<PAGE>
40 ACT FILE NO. 811-2271
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
<TABLE>
<S> <C> <C>
A. Exact name of Trust: NUVEEN TAX-FREE UNIT TRUST, SERIES 926
B. Name of Depositor: JOHN NUVEEN & CO. INCORPORATED
C. Complete address of Depositor's principal executive offices:
333 West Wacker Drive
Chicago, Illinois 60606
D. Name and complete address of agents for service:
JOHN NUVEEN & CO. INCORPORATED
Attn: Gifford R. Zimmerman
333 West Wacker Drive
Chicago, Illinois 60606
CHAPMAN AND CUTLER
Attn: Eric F. Fess
111 West Monroe Street
Chicago, Illinois 60603
It is proposed that this filing will become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/ / on February 25, 1997 pursuant to paragraph (b) of rule 485
/ / 60 days after filing pursuant to paragraph (a)
/ / on February 25, 1997 pursuant to paragraph (a) of rule 485 or 486
E. Title and amount of securities being registered: An indefinite number of Units
pursuant to Rule 24f-2 promulgated under the investment company act of 1940, as
amended.
F. Proposed maximum offering price to the public of the securities being registered:
Indefinite.
G. Amount of filing fee: $0
H. Approximate date of proposed sale to the public: As soon as practicable after the
effective date of the Registration Statement.
/ / Check box if it is proposed that this filing will become effective on (date) at
(time) pursuant to Rule 487.
</TABLE>
- --------------------------------------------------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A)
MAY DETERMINE.
<PAGE>
FEBRUARY 25, 1997
SUBJECT TO COMPLETION
A
NUVEEN NUVEEN PENNSYLVANIA INSURED TRUST 222
(NUVEEN TAX-FREE UNIT TRUSTS SERIES 921)
CUSIP NUMBERS:
Monthly: 6706H7 102
Quarterly: 6706H7 110
Semi-Annually: 6706H7 128
PROSPECTUS--PART A (SPECIFIC TERMS) -- FEBRUARY 25, 1997
THIS PART A OF THE PROSPECTUS MAY NOT BE DISTRIBUTED UNLESS ACCOMPANIED BY THE
PART B OF
THE NUVEEN TAX-FREE UNIT TRUSTS PROSPECTUS DATED FEBRUARY 1, 1997, TO WHICH SUCH
REFERENCE
HEREIN APPLIES. BOTH PARTS OF THE PROSPECTUS SHOULD BE RETAINED FOR FUTURE
REFERENCE.
Pennsylvania Insured Trust 222 (the "Trust") consists of a portfolio of
interest-bearing obligations issued by or on behalf of the State of
Pennsylvania, certain United States Territories or authorities and political
subdivisions thereof which, in the opinion of recognized bond counsel to the
issuing authorities, provide income which is exempt from Federal income tax and
Pennsylvania state and local income taxes, to the extent indicated below.
The objectives of the Trust are income exempt from Federal and state income
taxes, and conservation of capital. The objectives are, of course, dependent
upon the continuing ability of the issuers, obligors and/or insurers to meet
their respective obligations.
The Portfolio of the Trust consists of 9 obligations issued by entities
located in Pennsylvania. The Bonds in the Trust are either general obligations
of the governmental entity issuing them and are backed by the taxing power
thereof or are payable as to principal and interest from the income of a
specific project or authority and are not supported by the issuer's power to
levy taxes. The sources of payment for the Bonds are divided as follows:
<TABLE>
<CAPTION>
NUMBER OF PORTFOLIO
ISSUES PURPOSE OF ISSUE PERCENTAGE
--------------- ----------------------------------------------------
<C> <S> <C>
3 General Obligations 34 %
3 Water and/or Sewer Revenue 34
2 Health Care Facility Revenue 29
1 Transportation Facility Revenue 3
</TABLE>
Approximately 5.7% of the aggregate principal amount of the Bonds in the
Trust (accounting for approximately 1.6% of the aggregate offering price of the
Bonds) are original issue discount obligations. Certain of these original issue
discount obligations, amounting to 5.7% of the aggregate principal amount and
1.6% of the aggregate offering price of the Bonds in the Trust, are "zero
coupon" bonds. See "RISK FACTORS" in Part B of this Prospectus for a discussion
of the characteristics of such obligations and of the risks associated
therewith.
All of the Bonds in the Trust are covered by policies of insurance obtained
from the MBIA Insurance Corporation guaranteeing payment of principal and
interest when due. As a result of such insurance, the Bonds in the Trust have
received a rating of "Aaa" by Moody's, "AAA" by Fitch, and/or "AAA" by Standard
& Poor's.
The Trust is considered to be concentrated in Bonds of Water and/or Sewer
Revenue Issuers whose revenues are subject to certain risks including problems
obtaining timely and adequate rate increases and population decline resulting in
decreased user fees. The Trust is also considered to be concentrated in Bonds of
Health Care Facility Revenue Issuers whose revenues are subject to certain risks
including increased governmental regulation, fluctuating occupancy levels and
increased competition. For a discussion of the risks associated with investments
in the bonds of various issuers, see "RISK FACTORS" in Part B of this
Prospectus.
ESSENTIAL INFORMATION
REGARDING THE NUVEEN PENNSYLVANIA INSURED TRUST 222
ON THE BUSINESS DAY PRIOR TO THE DATE OF DEPOSIT, FEBRUARY 24, 1997
Sponsor and Evaluator.......... John Nuveen & Co. Incorporated
Trustee.............................. The Chase Manhattan Bank
------------------------------------------------
The income, expense and distribution data set forth below have been calculated
for Unitholders receiving monthly, quarterly or semi-annual distribution
options.
<TABLE>
<S> <C>
Principal Amount of Bonds in Trust.................. $ 3,500,000
Number of Units..................................... 35,000
Fractional Undivided Interest in Trust Per Unit..... 1/35,000
Public Offering Price--Less than 500 Units
Aggregate Offering Price of Bonds in Trust...... $ 3,320,278
Divided by Number of Units...................... $ 94.87
Plus Sales Charge 4.9% (5.152% of the Aggregate
Offering Price of the Bonds per Unit).......... $ 4.89
Public Offering Price Per Unit(1)............... $ 99.76
Redemption Price Per Unit (exclusive of accrued
interest)......................................... $ 94.38
Sponsor's Initial Repurchase Price Per Unit
(exclusive of accrued interest)................... $ 94.87
Excess of Public Offering Price Per Unit over
Redemption Price Per Unit......................... $ 5.38
Excess of Public Offering Price Per Unit over
Sponsor's Repurchase Price Per Unit............... $ 4.89
Average Maturity of Bonds in the Trust(2)........... 26.1 years
</TABLE>
- ----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any State.
1 of 7
<PAGE>
ESSENTIAL INFORMATION (CONT.)
<TABLE>
<CAPTION>
MONTHLY QUARTERLY SEMI-ANNUAL
----------- ----------- -----------
<S> <C> <C> <C>
Calculation of Estimated Net Annual
Interest Income Per Unit
Annual Interest Income(3)............ $5.2449 $5.2449 $5.2449
Less Estimated Annual Expense........ $.2405 $.2085 $.1895
----------- ----------- -----------
Estimated Net Annual Interest
Income(4).......................... $5.0044 $5.0364 $5.0554
Daily Rate of Accrual Per Unit........... $.01390 $.01398 $.01404
ESTIMATED CURRENT RETURN(5).............. 5.02% 5.05% 5.07 %
ESTIMATED LONG TERM RETURN(5)............ 5.09% 5.12% 5.14 %
Trustee's Annual Fees(6)................. $1.5323 $1.2123 $1.0223
Date of Deposit..................................................................................February 25, 1997
Settlement Date..................................................................................February 28, 1997
Mandatory Termination Date....................................See "OTHER INFORMATION" in Part B of this Prospectus
Minimum Value of Each Trust...................................See "OTHER INFORMATION" in Part B of this Prospectus
Sponsor's Annual Evaluation Fee.........................................$0.17 per $1,000 principal amount of Bonds
Estimated Annual Organizational Expenses(7).......................................................$.03029 per Unit
- ----------
</TABLE>
The evaluation time for purpose of sale, purchase or redemption of Units is 4
p.m. Eastern time or as of any earlier closing time on a day on which the New
York Stock Exchange is scheduled in advance to close at such earlier time. (See
"HOW IS THE PUBLIC OFFERING PRICE DETERMINED?" in Part B of this Prospectus.)
(1) Units are offered at the Public Offering Price plus accrued interest from
the preceding Record Date to, but not including, the date of settlement
(normally three business days after purchase). The Date of Deposit of the
Fund has been designated as the First Record Date for all plans of
distribution of the Trust and, accordingly, for Units purchased on the Date
of Deposit, $.04 of accrued interest to the Settlement Date will be added to
the Public Offering Price. (See "WHAT IS ACCRUED INTEREST?" in Part B of
this Prospectus.)
(2) The Average Maturity of Bonds in the Trust is calculated based upon the
stated maturities of the Bonds in the Trust (or, with respect to Bonds for
which funds or securities have been placed in escrow to redeem such Bonds on
a stated call date, based upon such call date). The Average Maturity of
Bonds in the Trust may increase or decrease from time to time as Bonds
mature or are called or sold.
(3) Assumes delivery of all Bonds. (See "COMPOSITION OF TRUSTS" appearing in
Part B of this Prospectus.) Interest income does not include accretion of
original issue discount on "zero coupon" Bonds, Stripped Obligations or
other original issue discount Bonds. (See "RISK FACTORS" in Part B of this
Prospectus.)
(4) The amount and timing of interest distributions from the Trust under the
various plans of distribution are set forth below. It is anticipated that
the amount of interest to be distributed per Unit in each year under each
plan of distribution will initially be substantially equal to the Estimated
Net Annual Interest Income per Unit for that plan. The amount of interest to
be distributed annually per Unit, will generally change as Bonds are
redeemed, mature or are sold or as fees and expenses increase or decrease.
(5) Estimated Long Term Return for the Trust represents the average of the
yields to maturity (or call) of the Bonds in the Trust's portfolio
calculated in accordance with accepted bond practices and adjusted to
reflect a compounding factor, expenses and sales charges. Estimated Current
Return is computed by dividing the Net Annual Interest Income per Unit by
the Public Offering Price, and in contrast to Estimated Long Term Return
does not reflect the amortization of premium or accretion of discount, if
any. For more information see "WHAT ARE ESTIMATED LONG TERM RETURN AND
ESTIMATED CURRENT RETURN?" in Part B of this Prospectus.
(6) Each Trustee annual fee is per $1,000 principal amount of the underlying
Bonds in the Trust for that portion of the Trust that represents a
particular plan of distribution.
(7) The Trust (and therefore Unitholders) will bear all or a portion of its
organizational costs (including costs of preparing the registration
statements, the trust indenture and other closing documents, registering
Units with the Securities and Exchange Commission and states, the initial
audit of the Trust portfolio, initial evaluation fees, legal fees and the
initial fees and expenses of the Trustee but not including the expenses
incurred in the printing of preliminary and final prospectuses, and expenses
incurred in the preparation and printing of brochures and other advertising
materials and any other selling expenses) as is common for mutual funds.
Total organizational expenses will be amortized over a five year period. See
"WHAT ARE NORMAL TRUST OPERATING EXPENSES?" in Part B of this Prospectus and
"Statement of Condition." Historically, the sponsors of unit investment
trusts have paid all the costs of establishing such trusts.
2 of 7
<PAGE>
INTEREST DISTRIBUTION
Details of interest distributions per Unit of the Trust under the various
plans appear in the following table based upon estimated Net Annual Interest
Income at the Date of Deposit:
<TABLE>
<CAPTION>
NORMAL
DISTRIBUTIONS
1997 PER YEAR
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------ --------------
Record Date*.......................... 4/1 5/1 8/1 11/1
Distribution Date..................... 4/15 5/15 8/15 11/15
- ----------------------------------------------------------------------------------------------------------------
Monthly Distribution Plan............. $ .5004(1) $ 5.0044
-------- $.4170 every month --------
Quarterly Distribution Plan........... $ .5004(1) $ .4194(2) $ 1.2582 $ 1.2582 $ 5.0364
Semi-Annual Distribution Plan......... $ .5004(1) $ .4212(3) $ 2.5272 $ 5.0554
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* Record Dates for semi-annual distributions are May 1 and November 1; for
quarterly distributions, they are February 1, May 1, August 1 and November 1.
Record Dates for monthly distributions are the first day of each month.
Distribution Dates under each distribution plan are the fifteenth day of the
month in which the respective Record Date occurred. For additional
information see "WHEN ARE DISTRIBUTIONS MADE TO UNITHOLDERS?" in Part B of
this Prospectus.
(1) The first distribution will be paid to all Unitholders, regardless of the
distribution plan selected. Such distribution may be more or less than a
regular monthly distribution.
(2) The second distribution under the quarterly distribution plan represents a
1-month distribution; subsequent quarterly distributions will be regular
3-month distributions.
(3) The second distribution under the semi-annual distribution plan represents a
1-month distribution; subsequent semi-annual distributions will be regular
6-month distributions.
PENNSYLVANIA RISK FACTORS
The financial condition of the Commonwealth of Pennsylvania is affected by
various national, economic, social and environmental policies and conditions.
Additionally, Constitutional and statutory limitations imposed on the State and
its local governments concerning taxes, bond indebtedness and other matters may
constrain the revenue-generating capacity of the Commonwealth and its local
governments and, therefore, the ability of the issuers of the Bonds to satisfy
their obligations. Historically, the Commonwealth has experienced significant
revenue shortfalls.
The economic vitality of the State and its various regions and, therefore,
the ability of the State and its local governments to satisfy the Bonds, are
affected by numerous factors. The economy of the Commonwealth continues to be
dependent on heavy industry and manufacturing. These sectors tend to be cyclical
and are facing increasing competition from foreign producers.
The Commonwealth is a party to numerous lawsuits in which an adverse final
decision could materially affect the Commonwealth's governmental operations and
consequently its ability to pay debt service on its obligations.
All outstanding general obligation bonds of the Commonwealth are rated AA-
by Standard and Poor's and A1 by Moody's.
Further information concerning Pennsylvania risk factors may be obtained
upon written or telephonic request to the Trustee as described in "OTHER
INFORMATION -- Supplemental Information" appearing in Part B of this Prospectus.
TAX STATUS
For a discussion of the Federal tax status of income earned on Trust Units,
see "WHAT IS THE TAX STATUS OF UNITHOLDERS?" appearing in Part B of this
Prospectus.
In the opinion of Dechert Price & Rhoads, special Pennsylvania counsel to
the Trust, under existing law:
Units evidencing fractional undivided interests in the Trust are not subject
to any of the personal property taxes presently in effect in Pennsylvania to the
extent of that proportion of the Trust represented by Bonds issued by the
Commonwealth of Pennsylvania, its agencies and instrumentalities, or by any
county, city, borough, town, township, school district, municipality and local
housing or parking authority in the Commonwealth of Pennsylvania or issued by
Puerto Rico, the Virgin Islands, Guam or the Northern Mariana Islands
("Pennsylvania Bonds"). The taxes referred to above include the County Personal
Property Tax, the additional personal property taxes imposed on Pittsburgh
residents by the School District of Pittsburgh and by the City of Pittsburgh.
The City of Pittsburgh, the School District of Pittsburgh and Allegheny County
cannot impose personal property taxes as of January 1, 1995. Trust Units may be
taxable under the Pennsylvania inheritance and estate taxes.
3 of 7
<PAGE>
The proportion of interest income representing interest income from
Pennsylvania Bonds distributed to Unitholders of the Trust is not taxable under
the Pennsylvania Personal Income Tax or under the Corporate Net Income Tax
imposed on corporations by Article IV of the Tax Reform Code. Nor will such
interest be taxable under the Philadelphia School District Investment Income Tax
imposed on Philadelphia resident individuals.
The disposition by the Trust of a Pennsylvania Bond (whether by sale,
exchange, redemption or payment at maturity) will not constitute a taxable event
to a Unitholder under the Pennsylvania Personal Income Tax if the Pennsylvania
Bond was issued prior to February 1, 1994. Further, although there is no
published authority on the subject, counsel is of the opinion that (i) a
Unitholder of the Trust will not have a taxable event under the Pennsylvania
state and local income taxes referred to in the preceding paragraph (other than
the Corporate Net Income Tax) upon the redemption or sale of his Unit to the
extent that the Trust is then comprised of Pennsylvania Bonds issued prior to
February 1, 1994 and (ii) the dispositions by the Trust of a Pennsylvania Bond
(whether by sale, exchange, redemption or payment at maturity) will not
constitute a taxable event to a Unitholder under the Corporate Net Income Tax or
the Philadelphia School District Investment Income Tax if the Pennsylvania Bond
was issued prior to February 1, 1994. (The School District tax has no
application to gain on the disposition of property held by the taxpayer for more
than six months.)
Gains on the sale, exchange, redemption, or payment at maturity of a
Pennsylvania Bond issued on or after February 1, 1994, will be taxable under all
of these taxes, as will gains on the redemption or sale of a unit to the extent
that the Trust is comprised of Pennsylvania Bonds issued on or after February 1,
1994.
4 of 7
<PAGE>
NUVEEN PENNSYLVANIA INSURED TRUST 222
(NUVEEN TAX-FREE UNIT TRUST SERIES 921)
SCHEDULE OF INVESTMENTS AT THE DATE OF DEPOSIT, FEBRUARY 25, 1997
<TABLE>
<CAPTION>
Ratings(3) Trustee's
Optional --------------------- Determination
Aggregate Name of Issuer and Title of Issue Represented Redemption Standard of Offering
Principal by Sponsor's Contracts to Purchase Bonds(1) Provisions(2) & Poor's Moody's Price
<C> <C> <S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
$ 105,000 Delaware River Port Authority (New Jersey and 2006 at 102 AAA Aaa $ 104,240
Pennsylvania), Revenue Bonds, Series of 1995,
5.50% Due 1/1/26.
500,000 Allegheny County Hospital Development Authority 2005 at 102 AAA Aaa 478,750
(Pennsylvania), Health Center Revenue Bonds,
Series of 1995 (University of Pittsburgh
Medical Center System), 5.375% Due 12/1/25.
500,000 Bellefonte Area School District (Centre County, 2006 at 100 AAA Aaa 492,800
Pennsylvania), General Obligation Bonds,
Series of 1996, 5.50% Due 5/15/26.
200,000 Dauphin County General Authority, Dauphin No Optional Call AAA Aaa 54,318
County, Pennsylvania, County Guaranteed
Revenue Bonds-Series of 1993, 0.00% Due
10/1/20. (Original issue discount bonds
delivered on or about May 26, 1993 at a price
of 19.08% of principal amount.)(General
Obligation Bonds.)
500,000 Lehigh County (Pennsylvania), General Purpose 2005 at 102 AAA Aaa 495,000
Authority, Hospital Revenue Bonds (Lehigh
Valley Hospital), Series B of 1995, 5.625%
Due 7/1/25.
500,000 Luzerne County Flood Protection Authority 2006 at 100 AAA Aaa 501,770
(Pennsylvania), Guaranteed Flood Protection
Bonds, Series of 1996, 5.65% Due 7/15/26.
(General Obligation Bonds.)
500,000 New Castle Sanitation Authority (Lawrence 2007 at 100 AAA Aaa 501,250
County, Pennsylvania), Sewer Revenue Bonds,
Series of 1997, 5.625% Due 6/1/17. (When
issued.)
500,000 City of Philadelphia, Pennsylvania, Water and 2005 at 102 AAA Aaa 498,125
Wastewater Revenue Bonds, Series 1995, 5.60%
Due 8/1/18.
195,000 Pittsburgh (Pennsylvania), Water and Sewer 2005 at 100 AAA Aaa 194,025
Authority, Water and Sewer System First Lien
Revenue Bonds, Series A of 1995, 5.60% Due
9/1/22.
- ----------- ---------------
$ 3,500,000 $ 3,320,278
- ----------- ---------------
- ----------- ---------------
</TABLE>
- ------------
(1) The Sponsor's contracts to purchase Bonds were entered into during the
period from February 21, 1997 to February 24, 1997. Other information regarding
the Bonds in the Trust on the Date of Deposit is as follows:
<TABLE>
<CAPTION>
ANNUAL
PROFIT INTEREST
COST TO (OR LOSS) INCOME TO BID PRICE
TRUST SPONSOR TO SPONSOR TRUST OF BONDS
---------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
PENNSYLVANIA INSURED TRUST 222.......... $ 3,309,379 $ 10,899 $ 183,570 $ 3,303,278
</TABLE>
In addition, the difference between the Trustee's determination of Offering
Price and Bid Price (as a percentage of principal amount) is .49%. Neither cost
to Sponsor nor profit (or loss) to Sponsor reflects underwriting profits or
losses received or incurred by the Sponsor through its participation in
underwriting syndicates. The Sponsor did not participate as either the sole
underwriter or as a manager or member of a syndicate that acted as the original
underwriter of any of the Bonds.
(2) The Bonds are first subject to optional redemption in the years, and at
the prices, shown. Unless otherwise indicated, the Bonds, except for Bonds
issued at a substantial original issue discount, are redeemable at declining
prices (but not below par value) in subsequent years. Original issue discount
bonds, including zero coupon bonds, are generally redeemable at prices based on
the issue price plus the amount of original issue discount accreted to
redemption plus, if applicable, some premium, the amount of which will decline
in subsequent years. The Bonds may also be subject to sinking fund redemption
without premium prior to the dates shown. Certain Bonds may be subject to
redemption without premium prior to the date shown pursuant to special or
mandatory call provisions specified in the instruments setting forth the terms
and provisions of such Bonds. See "COMPOSITION OF TRUSTS", "WHAT IS THE TAX
STATUS OF UNITHOLDERS?" and "RISK FACTORS" in Part B of this Prospectus.
(3) All the Bonds in the Insured Trusts, as insured by the Insurer, are
rated AAA by Standard & Poor's, AAA by Fitch and/or Aaa by Moody's. The
insurance obtained by the Trust guarantees the payment of interest and principal
on the Bonds when due but does not cover certain market risks associated with
fixed income securities such as accelerated payments, premiums payable on
mandatory redemptions or interest rate risks. (See "WHY AND HOW ARE THE BONDS
INSURED?" in Part B of this Prospectus and "Description of Ratings" in the
Information Supplement.)
5 of 7
<PAGE>
Statement of Condition
NUVEEN PENNSYLVANIA INSURED TRUST 222
(Nuveen Tax-Free Unit Trust, Series 921)
AS OF FEBRUARY 25, 1997
<TABLE>
<S> <C>
TRUST PROPERTY
Sponsor's contracts to purchase Tax-Free Bonds,
backed by an irrevocable letter of
credit(1)(2).................................... $ 3,320,278
Accrued interest to February 25, 1997 on
underlying Bonds(1)............................. 41,820
Organizational costs(3)........................... 5,300
--------------
Total................................. $ 3,367,398
--------------
--------------
LIABILITIES AND INTEREST OF UNITHOLDERS
LIABILITIES:
Accrued interest to February 25, 1997 on
underlying Bonds(4).......................... $ 41,820
Accrued organizational costs(3)............... 5,300
--------------
Total................................. $ 47,120
--------------
--------------
INTEREST OF UNITHOLDERS:
Units of fractional undivided interest
outstanding (35,000)
Cost to investors(5)........................ $ 3,491,339
Less: Gross underwriting commission(6).... (171,061)
--------------
Net amount applicable to investors............ $ 3,320,278
--------------
Total................................. $ 3,367,398
--------------
--------------
</TABLE>
- ------------
(1) Represented by contracts to purchase Tax-Exempt Bonds which include "when
issued" or "regular way" or "delayed delivery" contracts for which an
irrevocable letter of credit issued by a major commercial bank has been
deposited with the Trustee on the Date of Deposit. The amount of such letter
of credit and any cash deposited exceeds the amount necessary for the
purchase of the Bonds plus accrued interest to the Date of Deposit. At the
Date of Deposit, Bonds may have been delivered to the Sponsor pursuant to
certain of these contracts; the Sponsor has assigned to the Trustee all of
its rights, title and interest in and to such Bonds.
(2) Aggregate value (at offering prices) as of the Date of Deposit of the Bonds
listed under "Schedule of Investments" herein, and their aggregate cost to
the Trust are the same. Such offering prices were determined by Kenny S&P
Evaluation Services, a division of J.J. Kenny Co., Inc., as of the close of
business on the business day prior to the Date of Deposit. (See "HOW WAS THE
PRICE OF THE BONDS DETERMINED AT THE DATE OF DEPOSIT?" in Part B of this
Prospectus.) Insurance coverage providing for the timely payment, when due,
of all principal of and interest on the Bonds in an Insured Trust has been
obtained by the Sponsor or by the issuers of such Bonds. Such insurance does
not guarantee the market value of the Bonds or the value of the Units. Both
the bid and the offering prices of the underlying Bonds and of the Units may
include value attributable to such policies of insurance.
(3) The Trust (and therefore Unitholders) will bear all or a portion of its
estimated organizational costs which will be deferred and amortized over
five years from the Date of Deposit.
(4) Representing, as set forth in "WHAT IS ACCRUED INTEREST?" in Part B of this
Prospectus, advancement by the Trustee of an amount equal to the accrued
Bond interest as of the Date of Deposit.
(5) Aggregate Public Offering Price (exclusive of accrued interest) computed as
set forth under "HOW IS THE PUBLIC OFFERING PRICE DETERMINED?" in Part B of
this Prospectus.
(6) The gross underwriting commission of 4.90% of the Public Offering Price has
been calculated on the assumption that the Units sold are not subject to a
reduction of sales charge for quantity purchases. In single transactions
involving 500 Units or more, the sales charge is reduced. (See "HOW IS THE
PUBLIC OFFERING PRICE DETERMINED?" in Part B of this Prospectus.)
6 of 7
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF JOHN NUVEEN & CO. INCORPORATED AND UNITHOLDERS OF
PENNSYLVANIA INSURED TRUST 222:
We have audited the accompanying statement of condition and the schedule of
investments at date of deposit (included in Part A of this Prospectus) of
Pennsylvania Insured Trust 222 (contained in Nuveen Tax-Free Unit Trust, Series
921), as of February 25, 1997. These financial statements are the responsibility
of the Sponsor. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of the irrevocable letter of credit arrangement for the purchase of
securities, described in Note (1) to the statement of condition, by
correspondence with the Trustee. An audit also includes assessing the accounting
principles used and significant estimates made by the Sponsor, 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 statement of condition and the schedule of investments
at date of deposit referred to above present fairly, in all material respects,
the financial position of Pennsylvania Insured Trust 222 as of February 25,
1997, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
February 25, 1997.
7 of 7
<PAGE>
<PAGE>
B
NUVEEN Tax-Free Unit Trusts
PROSPECTUS -- PART B
(GENERAL TERMS)
FEBRUARY 1, 1997
THIS PART B OF THE PROSPECTUS MAY NOT BE DISTRIBUTED UNLESS ACCOMPANIED BY PART
A. BOTH PARTS OF THIS PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.
FURTHER DETAIL REGARDING CERTAIN OF THE INFORMATION PROVIDED IN THE PROSPECTUS
MAY BE OBTAINED WITHIN FIVE BUSINESS DAYS OF WRITTEN OR TELEPHONIC REQUEST TO
THE TRUSTEE AT 4 NEW YORK PLAZA, NEW YORK, NY 10004-2413 OR (800) 257-8787.
INTEREST INCOME TO A TRUST AND TO UNITHOLDERS, IN THE OPINION OF COUNSEL, UNDER
EXISTING LAW IS EXEMPT FROM FEDERAL INCOME TAX. CAPITAL GAINS, IF ANY, ARE
SUBJECT TO TAX. IN ADDITION, INTEREST INCOME OF STATE TRUSTS IS, IN THE OPINION
OF COUNSEL, EXEMPT, TO THE EXTENT INDICATED, FROM STATE AND LOCAL TAXES.
INTEREST INCOME OF ANY TRUST OTHER THAN A STATE TRUST MAY BE SUBJECT TO STATE
AND LOCAL TAXES.
CURRENTLY OFFERED AT PUBLIC OFFERING PRICE PLUS INTEREST ACCRUED TO THE DATE OF
SETTLEMENT. MINIMUM PURCHASE-- EITHER $5,000 OR 50 UNITS, WHICHEVER IS LESS.
THIS NUVEEN TAX-FREE UNIT TRUST SERIES consists of the underlying separate unit
investment trusts set forth in Part A to this Prospectus. Each Trust initially
consists of delivery statements relating to contracts to purchase Bonds and,
thereafter, will consist of a diversified portfolio of obligations issued by or
on behalf of states and territories of the United States and authorities and
political subdivisions thereof (see "Schedule of Investments" appearing in Part
A of this Prospectus). Except in specific instances as noted in Part A of this
Prospectus, the information contained in this Part B shall apply to each Trust
in its entirety. All obligations in each Traditional Trust are rated in the
category "A" or better by Standard & Poor's, a division of The McGraw Hill
Companies ("Standard & Poor's"), Moody's Investors Service, Inc. ("Moody's") or
Fitch Investors Service, Inc. ("Fitch") on the Date of Deposit. All obligations
in each Insured Trust are covered by policies of insurance obtained from the
MBIA Insurance Corporation guaranteeing payment of principal and interest when
due. All such policies of insurance remain effective so long as the obligations
are outstanding. As a result of such insurance, the Bonds in each portfolio of
the Insured Trusts have received a rating of "Aaa" by Moody's, "AAA" by Fitch
and/ or "AAA" by Standard & Poor's. INSURANCE RELATES ONLY TO THE BONDS IN THE
INSURED TRUSTS AND NOT TO THE UNITS OFFERED HEREBY OR TO THEIR MARKET VALUE.
(See "WHY AND HOW ARE THE BONDS INSURED?")
THE OBJECTIVES of a Trust are tax-exempt income and conservation of capital
through a diversified investment in tax-exempt Bonds. The payment of interest
and the preservation of principal are, of course, dependent upon the continuing
ability of the issuers of Bonds and of any insurer thereof to meet their
obligations thereunder. There is no guarantee that a Trust's objectives will be
achieved. (See "RISK FACTORS.")
DISTRIBUTIONS of interest received by a Trust will be made semi-annually unless
the Unitholder elects to receive them monthly or quarterly. (See "WHEN ARE
DISTRIBUTIONS MADE TO UNITHOLDERS?") Distribution of funds in the Principal
Account, if any, will ordinarily be made semi-annually.
FOR ESTIMATED LONG TERM RETURNS AND ESTIMATED CURRENT RETURNS to Unitholders on
the business day prior to the Date of Deposit, see Part A of this Prospectus and
"WHAT ARE ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN?"
THE PUBLIC OFFERING PRICE per Unit of each Trust during the initial offering
period is equal to a pro rata share of the OFFERING prices of the Bonds in such
Trust's portfolio plus a sales charge of up to 4.90% of the Public Offering
Price (equivalent to 5.152% of the net amount invested); the sales charge is
somewhat lower on Trusts with lesser average maturities. (See "HOW IS THE PUBLIC
OFFERING PRICE DETERMINED?") The Secondary Market Public Offering Price per Unit
for each Trust will be equal to a pro rata share of the sum of BID prices of the
Bonds in such Trust plus the sales charges determined based on the number of
years remaining to the maturity of each Bond. Accrued interest from the
preceding Record Date to, but not including, the settlement date (normally three
business days after purchase) is added to the Public Offering Price. The sales
charge is reduced on a graduated scale for sales involving at least $50,000 or
500 Units and will be applied on whichever basis is more favorable to the
purchaser. (See "HOW IS THE PUBLIC OFFERING PRICE DETERMINED?")
A UNITHOLDER MAY REDEEM UNITS at the office of the Trustee at prices based upon
the BID prices of the Bonds. The price received upon redemption may be more or
less than the amount paid by Unitholders, depending upon the value of the Bonds
on the date of tender for redemption. (See "HOW UNITS MAY BE REDEEMED WITHOUT
CHARGE.") The Sponsor, although not required to do so, intends to make a
secondary market for the Units of the Trusts at prices based upon the BID prices
of the Bonds in the respective Trusts. (See "MARKET FOR UNITS.")
RISK FACTORS. An investment in a Trust should be made with an understanding of
the risks associated therewith, including, among other factors, the inability of
the issuer or an insurer to pay the principal of or interest on a Bond when due,
volatile interest rates, early call provisions, and changes to the tax status of
the Bonds. See Part A of this Prospectus and "RISK FACTORS."
UNITS OF THE TRUST ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK AND ARE NOT FEDERALLY INSURED OR OTHERWISE PROTECTED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY AND
INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
NUVEEN Tax-Free Unit Trusts
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
<C> <S> <C>
WHAT IS THE NUVEEN TAX-FREE UNIT TRUST? 4
WHAT ARE THE OBJECTIVES OF THE TRUSTS? 4
SUMMARY OF PORTFOLIOS 4
RISK FACTORS 5
COMPOSITION OF TRUSTS 7
WHY AND HOW ARE THE BONDS INSURED? 8
HOW IS THE PUBLIC OFFERING PRICE DETERMINED? 9
MARKET FOR UNITS 12
WHAT IS ACCRUED INTEREST? 12
WHAT ARE ESTIMATED LONG TERM RETURN AND ESTIMATED
CURRENT RETURN? 13
HOW WAS THE PRICE OF THE BONDS DETERMINED AT THE
DATE
OF DEPOSIT? 13
WHAT IS THE TAX STATUS OF UNITHOLDERS? 14
WHAT ARE NORMAL TRUST OPERATING EXPENSES? 16
WHEN ARE DISTRIBUTIONS MADE TO UNITHOLDERS? 17
ACCUMULATION PLAN 17
HOW DETAILED ARE REPORTS TO UNITHOLDERS? 18
UNIT VALUE AND EVALUATION 18
HOW UNITS OF THE TRUSTS ARE DISTRIBUTED TO THE
PUBLIC 18
OWNERSHIP AND TRANSFER OF UNITS 19
HOW UNITS MAY BE REDEEMED WITHOUT CHARGE 20
HOW UNITS MAY BE PURCHASED BY THE SPONSOR 21
HOW BONDS MAY BE REMOVED FROM THE TRUSTS 21
INFORMATION ABOUT THE TRUSTEE 22
INFORMATION ABOUT THE SPONSOR 22
OTHER INFORMATION 23
</TABLE>
2
<PAGE>
NUVEEN Tax-Free Unit Trusts
<TABLE>
<CAPTION>
TOPICAL INDEX PAGE
<C> <S> <C> <C>
Accrued Interest 12
Accumulation Plan 17
Information
Bond Ratings, Description of Supplement
Bonds, Initial Determination of Offering Price 13
Bonds, How Selected 4
Bonds, Limited Right of Substitution 7
Bonds, Removal from a Trust 21
Call Provisions of Portfolio Bonds 7
Capital Gains Taxability 14
Composition of Trusts 7
Dealer Discounts 18
Distributions to Unitholders 17
Part
Distribution Payment Dates A,17
Distribution of Units to the Public 18
Part
Essential Information Regarding the Trusts A,13
Part
Estimated Long Term Return and Estimated Current Return A,13
Evaluation 18
Expenses for Normal Trust Operation 16
Indenture, Amendment of 23
Indenture, Termination of 23
Insurance on the Bonds 8
Interest Account Distributions Part A
Legal Opinion 23
Limitations on Liabilities of Sponsor and Trustee 22
Market for Units 12
Minimum Transaction 18
Objectives of the Trusts 4
Optional Distribution Plan 17
Other Information 23
Ownership and Transfer of Units 19
Principal Account Distributions 17
Public Offering Price of Units 9
Purchase of Units by Sponsor 21
Quantity Purchases 9
Part A,
Record Dates 17
Redemption of Units Without Charge 20
Report of Independent Public Accountants Part A
Reports to Unitholders 18
Risk Factors 5
Sales Charge 9
Schedules of Investments Part A
Sponsor, Information About 22
State Tax Status Part A
Statements of Condition Part A
Successor Trustees and Sponsors 22
Supplemental Information 23
Tax Status of Unitholders 14
Trustee, Information About 22
Units, Description of 4
</TABLE>
3
<PAGE>
WHAT IS THE NUVEEN TAX-FREE UNIT TRUST?
This Nuveen Tax-Free Unit Trust is one of a series of separate but similar
investment companies created by the Sponsor, each of which is designated by a
different Series number. The underlying unit investment trusts contained in this
Series are combined under one Trust Indenture and Agreement. Specific
information regarding this Trust is set forth in Part A of this Prospectus. The
various Nuveen Tax-Free Unit Trusts are collectively referred to herein as the
"Trusts"; the trusts in which few or none of the Bonds are insured are sometimes
referred to as the "Traditional Trusts," the trusts in which all of the Bonds
are insured as described herein are sometimes referred to as the "Insured
Trusts," and the state trusts (both Traditional and Insured) are sometimes
referred to as the "State Trusts." This Series was created under the laws of the
State of New York pursuant to a Trust Indenture and Agreement dated the Date of
Deposit (the "Indenture") between John Nuveen & Co. Incorporated ("Nuveen" or
the "Sponsor") and The Chase Manhattan Bank (the "Trustee").
The Sponsor has deposited with the Trustee delivery statements relating to
contracts for the purchase of municipal debt obligations together with funds
represented by an irrevocable letter of credit issued by a major commercial bank
in the amount, including accrued interest, required for their purchase (or the
obligations themselves) (the "Bonds"). See "Schedule of Investments" in Part A
of this Prospectus, for a description of the Bonds deposited in a Trust. See
"SUMMARY OF PORTFOLIOS" and "RISK FACTORS" for a discussion of zero coupon bonds
and stripped obligations included in the Trusts, if any. Some of the delivery
statements may relate to contracts for the purchase of "when issued" or other
Bonds with delivery dates after the date of settlement for a purchase made on
the Date of Deposit. See the "Schedule of Investments" in Part A of this
Prospectus and "COMPOSITION OF TRUSTS." For a discussion of the Sponsor's
obligations in the event of a failure of any contract for the purchase of any of
the Bonds and its limited right to substitute other bonds to replace any failed
contract, see "COMPOSITION OF TRUSTS."
Payment of interest on the Bonds in each Insured Trust, and of principal at
maturity, is guaranteed under policies of insurance obtained by the Sponsor or
by the issuers of the Bonds. (See "WHY AND HOW ARE THE BONDS INSURED?") AS A
GENERAL MATTER, NEITHER THE ISSUER NOR THE SPONSOR HAS OBTAINED INSURANCE WITH
RESPECT TO THE BONDS IN ANY TRADITIONAL TRUST.
The Trustee has delivered to the Sponsor registered Units which represent
ownership of the entire Trust, and which are offered for sale by this
Prospectus. Each Unit of a Trust represents a fractional undivided interest in
the principal and net income of such Trust in the ratio set forth in "Essential
Information" in Part A of this Prospectus. Units may only be sold in states in
which they are registered. To the extent that any Units of any Trust are
redeemed by the Trustee, the aggregate value of the Trust's assets will decrease
by the amount paid to the redeeming Unitholder, but the fractional undivided
interest of each unredeemed Unit in such Trust will increase proportionately.
The Sponsor will initially, and from time to time thereafter, hold Units in
connection with their offering.
WHAT ARE THE OBJECTIVES OF THE TRUSTS?
The objectives of the Trusts are income exempt from Federal income tax and, in
the case of State Trusts, where applicable, state income and intangibles taxes,
and conservation of capital, through an investment in obligations issued by or
on behalf of states and territories of the United States and authorities and
political subdivisions thereof, the interest on which is, in the opinion of
recognized bond counsel to the issuing governmental authorities, exempt from
Federal income tax under existing law and for State Trusts, from certain state
income taxes and intangibles taxes, if any, for purchasers who qualify as
residents of that State in which Bonds are issued. Insurance guaranteeing the
timely payment, when due, of all principal and interest on the Bonds in each
Insured Trust has been obtained by the Sponsor or by the issuers of such Bonds
from MBIA Insurance Corporation, and as a result of such insurance the Bonds in
the Insured Trusts are rated "Aaa" by Moody's, "AAA" by Fitch and/or "AAA" by
Standard & Poor's. (See "WHY AND HOW ARE THE BONDS INSURED?") All obligations in
each Traditional Trust are rated in the category "A" or better (SP-1, MIG 2 or
F-2 or better, respectively, in the case of short term obligations included in a
Short Term Traditional Trust) by Standard & Poor's, Moody's and/or Fitch
(including provisional or conditional ratings). In addition, certain Bonds in
certain Traditional Trusts may be covered by insurance guaranteeing the timely
payment, when due, of all principal and interest. There is, of course, no
guarantee that the Trusts' objectives will be achieved. For a comparison of net
after-tax return for various tax brackets, see the "TAXABLE EQUIVALENT ESTIMATED
CURRENT RETURN TABLES" included in the Appendices to the Information Supplement
of this Prospectus.
SUMMARY OF PORTFOLIOS
In selecting Bonds for the respective Trusts, the following factors, among
others, were considered: (i) the Standard & Poor's, Moody's and/or Fitch ratings
of the Bonds (see "WHAT ARE THE OBJECTIVES OF THE TRUSTS?" for a description of
minimum rating standards), (ii) the prices of the Bonds relative to other bonds
of comparable quality and maturity, (iii) the diversification of Bonds as to
purpose of issue and location of issuer, (iv) the maturity dates of the Bonds,
and (v) in the case of the Insured Trusts only, the availability of MBIA
Insurance Corporation insurance on such Bonds. (See "WHY AND HOW ARE THE BONDS
INSURED?")
4
<PAGE>
RISK FACTORS
An investment in Units of any Trust should be made with an understanding of the
risks that such an investment may entail. Each Trust consists of fixed-rate
municipal debt obligations. As such, the value of the debt obligations and
therefore of the Units will decline with increases in interest rates. In
general, the longer the period until the maturity of a Bond, the more sensitive
its value will be to fluctuations in interest rates. The Sponsor cannot predict
the extent or timing of such fluctuations and, accordingly, their effect upon
the value of the Bonds. Additional risk factors include the ability of the
issuer, or, if applicable, an insurer, to make payments of interest and
principal when due, "mandatory put" features, early call provisions and the
potential for changes in the tax status of the Bonds. As set forth in Part A of
this Prospectus, the Trusts may contain or be concentrated in one or more of the
types of bonds discussed below. The following paragraphs briefly discuss certain
circumstances which may adversely affect the ability of issuers of Bonds held in
the portfolio of a Trust to make payments of principal and interest thereon, and
which also therefore may adversely affect the ratings of such Bonds. With
respect to Insured Trusts, however, because of the insurance obtained by the
Sponsor or by the issuers of the Bonds, such changes should not adversely affect
an Insured Trust's receipt of principal and interest or the Standard & Poor's
"AAA", the Moody's "Aaa" or the Fitch "AAA" ratings of the Bonds in the Insured
Trust portfolio. The Bonds described below may be subject to special or
extraordinary redemption provisions. For economic risks specific to the
individual Trusts, see Part A of this Prospectus and the Appendices to the
Information Supplement of this Prospectus.
ESCROW SECURED OBLIGATIONS are typically secured by direct obligations of
the U.S. Government or in some cases obligations guaranteed by the U.S.
Government placed in an escrow account maintained by an independent trustee
until maturity or a predetermined redemption date. These obligations are
generally noncallable prior to maturity or the predetermined redemption date. In
a few isolated instances, however, bonds which were thought to be escrowed to
maturity have been called for redemption prior to maturity.
HEALTH CARE FACILITY OBLIGATIONS are obligations of issuers whose revenues
are derived from services provided by hospitals or other health care facilities,
including nursing homes. The ability of such issuers to make debt service
payments on these obligations is dependent on various factors, including
occupancy levels of the facility, demand for services, wages of employees,
overhead expenses, competition from other similar providers, government
regulation, the cost of malpractice insurance, and the degree of governmental
financial assistance, including Medicare and Medicaid.
HOUSING OBLIGATIONS are obligations of issuers whose revenues are primarily
derived from mortgage loans on single family residences or housing projects for
low to moderate income families. Housing obligations are generally prepayable at
any time and therefore their average life will ordinarily be less than their
stated maturities. The ability of such issuers to make debt service payments on
these obligations is dependent on various factors, including occupancy levels,
rental income, mortgage default rates, taxes, operating expenses, governmental
regulations and the appropriation of subsidies.
INDUSTRIAL REVENUE OBLIGATIONS are industrial revenue bonds ("IRBs"),
including pollution control revenue bonds, which are tax-exempt securities
issued by states, municipalities, public authorities or similar entities to
finance the cost of acquiring, constructing or improving various industrial
projects. Debt service payment on IRBs is dependent upon various factors,
including the creditworthiness of the corporate operator of the project and, if
applicable, corporate guarantor, revenues generated from the project, expenses
associated with the project and regulatory and environmental restrictions.
UTILITY OBLIGATIONS are obligations of issuers whose revenues are primarily
derived from the sale of several types of energy, including electric and natural
gas. The ability of such issuers to make debt service payments on these
obligations is dependent on various factors, including the rates for electricity
and natural gas, the demand for electricity and natural gas, the degree of
competition, governmental regulation, overhead expenses and variable costs, such
as fuel.
TRANSPORTATION FACILITY REVENUE OBLIGATIONS are obligations of issuers which
are payable from and secured by revenues derived from the ownership and
operation of airports, public transit systems and ports. The ability of issuers
to make debt service payments on airport obligations is dependent on the
capability of airlines to meet their obligations under use agreements. Due to
increased competition, deregulation, increased fuel costs and other factors,
many airlines may have difficulty meeting their obligations under these use
agreements. Bonds that are secured primarily by the revenue collected by a
public transit system typically are additionally secured by a pledge of sales
tax receipts collected at the state or local level, or of other governmental
financial assistance. The revenue of issuers of transit system obligations will
be affected by variations in utilization, which in turn may be affected by the
degree of local governmental subsidization, competition from other forms of
transportation, and increased costs. Port authorities derive their revenues
primarily from fees imposed on ships using the facilities which may fluctuate
depending on the local economy and on competition from competing forms of
transportation such as air, rail and trucks. The revenues of issuers which
derive their payments from bridge, road or tunnel toll revenues could
5
<PAGE>
be adversely affected by increases in fuel costs, competition from toll-free
vehicular bridges and roads and alternative modes of transportation.
WATER AND/OR SEWERAGE OBLIGATIONS are obligations of issuers whose revenues
are payable from user fees from the sale of water and/or sewerage services. The
problems of such issuers include the ability to obtain rate increases,
population declines, the limitations on operations and increased costs and
delays attributable to environmental considerations, the difficulties obtaining
new supplies of fresh water, the effect of conservation programs and "no-growth"
zoning ordinances.
UNIVERSITY AND COLLEGE REVENUE OBLIGATIONS are obligations of issuers whose
revenues are derived mainly from tuition, dormitory revenues, grants and
endowments. General problems faced by such issuers include declines in the
number of "college" age individuals, possible inability to raise tuitions and
fees, the uncertainty of continued receipt of Federal grants and state funding,
and government legislation or regulations which may adversely affect the
revenues or costs of such issuers.
DEDICATED-TAX SUPPORTED OBLIGATIONS are obligations of issuers which are
payable from and secured by tax revenues from a designated source, which
revenues are pledged to secure the bonds. The various types of Bonds described
below differ in structure and with respect to the rights of the bondholders to
the underlying property. Each type of dedicated-tax supported Bond has distinct
risks, only some of which are set forth below. One type of dedicated-tax
supported Bond is secured by the incremental tax received on either real
property or on sales within a specifically defined geographical area; such tax
generally will not provide bondholders with a lien on the underlying property or
revenues. Another type of dedicated-tax supported Bond is secured by a special
tax levied on real property within a defined geographical area in such a manner
that the tax is levied on those who benefit from the project; such bonds
typically provide for a statutory lien on the underlying property for unpaid
taxes. A third type of dedicated-tax supported Bond may be secured by a tax
levied upon the manufacture, sale or consumption of commodities or upon the
license to pursue certain occupations or upon corporate privileges within a
taxing jurisdiction. As to any of these types of Bonds, the ability of the
designated revenues to satisfy the interest and principal payments on such bonds
may be affected by changes in the local economy, the financial success of the
enterprise responsible for the payment of the taxes, the value of any property
on which taxes may be assessed and the ability to collect such taxes in a timely
fashion. Each of these factors will have a different affect on each distinct
type of dedicated-tax supported bonds.
MUNICIPAL LEASE OBLIGATIONS are obligations that are secured by lease
payments of a governmental entity and are normally subject to annual budget
appropriations of the leasing governmental entity. A governmental entity that
enters into such a lease agreement cannot obligate future governments to
appropriate for and make lease payments but covenants to take such action as is
necessary to include any lease payments due in its budgets and to make the
appropriations therefor. A governmental entity's failure to appropriate for and
to make payments under its lease obligation could result in insufficient funds
available for payment of the obligations secured thereby.
ORIGINAL ISSUE DISCOUNT OBLIGATIONS AND STRIPPED OBLIGATIONS are bonds which
were issued with nominal interest rates less than the rates then offered by
comparable securities and as a consequence were originally sold at a discount
from their face, or par, values. In a stable interest rate environment, the
market value of an original issue discount bond would tend to increase more
slowly in early years and in greater increments as the bond approached maturity.
Certain of the original issue discount obligations in a Trust may be zero
coupon bonds. Zero coupon bonds do not provide for the payment of any current
interest; the buyer receives only the right to receive a final payment of the
face amount of the bond at its maturity. Zero coupon bonds are subject to
substantially greater price fluctuations during periods of changing market
interest rates than are securities of comparable quality that pay interest
currently.
Original issue discount obligations, including zero coupon bonds, may be
subject to redemption at prices based on the issue price plus the amount of
original issue discount accreted to redemption (the "accreted value") plus, if
applicable, some premium. Pursuant to such call provisions, an original issue
discount bond may be called prior to its maturity date at a price less than its
face value. See the "Schedule of Investments" appearing in Part A of this
Prospectus for more information about the call provisions of portfolio Bonds.
Certain of the Bonds in a Trust may be stripped obligations, which represent
evidences of ownership with respect to either the principal amount of or a
payment of interest on a tax-exempt obligation ("Stripped Obligations"). Each
Stripped Obligation has been purchased at a discount from the amount payable at
maturity. A Stripped Obligation therefore has economic characteristics similar
to zero coupon bonds, as described above.
Unitholders should consult their own tax advisers with respect to the state
and local tax consequences of owning original issue discount bonds or Stripped
Obligations. Under applicable provisions governing determination of state and
local taxes, interest on original issue discount obligations or Stripped
Obligations may be deemed to be received in the year of accrual even though
there is no corresponding cash payment.
6
<PAGE>
Certain bonds may carry a "mandatory put" (also referred to as a "mandatory
tender" or "mandatory repurchase") feature pursuant to which the holder of such
bonds will receive payment of the full principal amount thereof on a stated date
prior to the maturity date unless such holder affirmatively acts to retain the
bond. The Trustee does not have the authority to act to retain Bonds with such
features; accordingly, it will receive payment of the full principal amount of
any such Bonds on the stated put date and such date is therefore treated as the
maturity date of such Bonds in selecting Bonds for the respective Trusts and for
purposes of calculating the average maturity of the Bonds in any Trust.
COMPOSITION OF TRUSTS
Each Trust initially consists of delivery statements relating to contracts to
purchase Bonds (or of such Bonds) as are listed under "Schedule of Investments"
in Part A of this Prospectus and, thereafter, of such Bonds as may continue to
be held from time to time (including certain securities deposited in the Trust
in substitution for Bonds not delivered to a Trust or in exchange or
substitution for Bonds upon certain refundings), together with accrued and
undistributed interest thereon and undistributed cash realized from the
disposition of Bonds.
"WHEN-ISSUED" AND "DELAYED DELIVERY" TRANSACTIONS. The contracts to
purchase Bonds delivered to the Trustee represent an obligation by issuers or
dealers to deliver Bonds to the Sponsor for deposit in the Trusts. Certain of
the contracts relate to Bonds which have not been issued as of the Date of
Deposit and which are commonly referred to as "when issued" or "when, as and if
issued" Bonds. Although the Sponsor believes it unlikely, if such Bonds, or
replacement bonds described below, are not acquired by a Trust or if their
delivery is delayed, the Estimated Current Returns and Estimated Long Term
Returns shown in Part A of this Prospectus may be reduced. Certain of the
contracts for the purchase of Bonds provide for delivery dates after the date of
settlement for purchases made on the Date of Deposit. Interest on such "when
issued" and "delayed delivery" Bonds accrues to the benefit of Unitholders
commencing with the first settlement date for the Units. However, in the opinion
of counsel, Unitholders who purchase their Units prior to the date such Bonds
are actually delivered to the Trustee must reduce the tax basis of their Units
for interest accruing on such Bonds during the interval between their purchase
of Units and the delivery of the Bonds because such amounts constitute a return
of principal. As a result of such adjustment, the Estimated Current Returns set
forth in Part A of this Prospectus (which are based on the Public Offering Price
as of the business day prior to the Date of Deposit) may be slightly lower than
that which Unitholders will receive after the first year, assuming the Portfolio
does not change and estimated annual expense does not vary from that set forth
under "Essential Information" in Part A of this Prospectus. Those Bonds in each
Trust purchased with delivery dates after the date of settlement for purchases
made on the Date of Deposit are so noted in the "Schedule of Investments" in
Part A of this Prospectus.
LIMITED REPLACEMENT OF CERTAIN BONDS. Neither the Sponsor nor the Trustee
shall be liable in any way for any default, failure or defect in any Bond. In
the event of a failure to deliver any Bond that has been purchased for a Trust
under a contract, including those Bonds purchased on a when, as and if issued
basis ("Failed Bonds"), the Sponsor is authorized under the Indenture to direct
the Trustee to acquire other specified Bonds ("Replacement Bonds") to make up
the original corpus of the Trust within 20 days after delivery of notice of the
failed contract and the cost to the Trust (exclusive of accrued interest) may
not exceed the amount of funds reserved for the purchase of the Failed Bonds.
The Replacement Bonds must satisfy the criteria previously described for the
Trusts and shall be substantially identical to the Failed Bonds they replace in
terms of (i) the exemption from federal and state taxation; (ii) maturity and;
(iii) cost to the Trust. In addition, Replacement Bonds shall not be "when, as
and if issued" Bonds. Whenever a Replacement Bond has been acquired for a Trust,
the Trustee shall, within five days after the delivery thereof, mail or deliver
a notice of such acquisition to all Unitholders of the Trust involved. Once the
original corpus of the Trust is acquired, the Trustee will have no power to vary
the investment of the Trust.
To the extent Replacement Bonds are not acquired, the Sponsor shall refund
to all Unitholders of the Trust involved the sales charge attributable to such
Failed Bonds not replaced, and the principal and accrued interest attributable
to such Bonds shall be distributed not more than 30 days after the determination
of such failure or at such earlier time as the Trustee in its sole discretion
deems to be in the interest of the Unitholders. Any such accrued interest paid
to Unitholders will be paid by the Sponsor and, accordingly, will not be treated
as tax-exempt income. In the event Failed Bonds in a Trust could not be
replaced, the Net Annual Interest Income per Unit for such Trust would be
reduced and the Estimated Current Return thereon might be lowered.
SALE, MATURITY AND REDEMPTION OF BONDS. Certain of the Bonds may from time
to time under certain circumstances be sold or redeemed or will mature in
accordance with their terms. The proceeds from such events will be used to pay
for Units redeemed or distributed to Unitholders and not reinvested;
accordingly, no assurance can be given that a Trust will retain for any length
of time its present size and composition.
All of the Bonds in each Trust are subject to being called or redeemed in
whole or in part prior to their stated maturities pursuant to the optional
redemption provisions described in the "Schedule of Investments" in Part A of
this Prospectus and in most cases pursuant to a sinking fund or special or
extraordinary redemption provisions. See
7
<PAGE>
the discussion of the various types of bond issues, above, for information on
the call provisions of such bonds, particularly single family mortgage revenue
bonds.
The exercise of redemption or call provisions will (except to the extent the
proceeds of the called Bonds are used to pay for Unit redemptions) result in the
distribution of principal and may result in a reduction in the amount of
subsequent interest distributions; it may also affect the current return on
Units of the Trust involved. The exercise of redemption or call provisions is
more likely to occur in situations where the Bonds have an offering side
evaluation which represents a premium over par (as opposed to a discount from
par). (In the case of original issue discount bonds, such redemption is
generally to be made at the issue price plus the amount of original issue
discount accreted to the date of redemption; such price is referred to herein as
"accreted value"). Because Bonds may have been valued at prices above or below
par value or the then current accreted value at the time Units were purchased,
Unitholders may realize gain or loss upon the redemption of portfolio Bonds.
(See "WHAT IS THE TAX STATUS OF UNITHOLDERS?" and "WHEN ARE DISTRIBUTIONS MADE
TO UNITHOLDERS?" in Part B and the "Schedule of Investments" in Part A of this
Prospectus.)
CERTAIN TAX MATTERS; LITIGATION. Certain of the Bonds in a Trust's
portfolio may be subject to continuing requirements regarding the actual use of
bond proceeds, the manner of operation of the project financed from bond
proceeds or the rebate of excess earnings on bond proceeds, any of which may
affect the exemption of interest on such Bonds from Federal income taxation.
Although at the time of issuance of each of the Bonds in each Trust an opinion
of bond counsel was rendered as to the exemption of interest on such obligations
from Federal income taxation, and the issuers covenanted to comply with all
requirements necessary to retain the tax-exempt status of the Bonds, there can
be no assurance that the respective issuers or other obligors on such
obligations will fulfill the various continuing requirements established upon
issuance of the Bonds. A failure to comply with such requirements may cause a
determination that interest on such obligations is subject to Federal income
taxation, perhaps even retroactively from the date of issuance of such Bonds,
thereby reducing the value of the Bonds and subjecting Unitholders to
unanticipated tax liabilities.
To the best knowledge of the Sponsor, there is no litigation pending as of
the Date of Deposit in respect of any Bonds which might reasonably be expected
to have a material adverse effect on any of the Trusts. It is possible that
after the Date of Deposit, litigation may be initiated with respect to Bonds in
any Trust. Any such litigation may affect the validity of such Bonds or the
tax-exempt nature of the interest thereon, but while the outcome of litigation
of such nature can never be entirely predicted, the opinions of bond counsel to
the issuer of each Bond on the date of issuance state that such Bonds were
validly issued and that the interest thereon is, to the extent indicated, exempt
from Federal income tax.
WHY AND HOW ARE THE BONDS INSURED?
Insurance guaranteeing the timely payment, when due, of all principal and
interest on the Bonds in each Insured Trust has been obtained by the Sponsor or
by the issuers or underwriters of the Bonds from the MBIA Insurance Corporation
(the "Insurer"). Certain of the Bonds in an Insured Trust may be covered by a
policy or policies of insurance obtained by the issuers or underwriters of the
Bonds from Municipal Bond Insurance Association (the "Association") or Bond
Investors Guaranty Insurance Company ("BIG"). The claims-paying ability of both
the Insurer and the Association was rated "AAA Prime Grade" by Standard &
Poor's. Moody's rates all bond issues insured by either the Insurer or the
Association "Aaa" and short-term loans "MIG 1." Fitch, upon request, rates all
bond issues insured by the Insurer or the Association "AAA" and short-term loans
"F-1." All such ratings designate the highest quality. The Insurer has issued a
policy or policies of insurance covering each of the Bonds in the Insured
Trusts, each policy to remain in force until the payment in full of such Bonds
and whether or not the Bonds continue to be held by an Insured Trust. By the
terms of each policy the Insurer will unconditionally guarantee to the holders
or owners of the Bonds the payment, when due, required of the issuer of the
Bonds of an amount equal to the principal of and interest on the Bonds as such
payments shall become due but not be paid (except that in the event of any
acceleration of the due date of principal by reason of mandatory or optional
redemption, default or otherwise, the payments guaranteed will be made in such
amounts and at such times as would have been due had there not been an
acceleration).
Insurance guaranteeing the timely payment, when due, of all principal and
interest on certain Bonds in a Traditional Trust may have been obtained by the
Sponsor, issuer or underwriter of the particular Bonds involved or by another
party. Such insurance, which provides coverage substantially the same as that
obtained with respect to Bonds in Insured Trusts as described above, is
effective so long as the insured Bond is outstanding and the insurer remains in
business. Insurance relates only to the particular Bond and not to the Units
offered hereby or to their market value. Insured Bonds have received a rating of
"Aaa" by Moody's, "AAA" by Fitch and/or "AAA" by Standard & Poor's in
recognition of such insurance.
If a Bond in a Traditional Trust is insured, the "Schedule of Investments"
appearing in Part A of this Prospectus will identify the insurer. There can be
no assurance that any insurer listed therein will be able to satisfy its
commitments in the event claims are made in the future. However, Standard &
Poor's, Fitch and/or Moody's have rated the claims-paying ability of each
insurer "AAA," "AAA" or "Aaa," respectively.
8
<PAGE>
The Insurer is the principal operating subsidiary of MBIA, Inc., a New York
Stock Exchange listed company. MBIA, Inc. is not obligated to pay the debts of
or claims against the Insurer. The Insurer is domiciled in the State of New York
and licensed to do business in and subject to regulation under the laws of all
50 states, the District of Columbia, the Commonwealth of Puerto Rico, the
Commonwealth of the Northern Mariana Islands, the Virgin Islands of the United
States and the Territory of Guam. The Insurer has two European branches, one in
the Republic of France and the other in the Kingdom of Spain. New York has laws
prescribing minimum capital requirements, limiting classes and concentrations of
investments and requiring the approval of policy rates and forms. State laws
also regulate the amount of both the aggregate and individual risks that may be
insured, the payment of dividends by the insurer, changes in control and
transactions among affiliates. Additionally, the Insurer is required to maintain
contingency reserves on its liabilities in certain amounts and for certain
periods of time.
As of December 31, 1995 the Insurer had admitted assets of $3.8 billion
(audited), total liabilities of $2.5 billion (audited), and total capital and
surplus of $1.3 billion (audited) determined in accordance with statutory
accounting practices prescribed or permitted by insurance regulatory
authorities. As of September 30, 1996, the Insurer had admitted assets of $4.3
billion (unaudited), total liabilities of $2.9 billion (unaudited), and total
capital and surplus of $1.4 billion (unaudited) determined in accordance with
statutory accounting practices prescribed or permitted by insurance regulatory
authorities.
The Association is comprised of the five insurance companies set forth in
the following table, which provides certain unaudited financial information with
respect to each of the five insurance companies comprising the Association.
MUNICIPAL BOND INSURANCE ASSOCIATION
FIVE MEMBER COMPANIES ASSETS AND POLICYHOLDERS' SURPLUS (UNAUDITED)
AS OF MARCH 31, 1995.
(000'S OMITTED)
<TABLE>
<CAPTION>
NEW YORK NEW YORK NEW YORK
STATUTORY STATUTORY POLICYHOLDERS
ASSETS LIABILITIES SURPLUS
------------ ------------ --------------
<S> <C> <C> <C>
The AEtna Casualty & Surety Company........................................ $ 10,225,604 $ 8,312,158 $ 1,913,446
Fireman's Fund Insurance Company........................................... 7,126,217 5,116,059 2,010,158
The Travelers Indemnity Company............................................ 10,461,356 8,654,130 1,807,226
CIGNA Property and Casualty Company (formerly Aetna Insurance Company)..... 4,260,177 3,637,513 622,664
The Continental Insurance Company.......................................... 3,060,583 2,380,723 679,860
------------ ------------ --------------
Total.............................................................. $ 35,133,937 $ 28,100,583 $ 7,033,354
------------ ------------ --------------
------------ ------------ --------------
</TABLE>
Insurance companies are subject to extensive regulation and supervision
where they do business by state insurance commissioners who regulate the
standards of solvency which must be maintained, the nature of and limitations on
investments, reports of financial condition, and requirements regarding reserves
for unearned premiums, losses and other matters. A significant portion of the
assets of insurance companies is required by law to be held in reserve against
potential claims on policies and is not available to general creditors. Although
the federal government does not regulate the business of insurance, federal
initiatives including pension regulation, controls on medical care costs,
minimum standards for no-fault automobile insurance, national health insurance,
tax law changes affecting life insurance companies and repeal of the antitrust
exemption for the insurance business can significantly impact the insurance
business.
The above ratings are not recommendations to buy, sell or hold the Bonds,
and such ratings may be subject to revision or withdrawal at any time by the
rating agencies. Any downward revision or withdrawal of either or both ratings
may have an adverse effect on the market price of the Bonds. See the Information
Supplement--for further information concerning insurance.
Because the insurance on the Bonds, if any, will be effective so long as the
Bonds are outstanding, such insurance will be taken into account in determining
the market value of the Bonds and therefore some value attributable to such
insurance will be included in the value of the Units of the Insured Trusts. The
insurance does not, however, guarantee the market value of the Bonds or of the
Units.
HOW IS THE PUBLIC OFFERING PRICE DETERMINED?
The Public Offering Price of the Units of each Trust is equal to the Trustee's
determination of the aggregate OFFERING prices of the Bonds deposited therein
(minus any advancement to the principal account of the Trust made by the
Trustee) plus a sales charge set forth in "Essential Information" in Part A of
this Prospectus, in each case adding to the total thereof cash held by the
Trust, if any, and dividing the sum so obtained by the number of Units
outstanding in the Trust. See "UNIT VALUE AND EVALUATION."
The sales charge applicable to quantity purchases is reduced on a graduated
scale for sales to any purchaser of at least $50,000 or 500 Units and will be
applied on whichever basis is more favorable to the purchaser. For purposes of
9
<PAGE>
calculating the applicable sales charge, purchasers who have indicated their
intent to purchase a specified amount of Units of any Trust in the primary or
secondary offering period by executing and delivering a letter of intent to the
Sponsor, which letter of intent must be in a form acceptable to the Sponsor and
shall have a maximum duration of thirteen months, will be eligible to receive a
reduced sales charge according to the following tables based on the amount of
intended aggregate purchases as expressed in the letter of intent. Due to
administrative limitations and in order to permit adequate tracking, the only
secondary market purchases that will be permitted to be applied toward the
intended specified amount and that will receive the corresponding reduced sales
charge are those Units that are acquired through or from the Sponsor. By
establishing a letter of intent, a Unitholder agrees that the first purchase of
Units following the execution of such letter of intent will be at least 5% of
the total amount of the intended aggregate purchases expressed in such
Unitholder's letter of intent. Further, through the establishment of the letter
of intent, such Unitholder agrees that Units representing 5% of the total amount
of the intended purchases will be held in escrow by the Trustee pending
completion of these purchases. All distributions on Units held in escrow will be
credited to such Unitholder's account. If total purchases prior to the
expiration of the letter of intent period equal or exceed the amount specified
in a Unitholder's letter of intent, the Units held in escrow will be transferred
to such Unitholder's account. A Unitholder who purchases Units during the letter
of intent period in excess of the number of Units specified in a Unitholder's
letter of intent, the amount of which would cause the Unitholder to be eligible
to receive an additional sales charge reduction, will be allowed such additional
sales charge reduction on the purchase of Units which caused the Unitholder to
reach such new breakpoint level and on all additional purchases of Units during
the letter of intent period. If the total purchases are less than the amount
specified, the Unitholder involved must pay the Sponsor an amount equal to the
difference between the amounts paid for these purchases and the amounts which
would have been paid if the higher sales charge had been applied; the Unitholder
will, however, be entitled to any reduced sales charge qualified for by reaching
any lower breakpoint level. If such Unitholder does not pay the additional
amount within 20 days after written request by the Sponsor or the Unitholder's
securities representative, the Sponsor will instruct the Trustee to redeem an
appropriate number of the escrowed Units to meet the required payment. By
establishing a letter of intent, a Unitholder irrevocably appoints the Sponsor
as attorney to give instructions to redeem any or all of such Unitholder's
escrowed Units, with full power of substitution in the premises. A Unitholder or
his securities representative must notify the Sponsor whenever such Unitholder
makes a purchase of Units that he wishes to be counted towards the intended
amount. Sales charges during the primary offering period are as follows:
<TABLE>
<CAPTION>
NATIONAL AND
STATE
NATIONAL AND STATE LONG TERM LONG INTERMEDIATE TRUSTS INTERMEDIATE
TRUSTS TRUSTS
----------------------------- ----------------------------- ------------
<S> <C> <C> <C> <C> <C>
PERCENT PERCENT PERCENT PERCENT PERCENT
OF OF NET OF OF NET OF
OFFERING AMOUNT OFFERING AMOUNT OFFERING
NUMBER OF UNITS* PRICE INVESTED PRICE INVESTED PRICE
- ---------------------------------------- ------------ ------------ ------------ ------------ ------------
Less than 500........................... 4.90 % 5.152% 4.25 % 4.439% 3.90%
500 but less than 1,000................. 4.75 4.987 4.15 4.330 3.70
1,000 but less than 2,500............... 4.50 4.712 3.85 4.004 3.50
2,500 but less than 5,000............... 4.25 4.439 3.60 3.734 3.25
5,000 but less than 10,000.............. 3.50 3.627 3.35 3.466 3.00
10,000 but less than 25,000............. 3.00 3.093 3.00 3.093 2.75
25,000 but less than 50,000............. 2.50 2.564 2.50 2.564 2.50
50,000 or more.......................... 2.00 2.041 2.00 2.041 2.00
<CAPTION>
<S> <C>
PERCENT
OF NET
AMOUNT
NUMBER OF UNITS* INVESTED
- ---------------------------------------- ------------
Less than 500........................... 4.058%
500 but less than 1,000................. 3.842
1,000 but less than 2,500............... 3.627
2,500 but less than 5,000............... 3.359
5,000 but less than 10,000.............. 3.093
10,000 but less than 25,000............. 2.828
25,000 but less than 50,000............. 2.564
50,000 or more.......................... 2.041
</TABLE>
<TABLE>
<CAPTION>
NATIONAL AND STATE SHORT
INTERMEDIATE TRUSTS SHORT TERM TRUSTS
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
PERCENT PERCENT PERCENT PERCENT
OF OF NET OF OF NET
OFFERING AMOUNT OFFERING AMOUNT
NUMBER OF UNITS* PRICE INVESTED PRICE INVESTED
- ---------------------------------------- ------------ ------------ ------------ ------------
Less than 500........................... 3.00 % 3.093% 2.50 % 2.564%
500 but less than 1,000................. 2.80 2.881 2.30 2.354
1,000 but less than 2,500............... 2.60 2.670 2.10 2.145
2,500 but less than 5,000............... 2.35 2.407 1.85 1.885
5,000 but less than 10,000.............. 2.10 2.145 1.60 1.626
10,000 but less than 25,000............. 1.85 1.885 1.35 1.368
25,000 but less than 50,000............. 1.80 1.833 1.25 1.266
50,000 or more.......................... 1.50 1.523 1.15 1.163
</TABLE>
*Breakpoint sales charges are computed both on a dollar basis and on the basis
of the number of Units purchased, using the equivalent of 500 Units to $50,000,
2,500 Units to $250,000 etc., and will be applied on that basis which is more
favorable to the purchaser.
For "secondary market" sales the Public Offering Price per Unit of each
Trust is determined by adding to the Trustee's determination of the BID price of
each Bond in the Trust a sales charge determined in accordance with the table
set forth below based upon the number of years remaining to the maturity of each
such Bond. See "UNIT VALUE AND EVALUATION." The effect of this method of sales
charge calculation will be that different sales charge rates will be applied to
the various Bonds in a Trust portfolio based upon the maturities of such Bonds.
As shown, the
10
<PAGE>
sales charge on Bonds in each maturity range (and therefore the aggregate sales
charge on the purchase) is reduced with respect to purchases of at least $50,000
or 500 Units:
<TABLE>
<CAPTION>
AMOUNT OF PURCHASE*
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$50,000 $100,000 $250,000 $500,000 $1,000,000 $2,500,000
UNDER TO TO TO TO TO TO $5,000,000
YEARS TO MATURITY $50,000 $99,999 $249,999 $499,999 $999,999 $2,499,999 $4,999,999 OR MORE
- ---------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Less than 1................... 0 0 0 0 0 0 0 0
1 but less than 2............. 1.523 % 1.446 % 1.369 % 1.317 % 1.215 % 1.061 % .900 % .750 %
2 but less than 3............. 2.041 1.937 1.833 1.729 1.626 1.420 1.225 1.030
3 but less than 4............. 2.564 2.433 2.302 2.175 2.041 1.781 1.546 1.310
4 but less than 5............. 3.093 2.961 2.828 2.617 2.459 2.175 1.883 1.590
5 but less than 7............. 3.627 3.433 3.239 3.093 2.881 2.460 2.165 1.870
7 but less than 10............ 4.167 3.951 3.734 3.520 3.239 2.828 2.489 2.150
10 but less than 13........... 4.712 4.467 4.221 4.004 3.788 3.253 2.842 2.430
13 but less than 16........... 5.263 4.988 4.712 4.439 4.167 3.627 3.169 2.710
16 or more.................... 5.820 5.542 5.263 4.987 4.603 4.004 3.500 3.000
</TABLE>
*Breakpoint sales charges are computed both on a dollar basis and on the basis
of the number of Units purchased, using the equivalent of 500 Units to
$50,000, 2,500 Units to $250,000, etc., and will be applied on that basis
which is more favorable to the purchaser.
The secondary market sales charges above are expressed as a percent of the
net amount invested; expressed as a percent of the Public Offering Price, the
maximum sales charge on a Trust, for instance one consisting entirely of Bonds
with 16 years or more to maturity, would be 5.50% (5.820% of the net amount
invested). The actual secondary market sales charge included in the Public
Offering Price of any particular Trust will depend on the maturities of the
Bonds in the portfolio of such Trust.
Pursuant to the terms of the Indenture, the Trustee may terminate a Trust if
the net asset value of such Trust, as shown by any evaluation, is less than 20%
of the original principal amount of the Trust.
At all times while Units are being offered for sale, the Sponsor will
appraise or cause to be appraised daily the value of the underlying Bonds in
each Trust as of 4:00 p.m. eastern time, or as of any earlier closing time on a
day on which the New York Stock Exchange (the "Exchange") is scheduled in
advance to close at such earlier time and will adjust the Public Offering Price
of the Units commensurate with such appraisal. Such Public Offering Price will
be effective for all orders received by a dealer or the Sponsor at or prior to
4:00 p.m. eastern time on each such day or as of any earlier closing time on a
day on which the Exchange is scheduled in advance to close at such earlier time.
Orders received after that time, or on a day when the Exchange is closed for a
scheduled holiday or weekend, will be held until the next determination of
price.
Accrued interest from the preceding Record Date to, but not including, the
settlement date of the transaction (three business days after purchase) will be
added to the Public Offering Price to determine the purchase price of Units. See
"WHAT IS ACCRUED INTEREST?"
The graduated sales charges set forth above will apply on all applicable
purchases of Nuveen investment company securities on any one day by the same
purchaser in the amounts stated, and for this purpose purchases of this Series
will be aggregated with concurrent purchases of any other Series or of shares of
any open-end management investment company of which the Sponsor is principal
underwriter and with respect to the purchase of which a sales charge is imposed.
Purchases by or for the account of an individual and his or her spouse and
children under 21 years of age ("immediate family members") will be aggregated
to determine the applicable sales charge. The graduated sales charges are also
applicable to a trustee or other fiduciary purchasing securities for a single
trust estate or single fiduciary account. Units may be purchased at the Public
Offering Price without a sales charge by officers or directors and by bona fide,
full-time employees of Nuveen, Nuveen Advisory Corp., Nuveen Institutional
Advisory Corp. and The John Nuveen Company, including in each case these
individuals and their immediate family members (as defined above).
Units may be purchased in the primary market with sales charges of 1.70% of
the Public Offering Price for National and State Long Term Trusts, 1.35% of the
Public Offering Price for Long Intermediate Trusts, 1.20% of the Public Offering
Price for National and State Intermediate Trusts, 1.0% of the Public Offering
Price for National and State Short Intermediate Trusts and 1.0% of the Public
Offering Price for Short Term Trusts by (1) investors who purchase Units through
registered investment advisers, certified financial planners and registered
broker-dealers who in each case either charge periodic fees for financial
planning, investment advisory or asset management services, or provide such
services in connection with the establishment of an investment account for which
a comprehensive "wrap fee" charge is imposed, (2) bank trust departments
investing funds over which they exercise exclusive discretionary investment
authority and that are held in a fiduciary, agency, custodial or similar
capacity, (3) any person who for at least 90 days, has been an officer, director
or bona fide employee of any firm offering Units for sale to investors or their
immediate family members (as defined above) and (4) officers and directors of
bank holding companies that make Units available directly or through
subsidiaries or bank affiliates (collectively, the "Discounted Purchases"). In
addition, such investors may purchase Units in the secondary market at the
Public Offering Price for non-breakpoint purchases minus the concession the
Sponsor typically allows to brokers and dealers for
11
<PAGE>
non-breakpoint purchases. Notwithstanding anything to the contrary in this
Prospectus, investors who purchase Units as described in this paragraph will not
receive sales charge reductions for quantity purchases.
The initial or primary Public Offering Price of the Units in each Trust is
based upon a pro rata share of the OFFERING prices per Unit of the Bonds in such
Trust plus the applicable sales charge. The secondary market Public Offering
Price of each Trust is based upon a pro rata share of the BID prices per Unit of
the Bonds in such Trust plus the applicable sales charge. The OFFERING prices of
Bonds in a Trust may be expected to average between 1/2% to 2% more than the BID
prices of such Bonds. The difference between the bid side evaluation and the
offering side evaluation of the Bonds in each Trust on the business day prior to
the Date of Deposit is shown in the discussion of each Trust portfolio.
Whether or not Units are being offered for sale, the Sponsor will determine
the aggregate value of each Trust as of 4:00 p.m. eastern time: (i) on each June
30 or December 31 (or, if such date is not a business day, the last business day
prior thereto), (ii) on any day on which a Unit is tendered for redemption (or
the next succeeding business day if the date of tender is a non-business day)
and (iii) at such other times as may be necessary. For this purpose, a "business
day" shall be any day on which the Exchange is normally open. (See "UNIT VALUE
AND EVALUATION.")
MARKET FOR UNITS
During the initial public offering period, the Sponsor intends to offer to
purchase Units of each Trust at a price equivalent to the pro rata share per
Unit of the OFFERING prices of the Bonds in such Trust (plus accrued interest).
Afterward, although it is not obligated to do so, the Sponsor intends to
maintain a secondary market for Units of each Trust at its own expense and
continuously to offer to purchase Units of each Trust at prices, subject to
change at any time, which are based upon the BID prices of Bonds in the
respective portfolios of the Trusts. UNITHOLDERS WHO WISH TO DISPOSE OF THEIR
UNITS SHOULD INQUIRE OF THE TRUSTEE OR THEIR BROKER AS TO THE CURRENT REDEMPTION
PRICE. (See "HOW UNITS MAY BE REDEEMED WITHOUT CHARGE?") In connection with its
secondary marketmaking activities, the Sponsor may from time to time enter into
secondary market joint account agreements with other brokers and dealers.
Pursuant to such an agreement, the Sponsor will purchase Units from the broker
or dealer at the bid price and will place the Units into a joint account managed
by the Sponsor; sales from the account will be made in accordance with the then
current prospectus and the Sponsor and the broker or dealer will share profits
and losses in the joint account in accordance with the terms of their joint
account agreement.
Certificates, if any, for Units are delivered to the purchaser as promptly
after the date of settlement (three business days after purchase) as the Trustee
can complete the mechanics of registration, normally within 48 hours after
registration instructions are received. Purchasers of Units to whom Certificates
are issued will be unable to exercise any right of redemption until they have
received their Certificates, properly endorsed for transfer. (See "HOW UNITS MAY
BE REDEEMED WITHOUT CHARGE?")
WHAT IS ACCRUED INTEREST?
Accrued interest is the accumulation of unpaid interest on a bond from the last
day on which interest thereon was paid. Interest on Bonds in each Trust is
accounted for daily on an accrual basis. For this reason, the purchase price of
Units of a Trust will include not only the Public Offering Price but also the
proportionate share of accrued interest to the date of settlement. Accrued
interest does not include accrual of original issue discount on zero coupon
bonds, Stripped Obligations or other original issue discount bonds. Interest
accrues to the benefit of Unitholders commencing with the settlement date of
their purchase transaction.
In an effort to reduce the amount of accrued interest that investors would
have to pay in addition to the Public Offering Price, the Trustee has agreed to
advance to each Trust the amount of accrued interest due on the Bonds as of the
Date of Deposit (which has been designated the first Record Date for all plans
of distribution). This accrued interest will be paid to the Sponsor as the
holder of record of all Units on the Date of Deposit. Consequently, the amount
of accrued interest to be added to the Public Offering Price of Units will
include only accrued interest from the Date of Deposit to, but not including,
the date of settlement of the investor's purchase (three business days after
purchase), less any distributions from the related Interest Account. The Trustee
will recover its advancements (without interest or other cost to the Trusts)
from interest received on the Bonds deposited in each Trust.
The Trustee has no cash for distribution to Unitholders until it receives
interest payments on the Bonds in the Trusts. Since municipal bond interest is
accrued daily but paid only semi-annually, during the initial months of the
Trusts, the Interest Accounts, consisting of accrued but uncollected interest
and collected interest (cash), will be predominantly the uncollected accrued
interest that is not available for distribution. However, due to advances by the
Trustee, the Trustee will provide a first distribution between approximately 30
and 60 days after the Date of Deposit. Assuming each Trust retains its original
size and composition and expenses and fees remain the same, annual interest
collected and distributed will approximate the estimated Net Annual Interest
Income stated herein. However, the amount of accrued interest at any point in
time will be greater than the amount that the Trustee will have actually
received and distributed to the Unitholders. Therefore, there will always remain
an item of accrued interest that is included in the Purchase Price and the
redemption price of the Units.
12
<PAGE>
Interest is accounted for daily and a proportionate share of accrued and
undistributed interest computed from the preceding Record Date is added to the
daily valuation of each Unit of each Trust. (See Part A of this Prospectus and
"WHEN ARE DISTRIBUTIONS MADE TO UNITHOLDERS?") As Bonds mature, or are redeemed
or sold, the accrued interest applicable to such bonds is collected and
subsequently distributed to Unitholders. Unitholders who sell or redeem all or a
portion of their Units will be paid their proportionate share of the remaining
accrued interest to, but not including, the third business day following the
date of sale or tender.
WHAT ARE ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN?
The Estimated Long Term Return for each Trust is a measure of the return to the
investor expected to be earned over the estimated life of the Trust. The
Estimated Long Term Return represents an average of the yields to maturity (or
call) of the Bonds in the Trust's portfolio calculated in accordance with
accepted bond practice and adjusted to reflect expenses and sales charges. Under
accepted bond practice, tax-exempt bonds are customarily offered to investors on
a "yield price" basis, which involves computation of yield to maturity or to an
earlier call date (whichever produces the lower yield), and which takes into
account not only the interest payable on the bonds but also the amortization or
accretion of any premium over, or discount from, the par (maturity) value
inherent in the bond's purchase price. In the calculation of Estimated Long Term
Return, the average yield for a Trust's portfolio is derived by weighting each
Bond's yield by the market value of the Bond and by the amount of time remaining
to the date to which the Bond is priced. This weighted average yield is then
adjusted to reflect estimated expenses, is compounded, and is reduced by a
factor which represents the amortization of the sales charge over the expected
average life of a Trust. The Estimated Long Term Return calculation does not
take into account the effect of a first distribution which may be less than a
regular distribution or may be paid at some point after 30 days (or a second
distribution which may be less than a normal distribution for Unitholders who
choose quarterly or semi-annual plans of distribution), and it also does not
take into account the difference in timing of payments to Unitholders who choose
quarterly or semi-annual plans of distribution, each of which will reduce the
return.
Estimated Current Return is computed by dividing the Net Annual Interest
Income per Unit by the Public Offering Price. In contrast to Estimated Long Term
Return, Estimated Current Return does not reflect the amortization of premium or
accretion of discount, if any, on the Bonds in a Trust's portfolio. Net Annual
Interest Income per Unit is calculated by dividing the annual interest income to
a Trust, less estimated expenses, by the number of Units outstanding.
Net Annual Interest Income per Unit, used to calculate Estimated Current
Return, will vary with changes in fees and expenses of the Trustee and the
Evaluator and with the redemption, maturity, exchange or sale of Bonds. A
Unitholder's actual return may vary significantly from the Estimated Long-Term
Return, based on their holding period, market interest rate changes, other
factors affecting the prices of individual bonds in the portfolio, and
differences between the expected remaining life of portfolio bonds and the
actual length of time that they remain in a Trust; such actual holding periods
may be reduced by termination of a Trust, as described in "OTHER INFORMATION."
Since both the Estimated Current Return and the Estimated Long Term Return
quoted herein are based on the market value of the underlying Bonds on the
business day prior to the Date of Deposit, subsequent calculations of these
performance measures will reflect the then current market value of the
underlying Bonds and may be higher or lower. The Sponsor will provide estimated
cash flow information relating to a Trust without charge to each potential
investor in a Trust who receives this prospectus and makes an oral or written
request to the Sponsor for such information.
A portion of the monies received by a Trust may be treated, in the first
year only, as a return of principal due to the inclusion in the Trust portfolio
of "when-issued" or other Bonds having delivery dates after the date of
settlement for purchases made on the Date of Deposit. A consequence of this
treatment is that in the computation of Estimated Current Return for the first
year, such monies are excluded from Net Annual Interest Income and treated as an
adjustment to the Public Offering Price. (See "Essential Information" appearing
in Part A of this Prospectus, "COMPOSITION OF TRUSTS" and "WHAT IS THE TAX
STATUS OF UNITHOLDERS?")
A comparison of tax-free and equivalent taxable estimated current returns
with the returns on various taxable investments is one element to consider in
making an investment decision. The Sponsor may from time to time in its
advertising and sales materials compare the then current estimated returns on a
Trust and returns over specified periods on other similar Nuveen Trusts with
returns on taxable investments such as corporate or U.S. Government bonds, bank
CD's and money market accounts or money market funds, each of which has
investment characteristics that may differ from those of the Trust. U.S.
Government bonds, for example, are backed by the full faith and credit of the
U.S. Government and bank CD's and money market accounts are insured by an agency
of the federal government. Money market accounts and money market funds provide
stability of principal, but pay interest at rates that vary with the condition
of the short-term debt market. The investment characteristics of the Trusts are
described more fully elsewhere in the Prospectus.
HOW WAS THE PRICE OF THE BONDS DETERMINED AT THE DATE OF DEPOSIT?
The prices at which the Bonds deposited in the Trusts would have been offered to
the public on the business day prior to the Date of Deposit were determined by
the Trustee on the basis of an evaluation of such Bonds prepared by
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Kenny S&P Evaluation Services, a division of J. J. Kenny Co., Inc. ("Kenny
S&P"), a firm regularly engaged in the business of evaluating, quoting or
appraising comparable bonds. With respect to Bonds in Insured Trusts and insured
Bonds in Traditional Trusts, Kenny S&P evaluated the Bonds as so insured. (See
"WHY AND HOW ARE THE BONDS INSURED?")
The amount by which the Trustee's determination of the OFFERING PRICES of
the Bonds deposited in the Trusts was greater or less than the cost of such
Bonds to the Sponsor was PROFIT OR LOSS to the Sponsor exclusive of any
underwriting profit. (See Part A of this Prospectus.) The Sponsor also may
realize FURTHER PROFIT OR SUSTAIN FURTHER LOSS as a result of fluctuations in
the Public Offering Price of the Units. Cash, if any, made available to the
Sponsor prior to the settlement date for a purchase of Units, or prior to the
acquisition of all Portfolio securities by a Trust, may be available for use in
the Sponsor's business, and may be of benefit to the Sponsor.
WHAT IS THE TAX STATUS OF UNITHOLDERS?
At the respective times of issuance of the Bonds, opinions relating to the
validity thereof and to the exclusion of interest thereon from Federal gross
income were rendered by bond counsel to the respective issuing authorities. In
addition, with respect to State Trusts, where applicable, bond counsel to the
issuing authorities rendered opinions as to the exemption of interest on such
Bonds, when held by residents of the state in which the issuers of such Bonds
are located, from state income taxes and certain state or local intangibles and
local income taxes. For a discussion of the tax status of State Trusts, see Part
A of this Prospectus. Neither the Sponsor nor Chapman and Cutler has made any
special review for the Trusts of the proceedings relating to the issuance of the
Bonds or of the basis for the opinions rendered in connection therewith. If the
interest on a Bond should be determined to be taxable, the Bond would generally
have to be sold at a substantial discount. In addition, investors could be
required to pay income tax on interest received prior to the date of which
interest is determined to be taxable.
Federally tax-exempt income, including income on Units of the Trusts, will
be taken into consideration in computing the portion, if any, of social security
benefits received that will be included in a taxpayer's gross income subject to
the Federal income tax.
Gain realized on the sale or redemption of the Bonds by the Trustee or of a
Unit by a Unitholder is includable in gross income for Federal income tax
purposes, and may be includable in gross income for state tax purposes. (Such
gain does not include any amounts received in respect of tax-exempt accrued
interest or accrued original issue discount, if any.) Sections 1288 and 1272 of
the Internal Revenue Code of 1986, as amended (the "Code") provide a complex set
of rules governing the accrual of original issue discount. These rules provide
that original issue discount accrues either on the basis of a constant compound
interest rate or ratably over the term of the Bond, depending on the date the
Bond was issued. In addition, special rules apply if the purchase price of a
Bond exceeds the original issue price plus the amount of original issue discount
which would have previously accrued based upon its issue price (its "adjusted
issue price") to prior owners. If a Bond is acquired with accrued interest, that
portion of the price paid for the accrued interest is added to the tax basis of
the Bond. When this accrued interest is received, it is treated as a return of
capital and reduces the tax basis of the Bond. If a Bond is purchased for a
premium, the amount of the premium is added to the tax basis of the Bond. Bond
premium is amortized over the remaining term of the Bond, and the tax basis of
the Bond is reduced each tax year by the amount of the premium amortized in that
tax year. The application of these rules will also vary depending on the value
of the Bond on the date a Unitholder acquires his Units and the price the
Unitholder pays for his Units. Unitholders should consult with their tax
advisers regarding these rules and their application.
The "Revenue Reconciliation Act of 1993" (the "Tax Act") subjects tax-exempt
bonds to the market discount rules of the Code, effective for bonds purchased
after April 30, 1993. In general, market discount is the amount (if any) by
which the stated redemption price at maturity exceeds an investor's purchase
price (except to the extent that such difference, if any, is attributable to
original issue discount not yet accrued), subject to a statutory DE MINIMIS
rule. Market discount can arise based on the price the Trust pays for the Bonds
or the price a Unitholder pays for his or her Units. Under the Tax Act,
accretion of market discount is taxable as ordinary income; under prior law, the
accretion had been treated as capital gain. Market discount that accretes while
the Trust holds a Bond would be recognized as ordinary income by the Unitholders
when principal payments are received on the Bond, upon sale or at redemption
(including early redemption), or upon the sale or redemption of his or her
Units, unless a Unitholder elects to include market discount in taxable income
as it accrues. The market discount rules are complex and Unitholders should
consult their tax advisors regarding these rules and their application.
In the opinion of Chapman and Cutler, Counsel to the Sponsor, under existing
law:
(1) the Trusts are not associations taxable as corporations for Federal
income tax purposes, and interest and accrued original issue discount on
Bonds which is excludable from gross income under the Code will retain
its status when distributed to the Unitholders; however such interest
may be taken into account in computing the alternative minimum tax, an
additional tax on branches of foreign corporations and the environmental
tax (the "Superfund Tax"). See "CERTAIN TAX MATTERS APPLICABLE TO
CORPORATE UNITHOLDERS", below;
(2) each Unitholder of a Trust is considered to be the owner of a pro rata
portion of such Trust under Subpart E, subchapter J of Chapter 1 of the
Code and will have a taxable event when the Trust disposes of a Bond or
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when the Unitholder redeems or sells Units. Unitholders must reduce the
tax basis of their Units for their share of accrued interest received by
the Trust, if any, on Bonds delivered after the Unitholders pay for
their Units to the extent that such interest accrued on such Bonds
before the date the Trust acquired ownership of the Bonds (and the
amount of this reduction may exceed the amount of accrued interest paid
to the seller) during the period from the Unitholders settlement date to
the date such Bonds are delivered to the respective Trusts and,
consequently, such Unitholders may have an increase in taxable gain or
reduction in capital loss upon the disposition of such Units. Gain or
loss upon the sale or redemption of Units is measured by comparing the
proceeds of such sale or redemption with the adjusted basis of the
Units. If the Trustee disposes of Bonds (whether by sale, payment at
maturity, redemption or otherwise), gain or loss is recognized to the
Unitholder. The amount of any such gain or loss is measured by comparing
the Unitholder's pro rata share of the total proceeds from such
disposition with the Unitholder's basis for his or her fractional
interest in the asset disposed of. In the case of a Unitholder who
purchases Units, such basis (before adjustment for earned original issue
discount and amortized bond premium, if any) is determined by
apportioning the cost of the Units among each of the Trust assets
ratably according to value as of the valuation date nearest the date of
acquisition of the Units. The tax basis reduction requirements of said
Code relating to amortization of bond premium may, under some
circumstances, result in the Unitholder realizing a taxable gain when
his or her Units are sold or redeemed for an amount less than or equal
to their original cost; and
(3) any amounts paid on defaulted Bonds held by the Trustee under policies
of insurance issued with respect to such Bonds will be excludable from
Federal gross income if, and to the same extent as, such interest would
have been so excludable if paid in the normal course by the issuer of
the defaulted Bonds provided that, at the time such policies are
purchased, the amounts paid for such policies are reasonable, customary
and consistent with the reasonable expectation that the issuer of the
Bonds, rather than the insurer, will pay debt service on the Bonds.
Paragraph (2) of this opinion is accordingly applicable to policy
proceeds representing maturing interest.
In the opinion of Carter, Ledyard & Milburn, counsel to the Trustee, and, in the
absence of a New York Trust from the Series, special counsel for the Series for
New York tax matters, under existing law:
Under the income tax laws of the State and City of New York, each Trust
is not an association taxable as a corporation and the income of each Trust
will be treated as the income of the Unitholders.
For a summary of each opinion of special counsel to the respective State
Trusts for state tax matters, see Part A of this Prospectus.
ALL STATEMENTS IN THE PROSPECTUS CONCERNING EXCLUSION FROM GROSS INCOME FOR
FEDERAL, STATE OR OTHER TAX PURPOSES ARE THE OPINION OF COUNSEL AND ARE TO BE SO
CONSTRUED.
Counsel for the Sponsor has also advised that under Section 265 of the Code,
interest on indebtedness incurred or continued to purchase or carry Units of a
Trust is not deductible for Federal income tax purposes. The Internal Revenue
Service has taken the position that such indebtedness need not be directly
traceable to the purchase or carrying of Units (however, these rules generally
do not apply to interest paid on indebtedness incurred to purchase or improve a
personal residence). Also, under Section 265 of the Code, certain financial
institutions that acquire Units would generally not be able to deduct any of the
interest expense attributable to ownership of such Units. On December 7, 1995,
the U.S. Treasury Department released proposed legislation that, if enacted,
would generally extend the financial institution rules to all corporations,
effective for obligations acquired after the date of announcement. Investors
with questions regarding this issue should consult with their tax advisers.
In the case of certain of the Bonds in the Trust, the opinions of bond
counsel indicate that interest on such Bonds received by a "substantial user" of
the facilities being financed with the proceeds of these Bonds, or persons
related thereto, for periods while such Bonds are held by such a user or related
person, will not be excludable from Federal gross income, although interest on
such Bonds received by others would be excludable from Federal gross income.
"Substantial user" and "related person" are defined under the Code and U.S.
Treasury Regulations. Any person who believes that he or she may be a
"substantial user" or a "related person" as so defined should contact his or her
tax adviser.
For purposes of computing the alternative minimum tax for individuals and
corporations, interest on certain specified tax-exempt private activity bonds is
included as a preference item. The Trusts do not include any such bonds.
CERTAIN TAX MATTERS APPLICABLE TO CORPORATE UNITHOLDERS. In the case of
certain corporations, the alternative minimum tax and the Superfund Tax depend
upon the corporation's alternative minimum taxable income ("AMTI"), which is the
corporation's taxable income with certain adjustments. One of the adjustment
items used in computing AMTI and the Superfund Tax of a corporation (other than
an S corporation, Regulated Investment Company, Real Estate Investment Trust, or
REMIC) is an amount equal to 75% of the excess of such corporation's "adjusted
current earnings" over an amount equal to its AMTI (before such adjustment item
and the alternative tax net operating loss deduction). "Adjusted current
earnings" includes all tax-exempt interest, including interest on all
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Bonds in the Trust. Under current Code provisions, the Superfund Tax does not
apply to tax years beginning on or after January 1, 1996. However, the Superfund
Tax could be extended retroactively. Under the provisions of Section 884 of the
Code, a branch profits tax is levied on the "effectively connected earnings and
profits" of certain foreign corporations which include tax-exempt interest such
as interest on the Bonds in the Trust. Unitholders should consult their tax
advisors with respect to the particular tax consequences to them including the
corporate alternative minimum tax, the Superfund Tax and the branch profits tax
imposed by Section 884 of the Code.
Ownership of the Units may result in collateral federal income tax
consequences to certain taxpayers, including, without limitation, corporations
subject to either the environmental tax or the branch profits tax, financial
institutions, certain insurance companies, certain S corporations, individual
recipients of Social Security or Railroad Retirement benefits and taxpayers who
may be deemed to have incurred (or continued) indebtedness to purchase or carry
tax-exempt obligations. Prospective investors should consult their tax advisers
as to the applicability of any such collateral consequences.
EXCEPT AS NOTED ABOVE AND IN PART A OF THIS PROSPECTUS, THE EXEMPTION OF
INTEREST ON STATE AND LOCAL OBLIGATIONS FOR FEDERAL INCOME TAX PURPOSES
DISCUSSED ABOVE DOES NOT NECESSARILY RESULT IN EXEMPTION UNDER THE INCOME OR
OTHER TAX LAWS OF ANY STATE OR CITY. THE LAWS OF THE SEVERAL STATES VARY WITH
RESPECT TO THE TAXATION OF SUCH OBLIGATIONS.
WHAT ARE NORMAL TRUST OPERATING EXPENSES?
No annual advisory fee is charged to the Trusts by the Sponsor. The Sponsor
does, however, receive a fee as set forth in "Essential Information" in Part A
of this Prospectus for regularly evaluating the Bonds and for maintaining
surveillance over the portfolio. (See "UNIT VALUE AND EVALUATION.")
The Trustee receives for ordinary recurring services an annual fee for each
plan of distribution for each Trust as set forth in "Essential Information"
appearing in Part A of this Prospectus. Each annual fee is per $1,000 principal
amount of the underlying Bonds in a Trust for that portion of the Trust that
represents a particular plan of distribution. The Trustee's fee may be
periodically adjusted in response to fluctuations in short-term interest rates
(reflecting the cost to the Trustee of advancing funds to a Trust to meet
scheduled distributions) and may be further adjusted in accordance with the
cumulative percentage increase of the United States Department of Labor's
Consumer Price Index entitled "All Services Less Rent of Shelter" since the
establishment of the Trusts. The Trustee has the use of funds, if any, being
held in the Interest and Principal Accounts of each Trust for future
distributions, payment of expenses and redemptions. These Accounts are
non-interest bearing to Unitholders. Pursuant to normal banking procedures, the
Trustee benefits from the use of funds held therein. Part of the Trustee's
compensation for its services to the Trusts is expected to result from such use
of these funds.
Premiums for the policies of insurance obtained by the Sponsor or by the
Bond issuers with respect to the Bonds in the Insured Trusts and with respect to
insured Bonds in Traditional Trusts have been paid in full prior to the deposit
of the Bonds in the Trusts, and the value of such insurance has been included in
the evaluation of the Bonds in each Trust and accordingly in the Public Offering
Price of Units of each Trust. There are no annual continuing premiums for such
insurance.
All or a portion of the expenses incurred in establishing the Trusts,
including costs of preparing the registration statement, the trust indenture and
other closing documents, registering Units with the Securities and Exchange
Commission and states, the initial audit of each Trust portfolio, the initial
evaluation, legal fees, the initial fees and expenses of the Trustee and any
other non-material out-of-pocket expenses, will be paid by the Trusts and
amortized over the first five years of such Trusts. The following are additional
expenses of the Trusts and, when paid by or are owed to the Trustee, are secured
by a lien on the assets of the Trust or Trusts to which such expenses are
allocable: (1) the expenses and costs of any action undertaken by the Trustee to
protect the Trusts and the rights and interests of the Unitholders; (2) all
taxes and other governmental charges upon the Bonds or any part of the Trusts
(no such taxes or charges are being levied or made or, to the knowledge of the
Sponsor, contemplated); (3) amounts payable to the Trustee as fees for ordinary
recurring services and for extraordinary non-recurring services rendered
pursuant to the Indenture, all disbursements and expenses including counsel fees
(including fees of bond counsel which the Trustee may retain) sustained or
incurred by the Trustee in connection therewith; and (4) any losses or
liabilities accruing to the Trustee without negligence, bad faith or willful
misconduct on its part. The Trustee is empowered to sell Bonds in order to pay
these amounts if funds are not otherwise available in the applicable Interest
and Principal Accounts.
The Indenture requires each Trust to be audited on an annual basis at the
expense of the Trust by independent public accountants selected by the Sponsor.
The Trustee shall not be required, however, to cause such an audit to be
performed if its cost to a Trust shall exceed $.05 per Unit on an annual basis.
Unitholders of a Trust covered by an audit may obtain a copy of the audited
financial statements upon request.
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WHEN ARE DISTRIBUTIONS MADE TO UNITHOLDERS?
Interest received by the Trustee on the Bonds in each Trust, including that part
of the proceeds of any disposition of Bonds which represents accrued interest
and including any insurance proceeds representing interest due on defaulted
Bonds, shall be credited to the "Interest Account" of such Trust and all other
moneys received by the Trustee shall be credited to the "Principal Account" of
such Trust.
The pro rata share of cash in the Principal Account in each Trust will be
computed as of each semi-annual Record Date and distributions to the Unitholders
as of such Record Date will be made on or shortly after the fifteenth day of the
month. Proceeds received from the disposition, including sale, call or maturity,
of any of the Bonds and all amounts paid with respect to zero coupon bonds and
Stripped Obligations will be held in the Principal Account and either used to
pay for Units redeemed or distributed on the Distribution Date following the
next semi-annual Record Date. The Trustee is not required to make a distribution
from the Principal Account of any Trust unless the amount available for
distribution in such account equals at least ten cents per Unit.
The pro rata share of the Interest Account in each Trust will be computed by
the Trustee each month as of each Record Date and distributions will be made on
or shortly after the fifteenth day of the month to Unitholders of such Trust as
of the Record Date who are entitled to distributions at that time under the plan
of distribution chosen. 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 under the applicable plan of distribution.
Purchasers of Units who desire to receive interest distributions on a
monthly or quarterly basis may elect to do so at the time of purchase during the
initial public offering period. Those indicating no choice will be deemed to
have chosen the semi-annual distribution plan. All Unitholders, however, who
purchase Units during the initial public offering period and who hold them of
record on the first Record Date will receive the first distribution of interest.
Thereafter, Record Dates for monthly distributions will be the first day of each
month; Record Dates for quarterly distributions will be the first day of
February, May, August and November; and Record Dates for semi-annual
distributions will be the first day of May and November. See Part A of this
Prospectus for details of distributions per Unit of each Trust under the various
plans based upon estimated Net Annual Interest Income at the Date of Deposit.
The amount of the regular distributions will generally change when Bonds are
redeemed, mature or are sold or when fees and expenses increase or decrease. For
the purpose of minimizing fluctuations in the distributions from the Interest
Account of a Trust, the Trustee is authorized to advance such amounts as may be
necessary to provide for interest distributions of approximately equal amounts.
The Trustee shall be reimbursed, without interest, for any such advances from
funds in the Interest Account of such Trust. The Trustee's fee takes into
account the costs attributable to the outlay of capital needed to make such
advances.
The plan of distribution selected by a Unitholder will remain in effect
until changed. Unitholders purchasing Units in the secondary market will
initially receive distributions in accordance with the election of the prior
owner. Unitholders desiring to change their plan of distribution may do so by
sending a written notice requesting the change, together with any
Certificate(s), to the Trustee. The notice and any Certificate(s) must be
received by the Trustee not later than the semi-annual Record Date to be
effective as of the semi-annual distribution following the subsequent
semi-annual Record Date. Unitholders are requested to make any such changes
within 45 days prior to the applicable Record Date. Certificates should only be
sent by registered or certified mail to minimize the possibility of their being
lost or stolen. (See "OWNERSHIP AND TRANSFER OF UNITS.")
As of the first day of each month the Trustee will deduct from the Interest
Account of a Trust or, to the extent funds are not sufficient therein, from the
Principal Account of a Trust, amounts needed for payment of expenses of such
Trust. The Trustee also may withdraw from said accounts such amount, if any, as
it deems necessary to establish a reserve for any governmental charges payable
out of such Trust. Amounts so withdrawn shall not be considered a part of a
Trust's assets until such time as the Trustee shall return all or any part of
such amounts to the appropriate account. In addition, the Trustee shall withdraw
from the Interest Account and the Principal Account of a Trust such amounts as
may be necessary to cover redemptions of Units of such Trust by the Trustee.
Funds which are available for future distributions, redemptions and payment of
expenses are held in accounts which are non-interest bearing to Unitholders and
are available for use by the Trustee pursuant to normal banking procedures.
ACCUMULATION PLAN
The Sponsor is also the principal underwriter of several open-end mutual funds
(the "Accumulation Funds") into which Unitholders may choose to reinvest Trust
distributions. Unitholders may elect to reinvest principal distributions or
interest and principal distributions automatically, without any sales charge.
Each Accumulation Fund has investment objectives which differ in certain
respects from those of the Trusts and may invest in securities which would not
be eligible for deposit in the Trusts. Further information concerning the
Accumulation Plan and a list of Accumulation Funds is set forth in the
Information Supplement of this Prospectus, which may be obtained by contacting
the Trustee at the phone number listed on the back cover of this Prospectus.
Participants may at any time, by so notifying the Trustee in writing, elect to
change the Accumulation Fund into which their distributions are being
reinvested, to change from principal only reinvestment to reinvestment of both
principal and interest or vice versa, or to terminate their participation in the
Accumulation Plan altogether and
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receive future distributions on their Units in cash. There will be no charge or
other penalty for such change of election or termination. The character of Trust
distributions for income tax purposes will remain unchanged even if they are
reinvested in an Accumulation Fund.
HOW DETAILED ARE REPORTS TO UNITHOLDERS?
The Trustee shall furnish Unitholders of a Trust in connection with each
distribution, a statement of the amount of interest, if any, and the amount of
other receipts (received since the preceding distribution) being distributed,
expressed in each case as a dollar amount representing the pro rata share of
each Unit of a Trust outstanding and a year to date summary of all distributions
paid on said Units. Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish to each person, who at any time during
the calendar year was a registered Unitholder of a Trust, a statement with
respect to such Trust (i) as to the Interest Account: interest received
(including amounts representing interest received upon any disposition of
Bonds), and, except for any State Trust, the percentage of such interest by
states in which the issuers of the Bonds are located, deductions for fees and
expenses of such Trust, redemption of Units and the balance remaining after such
distributions and deductions, expressed in each case both as a total dollar
amount and as a dollar amount representing the pro rata share of each Unit
outstanding on the last business day of such calendar year; (ii) as to the
Principal Account: the dates of disposition of any Bonds and the net proceeds
received therefrom (excluding any portion representing accrued interest), the
amount paid for purchase of Replacement Bonds, the amount paid upon redemption
of Units, deductions for payment of applicable taxes and fees and expenses of
the Trustee, 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 Unit outstanding on the last business day of such
calendar year; (iii) a list of the Bonds held and the number of Units
outstanding on the last business day of such calendar year; (iv) the Unit Value
based upon the last computation thereof made during such calendar year; and (v)
amounts actually distributed during such calendar year from the Interest Account
and from the Principal Account, separately stated, expressed both as total
dollar amounts and as dollar amounts representing the pro rata share of each
Unit outstanding. Each annual statement will reflect pertinent information in
respect of all plans of distribution so that Unitholders may be informed
regarding the results of other plans of distribution.
UNIT VALUE AND EVALUATION
The value of each Trust is determined by the Sponsor on the basis of (1) the
cash on hand in the Trust or moneys in the process of being collected, (2) the
value of the Bonds in the Trust based on the BID prices of the Bonds and (3)
interest accrued thereon not subject to collection, LESS (1) amounts
representing taxes or governmental charges payable out of the Trust and (2) the
accrued expenses of the Trust. The result of such computation is divided by the
number of Units of such Trust outstanding as of the date thereof to determine
the per Unit value ("Unit Value") of such Trust. The Sponsor may determine the
value of the Bonds in each Trust (1) on the basis of current BID prices of the
Bonds obtained from dealers or brokers who customarily deal in bonds comparable
to those held by a Trust, (2) if bid prices are not available for any of the
Bonds, on the basis of bid prices for comparable bonds, (3) by causing the value
of the Bonds to be determined by others engaged in the practice of evaluating,
quoting or appraising comparable bonds or (4) by any combination of the above.
Although the Unit Value of each Trust is based on the BID prices of the Bonds,
the Units are sold initially to the public at the Public Offering Price based on
the OFFERING prices of the Bonds.
Because the insurance obtained by the Sponsor or by the issuers of Bonds
with respect to the Bonds in the Insured Trusts and with respect to insured
Bonds in Traditional Trusts is effective so long as such Bonds are outstanding,
such insurance will be taken into account in determining the bid and offering
prices of such Bonds and therefore some value attributable to such insurance
will be included in the value of Units of Trusts that include such Bonds.
HOW UNITS OF THE TRUSTS ARE DISTRIBUTED TO THE PUBLIC
Nuveen, in addition to being the Sponsor, is the sole Underwriter of the Units.
It is the intention of the Sponsor to qualify Units of National, Long
Intermediate, Intermediate, Short Intermediate and Short Term Trusts for sale
under the laws of substantially all of the states of the United States of
America, and Units of State Trusts only in the state for which the Trust is
named and selected other states.
Promptly following the deposit of Bonds in exchange for Units of the Trusts,
it is the practice of the Sponsor to place all of the Units as collateral for a
letter or letters of credit from one or more commercial banks under an agreement
to release such Units from time to time as needed for distribution. Under such
an arrangement the Sponsor pays such banks compensation based on the then
current interest rate. This is a normal warehousing arrangement during the
period of distribution of the Units to public investors. To facilitate the
handling of transactions, sales of Units shall be limited to transactions
involving a minimum of either $5,000 or 50 Units, whichever is less. The Sponsor
reserves the right to reject, in whole or in part, any order for the purchase of
Units.
The Sponsor plans to allow a discount to brokers and dealers in connection
with the primary distribution of Units and also in secondary market
transactions. The primary market discounts are as follows:
18
<PAGE>
<TABLE>
<CAPTION>
DISCOUNT PER UNIT
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NATIONAL LONG INTER- SHORT INTER-
AND STATE MEDIATE INTERMEDIATE MEDIATE SHORT TERM
NUMBER OF UNITS* TRUSTS TRUSTS TRUSTS TRUSTS TRUSTS
- ------------------------------ ---------- ------------- ------------- ------------- -----------
Less than 500................. $3.20 $2.90 $2.70 $2.00 $1.50
500 but less than 1,000....... 3.20 2.90 2.70 2.00 1.50
1,000 but less than 2,500..... 3.20 2.70 2.50 1.80 1.30
2,500 but less than 5,000..... 3.20 2.45 2.25 1.55 1.05
5,000 but less than 10,000.... 2.50 2.45 2.25 1.55 1.05
10,000 but less than 25,000... 2.00 2.00 2.00 1.30 .80
25,000 but less than 50,000... 1.75 1.75 1.75 1.30 .60
50,000 or more................ 1.75 1.50 1.50 1.00 .60
</TABLE>
*Breakpoint sales charges and related dealer concessions are computed both on a
dollar basis and on the basis of the number of Units purchased, using the
equivalent of 500 Units to $50,000, 2,500 Units to $250,000 etc. and will be
applied on that basis which is more favorable to the purchaser.
The Sponsor currently intends to maintain a secondary market for Units of
each Trust. See "MARKET FOR UNITS." The amount of the dealer concession on
secondary market purchases of Trust Units through the Sponsor will be computed
based upon the value of the Bonds in the Trust portfolio, including the sales
charge computed as described in "HOW IS THE PUBLIC OFFERING PRICE DETERMINED?",
and adjusted to reflect the cash position of the Trust principal account, and
will vary with the size of the purchase as shown in the following table:
<TABLE>
<CAPTION>
AMOUNT OF PURCHASE*
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$50,000 $100,000 $250,000 $500,000 $1,000,000 $2,500,000
UNDER TO TO TO TO TO TO $5,000,000
YEARS TO MATURITY $50,000 $99,999 $249,999 $499,999 $999,999 $2,499,999 $4,999,999 OR MORE
- -------------------------- --------- --------- --------- --------- --------- ---------- ---------- ----------
Less than 1............... 0 0 0 0 0 0 0 0
1 but less than 2......... 1.00% .90% .85% .80% .70% .55% .467% .389%
2 but less than 3......... 1.30% 1.20% 1.10% 1.00% .90% .73% .634% .538%
3 but less than 4......... 1.60% 1.45% 1.35% 1.25% 1.10% .90% .781% .662%
4 but less than 5......... 2.00% 1.85% 1.75% 1.55% 1.40% 1.25% 1.082% .914%
5 but less than 7......... 2.30% 2.15% 1.95% 1.80% 1.65% 1.50% 1.320% 1.140%
7 but less than 10........ 2.60% 2.45% 2.25% 2.10% 1.95% 1.70% 1.496% 1.292%
10 but less than 13....... 3.00% 2.80% 2.60% 2.45% 2.30% 2.00% 1.747% 1.494%
13 but less than 16....... 3.25% 3.15% 3.00% 2.75% 2.50% 2.15% 1.878% 1.606%
16 or more................ 3.50% 3.50% 3.40% 3.35% 3.00% 2.50% 2.185% 1.873%
</TABLE>
*Breakpoint sales charges and related dealer concessions are computed both on a
dollar basis and on the basis of the number of Units purchased, using the
equivalent of 500 Units to $50,000, 2,500 Units to $250,000, etc., and will be
applied on that basis which is more favorable to the purchaser.
The Sponsor reserves the right to change the foregoing dealer concessions
from time to time.
Registered investment advisers, certified financial planners and registered
broker-dealers who in each case either charge periodic fees for financial
planning, investment advisory or asset management services, or provide such
services in connection with the establishment of an investment account for which
a comprehensive "wrap fee" charge is imposed, and bank trust departments
investing funds over which they exercise exclusive discretionary investment
authority and that are held in a fiduciary, agency, custodial or similar
capacity, are not entitled to receive any dealer concession for any sales made
to investors which qualified as "Discounted Purchases" during the primary or
secondary market. (See "HOW IS THE PUBLIC OFFERING PRICE DETERMINED?")
Certain commercial banks are making Units of the Trusts available to their
customers on an agency basis. A portion of the sales charge paid by these
customers is retained by or remitted to the banks in the amounts shown in the
above table. The Glass-Steagall Act prohibits banks from underwriting Trust
Units; the Act does, however, permit certain agency transactions and banking
regulators have not indicated that these particular agency transactions are not
permitted under the Act. In Texas and in certain other states, any bank making
Units available must be registered as a broker-dealer under state law.
OWNERSHIP AND TRANSFER OF UNITS
The ownership of Units is evidenced by book entry positions recorded on the
books and records of the Trustee unless the Unitholder expressly requests that
the purchased Units be evidenced in Certificate form. The Trustee is authorized
to treat as the owner of Units that person who at the time is registered as such
on the books of the Trustee. Any Unitholder who holds a Certificate may change
to book entry ownership by submitting to the Trustee the Certificate along with
a written request that the Units represented by such Certificate be held in book
entry form. Likewise, a Unitholder who holds Units in book entry form may obtain
a Certificate for such Units by written request to the Trustee. Units may be
held in denominations of one Unit or any multiple or fraction thereof. Fractions
of Units are computed to three decimal places. Any Certificates issued will be
numbered serially for identification, and are issued in fully registered form,
transferable only on the books of the Trustee. Book entry Unitholders will
receive a Book Entry Position Confirmation reflecting their ownership.
For Trusts allowing optional plans of distribution, Certificates for Units
will bear an appropriate notation on their face indicating which plan of
distribution has been selected. When a change is made, the existing Certificates
19
<PAGE>
must be surrendered to the Trustee and new Certificates issued to reflect the
currently effective plan of distribution. There will be no charge for this
service. Holders of book entry Units can change their plan of distribution by
making a written request to the Trustee, which will issue a new Book Entry
Position Confirmation to reflect such change.
Units are transferable by making a written request to the Trustee and, in
the case of Units evidenced by Certificate(s), by presenting and surrendering
such Certificate(s) to the Trustee, at its address listed on the back cover of
this Part B of the Prospectus, properly endorsed or accompanied by a written
instrument or instruments of transfer. The Certificate(s) should be sent
registered or certified mail for the protection of the Unitholder. Each
Unitholder must sign such written request, and such Certificate(s) or transfer
instrument, exactly as his name appears on (a) the face of the Certificate(s)
representing the Units to be transferred, or (b) the Book Entry Position
Confirmation(s) relating to the Units to be transferred. Such signature(s) must
be guaranteed by a guarantor acceptable to the Trustee. In certain instances the
Trustee may require additional documents such as, but not limited to, trust
instruments, certificates of death, appointments as executor or administrator or
certificates of corporate authority. Mutilated Certificates must be surrendered
to the Trustee in order for a replacement Certificate to be issued. Although at
the date hereof no charge is made and none is contemplated, a Unitholder may be
required to pay $2.00 to the Trustee for each Certificate reissued or transfer
of Units requested and to pay any governmental charge which may be imposed in
connection therewith.
REPLACEMENT OF LOST, STOLEN OR DESTROYED CERTIFICATES.
To obtain a new Certificate replacing one that has been lost, stolen, or
destroyed, the Unitholder must furnish the Trustee with sufficient
indemnification and pay such expenses as the Trustee may incur. This
indemnification must be in the form of an Open Penalty Bond of Indemnification.
The premium for such an indemnity bond may vary, but currently amounts to 1% of
the market value of the Units represented by the Certificate. In the case
however, of a Trust as to which notice of termination has been given, the
premium currently amounts to 0.5% of the market value of the Units represented
by such Certificate.
HOW UNITS MAY BE REDEEMED WITHOUT CHARGE
Unitholders may redeem all or a portion of their Units by (1) making a written
request for such redemption (book entry Unitholders may use the redemption form
on the reverse side of their Book Entry Position Confirmation) to the Trustee at
its address listed on the back cover of this Part B of the Prospectus
(redemptions of 1,000 Units or more will require a signature guarantee), (2) in
the case of Units evidenced by a Certificate, by also tendering such Certificate
to the Trustee, duly endorsed or accompanied by proper instruments of transfer
with signatures guaranteed as explained above, or provide satisfactory indemnity
required in connection with lost, stolen or destroyed Certificates and (3)
payment of applicable governmental charges, if any. Certificates should be sent
only by registered or certified mail to minimize the possibility of their being
lost or stolen. (See "OWNERSHIP AND TRANSFER OF UNITS.") No redemption fee will
be charged. A Unitholder may authorize the Trustee to honor telephone
instructions for the redemption of Units held in book entry form. Units
represented by Certificates may not be redeemed by telephone. The proceeds of
Units redeemed by telephone will be sent by check either to the Unitholder at
the address specified on his account or to a financial institution specified by
the Unitholder for credit to the account of the Unitholder. A Unitholder wishing
to use this method of redemption must complete a Telephone Redemption
Authorization Form and furnish the Form to the Trustee. Telephone Redemption
Authorization Forms can be obtained from a Unitholder's registered
representative or by calling the Trustee. Once the completed Form is on file,
the Trustee will honor telephone redemption requests by any authorized person.
The time a telephone redemption request is received determines the "date of
tender" as discussed below. The redemption proceeds will be mailed within three
business days following the telephone redemption request. Only Units held in the
name of individuals may be redeemed by telephone; accounts registered in broker
name, or accounts of corporations or fiduciaries (including among others,
trustees, guardians, executors and administrators) may not use the telephone
redemption privilege.
On the third business day following the date of tender, the Unitholder will
be entitled to receive in cash for each Unit tendered an amount equal to the
Unit Value of such Trust determined by the Trustee, as of 4:00 p.m. eastern
time, or as of any earlier closing time on a day on which the Exchange is
scheduled in advance to close at such earlier time, on the date of tender as
defined hereafter, plus accrued interest to, but not including, the third
business day after the date of tender ("Redemption Price"). The price received
upon redemption may be more or less than the amount paid by the Unitholder
depending on the value of the Bonds on the date of tender. Unitholders should
check with the Trustee or their broker to determine the Redemption Price before
tendering Units.
The "date of tender" is deemed to be the date on which the request for
redemption of Units is received in proper form by the Trustee, except that as
regards a redemption request received after 4:00 p.m. eastern time, or as of any
earlier closing time on a day on which the Exchange is scheduled in advance to
close at such earlier time, or on any day on which the Exchange is normally
closed, the date of tender is the next day on which such Exchange is normally
open for trading and such request will be deemed to have been made on such day
and the redemption will be effected at the Redemption Price computed on that
day.
20
<PAGE>
Accrued interest paid on redemption shall be withdrawn from the Interest
Account of the appropriate Trust or, if the balance therein is insufficient,
from the Principal Account of such Trust. All other amounts paid on redemption
shall be withdrawn from the Principal Account. The Trustee is empowered to sell
underlying Bonds of a Trust in order to make funds available for redemption.
(See "HOW BONDS MAY BE REMOVED FROM THE TRUSTS.") Units so redeemed shall be
cancelled. To the extent that Bonds are sold from a Trust, the size and
diversity of such Trust will be reduced. Such sales may be required at a time
when Bonds would not otherwise be sold and might result in lower prices than
might otherwise be realized.
The Redemption Price is determined on the basis of the BID prices of the
Bonds in each Trust, while the initial Public Offering Price of Units will be
determined on the basis of the OFFERING prices of the Bonds as of 4:00 p.m.
eastern time on any day on which the Exchange is normally open for trading, or
as of any earlier closing time on a day on which the Exchange is scheduled in
advance to close at such earlier time, and such determination is made. As of any
given time, the difference between the bid and offering prices of such Bonds may
be expected to average 1/2% to 2% of principal amount. In the case of actively
traded Bonds, the difference may be as little as 1/4 to 1/2 of 1%, and in the
case of inactively traded Bonds such difference usually will not exceed 3%.
The right of redemption may be suspended and payment postponed for any
period during which the Securities and Exchange Commission determines that
trading in the municipal bond market is restricted or an emergency exists, as a
result of which disposal or evaluation of the Bonds is not reasonably
practicable, or for such other periods as the Securities and Exchange Commission
may by order permit.
Under regulations issued by the Internal Revenue Service, the Trustee will
be required to withhold a specified percentage of the principal amount of a Unit
redemption if the Trustee has not been furnished the redeeming Unitholder's tax
identification number in the manner required by such regulations. Any amount so
withheld is transmitted to the Internal Revenue Service and may be recovered by
the Unitholder only when filing his or her tax return. Under normal
circumstances the Trustee obtains the Unitholder's tax identification number
from the selling broker at the time the Certificate or Book Entry Return
Confirmation is issued, and this number is printed on the Certificate or Book
Entry Return Confirmation and on distribution statements. If a Unitholder's tax
identification number does not appear as described above, or if it is incorrect,
the Unitholder should contact the Trustee before redeeming Units to determine
what action, if any, is required to avoid this "back-up withholding."
HOW UNITS MAY BE PURCHASED BY THE SPONSOR
The Trustee will notify the Sponsor of any tender of Units for redemption. If
the Sponsor's bid in the secondary market at that time equals or exceeds the
Redemption Price it may purchase such Units by notifying the Trustee before the
close of business on the second succeeding business day and by making payment
therefor to the Unitholder not later than the day on which payment would
otherwise have been made by the Trustee. (See "HOW UNITS MAY BE REDEEMED WITHOUT
CHARGE.") The Sponsor's current practice is to bid at the Redemption Price in
the secondary market. Units held by the Sponsor may be tendered to the Trustee
for redemption as any other Units.
HOW BONDS MAY BE REMOVED FROM THE TRUSTS
Bonds will be removed from a Trust as they mature or are redeemed by the issuers
thereof. See Part A of this Prospectus and "RISK FACTORS" for a discussion of
call provisions of portfolio Bonds.
The Indenture also empowers the Trustee to sell Bonds for the purpose of
redeeming Units tendered by any Unitholder, and for the payment of expenses for
which income may not be available. Under the Indenture, the Sponsor is obligated
to provide the Trustee with a current list of Bonds in each Trust to be sold in
such circumstances. In deciding which Bonds should be sold the Sponsor intends
to consider, among other things, such factors as: (1) market conditions; (2)
market prices of the Bonds; (3) the effect on income distributions to
Unitholders of the sale of various Bonds; (4) the effect on principal amount of
underlying Bonds per Unit of the sale of various Bonds; (5) the financial
condition of the issuers; and (6) the effect of the sale of various Bonds on the
investment character of the Trust. Such sales, if required, could result in the
sale of Bonds by the Trustee at prices less than original cost to the Trust. To
the extent Bonds are sold, the size and diversity of such Trust will be reduced.
In addition, the Sponsor is empowered to direct the Trustee to liquidate
Bonds upon the happening of certain other events, such as default in the payment
of principal and/or interest, an action of the issuer that will adversely affect
its ability to continue payment of the principal of and interest on its Bonds,
or an adverse change in market, revenue or credit factors affecting the
investment character of the Bonds. If a default in the payment of the principal
of and/or interest on any of the Bonds occurs, and if the Sponsor fails to
instruct the Trustee whether to sell or continue to hold such Bonds within 30
days after notification by the Trustee to the Sponsor of such default, the
Indenture provides that the Trustee shall liquidate said Bonds forthwith and
shall not be liable for any loss so incurred. The Sponsor may also direct the
Trustee to liquidate Bonds in a Trust if the Bonds in the Trust are the subject
of an advanced refunding, generally considered to be when refunding bonds are
issued and the proceeds thereof are deposited in irrevocable trust to retire the
refunded Bonds on their redemption date.
21
<PAGE>
Except as stated in "COMPOSITION OF TRUSTS" regarding the limited right of
substitution of Replacement Bonds for Failed Bonds, and except for refunding
securities that may be exchanged for Bonds under certain conditions specified in
the Indenture, the Indenture does not permit either the Sponsor or the Trustee
to acquire or deposit bonds either in addition to, or in substitution for, any
of the Bonds initially deposited in a Trust.
INFORMATION ABOUT THE TRUSTEE
The Trustee and its address are stated on the back cover of this Part B of the
Prospectus. The Trustee is subject to supervision and examination by the Federal
Deposit Insurance Corporation, the Board of Governors of the Federal Reserve
System and either the Comptroller of the Currency or state banking authorities.
LIMITATIONS ON LIABILITIES OF SPONSOR AND TRUSTEE
The Sponsor and the Trustee shall be under no liability to Unitholders for
taking any action or for refraining from any action in good faith pursuant to
the Indenture, or for errors in judgment, but shall be liable only for their own
negligence, lack of good faith or willful misconduct. The Trustee shall not be
liable for depreciation or loss incurred by reason of the sale by the Trustee of
any of the Bonds. In the event of the failure of the Sponsor to act under the
Indenture, the Trustee may act thereunder and shall not be liable for any action
taken by it in good faith under the Indenture.
The Trustee shall not be liable for any taxes or other governmental charges
imposed upon or in respect of the Bonds or upon the interest thereon or upon it
as Trustee under the Indenture or upon or in respect of any Trust which the
Trustee may be required to pay under any present or future law of the United
States of America or of any other taxing authority having jurisdiction. In
addition, the Indenture contains other customary provisions limiting the
liability of the Trustee.
SUCCESSOR TRUSTEES AND SPONSORS
The Trustee or any successor trustee may resign by executing an instrument
of resignation in writing and filing same with the Sponsor and mailing a copy of
a notice of resignation to all Unitholders then of record. Upon receiving such
notice, the Sponsor is required to promptly appoint a successor trustee. If the
Trustee becomes incapable of acting or is adjudged a bankrupt or insolvent, or a
receiver or other public officer shall take charge of its property or affairs,
the Sponsor may remove the Trustee and appoint a successor by written
instrument. The resignation or removal of a trustee and the appointment of a
successor trustee shall become effective only when the successor trustee accepts
its appointment as such. Any successor trustee shall be a corporation authorized
to exercise corporate trust powers, having capital, surplus and undivided
profits of not less than $5,000,000. Any corporation into which a trustee may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which a trustee shall be a party, shall be the
successor trustee.
If upon resignation of a trustee no successor has been appointed and has
accepted the appointment within 30 days after notification, the retiring trustee
may apply to a court of competent jurisdiction for the appointment of a
successor.
If the Sponsor fails to undertake any of its duties under the Indenture, and
no express provision is made for action by the Trustee in such event, the
Trustee may, in addition to its other powers under the Indenture (1) appoint a
successor sponsor or (2) terminate the Indenture and liquidate the Trusts.
INFORMATION ABOUT THE SPONSOR
Founded in 1898, Nuveen is the oldest and largest investment banking firm
specializing in the underwriting and distribution of tax-exempt securities and
maintains the largest research department in the investment banking community
devoted exclusively to the analysis of municipal securities. In 1961, Nuveen
began sponsoring the Nuveen Tax-Free Unit Trust and since that time has issued
more than $36 billion in tax-exempt unit trusts, including over $12 billion in
tax-exempt insured unit trusts. In addition, Nuveen open-end and closed-end
funds held approximately $35 billion in securities under management as of the
date of this Statement. Over 1,000,000 individuals have invested to date in
Nuveen's tax-exempt funds and trusts. Nuveen is a subsidiary of The John Nuveen
Company which, in turn, is approximately 78% owned by the St. Paul Companies,
Inc. ("St. Paul"). St. Paul is located in St. Paul, Minnesota and is principally
engaged in providing property-liability insurance through subsidiaries. Nuveen
is a member of the National Association of Securities Dealers, Inc. and the
Securities Industry Association and has its principal offices located in Chicago
(333 W. Wacker Drive) and New York (Swiss Bank Tower, 10 East 50th Street).
Nuveen maintains 11 regional offices.
To help advisers and investors better understand and more efficiently use an
investment in the Trusts to reach their investment goals, the Sponsor may
advertise and create specific investment programs and systems. For example, such
activities may include presenting information on how to use an investment in the
Trust, alone or in combination with an investment in other mutual funds or unit
investment trusts sponsored by Nuveen, to accumulate assets for future education
needs or periodic payments such as insurance premiums. The Trusts' sponsor may
produce software or additional sales literature to promote the advantages of
using the Trusts to meet these and other specific investor needs.
22
<PAGE>
OTHER INFORMATION
AMENDMENT OF INDENTURE
The Indenture may be amended by the Trustee and the Sponsor without the
consent of any of the Unitholders (1) to cure any ambiguity or to correct or
supplement any provision thereof which may be defective or inconsistent, or (2)
to make such other provisions as shall not adversely affect the Unitholders,
provided, however, that the Indenture may not be amended to increase the number
of Units in any Trust or to permit the deposit or acquisition of bonds either in
addition to, or in substitution for any of the Bonds initially deposited in any
Trust except as stated in "COMPOSITION OF TRUSTS" regarding the limited right of
substitution of Replacement Bonds and except for the substitution of refunding
bonds under certain circumstances. The Trustee shall advise the Unitholders of
any amendment promptly after execution thereof.
TERMINATION OF INDENTURE
Each Trust may be liquidated at any time by written consent of 100% of the
Unitholders or by the Trustee when the value of such Trust, as shown by any
evaluation, is less than 20% of the original principal amount of such Trust and
will be liquidated by the Trustee in the event that Units not yet sold
aggregating more than 60% of the Units originally created are tendered for
redemption by the Sponsor thereby reducing the net worth of such Trust to less
than 40% of the principal amount of the Bonds originally deposited in the
portfolio. (See "Essential Information" appearing in Part A of this Prospectus.)
The sale of Bonds from the Trusts upon termination may result in realization of
a lesser amount than might otherwise be realized if such sale were not required
at such time. For this reason, among others, the amount realized by a Unitholder
upon termination may be less than the principal amount of Bonds originally
represented by the Units held by such Unitholder. The Indenture will terminate
upon the redemption, sale or other disposition of the last Bond held thereunder,
but in no event shall it continue beyond the end of the calendar year preceding
the fiftieth anniversary of its execution for National and State Trusts, beyond
the end of the calendar year preceding the twentieth anniversary of its
execution for Long Intermediate, and Intermediate Trusts or beyond the end of
the calendar year preceding the tenth anniversary of its execution for Short
Intermediate and Short Term Trusts.
Written notice of any termination specifying the time or times at which
Unitholders may surrender their Certificates, if any, for cancellation shall be
given by the Trustee to each Unitholder at the address appearing on the
registration books of a Trust maintained by the Trustee. Within a reasonable
time thereafter, the Trustee shall liquidate any Bonds in the Trust then held
and shall deduct from the assets of the Trust any accrued costs, expenses or
indemnities provided by the Indenture which are allocable to such Trust,
including estimated compensation of the Trustee and costs of liquidation and any
amounts required as a reserve to provide for payment of any applicable taxes or
other governmental charges. The Trustee shall then distribute to Unitholders of
such Trust their pro rata share of the balance of the Interest and Principal
Accounts. With such distribution, the Unitholders shall be furnished a final
distribution statement, in substantially the same form as the annual
distribution statement, of the amount distributable. At such time as the Trustee
in its sole discretion shall determine that any amounts held in reserve are no
longer necessary, it shall make distribution thereof to Unitholders in the same
manner.
LEGAL OPINION
The legality of the Units offered hereby has been passed upon by Chapman and
Cutler, 111 West Monroe Street, Chicago, Illinois 60603. Special counsel for the
Trusts for respective state tax matters are named in "Tax Status" for each Trust
appearing in Part A of this Prospectus. Carter, Ledyard & Milburn, 2 Wall
Street, New York, New York 10005, has acted as counsel for the Trustee with
respect to the Series, and, in the absence of a New York Trust from the Series,
as special New York tax counsel for the Series.
AUDITORS
The "Statement of Condition" and "Schedule of Investments" at Date of
Deposit included in Part A of this Prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report in
Part A of this Prospectus, and are included herein in reliance upon the
authority of said firm as experts in giving said report.
SUPPLEMENTAL INFORMATION
Upon written or telephonic request to the Trustee, investors will receive at
no cost to the investor supplemental information about this Trust, which has
been filed with the Securities and Exchange Commission and is intended to
supplement information contained in Part A and Part B of this Prospectus. The
supplemental information includes more detailed information concerning certain
of the Bonds included in the Trusts contained in the applicable Series and more
specific risk information concerning the individual state Trusts. This
supplement also includes additional general information about the Sponsor and
the Trusts.
23
<PAGE>
NUVEEN Tax-Free Unit Trusts
PROSPECTUS -- PART B
FEBRUARY 1, 1997
<TABLE>
<C> <S> <C>
SPONSOR John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
Telephone: 312.917.7700
Swiss Bank Tower
10 East 50th Street
New York, NY 10022
212.207.2000
TRUSTEE The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
800.257.8787
LEGAL COUNSEL Chapman and Cutler
TO SPONSOR 111 West Monroe Street
Chicago, IL 60603
INDEPENDENT Arthur Andersen LLP
PUBLIC 33 West Monroe Street
ACCOUNTANTS Chicago, IL 60603
FOR THE TRUSTS
</TABLE>
--------------
Except as to statements made herein furnished by the Trustee, the
Trustee has assumed no responsibility for the accuracy, adequacy and
completeness of the information contained in this Prospectus.
This Prospectus does not contain all of the information set forth in
the registration statement and exhibits relating thereto, filed with the
Securities and Exchange Commission, Washington, D.C., under the Securities Act
of 1933, and to which reference is made.
No person is authorized to give any information or to make
representations not contained in this Prospectus or in supplemental information
or sales literature prepared by the Sponsor, and any information or
representation not contained therein must not be relied upon as having been
authorized by either the Trusts, the Trustee or the Sponsor. 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. The Trusts are registered as Unit Investment Trusts under
the Investment Company Act of 1940, as amended. Such registration does not imply
that the Trusts or any of their Units have been guaranteed, sponsored,
recommended or approved by the United States or any State or agency or officer
thereof.
<PAGE>
NUVEEN TAX-FREE UNIT TRUSTS
---------------------------------------------
INFORMATION SUPPLEMENT
NUVEEN SERIES 921
This Information Supplement provides additional
information concerning the structure, operations and
risks of a Nuveen Tax-Free Unit Trust not found in the
prospectuses for the Trusts. This Information Supplement
is not a prospectus and does not include all of the
information that a prospective investor should consider
before investing in a Trust. This Information Supplement
should be read in conjunction with the prospectus for
the Trust in which an investor is considering investing
("Prospectus"). Copies of the Prospectus can be obtained
by calling or writing the Trustee at the telephone
number and address indicated in Part B of the
Prospectus. This Information Supplement has been created
to supplement information contained in the Prospectus.
This Information Supplement is dated February 25,
1997. Capitalized terms have been defined in the
Prospectus.
TABLE OF CONTENTS
--------------------------------------------------
<TABLE>
<S> <C>
GENERAL RISK DISCLOSURE..................................................... 2
Health Care Facility Obligations.......................................... 2
Housing Obligations....................................................... 2
Single Family Mortgage Revenue Bonds...................................... 2
Federally Enhanced Obligations............................................ 3
Industrial Revenue Obligations............................................ 3
Electric Utility Obligations.............................................. 3
Transportation Facility Revenue Bonds..................................... 4
Water and/or Sewerage Obligations......................................... 4
University and College Revenue Obligations................................ 4
Bridge Authority and Tollroad Obligations................................. 4
Dedicated-Tax Supported Bonds............................................. 4
Municipal Lease Bonds..................................................... 5
Original Issue Discount Bonds and Stripped Obligations.................... 5
WHY AND HOW ARE THE BONDS INSURED?.......................................... 6
ACCUMULATION PLAN........................................................... 7
INFORMATION ABOUT THE SPONSOR............................................... 9
DESCRIPTION OF RATINGS...................................................... 10
HOW THE TRUST COMPARES PERFORMANCE.......................................... 12
HOW TO CALCULATE YOUR ESTIMATED INCOME...................................... 13
Appendix A -- North Carolina Disclosure..................................... A-1
Appendix B -- Pennsylvania Disclosure....................................... B-1
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GENERAL RISK DISCLOSURE
An investment in Units of any Trust should be made with an understanding of
the risks that such an investment may entail. These include the ability of the
issuer, or, if applicable, an insurer, to make payments of interest and
principal when due, the effects of changes in interest rates generally, early
call provisions and the potential for changes in the tax status of the Bonds. As
set forth in the portfolio summaries in Part A of this Prospectus, the Trusts
may contain or be concentrated in one or more of the types of bonds discussed
below. The following paragraphs discuss certain circumstances which may
adversely affect the ability of issuers of Bonds held in the portfolio of a
Trust to make payment of principal and interest thereon or which may adversely
affect the ratings of such Bonds; with respect to Insured Trusts, however,
because of the insurance obtained by the Sponsor or by the issuers of the Bonds,
such changes should not adversely affect an Insured Trust's receipt of principal
and interest, the Standard & Poor's AAA or Moody's Aaa ratings of the Bonds in
the Insured Trust portfolio, or the Standard & Poor's AAA rating of the Units of
each such Insured Trust. For economic risks specific to the individual Trusts,
see "Risk Factors" for each Trust.
HEALTH CARE FACILITY OBLIGATIONS. Some of the Bonds in a Trust may be
obligations of issuers whose revenues are derived from services provided by
hospitals or other health care facilities, including nursing homes. Ratings of
bonds issued for health care facilities are sometimes based on feasibility
studies that contain projections of occupancy levels, revenues and expenses. A
facility's gross receipts and net income available for debt service may be
affected by future events and conditions including, among other things, demand
for services, the ability of the facility to provide the services required, an
increasing shortage of qualified nurses or a dramatic rise in nursing salaries,
physicians' confidence in the facility, management capabilities, economic
developments in the service area, competition from other similar providers,
efforts by insurers and governmental agencies to limit rates, legislation
establishing state rate-setting agencies, expenses, government regulation, the
cost and possible unavailability of malpractice insurance, and the termination
or restriction of governmental financial assistance, including that associated
with Medicare, Medicaid and other similar third party payor programs. Medicare
reimbursements are currently calculated on a prospective basis and are not based
on a provider's actual costs. Such method of reimbursement may adversely affect
reimbursements to hospitals and other facilities for services provided under the
Medicare program and thereby may have an adverse effect on the ability of such
institutions to satisfy debt service requirements. In the event of a default
upon a bond secured by hospital facilities, the limited alternative uses for
such facilities may result in the recovery upon such collateral not providing
sufficient funds to fully repay the bonds.
Certain hospital bonds provide for redemption at par upon the damage,
destruction or condemnation of the hospital facilities or in other special
circumstances.
HOUSING OBLIGATIONS. Some of the Bonds in a Trust may be obligations of
issuers whose revenues are primarily derived from mortgage loans to housing
projects for low to moderate income families. Such issues are generally
characterized by mandatory redemption at par or, in the case of original issue
discount bonds, accreted value in the event of economic defaults and in the
event of a failure of the operator of a project to comply with certain covenants
as to the operation of the project. The failure of such operator to comply with
certain covenants related to the tax-exempt status of interest on the Bonds,
such as provisions requiring that a specified percentage of units be rented or
available for rental to low or moderate income families, potentially could cause
interest on such Bonds to be subject to Federal income taxation from the date of
issuance of the Bonds. The ability of such issuers to make debt service payments
will be affected by events and conditions affecting financed projects,
including, among other things, the achievement and maintenance of sufficient
occupancy levels and adequate rental income, employment and income conditions
prevailing in local labor markets, increases in taxes, utility costs and other
operating expenses, the managerial ability of project managers, changes in laws
and governmental regulations, the appropriation of subsidies, and social and
economic trends affecting the localities in which the projects are located.
Occupancy of such housing projects may be adversely affected by high rent levels
and income limitations imposed under Federal and state programs.
SINGLE FAMILY MORTGAGE REVENUE BONDS. Some of the Bonds in a Trust may be
single family mortgage revenue bonds, which are issued for the purpose of
acquiring from originating financial institutions notes secured by mortgages on
residences located within the issuer's boundaries and owned by persons of low or
moderate income. Mortgage loans are generally partially or completely prepaid
prior to their final maturities as a result of events such as sale of the
mortgaged premises, default, condemnation or casualty loss. Because these bonds
are subject to extraordinary mandatory redemption in whole or in part from such
prepayments of mortgage loans, a substantial portion of such bonds will probably
be redeemed prior to their scheduled maturities or even prior to their ordinary
call dates. Extraordinary mandatory redemption without premium could also result
from the failure of the originating financial institutions to make mortgage
loans in sufficient amounts within a specified time period. The redemption price
of such issues may be more or less than the offering price of such bonds.
Additionally, unusually
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high rates of default on the underlying mortgage loans may reduce revenues
available for the payment of principal of or interest on such mortgage revenue
bonds. Single family mortgage revenue bonds issued after December 31, 1980 were
issued under Section 103A of the Internal Revenue Code of 1954, as amended, or
Section 143 of the Internal Revenue Code of 1986, which Sections contain certain
requirements relating to the use of the proceeds of such bonds in order for the
interest on such bonds to retain its tax-exempt status. In each case, the issuer
of the bonds has covenanted to comply with applicable requirements and bond
counsel to such issuer has issued an opinion that the interest on the bonds is
exempt from Federal income tax under existing laws and regulations. There can be
no assurance that such continuing requirements will be satisfied; the failure to
meet such requirements could cause interest on the Bonds to be subject to
Federal income taxation, possibly from the date of issuance of the Bonds.
FEDERALLY ENHANCED OBLIGATIONS. Some of the mortgages which secure the
various health care or housing projects which underlie the previously discussed
Health Facility, Housing, and Single Family Mortgage Revenue Obligations (the
"Obligations") in a Trust may be insured by the Federal Housing Administration
("FHA"). Under FHA regulations, the maximum insurable mortgage amount cannot
exceed 90% of the FHA's estimated value of the project. The FHA mortgage
insurance does not constitute a guarantee of timely payment of the principal of
and interest on the Obligations. Payment of mortgage insurance benefits may be
(1) less than the principal amount of Obligations outstanding or (2) delayed if
disputes arise as to the amount of the payment or if certain notices are not
given to the FHA within the prescribed time periods. In addition, some of the
previously discussed Obligations may be secured by mortgage-backed certificates
guaranteed by the Government National Mortgage Association ("GNMA"), a wholly
owned corporate instrumentality of the United States, and/or the Federal
National Mortgage Association ("Fannie Mae") a federally chartered and
stockholder-owed corporation. GNMA and Fannie Mae guarantee timely payment of
principal and interest on the mortgage-backed certificates, even where the
underlying mortgage payments are not made. While such mortgage-backed
certificates are often pledged to secure payment of principal and interest on
the Obligations, timely payment of interest and principal on the Obligations is
not insured or guaranteed by the United States, GNMA, Fannie Mae or any other
governmental agency or instrumentality. The GNMA mortgage-backed certificates
constitute a general obligation of the United States backed by its full faith
and credit. The obligations of Fannie Mae, including its obligations under the
Fannie Mae mortgage-backed securities, are obligations solely of Fannie Mae and
are not backed by, or entitled to, the full faith and credit of the United
States.
INDUSTRIAL REVENUE OBLIGATIONS. Certain of the Bonds in a Trust may be
industrial revenue bonds ("IRBs"), including pollution control revenue bonds,
which are tax-exempt securities issued by states, municipalities, public
authorities or similar entities to finance the cost of acquiring, constructing
or improving various industrial projects. These projects are usually operated by
corporate entities. Issuers are obligated only to pay amounts due on the IRBs to
the extent that funds are available from the unexpended proceeds of the IRBs or
receipts or revenues of the issuer under an arrangement between the issuer and
the corporate operator of a project. The arrangement may be in the form of a
lease, installment sale agreement, conditional sale agreement or loan agreement,
but in each case the payments to the issuer are designed to be sufficient to
meet the payments of amounts due on the IRBs. Regardless of the structure,
payment of IRBs is solely dependent upon the creditworthiness of the corporate
operator of the project and, if applicable, corporate guarantor. Corporate
operators or guarantors may be affected by many factors which may have an
adverse impact on the credit quality of the particular company or industry.
These include cyclicality of revenues and earnings, regulatory and environmental
restrictions, litigation resulting from accidents or environmentally-caused
illnesses, extensive competition and financial deterioration resulting from a
corporate restructuring pursuant to a leveraged buy-out, takeover or otherwise.
Such a restructuring may result in the operator of a project becoming highly
leveraged which may have an impact on such operator's creditworthiness which in
turn would have an adverse impact on the rating and/or market value of such
Bonds. Further, the possibility of such a restructuring may have an adverse
impact on the market for and consequently the value of such Bonds, even though
no actual takeover or other action is ever contemplated or effected. The IRBs in
a Trust may be subject to special or extraordinary redemption provisions which
may provide for redemption at par or, in the case of original issue discount
bonds, accreted value. The Sponsor cannot predict the causes or likelihood of
the redemption of IRBs in a Trust prior to the stated maturity of such Bonds.
ELECTRIC UTILITY OBLIGATIONS. Some of the Bonds in a Trust may be
obligations of issuers whose revenues are primarily derived from the sale of
electric energy. The problems faced by such issuers include the difficulty in
obtaining approval for timely and adequate rate increases from the applicable
public utility commissions, the difficulty of financing large construction
programs, increased competition, reductions in estimates of future demand for
electricity in certain areas of the country, the limitations on operations and
increased costs and delays attributable to environmental considerations, the
difficulty of the capital market in absorbing utility debt, the
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difficulty in obtaining fuel at reasonable prices and the effect of energy
conservation. All of such issuers have been experiencing certain of these
problems in varying degrees. In addition, Federal, state and municipal
governmental authorities may from time to time review existing, and impose
additional, regulations governing the licensing, construction and operation of
nuclear power plants, which may adversely affect the ability of the issuers of
certain of the Bonds in a Trust to make payments of principal and/or interest on
such Bonds.
TRANSPORTATION FACILITY REVENUE BONDS. Some of the Bonds in a Trust may be
obligations of issuers which are payable from and secured by revenues derived
from the ownership and operation of airports, public transit systems and ports.
The major portion of an airport's gross operating income is generally derived
from fees received from airlines pursuant to use agreements which consist of
annual payments for airport use, occupancy of certain terminal space, service
fees and leases. Airport operating income may therefore be affected by the
ability of the airlines to meet their obligations under the use agreements. The
air transport industry is experiencing significant variations in earnings and
traffic, due to increased competition, excess capacity, increased costs,
deregulation, traffic constraints and other factors, and several airlines are
experiencing severe financial difficulties. In particular, facilities with use
agreements involving airlines experiencing financial difficulty may experience a
reduction in revenue due to the possible inability of these airlines to meet
their use agreement obligations because of such financial difficulties and
possible bankruptcy. The Sponsor cannot predict what effect these industry
conditions may have on airport revenues which are dependent for payment on the
financial condition of the airlines and their usage of the particular airport
facility. Bonds that are secured primarily by the revenue collected by a public
transit system typically are additionally secured by a pledge of sales tax
receipts collected at the state or local level, or of other governmental
financial assistance. Transit system net revenues will be affected by variations
in utilization, which in turn may be affected by the degree of local
governmental subsidization, demographic and population shifts, and competition
from other forms of transportation; and by increased costs, including costs
resulting from previous deferrals of maintenance. Port authorities derive their
revenues primarily from fees imposed on ships using the facilities. The rate of
utilization of such facilities may fluctuate depending on the local economy and
on competition from competing forms of transportation such as air, rail and
trucks.
WATER AND/OR SEWERAGE OBLIGATIONS. Some of the Bonds in a Trust may be
obligations of issuers whose revenues are derived from the sale of water and/or
sewerage services. Such Bonds are generally payable from user fees. The problems
of such issuers include the ability to obtain timely and adequate rate
increases, population decline resulting in decreased user fees, the difficulty
of financing large construction programs, the limitations on operations and
increased costs and delays attributable to environmental considerations, the
increasing difficulty of obtaining or discovering new supplies of fresh water,
the effect of conservation programs and the impact of "no-growth" zoning
ordinances. All of such issuers have been experiencing certain of these problems
in varying degrees.
UNIVERSITY AND COLLEGE REVENUE OBLIGATIONS. Some of the Bonds in a Trust
may be obligations of issuers which are, or which govern the operation of,
colleges and universities and whose revenues are derived mainly from tuition,
dormitory revenues, grants and endowments. General problems of such issuers
include the prospect of a declining percentage of the population consisting of
"college" age individuals, possible inability to raise tuitions and fees
sufficiently to cover increased operating costs, the uncertainty of continued
receipt of Federal grants and state funding, and government legislation or
regulations which may adversely affect the revenues or costs of such issuers.
All of such issuers have been experiencing certain of these problems in varying
degrees.
BRIDGE AUTHORITY AND TOLLROAD OBLIGATIONS. Some of the Bonds in a Trust may
be obligations of issuers which derive their payments from bridge, road or
tunnel toll revenues. The revenues of such an issuer could be adversely affected
by competition from toll-free vehicular bridges and roads and alternative modes
of transportation. Such revenues could also be adversely affected by a reduction
in the availability of fuel to motorists or significant increases in the costs
thereof. Specifically, governmental regulations restricting the use of vehicles
in the New York City metropolitan area may adversely affect revenues of the
Triborough Bridge and Tunnel Authority.
DEDICATED-TAX SUPPORTED BONDS. Some of the Bonds in a Trust may be
obligations of issuers which are payable from and secured by tax revenues from a
designated source, which revenues are pledged to secure the bonds. The various
types of Bonds described below differ in structure and with respect to the
rights of the bondholders to the underlying property. Each type of dedicated-tax
supported Bond has distinct risks, only some of which are set forth below. One
type of dedicated-tax supported Bond is secured by the incremental tax received
on either real property or on sales within a specifically defined geographical
area; such tax generally will not provide bondholders with a lien on the
underlying property or revenues. Another type of dedicated-tax supported Bond is
secured by a special tax levied on real property within a defined geographical
area in such a manner that the tax is levied on those who benefit from the
project; such bonds typically provide for a statutory lien on the underlying
property for unpaid taxes. A third type of dedicated-tax supported Bond may be
secured by a tax levied upon the manufacture, sale or consumption of commodities
or upon the license to pursue certain occupations or
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upon corporate privileges within a taxing jurisdiction. As to any of these types
of Bonds, the ability of the designated revenues to satisfy the interest and
principal payments on such bonds may be affected by changes in the local
economy, the financial success of the enterprise responsible for the payment of
the taxes, the value of any property on which taxes may be assessed and the
ability to collect such taxes in a timely fashion. Each of these factors will
have a different affect on each distinct type of dedicated-tax supported bonds.
MUNICIPAL LEASE BONDS. Some of the Bonds in a Trust may be obligations that
are secured by lease payments of a governmental entity. Such payments are
normally subject to annual budget appropriations of the leasing governmental
entity. A governmental entity that enters into such a lease agreement cannot
obligate future governments to appropriate for and make lease payments but
covenants to take such action as is necessary to include any lease payments due
in its budgets and to make the appropriations therefor. A governmental entity's
failure to appropriate for and to make payments under its lease obligation could
result in insufficient funds available for payment of the obligations secured
thereby.
ORIGINAL ISSUE DISCOUNT BONDS AND STRIPPED OBLIGATIONS. Certain of the
Bonds in a Trust may be original issue discount bonds. These Bonds were issued
with nominal interest rates less than the rates then offered by comparable
securities and as a consequence were originally sold at a discount from their
face, or par, values. This original issue discount, the difference between the
initial purchase price and face value, is deemed under current law to accrue on
a daily basis and the accrued portion is treated as tax-exempt interest income
for federal income tax purposes. On sale or redemption, gain, if any, realized
in excess of the earned portion of original issue discount will be taxable as
capital gain. See "What is the Tax Status of Unitholders". The current value of
an original issue discount bond reflects the present value of its face amount at
maturity. In a stable interest rate environment, the market value of an original
issue discount bond would tend to increase more slowly in early years and in
greater increments as the bond approached maturity.
Certain of the original issue discount bonds in a Trust may be zero coupon
bonds. Zero coupon bonds do not provide for the payment of any current interest;
the buyer receives only the right to receive a final payment of the face amount
of the bond at its maturity. The effect of owning a zero coupon bond is that a
fixed yield is earned not only on the original investment but also, in effect,
on all discount earned during the life of the obligation. This implicit
reinvestment of earnings at the same rate eliminates the risk of being unable to
reinvest the income on such obligation at a rate as high as the implicit yield,
but at the same time also eliminates the holder's ability to reinvest at higher
rates in the future. For this reason, zero coupon bonds are subject to
substantially greater price fluctuations during periods of changing market
interest rates than are securities of comparable quality that pay interest
currently.
Original issue discount bonds, including zero coupon bonds, may be subject
to redemption at prices based on the issue price plus the amount of original
issue discount accreted to redemption (the "accreted value") plus, if
applicable, some premium. Pursuant to such call provisions an original issue
discount bond may be called prior to its maturity date at a price less than its
face value. See the "Schedules of Investments" for more information about the
call provisions of portfolio Bonds.
Certain of the Bonds in a Trust may be Stripped Obligations, which represent
evidences of ownership with respect to either the principal amount of or a
payment of interest on a tax-exempt obligation. An obligation is "stripped" by
depositing it with a custodian, which then effects a separation in ownership
between the bond and any interest payment which has not yet become payable, and
issues evidences of ownership with respect to such constituent parts. A Stripped
Obligation therefore has economic characteristics similar to zero coupon bonds,
as described above.
Each Stripped Obligation has been purchased at a discount from the amount
payable at maturity. With respect to each Unitholder, the Internal Revenue Code
treats as "original issue discount" that portion of the discount which produces
a yield to maturity (as of the date of purchase of the Unitholder's Units) equal
to the lower of the coupon rate of interest on the underlying obligation or the
yield to maturity on the basis of the purchase price of the Unitholder's Units
which is allocable to each Stripped Obligation. Original issue discount which
accrues with respect to a Stripped Obligation will be exempt from Federal income
taxation to the same extent as interest on the underlying obligations. (See
"WHAT IS THE TAX STATUS OF UNITHOLDERS?" in Part B of this Prospectus.)
Unitholders should consult their own tax advisers with respect to the state
and local tax consequences of owning original issue discount bonds or Stripped
Obligations. Under applicable provisions governing determination of state and
local taxes, interest on original issue discount bonds or Stripped Obligations
may be deemed to be received in the year of accrual even though there is no
corresponding cash payment.
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WHY AND HOW ARE THE BONDS INSURED?
INSURANCE ON BONDS
INSURED TRUSTS--The Insurer's policy unconditionally and irrevocably guarantees
the full and complete payment required to be made by or on behalf of the Issuer
to the Paying Agent or its successor of an amount equal to (i) the principal of
(either at the stated maturity or by an advancement of maturity pursuant to a
mandatory sinking fund payment) and interest on, the Bonds as such payments
shall become due but shall not be so paid (except that in the event of any
acceleration of the due date of such principal by reason of mandatory or
optional redemption or acceleration resulting from default or otherwise, other
than any advancement of maturity pursuant to a mandatory sinking fund payment,
the payments guaranteed by the Insurer's policy shall be made in such amounts
and at such times as such payments of principal would have been due had there
not been any such acceleration); and (ii) the reimbursement of any such payment
which is subsequently removed from any owner of the Bonds purusant to a final
judgment by a court of competent jurisdiction that such payment constitutes an
avoidable preference to such owner within the meaning of any applicable
bankruptcy law (a "Preference").
The Insurer's policy does not insure against loss of any prepayment premium
which may at any time be payable with respect to any Bond. The Insurer's policy
does not, under any circumstance, insure against loss relating to: (i) optional
or mandatory redemptions (other than mandatory sinking fund redemptions); (ii)
any payments to be made on an accelerated basis; (iii) payments of the purchase
price of Bonds upon tender by an owner thereof; or (iv) any Preference relating
to (i) through (iii) above. The Insurer's policy also does not insure against
nonpayment of principal of or interest on the Bonds resulting from the
insolvency, negligence or any other act or omission of the Paying Agent or any
other paying agent for the Bonds.
Upon receipt of telephonic notice, such notice subsequently confirmed in
writing by registered or certified mail, or upon receipt of written notice by
registered or certified mail, by the Insurer from the Paying Agent or any owner
of a Bond the payment of an insured amount for which is then due, that such
required payment has not been made, the Insurer on the due date of such payment
or within one business day after receipt of notice of such nonpayment, whichever
is later, will make a deposit of funds, in an account with State Street Bank and
Trust Company, N.A., in New York, New York, or its successor, sufficient for the
payment of any such insured amounts which are then due. Upon presentment and
surrender of such Bonds or presentment of such other proof of ownership of the
Bonds, together with any appropriate instruments of assignment to evidence the
assignment of the insured amounts due on the Bonds as are paid by the Insurer,
and appropriate instruments to effect the appointment of the Insurer as agent
for such owners of the Bonds in any legal proceeding related to payment of
insured amounts on the Bonds, such instruments being in a form satisfactory to
State Street Bank and Trust Company, N.A. State Street Bank and Trust Company,
N.A. shall disclose to such owners or the Paying Agent payment of the insured
amounts due on such Bonds, less any amount held by the Paying Agent for the
payment of such insured amounts and legally available therefor.
The Insurer is the principal operating subsidiary of MBIA, Inc., a New York
Stock Exchange listed company. MBIA Inc. is not obligated to pay the debts of or
claims against the Insurer. The Insurer is domiciled in the State of New York
and licensed to do business in and subject to regulation under the laws of all
50 states, the District of Columbia, the Commonwealth of Puerto Rico, the
Commonwealth of the Northern Mariana Islands, the Virgin Islands of the United
States and the Territory of Guam. The Insurer has two European branches, one in
the Republic of France and the other in the Kingdom of Spain. New York has laws
prescribing minimum capital requirements, limiting classes and concentrations of
investments and requiring the approval of policy rates and forms. State laws
also regulate the amount of both the aggregate and individual risks that may be
insured, the payment of dividends by the insurer, changes in control and
transactions among affiliates. Additionally, the Insurer is required to maintain
contingency reserves on its liabilities in certain amounts and for certain
periods of time.
As of December 31, 1995 the Insurer had admitted assets of $3.8 billion
(audited), total liabilities of $2.5 billion (audited), and total capital and
surplus of $1.3 billion (audited) determined in accordance with statutory
accounting practices prescribed or permitted by insurance regulatory
authorities. As of September 30, 1996, the Insurer had admitted assets of $4.3
billion (unaudited), total liabilities of $2.9 billion (unaudited), and total
capital and surplus of $1.4 billion (unaudited) determined in accordance with
statutory accounting practices prescribed or permitted by insurance regulatory
authorities.
Furthermore, copies of the Insurer's year end financial statements prepared
in accordance with statutory accounting practices are available without charge
from the Insurer. A copy of the Annual Report on Form 10-K of MBIA, Inc. is
available from the Insurere or the Securities and Exchange Commission. The
address of the Insurer is 113 King Street, Armonk, New York 10504. The telephone
number of the Insurer is (914) 273-4545.
Moody's Investors Service rates the claims paying ability of the Insurer
"Aaa".
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Standard & Poor's Ratings Service, a division of the McGraw Hill Companies,
Inc. rates the claims paying ability of the Insurer "AAA".
Fitch Investors Service, L.P., rates the claims paying ability of the
Insurer "AAA".
Each rating of the Insurer should be evaluated independently. No application
has been made to any other rating agency in order to obtain additional ratings
on the Bonds. The ratings reflect the respective rating agency's current
assessment of the creditworthiness of the Insurer and its ability to pay claims
on its policies of insurance. Any further explanation as to the significance of
the above ratings may be obtained only from the applicable rating agency.
The above ratings are not recommendations to buy, sell or hold the Bonds,
and such ratings may be subject to revision or withdrawal at any time by the
rating agencies. Any downward revision or withdrawal of either or both ratings
may have an adverse effect on the market price of the Bonds. The Insurer does
not guaranty the market price of the Bonds nor does it guaranty that the ratings
on the Bonds will not be revised or withdrawn.
TRADITIONAL TRUSTS--Insurance guaranteeing the timely payment, when due, of all
principal and interest on certain Bonds in a Traditional Trust may have been
obtained by the Sponsor, issuer or underwriter of the particular Bonds involved
or by another party. Such insurance, which provides coverage substantially the
same as that obtained with respect to Bonds in Insured Trusts as described
above, is effective so long as the insured Bond is outstanding and the insurer
remains in business. Insurance relates only to the particular Bond and not to
the Units offered hereby or to their market value. Insured Bonds have received a
rating of "Aaa" by Moody's Investors Service, Inc. and/or "AAA" by Standard &
Poor's Corporation in recognition of such insurance.
If a Bond in a Traditional Trust is insured, the Schedule of Investments in
Part A of this Prospectus will identify the insurer. Such insurance will be
provided by Financial Guaranty Insurance Company ("FGIC"), AMBAC Indemnity
Corporation ("AMBAC"), Bond Investors Guaranty Insurance Company, now known as
MBIA Corp. of Illinois ("BIG"), Capital Guaranty Insurance Company ("CGIC"),
Financial Security Assurance, Inc. ("FSA"), Municipal Bond Insurance Association
(the "Association"), MBIA Insurance Corporation ("MBIA") or Connie Lee Insurance
Company ("ConnieLee"). The Sponsor to date has purchased and presently intends
to purchase insurance for Bonds in Traditional Trusts exclusively from MBIA (see
the preceding disclosure regarding MBIA). There can be no assurance that any
insurer listed therein will be able to satisfy its commitments in the event
claims are made in the future. However, Standard & Poor's Corporation has rated
the claims-paying ability of each insurer "AAA," and Moody's Investors Service
has rated all bonds insured by each such insurer, except ConnieLee, "Aaa."
Moody's Investor's Service gives no ratings for bonds insured by ConnieLee.
Because any such insurance will be effective so long as the insured Bonds
are outstanding, such insurance will be taken into account in determining the
market value of such Bonds and therefore some value attributable to such
insurance will be included in the value of the Units of the Trust that includes
such Bonds. The insurance does not, however, guarantee the market value of the
Bonds or of the Units.
ACCUMULATION PLAN
The Sponsor, John Nuveen & Co. Incorporated, is also the principal underwriter
of the Accumulation Funds listed in the following table. Each of these funds is
an open-end, diversified management investment company into which Unitholders
may choose to reinvest Trust distributions automatically, without any sales
charge. Unitholders may reinvest both interest and principal distributions or
principal distributions only. Each Accumulation Fund has investment objectives
which differ in certain respects from those of the Trusts and may invest in
securities which would not be eligible for deposit in the Trusts. The investment
adviser to each Accumulation Fund is a wholly-owned subsidiary of the Sponsor.
Unitholders should contact their financial adviser or the Sponsor to determine
which of the Accumulation Funds they may reinvest into, as reinvestment in
certain of the Accumulation Funds may be restricted to residents of a particular
state or states. Unitholders may obtain a prospectus for each Accumulation Fund
through their financial adviser or through the Sponsor at (800) 621-7227. For a
more detailed description, Unitholders should read the prospectus of the
Accumulation Fund in which they are interested.
The following is a complete list of the Accumulation Funds currently available,
as of the Date of Deposit of this Prospectus, to Unitholders under the
Accumulation Plan. The list of available Accumulation Funds is subject to change
without the consent of any of the Unitholders.
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ACCUMULATION FUNDS
MUTUAL FUNDS
NUVEEN FLAGSHIP MUNICIPAL TRUST
Nuveen Municipal Bond Fund
Nuveen Insured Municipal Bond Fund
Nuveen Flagship All-American Municipal Bond Fund
Nuveen Flagship Limited Term Municipal Bond Fund
Nuveen Flagship Intermediate Municipal Bond Fund
NUVEEN FLAGSHIP MULTISTATE TRUST I
Nuveen Flagship Arizona Municipal Bond Fund
Nuveen Flagship Colorado Municipal Bond Fund
Nuveen Flagship Florida Municipal Bond Fund
Nuveen Flagship Florida Intermediate Municipal Bond Fund
Nuveen Maryland Municipal Bond Fund
Nuveen Flagship New Mexico Municipal Bond Fund
Nuveen Flagship Pennsylvania Municipal Bond Fund
Nuveen Flagship Virginia Municipal Bond Fund
NUVEEN FLAGSHIP MULTISTATE TRUST II
Nuveen California Municipal Bond Fund
Nuveen California Insured Municipal Bond Fund
Nuveen Flagship Connecticut Municipal Bond Fund
Nuveen Massachusetts Municipal Bond Fund
Nuveen Massachusetts Insured Municipal Bond Fund
Nuveen Flagship New Jersey Municipal Bond Fund
Nuveen Flagship New Jersey Intermediate Municipal Bond Fund
Nuveen Flagship New York Municipal Bond Fund
Nuveen New York Insured Municipal Bond Fund
NUVEEN FLAGSHIP MULTISTATE TRUST III
Nuveen Flagship Alabama Municipal Bond Fund
Nuveen Flagship Georgia Municipal Bond Fund
Nuveen Flagship Louisiana Municipal Bond Fund
Nuveen Flagship North Carolina Municipal Bond Fund
Nuveen Flagship South Carolina Municipal Bond Fund
Nuveen Flagship Tennessee Municipal Bond Fund
NUVEEN FLAGSHIP MULTISTATE TRUST IV
Nuveen Flagship Kansas Municipal Bond Fund
Nuveen Flagship Kentucky Municipal Bond Fund
Nuveen Flagship Kentucky Limited Term Municipal Bond Fund
Nuveen Flagship Michigan Municipal Bond Fund
Nuveen Flagship Missouri Municipal Bond Fund
Nuveen Flagship Ohio Municipal Bond Fund
Nuveen Flagship Wisconsin Municipal Bond Fund
Flagship Utility Income Fund
Nuveen Growth and Income Stock Fund
MONEY MARKET FUNDS
Nuveen California Tax-Free Money Market Fund
Nuveen Massachusetts Tax-Free Money Market Fund
Nuveen New York Tax-Free Money Market Fund
Nuveen Tax-Free Reserves, Inc.
Nuveen Tax-Exempt Money Market Fund, Inc.
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Each person who purchases Units of a Trust may become a participant in the
Accumulation Plan and elect to have his or her distributions on Units of the
Trust invested directly in shares of one of the Accumulation Funds. Reinvesting
Unitholders may select any interest distribution plan. Thereafter, each
distribution of interest income or principal on the participant's Units
(principal only in the case of a Unitholder who has chosen to reinvest only
principal distributions) will, on the applicable distribution date, or the next
day on which the New York Stock Exchange is normally open ("business day") if
the distribution date is not a business day, automatically be received by the
transfer agent for each of the Accumulation Funds, on behalf of such participant
and applied on that date to purchase shares (or fractions thereof) of the
Accumulation Fund chosen at net asset value as computed as of 4:00 p.m. eastern
time on each such date. All distributions will be reinvested in the Accumulation
Fund chosen and no part thereof will be retained in a separate account. These
purchases will be made without a sales charge.
The Transfer Agent of the Accumulation Fund will mail to each participant in
the Accumulation Plan a quarterly statement containing a record of all
transactions involving purchases of Accumulation Fund shares (or fractions
thereof) with Trust interest distributions or as a result of reinvestment of
Accumulation Fund dividends. Any distribution of principal used to purchase
shares of an Accumulation Fund will be separately confirmed by the Transfer
Agent. Unitholders will also receive distribution statements from the Trustee
detailing the amounts transferred to their Accumulation Fund accounts.
Participants may at any time, by so notifying the Trustee in writing, elect
to change the Accumulation Fund into which their distributions are being
reinvested, to change from principal only reinvestment to reinvestment of both
principal and interest or vice versa, or to terminate their participation in the
Accumulation Plan altogether and receive future distributions on their Units in
cash. There will be no charge or other penalty for such change of election or
termination. The character of Trust distributions for income tax purposes will
remain unchanged even if they are reinvested in an Accumulation Fund.
INFORMATION ABOUT THE SPONSOR
Founded in 1898, Nuveen is the oldest and largest investment banking firm
specializing in the underwriting and distribution of tax-exempt securities and
maintains the largest research department in the investment banking community
devoted exclusively to the analysis of municipal securities. In 1961, Nuveen
began sponsoring the Nuveen Tax-Free Unit Trust and since that time has issued
more than $36 billion in tax-exempt unit trusts, including over $12 billion in
tax-exempt insured unit trusts. The Sponsor is also principal underwriter of the
registered open-end investment companies set forth herein under "Accumulation
Plan" as well as for the Golden Rainbow A James Advised Mutual Fund, and acted
as co-managing underwriter of Nuveen Municipal Value Fund, Inc., Nuveen
California Municipal Value Fund, Inc., Nuveen New York Municipal Value Fund,
Inc., Nuveen Municipal Income Fund, Inc., Nuveen Premium Income Municipal Fund,
Inc., Nuveen Performance Plus Municipal Fund, Inc., Nuveen California
Performance Plus Municipal Fund, Inc., Nuveen New York Performance Plus
Municipal Fund, Inc., Nuveen Municipal Advantage Fund, Inc., Nuveen Municipal
Market Opportunity Fund, Inc., Nuveen California Municipal Market Opportunity
Fund, Inc., Nuveen Investment Quality Municipal Fund, Inc., Nuveen California
Investment Quality Municipal Fund, Inc., Nuveen New York Investment Quality
Municipal Fund, Inc., Nuveen Insured Quality Municipal Fund, Inc., Nuveen
Florida Investment Quality Municipal Fund, Nuveen Pennsylvania Investment
Quality Municipal Fund, Nuveen New Jersey Investment Quality Municipal Fund,
Inc., and the Nuveen Select Quality Municipal Fund, Inc., Nuveen California
Select Quality Municipal Fund, Inc., Nuveen New York Select Quality Municipal
Fund, Inc., Nuveen Quality Income Municipal Fund, Inc., Nuveen Insured Municipal
Opportunity Fund, Inc., Nuveen Florida Quality Income Municipal Fund, Nuveen
Michigan Quality Income Municipal Fund, Inc., Nuveen Ohio Quality Income
Municipal Fund, Inc., Nuveen Texas Quality Income Municipal Fund, Nuveen
California Quality Income Municipal Fund, Inc., Nuveen New York Quality Income
Municipal Fund, Inc., Nuveen Premier Municipal Income Fund, Inc., Nuveen Premier
Insured Municipal Income Fund, Inc., Nuveen Select Tax-Free Income Portfolio,
Nuveen Select Tax-Free Income Portfolio 2, Nuveen Insured California Select
Tax-Free Income Portfolio, Nuveen Insured New York Select Tax-Free Income
Portfolio, Nuveen Premium Income Municipal Fund 2, Inc., Nuveen Select Tax-Free
Income Portfolio 3, Nuveen Select Maturities Municipal Fund, Nuveen Insured
California Premium Income Municipal Fund, Inc., Nuveen Arizona Premium Income
Municipal Fund, Inc., Nuveen Insured Florida Premium Income Municipal Fund,
Nuveen Michigan Premium Income Municipal Fund, Inc., Nuveen New Jersey Premium
Income Municipal Fund, Inc., Nuveen Insured New York Premium Income Municipal
Fund, Inc., Nuveen Premium Income Municipal Fund 4, Inc., Nuveen Pennsylvania
Premium Income Municipal Fund 2, Nuveen Maryland Premium Income Municipal Fund,
Nuveen Virginia Premium Income Municipal Fund, Nuveen Massachusetts Premium
Income Municipal Fund, Nuveen Insured California Premium Income Municipal Fund
2, Inc., Nuveen Washington Premium Income Municipal Fund, Nuveen Georgia Premium
Income Municipal Fund, Nuveen Missouri Premium Income Municipal Fund, Nuveen
Connecticut Premium Income Municipal Fund, Nuveen North Carolina Premium Income
Municipal Fund, Nuveen California
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<PAGE>
Premium Income Municipal Fund, Nuveen Insured Premium Income Municipal Fund 2,
all registered closed-end management investment companies. These registered
open-end and closed-end investment companies currently have approximately $35
billion in securities under management. Over 1,000,000 individuals have invested
to date in Nuveen's tax-exempt funds and trusts. Nuveen is a subsidiary of The
John Nuveen Company which, in turn, is approximately 78% owned by the St. Paul
Companies, Inc. ("St. Paul"). St. Paul is located in St. Paul, Minnesota and is
principally engaged in providing property-liability insurance through
subsidiaries. Nuveen is a member of the National Association of Securities
Dealers, Inc. and the Securities Industry Association and has its principal
offices located in Chicago (333 W. Wacker Drive) and New York (Swiss Bank Tower,
10 East 50th Street). Nuveen maintains 11 regional offices.
To help advisers and investors better understand and more efficiently use an
investment in the Trust to reach their investment goals, the Trust's sponsor,
John Nuveen & Co. Incorporated, may advertise and create specific investment
programs and systems. For example, such activities may include presenting
information on how to use an investment in the Trust, alone or in combination
with an investment in other mutual funds or unit investment trusts sponsored by
Nuveen, to accumulate assets for future education needs or periodic payments
such as insurance premiums. The Trust's sponsor may produce software or
additional sales literature to promote the advantages of using the Trust to meet
these and other specific investor needs.
The Sponsor offers a program of advertising support to registered
broker-dealer firms, banks and bank affiliates ("Firms") that sell Trust Units
or shares of Nuveen Open-End Mutual Funds (excluding money-market funds)
("Funds"). Under this program, the Sponsor will pay or reimburse the Firm for up
to one half of specified media costs incurred in the placement of advertisements
which jointly feature the Firm and the Nuveen Funds and Trusts. Reimbursements
to the Firm will be based on the number of the Firm's registered representatives
who have sold Fund Shares and/or Trust Units during the prior calendar year
according to an established schedule. Reimbursements under this program will be
made by the Sponsor and not by the Funds or Trusts.
DESCRIPTION OF RATINGS*
STANDARD & POOR'S CORPORATION. A description of the applicable Standard &
Poor's Corporation rating symbols and their meanings follows:
A Standard & Poor's rating is a current assessment of the creditworthiness
of an obligor with respect to a specific debt obligation. This assessment may
take into consideration obligors such as guarantors, insurers or lessees.
The rating is not a recommendation to purchase, sell or hold a security,
inasmuch as it does not comment as to market price or suitability for a
particular investor.
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. Standard
& Poor's does not perform an audit in connection with any rating and may, on
occasion, rely on unaudited financial information. The ratings may be changed,
suspended or withdrawn as a result of changes in, or unavailability of, such
information, or for other circumstances.
The ratings are based, in varying degrees, on the following considerations:
I. Likelihood of default--capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance
with the terms of the obligation;
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or other arrangements under
the laws of bankruptcy and other laws affecting creditors' rights.
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.
AA--Bonds rated AA have a very strong capacity to pay interest and repay
principal, and differ from the highest rated issues only in small degree.
A--Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
- ----------
*As published by the rating companies.
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<PAGE>
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in the higher rated categories.
PLUS (+) OR MINUS (-): The ratings from "AA" to "BB" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
PROVISIONAL RATINGS: The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful completion of the
project being financed by the issuance of the bonds being rated and indicates
that payment of debt service requirements is largely or entirely dependent upon
the successful and timely completion of the project. This rating, however, while
addressing credit quality subsequent to completion of the project, makes no
comment on the likelihood of, or the risk of default upon failure of, such
completion. Accordingly, the investor should exercise his own judgment with
respect to such likelihood and risk.
NOTE RATINGS: A Standard & Poor's note rating reflects the liquidity
concerns and market access risks unique to notes. Notes due in 3 years or less
will likely receive a note rating. Notes maturing beyond 3 years will most
likely receive a long-term debt rating.
Note rating symbols are as follows:
SP-1 Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety
characteristics will be given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
MOODY'S INVESTORS SERVICE, INC. A brief description of the applicable
Moody's Investors Service, Inc. rating symbols and their meanings follows:
Aaa--Bonds which are rated Aaa are judged to be the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues. Their safety is so absolute that,
with the occasional exception of oversupply in a few specific instances,
characteristically, their market value is affected solely by money market
fluctuations.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities. Their market value is virtually immune to all but money market
influences, with the occasional exception of oversupply in a few specific
instances.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future. The market
value of A-rated bonds may be influenced to some degree by economic performance
during a sustained period of depressed business conditions, but, during periods
of normalcy, A-rated bonds frequently move in parallel with Aaa and Aa
obligations, with the occasional exception of oversupply in a few specific
instances.
Moody's bond rating symbols may contain numerical modifiers of a generic
rating classification. The modifier 1 indicates that the bond ranks at the high
end of its category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of its generic rating
category.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well. The market value of Baa-rated
bonds is more sensitive to changes in economic circumstances, and aside from
occasional speculative factors applying to some bonds of this class, Baa market
valuations move in parallel with Aaa, Aa and A obligations during periods of
economic normalcy, except in instances of oversupply.
Con. (--)--Bonds for which the security depends upon the completion of some
act or the fulfillment of some condition are rated conditionally. These are
bonds secured by (a) earnings of projects under construction, (b) earnings of
projects unseasoned in operation experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting condition
attaches. Parenthetical rating denotes probable credit stature upon completion
of construction or elimination of basis of condition.
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NOTE RATINGS:
MIG 1 This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2 This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
FITCH INVESTORS SERVICE, INC. A brief description of the applicable Fitch
Investors Service, Inc. rating symbols and their meanings follow:
AAA--Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA--Bonds considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated AAA. Bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and therefore
impair timely payment. The likelihood that the ratings of these bonds will fall
below investment grade is higher than for bonds with higher ratings.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
NOTE RATINGS:
FIN-1 Notes assigned this rating are regarded as having the strongest
degree of assurance for timely payment.
FIN-2 Notes assigned this rating reflect a degree of assurance for timely
payment only slightly less in degree than the highest category.
HOW THE TRUST COMPARES PERFORMANCE
The Sponsor may compare the estimated returns of the Trust with the returns
or yields of other tax-free and taxable investments, often on a taxable
equivalent basis. In addition, the Sponsor from time to time may quote various
performance measures and studies in order to compare the historical returns
available from an investment in municipal securities with investments in both
tax-free and taxable securities.
In September 1995, Nuveen Research prepared one such study which compared
the after-tax value of $100,000 initially invested in 1975 in various asset
classes including municipal bonds, treasury bonds and corporate bonds. As
indicated in the chart provided below, the 20-year study shows that municipal
bonds significantly outperformed corporate and treasury bonds once the effects
of taxes were factored in. In fact, over the 20-year period, municipal bond
returns in dollars were more than double those of treasury bonds.
AFTER-TAX VALUE OF $100,000 INVESTED IN 1975*
The graph appearing on this page of the Information Supplement compares
after-tax total returns of $100,000 initially in 1975 in each of the Lehman
Brothers MuniBond Index, Long-Term Treasury Index and Long-Term Corporate Index.
As indicated in the graph, such an investment in the Lehman Brothers MuniBond
Index, Long-Term Treasury Index and Long-Term Corporate Index would have
appreciated to $448,740, $267,668, and $304,049, respectively at the end of
1994. The graph assumes all proceeds of investment are reinvested at the
respective index rates at the time of reinvestment and also assumes that 20% of
the assets in each category are turned over annually and proceeds are reinvested
in the respective indexes. The tax rates assumed to generate the after-tax total
returns were based upon the income and capital gain rates applicable each year
from 1975-1994 for an investor who earned the inflation-adjusted equivalents of
$400,000 in 1994. In addition, treasury returns were "grossed up" an assumed 5%
to take into account the Treasuries' exemption from state income tax. The graph
is for illustrative purposes only, and does not represent the return or
performance of any Nuveen Tax-Free Unit Trust and is not intended to predict
future results.
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* The graph compares after-tax total returns using the Lehman Brothers
MuniBond Index, Long-Term Treasury Index and Long-Term Corporate Index. The
graph assumes all proceeds of investment are reinvested at the respective index
rates at the time of reinvestment and also assumes that 20% of the assets in
each category are turned over annually and proceeds are reinvested in the
respective indexes. The tax rates assumed to generate the after-tax total
returns were based upon the income and capital gain rates applicable each year
from 1975-1994 for an investor who earned the inflation-adjusted equivalents of
$100,000 in 1994. In addition, treasury returns were "grossed up" an assumed 5%
to take into account the Treasuries' exemption from state income tax. The graph
is for illustrative purposes only, and does not represent the return or
performance of any Nuveen Tax-Free Unit Trust and is not intended to predict
future results.
A comparison of the estimated returns of the Trust and the historic
performance of municipal bonds to the returns and performance of other
investments is one element to consider in making an informed investment
decision. Taxable investments have investment characteristics that differ from
those of the Trust. U.S. Government bonds are long-term investments backed by
the full faith and credit of the U.S. Government and are subject to federal
income tax but are exempt from state income taxes. Bank CDs are generally
short-term FDIC insured investments, which pay fixed principal and interest but
are subject to fluctuating rollover rates. Both bank CDs and corporate bonds are
generally subject to both federal and state income taxes. Money market funds are
short term investments with stable net asset values, fluctuating yields and
special features that enhance liquidity.
HOW TO CALCULATE YOUR ESTIMATED INCOME
The examples provided below illustrate how to calculate the estimated annual
income generated by a hypothetical $10,000 investment in each respective Trust.
The illustrations assume that the investment was made on the day prior to the
date of deposit by an investor electing the monthly distribution plan. These
hypothetical examples are for illustrative purposes only and not intended to
reflect or predict the results of any actual investment.
<TABLE>
<S> <C> <C> <C> <C>
EXAMPLE OF HOW TO CALCULATE YOUR ESTIMATED INCOME:
NORTH CAROLINA TRADITIONAL TRUST 304
$10,000 DIVIDED BY $101.75 = 98.280
Investment Offering price and # of units purchased
(as of 02/24/97) accrued interest
98.280 X $4.9931 = $490.72
# of units purchased Annual income per unit annual income
(monthly plan)
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
EXAMPLE OF HOW TO CALCULATE YOUR ESTIMATED INCOME:
PENNSYLVANIA INSURED TRUST 222
$10,000 DIVIDED BY $99.80 = 100.200
Investment Offering price and # of units purchased
(as of 02/24/97) accrued interest
100.200 X $5.0044 = $501.44
# of units purchased Annual income per unit annual income
(monthly plan)
</TABLE>
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APPENDIX B
PENNSYLVANIA DISCLOSURE
ECONOMIC FACTORS--PENNSYLVANIA
RISK FACTORS--Prospective investors should consider the financial
difficulties and pressures which the Commonwealth of Pennsylvania (the
"Commonwealth" or "Pennsylvania") and certain of its municipal subdivisions have
undergone. Both the Commonwealth and the City of Philadelphia have historically
experienced significant revenue shortfalls. There can be no assurance that the
Commonwealth will not experience further declines in economic conditions or that
portions of the municipal obligations purchased by the Fund will not be affected
by such declines. Without intending to be complete, the following briefly
summarizes some of these difficulties and the current financial situation, as
well as some of the complex factors affecting the financial situation in the
Commonwealth. It is derived from sources that are generally available to
investors and is based in part on information obtained from various agencies in
the Commonwealth. No independent verification has been made of the following
information.
STATE ECONOMY--Pennsylvania has been historically identified as a
heavy-industry state although that reputation has changed over the last 30 years
as the industrial composition of the Commonwealth diversified when the coal,
steel and railroad industries began to decline. The major new sources of growth
in the Commonwealth are in the service sector, including trade, medical and the
health services, education and financial institutions. The Commonwealth's
agricultural industries are also an important component of its economic
structure, accounting for more than $3.6 billion in crop and livestock products
annually while agribusiness and food related industries support $39 billion in
economic activity annually.
Non-manufacturing employment in the Commonwealth has increased steadily
since 1980 to its 1995 level of 82.1 percent of total Commonwealth employment.
The growth in employment experienced in the Commonwealth during such periods is
comparable to the growth in employment in the Middle Atlantic region of the
United States. Manufacturing, which contributed 17.9 percent of 1995
non-agricultural employment, has fallen behind both the services sector and the
trade sector as the largest single source of employment within the Commonwealth.
In 1995, the services sector accounted for 30.4 percent of all non-agricultural
employment in the Commonwealth while the trade sector accounted for 22.8
percent.
The Commonwealth recently experienced a slowdown in its economy. Moreover,
economic strengths and weaknesses vary in different parts of the Commonwealth.
In general, heavy industry and manufacturing have been facing increasing
competition from foreign producers. During 1995, the annual average unemployment
rate in the Commonwealth was 5.9 percent compared to 5.6 percent for the United
States. For September 1996 the unadjusted unemployment rate was 4.8 percent in
the Commonwealth and 5.0 percent in the United States, while the seasonally
adjusted unemployment rate for the Commonwealth was 5.0 percent and for the
United States was 5.2 percent.
STATE BUDGET--The Commonwealth operates under an annual budget that is
formulated and submitted for legislative approval by the Governor each February.
The Pennsylvania Constitution requires that the Governor's budget proposal
consist of three parts: (i) a balanced operating budget setting forth proposed
expenditures and estimated revenues from all sources and, if estimated revenues
and available surplus are less than proposed expenditures, recommending specific
additional sources of revenue sufficient to pay the deficiency; (ii) a capital
budget setting forth proposed expenditures to be financed from the proceeds of
obligations of the Commonwealth or its agencies or from operating funds; and
(iii) a financial plan for not less than the succeeding five fiscal years, that
includes for each year projected operating expenditures and estimated revenues
and projected expenditures for capital projects. The General Assembly may add,
change or delete any items in the budget prepared by the Governor, but the
Governor retains veto power over the individual appropriations passed by the
legislature. The Commonwealth's fiscal year begins on July 1 and ends on June
30.
All funds received by the Commonwealth are subject to appropriation in
specific amounts by the General Assembly or by executive authorization by the
Governor. Total appropriations enacted by the General Assembly may not exceed
the ensuing year's estimated revenues, plus (less) the unappropriated fund
balance (deficit) of the preceding year, except for constitutionally authorized
debt service payments. Appropriations from the principal operating funds of the
Commonwealth (the General Fund, the Motor License Fund and the State Lottery
Fund) are generally made for one fiscal year and are returned to the
unappropriated surplus of the fund if not spent or encumbered by the end of the
fiscal year. The Constitution specifies that a surplus of operating funds at the
end of a fiscal year must be appropriated for the ensuing year.
Pennsylvania uses the "fund" method of accounting. For purposes of
government accounting, a "fund" is an independent fiscal and accounting entity
with a self-balancing set of accounts, recording cash and/or other
B-1
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resources together with all related liabilities and equities that are segregated
for the purpose of carrying on specific activities or attaining certain
objectives in accordance with the fund's special regulations, restrictions or
limitations. In the Commonwealth, funds are established by legislative enactment
or in certain cases by administrative action. Over 150 funds have been
established for the purpose of recording the receipt and disbursement of moneys
received by the Commonwealth. Annual budgets are adopted each fiscal year for
the principal operating funds of the Commonwealth and several other special
revenue funds. Expenditures and encumbrances against these funds may only be
made pursuant to appropriation measures enacted by the General Assembly and
approved by the Governor. The General Fund, the Commonwealth's largest fund,
receives all tax revenues, non-tax revenues and federal grants and entitlements
that are not specified by law to be deposited elsewhere. The majority of the
Commonwealth's operating and administrative expenses are payable from the
General Fund. Debt service on all bond indebtedness of the Commonwealth, except
that issued for highway purposes or for the benefit of other special revenue
funds, is payable from the General Fund.
Financial information for the principal operating funds of the Commonwealth
are maintained on a budgetary basis of accounting, which is used for the purpose
of ensuring compliance with the enacted operating budget. Since 1984, the
Commonwealth has also prepared annual financial statements in accordance with
generally accepted accounting principles ("GAAP"). Budgetary basis financial
reports are based on a modified cash basis of accounting as opposed to a
modified accrual basis of accounting prescribed by GAAP. The budgetary basis
financial information is adjusted at fiscal year-end to reflect appropriate
accruals for financial reporting in conformity with GAAP.
RECENT FINANCIAL CONDITIONS--From fiscal 1984, when the Commonwealth first
prepared its financial statements on a GAAP basis, through fiscal 1989, the
Commonwealth reported a positive unreserved-undesignated fund balance for its
governmental fund types at each fiscal year end. Slowing economic growth during
1990, leading to a national economic recession beginning in fiscal 1991, reduced
revenue growth and increased costs of certain governmental programs and
contributed to negative unreserved-undesignated fund balances at the end of the
1990 and 1991 fiscal years. The negative unreserved-undesignated fund balance
was due largely to operating deficits in the General Fund and the State Lottery
Fund during those fiscal years. Actions taken during fiscal 1992 to bring the
General Fund budget back into balance, including tax increases and expenditure
restraints, resulted in a $1.1 billion reduction to the unreserved-undesignated
fund deficit for combined governmental fund types and a return to a positive
fund balance. Financial performance continued to improve during the 1993 and
1994 fiscal years. The fund balance for the governmental fund types increased
from $1,692.8 million on June 30, 1993, as restated, to $1,982.0 million on June
30, 1994, an increase of $289.2 million. An unreserved-undesignated fund balance
of $334.7 million was recorded for fiscal 1994 year end. At June 30, 1995, the
fund balance totaled $1,927.6 million, including an unreserved-undesignated fund
balance of $104.8 million.
FINANCIAL RESULTS FOR RECENT FISCAL YEARS--For the five-year period from
fiscal 1991 through fiscal 1995, total revenues and other sources rose at a 9.1
percent average annual rate while total expenditures and other uses grew by 7.4
percent annually. Over two-thirds of the increase in total revenues and other
sources during this period occurred during fiscal 1992 when a $2.7 billion tax
increase was enacted to address a fiscal 1991 budget deficit and to fund
increased expenditures for fiscal 1992. For the four-year period from fiscal
1992 through fiscal 1995, total revenues and other sources increased at an
annual average of 3.3 percent, less than one-half the rate of increase for the
five-year period beginning with fiscal 1991. This slower rate of growth was due,
in part, to tax rate reductions and other tax law revisions that restrained the
growth of tax receipts for fiscal years 1993, 1994 and 1995.
Expenditures and other uses followed a pattern similar to that for revenues,
although with smaller growth rates, during the fiscal 1991 through fiscal 1995
period. Program areas having the largest increase in costs for the fiscal 1991
to fiscal 1995 period related to protection of persons and property, an
expansion of state prisons, and public health and welfare. Recently, efforts to
restrain the rapid expansion of public health and welfare program costs have
resulted in expenditure increases at or below the total rate of increase for
total expenditures in each fiscal year.
FISCAL 1994 FINANCIAL RESULTS--Commonwealth revenues during the 1994 fiscal
year totaled $15,210.7 million, $38.6 million above the fiscal year estimate,
and 3.9 percent over commonwealth revenues during the 1993 fiscal year. The
sales tax was an important contributor to the higher than estimated revenues.
The strength of collections from the sales tax offset the lower than budgeted
performance of the personal income tax that ended the 1994 fiscal year $74.4
million below estimate. The shortfall in the personal income tax was largely due
to shortfalls in income not subject to withholding such as interest, dividends
and other income. Expenditures, excluding pooled financing expenditures and net
of all fiscal 1994 appropriation lapses, totaled $14,934.4 million representing
a 7.2 percent increase over fiscal 1993 expenditures. Medical assistance and
prisons spending
B-2
<PAGE>
contributed to the rate of spending growth for the 1994 fiscal year. The
Commonwealth maintained an operating balance on a budgetary basis for fiscal
1994 producing a fiscal year ending unappropriated surplus of $335.8 million.
FISCAL 1995 FINANCIAL RESULTS--Commonwealth revenues for the 1995 fiscal
year were above estimate and exceeded fiscal year expenditures and encumbrances.
Fiscal 1995 was the fourth consecutive fiscal year the Commonwealth reported an
increase in the fiscal year-end unappropriated balance. Prior to reserves for
transfer to the Tax Stabilization Reserve Fund, the fiscal 1995 closing
unappropriated surplus was $540.0 million, an increase of $204.2 million over
the fiscal 1994 closing unappropriated surplus prior to transfers.
Commonwealth revenues during the 1995 fiscal year were $459.4 million, 2.9
percent, above the estimate of revenues used at the time the 1995 fiscal year
budget was enacted. Corporation taxes contributed $329.4 million of the
additional receipts largely due to higher receipts from the corporate net income
tax. Fiscal 1995 revenues from the corporate net income tax were 22.6 percent
over collections in fiscal 1994 and include the effects of the reduction of the
tax rate from 12.25 percent to 11.99 percent that became effective with tax
years beginning on and after January 1, 1994. The sales and use tax and
miscellaneous revenues also showed strong year-over-year growth that produced
above-estimate revenue collections. Sales and use tax revenues were $5,526.9
million, $128.8 million above the enacted budget estimate and 7.9 percent over
fiscal 1994 collections. Tax receipts from both motor vehicle and non-motor
vehicle sales contributed to the higher collections. Miscellaneous revenue
collections for fiscal 1995 were $183.5 million, $44.9 million above estimate
and were largely due to additional investment earnings, escheat revenues and
other miscellaneous revenues.
FISCAL 1996 FINANCIAL RESULTS (BUDGETARY BASIS).--Commonwealth revenues
(prior to tax refunds) for the 1996 fiscal year increased by $113.9 million over
the prior fiscal year to $16,338.5 million representing a growth rate of 0.7
percent. Tax rate reductions and other tax law changes substantially reduced the
amount and rate of revenue growth for the fiscal year. The Commonwealth has
estimated that tax changes enacted for the 1996 fiscal year reduced Commonwealth
revenues by $283.4 million representing 1.7 percentage points of fiscal 1996
growth in Commonwealth revenues. The most significant tax changes enacted for
the 1996 fiscal year were (i) the reduction of the corporate net income tax rate
to 9.99 percent; (ii) double weighing of the sales factor of the corporate net
income apportionment calculation; (iii) an increase in the maximum annual
allowance for a net operating loss deduction from $0.5 million to $1.0 million;
(iv) an increase in the basic exemption amount for the capital stock and
franchise tax; (v) the repeal of the tax on annuities; and (vi) the elimination
of inheritance tax on transfers of certain property to surviving spouses.
Among the major sources of Commonwealth revenues for the 1996 fiscal year,
corporate tax receipts declined $338.4 million from receipts in the prior fiscal
year, largely due to the various tax changes enacted for these taxes. Corporate
tax changes were enacted to reduce the cost of doing business in Pennsylvania
for the purpose of encouraging business to remain in Pennsylvania and to expand
employment opportunities within the state. Sales and use tax receipts for the
fiscal year increased $155.5 million, or 2.8 percent, over receipts during
fiscal 1995. All of the increase was produced by the non-motor vehicle portion
of the tax as receipts from the sale of motor vehicles declined slightly for
fiscal 1996. Personal income tax receipts for the fiscal year increased $291.1
million, or 5.7 percent, over receipts during fiscal 1995. Personal income tax
receipts were aided by a 10.2 percent increase in nonwithholding tax payments
which generally are comprised of quarterly estimated and annual final return tax
payments. Non-tax receipts for the fiscal year increased $23.7 million for the
fiscal year. Included in that increase was $67 million in net receipts from a
tax amnesty program that was available for a portion of the 1996 fiscal year.
Some portion of the tax amnesty receipts represent normal collections of
delinquent taxes. The tax amnesty program is not expected to be repeated.
The unappropriated surplus (prior to transfers to Tax Stabilization Reserve
Fund) at the close of the fiscal year for the General Fund was $183.8 million,
$65.5 million above estimate. Transfers to the Tax Stabilization Reserve Fund
from fiscal 1996 operations will be $27.6 million. This amount represents the
fifteen percent of the fiscal year ending unappropriated surplus transfer
provided under current law. With the addition of this transfer and anticipated
interest earnings, the Tax Stabilization Reserve Fund balance will be $211
million.
FISCAL 1997 BUDGET--The enacted fiscal 1997 budget provides for expenditures
from Commonwealth revenues of $16,375.8 million, an increase of 0.6% over
appropriated amounts from Commonwealth revenues for fiscal 1996. The fiscal 1997
budget is based on anticipated Commonwealth revenues before refunds of $16,744.5
million, an increase over actual fiscal 1996 revenues of 2.5 percent.
Increased authorized spending for fiscal 1997 is driven largely by increased
costs of the corrections and the probation and parole programs. Continuation of
the trend of rapidly rising inmate populations increases operating costs for
correctional facilities and requires the opening of new facilities. The fiscal
1997 budget contains an appropriation increase in excess of $110 million for
these programs. The approved budget also contains some
B-3
<PAGE>
departmental restructurings. The Department of Community Affairs was eliminated
with certain of its programs transferred to the Department of Commerce that has
been renamed the Department of Community and Economic Development. In addition
to assuming some of the community programs, a significant restructuring of the
economic development programs was completed with the establishment of the new
Department of Community and Economic Development. Although the departmental
restructurings are estimated to save approximately $8 million, a $25 million
increase in funds was committed to economic and community development programs
for fiscal 1997.
Providing funding for these program increases in a fiscal year budget where
appropriations increased by only $96.7 million, or 0.6 percent, required
reductions and savings in other programs funded from the General Fund. A major
reform of the current welfare system was enacted in May 1996 to encourage
recipients toward self-sufficiency through work requirements, to provide
temporary support for families showing personal responsibility and to maintain
safeguards for those who cannot help themselves. Net savings to the fiscal 1997
budget of $176.5 million is anticipated. Many of these savings are redirected in
the fiscal 1997 budget toward providing additional support services to those
working and seeking work. Of the net savings, $21 million is committed to job
training opportunities and an additional $69 million towards making day care
services available to welfare recipients for work opportunities. The fiscal 1997
budget also provides additional funding without requiring additional
appropriations. An actuarial reduction of 112 basis points in the employer
contribution rate is estimated to save school districts approximately $21
million for the fiscal year. Additional savings can be expected to be realized
by school districts from legislated changes to teacher sabbatical leaves and
worker's compensation insurance.
DEBT LIMITS AND OUTSTANDING DEBT--The Pennsylvania Constitution permits the
issuance of the following types of debt: (i) debt to suppress insurrection or
rehabilitate areas affected by disaster; (ii) electorate approved debt; (iii)
debt for capital projects subject to an aggregate outstanding debt limit of 1.75
times the annual average tax revenues of the preceding five fiscal years; and
(iv) tax anticipation notes payable in the fiscal year of issuance.
Under the Pennsylvania Fiscal Code, the Auditor General is required to
certify to the Governor and the General Assembly certain information regarding
the Commonwealth's indebtedness. According to the February 29, 1996 Auditor
General certificate, the average annual tax revenues deposited in all funds in
the five fiscal years ended June 30, 1995 was approximately $17.7 billion, and,
therefore, the net debt limitation for the 1996 fiscal year is $30.9 billion.
Outstanding net debt totaled $3.9 billion at June 30, 1995, approximately equal
to the net debt at June 30, 1994. At February 29, 1996, the amount of debt
authorized by law to be issued, but not yet incurred, was $16.5 billion.
Outstanding general obligation debt totaled $5,045.4 million at June 30,
1995, a decrease of $30.4 million from June 30, 1994. Over the ten-year period
ending June 30, 1995, total outstanding general obligation debt increased at an
annual rate of 1.1 percent. Within the most recent five-year period, outstanding
general obligation debt has grown at an annual rate of 1.7 percent.
DEBT RATINGS--All outstanding general obligation bonds of the Commonwealth
are rated AA- by S&P and A1 by Moody's.
CITY OF PHILADELPHIA--The City of Philadelphia (the "City" or
"Philadelphia") is the largest city in the Commonwealth, with an estimated
population of 1,585,577 according to the 1990 Census. Philadelphia experienced a
series of general fund deficits for fiscal years 1988 through 1992 which
culminated in serious financial difficulties for the City. In its 1992
Comprehensive Annual Financial Report, Philadelphia reported a cumulative
general fund deficit of $71.4 million for fiscal year 1992.
In June 1991, the Pennsylvania legislature established the Pennsylvania
Intergovernmental Cooperation Authority ("PICA"), a five-member board to assist
Philadelphia in remedying fiscal emergencies. PICA is designed to provide
assistance through the issuance of funding debt and to make factual findings and
recommendations to Philadelphia concerning its budgetary and fiscal affairs. The
legislation empowered PICA to issue notes and bonds on behalf of Philadelphia,
and also authorized Philadelphia to levy a one-percent sales tax the proceeds of
which would be used to pay off the bonds. In return for PICA's fiscal
assistance, Philadelphia is required, among other things, to establish five-year
financial plans that include balanced annual budgets. Under the legislation, if
Philadelphia does not comply with such requirements, PICA may withhold bond
revenues and certain state funding. At this time, the City is operating under a
five-year fiscal plan approved by PICA on April 30, 1996. As of September 19,
1996, PICA has issued approximately $1,761.7 million of its Special Tax Revenue
Bonds. The financial assistance has included the refunding of certain city
general obligation bonds, funding of capital projects and the liquidation of the
City's Cumulative General Fund balance deficit as of June 30, 1992 of $224.9
million.
No further PICA bonds are to be issued by PICA for the purpose of financing
a capital project or deficit as the authority for such bond sales expired on
December 31, 1994. PICA's authority to issue debt for the purpose of
B-4
<PAGE>
financing a cash flow deficit expires on December 31, 1996. Its ability to
refund existing outstanding debt is unrestricted. PICA had $1,146.2 million in
Special Tax Revenue Bonds outstanding as of June 30, 1996.
The audited General fund balance of the City as of June 30, 1993, 1994 and
1995 showed a surplus of approximately $3 million, $15.4 million and $80.5
million.
S&P's rating on Philadelphia's general obligation bonds is "BBB-." Moody's
rating is currently "Baa."
LITIGATION--The Commonwealth is a party to numerous lawsuits in which an
adverse final decision could materially affect the Commonwealth's governmental
operations and consequently its ability to pay debt service on its obligations.
The Commonwealth also faces tort claims made possible by the limited waiver of
sovereign immunity effected by Act 152, approved September 28, 1978, as amended.
Under the Act, damages for any loss are limited to $250,000 per person and $1
million for each accident.
PENNSYLVANIA TAXABLE ESTIMATED CURRENT RETURN TABLE
The following tables show the approximate taxable estimated current returns
for individuals that are equivalent to tax-exempt estimated current returns
under combined Federal and state taxes, using published 1997 marginal Federal
tax rates and marginal state tax rates currently available and scheduled to be
in effect. The tables incorporate increased tax rates for higher-income
taxpayers that were included in the Revenue Reconciliation Act of 1993. The
combined state and Federal tax brackets shown reflect the fact that state tax
payments are currently deductible for Federal tax purposes. The table does not
reflect any local taxes or any taxes other than personal income taxes. The
tables illustrate what you would have to earn on taxable investments to equal
the tax-exempt estimated current return for your income tax bracket. A
taxpayer's marginal tax rate is affected by both his taxable income and his
adjusted gross income. Locate your adjusted gross and your taxable income (which
is your adjusted gross income reduced by any deductions and exemptions), then
locate your tax bracket based on joint or single tax filing. Read across to the
equivalent taxable estimated current return you would need to match the tax-free
income.
B-5
<PAGE>
COMBINED MARGINAL TAX RATES FOR JOINT TAXPAYERS WITH FOUR PERSONAL EXEMPTIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FEDERAL
FEDERAL ADJUSTED COMBINED
TAXABLE GROSS STATE AND TAX-FREE ESTIMATED CURRENT RETURN
INCOME INCOME FEDERAL --------------------------------------------------------------
(1,000'S) (1,000'S) TAX RATE1 4.75% 5.00% 5.25% 5.50% 5.75% 6.00% 6.25% 6.50%
------------- ------------- ----------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 41.2 $ 0-121.20 17.5 % 5.76 6.06 6.36 6.67 6.97 7.27 7.58 7.88
41.2- 99.6 0-121.20 30.0 6.79 7.14 7.50 7.86 8.21 8.57 8.93 9.29
121.20-181.80 31.0 6.88 7.25 7.61 7.97 8.33 8.70 9.06 9.42
99.6-151.75 0-121.20 33.0 7.09 7.46 7.84 8.21 8.58 8.96 9.33 9.70
121.20-181.80 34.0 7.20 7.58 7.95 8.33 8.71 9.09 9.47 9.85
181.80-304.30 36.5 7.48 7.87 8.27 8.66 9.06 9.45 9.84 10.24
151.75-271.05 121.20-181.80 39.0 7.79 8.20 8.61 9.02 9.43 9.84 10.25 10.66
181.80-304.30 42.0 8.19 8.62 9.05 9.48 9.91 10.34 10.78 11.21
Over 304.30 39.0 2 7.79 8.20 8.61 9.02 9.43 9.84 10.25 10.66
Over 271.05 181.80-304.30 45.5 8.72 9.17 9.63 10.09 10.55 11.01 11.47 11.93
Over 304.30 42.5 3 8.26 8.70 9.13 9.57 10.00 10.43 10.87 11.30
</TABLE>
COMBINED MARGINAL TAX RATES FOR SINGLE TAXPAYERS WITH ONE PERSONAL EXEMPTION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FEDERAL
FEDERAL ADJUSTED COMBINED
TAXABLE GROSS STATE AND TAX-FREE ESTIMATED CURRENT RETURN
INCOME INCOME FEDERAL --------------------------------------------------------------
(1,000'S) (1,000'S) TAX RATE1 4.75% 5.00% 5.25% 5.50% 5.75% 6.00% 6.25% 6.50%
------------- ------------- ----------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 24.65 $ 0-121.20 17.5 5.76 6.06 6.36 6.67 6.97 7.27 7.58 7.88
24.65- 59.75 0-121.20 30.0 6.79 7.14 7.50 7.86 8.21 8.57 8.93 9.29
59.75-124.65 0-121.20 33.0 7.09 7.46 7.84 8.21 8.58 8.96 9.33 9.70
121.20-243.70 34.5 7.25 7.63 8.02 8.40 8.78 9.16 9.54 9.92
124.65-271.05 121.20-243.70 39.5 7.85 8.26 8.68 9.09 9.50 9.92 10.33 10.74
Over 243.70 39.0 2 7.79 8.20 8.61 9.02 9.43 9.84 10.25 10.66
Over 271.05 Over 243.70 42.5 3 8.26 8.70 9.13 9.57 10.00 10.43 10.87 11.30
</TABLE>
- ------------------
1 The table reflects the effect of the limitations on itemized deductions
and the deduction for personal exemptions. They were designed to phase out
certain benefits of these deductions for higher income taxpayers. These
limitations, in effect, raise the current maximum marginal combined tax rate to
approximately 45.71 percent for taxpayers filing a joint return and entitled to
four personal exemptions and to approximately 42.45 percent for taxpayers filing
a single return entitled to only one personal exemption. These limitations are
subject to certain maximums, which depend on the number of exemptions claimed
and the total amount of the taxpayer's itemized deductions. For example, the
limitation on itemized deductions will not cause a taxpayer to lose more than
80% of his allowable itemized deductions, with certain exceptions.
2 Marginal combined tax rate reverts to 37.79% after the 80% cap on the
limitation on itemized deductions has been met.
3 Marginal combined tax rate reverts to 41.29% after the 80% cap on the
limitation on itemized deductions has been met.
B-6
<PAGE>
------------------------------------------------
PRELIMINARY PROSPECTUS DATED FEBRUARY 25, 1997
------------------------------------------------
NUVEEN TAX-FREE UNIT TRUST
- --------------------------------------------------------------------------------
100,000 UNITS SERIES 926
(A UNIT INVESTMENT TRUST)
- --------------------------------------------------------------------------------
The attached final Prospectus for a prior Series is hereby used as a preliminary
Prospectus for the above-stated Series. The narrative information and structure
of the attached final Prospectus will be substantially the same as that of the
final Prospectus for this Series. Although the attached Prospectus includes
trusts as indicated therein, the specific trusts included in this Series when
deposited may differ from such trusts. Information with respect to the actual
trusts to be included, pricing, the number of Units, dates and summary
information regarding the characteristics of securities to be deposited in this
Series is not now available and will be different since each Series has a unique
Portfolio. Accordingly the information contained herein with regard to the
previous Series should be considered as being included for informational
purposes only. Ratings of the securities in this Series are expected to be
comparable to those of the securities deposited in the previous Series. However,
the Estimated Current Return for this Series will depend on the interest rates
and offering prices of the securities in this Series and may vary materially
from that of the previous Series.
A REGISTRATION STATEMENT RELATING TO THE UNITS OF THIS SERIES HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. SUCH UNITS
MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE
AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY
SALE OF THE UNITS IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD
BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
<PAGE>
STATEMENT OF DIFFERENCES BETWEEN ELECTRONIC FILING AND PRINTED DOCUMENT.
Pursuant to Rule 499(c) (7) under the Securities Act of 1933 and Rule 20-11
under the Investment Company Act of 1940, Registrant hereby identifies those
differences in the foregoing document between the electronic format in which it
is filed and the printed form in which it will be circulated:
(1) The printed and distributed prospectus may be paged differently because
the printed document may contain a different amount of information on each page
from that contained in the electronic transmission.
(2) In the printed document, footnote symbols may include a "dagger" or
multiple "dagger". The "dagger" symbol is represented as # in the electronic
document.
(3) The printed and distributed prospectus will not contain the preliminary
prospectus legend included at the beginning of the first prospectus page.
<PAGE>
NUVEEN TAX-FREE UNIT TRUST, SERIES 926
CROSS-REFERENCE SHEET
PURSUANT TO RULE 404(C) OF REGULATION C
UNDER THE SECURITIES ACT OF 1933
(FORM N-8B-2 ITEMS REQUIRED BY INSTRUCTION 1 AS
TO PROSPECTUS ON FORM S-6)
<TABLE>
<C> <S> <C> <C> <C>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust ) Prospectus Part A -- Cover Page
(b) Title of securities issued )
2. Name and address of Depositor ) Information About the Sponsor
3. Name and address of Trustee ) Information About the Trustee
4. Name and address of principal Underwriter ) Information About the Sponsor
5. Organization of trust ) What Is The Nuveen Tax-Free Unit Trust?
6. Execution and termination of Trust Agreement ) What Is The Nuveen Tax-Free Unit Trust?
) Information About The Trustee
) Other Information
7. Changes of Name ) *
8. Fiscal Year )
9. Litigation )
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
10. General Information regarding trust's securities ) Summary of Portfolios
) Why and How are the Bonds Insured?
) When Are Distributions Made to Unitholders?
) Ownership and Transfer of Units
) How Units May Be Redeemed Without Charge?
) How Bonds May Be Removed From The Trusts?
) Information About the Trustee
) Information About the Sponsor
) Other Information
) What Is The Tax Status of Unitholders?
11. Type of securities comprising units ) What Is The Nuveen Tax-Free Unit Trust?
) Summary of Portfolios
) Composition of Trusts
) What Are The Objectives Of The Trusts?
) Why and How are the Bonds Insured?
12. Certain information regarding ) *
periodic payment certificates )
13. (a) Load, fees, expenses, etc. ) Part A -- Essential Information
) How Is The Public Offering Price Determined?
) Market For Units
) What Is Accrued Interest?
) What Are Estimated Long Term Return
) And Estimated Current Return?
) How Was The Price Of The Bonds
) Determined At The Date of Deposit?
) What Are Normal Trust Operating Expenses?
) When Are Distributions Made To Unitholders?
) Summary Of Portfolios
) How Detailed Are Reports To Unitholders?
(b) Certain information regarding ) *
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
periodic payment certificates )
(c) Certain percentages ) How Is The Public Offering Price Determined?
) Market For Units
) What Are Estimated Long Term Return
) And Estimated Current Return?
) How Was The Price Of The Bonds
) Determined At The Date Of Deposit?
) What Is Accrued Interest?
(d) Certain other fees, etc. payable by holders ) How Was The Price Of The Bonds Determined
) At The Date Of Deposit?
) What Are Normal Trust Operating Expenses?
) Ownership And Transfer Of Units
(e) Certain profits receivable by depositor, ) Composition Of Trusts
principal underwriter, trustee or )
affiliated persons )
) How Units May Be Purchased By The Sponsor
(f) Ratio of annual charges to income ) *
14. Issuance of trust's securities ) Summary of Portfolios
) When Are Distributions Made To Unitholders?
) Ownership and Transfer of Units
) How Units May Be Redeemed Without Charge
15. Receipt and handling of payments ) *
from purchasers )
16. Acquisition and Disposition of ) What Is The Nuveen Tax-Free Unit Trust?
Underlying Securities )
) Summary of Portfolios
) Composition of Trusts
) Why and How are the Bonds Insured?
) How Units May Be Redeemed Without Charge
) How Bonds May Be Removed From The Trusts
) Other Information
17. Withdrawal or redemption ) Market For Units
) How Units May Be Redeemed Without Charge
) How Units May Be Purchased By The Sponsor
18. (a) Receipt and disposition of income ) Summary of Portfolios
) When Are Distributions Made To Unitholders?
) How Detailed Are Reports To Unitholders?
(b) Reinvestment of distributions ) Accumulation Plan
(c) Reserves or special funds ) Summary of Portfolios
) When Are Distributions Made To Unitholders?
(d) Schedule of distributions ) *
19. Records, accounts and reports ) When Are Distributions Made To Unitholders?
) How Detailed Are Reports To Unitholders?
20. Certain miscellaneous provisions of ) Information About the Trustee
Trust Agreement )
) Information About the Sponsor
) Other Information
21. Loans to security holders ) *
22. Limitations on liability ) Summary of Portfolios
) Composition of Trusts
) Information About The Trustee
23. Bond arrangements ) *
24. Other material provisions of Trust Agreement. ) *
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
III. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
25. Organization of Depositor ) Information About the Sponsor
26. Fees received by Depositor ) *
27. Business of Depositor ) Information About the Sponsor
28. Certain information as to officials ) *
and affiliated persons of Depositor )
29. Voting Securities of Depositor ) Information About the Sponsor
30. Persons controlling Depositor )
31. Payments by Depositor for certain )
services rendered to trust )
32. Payments by Depositor for certain ) *
other services rendered to trust )
33. Remuneration of employees of Depositor )
for certain services rendered to trust )
34. Remuneration of other persons for )
certain services rendered to trust )
IV. DISTRIBUTION AND REDEMPTION OF SECURITIES
35. Distribution of trust's securities by states ) *
36. Suspension of sales of trust's securities )
37. Revocation of authority to distribute )
38. (a) Method of distribution )
(b) Underwriting agreements ) How Units of The Trusts Are
) Distributed To The Public
(c) Selling agreement )
39. (a) Organization of principal underwriter ) Information About The Sponsor
(b) NASD membership of principal underwriter )
40. Certain fees received by principal underwriter ) *
41. (a) Business of principal underwriter )
(b) Branch offices of principal underwriter ) *
(c) Salesmen of principal underwriter )
42. Ownership of trust's securities by ) *
certain persons )
43. Certain brokerage commissions received ) *
by principal underwriter )
44. (a) Method of valuation ) Part A -- Essential Information
) How Is The Public Offering Price Determined?
) How Was The Price Of The Bonds
) Determined At The Date of Deposit?
) What Are Normal Trust Operating Expenses?
(b) Schedule as to offering price ) *
(c) Variation in offering price to ) How Is the Public Offering Price
certain persons ) Determined?
) What Is Accrued Interest?
) How Was The Price Of The Bonds
) Determined At The Date of Deposit?
45. Suspension of redemption rights ) *
46. (a) Redemption valuation ) Unit Value and Evaluation
) How Units May Be Redeemed Without Charge
) How Units May Be Purchased By The Sponsor
(b) Schedule as to redemption price ) *
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
47. Maintenance of position in underlying ) How Is the Public Offering Price
securities ) Determined?
) How Units May Be Purchased By The Sponsor
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation of Trustee ) Information About The Trustee
49. Fees and expenses of Trustee ) Part A -- Essential Information
) What Are Normal Trust Operating Expenses?
50. Trustee's lien ) What Are Normal Trust Operating Expenses?
) When Are Distributions Made To Unitholders?
VI. INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
51. Insurance of holders of trust's securities ) *
VII. POLICY OF REGISTRANT
52. (a) Provisions of trust agreement with ) What Are Normal Trust Operating
respect to selection or elimination ) Expenses?
of underlying securities )
) How Units May Be Redeemed Without Charge
) How Bonds May Be Removed From The Trusts
(b) Transactions involving elimination ) *
of underlying securities )
(c) Policy regarding substitution or ) Summary of Portfolios
elimination of underlying securities )
) Composition of Trusts
) How Bonds May Be Removed From The Trusts
(d) Fundamental policy not otherwise covered ) *
53. Tax status of trust ) What Is The Tax Status Of Unitholders?
VIII. FINANCIAL AND STATISTICAL INFORMATION
54. Trust's securities during last ten years ) *
55. )
56. Certain information regarding ) *
periodic payment certificate )
57. )
58. )
</TABLE>
- ---------
* Inapplicable, omitted, answer negative or not required.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
A. BONDING ARRANGEMENTS OF DEPOSITOR:
The Depositor has obtained the following Stockbrokers Blanket Bonds for its
officers, directors and employees:
<TABLE>
<S> <C>
INSURER/POLICY NO. AMOUNT
United Pacific Insurance Co. $ 10,000,000
Reliance Insurance Company
B 74 92 20
Aetna Casualty and Surety $ 10,000,000
08 F10618BCA
St. Paul Insurance Co. $ 6,000,000
400 HC 1051
</TABLE>
B. THIS REGISTRATION STATEMENT COMPRISES THE FOLLOWING PAPERS AND DOCUMENTS:
The facing sheet
The Prospectus
The signatures
Consents of Counsel
Exhibits
C. EXPLANATORY NOTE:
The Registration Statement will contain multiple separate prospectuses. Each
prospectus will relate to an individual unit investment trust and will consist
of a Part A, a Part B and an Information Supplement. Each prospectus will be
identical with the exception of the respective Part A which will contain the
financial information specific to such underlying unit investment trust.
D. UNDERTAKINGS:
1. With the exception of the information included in the state specific
appendices to the Information Supplement, which will vary depending upon the
make-up of a Fund or updated to reflect current events, any amendment to a
Fund's Information Supplement will be subject to the review of the staff of the
Securities and Exchange Commission prior to distribution; and
2. The Information Supplement to the Trust will not include third party
financial information.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Nuveen Tax-Free Unit Trust, Series 926 has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized in the City of Chicago and State of Illinois on February 25, 1997.
NUVEEN TAX-FREE UNIT TRUST, SERIES 926
(Registrant)
By JOHN NUVEEN & CO. INCORPORATED
(Depositor)
By: Larry Woods Martin
--------------------------------------
Vice President
Attest: Morrison C. Warren
--------------------------------------
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE* DATE
<S> <C> <C> <C>
Timothy T. Schwertfeger Chairman, Board of Directors )
Chief Executive Officer and )
Director )
)
Anthony T. Dean President, Chief Operating )
Officer and Director ) Larry Woods Martin
) Attorney-In-Fact**
)
John P. Amboian Chief Financial Officer and ) February 25, 1997
Executive Vice President )
)
)
O. Walter Renfftlen Vice President and Controller )
(Principal Accounting Officer) )
)
)
</TABLE>
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* The titles of the persons named herein represent their capacity in and
relationship to John Nuveen & Co. Incorporated, the Depositor.
** The powers of attorney were filed on Form SE for Messrs. Renfftlen, Dean and
Schwertfeger with the Amendment to the Registration Statement on Form S-6 of
Nuveen Tax-Exempt Unit Trust, Series 671 (File No. 33-49175). The Power of
Attorney for Messr. Amboian was filed with the Amendment to the Registration
Statement on Form S-6 of Nuveen Tax-Exempt Unit Trust, Series 823 (File No.
33-62325).
<PAGE>
CONSENT OF CHAPMAN AND CUTLER
The consent of Chapman and Cutler to the use of its name in the Prospectus
included in the Registration Statement will be filed by amendment.
CONSENT OF STATE COUNSEL
The consents of special counsel to the Fund for state tax matters to the use
of their names in the Prospectus included in the Registration Statement will be
filed by amendment.
CONSENT OF STANDARD & POOR'S,
A DIVISION OF THE MCGRAW-HILL COMPANIES
The consent of Standard & Poor's, a Division of The McGraw-Hill Companies,
to the use of its name in the Prospectus included in the Registration Statement
will be filed by amendment.
CONSENT OF KENNY S&P EVALUATION SERVICES
The consent of Kenny S&P Evaluation Services to the use of its name in the
Prospectus included in the Registration Statement will be filed by amendment.
CONSENT OF CARTER, LEDYARD & MILBURN
The consent of Carter, Ledyard & Milburn to the use of its name in the
Prospectus included in the Registration Statement will be filed by amendment.
CONSENT OF ARTHUR ANDERSEN LLP
The consent of Arthur Andersen LLP to the use of its report and to the
reference to such firm in the Prospectus included in the Registration Statement
will be filed by amendment.
<PAGE>
LIST OF EXHIBITS
<TABLE>
<S> <C>
1.1(a) Copy of Standard Terms and Conditions of Trust between John Nuveen & Co. Incorporated,
Depositor, and The Chase Manhattan Bank, Trustee. Filed as Exhibit 1.1(A) to the Spon-
sor's Registration Statement filed with respect to Series 823 (File No. 33-62325) and
is incorporated herein by reference.
1.1(b) Trust Indenture and Agreement (to be supplied by amendment).
1.2* Copy of Certificate of Incorporation, as amended, of John Nuveen & Co. Incorporated,
Depositor.
1.3** Copy of amendment of Certificate of Incorporation changing name of Depositor to John
Nuveen & Co. Incorporated.
2.1 Copy of Certificate of Ownership (included in Exhibit 1.1(A) and Incorporated herein by
reference).
3.1 Opinion of counsel as to legality of securities being registered (to be supplied by
amendment).
3.2 Opinion of counsel as to Federal income tax status of securities being registered (to
be supplied by amendment).
3.3 Consents of special state counsel to the Fund for state tax matters to use of their
names in the Prospectus (to be supplied by amendment).
4.1 Consent of Standard + Poor's Corporation (to be supplied by amendment).
4.2 Consent of Kenny S+P Evaluation Services (to be supplied by amendment).
4.3 Consent of Carter, Ledyard & Milburn (to be supplied by amendment).
6.1 List of Directors and Officers of Depositor and other related information (incorporated
by reference to Form S-6 [File No. 33-62325] filed on September 7, 1995 on behalf of
Nuveen Tax-Exempt Unit Trust, Series 823).
</TABLE>
- --------------
* Incorporated by reference to Form N-8B-2 (File No. 811-1547) filed on
behalf of Nuveen Tax-Exempt Unit Trust, Series 16.
** Incorporated by reference to Form N-8B-2 (File No. 811-2198) filed on
behalf of Nuveen Tax-Exempt Unit Trust, Series 37.
