As filed with the Securities and Exchange Commission on June 9, 2000
Registration No. 333-
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
FORM S-6
-------------
For Registration Under the Securities Act
of 1933 of Securities of Unit Investment
Trusts Registered on Form N-8B-2
-------------
A. EXACT NAME OF TRUST:
The Pinnacle Family of Trusts, Financial Trust Series I
B. NAME OF DEPOSITOR:
ING Funds Distributor, Inc.
C. COMPLETE ADDRESS OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:
ING Funds Distributor, Inc.
1475 Dunwoody Drive
West Chester, Pennsylvania 19380
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
COPY OF COMMENTS TO:
PETER J. DEMARCO MICHAEL R. ROSELLA, Esq.
Senior Vice President Paul, Hastings, Janofsky &
ING Funds Distributor, Inc. Walker LLP
230 Park Avenue 75 East 55th Street
New York, New York 10169 New York, New York 10022
(212) 856-6858
E. TITLE OF SECURITIES BEING REGISTERED:
An indefinite number of Units of The Pinnacle Family of Trusts, Financial
Trust Series I are being registered under the Securities Act of 1933
pursuant to Section 24(f) of the Investment Company Act of 1940, as
amended, and Rule 24f-2 thereunder.
F. APPROPRIATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective date of the Registration
Statement.
The registrant hereby amends the registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
==========================================================================
956460.1
<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 9, 2000
------------------------------------------------------------------------------
THE PINNACLE FAMILY OF TRUSTS
------------------------------------------------------------------------------
FINANCIAL TRUST SERIES I
A unit investment trust
The investment objective of the Financial Trust is to maximize total return
through capital appreciation.
The Sponsor is ING Funds Distributor, Inc.
This Prospectus consists of two parts. Part A contains the Summary of Essential
Information including descriptive these material relating to the Trust and the
Statement of Financial Condition of the Trust. Part B contains general
securities information about the Trust. Part A and Part B must be distributed
together. Read and retain this Prospectus for until 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 ________, 2000
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy
securities in any state where the offer or sale is not permitted.
956460.1
<PAGE>
INVESTMENT SUMMARY
INVESTMENT OBJECTIVE. The Financial Trust Series I (the "Financial Trust") seeks
to maximize total return through capital appreciation. There is no guarantee
that the investment objective of the Trust will be achieved.
STRATEGY OF PORTFOLIO SELECTION. The Financial Trust seeks to achieve its
investment objective by creating a portfolio of the 25 best performing stocks on
the New York Stock Exchange ("NYSE")1 categorized in the financial sector by
Morningstar Publications, Inc. ("Morningstar"), as measured by price
appreciation, during the twelve-month period ending June 30, 2000. Price
appreciation is measuring by the percentage change in market value of each stock
from June 30, 1999 through June 30, 2000. This strategy involves a 4-step
selection process:
Step 1: Calculate the price appreciation for each financial sector
company listed on the NYSE over the 12-month period ending
June 30, 2000.
Step 2: Eliminate non-ordinary common shares (including preferred
securities, rights and warrants) and foreign issues (except
American Depository Receipts).
Step 3: Of the remaining companies, select the twenty-five (25)
companies having the greatest price appreciation (the "Top
Twenty-Five").
Step 4: Of the Top Twenty-Five, weigh the 25 stocks equally.
DESCRIPTION OF THE TRUST. The Financial Trust contains 25 issues of common
stock. 100% of the issues are represented by the Sponsors' contracts to
purchase. Based upon the principal business of each issuer and current market
values, the following industries are represented in the Trust:
A Trust is considered to be "concentrated" in a particular category or industry
when the securities in that category or that industry constitute 25% or more of
the total assets of the portfolio. The Trust is concentrated in the financial
industry.
PRINCIPAL RISK CONSIDERATIONS. Unitholders can lose money by investing in the
Trust. The value of the Units and the Securities in the Trust can each decline
in value. An investment in Units of the Trust should be made with an
understanding of the following risks:
o Since the Trust is concentrated in stocks which derive a substantial
portion of their income from the banking and finance industries, investors
should be familiar with the risks associated with these industries which
may include the strong effect on this sector of changes in interest rates
and general economic conditions.
o An investment in common stocks includes the risk that the financial
condition of the issuers of the Securities may become impaired or that the
general condition of the stock market may worsen (both of which may
contribute directly to a decrease in the value of the Securities and thus
in the value of the Units).
o Since the portfolio of the Trust is fixed and "not managed," in general,
the Sponsor can sell Securities only 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.
----------
* The New York Stock Exchange and Morningstar are not affiliated with the
Sponsor and have not participated in any way in the creation of the Trusts
or in the selection of the stocks included in the Trust and have not reviewed
or approved any information included in this Prospectus.
956460.1
A-2
<PAGE>
o When cash or a letter of credit is deposited with instructions to purchase
securities in order to create additional Units, an increase in the price of
a particular security between the time of deposit and the time that
securities are purchased will cause the Units to be comprised of less of
that security and more of the remaining securities. In addition, brokerage
fees incurred in purchasing the Securities will be an expense of the Trust.
o Securities price fluctuations during the period from the time of deposit to
the time the Securities are purchased, and payment of brokerage fees, will
affect the value of each Unit and the income per Unit received by the
Trust.
o There is no assurance that any dividends will be declared or paid in the
future on the Securities.
o Investors should also consider the greater risk of the Trust's
concentration in a particular industry or sector and the effect on their
investment versus a more diversified portfolio. Investors should compare
returns available in less concentrated portfolios before making an
investment decision.
PUBLIC OFFERING PRICE. The Initial 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 (representing the estimated organizational costs) by the number
of units outstanding;
o adding a sales charge of 4.495% (4.707% of the net amount invested); and
o multiplying the result by 100.
In addition, during the initial offering period, the Public Offering Price per
100 Units will include an amount sufficient to reimburse the Sponsors for the
payment of all or a portion of the estimated organizational costs of the Trust.
The price of a single unit, or any multiple thereof, is calculated by dividing
the Public Offering Price per 100 Units by 100 and multiplying by the number of
units. The Public Offering Price per Unit will vary on a daily basis in
accordance with fluctuations in the aggregate value of the underlying Securities
and each investor's purchase price will be computed as of the date the Units are
purchased. Orders involving at least 25,000 Units will be entitled to a volume
discount from the Public Offering Price.
MINIMUM PURCHASE. 100 Units for individuals and 25 Units for custodial accounts
and certain tax deferred retirement plans.
DISTRIBUTIONS. The Trust will distribute any dividends received, less expenses,
semi-annually. The first dividend distribution will be made on December 31, 2000
to all Unitholders of record on December 15, 2000 and thereafter distributions
will be made on the last business day of every December and June. The final
distribution will be made within a reasonable period of time after the Trust
terminates.
MARKET FOR UNITS. Unitholders may sell their Units to the Sponsor or the Trustee
at any time, without fee or penalty. The Sponsor intends to repurchase Units
from Unitholders throughout the life of the Trust at prices based upon the
market value of the underlying Securities. However, the Sponsor is not obligated
to maintain a market and may stop doing so without prior notice for any business
reason. If a market is not maintained, a Unitholder will be able to redeem his
Units with the Trustee at the same price. The existence of a liquid trading
market for the Securities in the Trust 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.
AUTOMATIC REDEMPTION. Any transfer of Units by Unitholders from their
McLaughlin, Piven, Vogel brokerage account will result in the automatic
redemption of those Units. Unitholders, excluding tax sheltered
956460.1
A-3
<PAGE>
retirement accounts, will generally incur a taxable gain or loss upon an
involuntary redemption. See "Tax Status" in Part B.
TERMINATION. The Trust will terminate in approximately fifteen months. During
the Liquidation Period, Securities will be sold in connection with the
termination of the Trust. All Securities will be sold or distributed by the
Mandatory Termination Date. The Sponsor does not anticipate that the Liquidation
Period will be longer than seven days, and it could be as short as one day,
depending on the liquidity of the Securities being sold. Unitholders may elect
one of the following three options in receiving their terminating distributions:
o receive their 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 Pinnacle Family of Trusts (if
one is offered), at a reduced sales charge.
ROLLOVER OPTION. Unitholders may elect to rollover their terminating
distributions into the next available series of The Pinnacle Family of Trusts
(if one is offered), at a reduced sales charge. Rollover Unitholders must make
this election on or prior to the Rollover Notification Date. When Unitholders
make this election, their Units will be redeemed and the proceeds will be
reinvested in units of the next available series of The Pinnacle Family of
Trusts. An election to rollover terminating distributions will generally be a
taxable event. See "Administration of the Trust--Trust Termination" in Part B
for details to make this election.
REINVESTMENT PLAN. Unitholders may elect to automatically reinvest any
distributions they may receive (except the final distribution made at
termination) 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.
UNDERWRITING. McLaughlin, Piven, Vogel Securities, Inc., with principal offices
at 30 Wall Street, New York, New York 10005, will act as Underwriter for all of
the Units of The Pinnacle Family of Trusts, Financial Trust Series I.
956460.1
A-4
<PAGE>
FEE TABLE
-----------------------------------------------------------------------------
This Fee Table is intended to help you understand the costs and expenses you
will bear directly or indirectly. See "Public Sale of Units" and "Trust Expenses
and Charges" in Part B. Although the Trust is a unit investment trust rather
than a mutual fund, this information is presented to permit a comparison of
fees, assuming the principal amount and contributions are rolled over each year
into a new series subject only to a sales charge and trust expenses.
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Unitholder Transaction Expenses
(Fees paid directly from your investment)
Financial Trust
-------------------------
As a %
Of Initial Amount
Offering Per 100
Price Units
---------- -------
<S> <C> <C>
Maximum Sales Charge Imposed on Purchase............. 4.495% $ 44.95
Maximum Sales Charge Imposed Per Year on Reinvested
Dividends.......................................... 0% $ 0
Estimated Organizational Expenses.................... % $
Maximum Annual Maintenance Fee for a McLaughlin,
Piven, Vogel Brokerage Account..................... $
Estimated Annual Fund Operating Expenses
(Expenses that are deducted from Trust assets)
Financial Trust
-----------------------------
As a % Amount
Of Initial Per 100
Net Assets Units
------------- -----------
Trustee's Fee.................... % $
Other Operating Expenses......... % $
Portfolio Supervision,
Bookkeeping and
Administrative Fees.......... % $ .25
------ ------
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. You would pay the following
expenses on a $10,000 investment in the Trust assuming estimated operating
expense ratio of % for the Trust 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:
1 year 3 years
------ -------
Internet Trust............................ $ $
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 an annual rate of
return.
The Annual Maintenance Fee is applicable to your entire brokerage account
regardless of account size or diversity of holdings and is not related solely to
the purchase of Units. Such account may entitle Unitholders to a commission
discount for equity trades. Contact your account representative for additional
information and see "Public Sale of Units" in Part B.
956460.1
A-5
<PAGE>
THE PINNACLE FAMILY OF TRUSTS
FINANCIAL TRUST SERIES I
SUMMARY OF ESSENTIAL INFORMATION
As of ________, 2000, the business day prior to the Initial Date of Deposit
<TABLE>
<CAPTION>
<S> <C>
Initial Date of Deposit of Securities in the Evaluation Time: 4:00 p.m. New York Time
Trust: ________, 2000 Minimum Value of Trust: The Trust may be
Aggregate Value of Securities: ............. $ terminated if the value of the Trust is less than 40% of the
Number of Units: ........................... aggregate value of the Securities at the completion of the
Fractional Undivided Interest in initial offering period.
Trust: .................................. 1/ Cusip Numbers: Cash: 72346A
Public Offering Price per 100 Units: Reinvestment: 72346A
Aggregate Value of Securities in Trust... $ Trustee: The Bank of New York
Divided By Units (times 100)............. Trustee's Fee per 100 Units: $
Plus Estimated Organization Costs*....... $ Other Fees and Expenses per 100 Units: $
Plus Sales Charge of 4.495% of Public Sponsor: ING Funds Distributor, Inc.
Offering Price........................... $ Portfolio Supervisor: ING Mutual Funds
Public Offering Price+................... $1,000.00 Management Co. LLC
Sponsor's Repurchase Price And Portfolio Supervisory, Bookkeeping
Redemption Price per 100 Units++: ....... $ And Administrative Fee per 100 Units:
Minimum Income or Principal Maximum of $.25 (see "Trust Expenses and Charges" in Part B).
Distribution per 100 Units: ............. $1.00 Expected Settlement Date of Securities in the
Liquidation Period: A 40 day period Trust: _______, 2000
beginning on the first business day Record Dates: June 15 and December 15
following the Termination Date. Distribution Dates: June 30 and December 31
Termination Date: , 2001 or
the disposition of the last security in the
Trust.
Mandatory Termination Date: The last
day of the liquidation period.
Rollover Notification Date**: , 2001
or another date as determined by the Sponsors.
</TABLE>
----------
* Investors will reimburse the Sponsor for all or a portion of the costs
incurred in organizing and offering the Trust. These "organization costs"
include costs of preparing the registration statement, the Trust indenture
and other closing documents, registering units with the SEC and the states
and the initial audit of the Trust portfolio. The estimated organization
costs will be paid to the Sponsor from the assets of the Trust as of the
close of the initial offering period. To the extent that actual organization
costs are less than the estimated amount, only the actual organization costs
will be deducted from the assets of the Trust. To the extent that actual
organization costs are greater than the estimated amount, only the estimated
organization costs included in the Public Offering Price will be reimbursed
to the Sponsor.
** The date by which a Rollover Unitholder must elect to reinvest its
terminating distribution in an available series of The Pinnacle Family of
Trusts, if offered.
+ On the Initial Date of Deposit, the only cash in the Income or Principal
Accounts will represent the estimated organization costs. Anyone purchasing
Units after such date will pay a Public Offering Price which includes a pro
rata share of any cash in such Accounts.
++ A Unitholder redeeming 2,500 Units or more may request redemptions be made
in-kind. The Trustee will distribute securities to the Unitholder's
McLaughlin, Piven, Vogel broker-dealer account at The Depository Trust
Company in book-entry form. As of the close of the initial offering period,
the Sponsor's Repurchase Price and Redemption Price for the Trust will be
reduced to reflect its estimated organization cost.
956460.1
A-6
<PAGE>
THE PINNACLE FAMILY OF TRUSTS
FINANCIAL TRUST SERIES I
STATEMENT OF FINANCIAL CONDITION, AS OF ________, 2000
ASSETS
Investment in Securities--Sponsor's Contracts to Purchase
Underlying Securities Backed by Letter of Credit (cost for
Internet Trust: $________) (Note 1)........................ $
Cash........................................................... ______
Total..........................................................
$======
LIABILITIES AND INTEREST OF UNITHOLDERS
Reimbursement to the Sponsor for Organization Costs (Note 2)... $
Interest of Unitholders--Units of Fractional Undivided Interest
Outstanding (Financial Trust: Units)................ $______
Total..........................................................
$======
Net Asset Value per Unit.......................................
$======
----------
Notes to Statement of Financial Condition:
The preparation of financial statements in accordance with generally
accepted accounting principles requires Trust management to make estimates and
assumptions that affect the reported amounts and disclosures. Actual results can
differ from those estimates.
(1) The Pinnacle Family of Trusts, Financial Trust Series I (the "Trust")
is a unit investment trust created under the laws of the State of New York and
registered under the Investment Company Act of 1940. The objective of the
Financial Trust sponsored by ING Funds Distributor, Inc., the Sponsor, is to
maximize total return through capital appreciation. An irrevocable letter of
credit issued by The Bank of New York in an amount of $200,000 has been
deposited with the Trustee for the benefit of the Trust to cover the purchases
of such Securities. Aggregate cost to the Trust of the Securities listed in the
portfolios is determined by the Trustee on the basis set forth under "Public
Sale of Units--Public Offering Price" as of 4:00 p.m. on ________, 2000. The
Trust will terminate on ___________, 2001 or earlier under certain circumstances
as further described in the Prospectus.
(2) A portion of the Public Offering Price consists of cash in an amount
sufficient to reimburse the Sponsor for the per Unit portion of all or part of
the costs of establishing the Trust. These costs have been estimated at $____
per 100 Units for the Trust. A payment will be made as of the close of the
initial public offering period to an account maintained by the Trustee from
which the obligation of the investors to the Sponsor will be satisfied. To the
extent that actual organization costs are less than the estimated amount, only
the actual organization costs will be deducted from the assets of the Trust.
956460.1
A-7
<PAGE>
<TABLE>
<CAPTION>
THE PINNACLE
FAMILY OF TRUSTS
FINANCIAL TRUST SERIES I
PORTFOLIO
AS OF ________, 2000
Market
Value
Name of Issuer (1) of Stocks of Stocks
as a Cost of
Port- Number Percentage Market Securities
folio Of Ticker Of the Value Per to the
No. Shares Name of Issuer Symbol Trust (2) Share Trust (3)
----- ------ -------------- ------ --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
1 % $ $
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25 _______ _______
Total Investments 100.00% $
in Securities ======= =======
</TABLE>
FOOTNOTES TO PORTFOLIO
(1) Contracts to purchase the Securities were entered into on ________, 2000.
All such contracts are expected to be settled on or about the First
Settlement Date of the Trust which is expected to be ________, 2000.
(2) Based on the cost of the Securities to the Trust.
(3) Evaluation of Securities by the Trustee was made on the basis of closing
sale prices at the Evaluation Time on the day prior to the Initial Date
of Deposit. The Sponsor's Purchase Price is $ . The Sponsor's Loss
on the Initial Date of Deposit is $ .
* Stocks which have not paid out any dividends during the twelve months
preceding the Initial Date of Deposit.
956460.1
A-8
<PAGE>
THE UNITHOLDERS, SPONSOR AND TRUSTEE
THE PINNACLE FAMILY OF TRUSTS,
FINANCIAL TRUST SERIES I
We have audited the accompanying Statement of Financial Condition of The
Pinnacle Family of Trusts, Financial Trust Series I, including the Portfolio, as
of ________, 2000. This financial statement is the responsibility of the Trust's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with accepted 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
statement is 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 with The Bank of New York,
Trustee, of an irrevocable letter of credit deposited for the purchase of
securities, as shown in the financial statement as of ________, 2000. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the financial position of The Pinnacle Family of
Trusts, Financial Trust Series I, at ________, 2000, in conformity with
accounting principles generally accepted in the United States.
ERNST & YOUNG LLP
New York, New York
________, 2000
956460.1
A-9
<PAGE>
THE PINNACLE FAMILY OF TRUSTS
FINANCIAL TRUST SERIES I
(the "Financial Trust")
PROSPECTUS--PART B
PART B OF THIS PROSPECTUS MAY NOT BE
DISTRIBUTED UNLESS ACCOMPANIED BY
PART A
THE TRUST
ORGANIZATION. The Trust was created under New York State law pursuant to an
Indenture and Trust Agreement and related Reference Trust Agreement
(collectively, the "Trust Agreement ") among ING Funds Distributor, Inc., as
Sponsor, ING Mutual Funds Management Co. LLC, as Portfolio Supervisor, and The
Bank of New York, as Trustee.
On the Initial Date of Deposit, (i) the Sponsor deposited with the Trustee
common stock, including contracts for the purchase of certain such securities
(collectively, the "Securities") and cash or an irrevocable letter of credit
issued by a major commercial bank in the amount required for such purchases, and
(ii) the Trustee, in exchange for the Securities, registered on the registration
books of the Trust the Sponsor's ownership of all Units of the Trust. As used
herein, the term "Securities" means the common stocks initially deposited in the
Trust and described in "Portfolio" in Part A and any additional common stocks
acquired and held by the Trust pursuant to the provisions of the Indenture.
As of the Initial Date of Deposit, a "Unit" represents a fractional
undivided interest or pro rata share in the Securities and cash of 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.
The contracts to purchase Securities deposited initially in the Trust is
expected to settle in three business days, in the ordinary manner for such
Securities. Settlement of the contracts for Securities is thus expected to take
place prior to the settlement of purchase of Units on the Initial Date of
Deposit.
DEPOSIT OF ADDITIONAL SECURITIES. During the 90-day period following the
Initial Date of Deposit (the "Deposit Period"), the Sponsor may deposit (i)
additional Securities in the Trust that are substantially similar to the
Securities already deposited in the Trust ("Additional Securities"), (ii)
contracts to purchase Additional Securities or (iii) 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's 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.
The proportionate relationship among the Securities in the Trust will be
adjusted to reflect the occurrence of a stock dividend, a stock split or a
similar event which affects the capital structure of the issuer of a Security in
the Trust but which does not affect the Trust's percentage ownership of the
common stock equity of such issuer at the
956460.1
B-1
<PAGE>
time of such event. 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, or the unavailability of Securities. 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's portfolio. Substitute Securities may be acquired under specified
conditions when Securities originally deposited in the Trust are unavailable
(see "The Trust--Substitution of Securities").
INVESTMENT OBJECTIVE. The Trust seeks to maximize total return through
capital appreciation. There is no guarantee that the investment objective of the
Trust will be achieved.
Achievement of the investment objective is dependent upon several factors
including any appreciation or depreciation in value of the Securities, the full
range of economic and market influences affecting corporate profitability, the
financial condition of issuers and the prices of equity securities in general
and the Securities in particular. In addition, because of other factors (i.e.,
Trust sales charges and expenses, brokerage costs and any delays in purchasing
securities with cash deposited), investors in the Trust may not realize as high
a total return as the theoretical performance of the underlying stocks in the
Trust. 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.
STRATEGY OF PORTFOLIO SELECTION. The Financial Trust seeks to achieve its
objective by creating a portfolio of the 25 best performing stocks on the NYSE,
categorized in the financial sector by Morningstar, as measured by price
appreciation during the twelve-month period ending June 30, 2000. Price
appreciation is measured by the percentage change in market value of each stock
from June 30, 1999 through June 30, 2000. This strategy involves a 4-step
selection process:
Step 1: Calculate the price appreciation for each financial sector
company listed on the NYSE over the 12-month period ending
June 30, 2000.
Step 2: Eliminate non-ordinary common shares (including preferred
securities, rights and warrants) and foreign issues (except
American Depository Receipts).
Step 3: Of the remaining companies, select the twenty-five (25)
companies having the greatest price appreciation (the "Top
Twenty-Five").
Step 4: Of the Top Twenty-Five, weigh the 25 stocks equally.
Purchasing a portfolio of these stocks as opposed to one or two stocks can
achieve a more diversified holding. There is only one investment decision
instead of twenty-five. An investment in the Trust can be cost-efficient,
avoiding the odd-lot costs of buying small quantities of securities directly.
The Trust's return will consist of capital appreciation.
956460.1
B-2
<PAGE>
THE SECURITIES. NYSE. The New York Stock Exchange (NYSE) is the world's
largest equity market. The NYSE is a floor-based, auction market trading system.
In 1999, there were approximately 809.2 million shares traded each day.
Approximately 3,025 domestic and foreign companies are listed on the NYSE with
over 280.9 billion shares outstanding and total market capitalization of nearly
$12.3 trillion.
The NYSE consists of large, mid-sized and smaller companies in all business
sectors. Moreover, virtually every leading industrial, financial and service
corporation is listed on the NYSE. To be considered for listing on the NYSE, a
company must meet specified levels of net earnings, assets, and trading volume,
and its shares must be widely held by investors.
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 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.
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
COMMON STOCK. An investment in Units should be made with an understanding
of the risks inherent in any investment in common stocks including the risk that
the financial condition of the issuers of the Securities may become impaired or
that the general condition of the stock market may worsen (both of which may
contribute directly to a decrease in the value of the Securities and thus in the
value of the Units). Additional risks include those associated with the right to
receive payments from the issuer which is generally inferior to the rights of
creditors of, or holders of, debt obligations or preferred stock issued by the
issuer. Holders of common stocks have a right to receive dividends only when,
if, and in the amounts declared by the issuer's board of directors and to
participate in amounts available for distribution by the issuer only after all
other claims on the issuer have been paid or provided for. By contrast, holders
of preferred stocks usually have the right to receive dividends at a fixed rate
when and as declared by the issuer's board of directors, normally on a
cumulative basis. Dividends on cumulative preferred stock must be paid before
any dividends are paid on common stock and any cumulative preferred stock
dividend which has been omitted is added to future dividends payable to the
holders of such cumulative preferred stock. Preferred stocks are also usually
entitled to rights on liquidation which are senior to those of common stocks.
For these reasons, preferred stocks generally entail less risk than common
stocks.
Moreover, common stocks do not represent an obligation of the issuer and
therefore do not offer any assurance of income or provide the degree of
protection of debt securities. The issuance of debt securities or even preferred
stock by an issuer will create prior claims for payment of principal, interest
and dividends which can 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
956460.1
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<PAGE>
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.
Unitholders will be unable to dispose of any of the Securities in the
Trust, and, as such, will not be able to vote the Securities. As the holder of
the Securities, the Trustee will have the right to vote all of the voting stocks
in the Trust and will vote in accordance with the instructions of the Sponsor.
FINANCIAL COMPANIES. The banking, financial services and financial
services-related industries will be particularly affected by certain economic,
competitive and regulatory developments. The profitability of financial services
companies as a group is largely dependent upon the availability and cost of
capital funds which in turn may fluctuate significantly in response to changes
in interest rates and general economic conditions. Credit losses resulting from
financial difficulties of borrowers can negatively impact the sector. Rising
interest rates and inflation may negatively affect certain financial services
companies as the costs of lending money, attracting deposits and doing business
rise. Insurance companies may be subject to severe price competition. Financial
institutions are subject to regulation and supervision by governmental
authorities and changes in governmental policies may impact the way financial
institutions conduct business. Such governmental regulation may limit both the
amounts and types of loans and other financial commitments they can make, and
the interest rates and fees they can charge. Also, if government regulation
which would further reduce the separation between commercial and investment
banking is ultimately enacted, financial services companies may be significantly
affected in terms of profitability and competition.
FIXED PORTFOLIO. Unlike a "managed" investment company in which there may
be frequent changes in the portfolio of securities based upon economic,
financial and market analyses, the adverse financial condition of a company will
not result in the elimination of its securities from the portfolio of the Trust.
In the event a public tender offer is made for a Security or a merger or
acquisition is announced affecting a Security, the Sponsor may instruct the
Trustee to tender or sell the Security on the open market when, in its opinion,
it is in the best interests of the Unitholders to do so. 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, but
only at the Trust's termination or upon the occurrence of certain events, 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. See
"Administration of the Trust--Trust Supervision." 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. Although the Trust is regularly reviewed and
evaluated and the Sponsor may instruct the Trustee to sell Securities under
certain limited circumstances, Securities will not be sold by the Trust to take
advantage of market fluctuations or changes in anticipated rates of
appreciation.
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 (i) Additional Securities, (ii) contracts to purchase
Additional Securities or (iii) 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. 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. 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.
956460.1
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<PAGE>
In particular, Unitholders who purchase Units during the initial offering
period will 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 their contracts
to purchase the Additional Securities. The failure of the Sponsor to deliver
cash to the Trust, or any delays in the Trust receiving such cash, may have
significant adverse consequences for the Trust.
TERMINATION. The Trust may be terminated at any time and all outstanding
Units liquidated if the net asset value of the Trust falls below 40% of the
aggregate net asset value of that Trust at the completion of the initial public
offering period. Investors should note that if the net asset value of the Trust
should fall below the applicable minimum value, the Sponsor may then terminate
the Trust, at their sole discretion, prior to the Termination Date specified in
the Summary of Essential Information.
LEGAL PROCEEDINGS AND LEGISLATION. 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, 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.
RETIREMENT PLANS. The Trust may be well suited for purchase by Individual
Retirement Accounts ("IRAs"), Keogh plans, pension funds and other qualified
retirement plans. Generally, capital gains and income received in each of the
foregoing plans are exempt from Federal taxation. Except with respect to certain
IRAs known as Roth IRAs, distributions from such plans are generally treated as
ordinary income but may be eligible for tax-deferred rollover treatment or, in
very limited cases, special 10-year averaging. Ten year averaging has been
preserved in very limited circumstances. Holders of Units in IRAs, Keogh plans
and other tax-deferred retirement plans should consult their plan custodian as
to the appropriate disposition of distributions. Investors considering
participation in any such plan should review specific tax laws related thereto
and should consult their attorneys or tax advisors with respect to the
establishment and maintenance of any such plan. Such plans are offered by
McLaughlin, Piven, Vogel Securities, Inc. Fees and charges with respect to such
plans may vary.
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 whether (i) 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; (ii) the investment satisfies the diversification requirement of
Section 404(a)(1)(C) of ERISA; and (iii) the assets of the Trust are deemed
"plan assets" under ERISA's and the Department of Labor's definition of "plan
assets."
956460.1
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<PAGE>
PUBLIC SALE OF UNITS
PUBLIC OFFERING PRICE. The Public Offering Price of the Units for the Trust
is computed by adding the applicable initial sales charge to the aggregate value
of the Securities (as determined by the Trustee) and any cash held to purchase
Securities, divided by the number of Units of the Trust outstanding. Valuation
of Securities by the Trustee is made at the close of business on the NYSE on
each business day. Securities quoted on a national exchange or NASDAQ are valued
at the closing sale price. Securities not so quoted are valued in the manner
described in the Indenture.
PUBLIC DISTRIBUTION OF UNITS. Units will be distributed to the public at
the Public Offering Price through the Sponsor and may also be distributed
through dealers. The Sponsor intends to qualify the Units for sale in certain
states.
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 the following reduction of the sales charge applicable
to such purchases:
Approximate
Reduced
Number of Units Sales Charge
--------------- ------------
25,000 but less than 50,000................. 3.995%
50,000 but less than 100,000................ 3.745%
100,000 or more............................. 3.495%
For transactions of at least 100,000 Units or more, the Sponsor may
negotiate the applicable sales charge and such charge will be disclosed to any
such purchaser.
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. 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.
Unitholders of prior series of The Pinnacle Family of Trusts (formerly
known as McLaughlin, Piven, Vogel Family of Trusts) (the "Prior Series") may
"rollover" into the Trust by exchanging units of the Prior Series for Units of
the Trust at their relative net asset values plus the applicable sales charge.
Unitholders maintaining an account at McLaughlin, Piven, Vogel Securities, Inc.
exercising this option, may purchase such Units subject to a reduced sales
charge of 3.995% for the Financial Trust. (See "Administration of the
Trust--Trust Termination".) The rollover option described herein will also be
available to investors in the Prior Series who elect to exchange units of a
Prior Series for Units of the Trust. An exchange or rollover of units of a Prior
Series for Units of the Trust will generally be a taxable event.
Unitholders with a brokerage account at McLaughlin, Piven, Vogel
Securities, Inc. will qualify to receive one trade to buy equity securities any
time following the first Settlement Date of the Trust and only be charged a
$29.50 processing fee.
During the initial offering period, Unitholders who have redeemed units of
the Trust, may purchase Units of this Trust in an amount up to the amount
redeemed, within thirty days after such redemption, at no sales charge.
Investors who purchase Units of the Trust through a Keogh Plan, pension
fund or other qualified retirement plan having 25 or more members maintained at
McLaughlin, Piven, Vogel Securities, Inc. will be subject to a reduced sales
charge of 2.0%.
956460.1
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<PAGE>
Employees (and their immediate families) of McLaughlin, Piven, Vogel
Securities, Inc. and ING Funds Distributor, Inc. (and their affiliates) and of
the special counsel to the Sponsor, may, pursuant to employee benefit
arrangements, purchase Units of the Trust without a sales charge at a price
equal to the aggregate value of the underlying securities in the Trust, divided
by the number of Units outstanding. 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.
SPONSOR'S PROFITS. The Sponsor will receive a combined gross underwriting
commission equal to up to 4.495% of the Public Offering Price per 100 Units
(equivalent to 4.707% of the net amount invested in the Securities) for the
Internet Trust. 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" in Part A). 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 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 only 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 "Liquidity-Sponsors 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
BOOK-ENTRY 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
McLaughlin, Piven, Vogel brokerage account. Units held through DTC will be
deposited by the Sponsor with DTC in the McLaughlin, Piven, Vogel DTC account
and registered in the nominee name CEDE & CO. Individual purchases of beneficial
ownership interest in the Trust will be made in book-entry form through DTC.
Ownership and transfer of Units will be evidenced and accomplished directly and
indirectly only by book-entries made by DTC and its participants. DTC will
record ownership and transfer of the Units among DTC participants and forward
all notices and credit all payments received in respect of the Units held by the
DTC participants. Beneficial owners of Units will receive written confirmation
of their purchases and sale from their McLaughlin, Piven, Vogel representative.
Transfer, and the requirements therefore, will be governed by the applicable
procedures of DTC and the Unitholder's agreement with the DTC participant in
whose name the Unitholder's Units are registered on the transfer records of DTC.
DISTRIBUTIONS. Dividends, if any, 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 Accounts
956460.1
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<PAGE>
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
following the next Record Date.
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 unless the balance therein is an amount sufficient to
distribute $1.00 per 100 Units.
RECORDS. The Trustee keeps records of the transactions of the Trust at its
corporate trust office including names, addresses and holdings of all
Unitholders of record, a current list of the Securities and a copy of the
Indenture. Such records are available to Unitholders for inspection at
reasonable times during business hours.
REPORTS TO HOLDERS. The Trustee will furnish Unitholders with each
distribution a statement of the amount of income 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:
(i) 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;
(ii) 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;
(iii) 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;
(iv) the Redemption Price per 100 Units based upon the last
computation thereof made during such calendar year; and
(v) 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.
Unitholders will be furnished with evaluations of Securities upon request
to the Trustee in order to comply with Federal, state and local tax reporting
requirements.
956460.1
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<PAGE>
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., 230 Park Avenue, New York, New York 10169. Redemption requests received
after 4 P.M., New York Time, will be deemed to have been repurchased on the next
business day. In the event a market is not maintained for the Units, a
Unitholder may be able to dispose of Units only by tendering them to the Trustee
for redemption.
Units purchased by the Sponsor in the secondary market may be reoffered for
sale by the Sponsor at a price based on (i) the aggregate value of the
Securities in a Trust plus (ii) 4.495% sales charge (or 4.707% of the net amount
invested) for the Trust plus (iii) a pro rata portion of amounts, if any, in the
Income and Principal Accounts. 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
"Liquidity--Trustee Redemption"). Factors that the Sponsor will consider in
making a determination will include the number of Units of the Trust which they
have in inventory, their estimate of the stability 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
fifteen months from the Date of Deposit), Units may also be tendered to the
Trustee for redemption upon payment of any relevant tax by contacting the
Sponsors 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 Sponsors 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 set forth under
"Summary of Essential Information" in Part A on the date of tender. The "date of
tender" is deemed to be the date on which Units are received by the Trustee. For
Units received after the close of trading on the NASDAQ or NYSE (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 Accounts, or, if the balance
therein is insufficient, from the Principal Accounts. All other amounts paid on
redemption shall be withdrawn from the Principal Account. The Trustee is
empowered to sell Securities in order to make funds available for redemptions.
Such sales, if required, can 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
956460.1
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<PAGE>
accordance with market conditions, the Sponsor believes that the minimum amounts
specified will 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
particular 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 public 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. The Trustee may determine the value of the
Securities in the Trust in the following manner: because the Securities are
listed on national securities exchanges, this evaluation is based on the closing
sale prices on those exchanges. 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: (i) on the basis of current bid
prices for comparable securities, (ii) by appraising the value of the Securities
on the bid side of the market or (iii) 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 broker-dealer at DTC. 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 NASDAQ or NYSE is closed, other than customary weekend and
holiday closings, or when 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
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.
AUTOMATIC REDEMPTION. In the event a transfer of Units from a Unitholder's
McLaughlin, Piven, Vogel brokerage account results in the automatic redemption
of those Units, Unitholders will receive an amount equal to the Redemption Price
per Unit computed as of the Evaluation Time set forth under "Summary of
Essential Information" in Part A on the date of transfer. Automatic redemption
proceeds will be paid within three business days following the tender of a
notification of transfer.
956460.1
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ADMINISTRATION OF THE TRUST
TRUST 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.
Although the Portfolio is regularly reviewed, because of the formula employed in
selecting the Securities, it is unlikely 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: (i)
default in payment of amounts due on any of the Securities; (ii) institution of
certain legal proceedings; (iii) default under certain documents materially and
adversely affecting future declaration or payment of amounts due or expected;
(iv) determination by the Sponsor that the tax treatment of the Trust as a
grantor trust would otherwise be jeopardized; (v) 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, will make the retention of the Security
detrimental to the Trust or the Unitholders; or (vi) that there has been a
public tender offer made for a Security or a merger or acquisition is announced
affecting a Security, and that in the opinion of the Sponsor the sale or tender
of the Security is in the best interest of the Unitholders. Furthermore, the
Trust will likely continue to hold a Security and purchase additional shares
notwithstanding its ceasing to be included among the Top Twenty-Five.
In addition, the Trust Agreement provides as follows:
1. If a default in the payment of amounts due on any Security occurs
pursuant to provision (i) 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.
2. 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.
3. 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, which shall be retained, 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 Accounts of the Trust.
4. 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 in a Trust 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 or
more other issues originally deposited or a Substitute Security.
In determining whether to dispose of or hold Securities, new securities or
property, the Sponsor may be advised by the Portfolio Supervisor.
TRUST AGREEMENT AND AMENDMENT. The Trust Agreement may be amended by the
Trustee and the Sponsor without the consent of any of the Unitholders to: (i)
cure any ambiguity or to correct or supplement any
956460.1
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provision which may be defective or inconsistent; (ii) change any provision
thereof as may be required by the Securities and Exchange Commission or any
successor governmental agency; or (iii) 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
commencement of the Liquidation Period or upon the maturity, redemption or other
disposition, as the case may be, of the last of the Securities held in such
Trust but 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 such 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. 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:
1. a Unitholder who owns at least 2,500 units and whose interest in
the Trust will entitle it to receive at least one share of each underlying
Security will have its Units redeemed on or about the commencement of the
Liquidation Period. This will be accomplished 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 Sponsors as the
agents 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; and/or
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 in units of a subsequent series of The Pinnacle
Family of Trusts (the "New Series") provided one is offered. It is expected
that a special redemption and liquidation will be made of all Units of the
Trust held by Unitholders (the "Rollover Unitholders") who affirmatively
notify the Trustee of their election to participate in this option 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
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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 that Securities contained in the New Series are treated
as substantially identical to Securities held by 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 the Securities by
the last business day of the Liquidation Period 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. 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 Sponsors believe that the sale of
underlying Securities over the Liquidation Period described above is in the best
interest of a Unitholder and may mitigate the negative market price consequences
stemming from the trading of large amounts of Securities. The Securities may be
sold in fewer than seven days if, in the Sponsor's judgment, such sales are in
the best interest of Unitholders. The Sponsor, in implementing such sales of
securities on behalf of the Trustee, will seek to maximize the sales proceeds
and will act in the best interests of the Unitholders. There can be no
assurance, however, that any adverse price consequences of heavy trading will be
mitigated.
Section 17(a) of the Investment Company Act of 1940 generally prohibits
principal transactions between registered investment companies and their
affiliates. Pursuant to an exemptive order issued by the SEC, each terminating
Pinnacle Family of Trusts can sell Duplicated Securities directly to a New
Series. The exemption will enable the Trust to eliminate commission costs on
these transactions. The price for those securities transferred will be the
closing sale price on the sale date on the national securities exchange where
the securities are principally traded, as certified and confirmed by the
Trustee.
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.
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 rollover 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 trusts 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.
956460.1
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In the event the Sponsor determines that a subsequent investment in a New
Series by a Unitholder may be accomplished in a manner that will not result in
the recognition of gain or loss for Federal income tax purposes with respect to
any Securities included in the portfolio of the New Series, Unitholders will be
notified at least 30 days prior to the Rollover Notification Date of the
procedures and process necessary to facilitate such tax treatment.
THE SPONSOR. ING Funds Distributor, Inc., an Iowa corporation, is a wholly
owned indirect subsidiary of ING Groep N.V. ING Groep N.V., among the leading
global financial services organizations, is engaged in asset management, banking
and insurance activities in 60 countries worldwide with over 90,000 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 executed
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
become incapable of acting or become bankrupt or their affairs are taken over by
public authorities, then the Trustee may either (i) appoint a successor sponsor;
(ii) terminate the Trust Agreement and liquidate the Trust; or (iii) 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 Bank of New York, a trust company organized
under the laws of New York, having its offices at 101 Barclay Street, New York,
New York 10286. The Trustee is subject to supervision and examination by the
Superintendent of Banks of the State of New York and the Board of Governors of
the Federal Reserve System, and its deposits are insured by the Federal Deposit
Insurance Corporation to the extent permitted by law.
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 Trusts 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. The Trustee has not participated in the selection of the
Trust's Securities.
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 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.
956460.1
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<PAGE>
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.
TRUST EXPENSES AND CHARGES
Investors will reimburse the Sponsor for all or a portion of the estimated
costs incurred in organizing and offering the Trust (collectively, the
"organization costs")--including the cost of the initial preparation and
execution of the Trust Agreement, registration of the Trust and the Units under
the Investment Company Act of 1940 and the Securities Act of 1933 and state
registration fees, the initial fees and expenses of the Trustee, legal expenses
and other actual out-of-pocket costs. The estimated organization costs will be
paid from the assets of the Trust as of the close of the initial public offering
period (which may be between 30 and 90 days). To the extent that actual
organization costs are less than the estimated amount, only the actual
organization costs will be deducted from the assets of the Trust. To the extent
that actual organization costs are greater than the estimated amount, only the
estimated organization costs included in the Public Offering Price will be
reimbursed to the Sponsor. All advertising and selling expenses, as well as any
organizational costs not paid by the Trust, will be borne by the Sponsor at no
cost to the Trust.
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.
This 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 Pinnacle Family of Trusts in
any calendar year exceed the aggregate cost to the Portfolio Supervisor of
supplying such services in such year. (See "Administration of the Trust--Trust
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 "Administration of the Trust" and
"Rights of Unitholders."
The Trustee's fees applicable to the Trust are payable as of each Record
Date from the Income Accounts of the Trust to the extent funds are available and
then from the Principal Accounts. Both the Portfolio Supervisor's and the
Trustee's 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."
956460.1
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<PAGE>
The following additional charges are or may be incurred by the Trust: (i)
all expenses (including counsel fees) of the Trustee incurred and advances made
in connection with its activities under the Trust Agreements, including the
expenses and costs of any action undertaken by the Trustee to protect the Trust
and the rights and interests of the Unitholders; (ii) 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; (iii)
indemnification of the Sponsor for any losses, liabilities and expenses incurred
in acting as sponsor of the Trust without gross negligence, bad faith or willful
misconduct on its part; and (iv) 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. To the extent lawful, the expenses of the audit shall be an expense of
the Trust. 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 of Units (other than the final
distribution in connection with the termination of the Trusts) 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--Deposit of Additional Securities" in this Part B.
Units acquired by reinvestment will not be subject to a sales charge.
Unitholders who participate in the Reinvestment Plan will nevertheless be
subject to tax on their distributions in the manner described under "Tax
Status." Investors should inform their broker when purchasing their Units if
they wish to participate in the Reinvestment Plan. Thereafter, Unitholders
should contact their broker 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 Date for such distribution. Each subsequent distribution of income or
principal on the participant's Units will be automatically applied by the
Trustee to purchase additional Units of the Trust. The Sponsor reserves the
right to demand, modify or terminate the Reinvestment Plan at any time without
prior notice. The Reinvestment Plan for the Trust may not be available in all
states.
TAX STATUS
This is a general discussion of certain of the Federal income tax
consequences of the purchase, ownership and disposition of the Units by U.S.
citizens and residents and corporations organized in the United States. The
summary is limited to investors who hold the Units as "capital assets"
(generally, property held for investment) within the meaning of the Internal
Revenue Code and does not address the tax consequences of Units held by dealers,
financial institutions or insurance companies. Unitholders should consult their
tax advisers in determining the Federal, state, local and any other tax
consequences of the purchase, ownership and disposition of Units.
In rendering the opinion set forth below, Paul, Hastings, Janofsky & Walker
LLP has examined the Agreement, the final form of Prospectus dated the date
hereof and the documents referred to therein, among others, and has relied on
the validity of said documents and the accuracy and completeness of the facts
set forth therein. In the opinion of Paul, Hastings, Janofsky & Walker LLP,
special counsel for the Sponsor, under existing law:
1. The Trust will be classified as a grantor trust for Federal income
tax purposes and not as a partnership or association taxable as a
corporation. Classification of the Trust as a grantor trust will cause the
Trust not to be subject to Federal income tax, and will cause the
Unitholders of the Trust to be treated for Federal income tax purposes as
the owners of an undivided pro rata portion of the assets of the Trust. All
income received by the Trust will be treated as income of the Unitholders
in the manner set forth below.
956460.1
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<PAGE>
2. The Trust is not subject to the New York Franchise Tax on Business
Corporations or the New York City General Corporation Tax. For a Unitholder
who is a New York resident, however, a pro rata portion of all or part of
the income of the Trust will be treated as income of the Unitholder under
the income tax laws of the State and City of New York. Similar treatment
may apply in other states.
3. During the 90-day period subsequent to the initial issuance date,
the Sponsor reserves the right to deposit Additional Securities that are
substantially similar to those deposited in initially establishing the
Trust. This retained right falls within the guidelines promulgated by the
IRS and should not affect the taxable status of the Trust.
A taxable event will generally occur with respect to each Unitholder when
the Trust disposes of a Security (whether by sale, exchange or redemption) or
upon the sale, exchange or redemption of Units by the Unitholder. The price a
Unitholder pays for its Units, including sales charges, is allocated among its
pro rata portion of each Security held by the Trust (in proportion to the fair
market values thereof on the date the Unitholder purchases its Units) in order
to determine its initial cost for its pro rata portion of each Security held by
the Trust.
For Federal income tax purposes, a Unitholder's pro rata portion of
dividends paid with respect to a Security held by the Trust is taxable as
ordinary income to the extent of such corporation's current or accumulated
earnings and profits. A Unitholder's pro rata portion of dividends paid on a
Security that exceed current and accumulated earnings and profits will first
reduce a Unitholder's tax basis in the Security, and to the extent that such
dividends exceed a Unitholder's tax basis in the Security will generally be
treated as a capital gain.
A Unitholder's portion of gain, if any, upon the sale, exchange or
redemption of Units or the disposition of Securities held by the Trust will
generally be considered a capital gain and will be long-term if the Unitholder
has held its Units (and the Trust has held the Securities) for more than one
year. Capital gains realized by corporations are generally taxed at the same
rates applicable to ordinary income, but non-corporate taxpayers who realize
long-term capital gains may be subject to a reduced tax rate of 20%, rather than
the "regular" maximum tax rate of 39.6%. Tax rates may increase prior to the
time when Unitholders may realize gains from the sale, exchange or redemption of
the Units or Securities.
A Unitholder's portion of loss, if any, upon the sale or redemption of
Units or the disposition of Securities held by the Trust will generally be
considered a capital loss and will be long-term if the Unitholder has held its
Units (and the Trust has held the Securities) for more than one year. Capital
losses are deductible to the extent of capital gains; in addition, up to $3,000
of capital losses ($1,500 for married individuals filing separately) recognized
by non-corporate Unitholders may be deducted against ordinary income.
A Unitholder that itemizes its deductions may also deduct its pro rata
share of the fees and expenses of the Trust, but only to the extent that such
amounts, together with the Unitholder's other miscellaneous deductions, exceed
2% of its adjusted gross income. The deduction of fees and expenses is subject
to limitations for individuals with incomes in excess of certain thresholds.
After the end of each calendar year, the Trustee will furnish to each
Unitholder an annual statement containing information relating to the dividends
received by the Trust on the Securities, the gross proceeds received by the
Trust from the disposition of any Security, and the fees and expenses paid by
the Trust. The Trustee will also furnish annual information returns to each
Unitholder and to the Internal Revenue Service.
A corporation (other than an S corporation and certain ineligible
corporations) that owns Units will generally be entitled to a 70% dividends
received deduction with respect to its pro rata portion of dividends taxable as
ordinary income received by the Trust from a domestic corporation or from a
qualifying foreign corporation in the same manner as if such corporation
directly owned the Securities paying such dividends. However, a corporation
owning Units should be aware that there are additional limitations on the
eligibility of dividends for the 70% dividends received deduction. These
limitations include a requirement that stock (and therefore Units) must
generally be held at least 46 days during the 90-day period beginning on the
date that is 45 days before the date on which the stock becomes ex-dividend.
Moreover, the allowable percentage of the deduction will be reduced if a
956460.1
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<PAGE>
corporate Unitholder owns stock (or Units) the financing of which is directly
attributable to indebtedness incurred by such corporation.
As discussed in the section "Administration of the Trust--Trust
Termination," each Unitholder may have three options in receiving its
termination distributions, namely (i) to receive its pro rata share of the
underlying Securities in kind, (ii) to receive cash upon liquidation of its pro
rata share of the underlying Securities, or (iii) to invest the amount of cash
it will receive upon the liquidation of its pro rata share of the underlying
Securities in units of a future series of the Trust (if one is offered) at a
reduced sales charge. A Unitholder that chooses option (i) should be treated as
merely exchanging its undivided pro rata ownership of Securities held by the
Trust for sole ownership of a proportionate share of Securities, and therefore
the transaction should be tax free to the extent Securities are received.
Entities that generally qualify for an exemption from Federal income tax,
such as many pension trusts, are nevertheless taxed under Section 511 of the
Code on unrelated business taxable income. Unrelated business taxable income is
income from a trade or business regularly carried on by the tax-exempt entity
that is unrelated to the entity's exempt purpose. Unrelated business taxable
income generally does not include dividend or interest income or gain from the
sale of investment property, unless such income is derived from property that is
debt-financed or is dealer property. A tax-exempt entity's dividend income from
the Trust and gain from the sale of Units in the Trust or the Trust's sale of
Securities is not expected to constitute unrelated business taxable income to
such tax-exempt entity unless the acquisition of the Unit itself is
debt-financed or constitutes dealer property in the hands of the tax-exempt
entity.
Prospective 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.
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, 75 East 55th Street, New York, New York 10022 as counsel
for the Sponsor. Emmet, Marvin & Martin, LLP, 120 Broadway, New York, New York
10271, have acted as counsel for the Trustee.
INDEPENDENT AUDITORS. The Statement of Financial Condition, including the
Portfolio, is included herein in reliance upon the report of Ernst & Young LLP,
independent auditors, and upon the authority of said firm as experts in
accounting and auditing.
PORTFOLIO SUPERVISOR. ING Mutual Funds Management Co. LLC, a Delaware
limited liability company, is a wholly-owned indirect subsidiary of ING Groep
N.V. and is an affiliate of the Sponsor.
PERFORMANCE INFORMATION. Total returns, average annualized returns or
cumulative returns for various periods of the strategy, the related index and
the Trust may be included from time to time in advertisements, sales literature
and reports to current or prospective investors. Total return shows changes in
Unit price during the period plus any dividends and capital gains, divided by
the original public offering price. Average annualized returns show the average
return for stated periods of longer than a year. Sales material may also include
an illustration of the cumulative results of like annual investments in a
strategy during an accumulation period and like annual withdrawals during a
distribution period. 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 the Trust
applying the investment strategies to other indexes. Returns may also be shown
on a combined basis. Trust performance may be compared to performance on a total
return basis of the NASDAQ, NYSE or similar exchanges, as well as the DJIA, S&P
500 Index or other similar indices. In addition, total return comparisons may be
made to performance data from Bloomberg Financial Markets LP, Lipper Analytical
Services, Inc., Morningstar Publications, Inc., Standard & Poor's CompuStat and
Center for Research in Security Prices (CRSP) at the University of Chicago or
from publications such as The Wall Street Journal, Money,
956460.1
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<PAGE>
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 the Trust's relative performance for any future
period.
Pending the approval of the National Association of Securities Dealers
Regulation, the Sponsor may also include, in advertisements, sales literature
and reports to current or prospective investors, the performance of hypothetical
portfolios to which the Sponsor has applied the same investment objectives and
selection strategies, as well as back-tested data of the historical performance
of such strategies, as described in "The Trust--The Securities" and which the
Sponsor intends to apply to the selection of securities for the Trust. This
performance information is intended to illustrate the Trust's strategies and
should not be interpreted as indicative of the future performance of the Trust.
956460.1
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<PAGE>
No person is authorized to give any information or to make any
representations not contained in this Prospectus and you should not rely on any
other information. The Trust are 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.
Table of Contents
Title Page
PART A
Investment Summary.................... A-2
Fee Table............................. A-5
Summary of Essential Information...... A-6
Statement of Financial Condition...... A-7
Portfolio............................. A-8
Report of Independent Auditors........ A-9
PART B
The Trust............................. B-1
Risk Considerations................... B-3
Public Sale of Units.................. B-6
Rights of Unitholders................. B-7
Liquidity............................. B-9
Administration of the Trust........... B-11
Trust Expenses and Charges............ B-15
Reinvestment Plan..................... B-16
Tax Status............................ B-16
Other Matters......................... B-18
This Prospectus does not contain all of the information set forth in the
registration statement, filed with the SEC, Washington, D.C., under the
Securities Act of 1933 (file no. 333-_____), and the Investment Company Act of
1940 (file no. 811-08945), and to which reference is 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
LOGO
Financial Trust Series I
(A Unit Investment Trust)
PROSPECTUS
DATED: ________, 2000
SPONSOR:
ING FUNDS DISTRIBUTOR, INC.
230 Park Avenue
New York, New York 10169
(212) 309-8650
TRUSTEE:
THE BANK OF NEW YORK
101 Barclay Street
New York, New York 10286
----------
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.
956460.1
<PAGE>
PART II--ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM A--BONDING ARRANGEMENTS
The employees of ING Funds Distributor, Inc. are covered under Brokers'
Blanket Policy, Standard Form 14, in the amount of $2,000,000.
ITEM B--CONTENTS OF REGISTRATION STATEMENT
This Registration Statement on Form S-6 comprises the following papers and
documents:
The facing sheet on Form S-6.
The Cross-Reference Sheet (incorporated by reference to the
Cross-Reference Sheets to the Registration Statements of McLaughlin,
Piven, Vogel Family of Trusts, McLaughlin, Piven, Vogel Industrial
Trust and McLaughlin, Piven, Vogel Technology Trust filed on March 5,
1999, and McLaughlin, Piven, Vogel Family of Trusts, Pinnacle Trust
filed on August 7, 1998.)
The Prospectus consisting of pages.
Undertakings.
Signatures.
Written consents of the following persons:
Paul, Hastings, Janofsky & Walker LLP (included in Exhibit 3.1)
Ernst & Young LLP
The following exhibits:
99.1.1 -- Reference Trust Agreement including certain amendments to
the Trust Indenture and Agreement referred to under Exhibit
99.1.1.1 below.
99.1.1.1 -- Form of Trust Indenture and Agreement (filed as Exhibit
1.1.1 to Amendment No. 2 to Form S-6 Registration Statement
No. 333-31048 of The Pinnacle Family of Trusts, Internet Trust
Series on March 28, 2000 and incorporated herein by
reference).
99.1.3.5 -- Articles of Incorporation and Articles of Amendment of ING
Funds Distributor, Inc. (filed as Exhibit 99.1.3.5 to
Amendment No. 2 to the Form S-6 Registration Statement No.
333-31048 of The Pinnacle Trust, Internet Trust Series I on
March 28, 2000 and incorporated herein by reference).
99.1.3.6 -- By-Law of ING Funds Distributor, Inc. (filed as Exhibit
99.1.3.6 to Amendment No. 2 to the Form S-6 Registration
Statement No. 333-31048 of The Pinnacle Trust, Internet Trust
Series I on March 28, 2000 and incorporated herein by
reference).
*99.3.1 -- Opinion of Paul, Hastings, Janofsky & Walker LLP as to the
legality of the securities being registered, including their
consent to the filing thereof and to the use of their name
under the headings "Tax Status" and "Legal Opinions" in the
Prospectus, and to the filing of their opinion Regarding tax
status of the Trust.
99.6.0 -- Power of Attorney of ING Funds Distributor, Inc., the
Depositor, by its officers and a majority of its Directors
(filed as Exhibit 99.6.0 to Form S-6 Registration No.
333-31048 of The Pinnacle Family of Trusts, Internet Trust
Series I on February 24, 2000 and incorporated hereby by
reference).
----------
* To be filed by Amendment.
956460.1
II-1
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant, the
Pinnacle Family of Trusts, Financial Trust Series I has duly caused this
Registration Statement to be signed on its behalf by the undersigned, hereunto
duly authorized, in the City of New York and State of New York on the 9th day of
June, 2000.
THE PINNACLE FAMILY OF TRUSTS, FINANCIAL TRUST
SERIES I (Registrant)
ING FUNDS DISTRIBUTOR, INC.
(Depositor)
By /S/ PETER J. DEMARCO
-------------------------------------------
Peter J. DeMarco
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons, who
constitute the principal officers and a majority of the directors of ING Funds
Distributor, Inc., the Depositor, in the capacities and on the dates indicated.
Name Title Date
------------------ ------------------------------------- -------------
John J. Pileggi Chief Executive Officer and Director
Mitchell J. Mellen President and Director
Donald E. Brostrom Chief Financial Officer, Treasurer and
Director
Eric M. Rubin Director June 9, 2000
By /S/ PETER J. DEMARCO
--------------------------
Peter J. DeMarco
as Senior Vice President
and Attorney-In-Fact*
------------------
* An executed copy of the Power of Attorney was filed as Exhibit 99.6.0 to
Form S-6 Registration Statement No. 333-31048 on February 24, 2000.
956460.1
II-2
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference made to our firm under the Caption "Independent
Auditors in Part B of the Prospectus and to the use of our report dated
________, 2000, in this Registration Statement (Form S-6 No. 333-_____) of The
Pinnacle Family of Trusts, Financial Trust Series I.
ERNST & YOUNG LLP
New York, New York
________, 2000
956460.1
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