Rule 497(b)
Registration No. 333-86705
--------------------------------------------------------------------------------
[GRAPHIC OMITTED]
--------------------------------------------------------------------------------
EQUITY SECURITIES TRUST
SERIES 24
MUNICIPAL SYMPHONY SERIES III
The Trust is a unit investment trust designated Equity Securities Trust, Series
24, Municipal Symphony Series III. The Sponsor is ING Funds Distributor, Inc.
The Trust consists of a fixed, diversified portfolio of publicly traded common
stock of closed-end investment companies, whose portfolios consist primarily of
tax exempt municipal bonds. These municipal funds and their weightings in the
Trust portfolio will be selected based upon the recommendations of the portfolio
consultant. The Trust seeks to preserve capital and to provide interest income
which is generally exempt from regular Federal income tax. The possibility of
capital growth 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
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 OCTOBER 28, 2000
NY/308861.1
<PAGE>
OBJECTIVES. The Trust seeks to preserve capital and to provide investors with
interest income which is generally exempt from regular Federal income tax. The
possibility of capital growth is a secondary objective. There is no guarantee
that the objectives of the Trust will be achieved.
PORTFOLIO SELECTION. The Trust seeks to achieve its objectives by investing in a
portfolio of the common stock of closed-end investment companies, the portfolios
of which are concentrated in municipal bonds. As used herein, the term
"Securities" means the common stocks of the municipal funds initially deposited
in the Trust and contracts and funds for the purchase of such municipal funds,
and any additional securities acquired and held by the Trust pursuant to the
provisions of the Indenture.
DESCRIPTION OF PORTFOLIO*. The Portfolio contains 24 issues of domestic common
stock. 100% of the issues are represented by the Sponsor's contracts to
purchase. 100% of the Portfolio is listed on the New York Stock Exchange.
RISK CONSIDERATIONS. Unitholders can lose money by investing in this Trust. The
value of the units, the Securities and the bonds held by the high yield funds
included in the portfolio can each decline in value. An investment in units of
the Trust should be made with an understanding of the following risks:
o The municipal funds which comprise the Securities invest in
municipal bonds. Municipal bonds are long-term fixed rate debt
obligations that decline in value with increases in interest rates,
an issuer's worsening financial condition or a drop in bond ratings.
The longer the maturity of a municipal bond the greater the risk of
a decline in value with increases in interest rates.
o The municipal funds will receive early returns of principal when
bonds are called or sold before they mature. The funds may not be
able to reinvest the money they receive at as high a yield or as
long a maturity.
o The Securities are shares of common stock which are subject to the
risk that the financial condition of the issuers may become impaired
or that the general condition of the stock market may worsen.
o The high yield bonds held by the municipal funds will generally be
rated in lower rating categories (Baa or lower by Moody's and BBB or
lower by Standard & Poor's), or in comparable non-rated municipal
securities. While these lower rated securities offer a higher return
potential than higher rated securities, they also involve greater
price volatility and greater risk of loss of income and principal.
o Unitholders will pay both Trust expenses and a share of each
municipal fund's expenses.
o The Securities are shares of closed-end funds which frequently trade
at a discount from their net asset value in the secondary market.
The amount of such discount is subject to change from time to time
in response to various factors.
o Since the portfolio of the Trust is fixed and "not managed", in
general the Sponsor can only sell securities 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
--------
* For changes in the Trust Portfolio from July 1, 2000 to September 15,
2000 see Schedule A on page A-7 which reflects the content or "makeup" of the
Trust as of September 15, 2000.
NY/308861.1
A-2
<PAGE>
of the remaining securities. In addition, brokerage fees incurred in
purchasing the Securities will be an expense of the Trust.
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 4.50% (4.712% 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. Orders involving at least 10,000 units will be entitled to a volume
discount from the Public Offering Price. The Public Offering Price per Unit may
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. The Trust will distribute dividends received, less expenses on
the last business day of every month. 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
any time, without fee or penalty. However, 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 seven years from the
initial Date of Deposit. 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 without a sales
charge. See "Reinvestment Plan" in Part B for details on how to enroll in the
Reinvestment Plan.
NY/308861.1
A-3
<PAGE>
FEE TABLE
As of June 30, 2000
--------------------------------------------------------------------------------
This FeeTable is intended to help you to understand the costs and expenses that
you will bear directly or indirectly. See "Public Offering and Trust Expenses
and Charges." Although the Trust is a unit investment trust rather than a mutual
fund, this information is presented to permit a comparison of fees.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
As a % of Amount per
Unitholder Transaction Expenses Offering Price 100 Units
-------------- ---------
<S> <C> <C>
(fees paid directly from your investment)
----------------------------------------
Maximum Sales Charges Imposed on Purchase................... 4.50% $45.00
Estimated Annual Fund Operating Expenses As a % of Amount per
(Expenses that are deducted from Trust Assets) Net Assets 100 Units
-------------------------------------------- ---------- ---------
Trustee's Fee............................................... .086% $ .74
Other Operating Expenses.................................... .042% $ .36
Portfolio Supervision, Bookkeeping and
Administrative Fees............................ .035% $ .30
Underlying Closed-End Fund Expenses*........................ 1.287% $ 9.50
------ ------
1.230% $10.60
Total............................................................... ======= =======
</TABLE>
Example
This Example is intended to help you compare the cost of investing in the Trust
with the cost of investing in other unit trusts.
<TABLE>
1 3 5
year years years
<S> <C> <C> <C>
This Example assumes that you invest $10,000 in the Trust for the time periods
indicated, assuming the Trust's estimated operating expense ratio of 1.23% and a
5% return on the investment throughout the period. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:............ $ 570 $ 823 $ 1095
</TABLE>
The Example assumes reinvestment of all dividends and distributions and
utilizes a 5% annual rate of return as mandated by Securities and Exchange
Commission regulations applicable to mutual funds. The Example should not be
considered a representation of past or future expenses or a annual rate of
return; the actual expenses and annual rate of return may be more or less than
those assumed for purposes of the Example.
--------
* Although not an actual Trust operating expense, each Trust, and
therefore unitholders, will indirectly bear similar operating expenses of the
closed-end funds in which the Trust invests in the estimated amount set forth in
the table. The expenses are estimated based on the actual closed-end fund
expenses charged in a fund's most recent fiscal year but are subject to change
in the future. An investor in a Trust will therefore indirectly pay higher
expenses than if the underlying closed-end fund shares were held directly.
NY/308861.1
A-4
<PAGE>
<TABLE>
<CAPTION>
SUMMARY OF ESSENTIAL INFORMATION
As of June 30, 2000
<S> <C>
Initial Date of Deposit: September 21, 1999 Minimum Value of Trust: The Trust may be
Aggregate Value of Securities $ 28,474,150 terminated if the value of the trust is less than
Number of Units 3,297,386 40% of the aggregate value of the securities at
Fractional Undivided Interest in Trust 1/3,297,386 the completion of the deposit period
Public Offering Price Per 100 Units Mandatory Termination Date: The earlier of
Net Assets of the Trust..........................$28,423,117 September 21, 2006 or the disposition of the last
Divided by 3,297,386 Units (times 100)...............$861.99 Security in the Trust.
Plus Sales Charge of 4.50% of Public CUSIP Numbers: Cash: 294762 51 3
Offering Price.....................................$40.60 Reinvestment: 294762 52 1
Public Offering Price+..............................$ 902.59 Trustee: The Chase Manhattan Bank
Sponsor's Repurchase Price And Trustee's Fee: $ per 100 Units
Redemption Price Per 100 Units++..................$861.99 outstanding
Evaluation Time: 4:00 p.m. New York Time. Other Fees and Expenses: $ per 100
Minimum Income or Principal Units outstanding
Distribution: $1.00 per 100 Units Sponsor: ING Funds Distributor, Inc.
Liquidation Period: Beginning five days prior to Sponsor's Supervisor Fee: Maximum of
the Mandatory Termination Date. $.30 per 100 Unites outstanding (see "Trust
Rollover Notification Date: September 10, 2006 or Expenses and Charges" in Part B).
another date as determined by the Sponsor Porfolio Consultant:
Riccardi Group LLC
Record Dates: Fifteenth day of each month
Distribution Dates: Last business day of
each month.
</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.
NY/308861.1
A-5
<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>
June 30, 1999 3,297,386 $861.99 $48.21 0
</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
NY/308861.1
A-6
<PAGE>
EQUITY SECURITIES TRUST SERIES 24
MUNICIPAL SYMPHONY SERIES
SCHEDULE A
<TABLE>
<CAPTION>
# Shares Description Market Value % Portfolio
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 42,862 Acm Municipal Securities Income Fund $ 530,417.25 3.01232%
2 17,416 Apex Municipal Fund 149,124.50 0.84690%
3 35,575 Colonial High Income Municipal Trust 242,354.69 1.37637%
4 50,643 Dreyfus Strategic Municipal Income Trust 420,969.94 2.39075%
5 41,630 Kemper Strategic Municipal Income Trust 463,133.75 2.63020%
6 71,030 Kemper Municipal Income Trust 759,133.13 4.31123%
7 40,024 MFS Municipal Income Trust 312,687.50 1.77580%
8 27,798 Municipal Advantage Trust 330,101.25 1.87469%
9 16,556 Municipal High Income Fund 141,760.75 0.80508%
10 52,377 Muniholdings Fund 661,259.63 3.75539%
11 140,201 Nuveen Investment Quality Municipal 1,857,663.25 10.54994%
Income Fund
12 153,294 Nuveen Municipal Advantage Fund 2,002,402.88 11.37194%
13 99,316 Nuveen Municipal Market Opportunity Fund 1,340,766.00 7.61441%
14 51,391 Nuveen Premier Municipal Income Fund 703,414.31 3.99479%
15 122,910 Nuveen Quality Income Municipal Fund 1,674,648.75 9.51058%
16 130,939 Nuveen Select Quality Municipal Fund 1,784,043.88 10.13185%
17 10,005 Putnam Investment Grade Municipal Trust 105,052.50 0.59661%
18 11,118 Putnam Investment Grade Municipal Trust II 129,941.63 0.73796%
19 82,266 Putnam Managed Municipal Income Trust 817,518.38 4.64281%
20 22,484 Putnam Municipal Opportunities Trust 295,102.50 1.67593%
21 20,011 Van Kampen Investment Grade Municipal 165,090.75 0.93757%
Trust
22 32,736 Van Kampen Municipal Income Fund 278,256.00 1.58026%
23 140,201 Van Kampen Municipal Trust 1,840,138.13 10.45041%
24 43,481 Van Kampen Trust for Investment Grade 603,298.88 3.42622%
Municipals
-------------------------------------------------------------------------------------------------
TOTALS 1,456,264 $17,608,280.19 100.00%
</TABLE>
NY/308861.1
A-7
<PAGE>
Report of Independent Auditors
The Sponsor, Trustee and Certificateholders of
Equity Securities Trust, Series 24, Municipal Symphony Series III
We have audited the accompanying statement of net assets of Equity Securities
Trust, Series 24, Municipal Symphony Series III, including the portfolio, as of
June 30, 2000 and the related statement of operations, and changes in net assets
and financial highlights for the period from September 21, 1999 (date of
deposit) to June 30, 2000. 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 24, Municipal Symphony Series III at June 30, 2000, the
results of its operations, changes in its net assets and financial highlights
for the period from September 21, 1999 to June 30, 2000, in conformity with
accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
New York, New York
October 16, 2000
<PAGE>
Equity Securities Trust, Series 24, Municipal Symphony Series III
Portfolio
June 30, 2000
<TABLE>
<CAPTION>
Principal
Portfolio Amount/ Percentage Cost of Market
No. Shares Name of Issuer of Trust(1) Securities(2) Value(3)
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 71,313 ACM Municipal Securities Income Fund 2.90% $ 799,595 $ 824,557
2 28,978 Apex Municipal Fund, Inc. 0.91 249,956 258,991
3 59,191 Colonial High Income Municipal Trust 1.29 383,516 366,244
4 84,266 Dreyfus Strategic Municipal Bond Fund 2.39 651,136 679,395
5 69,269 Kemper Strategic Municipal Income
Trust 2.62 707,260 744,642
6 118,186 Kemper Municipal Income Trust 4.64 1,259,152 1,322,206
7 66,596 MFS Municipal Income Trust 1.75 469,895 499,470
8 46,251 Municipal Advantage Fund, Inc. 1.81 526,928 514,542
9 27,544 Municipal High Income Fund, Inc. 0.74 213,028 211,745
10 87,151 MuniHoldings Fund, Inc. 4.09 1,095,962 1,165,645
11 233,284 Nuveen Investment Quality Municipal
Fund, Inc. 10.34 2,897,412 2,945,211
12 255,073 Nuveen Municipal Advantage Fund 11.25 3,267,772 3,204,351
13 165,254 Nuveen Municipal Market Opportunity
Fund 7.51 2,135,569 2,137,974
14 85,506 Nuveen Premier Municipal Income Fund 3.94 1,132,217 1,122,266
15 204,515 Nuveen Quality Income Municipal Fund 9.52 2,701,396 2,709,824
16 217,875 Nuveen Select Quality Municipal Fund 9.95 2,772,191 2,832,375
17 16,651 Putnam Investment Grade Municipal
Trust 0.60 200,700 170,673
18 18,495 Putnam Investment Grade Municipal
Trust II 0.72 201,807 204,601
19 136,888 Putnam Managed Municipal Income Trust 4.39 1,296,175 1,249,103
20 37,407 Putnam Municipal Opportunities Trust 1.59 438,145 453,560
21 33,289 Van Kampen Investment Grade
Municipal Trust 1.02 280,741 291,279
22 54,469 Van Kampen Municipal Income Fund 1.66 447,361 473,199
23 233,284 Van Kampen Municipal Trust 10.96 3,020,582 3,120,174
24 72,344 Van Kampen Trust For Investment
Grade Municipals 3.41 969,476 972,123
-------------------------------------
Total Investment in Securities 100.00% $ 28,117,972 $ 28,474,150
=====================================
</TABLE>
See accompanying footnotes to portfolio and notes to financial statements.
<PAGE>
Equity Securities Trust, Series 24, Municipal Symphony Series III
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, redemption or maturity
of a security.
3. At June 30, 2000, the net unrealized appreciation of all the securities
was comprised of the following:
Gross unrealized appreciation $537,586
Gross unrealized depreciation (181,408)
--------------
Net unrealized appreciation $356,178
==============
The accompanying notes form an integral part of the financial statements.
<PAGE>
Equity Securities Trust, Series 24, Municipal Symphony Series III
Statement of Net Assets
June 30, 2000
Investments in securities, at market value (cost
$28,117,972) $28,474,150
Other assets
Dividends receivable 101,938
---------------
Total other assets 101,938
---------------
Liabilities
Payable for securities purchased 58,371
Advance from Trustee 94,600
---------------
Total liabilities 152,971
---------------
Excess of liabilities over total other assets 51,033
---------------
Net assets (3,297,386 units of fractional undivided
interest outstanding, $8.62 per unit) $28,423,117
===============
The accompanying notes form an integral part of the financial statements.
<PAGE>
Equity Securities Trust, Series 24, Municipal Symphony Series III
Statements of Operations
For the period from September 21, 1999 (date of deposit)
to June 30, 2000
Investment income
Dividends $538,496
Other income 5,915
------------
Total income 544,411
Expenses
Trustee's fees 7,342
Organizational expenses 14,644
Sponsor's advisory fee 532
------------
Total expenses 22,518
------------
Net investment income 521,893
------------
Realized and unrealized gain (loss)
Realized gain on investments -
Unrealized appreciation on investments 356,178
------------
Net gain on investments 356,178
------------
Net increase in net assets resulting from operations $878,071
============
The accompanying notes form an integral part of the financial statements.
<PAGE>
Equity Securities Trust, Series 24, Municipal Symphony Series III
Statements of Changes in Net Assets
For the period from September 21, 1999 (date of deposit)
to June 30, 2000
Operations
Net investment income $ 521,893
Realized gain on investments -
Unrealized appreciation on investments 356,178
-------------
Net decrease in net assets resulting from operations 878,071
-------------
Distributions to Certificateholders
Investment income 578,840
Principal -
Redemptions
Interest -
Principal 25,969
-------------
Total distributions and redemptions 604,809
Total increase 273,262
Value of additional units acquired during the offering
period to certificateholders 27,999,925
Net assets
Beginning of year 149,930
-------------
End of year (including distribution in excess of net
investment income of $48,218) $28,423,117
=============
The accompanying notes form an integral part of the financial statements.
<PAGE>
Equity Securities Trust, Series 24, Municipal Symphony Series III
Financial Highlights
For the period from September 21, 1999 (date of deposit)
to June 30, 2000
Selected data for a unit of the Trust outstanding:*
Net asset value, beginning of year** $9.55
Dividend income .33
Expenses (.01)
------------
Net investment income .32
Net gain or loss on investments(1) (.90)
------------
Total from investment operations (.58)
Less distributions to Certificateholders:
Income .35
------------
Total distributions .35
------------
Net asset value, end of year** $8.62
============
(1)Net gain or loss on investments is a result of changes in outstanding units
since September 21, 1999, and the dates of net gain and loss on investments.
* Unless otherwise stated, based upon average units outstanding during the year
of 1,656,543 ([3,297,386 + 15,699]/2) for 2000.
** Based upon actual units outstanding.
The accompanying notes form an integral part of the financial statements.
<PAGE>
Equity Securities Trust, Series 24, Municipal Symphony Series III
Notes to Financial Statements
June 30, 2000
1. Organization
Equity Securities Trust, Series 24, Municipal Symphony Series III (the Trust)
was organized on September 21, 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 interest income which is generally exempt from regular Federal
income tax under existing law and to preserve capital.
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.
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 securities at the end of the year, which approximates the fair value of
the securities 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.
<PAGE>
Equity Securities Trust, Series 24, Municipal Symphony Series III
Notes to Financial Statements (continued)
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 principal received from
the disposition of securities, other than those se curities sold in connection
with the redemption of units, be distributed to Certificateholders.
The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. For the period ended June 30, 2000, 0 units were redeemed.
The Trust pays an annual fee for trustee services rendered by the Trustees of
$.74 per 100 units outstanding. A maximum fee of $.30 per 100 units outstanding
is paid to the Sponsor. For the year ended June 30, 2000, the "Trustee's Fees"
are comprised of Trustee fees of $6,205 and other expenses of $1,137,
respectively. The other expenses include professional, printing, and
miscellaneous fees.
<PAGE>
Equity Securities Trust, Series 24, Municipal Symphony Series III
Notes to Financial Statements (continued)
5. Net Assets
At June 30, 2000, the net assets of the Trust represented the interest of
Certificateholders as follows:
Original cost of Certificateholders $ 149,930
Less initial gross underwriting commission 31,883
---------------
118,047
Cost of additional units acquired during the offering
period to Certificateholders 27,999,925
Accumulated cost of securities sold, matured or called -
Net unrealized appreciation 356,178
Distributions in excess of net investment income (48,218)
Undistributed proceeds from investments (2,815)
---------------
Total $28,423,117
===============
The original cost to Certificateholders, less the initial gross underwriting
commission, represents the aggregate initial public offering price net of the
applicable sales charge on 15,699 units of fractional undivided interest of the
Trust as of the date of deposit. An additional 3,281,687 units of fractional
undivided interest were issued during the offering period.
<PAGE>
--------------------------------------------------------------------------------
[GRAPHIC OMITTED]
--------------------------------------------------------------------------------
EQUITY SECURITIES TRUST
SERIES 24
MUNICIPAL SYMPHONY SERIES III
PROSPECTUS PART B
PART B OF THIS PROSPECTUS MAY NOT BE
DISTRIBUTED UNLESS ACCOMPANIED BY
PART A
THE TRUST
ORGANIZATION. Equity Securities Trust, Series 24, Municipal Symphony
Series III 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.
NY/302478.2
B-1
<PAGE>
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"), 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 or the fact that the Trust is prohibited
from acquiring more than 3% of the outstanding voting stock of any Municipal
Fund. 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 preserve
capital and to provide interest income which is generally exempt from regular
Federal income tax. The possibility of capital growth is a secondary objective.
The Trust seeks to achieve its objectives by investing in a portfolio of the
common stock of closed-end tax-exempt municipal bond funds, each of which has
been recommended based upon the review of the Portfolio Consultant as able, in
its view, to maintain consistent dividend distributions generally exempt from
regular Federal income tax. 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 seven years from the Initial
Date of Deposit, 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. The Trust is intended to be an investment that should be held by
investors for the full term of the Trust and not be used as a trading vehicle.
Since the Sponsor may deposit additional Securities in connection with the sale
of additional Units, the 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.
THE SECURITIES. Each of the Securities in the portfolio of the Trust is
a closed-end municipal bond fund (the "Municipal Funds") that is able in the
view of the Portfolio Consultant to maintain consistent dividend distributions
exempt from regular Federal income tax. Each Municipal Fund is analyzed by the
Portfolio Consultant based on the underlying characteristics of its individual
holdings. Individual bond research is vital to the success of any municipal bond
fund. Careful attention has been paid to the individual municipal bond
investments that each Municipal Fund has under management in order to reduce the
Trust's exposure to early bond calls and under-performing securities that would
have the effect of diluting the Trust's current income. Each security within a
potential bond fund purchase is evaluated by the Portfolio Consultant for its
credit quality and
NY/302478.2
B-2
<PAGE>
call risk probability. In addition, all potential investments are evaluated
based upon the experience of each funds' portfolio manager in various economic
and interest rate cycles.
Out of the universe of national, closed-end municipal funds and state
specific municipal bond funds, the initial selection process narrowed the field
to a group of 24 funds that meet the criteria of tax exempt income, stable
performance, and are consistent with the Trust's objectives. By employing an
investment strategy that will require the Trust to invest in a series of funds,
investors will be diversified across a wide spectrum of bond issues, thereby
reducing the exposure to any single issuer of municipal debt, or any single
portfolio manager.
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.
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. Where 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 plus accrued interest, if
any.
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
CLOSED-END FUNDS. The value of your units may increase or decrease
depending on the value of the underlying shares of the Municipal Funds in the
Trust's portfolio. The Municipal Funds are closed-end investment companies with
managed portfolios. Shares of closed-end funds frequently trade at a discount
from net asset value. However, a fund's Articles of Incorporation may contain
certain anti-takeover provisions that may have the effect of inhibiting the
fund's possible conversion to open-end status and limiting the ability of other
persons to acquire control of the fund. In certain circumstances, these
provisions might also inhibit the ability of stockholders (including the Trust)
to sell their shares at a premium over prevailing market prices. This
characteristic is a risk separate and distinct from the risk that the fund's net
asset value will decrease. In particular, this characteristic would increase the
loss or reduce the return on the sale of those Municipal Funds whose shares were
purchased by the Trust at a premium. As of September 29, 2000, 92.7% of the
Municipal Funds included in the Trust's portfolio were trading at a premium.
Should any of the Municipal Funds convert to open-end status, the Trust will
retain such shares unless a determination is made that the retention of such
shares would be detrimental to the Trust. In the unlikely event that a Fund
converts to open-end status at a time when its shares are trading at a premium
there would be an immediate loss in value to the Trust since shares of open-end
funds trade at net asset value. In
NY/302478.2
B-3
<PAGE>
addition, to the extent that the converted Fund creates additional shares when
interest rates have declined and invests in lower yielding securities, the Trust
may experience a reduction of the average yield of its retained shares in that
Fund caused by the acquisition of lower coupon investments. Certain of the
Municipal Funds may have in place or may put in place in the future plans
pursuant to which the Fund may repurchase its own shares in the marketplace.
Typically, these plans are put in place in an attempt by the Fund's board to
reduce a discount on its share price. To the extent such a plan was implemented
and shares owned by the Trust are repurchased by the Fund, the Trust position in
that Fund would be reduced and the cash would be deposited in the Trust's
Principal Account and distributed to Unitholders at the next applicable
Distribution Date. Similarly, in the event that the Trust does not retain shares
of a Fund which converted to open-end status, the Trust position in that Fund
would be eliminated and the cash distributed to Unitholders.
Shares of many Municipal Funds are thinly traded, and therefore may be
more volatile and subject to greater price fluctuations because of the Sponsor's
buying and selling securities than shares with greater liquidity. Investors
should be aware that there can be no assurance that the value of the Securities
in the Trust's Portfolio will increase or that the issuers of those Securities
will pay dividends on outstanding shares. Any distributions of income to
Unitholders will generally depend on the declaration of dividends by the issuers
of the underlying stocks, and the declaration of dividends depends on several
factors including the financial condition of the issuers included in the
portfolios of those Securities and general economic conditions.
LOWER GRADE SECURITIES. The Municipal Funds in the Trust portfolio may
invest primarily in lower grade securities. There are certain risks associated
with the Municipal Funds' investments in such securities that could cause the
value of these funds to decrease. This, in turn, could cause the value of your
Units to decrease. The risks are outlined below.
Lower grade securities are regarded as being predominately speculative
as to the issuer's ability to make payments of principal and interest.
Investment in such securities involves substantial risk. Lower grade securities
are commonly referred to as "junk bonds." Issuers of lower grade securities may
be highly leveraged and may not have available to them more traditional methods
of financing. Therefore, the risks associated with acquiring the securities of
such issuers generally are greater than is the case with higher-rated
securities. For example, during an economic downturn or a sustained period of
rising interest rates, issuers of lower grade securities may be more likely to
experience financial stress, especially if such issuers are highly leveraged.
During periods of economic downturn, such issuers may not have sufficient
revenues to meet their interest payment obligations. The issuer's ability to
make payments on its debt obligations also may be adversely affected by specific
issuer developments, the issuer's inability to meet specific projected business
forecasts or the unavailability of additional financing. Therefore, there can be
no assurance that in the future there will not exist a higher default rate
relative to the rates currently existing in the market for lower grade
securities.
The risk of loss due to default by the issuer is significantly greater
for the holders of lower grade securities because such securities may be
unsecured and may be subordinate to other creditors of the issuer. Other than
with respect to distressed securities, discussed below, the lower grade
securities in which the Municipal Funds may invest do not include instruments
which, at the time of investment, are in default or the issuers of which are in
bankruptcy. However, there can be no assurance that such events will not occur
after a Municipal Fund purchases a particular security, in which case the
Municipal Fund and the Trust may experience losses and incur costs.
Lower grade securities frequently have call or redemption features that
would permit an issuer to repurchase the security from one of the Municipal
Funds which holds it. If a call were exercised by the issuer during a period of
declining interest rates, the particular Municipal Fund is likely to have to
replace such called security with a lower yielding security, thus decreasing the
net investment income to the Municipal Fund and the Trust and dividends to
Unitholders.
Lower grade securities tend to be more volatile than higher-rated
fixed-income securities, so that adverse
NY/302478.2
B-4
<PAGE>
economic events may have a greater impact on the prices of lower grade
securities than on higher-rated fixed-income securities. Factors adversely
affecting the market value of such securities are likely to adversely affect a
Municipal Fund's net asset value which, in turn, may adversely affect the value
of your Units. Recently, demand for lower grade securities has increased
significantly and the difference between the yields paid by lower grade
securities and investment grade bonds (i.e., the "spread") has narrowed. To the
extent this differential increases, the value of lower grade securities in a
Municipal Fund's portfolio could be adversely affected along with the value of
your Units.
Like higher-rated fixed-income securities, lower grade securities
generally are purchased and sold through dealers who make a market in such
securities for their own accounts. However, there are fewer dealers in the lower
grade securities market, which market may be less liquid than the market for
higher-rated fixed-income securities, even under normal economic conditions.
Also, there may be significant disparities in the prices quoted for lower grade
securities by various dealers. As a result, during periods of high demand in the
lower grade securities market, it may be difficult to acquire lower grade
securities appropriate for investment by the Municipal Funds. Adverse economic
conditions and investor perceptions thereof (whether or not based on economic
reality) may impair liquidity in the lower grade securities market and may cause
the prices a Municipal Fund receives for its lower grade securities to be
reduced. In addition, a Municipal Fund may experience difficulty in liquidating
a portion of its portfolio when necessary to meet its liquidity needs or in
response to a specific economic event such as deterioration in the
creditworthiness of the issuers. Under such conditions, judgment may play a
greater role in valuing certain of a Municipal Fund's portfolio instruments than
in the case of instruments trading in a more liquid market. Moreover, a
Municipal Fund may incur additional expenses to the extent that it is required
to seek recovery upon a default on a portfolio holding or to participate in the
restructuring of the obligation.
DILUTION. The Trust is prohibited from subscribing to a rights offering
for shares of any of the Municipal Funds. In the event of a rights offering for
additional shares of a Municipal Fund, Unitholders should expect that the Trust
will, at the completion of the offer, own a smaller proportional interest in
such Fund that would otherwise be the case. It is not possible to determine the
extent of this dilution in share ownership without knowing what proportion of
the shares in a rights offering will be subscribed.
This may be particularly serious when the subscription price per share
for the offer is less than the Municipal Fund's net asset value per share.
Assuming that all rights are exercised and there is no change in the net asset
value per share, the aggregate net asset value of each shareholder's shares of
common stock should decrease as a result of the offer. If a Municipal Fund's
subscription price per share is below that Fund's net asset value per share at
the expiration of the offer, shareholders would experience an immediate dilution
of the aggregate net asset value of their shares of common stock as a result of
the offer, which could be substantial.
The Trust may transfer or sell its rights to purchase additional shares
of a Municipal Fund to the extent permitted by the terms of that Fund's rights
offering. The cash the Trust receives from transferring your rights might serve
as partial compensation for any possible dilution of the Trust's interest in the
Fund. There can be no assurance, however, that the rights will be transferable
or that a market for the rights will develop or the value, if any, that such
rights will have.
LEVERAGE. The use of leverage by the Municipal Funds creates an
opportunity for increased net income and capital growth for their shares, but,
also creates special risks. There can be no assurance that a leveraging strategy
will be successful during any period in which it is employed. The Municipal
Funds may use leverage to provide their shareholders with a potentially higher
return. Leverage creates risks for shareholders including the likelihood of
greater volatility of net asset value and market price of the shares and the
risk that fluctuations in interest rates on borrowing and debt or in the
dividend rates on any preferred shares may affect the return to shareholders.
To the extent the income or capital growth derived from securities
purchased with funds received from
NY/302478.2
B-5
<PAGE>
leverage exceeds the cost of leverage, a Municipal Fund's return will be greater
than if leverage had not been used. Conversely, if the income or capital growth
from the securities purchased with such funds is not sufficient to cover the
cost of leverage, the return to a Municipal Fund will be less than if leverage
had not been used, and therefore the amount available for distribution to
shareholders as dividends and other distributions will be reduced. This would,
in turn, reduce the amount available for distribution to you as a Unitholder.
VOTING. In regard to the voting of all proxies with respect to a
Municipal Fund, the Sponsor has instructed the Trustee to vote the shares held
by the Trust in the same proportion as the vote of all other holders of the
shares of such Municipal Fund. With respect to rights offering, as described in
the Dilution section above, the Trust may not accept any additional securities
of the Municipal Funds.
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 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 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.
NY/302478.2
B-6
<PAGE>
COMMON STOCK. Since the Trust contains primarily common stocks of
domestic 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. Additional risks include risks 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 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.
MUNICIPAL BONDS. Private Activity Bonds. The portfolios of the Municipal
Funds may contain other bonds which are "private activity bonds" (often called
Industrial Revenue Bonds ("IRBs") if issued prior to 1987) which would be
primarily of two types: (1) bonds for a publicly owned facility which a private
entity may have a right to use or manage to some degree, such as an airport,
seaport facility or water system and (2) facilities deemed owned or beneficially
owned by a private entity but which were financed with tax-exempt bonds of a
public issuer, such as a manufacturing facility or a pollution control facility.
In the case of the first type, bonds are generally payable from a designated
source of revenues derived from the facility and may further receive the benefit
of the legal or moral obligation of one or more political subdivisions or taxing
jurisdictions. In most cases of project financing of the first type, receipts or
revenues of the issuer are derived from the project or the operator or from the
unexpended proceeds of the bonds. Such revenues include user fees, service
charges, rental and lease payments, and mortgage and other loan payments.
The second type of issue will generally finance projects which are owned
by or for the benefit of, and are operated by, corporate entities. Ordinarily,
such private activity bonds are not general obligations of governmental entities
and are not backed by the taxing power of such entities, and are solely
dependent upon the creditworthiness of the corporate user of the project or
corporate guarantor.
The private activity bonds in the funds have generally been issued under
bond resolutions, agreements or trust indentures pursuant to which the revenues
and receipts payable under the issuer's arrangements with the users or the
corporate operator of a particular project have been assigned and pledged to the
holders of the private activity bonds. In certain cases a mortgage on the
underlying project has been assigned to the holders of the
NY/302478.2
B-7
<PAGE>
private activity bonds or a trustee as additional security. In addition, private
activity bonds are frequently directly guaranteed by the corporate operator of
the project or by another affiliated company.
Litigation. Litigation challenging the validity under state
constitutions of present systems of financing public education has been
initiated in a number of states. Decisions in some states have been reached
holding such school financing in violation of state constitutions. In addition,
legislation to effect changes in public school financing has been introduced in
a number of states. The Sponsor is unable to predict the outcome of the pending
litigation and legislation in this area and what effect, if any, resulting
change in the sources of funds, including proceeds from property taxes applied
to the support of public schools, may have on the school bonds in the Municipal
Funds.
Legal Proceedings Involving the Funds. The Sponsor has not been notified
or made aware of any litigation pending with respect to any bonds which might
reasonably be expected to have a material effect on the Municipal Funds other
than that which is discussed herein. Such litigation as, for example, suits
challenging the issuance of pollution control revenue bonds under recently
enacted environmental protection statutes may affect the validity of such bonds
or the tax-free nature of the interest thereon. At any time after the date of
this Prospectus, litigation may be instituted on a variety of grounds with
respect to the bonds in the Municipal Funds. The Sponsor is unable to predict
whether any such litigation may be instituted or, if instituted, whether it will
have a material adverse effect on a Municipal Fund.
Other Factors. The bonds in the Municipal Funds, despite their optional
redemption provisions which generally do not take effect until 10 years after
the original issuance dates of such bonds (often referred to as "ten year call
protection"), do contain provisions which require the issuer to redeem such
obligations at par from unused proceeds of the issue within a stated period. In
recent periods of declining interest rates there have been increased redemptions
of bonds, particularly housing bonds, pursuant to such redemption provisions. In
addition, the bonds in the Municipal Funds are also subject to mandatory
redemption in whole or in part at par at any time that voluntary or involuntary
prepayments of principal on the underlying collateral are made to the trustee
for such bonds or that the collateral is sold by the bond issuer. Prepayments of
principal tend to be greater in periods of declining interest rates; it is
possible that such prepayments could be sufficient to cause a bond to be
redeemed substantially prior to its stated maturity date, earliest call date or
sinking fund redemption date.
The bonds may also be subject to other calls, which may be permitted or
required by events which cannot be predicted (such as destruction, condemnation,
or termination of a contract).
In 1976 the federal bankruptcy laws were amended so that an authorized
municipal debtor could more easily seek federal court protection to assist in
reorganizing its debts so long as certain requirements were met. Historically,
very few financially troubled municipalities have sought court assistance for
reorganizing their debts; notwithstanding, the Sponsor is unable to predict to
what extent financially troubled municipalities may seek court assistance in
reorganizing their debts in the future and, therefore, what effect, if any, the
applicable federal bankruptcy law provisions will have on the Municipal Funds.
The Municipal Funds may also include "moral obligation" bonds. Under
statutes applicable to such bonds, if an issuer is unable to meet its
obligations, the repayment of such bonds becomes a moral commitment but not a
legal obligation of the state or municipality in question.
Certain of the bonds in the Municipal Funds are subject to redemption
prior to their stated maturity dates pursuant to sinking fund or call
provisions. A sinking fund is a reserve fund appropriated specifically toward
the retirement of a debt. A callable bond is one which is subject to redemption
or refunding prior to maturity at the option of the issuer. A refunding is a
method by which a bond is redeemed at or before maturity from the proceeds of a
new issue of bonds. In general, call provisions are more likely to be exercised
when the offering side evaluation of a bond is at a premium over par than when
it is at a discount from par. Shareholders of the Municipal
NY/302478.2
B-8
<PAGE>
Funds (including the Trust), will realize a gain or loss on the early redemption
of such bonds, depending upon whether the price of such bonds is at a discount
from or at a premium over par at the time the Trust purchases its shares.
Discount and Zero Coupon Bonds. The Municipal Funds' portfolios may
contain original issue discount bonds. The original issue discount, which is the
difference between the initial purchase price of the bonds and the face value,
is deemed to accrue on a daily basis and the accrued portion will be treated as
tax-exempt interest income for regular federal income tax purposes. Upon sale or
redemption, any gain realized that is in excess of the earned portion of
original issue discount will be taxable as ordinary income or capital gain. See
"Tax Status." The current value of an original issue discount bond reflects the
present value of its face amount at maturity. The market value tends to increase
more slowly in early years and in greater increments as the bonds approach
maturity. Of these original issue discount bonds, a portion of the aggregate
principal amount of the bonds in each municipal fund may be zero coupon bonds.
Zero coupon bonds do not provide for the payment of any current interest and
provide for payment at maturity at face value unless sooner sold or redeemed.
The market value of zero coupon bonds is subject to greater fluctuations than
coupon bonds in response to changes in interest rates. Zero coupon bonds
generally are subject to redemption at compound accredited value based on par
value at maturity. Because the issuer is not obligated to make current interest
payments, zero coupon bonds may be less likely to be redeemed than coupon bonds
issued at a similar interest rate.
The Municipal Funds' portfolios may also contain bonds that were
purchased at "market" discount from their par value payable at maturity. The
discount results from the fact that the coupon interest rates on the discount
bonds at the time they were purchased and deposited in the Municipal Funds were
lower than the current market interest rates for newly issued bonds of
comparable rating and type, even though at the time of issuance the discount
bonds were for the most part issued at then current coupon interest rates.
Discount bonds with a longer term to maturity tend to have a higher current
yield and a lower current market value than otherwise comparable bonds with a
shorter term to maturity. If interest rates rise, the value of the bonds will
decrease; and if interest rates decline, the value of the bonds will increase.
The discount does not necessarily indicate a lack of market confidence in the
issuer. The current returns (coupon interest income as a percentage of market
price) of discount bonds will be lower than the current returns of comparably
rated bonds of similar type newly issued at current interest rates. Because
discount bonds tend to increase in market value as they approach maturity and
the full principal amount becomes payable, a discount bond held to maturity will
have a larger portion of its total return in the form of taxable income and gain
and less in the form of tax-exempt interest income than a comparable bond newly
issued at current market rates. Gain on the disposition of a bond purchased at a
market discount generally will be treated as ordinary income, rather than
capital gain, to the extent of accrued market discount.
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.
NY/302478.2
B-9
<PAGE>
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.
VOLUME AND OTHER DISCOUNTS. Units are available at a volume discount
from the Public Offering Price based upon the number of Units purchased. This
volume discount will result in a reduction of the sales charge applicable to
such purchases. The approximate reduced sales charge on the Public Offering
Price applicable to such purchases is as follows:
<TABLE>
APPROXIMATE
REDUCED SALES
NUMBER OF UNITS CHARGE
--------------- ------
<S> <C>
10,000 but less than 25,000...................................... 4.25%
25,000 but less than 50,000...................................... 4.00%
50,000 but less than 75,000...................................... 3.50%
75,000 but less than 100,000..................................... 3.00%
</TABLE>
For transactions of 100,000 Units or more, the Sponsor intends to
negotiate the applicable sales charge and such charge will be disclosed to any
such purchaser. The Sponsor reserves the right to change the discounts from time
to time.
These discounts will apply to all purchases of Units by the same
purchaser. Units purchased by the same purchasers in separate transactions will
be aggregated for purposes of determining if such purchaser is entitled to a
discount provided that such purchaser must own at least the required number of
Units at the time such determination is made. Units held in the name of the
spouse of the purchaser or in the name of a child of the purchaser under 21
years of age are deemed for the purposes hereof to be registered in the name of
the purchaser. The discount is also applicable to a trustee or other fiduciary
purchasing securities for a single trust estate or single fiduciary account.
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 3.50%. 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 "Trust Termination").
Employees (and their immediate families) of ING Funds Distributor, Inc.
(and its affiliates), the Portfolio
NY/302478.2
B-10
<PAGE>
Consultant 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 3.50% of the public offering price.
Units may be purchased in the primary or 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 institutions. 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 4.0% 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
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
NY/302478.2
B-11
<PAGE>
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 its 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 4.50% of the Public Offering Price per 100 Units
(equivalent to 4.712% 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 Underwriter 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 Units among DTC
participants and forward all notices and credit all payments received in respect
of the Units held by the DTC participants.
Beneficial owners of Units will receive written confirmation of their
purchases and sales 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 Unitholder. Holders must sign such
written request exactly as their names appear on the
NY/302478.2
B-12
<PAGE>
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 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.
NY/302478.2
B-13
<PAGE>
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., Eastern 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 4.50% sales charge (or 4.712% 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
seven 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.
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
NY/302478.2
B-14
<PAGE>
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 Security. 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 Securities is not reasonably
practicable, or for such other periods as the Securities and Exchange Commission
NY/302478.2
B-15
<PAGE>
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) 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
NY/302478.2
B-16
<PAGE>
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 or the
Portfolio Consultant.
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. 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 distributed to such Unitholder within three days of the
settlement of the trade of the last Security to be sold; or
NY/302478.2
B-17
<PAGE>
3. 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 five 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 Trustee of that decision, and the Trustee will notify the Unitholders. All
Unitholders will then elect either option 1, if eligible, or option 2.
NY/302478.2
B-18
<PAGE>
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."
The Trustee may resign by executing an instrument in writing and filing
the same with the Sponsor, and
NY/302478.2
B-19
<PAGE>
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 Riccardi Group LLC,
a Delaware limited liability corporation with offices at 340 Sunset Drive, Fort
Lauderdale, Florida 33301. Cynthia M. Brown, an officer and director of Riccardi
Group LLC will be primarily responsible for selecting which Municipal Funds to
recommend to the Sponsor. Ms. Brown is a former Senior Vice President and
portfolio manager at Massachusetts Financial Services. She was responsible for a
number of portfolios totaling over $2 billion which were comprised of primarily
non-rated as well as investment grade tax-exempt securities.
The Portfolio Consultant is not a sponsor of the Trust. The Portfolio
Consultant has been retained by the Sponsor, at its expense. 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.
The Portfolio Consultant may resign or may be removed by the Sponsor at
any time on sixty days' prior written 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.
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.
NY/302478.2
B-20
<PAGE>
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.
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 a 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
NY/302478.2
B-21
<PAGE>
Sponsor reserves the right to 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.
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, (iii) exchanges will be effected in whole units only, (iv)
Units of the Mortgage Securities Trust may only be acquired in blocks of 1,000
Units and (v) 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
NY/302478.2
B-22
<PAGE>
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 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
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
This is a general discussion of some of the Federal income tax
consequences of ownership of Units in the Trust. It applies only to investors
who hold their Units as capital assets. It does not discuss special rules that
apply to investors subject to special treatment, such as securities dealers,
financial institutions, insurance companies and investors who hold the Units as
part of a hedge or straddle.
OPINION OF COUNSEL. In the opinion of Paul, Hastings, Janofsky & Walker
LLP:
1. Each Trust will be classified as a grantor trust for Federal
income tax purposes. The Trust will not owe Federal income tax. Each
Unitholder will be treated as the owner of a pro rata portion of the
assets of the Trust. The income received by the Trust will be treated as
income of the Unitholders.
NY/302478.2
B-23
<PAGE>
2. The Trust will not be subject to the New York Franchise Tax on
Business Corporations or the New York City General Corporation Tax.
However, Unitholders who are New York residents must treat their pro rata
portion of the income of the Trust as their income under New York State
and City income tax laws. Residents of other states may have to do the
same thing in their states.
3. The Sponsor has the right to create additional Units for 90 days
after the original issuance date by depositing Additional Securities in
the Trust. The Additional Securities must be substantially similar to the
securities initially deposited in the Trust. This right falls within the
guidelines promulgated by the IRS and should not affect the taxable
status of the Trust.
Paul, Hastings, Janofsky & Walker LLP is special counsel to the Sponsor. Its
opinion is based on law existing as of the date of this Prospectus. Paul,
Hastings, Janofsky & Walker LLP has relied on the validity of the Trust
Agreement and the Prospectus and on the accuracy and completeness of the facts
they contain.
TAXATION OF UNITHOLDERS. Each Unitholder will be taxed the same way it
would have if the Unitholder owned directly its pro rata share of the securities
held by the Trust. Each Unitholder will determine its tax cost for its share of
the securities held by the Trust by allocating its cost of the Units (including
sales charges) among its share of the securities held by the Trust in proportion
to the fair market values of those securities on the date the Unitholder
purchases its Units. See "Fractional Undivided Interest in Trust" in the
"Summary of Essential Information" in order to determine a Unitholder's share of
each security on the date of Deposit, and see "Cost of Securities to Trust"
under "Portfolio" in order to determine the fair market value of each security
on that date.
The Trust will own shares of regulated investment companies (referred to
herein as the "Municipal Funds") that own municipal bonds. The interest on the
Municipal Bonds is exempt from regular Federal income tax but may be subject to
the alternative minimum tax. The Municipal Funds, if it meets certain
requirements, can distribute exempt-interest dividends to the Trust. If the
Municipal Funds qualify as regulated investment companies (as discussed further
below), each Unitholder will be treated as receiving its share of the exempt-
interest dividends, ordinary dividends and capital gain dividends on the shares
of the Municipal Funds held by the Trust, when the Trust receives those items,
unless the Unitholder has an accounting method that requires an earlier accrual.
The Unitholders will not have to pay regular Federal income tax on the
exempt-interest dividends but may have to pay alternative minimum tax on them.
Similarly, a Unitholder may treat its share of capital gains dividends received
by the Trust as capital gains dividends received by it.
Each Unitholder will generally have to calculate its gain or loss when the
Trust sells, exchanges or redeems shares in the Municipal Funds or when the
Unitholder sells, exchanges or redeems Units. Any gain will generally be a
capital gain and will be long-term if the Unitholder has held its Units for more
than one year and the Trust has held the shares in the Municipal Funds for more
than one year. A Unitholder's share of capital gains dividends received by the
Trust from the Municipal Funds will also be long-term capital gain, regardless
of the period of time for which the Unitholder has held its Units or the period
of time for which the Trust has held the shares in the Municipal Funds. For
corporations, capital gains are generally taxed at the same rates applicable to
ordinary income, although non-corporate Unitholders may be subject to a reduced
tax rate of 20% on long-term capital gains. Tax rates may increase before the
Trust sells shares in the Municipal Funds or the Unitholders sell Units.
Any loss on the sale or redemption of Units or shares in the Municipal
Funds will generally be a capital loss, and will be long-term for Unitholders
who have held their Units for more than one year if the Trust has also held the
shares in the Municipal Funds for more than one year and short-term capital gain
or loss if the Trust has held the shares, or the Unitholder has held the Units
for one year or less. Capital losses are deductible to the extent of capital
gains; in addition, non-corporate Unitholders may deduct up to $3,000 of capital
losses (married individuals filing separately may only deduct $1,500) against
ordinary income. However, if the Trust buys shares and sells them at a loss
within six months (or if the Unitholder buys Units and sells them at a loss
within six months), the loss cannot be deducted if (and to the extent that) the
Trust received any exempt-interest dividends on
NY/302478.2
B-24
<PAGE>
the shares. Any remaining loss will be treated as long-term, rather than
short-term capital loss if (and to the extent that) the Trust received any
capital gains dividends with respect to those shares.
Unitholders will also not be able to deduct losses resulting from the sale
of shares or the sale of Units if (and to the extent that) the Unitholder
purchases other shares or other Units within 30 days before or after the sale.
This rule could also apply to a transaction in which a Unitholder sell Units or
the Trust sells shares of a Municipal Fund, and the Unitholder purchases shares
of that same Municipal Fund directly within the 60 days period. If this
disallowance rule applies, the basis of the newly purchased Units and shares
will be adjusted to reflect the disallowed loss.
Unitholders that are not corporations cannot deduct their shares of fees
and expenses of the Trust because the fees and expenses relate to tax-exempt
income. In addition, Unitholders cannot deduct interest on money they borrow to
buy or carry Units. The IRS may treat Units as purchased with borrowed funds
even the borrowed funds cannot be traced directly to the purchase of Units.
The Trustee will give each Unitholder an annual statement showing the
dividends and capital gains dividends received by the Trust, the gross proceeds
received by the Trust from the disposition of any shares in the Municipal Funds,
and any other income and fees and expenses of the Trust. The Trustee will also
give an annual information return to each Unitholder and send copies of those
returns to the Internal Revenue Service.
Each Unitholder may have three choices when the Trust terminates. First, a
Unitholder who owns at least 2,500 units may have the Trust distribute its share
of the shares of the Municipal Funds in kind (plus cash in lieu of fractional
shares). Second, a Unitholder can have the Trust sell its share of the shares of
the Municipal Funds and distribute the cash. Third, a Unitholder can reinvest
the cash it would have received in units of a future series of the Trust (if one
is offered). A Unitholder who asks the Trust to distribute its share of the
shares of the Municipal Funds (plus cash for fractional shares) should not be
taxed when the shares of the Municipal Funds are distributed to it, although the
cash should be taxable. However, there is no specific authority covering this
issue.
TAXATION OF THE MUNICIPAL FUNDS. The Municipal Funds have elected and
intend to continue to qualify to be treated as regulated investment companies
for Federal income tax purposes. If they qualify, the Municipal Funds will not
be subject to Federal income tax on the income they distribute to their
shareholders, including the Trust.
When the Bonds owned by the Municipal Funds were issued, bond counsel
issued opinions that the interest on their Bonds is not subject to regular
Federal income tax (except in the limited circumstances referred to below).
Payments that a Municipal Funds receives on a bank letter of credit, guarantee
or insurance policy because the Bond issuer has defaulted will be treated as
payments on the Bond, namely as payments of principal or interest that are not
subject to regular Federal income tax or taxable market discount or capital
gain. The Sponsor and Paul, Hastings, Janofsky & Walker LLP have not made, and
will not make, any review of the basis for these opinions. The tax exempt status
of the interest depends on compliance by the issuer and others with ongoing
requirements, and the opinions of bond counsel assume that these requirements
will be met. However, no one can guarantee that the issuers (and other users)
will comply with these requirements.
In order to qualify as a regulated investment company, a Municipal Fund
must distribute each year at least 90% of its net investment income (including,
generally, taxable interest, dividends, net short-term capital gains, and
certain other income, less certain expenses), and at least 90% of its net exempt
interest income, and must meet several additional requirements. A Municipal Fund
that does not qualify as a regulated investment company will be taxed on its
taxable income and capital gains; and all distributions to its shareholders,
including distributions of net exempt interest income and long-term capital
gains, will be taxable as ordinary income.
The Municipal Funds may have to accrue and distribute income not yet
received if they invest in Bonds issued at a discount. The Municipal Funds may
be required to sell Bonds that they otherwise would have continued to hold in
order to generate sufficient cash to make this distribution.
NY/302478.2
B-25
<PAGE>
The Municipal Funds intend to distribute enough of their income to avoid
the 4% excise tax imposed on regulated investment companies that do not
distribute at least 98% of their taxable income.
TAXATION OF THE TRUSTS AS SHAREHOLDERS OF THE MUNICIPAL FUNDS. The
Municipal Funds expect to be able to pay "exempt-interest dividends" to their
shareholders, including the Trust, to the extent of their exempt interest income
(less applicable expenses). In order for the Municipal Funds to be able to pay
"exempt-interest dividends", at the close of each quarter of its taxable year,
at least 50% of the value of each Municipal Fund's total assets must consist of
tax-exempt bonds. If each Municipal Fund qualifies to pay "exempt-interest
dividends", Unitholders will not have to pay regular Federal income tax on
exempt-interest dividends. However, they may have to pay Federal alternative
minimum tax.
The interest on some private activity bonds is a preference item included
in alternative minimum taxable income. Each year the Municipal Funds will give
to shareholders, including the Trust, a report showing the percentage of income
that is a preference item. The Trust will give the same information to
Unitholders. In addition, alternative minimum taxable income of a Unitholder
that is a corporation is increased by part of the excess of its "adjusted
current earnings" (an alternative measure of income that includes interest on
all tax exempt securities) over the amount otherwise determined to be
alternative minimum taxable income. Therefore, the exempt-interest dividends may
cause a Unitholder to have to pay the Federal alternative minimum tax or may
increase the amount of that tax payable by a Unitholder already subject to
Federal alternative minimum tax.
The Municipal Funds may own Bonds originally issued at a discount. In
general, original issue discount is the difference between the price at which a
Bond was issued and its stated redemption price at maturity. Original issue
discount on tax-exempt Bonds accrues as tax-exempt interest over the life of the
Bond. A Municipal Fund's adjusted tax basis for a Bond issued with original
issue discount will include original issue discount accrued during the period it
held the Bond. A Municipal Fund can also pay a premium when it buys a Bond, even
a Bond issued with original issue discount. A Municipal Fund would be required
to amortize the premium over the term of the Bond, and reduce its basis for the
Bond even though it does not get any deduction for the amortization. Therefore,
sometimes a Municipal Fund may have a taxable gain when it sells a Bond for an
amount equal to or less than its original tax basis.
A Unitholder will generally have a taxable gain or loss when it sells
Units, when the Trust sells shares of the Municipal Funds, and when the
Municipal Funds sell Bonds and distribute capital gains dividends. The gain or
loss will generally be capital gain or capital loss if the Units are capital
assets for the Unitholders. Unitholders will also generally have ordinary income
if the Municipal Funds sell or redeem Bonds that were acquired at a market
discount, or sell Bonds at a short term capital gain, and distribute ordinary
dividends. In general, the IRS will treat Bonds as market discount Bonds when
the cost of the Bond, plus any original issue discount that has not yet accrued,
is less than the amount due to be paid at the maturity of the Bond. The IRS
taxes all or a portion of the gain on the sale of a market discount Bond as
ordinary income when the Bond is sold, redeemed or paid. The portion of the gain
taxed by the IRS as ordinary income is equal to the portion of the market
discount that has accrued since the seller purchased the Bond.
Some of the Bonds held by the Municipal Funds will lose their tax exempt
status while they are owned by a "substantial user" of the facilities being
financed with the proceeds of those Bonds, or by persons related to a
substantial user. A "substantial user" is a person whose gross revenue derived
with respect to the facilities financed by the Bonds is more than 5% of the
total revenue derived by all users of those facilities, or who occupies more
than 5% of the usable area of the facilities or for whom the facilities or a
part thereof were specifically constructed, reconstructed or acquired. "Related
persons" are certain related individuals, affiliated corporations, partners and
partnerships. This rule would not change the tax exempt status of interest on
Bonds held by other persons. These rules will apply to Unitholders who receive
exempt-interest dividends attributable to interest on Bonds that financed
facilities for which the Unitholders or related persons are "substantial users".
Individuals must take exempt-interest dividends into consideration in
computing the portion, if any, of social security benefits that will be included
in their gross income and subject to Federal income tax.
NY/302478.2
B-26
<PAGE>
Corporate Unitholders that are subject to the 0.12% environmental tax on
their alternative minimum taxable income in excess of $2,000,000 must take
account of the exempt-interest dividends in calculating that tax.
Any distributions made by the Municipal Funds that do not qualify as
exempt-interest dividends or capital gains dividends will be taxable to
Unitholders as ordinary income, and will not qualify for the corporate
dividends-received deduction.
If the Municipal Funds declare dividends in October, November or December
that are payable to shareholders of record on a date during those months,
Unitholders must take the dividends into account for tax purposes in the current
year, if the dividend is paid either in the current year, or in January of the
following year.
Ordinary, exempt-interest and capital gain dividends will be taxable as
described above whether received in cash or reinvested in additional Units under
the Reinvestment Plan. A Shareholder whose distributions are reinvested in
additional Units under the Reinvestment Plan will be treated as having received
the amount of cash allocated to the Unitholder for the purchase of those Units.
BACKUP WITHHOLDING. The Trust generally must withhold and pay over to the
U.S. Treasury 31% of the taxable dividends and other distributions paid to any
individual Unitholder who either does not supply its taxpayer identification
number, has not reported all of its dividends and interest income, or does not
certify to the Trust that he or she is not subject to withholding. The social
security number of an individual is its taxpayer identification number.
TAX-EXEMPT ENTITIES. 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 from 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.
Before investing in the Trust, the trustee or investment manager of an
employee benefit plan (e.g., a pension or profit-sharing retirement plan) should
consider among other things (a) whether the investment is prudent under the
Employee Retirement Income Security Act of 1974 ("ERISA"), taking into account
the needs of the plan and all of the facts and circumstances of the investment
in the Trust, including the fact that the Trust is intended to generate tax
exempt income; (b) whether the investment satisfies the diversification
requirement of Section 404(a)(1)(C) of ERISA; and (c) whether the assets of the
Trust are deemed "plan assets" under ERISA and the Department of Labor
regulations regarding the definition of "plan assets."
Prospective tax-exempt investors are urged to consult their own tax
advisers concerning the Federal, state, local and any other tax consequences of
the purchase, ownership and disposition of Units prior to investing in the
Trust.
STATE AND LOCAL TAXES. Unitholders may have to pay state and local tax on
their share of ordinary dividends and capital gain dividends paid by the
Municipal Funds.
POSSIBLE CHANGES IN THE LAW. From time to time proposals are introduced in
Congress and state legislatures that could have an adverse impact on the
tax-exempt status of the Bonds. We cannot predict whether any legislation like
this will be enacted.
NY/302478.2
B-27
<PAGE>
OTHER MATTERS
LEGAL OPINIONS. The legality of the Units offered hereby and certain
matters relating to federal tax law have been passed upon by Paul, Hastings,
Janofsky & Walker LLP, 399 Park Avenue, 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 AUDITORS. The financial statements of the Trust for the period
ended June 30, 2000 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.
PERFORMANCE INFORMATION. Total returns, average annualized returns or
cumulative returns for various periods of the High Yield Funds and this 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 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.
NY/302478.2
B-28
<PAGE>
No person is authorized to give any information or to make any
representations with respect to this Trust not contained in Parts A and B of
this Prospectus and you should not rely on any other information. 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>
<CAPTION>
Table of Contents
Title Page
----- ----
PART A
<S> <C>
Fee Table................................................................. A-5
Summary of Essential Information.......................................... A-6
Financial and Statistical Information..................................... A-7
Audit and Financial Information........................................... F-1
PART B
<S> <C>
The Trust................................................................. B-1
Risk Considerations....................................................... B-3
Public Offering.......................................................... B-10
Rights of Unitholders.................................................... B-12
Liquidity................................................................ B-14
Trust Administration..................................................... B-16
Trust Expenses and Charges............................................... B-21
Reinvestment Plan........................................................ B-21
Exchange Privilege and Conversion Offer................................... B-22
Tax Status............................................................... B-23
Other Matters............................................................ B-28
</TABLE>
[GRAPHIC OMITTED]
EQUITY SECURITIES TRUST
SERIES 24
MUNICIPAL SYMPHONY SERIES III
(A UNIT INVESTMENT TRUST)
PROSPECTUS
DATED: OCTOBER 28, 2000
SPONSOR:
ING FUNDS DISTRIBUTOR, INC.
1475 Dunwoody Drive
West Chester, Pennsylvania 19380
(877) 463-6464
TRUSTEE:
THE CHASE MANHATTAN BANK
4 New York Plaza
New York, New York 10004
This Prospectus does not contain all of the information with respect to the
Trust set forth in its registration statements filed with the Securities and
Exchange Commission, Washington, D.C. under the Securities Act of 1933 (file no.
333-86705) and the Investment Company Act of 1940 (file no. 811-2868), and to
which reference is hereby made. 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:
o visiting the SEC Internet address: http://www.sec.gov
------------------
o electronic request (after paying a duplicating fee) at the
following E-mail address: [email protected]
------------------
o writing: Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549-6009
NY/302478.2
B-29
