of
applicable sales charge on 15,666 units of fractional undivided interest of the
Trust as of the date of deposit. An additional 826,241 units of fractional
undivided interest were issued during the offering period.
<PAGE>
LOGO
EQUITY SECURITIES TRUST
SERIES 21, SIGNATURE SERIES
GABELLI ENTERTAINMENT & MEDIA TRUST II
PROSPECTUS PART B
PART B OF THIS PROSPECTUS MAY NOT BE
DISTRIBUTED UNLESS ACCOMPANIED BY
PART A
THE TRUST
ORGANIZATION. Equity Securities Trust, Series 21, Signature Series,
Gabelli Entertainment & Media Trust II is a "unit investment trust." The Trust
was created under the laws of the State of New York pursuant to a Trust
Indenture and Agreement (the "Trust Agreement "), dated the Initial Date of
Deposit, between Reich & Tang Distributors, Inc., the predecessor to ING Funds
Distributor, Inc., as Sponsor, and The Chase Manhattan Bank, as Trustee.
On the Initial Date of Deposit, the Sponsor deposited securities, with
the Trustee including common stock and funds and delivery statements relating to
contracts for the purchase of certain such securities (collectively, the
"Securities") with an aggregate value as set forth in Part A and cash or an
irrevocable letter of credit issued by a major commercial bank in the amount
required for such purchases. Thereafter the Trustee, in exchange for the
Securities so deposited, has registered on the registration books of the Trust
evidence of the Sponsor's ownership of all Units of the Trust. The Sponsor has a
limited right to substitute other securities in the Trust portfolio in the event
of a failed contract. See "The Trust -- Substitution of Securities." The Sponsor
may also, in certain circumstances, direct the Trustee to dispose of certain
Securities if the Sponsor believes that, because of market or credit conditions,
or for certain other reasons, retention of the Security would be detrimental to
Unitholders. See "Trust Administration Portfolio -- Supervision."
As of the Initial Date of Deposit, a "Unit" represents an undivided
interest or pro rata share in the Securities and cash of the Trust in the ratio
of one hundred Units for the indicated amount of the aggregate market value of
the Securities initially deposited in the Trust as is set forth in the "Summary
of Essential Information." As additional Units are issued by the Trust as a
result of the deposit of Additional Securities, as described below, the
aggregate value of the Securities in the Trust will be increased and the
fractional undivided interest in the Trust represented by each Unit will be
decreased. To the extent that any Units are redeemed by the Trustee, the
fractional undivided interest or pro rata share in such Trust represented by
each unredeemed Unit will increase, although the actual interest in such Trust
represented by such fraction will remain unchanged. Units will remain
outstanding until redeemed upon tender to the Trustee by Unitholders, which may
include the Sponsor, or until the termination of the Trust Agreement.
DEPOSIT OF ADDITIONAL SECURITIES. With the deposit of the Securities in
the Trust on the Initial Date of Deposit, the Sponsor established a
proportionate relationship among the initial aggregate value of specified
Securities in the Trust. During the 90 days subsequent to the Initial Date of
Deposit (the "Deposit Period"),
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the Sponsor may deposit additional Securities in the Trust that are
substantially similar to the Securities already deposited in the Trust
("Additional Securities"), contracts to purchase Additional Securities or cash
with instructions to purchase Additional Securities, in order to create
additional Units, maintaining to the extent practicable the original
proportionate relationship of the number of shares of each Security in the Trust
portfolio on the Initial Date of Deposit. These additional Units, which will
result in an increase in the number of Units outstanding, will each represent,
to the extent practicable, an undivided interest in the same number and type of
securities of identical issuers as are represented by Units issued on the
Initial Date of Deposit. It may not be possible to maintain the exact original
proportionate relationship among the Securities deposited on the Initial Date of
Deposit because of, among other reasons, purchase requirements, changes in
prices, unavailability of Securities. The composition of the Trust portfolio may
change slightly based on certain adjustments made to reflect the disposition of
Securities and/or the receipt of a stock dividend, a stock split or other
distribution with respect to such Securities, including Securities received in
exchange for shares or the reinvestment of the proceeds distributed to
Unitholders. Deposits of Additional Securities in the Trust subsequent to the
Deposit Period must replicate exactly the existing proportionate relationship
among the number of shares of Securities in the Trust portfolio. Substitute
Securities may be acquired under specified conditions when Securities originally
deposited in the Trust are unavailable (see "The Trust -- Substitution of
Securities" below).
OBJECTIVES. The primary objective of the Trust is to seek to achieve
capital appreciation. Current income is a secondary objective of the Trust. The
Trust seeks to achieve its objectives by investing primarily in a portfolio of
the equity securities of entertainment and media companies based both in the
United States and throughout the world. These equity securities include the
common stocks of both domestic and foreign companies and foreign equity
securities in the form of American Depository Receipts (ADRs) or Global
Depository Receipts (GDRs) (see "The Trust -- The Securities" below). As used
herein, the term "Securities" means the stocks initially deposited in the Trust
and described in "Portfolio" in Part A and any additional stocks acquired and
held by the Trust pursuant to the provisions of the Indenture. All of the
Securities in the Trust are listed on the New York Stock Exchange, the American
Stock Exchange or the National Association of Securities Dealers Automated
Quotations ("Nasdaq") National Quotation Market System.
The Trust will terminate in approximately two years, at which time
investors may choose to either receive the distributions in kind (if they own at
least 2,500 Units), in cash or reinvest in a subsequent series of Equity
Securities Trust (if offered) at a reduced sales charge. Since the Sponsor may
deposit additional Securities in connection with the sale of additional Units,
the dividend yields on these Securities may change subsequent to the Initial
Date of Deposit. Further, the Securities may appreciate or depreciate in value,
dependent upon the full range of economic and market influences affecting
corporate profitability, the financial condition of issuers (including non-U.S.
issuers) and the prices of equity securities in general and the Securities in
particular. Therefore, there is no guarantee that the objectives of the Trust
will be achieved. Investors should carefully review the objectives of the Trust
and consider their ability to assume the risks involved before making an
investment in the Trust.
THE SECURITIES. In selecting Securities for the Trust, the Portfolio
Consultant normally will consider the following factors, among others: (1) the
Portfolio Consultant's own evaluations of the private market value of the
underlying assets and business of the issuers of the Securities; (2) the
potential for capital appreciation for the Securities; (3) the prices of the
Securities relative to other comparable securities; (4) the interest or dividend
income generated by the Securities; (5) the management quality of the issuers of
the Securities; (6) the diversification of the Trust's portfolio as to issuers
product type and geographic focus; and (7) whether the Securities are entitled
to the benefits of other protective conditions. The Portfolio Consultant's
investment philosophy hinges on identifying assets that are selling in the
public market at a discount to the private market value, which the Portfolio
Consultant defines as the value informed purchasers are willing to pay to
acquire assets with similar characteristics. The Portfolio Consultant also
evaluates the issuers' free cash flow and long-term earnings trends. Finally,
the Portfolio Consultant looks for a catalyst; something in the company's
industry or indigenous to the company itself that will surface value.
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Some of the Securities in the Trust may be in the form of ADRs or GDRs.
ADRs evidence American Depositary Receipts and GDRs evidence Global Depository
Receipts which both, in turn, represent common stock of non-U.S. issuers
deposited with a custodian in a depository. In selecting depository receipts for
deposit into the Trust portfolio, in addition to the factors associated with the
selection of Securities of any issuer, the Portfolio Consultant considers the
following factors, among others: (1) the location of the issuer of the
Securities underlying the depository receipts; (2) the likelihood of favorable
market and political conditions in the country in which such issuer is located;
(3) the amount of publicly available information available from such issuer; and
(4) historical and recent fluctuations in the exchange rate of the currency of
such issuer relative to the United States dollar.
The Trust will be concentrated in the equity securities of
entertainment and media companies. Equity securities will consist of common
stock, ADRs and GDRs. Entertainment and media companies in which the Trust may
invest are engaged in providing the following products or services: regular
telephone service throughout the world; equipment and services for data, video
and voice transmission, including computer equipment; electronic commerce;
television and radio broadcasting via VHF, UHF, satellite and microwave
transmission and cable television; programming (including theatrical broadcast);
cable networks and interactive entertainment; filmed entertainment; emerging
technologies combining TV, telephone and computer systems; wireless
communications services and equipment, including cellular telephone, microwave
and satellite communications, paging and other emerging wireless technologies;
electronic components and communications equipment; video conferencing;
electronic mail; internet services; local and wide area networking, and linkage
of data and word processing systems; publishing and information systems; and
video text and teletext. (See "Risk Considerations--Entertainment and Media
Issuers.")
The Trust will also concentrate in the equity securities of
communications companies. Due to the overlap in the business lines of companies
in the media, entertainment and communications industries, these industries are
generally considered to be related. A communications company is a company which
derives at least 50% of either of its revenues or earnings from communications
activities, or which devotes at least 50% of its assets to such activities,
based on the company's most recent fiscal year for which audited financial
information is available. The communications industry is comprised of a variety
of sectors, ranging from companies concentrating in established technologies to
those primarily engaged in emerging or developing technologies. Examples of
communications companies include, but are not limited to, those engaged in
providing the following products or services which converge with the
entertainment and media industry: regular telephone service throughout the
world; wireless communications services and equipment, including cellular
telephone, microwave and satellite communications, paging, and other emerging
wireless technologies; equipment and services for both data and voice
transmission, including computer equipment; electronic components and
communications equipment; video conferencing; electronic mail; internet
services; local and wide area networking, and linkage of data and word
processing systems; publishing and information systems; video text and teletext;
emerging technologies combining television, telephone and computer systems;
broadcasting, including television and radio via VHF, UHF, satellite and
microwave transmission, and cable television. (See "Risk Considerations --
Communications Issuers.")
Communications is an expanding global industry. The Portfolio
Consultant believes that at the present time a portfolio of the securities of
communications companies located throughout the world presents greater potential
for achieving capital appreciation and earning higher income than a portfolio
comprised solely of U.S. communications issuers. While the Portfolio Consultant
expects that a substantial portion of the Trust portfolio's assets may be
invested in the securities of domestic entertainment and media companies, a
significant portion of the Trust portfolio may also be comprised of the
securities of entertainment and media issuers headquartered outside the United
States.
PORTFOLIO. The Trust consists of the Securities (or contracts to
purchase such Securities together with an irrevocable letter or letters of
credit for the purchase of such contracts) and Additional Securities deposited
upon the creation of additional Units as set forth above and Substitute
Securities acquired by the Trust as long as such Securities may continue to be
held from time to time in the Trust together with uninvested cash realized from
the
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<PAGE>
disposition of Securities. Because certain of the Securities from time to
time may be sold under certain circumstances, as described herein (see "Trust
Administration"), no assurance can be given that the Trust will retain for any
length of time its present size and composition. The Trustee has not
participated and will not participate in the selection of Securities for the
Trust, and neither the Sponsor, the Portfolio Consultant nor the Trustee will be
liable in any way for any default, failure or defect in any Securities.
Some of the Securities are publicly traded either on a stock exchange
or in the over-the-counter market. The contracts to purchase Securities
deposited initially in the Trust are expected to settle in three business days,
in the ordinary manner for such Securities. Settlement of the contracts for
Securities is thus expected to take place prior to the settlement of purchase of
Units on the initial Date of Deposit.
SUBSTITUTION OF SECURITIES. In the event of a failure to deliver any
Security that has been purchased for the Trust under a contract ("Failed
Securities"), the Sponsor is authorized under the Trust Agreement to direct the
Trustee to acquire other securities ("Substitute Securities") to make up the
original corpus of the Trust.
The Substitute Securities must be purchased within 20 days after the
delivery of the notice of the failed contract. When the Sponsor purchases
Substitute Securities in order to replace Failed Securities, the purchase price
may not exceed the purchase price of the Failed Securities and the Substitute
Securities must be substantially similar to the Securities originally contracted
for and not delivered.
Whenever a Substitute Security has been acquired for the Trust, the
Trustee shall, within five days thereafter, notify all Unitholders of the Trust
of the acquisition of the Substitute Security and the Trustee shall, on the next
Distribution Date which is more than 30 days thereafter, make a pro rata
distribution of the amount, if any, by which the cost to the Trust of the Failed
Security exceeded the cost of the Substitute Security.
In the event no substitution is made, the proceeds of the sale of
Securities will be distributed to Unitholders as set forth under "Rights of
Unitholders -- Distributions." In addition, if the right of substitution shall
not be utilized to acquire Substitute Securities in the event of a failed
contract, the Sponsor will cause to be refunded the sales charge attributable to
such Failed Securities to all Unitholders, and distribute the principal and
dividends, if any, attributable to such Failed Securities on the next
Distribution Date.
RISK CONSIDERATIONS
FIXED PORTFOLIO. The value of the Units will fluctuate depending on all
of the factors that have an impact on the economy and the equity markets. These
factors similarly impact the ability of an issuer to distribute dividends.
Unlike a managed investment company in which there may be frequent changes in
the portfolio of securities based upon economic, financial and market analyses,
securities of a unit investment trust, such as the Trust, are not subject to
such frequent changes based upon continuous analysis. All the Securities in the
Trust are liquidated or distributed during the Liquidation Period. Since the
Trust will not sell Securities in response to ordinary market fluctuation, and
only at the Trust's termination, the amount realized upon the sale of the
Securities may not be the highest price attained by an individual Security
during the life of the Trust.
Some of the Securities in the Trust may also be owned by other clients
of the Sponsor and their affiliates. However, because these clients may have
differing investment objectives, the Sponsor may sell certain Securities from
those accounts in instances where a sale by the Trust would be impermissible,
such as to maximize return by taking advantage of market fluctuations. Investors
should consult with their own financial advisers prior to investing in the Trust
to determine its suitability. (See "Trust Administration -- Portfolio
Supervision" below.)
ADDITIONAL SECURITIES. Investors should be aware that in connection
with the creation of additional Units subsequent to the Initial Date of Deposit,
the Sponsor may deposit Additional Securities, contracts
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to purchase Additional Securities or cash with instructions to purchase
Additional Securities, in each instance maintaining the original proportionate
relationship, subject to adjustment under certain circumstances, of the numbers
of shares of each Security in the Trust. Subject to regulatory approval, to the
extent the price of a Security increases or decreases between the time cash is
deposited with instructions to purchase the Security and the time the cash is
actually used to purchase the Security, Units may represent less or more of that
Security and more or less of the other Securities in the Trust. In addition,
brokerage fees (if any) incurred in purchasing Securities with cash deposited
with instructions to purchase the Securities will be an expense of the Trust.
Price fluctuations between the time of deposit and the time the
Securities are purchased, and payment of brokerage fees, will affect the value
of every Unitholder's Units and the Income per Unit received by the Trust. In
particular, Unitholders who purchase Units during the initial offering period
would experience a dilution of their investment as a result of any brokerage
fees paid by the Trust during subsequent deposits of Additional Securities
purchased with cash deposited. In order to minimize these effects, the Trust
will try to purchase Securities as near as possible to the Evaluation Time or at
prices as close as possible to the prices used to evaluate Trust Units at the
Evaluation Time.
In addition, subsequent deposits to create such additional Units will
not be covered by the deposit of a bank letter of credit. In the event that the
Sponsor does not deliver cash in consideration for the additional Units
delivered, the Trust may be unable to satisfy its contracts to purchase the
Additional Securities without the Trustee selling underlying Securities.
Therefore, to the extent that the subsequent deposits are not covered by a bank
letter of credit, the failure of the Sponsor to deliver cash to the Trust, or
any delays in the Trust receiving such cash, would have significant adverse
consequences for the Trust.
COMMON STOCK. Since the Trust contains common stocks of both domestic
and foreign issuers, an investment in Units of the Trust should be made with an
understanding of the risks inherent in any investment in common stocks including
the risk that the financial condition of the issuers of the Securities may
become impaired or that the general condition of the stock market may worsen.
Additional risks include those associated with the right to receive
payments from the issuer which is generally inferior to the rights of creditors
of, or holders of debt obligations or preferred stock issued by the issuer.
Holders of common stocks have a right to receive dividends only when, if, and in
the amounts declared by the issuer's board of directors and to participate in
amounts available for distribution by the issuer only after all other claims on
the issuer have been paid or provided for. By contrast, holders of preferred
stocks usually have the right to receive dividends at a fixed rate when and as
declared by the issuer's board of directors, normally on a cumulative basis.
Dividends on cumulative preferred stock must be paid before any dividends are
paid on common stock and any cumulative preferred stock dividend which has been
omitted is added to future dividends payable to the holders of such cumulative
preferred stock. Preferred stocks are also usually entitled to rights on
liquidation which are senior to those of common stocks. For these reasons,
preferred stocks generally entail less risk than common stocks.
Moreover, common stocks do not represent an obligation of the issuer
and therefore do not offer any assurance of income or provide the degree of
protection of debt securities. The issuance of debt securities or even preferred
stock by an issuer will create prior claims for payment of principal, interest
and dividends which could adversely affect the ability and inclination of the
issuer to declare or pay dividends on its common stock or the economic interest
of holders of common stock with respect to assets of the issuer upon liquidation
or bankruptcy. Further, unlike debt securities which typically have a stated
principal amount payable at maturity (which value will be subject to market
fluctuations prior thereto), common stocks have neither fixed principal amount
nor a maturity and have values which are subject to market fluctuations for as
long as the common stocks remain outstanding. Common stocks are especially
susceptible to general stock market movements and to volatile increases and
decreases in value as market confidence in and perceptions of the issuers
change. These perceptions are based on unpredictable factors including
expectations regarding government, economic, monetary and fiscal policies,
inflation and interest rates, economic expansion or contraction, and global or
regional political, economic or
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banking crises. The value of the common stocks in the Trust thus may be expected
to fluctuate over the life of the Trust to values higher or lower than those
prevailing on the Initial Date of Deposit.
ENTERTAINMENT AND MEDIA ISSUERS. The risks of investing in the
entertainment and media industry are largely the same as investing in the
communications industry (see below), except that the entertainment and media
industry is subject to less federal and state regulation. Additional risks
particular to the entertainment and media industry involve a greater price
volatility for the overall market, rapid obsolescence of entertainment products
and services resulting from changing consumer tastes, intense competition and
strong market reactions to technological developments throughout the industry.
Various types of ownership restrictions are imposed by the Federal
Communications Commission ("FCC") on investments both in mass media companies,
such as broadcasters and cable operators, as well as in common carrier
companies, such as the providers of local telephone service and cellular radio.
For example, the FCC's broadcast multiple ownership rules, which apply
to the radio and television industries, provide that investment advisers are
deemed to have an "attributable" interest whenever the adviser has the right to
determine how more than five percent of the issued and outstanding voting stock
of a broadcast company may be voted. These same broadcast rules prohibit the
holding of an attributable interest in AM and FM radio broadcast stations and
television stations nationally. Similar types of restrictions apply in the mass
media and common carrier industries.
COMMUNICATIONS ISSUERS. The Trust may also invest its assets in the
communications industry and, as a result, the value of the Units of the Trust
may be susceptible to factors affecting the communications industry. The
communications industry is subject to governmental regulation and the products
and services of communications companies may be subject to rapid obsolescence.
Telephone companies in the United States, for example, are subject to both state
and federal regulations affecting permitted rates of returns and the kinds of
services that may be offered. In addition, federal communications laws regarding
the cable television industry have recently been amended to eliminate government
regulation of cable television rates where competition is present and allow
rates to be dictated by market conditions. In the absence of competition,
however, rates shall be regulated by federal and state governments to protect
the interest of subscribers.
Certain types of companies represented in the Trust portfolio are
engaged in fierce competition for a share of the market of their products. As a
result, competitive pressures are intense and the stocks are subject to rapid
price volatility. While the Trust portfolio will concentrate on the securities
of established suppliers of traditional communication products and services, the
Trust may invest in smaller communications companies which may benefit from the
development of new products and services. These smaller companies may present
greater opportunities for capital appreciation, and may also involve greater
risk than large, established issuers. Such smaller companies may have limited
product lines, market or financial resources, and their securities may trade
less frequently and in a limited volume than the securities of larger, more
established companies. As a result, the prices of the securities of such smaller
companies may fluctuate to a greater degree than the prices of securities of
other issuers.
DEPOSITORY RECEIPTS AND FOREIGN INVESTMENTS. An investment in Units of
the Trust should be made with an understanding of the risks inherent in foreign
equity investments in the form of American Depositary Receipts or Global
Depository Receipts, including risks associated with government, economic,
monetary and fiscal policies, inflation and interest rates, economic expansion
or contraction, and global or regional political, economic or banking crises.
American Depository Receipts (ADRs) are receipts, issued by a U.S. bank, that
represent an interest in shares of a foreign-based corporation. Global
Depository Receipts (GDRs) are receipts, issued by foreign banks or trust
companies, or foreign branches of U.S. banks, that represent an interest in
shares of either a foreign or U.S. corporation.
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The characteristics and rights and privileges of equity securities vary
from country to country, and governments may impose restrictions on foreign
ownership of certain classes of equity securities unless a non-national
purchaser acquires a license or unless the particular issuer receives permission
for ownership by non-nationals. The Trust has not obtained any of these licenses
nor does the Sponsor anticipate the need to obtain them.
In general, foreign ownership restrictions are more likely to be
imposed on voting shares than non-voting shares. Equity securities, in general,
trade on the market at a multiple of their issuers' earnings, which multiple
varies by country, industry and company and may fluctuate over time based on
general perceptions of the marketplace even if such perceptions are not related
to specific actions or performance results of a particular issuer. This multiple
for any particular issuer may not be uniform for all classes of the issuer's
equity securities.
In addition, for foreign issuers that are not subject to the reporting
requirements of the Securities Exchange Act of 1934, there may be less publicly
available information than is available for a domestic issuer. Also, foreign
issuers are not necessarily subject to uniform accounting, auditing and
financial reporting standards, practices and requirements like those applicable
to domestic issuers. However, the Sponsor anticipates that adequate information
will be available to allow the Sponsor and Portfolio Consultant to supervise
and/or monitor the Trust portfolio.
Beginning on January 1, 1999, the Euro was introduced as the new,
single European currency by eleven European Monetary Union member countries.
These countries are Austria, Belgium, Finland, France, Germany, Ireland, Italy,
Luxembourg, the Netherlands, Portugal and Spain. The Euro may result in
uncertainties and disruptions for securities of European companies and European
financial markets which could adversely affect the Trust. At this time, the
Sponsor cannot predict what impact the Euro will have.
The depository receipts in the Portfolio have been issued by non-U.S.
issuers whose earnings are stated in foreign currencies. Further, depository
receipts in the Trust portfolio may pay dividends in foreign currencies, and the
securities underlying the depository receipts are principally traded in foreign
currencies. Most foreign currencies have fluctuated widely in value against the
United States dollar for many reasons, including supply and demand of the
respective currency, the soundness of the world economy and the strength of the
respective economy as compared to the economies of the United States and other
countries. Therefore, for those Securities of issuers whose earnings are stated
in foreign currencies, or which pay dividends in foreign currencies, or which
are traded in foreign currencies, there is a likelihood that their United States
dollar value will vary to some degree with fluctuations in the United States
dollar foreign exchange rates for the relevant currencies. Moreover, depository
receipt currency fluctuations will affect the U.S. dollar equivalent of the
local currency price of the underlying domestic share and, as a result, are
likely to affect the value of the depository receipts and consequently the value
of the Securities. In addition, the rights of holders of depository receipts may
be different than those of holders of the underlying shares, and the market for
depository receipts may be less liquid than that for the underlying shares.
Depository receipts may be sponsored or unsponsored. In an unsponsored
facility, the depositary initiates and arranges the facility at the request of
market markers and acts as agent for the depository receipt holder, while the
company itself is not involved in the transaction. In a sponsored facility, the
issuing company initiates the facility and agrees to pay certain administrative
and shareholder-related expenses. Sponsored facilities use a single depositary
and entail a contractual relationship among the issuer, the shareholder and the
depositary; unsponsored facilities involve several depositaries with no
contractual relationship to the company. ADRs or GDRs designed for use in the
United States securities markets may be registered securities pursuant to the
Securities Act of 1933 and/or subject to the reporting requirements of the
Securities Exchange Act of 1934. Dividends attributable to ADRs or GDRs may be
subject to foreign withholding tax.
LIQUIDITY. Some of the Securities in the Trust portfolio have been
purchased in ADR or GDR form in United States dollars. However, ADRs or GDRs are
not necessarily listed on a national securities exchange. Even when ADRs or GDRs
or other Securities are listed, the principal trading market for such Securities
may be in the over-the-counter market. As a result, the existence of a liquid
trading market for Securities in the Trust portfolio
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may depend on whether dealers will make a market in these Securities. There can
be no assurance that a market will be made for any of the Securities, that any
market for the Securities will be maintained or of the liquidity of the
Securities in any markets made. In addition, the Trust may be restricted under
the Investment Company Act of 1940 from selling Securities to the Sponsor. The
price at which the Securities may be sold to meet redemptions and the value of
the Units will be adversely affected if trading markets for the Securities are
limited or absent.
YEAR 2000 ISSUE. Many existing computer programs use only two digits to
identify a year in the date field and were designed and developed without
considering the impact of the upcoming change in the century. Therefore, for
example, the year "2000" would be incorrectly identified as the year "1900". If
not corrected, many computer applications could fail or create erroneous results
by or at the Year 2000, requiring substantial resources to remedy. The Sponsor
and Trustee believe that the "Year 2000" problem is material to their business
and operations and could have a material adverse effect on the Sponsor's and the
Trustee's results of operations and, in turn, cash available for distribution by
the Trustee. Although the Sponsor and the Trustee are addressing the problem
with respect to their business operations, there can be no assurance that the
"Year 2000" problem will be properly or timely resolved. The "Year 2000" problem
may also adversely affect issuers of the Securities contained in the Trust to
varying degrees based upon various factors. The Sponsor is unable to predict
what effect, if any, the "Year 2000" problem will have on such issuers.
LEGISLATION. At any time after the Initial Date of Deposit, legislation
may be enacted, affecting the Securities in the Trust or the issuers of the
Securities. Changing approaches to regulation, particularly with respect to the
environment or with respect to the petroleum industry, may have a negative
impact on certain companies represented in the Trust. There can be no assurance
that future legislation, regulation or deregulation will not have a material
adverse effect on the Trust or will not impair the ability of the issuers of the
Securities to achieve their business goals.
LEGAL PROCEEDINGS AND LITIGATION. At any time after the Initial Date of
Deposit, legal proceedings may be initiated on various grounds, or legislation
may be enacted, with respect to the Securities in the Trust or to matters
involving the business of the issuer of the Securities. There can be no
assurance that future legal proceedings or legislation will not have a material
adverse impact on the Trust or will not impair the ability of the issuers of the
Securities to achieve their business and investment goals.
PUBLIC OFFERING
OFFERING PRICE. In calculating the Public Offering Price, the aggregate
value of the Securities is determined in good faith by the Trustee on each
"Business Day" as defined in the Indenture in the following manner: because the
Securities are listed on a national securities exchange, this evaluation is
based on the closing sale prices on that exchange as of the Evaluation Time
(unless the Trustee deems these prices inappropriate as a basis for valuation).
If the Trustee deems these prices inappropriate as a basis for evaluation, then
the Trustee may utilize, at the Trust's expense, an independent evaluation
service or services to ascertain the values of the Securities. The independent
evaluation service shall use any of the following methods, or a combination
thereof, which it deems appropriate: (a) on the basis of current bid prices for
comparable securities, (b) by appraising the value of the Securities on the bid
side of the market or by such other appraisal deemed appropriate by the Trustee
or (c) by any combination of the above, each as of the Evaluation Time.
DISCOUNTS. The holders of units of prior series of Equity Securities
Trusts (the "Prior Series") may "rollover" into this Trust by exchanging units
of the Prior Series for Units of the Trust at their relative net asset values,
subject to a reduced sales charge of 2.95%. An exchange of a Prior Series for
Units of the Trust will generally be a taxable event. The rollover option
described herein will also be available to investors in the Prior Series who
elect to purchase Units of the Trust within 60 days of their liquidation of
units in the Prior Series (see
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"Trust Termination"). For transaction of at least 10,000 Units or more, rollover
investors will also be eligible for an additional reduction of their sales
charge based upon the same proportionate volume discounts set forth above.
Employees (and their immediate families) of ING Funds Distributor, Inc.
(and its affiliates), the Portfolio Consultants and of the special counsel to
the Sponsor, may, pursuant to employee benefit arrangements, purchase Units of
the Trust at a price equal to the aggregate value of the underlying securities
in the Trust, divided by the number of Units outstanding without a sales charge.
Such arrangements result in less selling effort and selling expenses than sales
to employee groups of other companies. Resales or transfers of Units purchased
under the employee benefit arrangements may only be made through the Sponsor's
secondary market, so long as it is being maintained, and not through other
broker-dealers.
Investors in any open-end management investment company or unit
investment trust that have purchased their investment within a five-year period
prior to the date of this Prospectus can purchase Units of the Trust in an
amount not greater in value than the amount of said investment made during this
five-year period at a reduced sales charge of 2.95% of the public offering
price.
Units may be purchased in the secondary market (including purchases by
Rollover Unitholders) at the Public Offering Price (for purchases which do not
qualify for a volume discount) less the concession the Sponsor typically allows
to brokers and dealers for purchases (see "Public Offering -- Distribution of
Units") by (1) investors who purchase Units through registered investment
advisers, certified financial planners and registered broker-dealers who in each
case either charge periodic fees for financial planning, investment advisory or
asset management service, or provide such services in connection with the
establishment of an investment account for which a comprehensive "wrap fee"
charge is imposed, (2) bank trust departments investing funds over which they
exercise exclusive discretionary investment authority and that are held in a
fiduciary, agency, custodial or similar capacity, (3) any person who, for at
least 90 days, has been an officer, director or bona fide employee of any firm
offering Units for sale to investors or their immediate family members (as
described above) and (4) officers and directors of bank holding companies that
make Units available directly or through subsidiaries or bank affiliates.
Notwithstanding anything to the contrary in this Prospectus, such investors,
bank trust departments, firm employees and bank holding company officers and
directors who purchase Units through this program will not receive the volume
discount.
DISTRIBUTION OF UNITS. During the initial offering period and
thereafter to the extent additional Units continue to be offered by means of
this Prospectus, Units will be distributed by the Sponsor and dealers at the
Public Offering Price. The initial offering period is thirty days after each
deposit of Securities in the Trust and the Sponsor may extend the initial
offering period for successive thirty day periods. Certain banks and thrifts
will make Units of the Trust available to their customers on an agency basis. A
portion of the sales charge paid by their customers is retained by or remitted
to the banks. Under the Glass-Steagall Act, banks are prohibited from
underwriting Units; however, the Glass-Steagall Act does permit certain agency
transactions and the banking regulators have indicated that these particular
agency transactions are permitted under such Act. On November 16, 1999,
President Clinton signed the Gramm-Leach-Bliley Act, repealing certain
provisions of the Glass-Steagall Act which have restricted affiliation between
banks and securities firms and amending the Bank Holding Company Act thereby
removing restrictions on banks and insurance companies. The new legislation
grants banks new authority to conduct certain authorized activity through
financial subsidiaries. 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.
The Sponsor presently maintains and intends to continue to qualify the
Units for sale in substantially all States through dealers who are members of
the National Association of Securities Dealers, Inc. Units may be sold to
dealers at prices which represent a concession of up to 3.00% per Unit, subject
to the Sponsor's right to change the dealers' concession from time to time. Such
Units may then be distributed to the public by the dealers at the Public
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Offering Price then in effect. The Sponsor reserves the right to reject, in
whole or in part, any order for the purchase of Units.
Broker-dealers of the Trust, banks and/or others are eligible to
participate in a program in which such firms receive from the Sponsor a nominal
award for each of their registered representatives who have sold a minimum
number of units of unit investment trusts created by the Sponsor during a
specified time period. In addition, at various times the Sponsor may implement
other programs under which the sales forces of brokers, dealers, banks and/or
others may be eligible to win other nominal awards for certain sales efforts or
under which the Sponsor will allow to any such brokers, dealers, banks and/or
others that sponsor sales contests or recognition programs conforming to
criteria established by the Sponsor, or participate in sales programs sponsored
by the Sponsor, an amount not exceeding the total applicable sales charges on
the sales generated by such person at the public offering price during such
programs. Also, the Sponsor in its discretion may from time to time pursuant to
objective criteria established by the Sponsor pay fees to qualifying brokers,
dealers, banks and/or others for certain services or activities which are
primarily intended to result in sales of Units of the Trust. Such payments are
made by the Sponsor out of their own assets and not out of the assets of the
Trust. These programs will not change the price Unitholders pay for their Units
or the amount that the Trust will receive from the Units sold.
SPONSOR'S PROFITS. The Sponsor will receive a combined gross
underwriting commission equal to up to 3.95% of the Public Offering Price per
100 Units (equivalent to 4.112% of the net amount invested in the Securities).
Additionally, the Sponsor may realize a profit on the deposit of the Securities
in the Trust representing the difference between the cost of the Securities to
the Sponsor and the cost of the Securities to the Trust (See "Portfolio"). The
Sponsor may realize profits or sustain losses with respect to Securities
deposited in the Trust which were acquired from underwriting syndicates of which
they were a member. All or a portion of the Securities initially deposited in
the Trust may have been acquired through the Sponsor.
During the initial offering period and thereafter to the extent
additional Units continue to be offered by means of this Prospectus, the Sponsor
may also realize profits or sustain losses as a result of fluctuations after the
Initial Date of Deposit in the aggregate value of the Securities and hence in
the Public Offering Price received by the Sponsor for the Units. Cash, if any,
made available to the Sponsor prior to settlement date for the purchase of Units
may be used in the Sponsor's business subject to the limitations of 17 CFR
240.15c3-3 under the Securities Exchange Act of 1934 and may be of benefit to
the Sponsor.
Both upon acquisition of Securities and termination of the Trust, the
Trustee may utilize the services of the Sponsor for the purchase or sale of all
or a portion of the Securities in the Trust. The Sponsor may receive brokerage
commissions from the Trust in connection with such purchases and sales in
accordance with applicable law.
In maintaining a market for the Units (see "Sponsor Repurchase") the
Sponsor will realize profits or sustain losses in the amount of any difference
between the price at which it buys Units and the price at which it resells such
Units.
RIGHTS OF UNITHOLDERS
OWNERSHIP OF UNITS. Ownership of Units of the Trust will not be
evidenced by certificates. All evidence of ownership of the Units will be
recorded in book-entry form at the Depository Trust Company ("DTC") through an
investor's brokerage account. Units held through DTC will be deposited by the
Sponsor with DTC in the Sponsor's DTC account and registered in the nominee name
CEDE & COMPANY. Individual purchases of beneficial ownership interest in the
Trust may be made in book-entry form through DTC. Ownership and transfer of
Units will be evidenced and accomplished directly and indirectly by book-entries
made by DTC and its participants. DTC will record ownership and transfer of the
Units among DTC participants and forward all notices and credit all
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payments received in respect of the Units held by the DTC participants.
Beneficial owners of Units will receive written confirmation of their purchases
and sale from the broker-dealer or bank from whom their purchase was made. Units
are transferable by making a written request property accompanied by a written
instrument or instruments of transfer which should be sent registered or
certified mail for the protection of the Unit Holder. Holders must sign such
written request exactly as their names appear on the records of the Trust. Such
signatures must be guaranteed by a commercial bank or trust company, savings and
loan association or by a member firm of a national securities exchange.
DISTRIBUTIONS. Dividends received by the Trust are credited by the
Trustee to an Income Account for the Trust. Other receipts, including the
proceeds of Securities disposed of, are credited to a Principal Account for the
Trust.
Distributions to each Unitholder from the Income Account are computed
as of the close of business on each Record Date for the following payment date
and consist of an amount substantially equal to such Unitholder's pro rata share
of the income credited to the Income Account, less expenses. Distributions from
the Principal Account of the Trust (other than amounts representing failed
contracts, as previously discussed) will be computed as of each Record Date, and
will be made to the Unitholders of the Trust on or shortly after the
Distribution Date. Proceeds representing principal received from the disposition
of any of the Securities between a Record Date and a Distribution Date which are
not used for redemptions of Units will be held in the Principal Account and not
distributed until the next Distribution Date. Persons who purchase Units between
a Record Date and a Distribution Date will receive their first distribution on
the Distribution Date after such purchase.
As of each Record Date, the Trustee will deduct from the Income Account
of the Trust, and, to the extent funds are not sufficient therein, from the
Principal Account of the Trust, amounts necessary to pay the expenses of the
Trust (as determined on the basis set forth under "Trust Expenses and Charges").
The Trustee also may withdraw from said accounts such amounts, if any, as it
deems necessary to establish a reserve for any applicable taxes or other
governmental charges that may be payable out of the Trust. Amounts so withdrawn
shall not be considered a part of such Trust's assets until such time as the
Trustee shall return all or any part of such amounts to the appropriate
accounts. In addition, the Trustee may withdraw from the Income and Principal
Accounts such amounts as may be necessary to cover redemptions of Units by the
Trustee.
The dividend distribution per 100 Units, if any, cannot be anticipated
and may be paid as Securities are redeemed, exchanged or sold, or as expenses of
the Trust fluctuate. No distribution need be made from the Income Account or the
Principal Account until the balance therein is an amount sufficient to
distribute $1.00 per 100 Units.
RECORDS. The Trustee shall furnish Unitholders in connection with each
distribution a statement of the amount of dividends and interest, if any, and
the amount of other receipts, if any, which are being distributed, expressed in
each case as a dollar amount per 100 Units. Within a reasonable time after the
end of each calendar year, the Trustee will furnish to each person who at any
time during the calendar year was a Unitholder of record, a statement showing
(a) as to the Income Account: dividends, interest and other cash amounts
received, amounts paid for purchases of Substitute Securities and redemptions of
Units, if any, deductions for applicable taxes and fees and expenses of the
Trust, and the balance remaining after such distributions and deductions,
expressed both as a total dollar amount and as a dollar amount representing the
pro rata share of each 100 Units outstanding on the last business day of such
calendar year; (b) as to the Principal Account: the dates of disposition of any
Securities and the net proceeds received therefrom, deductions for payments of
applicable taxes and fees and expenses of the Trust, amounts paid for purchases
of Substitute Securities and redemptions of Units, if any, and the balance
remaining after such distributions and deductions, expressed both as a total
dollar amount and as a dollar amount representing the pro rata share of each 100
Units outstanding on the last business day of such calendar year; (c) a list of
the Securities held, a list of Securities purchased, sold or otherwise disposed
of during the calendar year and the number of Units outstanding on the last
business day of such calendar year; (d) the Redemption Price per 100 Units based
upon the last computation thereof made during such calendar year; and (e)
amounts actually distributed to
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Unitholders during such calendar year from the Income and Principal Accounts,
separately stated, of the Trust, expressed both as total dollar amounts and as
dollar amounts representing the pro rata share of each 100 Units outstanding on
the last business day of such calendar year.
The Trustee shall keep available for inspection by Unitholders at all
reasonable times during usual business hours, books of record and account of its
transactions as Trustee, including records of the names and addresses of
Unitholders, a current list of Securities in the portfolio and a copy of the
Trust Agreement.
LIQUIDITY
SPONSOR REPURCHASE. Unitholders who wish to dispose of their Units
should inquire of the Sponsor as to current market prices prior to making a
tender for redemption. The aggregate value of the Securities will be determined
by the Trustee on a daily basis and computed on the basis set forth under
"Trustee Redemption." The Sponsor does not guarantee the enforceability,
marketability or price of any Securities in the Portfolio or of the Units. The
Sponsor may discontinue the repurchase of Units if the supply of Units exceeds
demand, or for other business reasons. The date of repurchase is deemed to be
the date on which redemption requests are received in proper form by ING Funds
Distributor, Inc., 1475 Dunwoody Drive, West Chester, Pennsylvania 19380.
Redemption requests received after 4 P.M., New York Time, will be deemed to have
been repurchased on the next business day. In the event a market is not
maintained for the Units, a Unitholder may be able to dispose of Units only by
tendering them to the Trustee for redemption.
Units purchased by the Sponsor in the secondary market may be reoffered
for sale by the Sponsor at a price based on the aggregate value of the
Securities in the Trust plus a 3.95% sales charge (or 4.112% of the net amount
invested) plus a pro rata portion of amounts, if any, in the Income Account. Any
Units that are purchased by the Sponsor in the secondary market also may be
redeemed by the Sponsor if it determines such redemption to be in its best
interest.
The Sponsor may, under certain circumstances, as a service to
Unitholders, elect to purchase any Units tendered to the Trustee for redemption
(see "Trustee Redemption"). Factors which the Sponsor will consider in making a
determination will include the number of Units of all Trusts which it has in
inventory, its estimate of the salability and the time required to sell such
Units and general market conditions. For example, if in order to meet
redemptions of Units the Trustee must dispose of Securities, and if such
disposition cannot be made by the redemption date (three calendar days after
tender), the Sponsor may elect to purchase such Units. Such purchase shall be
made by payment to the Unitholder not later than the close of business on the
redemption date of an amount equal to the Redemption Price on the date of
tender.
TRUSTEE REDEMPTION. At any time prior to the Evaluation Time on the
business day preceding the commencement of the Liquidation Period (approximately
three years from the Initial Date of Deposit), Units may also be tendered to the
Trustee for redemption upon payment of any relevant tax by contacting the
Sponsor, broker, dealer or financial institution holding such Units in street
name. In certain instances, additional documents may be required, such as trust
instrument, certificate of corporate authority, certificate of death or
appointment as executor, administrator or guardian. At the present time there
are no specific taxes related to the redemption of Units. No redemption fee will
be charged by the Sponsor or the Trustee. Units redeemed by the Trustee will be
canceled.
Within three business days following a tender for redemption, the
Unitholder will be entitled to receive an amount for each Unit tendered equal to
the Redemption Price per Unit computed as of the Evaluation Time on the date of
tender. The "date of tender" is deemed to be the date on which Units are
received by the Trustee, except that with respect to Units received after the
close of trading on the New York Stock Exchange (4:00 p.m. Eastern Time), the
date of tender is the next day on which such Exchange is open for trading, and
such Units will be deemed to have been tendered to the Trustee on such day for
redemption at the Redemption Price computed on that day.
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A Unitholder will receive his redemption proceeds in cash and amounts
paid on redemption shall be withdrawn from the Income Account, or, if the
balance therein is insufficient, from the Principal Account. All other amounts
paid on redemption shall be withdrawn from the Principal Account. The Trustee is
empowered to sell Securities in order to make funds available for redemptions.
Such sales, if required, could result in a sale of Securities by the Trustee at
a loss. To the extent Securities are sold, the size and diversity of the Trust
will be reduced. The Securities to be sold will be selected by the Trustee in
order to maintain, to the extent practicable, the proportionate relationship
among the number of shares of each Stock. Provision is made in the Indenture
under which the Sponsor may, but need not, specify minimum amounts in which
blocks of Securities are to be sold in order to obtain the best price for the
Trust. While these minimum amounts may vary from time to time in accordance with
market conditions, the Sponsor believes that the minimum amounts which would be
specified would be approximately 100 shares for readily marketable Securities.
The Redemption Price per Unit is the pro rata share of the Unit in the
Trust determined by the Trustee on the basis of (i) the cash on hand in the
Trust or moneys in the process of being collected, (ii) the value of the
Securities in the Trust as determined by the Trustee, less (a) amounts
representing taxes or other governmental charges payable out of the Trust, (b)
the accrued expenses of the Trust and (c) cash allocated for the distribution to
Unitholders of record as of the business day prior to the evaluation being made.
As of the close of the initial offering period the Redemption Price per 100
Units will be reduced to reflect the payment of the per 100 Unit organization
costs to the Sponsor. Therefore, the amount of the Redemption Price per 100
Units received by a Unitholder will include the portion representing
organization costs only when such Units are tendered for redemption prior to the
close of the initial offering period. Because the Securities are listed on a
national securities exchange, the Trustee may determine the value of the
Securities in the Trust based on the closing sale prices on that exchange.
Unless the Trustee deems these prices inappropriate as a basis for evaluation or
if there is no such closing purchase price, then the Trustee may utilize, at the
Trust's expense, an independent evaluation service or services to ascertain the
values of the Securities. The independent evaluation service shall use any of
the following methods, or a combination thereof, which it deems appropriate: (a)
on the basis of current bid prices for comparable securities, (b) by appraising
the value of the Securities on the bid side of the market or (c) by any
combination of the above.
Any Unitholder tendering 2,500 Units or more of the Trust for
redemption may request by written notice submitted at the time of tender from
the Trustee in lieu of a cash redemption a distribution of shares of Securities
and cash in an amount and value equal to the Redemption Price Per Unit as
determined as of the evaluation next following tender. To the extent possible,
in kind distributions ("In Kind Distributions") shall be made by the Trustee
through the distribution of each of the Securities in book-entry form to the
account of the Unitholder's bank or broker-dealer at The Depository Trust
Company. An In Kind Distribution will be reduced by customary transfer and
registration charges. The tendering Unitholder will receive his pro rata number
of whole shares of each of the Securities comprising the Trust portfolio and
cash from the Principal Accounts equal to the balance of the Redemption Price to
which the tendering Unitholder is entitled. If funds in the Principal Account
are insufficient to cover the required cash distribution to the tendering
Unitholder, the Trustee may sell Securities in the manner described above.
The Trustee is irrevocably authorized in its discretion, if the Sponsor
does not elect to purchase a Unit tendered for redemption or if the Sponsor
tenders a Unit for redemption, in lieu of redeeming such Unit, to sell such Unit
in the over-the-counter market for the account of the tendering Unitholder at
prices which will return to the Unitholder an amount in cash, net after
deducting brokerage commissions, transfer taxes and other charges, equal to or
in excess of the Redemption Price for such Unit. The Trustee will pay the net
proceeds of any such sale to the Unitholder on the day he would otherwise be
entitled to receive payment of the Redemption Price.
The Trustee reserves the right to suspend the right of redemption and
to postpone the date of payment of the Redemption Price per Unit for any period
during which the New York Stock Exchange is closed, other than customary weekend
and holiday closings, or trading on that Exchange is restricted or during which
(as determined by the Securities and Exchange Commission) an emergency exists as
a result of which disposal or evaluation of the
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Bonds is not reasonably practicable, or for such other periods as the Securities
and Exchange Commission may by order permit. The Trustee and the Sponsor are not
liable to any person or in any way for any loss or damage which may result from
any such suspension or postponement.
A Unitholder who wishes to dispose of his Units should inquire of his
bank or broker in order to determine if there is a current secondary market
price in excess of the Redemption Price.
TRUST ADMINISTRATION
PORTFOLIO SUPERVISION. The Trust is a unit investment trust and is not
a managed fund. Traditional methods of investment management for a managed fund
typically involve frequent changes in a portfolio of securities on the basis of
economic, financial and market analyses. The Portfolio of the Trust, however,
will not be managed and therefore the adverse financial condition of an issuer
will not necessarily require the sale of its Securities from the portfolio. It
is unlikely that the Trust will sell any of the Securities other than to satisfy
redemptions of Units, or to cease buying Additional Securities in connection
with the issuance of additional Units. However, the Trust Agreement provides
that the Sponsor may direct the disposition of Securities upon the occurrence of
certain events including: (1) default in payment of amounts due on any of the
Securities; (2) institution of certain legal proceedings; (3) default under
certain documents materially and adversely affecting future declaration or
payment of amounts due or expected; (4) determination of the Sponsor that the
tax treatment of the Trust as a grantor trust would otherwise be jeopardized; or
(5) decline in price as a direct result of serious adverse credit factors
affecting the issuer of a Security which, in the opinion of the Sponsor, would
make the retention of the Security detrimental to the Trust or the Unitholders.
In addition, the Trust Agreement provides as follows:
(a) If a default in the payment of amounts due on any Security
occurs pursuant to provision (1) above and if the Sponsor fails to give
immediate instructions to sell or hold that Security, the Trustee,
within 30 days of that failure by the Sponsor, shall sell the Security.
(b) It is the responsibility of the Sponsor to instruct the
Trustee to reject any offer made by an issuer of any of the Securities
to issue new securities in exchange and substitution for any Security
pursuant to a recapitalization or reorganization. If any exchange or
substitution is effected notwithstanding such rejection, any securities
or other property received shall be promptly sold unless the Sponsor
directs that it be retained.
(c) Any property received by the Trustee after the Initial
Date of Deposit as a distribution on any of the Securities in a form
other than cash or additional shares of the Securities, shall be
promptly sold unless the Sponsor directs that it be retained by the
Trustee. The proceeds of any disposition shall be credited to the
Income or Principal Account of the Trust.
(d) The Sponsor is authorized to increase the size and number
of Units of the Trust by the deposit of Additional Securities,
contracts to purchase Additional Securities or cash or a letter of
credit with instructions to purchase Additional Securities in exchange
for the corresponding number of additional Units from time to time
subsequent to the Initial Date of Deposit, provided that the original
proportionate relationship among the number of shares of each Security
established on the Initial Date of Deposit is maintained to the extent
practicable. The Sponsor may specify the minimum numbers in which
Additional Securities will be deposited or purchased. If a deposit is
not sufficient to acquire minimum amounts of each Security, Additional
Securities may be acquired in the order of the Security most
under-represented immediately before the deposit when compared to the
original proportionate relationship. If Securities of an issue
originally deposited are unavailable at the time of the subsequent
deposit, the Sponsor may (i)
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deposit cash or a letter of credit with instructions to purchase the
Security when it becomes available, or (ii) deposit (or instruct the
Trustee to purchase) either Securities of one or more other issues
originally deposited or a Substitute Security.
In determining whether to dispose of or hold Securities, new securities or
property, the Sponsor may be advised by the Portfolio Supervisor.
TRUST AGREEMENT AND AMENDMENT. The Trust Agreement may be amended by
the Trustee and the Sponsor without the consent of Unitholders: (1) to cure any
ambiguity or to correct or supplement any provision which may be defective or
inconsistent; (2) to change any provision thereof as may be required by the
Securities and Exchange Commission or any successor governmental agency; or (3)
to make such other provisions in regard to matters arising thereunder as shall
not adversely affect the interests of the Unitholders.
The Trust Agreement may also be amended in any respect, or performance
of any of the provisions thereof may be waived, with the consent of investors
holding 66 2/3% of the Units then outstanding for the purpose of modifying the
rights of Unitholders; provided that no such amendment or waiver shall reduce
any Unitholder's interest in the Trust without his consent or reduce the
percentage of Units required to consent to any such amendment or waiver without
the consent of the holders of all Units. The Trust Agreement may not be amended,
without the consent of the holders of all Units in the Trust then outstanding,
to increase the number of Units issuable or to permit the acquisition of any
Securities in addition to or in substitution for those initially deposited in
such Trust, except in accordance with the provisions of the Trust Agreement. The
Trustee shall promptly notify Unitholders, in writing, of the substance of any
such amendment.
TRUST TERMINATION. The Trust Agreement provides that the Trust shall
terminate as of the Evaluation Time on the business day preceding the
Liquidation Period or upon the earlier maturity, redemption or other
disposition, as the case may be, of the last of the Securities held in such
Trust and in no event is it to continue beyond the Mandatory Termination Date.
If the value of the Trust shall be less than the minimum amount set forth under
"Summary of Essential Information" in Part A, the Trustee may, in its
discretion, and shall, when so directed by the Sponsor, terminate the Trust. The
Trust may also be terminated at any time with the consent of the investors
holding 100% of the Units then outstanding. The Trustee may utilize the services
of the Sponsor for the sale of all or a portion of the Securities in the Trust,
and in so doing, the Sponsor will determine the manner, timing and execution of
the sales of the underlying Securities. Any brokerage commissions received by
the Sponsor from the Trust in connection with such sales will be in accordance
with applicable law. In the event of termination, written notice thereof will be
sent by the Trustee to all Unitholders. Such notice will provide Unitholders
with the following three options by which to receive their pro rata share of the
net asset value of the Trust and requires their election of one of the three
options by notifying the Trustee by returning a properly completed election
request (to be supplied to Unitholders of at least 2,500 Units prior to the
commencement of the Liquidation Period) (see Part A -- "Summary of Essential
Information" for the date of the commencement of the Liquidation Period):
1. A Unitholder who owns at least 2,500 Units and whose
interest in the Trust would entitle it to receive at least one share of
each underlying Security will have its Units redeemed on commencement
of the Liquidation Period by distribution of the Unitholder's pro rata
share of the net asset value of the Trust on such date distributed in
kind to the extent represented by whole shares of underlying Securities
and the balance in cash within three business days next following the
commencement of the Liquidation Period. Unitholders subsequently
selling such distributed Securities will incur brokerage costs when
disposing of such Securities. Unitholders should consult their own tax
adviser in this regard;
2. A Unitholder may elect to receive in cash such Unitholder's
pro rata share of the net asset value of the Trust derived from the
sale by the Sponsor as the agent of the Trustee of the underlying
Securities during the Liquidation Period. The Unitholder's pro rata
share of its net assets of the Trust will be
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distributed to such Unitholder within three days of the settlement of
the trade of the last Security to be sold; or
3. A Unitholder may elect to invest such Unitholder's pro rata
share of the net assets of the Trust derived from the sale by the
Sponsor as agent of the Trustee of the underlying Securities during the
Liquidation Period, in units of a subsequent series of Equity
Securities Trust (the "New Series"), provided one is offered. It is
expected that a special redemption and liquidation will be made of all
Units of this Trust held by a Unitholder (a "Rollover Unitholder") who
affirmatively notifies the Trustee on or prior to the Rollover
Notification Date set forth in the "Summary of Essential Information"
for the Trust in Part A. The Units of a New Series will be purchased by
the Unitholder within three business days of the settlement of the
trade for the last Security to be sold. Such purchaser will be entitled
to a reduced sales charge upon the purchase of units of the New Series.
It is expected that the terms of the New Series will be substantially
the same as the terms of the Trust described in this Prospectus, and
that similar options with respect to the termination of such New Series
will be available. The availability of this option does not constitute
a solicitation of an offer to purchase Units of a New Series or any
other security. A Unitholder's election to participate in this option
will be treated as an indication of interest only. At any time prior to
the purchase by the Unitholder of units of a New Series such Unitholder
may change his investment strategy and receive, in cash, the proceeds
of the sale of the Securities. An election of this option will not
prevent the Unitholder from recognizing taxable gain or loss (except in
the case of a loss, if and to the extent the New Series is treated as
substantially identical to the Trust) as a result of the liquidation,
even though no cash will be distributed to pay any taxes. Unitholders
should consult their own tax advisers in this regard.
Unitholders who do not make any election will be deemed to have elected
to receive the termination distribution in cash (option number 2).
The Sponsor has agreed that to the extent they effect the sales of
underlying securities for the Trustee in the case of the second and third
options during the Liquidation Period such sales will be free of brokerage
commissions. The Sponsor, on behalf of the Trustee, will sell, unless prevented
by unusual and unforeseen circumstances, such as, among other reasons, a
suspension in trading of a Security, the close of a stock exchange, outbreak of
hostilities and collapse of the economy, by the last business day of the
Liquidation Period. The Redemption Price per 100 Units upon the settlement of
the last sale of Securities during the Liquidation Period will be distributed to
Unitholders in redemption of such Unitholders' interest in the Trust.
Depending on the amount of proceeds to be invested in Units of the New
Series and the amount of other orders for Units in the New Series, the Sponsor
may purchase a large amount of securities for the New Series in a short period
of time. The Sponsor's buying of securities may tend to raise the market prices
of these securities. The actual market impact of the Sponsor's purchases,
however, is currently unpredictable because the actual amount of securities to
be purchased and the supply and price of those securities is unknown. A similar
problem may occur in connection with the sale of Securities during the
Liquidation Period; depending on the number of sales required, the prices of and
demand for Securities, such sales may tend to depress the market prices and thus
reduce the proceeds of such sales. The Sponsor believes that the sale of
underlying Securities over the Liquidation Period as described above is in the
best interest of a Unitholder and may mitigate the negative market price
consequences stemming from the trading of large amounts of Securities. The
Securities may be sold in fewer than seven days if, in the Sponsor's judgment,
such sales are in the best interest of Unitholders. The Sponsor, in implementing
such sales of securities on behalf of the Trustee, will seek to maximize the
sales proceeds and will act in the best interests of the Unitholders. There can
be no assurance, however, that any adverse price consequences of heavy trading
will be mitigated.
The Sponsor may for any reason, in its sole discretion, decide not to
sponsor any subsequent series of the Trust, without penalty or incurring
liability to any Unitholder. If the Sponsor so decides, the Sponsor will notify
the
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Trustee of that decision, and the Trustee will notify the Unitholders. All
Unitholders will then elect either option 1, if eligible, or option 2.
By electing to "rollover" into the New Series, the Unitholder indicates
his interest in having his terminating distribution from the Trust invested only
in the New Series created following termination of the Trust; the Sponsor
expects, however, that a similar rollover program will be offered with respect
to all subsequent series of the Trust, thus giving Unitholders an opportunity to
elect to roll their terminating distributions into a New Series. The
availability of the rollover privilege does not constitute a solicitation of
offers to purchase units of a New Series or any other security. A Unitholder's
election to participate in the rollover program will be treated as an indication
of interest only. The Sponsor intends to coordinate the date of deposit of a
future series so that the terminating trust will terminate contemporaneously
with the creation of a New Series. The Sponsor reserves the right to modify,
suspend or terminate the rollover privilege at any time.
THE SPONSOR. Effective February 9, 2000, ING Funds Distributor, Inc.
has become the successor to Reich & Tang Distributors, Inc., as Sponsor to the
Trusts. ING Funds Distributor, Inc., an Iowa corporation, is a wholly owned
indirect subsidiary of ING Group. ING Group, among the leading global financial
services organizations, is engaged in asset management, banking and insurance
activities in 60 countries worldwide with over 82,000 employees. The Sponsor is
a member of the National Association of Securities Dealers, Inc.
The information included herein is only for the purpose of informing
investors as to the financial responsibility of the Sponsor and its ability to
carry out its contractual obligations. The Sponsor will be under no liability to
Unitholders for taking any action, or refraining from taking any action, in good
faith pursuant to the Trust Agreement, or for errors in judgment except in cases
of its own willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties.
The Sponsor may resign at any time by delivering to the Trustee an
instrument of resignation executed by the Sponsor. If at any time the Sponsor
shall resign or fail to perform any of its duties under the Trust Agreement or
becomes incapable of acting or becomes bankrupt or its affairs are taken over by
public authorities, then the Trustee may either (a) appoint a successor Sponsor;
(b) terminate the Trust Agreement and liquidate the Trust; or (c) continue to
act as Trustee without terminating the Trust Agreement. Any successor Sponsor
appointed by the Trustee shall be satisfactory to the Trustee and, at the time
of appointment, shall have a net worth of at least $1,000,000.
THE TRUSTEE. The Trustee is The Chase Manhattan Bank with its principal
executive office located at 270 Park Avenue, New York, New York 10017 (800)
428-8890 and its unit investment trust office at Four New York Plaza, New York,
New York 10004. The Trustee is subject to supervision by the Superintendent of
Banks of the State of New York, the Federal Deposit Insurance Corporation and
the Board of Governors of the Federal Reserve System.
The Trustee shall not be liable or responsible in any way for taking
any action, or for refraining from taking any action, in good faith pursuant to
the Trust Agreement, or for errors in judgment; or for any disposition of any
moneys, Securities or Units in accordance with the Trust Agreement, except in
cases of its own willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties; provided, however, that the Trustee
shall not in any event be liable or responsible for any evaluation made by any
independent evaluation service employed by it. In addition, the Trustee shall
not be liable for any taxes or other governmental charges imposed upon or in
respect of the Securities or the Trust which it may be required to pay under
current or future law of the United States or any other taxing authority having
jurisdiction. The Trustee shall not be liable for depreciation or loss incurred
by reason of the sale by the Trustee of any of the Securities pursuant to the
Trust Agreement.
For further information relating to the responsibilities of the Trustee
under the Trust Agreement, reference is made to the material set forth under
"Rights of Unitholders."
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The Trustee may resign by executing an instrument in writing and filing
the same with the Sponsor, and mailing a copy of a notice of resignation to all
Unitholders. In such an event the Sponsor is obligated to appoint a successor
Trustee as soon as possible. In addition, if the Trustee becomes incapable of
acting or becomes bankrupt or its affairs are taken over by public authorities,
the Sponsor may remove the Trustee and appoint a successor as provided in the
Trust Agreement. Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsor. If upon resignation of the Trustee no successor has
been appointed and has accepted the appointment within thirty days after
notification, the retiring Trustee may apply to a court of competent
jurisdiction for the appointment of a successor. The resignation or removal of
the Trustee becomes effective only when the successor Trustee accepts its
appointment as such or when a court of competent jurisdiction appoints a
successor Trustee. Upon execution of a written acceptance of such appointment by
such successor Trustee, all the rights, powers, duties and obligations of the
original Trustee shall vest in the successor.
Any corporation into which the Trustee may be merged or with which it
may be consolidated, or any corporation resulting from any merger or
consolidation to which the Trustee shall be a party, shall be the successor
Trustee. The Trustee must always be a banking corporation organized under the
laws of the United States or any State and have at all times an aggregate
capital, surplus and undivided profits of not less than $2,500,000.
THE PORTFOLIO CONSULTANT. The Portfolio Consultant is Gabelli Funds,
LLC, a New York limited liability company, the successor to Gabelli Funds, Inc.,
with offices at One Corporate Center, Rye, New York 10580-1434. The Portfolio
Consultant is a registered investment advisor, and with its affiliate, GAMCO
Investors, Inc., acts as an investment manager, administrator or advisor for
assets of mutual funds and private managed accounts aggregating in excess of
$21.6 billion as of December 31, 1999.
The Portfolio Consultant is not a sponsor of the Trust. The Portfolio
Consultant has been retained by the Sponsor, at its expense to utilize its
equity expertise in selecting the securities deposited in the Trust. The
Portfolio Consultant's only responsibility with respect to the Trust, in
addition to its role in Portfolio selection, is to monitor the Securities of the
Portfolio and make recommendations to the Sponsor regarding the disposition of
the Securities held by the Trust. The responsibility of monitoring the
Securities of the Portfolio means that if the Portfolio Consultant's view
materially changes regarding the appropriateness of an investment in any
Security then held in the Trust based upon the investment objectives,
guidelines, terms, parameters, policies and restrictions supplied to the
Portfolio Consultant by the Sponsor, the Portfolio Consultant will notify the
Sponsor of such change to the extent consistent with applicable legal
requirements. The Sponsor is not obligated to adhere to the recommendations of
the Portfolio Consultant regarding the disposition of Securities. The Sponsor
has the sole authority to direct the Trust to dispose of Securities under the
Trust Agreement. The Portfolio Consultant has no other responsibilities or
obligations to the Trust or the Unitholders.
Investors should be aware that the Portfolio Consultant, with its
affiliates, is an investment adviser for managed investment companies and
managed private accounts that may have similar or different investment
objectives than the Trust. Some of the Securities in the Trust may also be owned
by these other clients of the Portfolio Consultant and its affiliates. However,
because these clients have "managed" portfolios and may have differing
investment objectives, the Portfolio Consultant may sell certain Securities for
those accounts in instances where a sale by the Trust would be impermissible,
such as to maximize return by taking advantage of market fluctuations.
The Portfolio Consultant may resign or may be removed by the Sponsor at
any time on sixty days' prior notice. The Sponsor shall use its best efforts to
appoint a satisfactory successor in the event that the Portfolio Consultant
resigns or is removed. Such resignation or removal shall become effective upon
the acceptance of appointment by the successor Portfolio Consultant. If upon
resignation of the Portfolio Consultant no successor has accepted appointment
within sixty days after notice of resignation, the Sponsor has agreed to perform
this function.
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EVALUATION OF THE TRUST. The value of the Securities in the Trust
portfolio is determined in good faith by the Trustee on the basis set forth
under "Public Offering -- Offering Price." The Sponsor and the Unitholders may
rely on any evaluation furnished by the Trustee and shall have no responsibility
for the accuracy thereof. Determinations by the Trustee under the Trust
Agreement shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Trustee shall be under no liability
to the Sponsor or Unitholders for errors in judgment, except in cases of its own
willful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties. The Trustee, the Sponsor and the Unitholders may rely on
any evaluation furnished to the Trustee by an independent evaluation service and
shall have no responsibility for the accuracy thereof.
TRUST EXPENSES AND CHARGES
ING Mutual Funds Management Co. LLC, an affiliate of ING Funds
Distributor, Inc., will receive for portfolio supervisory services to the Trust
an Annual Fee in the amount set forth under "Summary of Essential Information"
in Part A. The Sponsor's fee may exceed the actual cost of providing portfolio
supervisory services for the Trust, but at no time will the total amount
received for portfolio supervisory services rendered to all series of the Equity
Securities Trust in any calendar year exceed the aggregate cost to the Sponsor
of supplying such services in such year. (See "Portfolio Supervision.")
The Trustee will receive, for its ordinary recurring services to the
Trust, an annual fee in the amount set forth under "Summary of Essential
Information" in Part A. For a discussion of the services performed by the
Trustee pursuant to its obligations under the Trust Agreement, see "Trust
Administration" and "Rights of Unitholders."
The Trustee's fees applicable to a Trust are payable as of each Record
Date from the Income Account of the Trust to the extent funds are available and
then from the Principal Account. Both fees may be increased without approval of
the Unitholders by amounts not exceeding proportionate increases in consumer
prices for services as measured by the United States Department of Labor's
Consumer Price Index entitled "All Services Less Rent."
The following additional charges are or may be incurred by the Trust:
all expenses (including counsel fees) of the Trustee incurred and advances made
in connection with its activities under the Trust Agreement, including the
expenses and costs of any action undertaken by the Trustee to protect the Trust
and the rights and interests of the Unitholders; fees of the Trustee for any
extraordinary services performed under the Trust Agreement; indemnification of
the Trustee for any loss or liability accruing to it without gross negligence,
bad faith or willful misconduct on its part, arising out of or in connection
with its acceptance or administration of the Trust; indemnification of the
Sponsor for any losses, liabilities and expenses incurred in acting as sponsors
of the Trust without gross negligence, bad faith or willful misconduct on its
part; and all taxes and other governmental charges imposed upon the Securities
or any part of the Trust (no such taxes or charges are being levied, made or, to
the knowledge of the Sponsor, contemplated). The above expenses, including the
Trustee's fees, when paid by or owing to the Trustee are secured by a first lien
on the Trust to which such expenses are charged. In addition, the Trustee is
empowered to sell the Securities in order to make funds available to pay all
expenses.
Unless the Sponsor otherwise directs, the accounts of the Trust shall
be audited not less than annually by independent public accountants selected by
the Sponsor. The expenses of the audit shall be an expense of the Trust. So long
as the Sponsor maintains a secondary market, the Sponsor will bear any audit
expense which exceeds $.50 Cents per 100 Units. Unitholders covered by the audit
during the year may receive a copy of the audited financial statements upon
request.
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REINVESTMENT PLAN
Income and principal distributions on Units (other than the final
distribution in connection with the termination of the Trust) may be reinvested
by participating in the Trust's reinvestment plan. Under the plan, the Units
acquired for participants will be either Units already held in inventory by the
Sponsor or new Units created by the Sponsor's deposit of Additional Securities
as described in "The Trust -- Organization" in this Part B. Units acquired by
reinvestment will not be subject to any sales charge. Investors should inform
their broker, dealer or financial institution when purchasing their Units if
they wish to participate in the reinvestment plan. Thereafter, Unitholders
should contact their broker, dealer or financial institution if they wish to
modify or terminate their election to participate in the reinvestment plan. In
order to enable a Unitholder to participate in the reinvestment plan with
respect to a particular distribution on their Units, such notice must be made at
least three business days prior to the Record Day for such distribution. Each
subsequent distribution of income or principal on the participant's Units will
be automatically applied by the Trustee to purchase additional Units of the
Trust. The Sponsor reserves the right to demand, modify or terminate the
reinvestment plan at any time without prior notice. The reinvestment plan for
the Trust may not be available in all states.
EXCHANGE PRIVILEGE AND CONVERSION OFFER
Unitholders will be able to elect to exchange any or all of their Units
of this Trust for Units of one or more of any available series of Equity
Securities Trust, Insured Municipal Securities Trust, Municipal Securities
Trust, New York Municipal Trust or Mortgage Securities Trust (the "Exchange
Trusts") subject to a reduced sales charge as set forth in the prospectus of the
Exchange Trust (the "Exchange Privilege"). Unit owners of any registered unit
investment trust for which there is no active secondary market in the units of
such trust (a "Redemption Trust") will be able to elect to redeem such units and
apply the proceeds of the redemption to the purchase of available Units of one
or more series of an Exchange Trust (the "Conversion Trusts") at the Public
Offering Price for units of the Conversion Trust subject to a reduced sales
charge as set forth in the prospectus of the Conversion Trust (the "Conversion
Offer"). Under the Exchange Privilege, the Sponsor's repurchase price during the
initial offering period of the Units being surrendered will be based on the
market value of the Securities in the Trust portfolio or on the aggregate offer
price of the Bonds in the other Trust Portfolios; and, after the initial
offering period has been completed, will be based on the aggregate bid price of
the securities in the particular Trust portfolio. Under the Conversion Offer,
units of the Redemption Trust must be tendered to the trustee of such trust for
redemption at the redemption price determined as set forth in the relevant
Redemption Trust's prospectus. Units in an Exchange or Conversion Trust will be
sold to the Unitholder at a price based on the aggregate offer price of the
securities in the Exchange or Conversion Trust portfolio (or for units of Equity
Securities Trust, based on the market value of the underlying securities in the
trust portfolio) during the initial public offering period of the Exchange or
Conversion Trust; and after the initial public offering period has been
completed, based on the aggregate bid price of the securities in the Exchange or
Conversion Trust Portfolio if its initial offering has been completed plus
accrued interest (or for units of Equity Securities Trust, based on the market
value of the underlying securities in the trust portfolio) and a reduced sales
charge.
Except for Unitholders who wish to exercise the Exchange Privilege or
Conversion Offer within the first five months of their purchase of Units of the
Exchange or Redemption Trust, any purchaser who purchases Units under the
Exchange Privilege or Conversion Offer will pay a lower sales charge than that
which would be paid for the Units by a new investor. For Unitholders who wish to
exercise the Exchange Privilege or Conversion Offer within the first five months
of their purchase of Units of the Exchange or Redemption Trust, the sales charge
applicable to the purchase of units of an Exchange or Conversion Trust shall be
the greater of (i) the reduced sales charge or (ii) an amount which when coupled
with the sales charge paid by the Unitholder upon his original purchase of Units
of the Exchange or Redemption Trust would equal the sales charge applicable in
the direct purchase of units of an Exchange or Conversion Trust.
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In order to exercise the Exchange Privilege the Sponsor must be
maintaining a secondary market in the units of the available Exchange Trust. The
Conversion Offer is limited only to unit owners of any Redemption Trust.
Exercise of the Exchange Privilege and the Conversion Offer by Unitholders is
subject to the following additional conditions (i) at the time of the
Unitholder's election to participate in the Exchange Privilege or the Conversion
Offer, there must be units of the Exchange or Conversion Trust available for
sale, either under the initial primary distribution or in the Sponsor's
secondary market, (ii) exchanges will be effected in whole units only, (iii)
Units of the Mortgage Securities Trust may only be acquired in blocks of 1,000
Units and (iv) Units of the Equity Securities Trust may only be acquired in
blocks of 100 Units. Unitholders will not be permitted to advance any funds in
excess of their redemption in order to complete the exchange. Any excess
proceeds received from a Unitholder for exchange, or from units being redeemed
for conversion, will be remitted to such Unitholder.
The Sponsor reserves the right to suspend, modify or terminate the
Exchange Privilege and/or the Conversion Offer. The Sponsor will provide
Unitholders of the Trust with 60 days' prior written notice of any termination
or material amendment to the Exchange Privilege or the Conversion Offer,
provided that, no notice need be given if (i) the only material effect of an
amendment is to reduce or eliminate the sales charge payable at the time of the
exchange, to add one or more series of the Trust eligible for the Exchange
Privilege or the Conversion Offer, to add any new unit investment trust
sponsored by ING Funds Distributor, Inc. or a sponsor controlled by or under
common control with ING Funds Distributor, Inc., or to delete a series which has
been terminated from eligibility for the Exchange Privilege or the Conversion
Offer, (ii) there is a suspension of the redemption of units of an Exchange or
Conversion Trust under Section 22(e) of the Investment Company Act of 1940, or
(iii) an Exchange Trust temporarily delays or ceases the sale of its units
because it is unable to invest amounts effectively in accordance with its
investment objectives, policies and restrictions. During the 60-day notice
period prior to the termination or material amendment of the Exchange Privilege
described above, the Sponsor will continue to maintain a secondary market in the
units of all Exchange Trusts that could be acquired by the affected Unitholders.
Unitholders may, during this 60-day period, exercise the Exchange Privilege in
accordance with its terms then in effect.
To exercise the Exchange Privilege, a Unitholder should notify the
Sponsor of his desire to exercise his Exchange Privilege. To exercise the
Conversion Offer, a unit owner of a Redemption Trust should notify his retail
broker of his desire to redeem his Redemption Trust Units and use the proceeds
from the redemption to purchase Units of one or more of the Conversion Trusts.
If Units of a designated, outstanding series of an Exchange or Conversion Trust
are at the time available for sale and such Units may lawfully be sold in the
state in which the Unitholder is a resident, the Unitholder will be provided
with a current prospectus or prospectuses relating to each Exchange or
Conversion Trust in which he indicates an interest. He may then select the Trust
or Trusts into which he desires to invest the proceeds from his sale of Units.
The exchange transaction will operate in a manner essentially identical to a
secondary market transaction except that units may be purchased at a reduced
sales charge. The conversion transaction will be handled entirely through the
unit owner's retail broker. The retail broker must tender the units to the
trustee of the Redemption Trust for redemption and then apply the proceeds to
the redemption toward the purchase of units of a Conversion Trust at a price
based on the aggregate offer or bid side evaluation per Unit of the Conversion
Trust, depending on which price is applicable, plus accrued interest and the
applicable sales charge. The certificates must be surrendered to the broker at
the time the redemption order is placed and the broker must specify to the
Sponsor that the purchase of Conversion Trust Units is being made pursuant to
the Conversion Offer. The unit owner's broker will be entitled to retain a
portion of the sales charge.
TAX CONSEQUENCES OF THE EXCHANGE PRIVILEGE AND THE CONVERSION OFFER. A
surrender of Units pursuant to the Exchange Privilege or the Conversion Offer
will constitute a "taxable event" to the Unitholder under the Internal Revenue
Code. The Unitholder will realize a tax gain or loss (although any loss may not
be deductible to the extent that the Securities represented by the Units
received in the exchange are substantially identical to securities represented
by units surrendered in the exchange) that will be of a long- or short-term
capital or ordinary income nature depending on the length of time the units have
been held and other factors. (See "Tax Status".) A Unitholder's tax basis in the
Units acquired pursuant to the Exchange Privilege or Conversion
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Offer will be equal to the purchase price of such Units. Investors should
consult their own tax advisors as to the tax consequences to them of exchanging
or redeeming units and participating in the Exchange Privilege or Conversion
Offer.
TAX STATUS
The following is a general discussion of certain of the Federal income
tax consequences of the purchase, ownership and disposition of the Units. The
summary is limited to investors who hold the Units as "capital assets"
(generally, property held for investment) within the meaning of the Internal
Revenue Code.
In rendering the opinion set forth below, Battle Fowler LLP has
examined the Agreement, the final form of Prospectus dated the date hereof (the
"Prospectus") and the documents referred to therein, among others, and has
relied on the validity of said documents and the accuracy and completeness of
the facts set forth therein. In the Opinion of Battle Fowler LLP, special
counsel for the Sponsor, under existing law:
1. The Trust will be classified as a grantor trust for Federal income
tax purposes and not as a partnership or association taxable as a corporation.
Classification of the Trust as a grantor trust will cause the Trust not to be
subject to Federal income tax, and will cause the Unitholders of the Trust to be
treated for Federal income tax purposes as the owners of a pro rata portion of
the assets of the Trust. All income received by the Trust will be treated as
income of the Unitholders in the manner set forth below.
2. The Trust is not subject to the New York Franchise Tax on Business
Corporations or the New York City General Corporation Tax. For a Unitholder who
is a New York resident, however, a pro rata portion of all or part of the income
of the Trust will be treated as income of the Unitholder under the income tax
laws of the State and City of New York. Similar treatment may apply in other
states.
3. During the 90-day period subsequent to the initial issuance date,
the Sponsor reserves the right to deposit Additional Securities that are
substantially similar to those deposited in initially establishing the Trust.
This retained right falls within the guidelines promulgated by the Internal
Revenue Service ("IRS") and should not affect the taxable status of the Trust.
A taxable event will generally occur with respect to each Unitholder
when the Trust disposes of a Security (whether by sale, exchange or redemption)
or upon the sale, exchange or redemption of Units by such Unitholder. The price
a Unitholder pays for its Units, including sales charges, is allocated among its
pro rata portion of each Security held by the Trust (in proportion to the fair
market values thereof on the date the Unitholder purchases its Units) in order
to determine its initial cost for its pro rata portion of each Security held by
the Trust.
A Holder will be considered to have received all of the dividends paid
on its pro rata portion of each Security and any gain or loss resulting from the
conversion of foreign currency into U.S. dollars when such dividends are
received or amounts are converted by the Trust, even if the Holder does not
actually receive such distributions because all or a portion of them are subject
to withholding taxes, used to pay a portion of the Trust's expenses, or
reinvested pursuant to the Reinvestment Plan. For Federal income tax purposes, a
Unitholder's pro rata portion of dividends paid with respect to a Security held
by a Trust is taxable as ordinary income to the extent of such corporation's
current or accumulated earnings and profits. A Unitholder's pro rata portion of
dividends paid on such Security that exceed such current and accumulated
earnings and profits will first reduce a Unitholder's tax basis in such
Security, and to the extent that such dividends exceed a Unitholder's tax basis
in such Security will generally be treated as capital gain.
A Unitholder's portion of gain, if any, upon the sale, exchange or
redemption of Units or the disposition of Securities held by the Trust will
generally be considered a capital gain and will be long-term if the Unitholder
has
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held its Units (and the Trust has held the Securities) for more than one year.
Capital gains are generally taxed at the same rates applicable to ordinary
income, although non-corporate Unitholders who realize long-term capital gains
may be subject to a reduced tax rate of 20% on such gains, rather than the
"regular" maximum tax rate of 39.6%. Tax rates may increase prior to the time
when Unitholders may realize gains from the sale, exchange or redemption of the
Units or Securities.
A Unitholder's portion of loss, if any, upon the sale or redemption of
Units or the disposition of Securities held by the Trust will generally be
considered a capital loss and will be long-term if the Unitholder has held its
Units for more than one year. Capital losses are deductible to the extent of
capital gains. In addition, up to $3,000 of capital losses ($1,500 in the case
of married individuals filing separately) recognized by non-corporate
Unitholders may be deducted against ordinary income.
A Unitholder who itemizes its deductions may also deduct its pro rata
share of the fees and expenses of the Trust, but only to the extent that such
amounts, together with the Unitholder's other miscellaneous deductions, exceed
2% of its adjusted gross income. The deduction of fees and expenses is subject
to limitations for individuals with incomes in excess of certain thresholds.
A corporation that owns Units will generally be entitled to a 70%
dividends received deduction with respect to its pro rata portion of dividends
taxable as ordinary income received by the Trust from a domestic corporation or
from a qualifying foreign corporation in the same manner as if such corporate
Unitholder corporation directly owned the Securities paying such dividends. That
deduction is available to corporations (other than "S" corporations and certain
other corporations that are not eligible for such deduction) and is not
available for purposes of special taxes such as the accumulated earnings tax and
the personal holding company tax. However, a corporation owning Units should be
aware that the Code imposes additional limitations on the eligibility of
dividends for the 70% dividends received deduction. These limitations include a
requirement that stock (and therefore Units) must generally be held at least 46
days during the 90-day period beginning on the date that is 45 days before the
date on which the stock becomes "ex-dividend." Moreover, the allowable
percentage of the deduction will be reduced from 70% if a corporate Unitholder
owns certain stock (or Units) the financing of which is directly attributable to
indebtedness incurred by such corporation. The dividends-received deduction is
currently 70%. Congress from time to time considers proposals to reduce this
percentage.
The Trust may hold Securities, ADRs or GDRs of foreign corporations.
For United States income tax purposes, a holder of ADRs or GDRs is treated as
though it were holding directly the shares of the foreign corporation
represented by the ADRs or GDRs. Dividends paid by foreign issuers generally
will be subject to foreign withholding tax, which may entitle Holders to a
foreign tax credit (or deduction) against their U.S. income tax liability,
subject to the limitations applicable to the use of the foreign tax credit.
Amounts withheld on payments to the Trust may be greater than the amounts that
would be withheld if the shares were held directly by a U.S. Holder. The trust
will report as gross income earned by U.S. Holders their pro rata shares of such
dividends, including their pro rata shares of any corresponding amounts of
foreign tax withheld and their pro rata shares of any income or loss resulting
from currency conversion transactions. Capital gains attributable to the Units
or the underlying securities may also be subject to taxes by certain of those
jurisdictions.
After the end of each calendar year, the Trustee will furnish to each
Unitholder an annual statement containing information relating to the dividends
received by the Trust on the Securities, the gross proceeds received by the
Trust from the disposition of any Security, and the fees and expenses paid by
the Trust. The Trustee will also furnish annual information returns to each
Unitholder and to the Internal Revenue Service.
As discussed in the section "Termination", each Unitholder may have
three options in receiving his termination distributions, namely (i) to receive
its pro rata share of the underlying Securities in kind, (ii) to receive cash
upon liquidation of its pro rata share of the underlying Securities, or (iii) to
invest the amount of cash it would receive upon the liquidation of its pro rata
share of the underlying Securities in units of a future series of the Trust
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(if one is offered). There are special tax consequences should a Unitholder
choose option (i), the exchange of the Unitholder's Units for a pro rata portion
of each of the Securities held by the Trust plus cash. Treasury Regulations
provide that gain or loss is recognized when there is a conversion of property
into property that is materially different in kind or extent. In this instance,
the Unitholder may be considered the owner of any undivided interest in all of
the Trust's assets. By accepting the proportionate number of Securities of the
Trust, in partial exchange for its Units, the Unitholder should be treated as
merely exchanging its undivided pro rata ownership of Securities held by the
Trust into sole ownership of a proportionate share of Securities. As such, there
should be no material difference in the Unitholder's ownership, and therefore
the transaction should be tax free to the extent the Securities are received.
Alternatively, the transaction may be treated as an exchange that would qualify
for nonrecognition treatment to the extent the Unitholder is exchanging its
undivided interest in all of the Trust's Securities for its proportionate number
of shares of the underlying Securities. In either instance, the transaction
should result in a non-taxable event for the Unitholder to the extent Securities
are received, although the cash would be taxable. However, there is no specific
authority addressing the income tax consequences of an in-kind distribution from
a grantor trust.
Entities that generally qualify for an exemption from Federal income
tax, such as many pension trusts, are nevertheless taxed under Section 511 of
the Code on "unrelated business taxable income." Unrelated business taxable
income is income from a trade or business regularly carried on by the tax-exempt
entity that is unrelated to the entity's exempt purpose. Unrelated business
taxable income generally does not include dividend or interest income or gain
from the sale of investment property, unless such income is derived from
property that is debt-financed or is dealer property. A tax-exempt entity's
dividend income from the Trust and gain from the sale of Units in the Trust or
the Trust's sale of Securities is not expected to constitute unrelated business
taxable income to such tax-exempt entity unless the acquisition of the Unit
itself is debt-financed or constitutes dealer property in the hands of the
tax-exempt entity.
Prospective tax-exempt investors are urged to consult their own tax
advisors concerning the Federal, state, local and any other tax consequences of
the purchase, ownership and disposition of Units prior to investing in the
trust.
OTHER MATTERS
LEGAL OPINIONS. The legality of the Units offered hereby and certain
matters relating to federal tax law have been passed upon by Battle Fowler LLP,
75 East 55th Street, New York, New York 10022 as counsel for the Sponsor.
Carter, Ledyard & Milburn, Two Wall Street, New York, New York 10005 have acted
as counsel for the Trustee.
INDEPENDENT ACCOUNTANTS/AUDITORS. The financial statements of the Trust
for the period ended December 31, 1999 included in Part A of this Prospectus
have been examined by Ernst & Young LLP, independent auditors. The financial
statements have been so included in reliance on their report given upon the
authority of said firm as experts in accounting and auditing.
PORTFOLIO SUPERVISOR. ING Mutual Funds Management Co. LLC, a Delaware
limited liability company, is a wholly-owned indirect subsidiary of ING Group
and is an affiliate of the Sponsor.
PERFORMANCE INFORMATION. Total returns, average annualized returns or
cumulative returns for various periods of the Trust may be included from time to
time in advertisements, sales literature and reports to current or prospective
investors. Total return shows changes in Unit price during the period plus
reinvestment of dividends and capital gains, divided by the maximum public
offering price as of the date of calculation. Average annualized returns show
the average return for stated periods of longer than a year. Figures for actual
portfolios will reflect all applicable expenses and, unless otherwise stated,
the maximum sales charge. No provision is made for any income taxes payable.
Similar figures may be given for this Trust. Trust performance may be compared
to
B-24
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<PAGE>
performance on a total return basis of the Dow Jones Industrial Average, the
S&P 500 Composite Price Stock Index, or performance data from Lipper Analytical
Services, Inc. and Morningstar Publications, Inc. or from publications such as
Money, The New York Times, U.S. News and World Report, Business Week, Forbes or
Fortune. As with other performance data, performance comparisons should not be
considered representative of a Trust's relative performance for any future
period.
SEC WEBSITE. The Securities and Exchange Commission ("SEC") maintains a
website that contains reports, proxy and information statements and other
information regarding the Trust which is filed electronically with the SEC. The
SEC's Internet address is http:www.sec.gov. Offering materials for the sale of
these Units available through the Internet are not being offered directly or
indirectly to residents of a particular state nor is an offer of these Units
through the Internet specifically directed to any person in a state by, or on
behalf of, the issuer.
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<PAGE>
No person is authorized to give any information or to make any
representations not contained in Parts A and B of this Prospectus; and any
information or representation not contained herein must not be relied upon as
having been authorized by the Trust, the Trustee or the Sponsor. The Trust is
registered as a unit investment trust under the Investment Company Act of 1940.
Such registration does not imply that the Trust or any of its Units have been
guaranteed, sponsored, recommended or approved by the United States or any state
or any agency or officer thereof.
This Prospectus does not constitute an offer to sell, or a solicitation
of an offer to buy, securities in any state to any person to whom it is not
lawful to make such offer in such state.
Table of Contents
Title Page
PART A
The Trust A-2
Summary of Essential Information A-4
Financial and Statistical Information A-5
Audit and Financial Information A-7
PART B
The Trust B-1
Risk Considerations B-4
Public Offering B-8
Rights of Unitholders B-10
Liquidity B-12
Trust Administration B-14
Trust Expenses and Charges B-19
Reinvestment Plan B-20
Exchange Privilege and Conversion Offer B-20
Tax Status B-22
Other Matters B-24
Information may be reviewed and copied at the Commission's Public
Reference Room, and information on the Public Reference Room may be obtained by
calling the SEC at 1-202-942-8090. Copies may be obtained from the SEC by:
* visiting the SEC Internet address:
http://www.sec.gov
* electronic request (after paying a duplicating fee) at the following
E-mail address:
[email protected]
* writing: Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington D.C. 20549-6009
B-26
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<PAGE>
LOGO
EQUITY SECURITIES TRUST
SERIES 21, SIGNATURE SERIES
GABELLI ENTERTAINMENT &
MEDIA TRUST II
(A UNIT INVESTMENT TRUST)
PROSPECTUS
DATED: April 30, 2000
SPONSOR:
ING FUNDS DISTRIBUTOR, INC.
1475 Dunwoody Drive
West Chester, Pennsylvania 19380
1-877-463-6464
PORTFOLIO CONSULTANT:
GABELLI FUNDS, LLC
One Corporate Center
Rye, New York 10580-1434
TRUSTEE:
THE CHASE MANHATTAN BANK
4 New York Plaza
New York, New York 10004
940463.2
<PAGE>
PART II
ADDITIONAL INFORMATION NOT REQUIRED
IN PROSPECTUS
CONTENTS OF REGISTRATION STATEMENT
This Post-Effective Amendment to the Registration Statement on Form S-6
comprises the following papers and documents:
The facing sheet on Form S-6.
The Cross-Reference Sheet (incorporated by reference to the Registration
Statement of Equity Securities Trust, Series 12, 1997 Triple Strategy Trust
II.
The Prospectus consisting of pages.
Signatures.
Consent of Independent Auditors.
Consent of Counsel (included in Exhibit 99.3.1).
Consent of Portfolio Consultant.
The following exhibits:
99.1.1 -- Reference Trust Agreement including certain amendments to the
Trust Indenture and Agreement (filed as Exhibit 99.1.1 to
Amendment No. 1 to Form S-6 Registration Statement No.
333-70093 of Equity Securities Trust, Series 21 on January 26,
1999 and incorporated herein by reference).
99.1.1.1 -- Form of Trust Indenture and Agreement (filed as Exhibit
99.1.1.1 to Amendment No. 1 to Form S-6 Registration Statement
No. 33-62627 on November 16, 1995 and incorporated herein by
reference).
99.1.3.4 -- Articles of Incorporation and Articles of Amendment of ING
Funds Distributor, Inc. (filed as Exhibit 99.1.3.5 to Amendment
No. 2 to Form S-6 Registration Statement No. 333-31048 on March
28, 2000 and incorporated herein by reference).
99.1.3.5 -- By-Laws of ING Funds Distributor, Inc. (filed as Exhibit
99.1.3.6 to Amendment No. 2 to Form S-6 Registration Statement
No. 333-31048 on March 28, 2000 and incorporated herein by
reference).
99.1.4 -- Form of Agreement Among Underwriters (filed as Exhibit 1.4 to
Amendment No. 1 to Form S-6 Registration Statement No. 33-62627
of Equity Securities Trust, Series 6, Signature Series, Gabelli
Entertainment and Media Trust on November 16, 1995 and
incorporated herein by reference).
99.3.1 -- Opinion of Battle Fowler LLP as to the legality of the
securities being registered, including their consent to the
filing thereof and to the use of their name under the headings
"Tax Status" and "Legal Opinions" in the Prospectus, and to the
filing of their opinion regarding tax status of the Trust
(filed as Exhibit 99.3.1 to Amendment No. 1 to Form S-6
Registration Statement No. 333-70093 of Equity Securities
Trust, Series 21 on January 26, 1999 and incorporated herein by
reference).
99.6.0 -- Powers of Attorney of ING Funds Distributor, Inc., by its
officers and a majority of its Directors (filed as Exhibit
99.6.0 to Form S-6 Registration Statement No. 333-31048 on
February 24, 2000 and incorporated herein by reference).
II-1
935894.1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant, Equity Securities Trust, Series 21, Signature Series, Gabelli
Entertainment & Media Trust II certifies that it has met all of the requirements
for effectiveness of this Post-Effective Amendment to the Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933. The registrant has
duly caused this Post-Effective Amendment to the 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 the 19th day of April, 2000.
EQUITY SECURITIES TRUST, SERIES 21, SIGNATURE SERIES,
GABELLI ENTERTAINMENT & MEDIA TRUST II
(Registrant)
ING FUNDS DISTRIBUTOR, INC.
(Depositor)
By: /S/ PETER J. DEMARCO
---------------------
Peter J. DeMarco
(Senior Vice President)
Pursuant to the requirements of the Securities Act of 1933,
this Post- Effective Amendment to the Registration Statement has been signed
below by the following persons, who constitute the principal officers and a
majority of the directors of ING Funds Distributor, Inc., the Depositor, in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
<S> <C> <C>
JOHN J. PILEGGI Chief Executive Officer and Director )
MITCHELL J. MELLEN President and Director ) April 19, 2000
DONALD E. BROSTROM Chief Financial Officer, Treasurer )
and Director )
ERIC M. RUBIN Director ) By:/S/PETER J.DEMARCO
------------------
Peter J. DeMarco
as Senior Vice
President and
Attorney-in-Fact*
</TABLE>
- --------
* Executed copies of Powers of Attorney were filed as Exhibit 99.6.0 to Form
S-6 Registration Statement No. 333-31048 on February 24, 2000.
II-2
935894.1
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our report dated April 15, 2000, in the Registration Statement
and related Prospectus of Equity Securities Trust, Series 21, Signature Series,
Gabelli Entertainment & Media Trust II.
ERNST & YOUNG LLP
New York, New York
April 25, 2000
<PAGE>
II-3
935894.1
<PAGE>
CONSENT OF PORTFOLIO CONSULTANT
THE SPONSOR, TRUSTEE AND UNITHOLDERS
EQUITY SECURITIES TRUST, SERIES 21, SIGNATURE SERIES,
GABELLI ENTERTAINMENT & MEDIA TRUST II
We hereby consent to the use of the name "Gabelli Funds, LLC" included
herein and to the reference to our firm in the Prospectus.
GABELLI FUNDS, LLC
New York, New York
April 2000
II-4
935894.1
<PAGE>
