SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-6
For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N-8B-2
A. Exact name of Trust: NUVEEN UNIT TRUSTS, SERIES 1
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
Attention: Alan G. Berkshire
333 West Wacker Drive
Chicago, Illinois 60606
CHAPMAN AND CUTLER
Attention: 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 (date) pursuant to paragraph (b)
: : 60 days after filing pursuant to paragraph (a)
: : on (date) pursuant to paragraph (a) of rule 485 or 486
E. Title of securities being registered: Units of fractional undivided
beneficial interest.
F. Approximate date of proposed sale to the public: As soon as practicable
after the effective date of the Registration Statement.
:XX: Check box if it is proposed that this filing will become effective on
:XX: October 9, 1998 pursuant to paragraph (b) of Rule 485.
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NUVEEN UNIT TRUSTS, SERIES 1
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)
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FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
I. Organization and General Information
1. (a) Name of trust ) Prospectus 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 Sponsor
4. Name and address of principal Underwriter ) Information About The Sponsor
)
5. Organization of trust ) Nuveen Unit Trusts
)
6. Execution and termination of Trust Agreement ) Nuveen Unit Trusts
) 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.
) Composition of Trusts
) Distributions To Unitholders
) Redemption
) Removal of Securities From The Trusts
) Information About The Trustee
) Information About The Sponsor
) Other Information
) Tax Status
)
)
11. Type of securities comprising units ) Nuveen Unit Trusts
) Summary Of Portfolios
) Composition Of Trusts
) Objectives Of The Trusts
<PAGE>
)
12. Certain information regarding periodic payment ) *
certificates )
)
13. (a) Loan, fees, expenses, etc. ) Essential Information
) Public Offering Price
) Market For Units
) Accrued Interest
) Estimated Long Term Return
) and Estimated Current Return
) Evaluation of Securities at the Initial Date Of
) Deposit
) Trust Operating Expenses
) Distributions To Unitholders
) Summary Of Portfolios
) Reports To Unitholders
)
(b) Certain information regarding periodic ) *
payment certificates )
(c) Certain percentages ) Public Offering Price
) Market For Units
) Estimated Long Term Return
) and Estimated Current Return
) Evaluation of Securities at the Initial Date Of
) Deposit
) Accrued Interest
)
)
(d) Certain other fees, etc. payable by holders ) Evaluation of Securities at the Initial Date Of
) Deposit
) Normal Trust Operating Expenses
) Ownership and Transfer of Units
)
(e) Certain profits received by depositor, ) Composition Of Trusts
principal underwriter, trustee or ) Purchase of Units by the Sponsor
affiliated persons )
)
(f) Ratio of annual charges to income ) *
)
14. Issuance of trust's securities ) Summary Of Portfolios
) Distributions To Unitholders
) How Certificates Are Issued
) Redemption
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)
15. Receipt and handling of payments from purchasers ) *
)
16. Acquisition and Disposition of Underlying Securities ) Nuveen Unit Trusts
) Summary Of Portfolios
) Composition Of Trusts
) Redemption
) Removal of Securities from the Trusts
) Other Information
)
)
17. Withdrawal or redemption ) Market For Units
) Redemption
) Purchase of Units by the Sponsor
)
18. (a) Receipt and disposition of income ) Summary Of Portfolios
) Distributions to Unitholders
) Reports to Unitholders
)
)
(b) Reinvestment of distributions ) Accumulation Plan
(c) Reserves or special funds ) Summary Of Portfolios
) Distributions to Unitholders
)
(d) Schedule of distributions ) *
19. Records, accounts and reports ) Distributions to Unitholders
) Reports to Unitholders
)
20. Certain miscellaneous provisions of Trust Agreement ) Information About the Trustee
) 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 ) *
)
III. Organization, Personnel and Affiliated Persons of Depositor
25. Organization of Depositor ) Information About the Sponsor
26. Fees received by Depositor ) *
<PAGE>
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 ) Distribution of Units 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 )
<PAGE>
44. (a) Method of valuation ) Essential Information
) Public Offering Price
) Evaluation of Securities at the Date Of Deposit
) Trust Operating Expenses
)
)
(b) Schedule as to offering price ) *
(c) Variation in offering price to certain ) Public Offering Price
persons ) Accrued Interest
) Evaluation of Securities at the Date Of Deposit
)
)
)
45. Suspension of redemption rights ) *
46. (a) Redemption valuation ) Unit Value And Evaluation
) Redemption Without Charge
) Purchase of Units by the Sponsor
)
)
)
(b) Schedule as to redemption price ) *
)
47. Maintenance of position in underlying securities ) Public Offering Price
) Purchase of Units 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 ) Essential Information
) Trust Operating Expenses
)
50. Trustee's lien ) Trust Operating Expenses
) Distributions to Unitholders
)
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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 respect ) Trust Operating Expenses
to selection or elimination of underlying ) Redemption
securities ) Removal of Securities from the Trusts
)
)
(b) Transactions involving elimination of ) *
underlying securities )
)
(c) Policy regarding substitution elimination of ) Summary Of Portfolios
underlying or securities ) Composition Of Trusts
) Removal of Securities
)
(d) Fundamental policy not otherwise covered ) *
)
53. Tax status of trust ) Tax Status
)
VIII. Financial and Statistical Information
54. Trust's securities during last ten years ) *
)
55. )
56. Certain information regarding periodic payment ) *
certificate )
57. )
58. )
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*Inapplicable, omitted, answer negative or not required.
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THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF THE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
NUVEEN UNIT TRUSTS
FIXED INCOME PROSPECTUS
PART ONE
SEPTEMBER 15, 1998
Note: This Prospectus may be used only when accompanied by Part Two.
Both parts of this Prospectus should be retained for future reference.
See Part Two for the "Schedules of Investments," essential information
based thereon, and financial statements, including the report of independent
public accountants, relating to the Series of the Trust offered hereby.
THIS NUVEEN UNIT TRUST SERIES consists of the underlying separate unit
investment trusts set forth in Part Two of this Prospectus. Each trust consists
of a portfolio of securities (see "Schedule of Investments" appearing in Part
Two of this Prospectus). Except in specific instances as noted in Part Two of
this Prospectus, the information contained in this Part One shall apply to each
applicable Trust in its entirety.
Trusts consisting of a portfolio of U.S. Treasury obligations ("US.
Treasury Obligations") shall be referred to herein as "U.S. Treasury Trusts."
Trusts primarily consisting of a portfolio of investment grade, corporate debt
obligations issued after July 18, 1984 ("Corporate Bonds") shall be referred to
herein as "Corporate Trusts." Collectively, the U.S. Treasury Trusts and the
Corporate Trusts shall be referred to herein as the "Trusts." Corporate Trusts
consisting primarily of insured Corporate Bonds shall be referred to herein as
"Insured Corporate Trusts" and Corporate Trusts consisting primarily of
uninsured investment grade Corporate Bonds shall be referred to herein as
"Investment Grade Corporate Trusts." U.S. Treasury Obligations and the Corporate
Bonds shall be referred to herein as the "Obligations," "Securities," or
"Bonds."
THE OBJECTIVES of the U.S. Treasury Trusts are to provide current
interest income consistent with preservation of capital and investment
flexibility. The objective of the Insured Corporate Trusts is to provide a high
level of current income consistent with preservation of capital provided
primarily by an insured portfolio of corporate debt obligations issued by
utility companies, including telephone companies. The objective of the
Investment Grade Corporate Trusts is to provide a high level of current income
through investing in a portfolio consisting primarily of investment grade,
corporate debt obligations issued after July 18, 1984.
PUBLIC OFFERING PRICE. The Public Offering Price per Unit for a
particular Trust for "secondary market" sales is based on a pro rata share of
the sum of bid prices per Unit of the Securities in such Trust plus the sales
charges for the Securities determined in accordance with the table set forth
herein under the caption "Public Offering Price" based on the number of years
remaining to the maturity of each such Securities and adjusted for cash, if any,
held or owed by the Trust. See the table in "Public Offering Price" regarding
reduced sales charges on large transactions. Units are offered at the Public
Offering Price plus interest accrued to, but not including, the date of
settlement. (See "Public Offering Price.") The minimum purchase is either $5,000
or 50 Units ($1,000 or 10 Units for Traditional and Roth IRA purchases and $500
or nearest whole number of Units whose value is less than $500 for Education IRA
purchases), whichever is less. The bid prices of the Securities in a portfolio
may represent a "market" discount from or premium over the par value of the
Securities.
THE UNITS being offered by this Prospectus are issued and outstanding
Units that have either been reacquired by John Nuveen & Co. Incorporated through
the purchase of Units tendered to the Trustee for redemption or by purchase by
John Nuveen & Co. Incorporated or dealers in the open market. The price paid in
each instance was not less than the Redemption Price determined as provided
herein under the caption "How Units May Be Redeemed Without Charge." Any profit
or loss resulting from the sale of the Units will accrue to John Nuveen & Co.
Incorporated or dealers and no proceeds from the sale will be received by the
Trusts.
MARKET. A Unitholder may redeem Units at the office of the Trustee, The
Chase Manhattan Bank, at prices based upon the bid prices of the Bonds in such
Trust. The Sponsor, although not required to do so, intends to make a secondary
market for the Units at prices based upon the bid prices of the Bonds in each
Trust.
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.
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TABLE OF CONTENTS
THE NUVEEN UNIT TRUSTS--DESCRIPTION...............................................................................1
OBJECTIVES OF THE TRUSTS..........................................................................................1
SUMMARY OF PORTFOLIOS.............................................................................................2
RISK FACTORS......................................................................................................2
COMPOSITION OF TRUSTS.............................................................................................7
INSURANCE ON BONDS IN INSURED CORPORATE TRUSTS....................................................................9
PUBLIC OFFERING PRICE............................................................................................10
MARKET FOR UNITS.................................................................................................13
ACCRUED INTEREST.................................................................................................14
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN..........................................................14
DETERMINATION OF THE PRICE OF BONDS AT DATE OF DEPOSIT...........................................................15
TAX STATUS OF UNITHOLDERS........................................................................................15
COUNSEL FOR TRUSTEE..............................................................................................19
OPERATING EXPENSES...............................................................................................19
DISTRIBUTIONS TO UNITHOLDERS.....................................................................................20
ACCUMULATION PLAN................................................................................................21
DETAILED REPORTS TO UNITHOLDERS..................................................................................21
UNIT VALUE AND EVALUATION........................................................................................22
DISTRIBUTION OF UNITS TO THE PUBLIC..............................................................................22
OWNERSHIP AND TRANSFER OF UNITS..................................................................................24
REPLACEMENT OF LOST, STOLEN OR DESTROYED CERTIFICATES............................................................25
HOW UNITS MAY BE REDEEMED WITHOUT CHARGE.........................................................................25
HOW UNITS MAY BE PURCHASED BY THE SPONSOR........................................................................26
HOW BONDS MAY BE REMOVED FROM THE TRUSTS.........................................................................27
INFORMATION ABOUT THE TRUSTEE....................................................................................27
LIMITATIONS ON LIABILITIES OF SPONSOR AND TRUSTEE................................................................27
SUCCESSOR TRUSTEES AND SPONSORS..................................................................................28
INFORMATION ABOUT THE SPONSOR....................................................................................28
AMENDMENT AND TERMINATION OF INDENTURE...........................................................................29
LEGAL OPINION....................................................................................................29
AUDITORS.........................................................................................................29
SUPPLEMENTAL INFORMATION.........................................................................................30
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<PAGE>
THE NUVEEN UNIT TRUSTS--DESCRIPTION
Each Series of the Nuveen Unit Trusts 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. Each Series includes one or more
underlying separate unit investment trusts (the "Trusts"). Each Series was
created under the laws of the State of New York pursuant to a Trust Indenture
and Agreement (the "Indenture") between John Nuveen & Co. Incorporated (the
"Sponsor") and The Chase Manhattan Bank (the "Trustee"). Specific information
regarding each Trust is provided in Part Two to the Prospectus. The Sponsor has
deposited with the Trustee or the Trust has purchased the interest-bearing
obligations listed in the Schedules of Investments in Part Two, which constitute
the Trusts' underlying securities.
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 Two for the applicable Trust. To the extent that any Units
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 Units offered hereby are issued and outstanding Units which
have either been reacquired by the Sponsor through the purchase of Units
tendered to the Trustee for redemption or by purchase by the Sponsor or dealers
in the open market. No offering is being made on behalf of the Trusts and any
profit or loss realized on the sale of Units will accrue to the Sponsor.
Insurance guaranteeing the timely payment, when due, of all principal
and interest on the Bonds in each Insured Corporate Trust has been obtained by
the Sponsor or by the issuers of such Bonds from the MBIA Insurance Corporation,
and as a result of such insurance the Bonds in the Insured Corporate Trusts are
rated "Aaa" by Moody's Investors Services, Inc. ("Moody's") and/or "AAA" by
Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies,
Inc. ("Standard & Poor's"). (See "Insurance on Bonds in Insured Corporate
Trusts.")
OBJECTIVES OF THE TRUSTS
U.S. Treasury Trusts. The objective of the U.S. Treasury Trusts is to
provide current income consistent with preservation of capital and investment
flexibility. The U.S. Treasury Trusts seek to achieve this objective through
investment in a portfolio of U.S. Treasury Obligations with differing maturities
which are backed by the full faith and credit of the United States Government.
Interest income distributed by each U.S. Treasury Trust is exempt from state and
local personal income taxes in all states.
Corporate Trusts. The objective of the Insured Corporate Trusts is to
provide a high level of current income consistent with preservation of capital
provided primarily by an insured portfolio of corporate debt obligations issued
after July 18, 1984 by utility companies, including telephone companies. The
objective of the Investment Grade Corporate Trusts is to provide a high level of
current income through investing in a portfolio consisting primarily of
<PAGE>
investment grade, corporate debt obligations issued after July 18, 1984. In
addition, certain Corporate Trusts may also contain U.S. Treasury Obligations.
The Corporate Trusts may be an appropriate investment vehicle for investors who
wish to participate in a portfolio of taxable fixed income obligations issued by
corporate obligors with greater diversification than investors might be able to
acquire individually. Corporate Bonds of the type deposited in the Corporate
Trusts often are not available in small amounts. Diversification of the
Corporate Trusts' assets will not eliminate the risk of loss always inherent in
the ownership of corporate debt obligations.
Units of both the U.S. Treasury Trusts and the Corporate Trusts are
available to non-resident aliens and the income from the Trusts, provided
certain conditions are met, will be exempt from withholding for such foreign
investors. There is, of course, no guarantee that the Trusts' objectives will be
achieved.
SUMMARY OF PORTFOLIOS
In selecting U.S. Treasury Obligations for deposit in the U.S. Treasury
Trusts the following factors, among others, were considered by the Sponsor: (a)
the types of such obligations available; (b) the prices and yields of such
obligations relative to other comparable obligations, including the extent to
which such obligations are traded at a premium or at a discount from par; and
(c) the maturities of such obligations.
In selecting Corporate Bonds for deposit in the Corporate Trusts, the
following factors, among others, were considered by the Sponsor: (a) the prices
and yields of such Corporate Bonds relative to other Corporate Bonds of similar
quality and maturity, including the extent to which such Corporate Bonds are
traded at a premium or discount from par; (b) the present rating and credit
quality of the issuers of the Corporate Bonds and the potential improvement in
the credit quality of such issuers; (c) the diversification of the Corporate
Bonds as to location of issuer; (d) the income to the Unitholders of the
Corporate Trusts; (e) whether the Corporate Bonds were issued; (f) the stated
maturities and call provisions of the Corporate Bonds; (g) whether the Corporate
Bonds were issued by a utility company; and (h) whether the Corporate Bonds were
insured and the availability and cost of insurance for the Corporate Bonds.
RISK FACTORS
U.S. Treasury Obligations. U.S. Treasury Obligations are direct
obligations of the United States and are backed by its full faith and credit
although the Units are not so backed. The U.S. Treasury Obligations are not
rated but in the opinion of the Sponsor have credit characteristics comparable
to those of securities rated "AAA" by nationally recognized rating agencies.
An investment in Units of a Trust which contains U.S. Treasury
Obligations should be made with an understanding of the risks which an
investment in fixed rate debt obligations may entail, including the risk that
the value of the U.S. Treasury Obligations and hence the Units will decline with
increases in interest rates. The high inflation of prior years, together with
the fiscal measures adopted in response to such inflation, have resulted in wide
fluctuations in interest rates and, thus, in the value of fixed rate debt
obligations generally. The Sponsor cannot predict whether such fluctuations will
exist in the future.
<PAGE>
Corporate Debt Obligations. An investment in Units of a Corporate Trust
should be made with an understanding of the risks that an investment in fixed
rate, investment grade corporate debt obligations may entail, including the risk
that the value of the Bonds, and therefore the Units, will decline with
increases in interest rates. Although in recent years interest rates have been
relatively stable, the high inflation of prior years, together with the fiscal
measures adopted in response to such inflation, have resulted in wide
fluctuations in interest rates and thus in the value of fixed rate debt
obligations generally. Generally, bonds with longer maturities will fluctuate in
value more than bonds with shorter maturities. A slowdown in the economy, or a
development adversely affecting an issuer's creditworthiness, may result in the
issuer being unable to maintain earnings or sell assets at the rate and at the
prices, respectively, that are required to produce sufficient cash flow to meet
its interest and principal requirements and accordingly such issuer may not be
able to meet its obligations to make principal and income payments. In addition,
a slowdown in the economy or a development adversely affecting an issuer's
creditworthiness may also result in the ratings of the Corporate Bonds and the
value of the underlying portfolio being reduced. The Corporate Trusts consist of
Corporate Bonds that, in many cases, do not have the benefit of covenants that
would prevent the issuer from engaging in capital restructurings or borrowing
transactions in connection with corporate acquisitions, leveraged buyouts or
restructurings that could have the effect of reducing the ability of the issuer
to meet its obligations and might also result in the ratings of the Corporate
Bonds and the value of the underlying portfolio being reduced.
Should the issuer of any Corporate Bond default in the payment of
principal or interest, the Corporate Trust may incur additional expenses seeking
payment on the defaulted Bond. Because amounts recovered by a Corporate Trust in
payment under the defaulted Corporate Bond, if any, may not be reflected in the
value of the Units until actually received by such Corporate Trust, and
depending upon when a Unitholder purchases or sells his or her Units, it is
possible that a Unitholder would bear a portion of the cost of recovery without
receiving a portion of any payment recovered.
Utility Issues. Certain of the Corporate Bonds in a Corporate Trust may
be obligations of utility issuers. In general, utilities are regulated
monopolies engaged in the business of supplying light, water, power, heat,
transportation or means of communication. Historically, the utilities industry
has provided investors in securities issued by companies in this industry with
high levels of reliability, stability and relative total return on their
investments. However, an investment in a Corporate Trust which contains
obligations of utility issuers should be made with an understanding of the
characteristics of such issuers and the risks which such an investment may
entail. General problems of such issuers would include the difficulty in
financing large construction programs in an inflationary period, the limitations
on operations and increased costs and delays attributable to environmental
considerations, the difficulty of the capital market in absorbing utility debt,
the 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 such Corporate Bonds in certain Corporate Trusts to make payments of
principal and/or interest on such Corporate Bonds.
<PAGE>
Utilities are generally subject to extensive regulation by state
utility commissions which, for example, establish the rates which may be charged
and the appropriate rate of return on an approved asset base, which must be
approved by the state commissions. Certain utilities have had difficulty from
time to time in persuading regulators, who are subject to political pressures,
to grant rate increases necessary to maintain an adequate return on investment
and voters in many states have the ability to impose limits on rate adjustments
(for example, by initiative or referendum). Any unexpected limitations could
negatively affect the profitability of utilities whose budgets are planned far
in advance. Also, changes in certain accounting standards currently under
consideration by the Financial Accounting Standards Board could cause
significant write-downs of assets and reductions in earnings for many
investor-owned utilities. In addition, gas pipeline and distribution companies
have had difficulties in adjusting to short and surplus energy supplies,
enforcing or being required to comply with long-term contracts and avoiding
litigation from their customers, on the one hand, or suppliers, on the other.
Finally, utilities may be subject to deregulation and competitive pressures from
alternative providers. In this environment, utilities may face costs which
prevent them from earning a positive rate of return, which will negatively
impact the issues of Corporate Bonds.
Certain of the issuers of the Corporate Bonds in a Corporate Trust may
own or operate nuclear generating facilities. Governmental authorities may from
time to time review existing, and impose additional, requirements governing the
licensing, construction and operation of nuclear power plants. Nuclear
generating projects in the electric utility industry have experienced
substantial cost increases, construction delays and licensing difficulties.
These have been caused by various factors, including inflation, high financing
costs, required design changes and rework, allegedly faulty construction,
objections by groups and governmental officials, limits on the ability to
finance, reduced forecasts of energy requirements and economic conditions. This
experience indicates that the risk of significant cost increases, delays and
licensing difficulties remains present through completion and achievement of
commercial operation of any nuclear project. Also, nuclear generating units in
service have experienced unplanned outages or extensions of scheduled outages
due to equipment problems or new regulatory requirements sometimes followed by a
significant delay in obtaining regulatory approval to return to service. A major
accident at a nuclear plant anywhere could cause the imposition of limits or
prohibitions on the operation, construction or licensing of nuclear units in the
United States.
In view of the uncertainties discussed above, there can be no assurance
that any bond issuer's share of the full cost of nuclear units under
construction ultimately will be recovered in rates or of the extent to which a
bond issuer could earn an adequate return on its investment in such units. The
likelihood of a significantly adverse event occurring in any of the areas of
concern described above varies, as does the potential severity of any adverse
impact. It should be recognized, however, that one or more of such adverse
events could occur and individually or collectively could have a material
adverse impact on the financial condition or the results of operations or on a
bond issuer's ability to make interest and principal payments on its outstanding
debt.
Other general problems of the gas, water, telephone and electric
utility industry (including state and local joint action power agencies) include
difficulty in obtaining timely and adequate rate increases, difficulty in
financing large construction programs to provide new or replacement facilities
<PAGE>
during an inflationary period, rising costs of rail transportation to transport
fossil fuels, the uncertainty of transmission service costs for both interstate
and intrastate transactions, changes in tax laws which adversely affect a
utility's ability to operate profitably, increased competition in service costs,
reductions in estimates of future demand for electricity and gas in certain
areas of the country, restrictions on operations and increased cost and delays
attributable to environmental considerations, uncertain availability and
increased cost of capital, unavailability of fuel for electric generation at
reasonable prices, including the steady rise in fuel costs and the costs
associated with conversion to alternate fuel sources such as coal, availability
and cost of natural gas for resale, technical and cost factors and other
problems associated with construction, licensing, regulation and operation of
nuclear facilities for electric generation, including among other considerations
the problems associated with the use of radioactive materials and the disposal
of radioactive wastes, and the effects of energy conservation. Each of the
problems referred to could adversely affect the ability of the issuer of any
utility Bonds in a Corporate Trust to make payments due on these Corporate
Bonds.
In addition, the ability of state and local joint action power agencies
to make payments on bonds they have issued is dependent in large part on
payments made to them pursuant to power supply or similar agreements.
Courts in Washington and Idaho have held that certain agreements
between Washington Public Power Supply System ("WPPSS") and the WPPSS
participants are unenforceable because the participants did not have the
authority to enter into the agreements. While these decisions are not
specifically applicable to agreements entered into by public entities in other
states, they may cause a reexamination of the legal structure and economic
viability of certain projects financed by joint action power agencies, which
might exacerbate some of the problems referred to above and possibly lead to
legal proceedings questioning the enforceability of agreements upon which
payment of these bonds may depend.
Business conditions of the telephone industry in general may affect the
performance of a Trust. General problems of telephone companies include
regulation of rates for service by the FCC and various state or other regulatory
agencies. However, over the last several years regulation has been changing,
resulting in increased competition. The new approach is more market oriented,
more flexible and more complicated. For example, Federal and certain state
regulators have instituted "price cap" regulation which couples protection of
rate payers for basic services with flexible pricing for ancillary services.
These new approaches to regulation could lead to greater risks as well as
greater rewards for operating telephone companies such as those that may be
included in the Trusts. Inflation has substantially increased the operating
expenses and cost of plant required for growth, service, improvement and
replacement of existing plant. Continuing cost increases, to the extent not
offset by improved productivity and revenues from increased business, would
result in a decrease in rate of return and a continuing need for rate increases.
Although allowances are generally made in rate making proceedings for cost
increases, delays may be experienced in obtaining the necessary rate increases
and there can be no assurance that the regulatory agencies will grant rate
increases adequate to cover operating and other expenses and debt service
requirements. To meet increasing competition, telephone companies will have to
commit substantial capital, technological and marketing resources. Telephone
usage, and therefore revenues, could also be adversely affected by any sustained
<PAGE>
economic recession. New technology, such as cellular service and fiber optics,
will require additional capital outlays. The uncertain outcomes of future labor
agreements may also have a negative impact on the telephone companies. Each of
these problems could adversely affect the ability of the telephone company
issuers of any Corporate Bonds in a Corporate Trust to make payments of
principal and interest on their Corporate Bonds.
Hospital and Health Care Facility Issues. Certain of the Corporate
Bonds in a Corporate Trust may be obligations of hospital and health care
issuers. Payments on hospital and health care facility bonds are dependent upon
revenues of hospitals and other health care facilities. These revenues come from
private third-party payors and government programs, including the Medicare and
Medicaid programs, which have generally undertaken cost containment measures to
limit payments to health care facilities. Hospitals and health care facilities
are subject to various legal claims by patients and others and are adversely
affected by the increasing cost of insurance.
Banks and Other Financial Institution Issues. Certain of the Corporate
Bonds in a Corporate Trust may be obligations of banks and other financial
institution issuers. The profitability of a financial institution is largely
dependent upon the credit quality of its loan portfolio which, in turn, is
affected by the institution's underwriting criteria, concentrations within the
portfolio and specific industry and general economic conditions. The operating
performance of financial institutions is also impacted by changes in interest
rates, the availability and cost of funds, the intensity of competition and the
degree of governmental regulation.
Telecommunications Issues. Certain of the Corporate Bonds in a
Corporate Trust may be obligations of telecommunications issuers. Payments on
bonds of companies in the telecommunications industry, including local,
long-distance and cellular service, the manufacture of telecommunications
equipment, and other ancillary services, are generally dependent upon the amount
and growth of customer demand, the level of rates permitted to be charged by
regulatory authorities and the ability to obtain periodic rate increases, the
effects of inflation on the cost of providing services and the rate of
technological innovation. The industry is characterized by increasing
competition in all sectors and extensive regulation by the Federal
Communications Commission and various state regulatory authorities.
General. Certain of the Securities may have been deposited at a market
discount or premium principally because their interest rates are lower or higher
than prevailing rates on comparable securities. The current returns of market
discount securities are lower than comparably rated securities selling at par
because discount securities tend to increase in market value as they approach
maturity. The current returns of market premium securities are higher than
comparably rated securities selling at par because premium securities tend to
decrease in market value as they approach maturity. Because part of the purchase
price is returned through current income payments and not at maturity, an early
redemption at par of a premium security will result in a reduction in yield to a
Trust. Market premium or discount attributable to interest rate changes does not
indicate market confidence or lack of confidence in the issue.
Lower-rated securities tend to offer higher yields than higher-rated
securities with the same maturities because the creditworthiness of the issuers
<PAGE>
of lower-rated securities may not be as strong as that of other issuers.
Moreover, if a Bond is recharacterized as equity by the Internal Revenue Service
for Federal income tax purposes, the issuer's interest deduction with respect to
the Bond will be disallowed and this disallowance may adversely affect the
issuer's credit rating. Because investors generally perceive that there are
greater risks associated with lower-rated securities, the yields and prices of
these securities tend to fluctuate more than higher-rated securities with
changes in the perceived quality of the credit of their issuers. In addition,
the market value of certain fixed-income securities may fluctuate more than the
market value of higher-rated securities since lower-rated, fixed-income
securities tend to reflect short-term credit developments to a greater extent
than higher-rated securities. Issuers of certain securities may possess less
creditworthiness characteristics than issuers of higher-rated securities and,
especially in the case of issuers whose obligations or credit standing have
recently been downgraded, may be subject to claims by debtholders, owners of
property leased to the issuer or others which, if sustained, would make it more
difficult for the issuers to meet their payment obligations. Bonds are also
affected by variables such as interest rates, inflation rates and real growth in
the economy. Therefore, investors should consider carefully the relative risks
associated with investment in securities which carry lower ratings.
Foreign Issuers. A portion of the Bonds in the Trusts may be invested
in securities of foreign issuers. It is appropriate for investors in such Trusts
to consider certain investment risks that distinguish investments in Bonds of
foreign issuers from those of domestic issuers. Those investment risks include
future political and economic developments, the possible imposition of
withholding taxes on interest income payable on the Bonds held in the Trusts,
the possible seizure or nationalization of foreign deposits, the possible
establishment of exchange controls or the adoption of other foreign governmental
restrictions (including expropriation, burdensome or confiscatory taxation and
moratoriums) which might adversely affect the payment or receipt of payment of
amounts due on the Bonds. Investors should realize that, although the Trusts
invest in U.S. dollar denominated investments, the foreign issuers which operate
internationally are subject to currency risks. The value of Bonds can be
adversely affected by political or social instability and unfavorable diplomatic
or other negative developments. In addition, because many foreign issuers are
not subject to the reporting requirements of the Securities Exchange Act of
1934, there may be less publicly available information about the foreign issuer
than a U.S. domestic issuer. Foreign issuers also are not necessarily subject to
uniform accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to U.S. domestic issuers. However,
the Sponsor anticipates that adequate information will be available to allow the
Sponsor to provide portfolio surveillance.
Liquidity. The Bonds in the Trusts may not have been registered under
the Securities Act of 1933 and may not be exempt from the registration
requirements of the Act. Most of the Bonds will not be listed on a securities
exchange. Whether or not the Bonds are listed, the principal trading market for
the Bonds will generally be in the over-the-counter market. As a result, the
existence of a liquid trading market for the Bonds may depend on whether dealers
will make a market in the Bonds. There can be no assurance that a market will be
made for any of the Bonds, that any market for the Bonds will be maintained or
of the liquidity of the Bonds in any markets made. The price at which the Bonds
may be sold to meet redemptions and the value of the Trusts will be adversely
affected if trading markets for the Bonds are limited or absent. The Trusts may
also contain non-exempt Bonds in registered form which have been purchased on a
<PAGE>
private placement basis. Sales of these Bonds may not be practicable outside the
United States, but can generally be made to U.S. institutions in the private
placement market which may not be as liquid as the general U.S. securities
market. Since the private placement market is less liquid, the prices received
may be less than would have been received had the markets been broader.
Exchange Controls. On the basis of the best information available to
the Sponsor at the present time none of the Bonds is subject to exchange control
restrictions under existing law which would materially interfere with payment to
the Trusts of amounts due on the Bonds. However, there can be no assurance that
exchange control regulations might not be adopted in the future which might
adversely affect payments to the Trusts. In addition, the adoption of exchange
control regulations and other legal restrictions could have an adverse impact on
the marketability of the Bonds in the Trusts and on the ability of the Trusts to
satisfy its obligation to redeem Units tendered to the Trustee for redemption.
Jurisdiction Over, and US Judgments Concerning, Foreign Obligors.
Non-U.S. issuers of the Bonds will generally not have submitted to the
jurisdiction of U.S. courts for purposes of lawsuits relating to those Bonds.
If the Trusts contain Bonds of such an issuer, the Trusts as a holder of those
obligations may not be able to assert its rights in U.S. courts under the
documents pursuant to which the Bonds are issued. Even if the Trusts obtain a
U.S. judgment against a foreign obligor, there can be no assurance that
the judgment will be enforced by a court in the country in which the foreign
obligor is located. In addition, a judgment for money damages by a court in
the United States, if obtained, will ordinarily be rendered only in U.S.
dollars. It is not clear, however, whether, in granting a judgment, the rate
of conversion of the applicable foreign currency into U.S. dollars would be
determined with reference to the due date or the date the judgment is rendered.
Courts in other countries may have rules that are similar to, or different
from, the rules of U.S. courts.
Year 2000 Problem. Like other investment companies, financial and
business organizations and individuals around the world, a Trust could be
adversely affected if the computer systems used by the Sponsor or Trustee or
other service providers to a Trust do not properly process and calculate
date-related information and data from and after January 1, 2000. This is
commonly known as the "Year 2000 Problem." The Sponsor and Trustee are taking
steps that they believe are reasonably designed to address the Year 2000 Problem
with respect to computer systems that they use and to obtain reasonable
assurances that comparable steps are being taken by a Trust's other service
providers. At this time, however, there can be no assurance that these steps
will be sufficient to avoid any adverse impact to the Trusts.
The Year 2000 Problem is expected to impact corporations and other
parties, which may include issuers of the Securities contained in a Trust, to
varying degrees based upon various factors, including, but not limited to, their
industry sector and degree of technological sophistication. The Sponsor is
unable to predict what impact, if any, the Year 2000 Problem will have on
issuers of the Securities contained in the Trusts.
Legislation. At any time after the Initial Date of Deposit, legislation
may be enacted, with respect to the Securities in a Trust or the issuers of the
Securities. Changing approaches to regulation, particularly with respect to the
environment, may have a negative impact on certain companies represented in a
<PAGE>
Trust. There can be no assurance that future legislation, regulation or
deregulation will not have a material adverse effect on a Trust or will not
impair the ability of the issuers of the Securities to achieve their business
goals.
Discount Bonds. A Trust portfolio may consist of Bonds priced at a deep
"market" discount from par value at maturity. A primary reason for the market
values of the Bonds being less than their par values is that the coupon interest
rates on the Bonds are lower than the current market interest rates for newly
issued bonds of comparable rating and type. At the time of issuance most Bonds
in a Trust were issued at then current coupon interest rates. The current yields
(coupon interest income as a percentage of market price) of discount bonds are
lower than the current yields of comparably rated bonds of similar type newly
issued at current interest rates because discount bonds tend to increase in
market value as they approach maturity and the full principal amount becomes
payable. Discount bonds with a longer term to maturity tend to have a higher
current yield and a lower current market value than otherwise comparable bonds
with a shorter term to maturity. If interest rates rise, the market discount of
discount bonds will increase and the value of such bonds will decrease; and if
interest rates decline, the market discount of discount bonds will decrease and
the value of the bonds will increase. Market discount attributable to interest
rate changes does not necessarily indicate a lack of market confidence in the
issuer. Investors should also be aware that Bonds in the Trusts' portfolios may
be subject to special or extraordinary redemption at 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 redemption;
such price is hereafter referred to as "Accreted Value") under certain
circumstances, including economic and other defaults. Under such circumstances
the redemption price for such Bonds would not include any premium over par or
Accreted Value which the investor may have paid for such Bonds.
COMPOSITION OF TRUSTS
Each Trust consists of such Bonds listed in the Schedules of
Investments in Part Two as may continue to be held from time to time (including
certain securities deposited in the Trust 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. Neither
the Sponsor nor the Trustee shall be liable in any way for any default, failure
or defect in any Bond. Because certain of the Bonds may from time to time under
certain circumstances be sold or redeemed or will mature in accordance with
their terms and the proceeds from such events will be used to pay for Units
redeemed or distributed to Unitholders, and not reinvested, no assurance can be
given that a Trust will retain for any length of time its present size and
composition.
Sale, maturity and redemption of securities. Certain of the Securities
may from time to time under certain circumstances be sold or may 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. In addition, certain Bonds in the
Trusts 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 "Schedules of Investments" in Part Two and in most cases pursuant to a
<PAGE>
sinking fund or special or extraordinary redemption provisions. A bond subject
to optional call is one which is subject to redemption or refunding prior to
maturity at the option of the issuer. A refunding is a method by which a bond
issue is redeemed, at or before maturity, by the proceeds of a new bond issue. A
bond subject to sinking fund redemption is one which is subject to partial call
from time to time from a fund accumulated for the scheduled retirement of a
portion of an issue prior to maturity. Special or extraordinary redemption
provisions may provide for redemption of all or a portion of an issue upon the
occurrence of certain circumstances usually related to defaults or unanticipated
changes in circumstances. The Sponsor is unable to predict all of the
circumstances which may result in such redemption of an issue of 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. Redemption pursuant to optional call
provisions is more likely to occur, and redemption pursuant to sinking fund or
special or extraordinary redemption provisions may occur, when the Bonds have an
offering side evaluation which represents a premium over par (as opposed to a
discount from par). Redemption pursuant to optional call provisions may be, and
redemption pursuant to sinking fund or special or extraordinary redemption
provisions is likely to be, at a price equal to the par value of the bonds
without any premium (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 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 "Estimated Long Term Return and Estimated Current Return"
and the "Schedules of Investments" in Part Two.)
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 a Bond 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. Under the Indenture, the Trustee does not have the
authority to act to retain any 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 Trust and for purposes of calculating the
average maturity of the Bonds in any Trust.
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. 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.
<PAGE>
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 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" in Part Two for call provisions of portfolio Bonds.
Unitholders of a Trust which contains Stripped Treasury Securities
should note that Stripped Treasury Securities are sold at a deep discount
because the buyer of those securities obtains only the right to receive a future
fixed payment on the security and not any rights to periodic interest payments
thereon. Purchasers of these Securities acquire, in effect, discount obligations
that are economically identical to the "zero-coupon bonds" that have been issued
by corporations. Zero coupon bonds are debt obligations which do not make any
periodic payments of interest prior to maturity and, accordingly, are issued at
a deep discount. Under generally accepted accounting principles, a holder of a
security purchased at a discount normally must report as an item of income for
financial accounting purposes the portion of the discount attributable to the
applicable reporting period. The calculation of this attributable income would
be made on the "interest" method which generally will result in a lesser amount
of includible income in earlier periods and a corresponding larger amount in
later periods. For federal income tax purposes, the inclusion will be on a basis
that reflects the effective compounding of accrued but unpaid interest
effectively represented by the discount. Although this treatment is similar to
the "interest" method described above, the "interest" method may differ to the
extent that generally accepted accounting principles permit or require the
inclusion of interest on the basis of a compounding period other than the
semi-annual period. (See "Tax Status of Unitholders." )
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. (See "Tax Status of Unitholders.")
Litigation. Except as provided in Part Two to the Prospectus, to the
best knowledge of the Sponsor, there is no litigation pending as of the date of
this Prospectus in respect of any Securities which might reasonably be expected
to have a material adverse effect on the Trusts. It is possible that after the
date of this Prospectus, litigation may be initiated with respect to Securities
in any Trust. The Sponsor is unable to predict whether any such litigation may
<PAGE>
be instituted or, if instituted, whether such litigation might have a material
adverse effect on the Trusts.
INSURANCE ON BONDS IN INSURED CORPORATE TRUSTS
All Bonds in an Insured Corporate Trust portfolio except for any U.S.
Treasury obligations contained in such portfolio are insured as to the scheduled
payment of interest and principal under a financial guaranty insurance policy
obtained by the issuer of the Corporate Bonds or by the Sponsor from MBIA
Insurance Corporation ("MBIA"). The premium for each such insurance policy has
been paid in advance by such issuer or the Sponsor and each such policy is
non-cancelable and will remain in force so long as the Corporate Bonds are
outstanding and MBIA remains in business. No premiums for such insurance are
paid by any Corporate Trust. If MBIA is unable to meet its obligations under its
policy or if the rating assigned of the claims-paying ability of MBIA
deteriorates, no other insurer has any obligation to insure any issue adversely
affected by either of these events.
The aforementioned insurance guarantees the scheduled payment of
principal and interest on all of the Corporate Bonds in an Insured Corporate
Trust except for any U.S. Treasury obligations. It does not guarantee the market
value of the Corporate Bonds or the value of the Units of a Corporate Trust.
This insurance is effective so long as the Corporate Bond is outstanding,
whether or not held by a Corporate Trust. Therefore, any such insurance may be
considered to represent an element of market value in regard to the Corporate
Bonds, but the exact effect, if any, of this insurance on such market value
cannot be predicted.
MBIA, formerly known as Municipal Bond Investors Insurance Corporation,
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 MBIA. MBIA is domiciled in the State of New York and licensed to do
business in 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. MBIA has two European branches, one
in the Republic of France and the other in the Kingdom of Spain.
Effective February 17, 1998, MBIA, Inc. acquired all of the outstanding
stock of Capital Markets Assurance Corporation ("CMAC"), a New York domiciled
financial guarantee insurance company, through a merger with its parent, CapMAC
Holdings, Inc. MBIA, Inc. then contributed the common stock of CMAC to MBIA.
Pursuant to a reinsurance agreement, CMAC has ceded all of its net insured risks
as well as its unearned premiums and contingency reserves to MBIA and MBIA has
reinsured CMAC's net outstanding exposure. MBIA, Inc. is not obligated to pay
the debts of or claims against CMAC.
As of December 31, 1997, MBIA had admitted assets of $5.3 billion
(audited), total liabilities of $3.5 billion (audited), and total capital and
surplus of $1.8 billion (audited) determined in accordance with statutory
accounting practices prescribed or permitted by insurance regulatory
authorities. As of June 30, 1998, MBIA had admitted assets of $6.0 billion
(unaudited), total liabilities of $4.0 billion (unaudited), and total capital
<PAGE>
and surplus of $2.0 billion (unaudited) determined in accordance with statutory
accounting practices prescribed or permitted by insurance regulatory
authorities. Copies of MBIA Corporation's financial statements prepared in
accordance with statutory accounting practices are available from MBIA
Corporation. The address of MBIA Corporation is 113 King Street, Armonk, New
York 10504.
Moody's rates all bond issues insured by MBIA "Aaa" and short term
loans "MIG 1," both designated to be of the highest quality. Standard & Poor's,
upon request, rates all new issues insured by MBIA "AAA" Prime Grades. See
"Description of Ratings" in the Information Supplement for a discussion of
rating symbols and their meanings.
Bonds in an Insured Corporate Trust for which insurance has been
obtained by the issuer thereof or by the Sponsor from MBIA (all of which were
rated "AAA" by Standard & Poor's and "Aaa" by Moody's) may or may not have a
higher yield than uninsured bonds rated "AAA" by Standard & Poor's and "Aaa" by
Moody's. In selecting Corporate Bonds for the portfolio of a Corporate Trust,
the Sponsor has applied the criteria hereinbefore described. See "Description of
Ratings" in the Information Supplement for a discussion of rating symbols and
their meanings.
PUBLIC OFFERING PRICE
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 (1) as of 4:00 p.m. eastern time on each day on which the New York
Stock Exchange (the "Exchange") is normally open, or (2) as of such earlier
closing time on each day on which the Exchange is scheduled in advance to close
at an earlier time (the "Evaluation 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, or such earlier closing time, on each such day.
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.
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 calculating the applicable sales charge, purchasers who have
indicated their intent to purchase a specified amount of Units of any
Nuveen-sponsored unit trusts 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 table set forth below, based on the amount of intended
aggregate purchases (excluding purchases which are subject only to a deferred
sales charge) as expressed in the letter of intent. For purposes of letter of
intent calculations, units of equity products are valued at $10 per unit. 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
<PAGE>
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 those 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 toward the intended
amount.
The Public Offering Price of the Units of each Trust for secondary
market purchases is determined by adding to the Trustee's determination of the
bid price of each Bond in the Trust the appropriate 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, adjusting the total to reflect the
amount of any cash held in or advanced to the principal account of the Trust,
and dividing the result by the number of Units of such Trust then outstanding.
The effect of this method of sales charge calculation will be that
different sales charge rates will be applied to each of the various Bonds in a
Trust portfolio based upon the maturities of such Bonds, in accordance with the
following schedule. As shown, the sales charge on Bonds in each maturity range
(and therefore the aggregate sales charge on the purchase) is reduced with
respect to volume purchases:
<TABLE>
<CAPTION>
CORPORATE TRUST SECONDARY MARKET SALES CHARGES
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 $5,000,000
YEARS TO MATURITY UNDER TO TO TO TO TO TO OR
$50,000 $99,999 $249,999 $499,999 $999,999 $2,499,999 $4,999,999 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
- --------------------
* 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.
</TABLE>
<TABLE>
<CAPTION>
U.S. TREASURY TRUST SECONDARY MARKET SALES CHARGES
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 $5,000,000
YEARS TO MATURITY UNDER TO TO TO TO TO TO OR
$50,000 $99,999 $249,999 $499,999 $999,999 $2,499,999 $4,999,999 MORE
Less than 1 0 0 0 0 0 0 0 0
1 but less than 2 1.10% 1.00% 0.90% 0.90% 0.80% 0.70% 0.60% 0.50%
2 but less than 3 1.40 1.30 1.30 1.20 1.10 1.00 0.80 0.70
3 but less than 4 1.60 1.50 1.50 1.40 1.30 1.10 1.00 0.80
4 but less than 5 1.80 1.70 1.70 1.50 1.40 1.30 1.10 0.90
5 but less than 7 1.90 1.80 1.70 1.70 1.50 1.30 1.20 1.00
7 but less than 10 2.20 2.10 2.00 1.90 1.70 1.50 1.30 1.20
10 but less than 13 2.70 2.60 2.40 2.30 2.20 1.90 1.70 1.40
13 but less than 16 3.30 3.10 2.90 2.80 2.60 2.30 2.00 1.70
16 or more 3.60 3.40 3.30 3.10 2.90 2.50 2.20 1.90
- --------------------
* Breakpoint sales charges are computed both on a dollar basis and on the
basis of the number of Units purchased, using the equivalent of 5,000
Units to $500,000, 10,000 Units to $1 million, etc., and will be applied
on that basis which is more favorable to the purchaser.
</TABLE>
<PAGE>
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 Corporate 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 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 aggregate principal amount of the Securities deposited in the
Trust during the initial offering period.
As more fully set forth under "Accrued Interest" below, 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.
The above graduated sales charge 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 any Series will be
aggregated with concurrent purchases of Units 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 individuals and their spouses,
parents, children, grandchildren, grandparents, parents-in-law, sons- and
daughters-in-law, siblings, a sibling's spouse and a spouse's siblings
("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.
<PAGE>
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 secondary market at the Public Offering
Price for non-breakpoint purchases minus the concession the Sponsor typically
allows to brokers and dealers for non-breakpoint purchases (see "Distribution of
Units to the Public") by (1) investors who purchase Units through registered
investment advisors, 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"). 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.
Whether or not Units are being offered for sale, the Sponsor shall also
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 each day on which any 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
Although it is not obligated to do so, the Sponsor intends to maintain
a secondary market for Units of certain Trusts at its own expense and
continuously to offer to purchase Units of each such 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. If the supply of Units of any of the Trusts
exceeds the demand, or for some other business reason, the Sponsor may
discontinue purchases of Units of such Trust at such prices. Unitholders who
wish to dispose of Units should inquire of the Trustee or their broker as to
current redemption prices. (See "How Units May Be Redeemed Without Charge.")
In connection with its secondary market-making 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
<PAGE>
broker or dealer will share profits and losses in the joint account in
accordance with the terms of their joint account agreement. In maintaining a
market for the Units, the Sponsor will realize profits or sustain losses in the
amount of any difference between the price at which Units are purchased and the
price at which Units are resold or redeemed. The secondary market Public
Offering Price of Units may be greater or less than the cost of such Units to
the Sponsor.
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.")
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. (See
"Composition of Trusts" and "Tax Status of Unitholders.") Interest accrues to
the benefit of Unitholders commencing with the settlement date of their purchase
transaction.
The Trustee has no cash for distribution to Unitholders until it
receives interest payments on the Bonds in the Trusts. Since interest is accrued
daily but generally paid only semi-annually, during the initial months of each
Trust, 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 the size and
composition shown in the accompanying Part Two and expenses and fees remain the
same, annual interest collected and distributed in future periods will
approximate the estimated Net Annual Interest Income stated therein. 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
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.
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 "Distributions 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.
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN
<PAGE>
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 practice and adjusted to reflect expenses and sales
charges. Under accepted practice, 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 the 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 the 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 affect 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
Trust may experience expenses and portfolio changes different from those assumed
in the calculation of estimated Long Term Return. There can be no assurance that
the Estimated Current Returns or Estimated Long Term Returns quoted to a Trust
will be realized in the future. 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
"Amendment and Termination of Indenture". Since both the Estimated Current
Return and the Estimated Long Term Return quoted on a given business day are
based on the market value of the underlying Bonds on that day, 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.
<PAGE>
A comparison of estimated 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
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 a
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.
DETERMINATION OF THE PRICE OF BONDS AT DATE OF DEPOSIT
The prices at which the Bonds deposited in each Trust would have been
offered to the public on the business day prior to the Date of Deposit were
determined on the basis of an evaluation of the Bonds by 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 and appraising comparable bonds.
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 Bonds by a Trust, may be
available for use in the Sponsor's business, and may be of benefit to the
Sponsor.
TAX STATUS OF UNITHOLDERS
For purposes of the following discussion and opinions, it is assumed
that each Obligation is debt for federal income tax purposes and that interest
on each Obligation is includible in gross income for federal income tax
purposes. In the opinion of Chapman and Cutler, special counsel for the Sponsor,
under existing law:
1. Each Trust is not an association taxable as a corporation for
federal income tax purposes.
2. Each Unitholder will be considered the owner of a pro rata
portion of each of a Trust's assets for federal income tax purposes under
Subpart E, Subchapter J of Chapter 1 of the Internal Revenue Code of 1986 (the
"Code"). Each Unitholder will be considered to have received his pro rata share
of income derived from each Trust asset when such income is considered to be
received by a Trust. Each Unitholder will be required to include in taxable
income for federal income tax purposes, original issue discount with respect to
his interest in any Obligation held by a Trust at the same time and in the same
manner as though the Unitholder were the direct owner of such interest.
3. Each Unitholder will have a taxable event when an Obligation is
disposed of (whether by sale, exchange, liquidation, redemption, payment at
maturity or otherwise) or when the Unitholder redeems or sells his Units. A
Unitholder's tax basis in his Units will equal his tax basis in his pro rata
portion of all the assets of the Trust. Such basis is determined (before the
adjustments described below) by apportioning the tax basis for the Units among
<PAGE>
each of the Trust's assets, according to value as of the valuation date nearest
the date of acquisition of the Units. Unitholders must reduce the tax basis of
their Units for their share of accrued interest received, if any, on Obligations
delivered after the date on which the Unitholders pay for their Units to the
extent that such interest accrued on such Obligations before the date the Trust
acquired ownership of the Obligations (and the amount of this reduction may
exceed the amount of accrued interest paid to the sellers) and, consequently,
such Unitholders may have an increase in taxable gain or reduction in capital
loss upon the disposition of such Units. Unitholders should consult their own
tax advisors with regard to calculation of basis.
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 Obligations (whether by sale, exchange,
payment on maturity, redemption or otherwise) gain or loss is recognized to the
Unitholder (subject to various non-recognition provisions of the Code). The
amount of any such gain or loss is measured by comparing the Unitholders' pro
rata share of the total proceeds from such disposition with his basis for his
fractional interest in the asset disposed of. The basis of each Unit and of each
Obligation which was issued with original issue discount (including the Treasury
Bonds) (or which has market discount) must he increased by the amount of accrued
original issue discount (and market discount if the Unitholder elects to include
market discount in income as it accrues) and the basis of each Unit and of each
Obligation which was purchased by a Trust at a premium must be reduced by the
annual amortization of bond premium which the Unitholder has properly elected to
amortize under Section 171 of the Code. The tax basis reduction requirements of
the Code relating to amortization of bond premium, under some circumstances,
result in the Unitholder realizing a taxable gain when his Units are sold or
redeemed for an amount equal to or less than his original cost. A Trust may
contain certain "zero coupon" Securities (the "Stripped Treasury Securities")
that are treated as bonds that were originally issued at an original issue
discount provided, pursuant to a Treasury Regulation (the "Regulation") issued
on December 28, 1992, that the amount of original issue discount determined
under Section 1286 of the Code is not less than a de minimis amount as
determined thereunder. Because the Stripped Treasury Securities represent
interests in "stripped" U.S. Treasury bonds, a Unitholder's initial cost for his
pro rata portion of each Stripped Treasury Security held by a Trust (determined
at the time he acquires his Units, in the manner described above) shall be
treated, as its "purchase price" by the Unitholder. Original issue discount is
effectively treated as interest for federal income tax purposes, and the amount
of original issue discount in this case is generally the difference between the
bond's purchase price and its stated redemption price at maturity. A Unitholder
will be required to include in gross income for each taxable year the sum of his
daily portions of original issue discount attributable to the Stripped Treasury
Securities held by a Trust as such original issue discount accrues and will, in
general, be subject to federal income tax with respect to the total amount of
such original issue discount that accrues for such year even though the income
is not distributed to the Unitholders during such year to the extent it is not
less than a de minimis amount as determined under the Regulation. To the extent
that the amount of such discount is less than the respective de minimis amount,
such discount shall be treated as zero. In general, original issue discount
accrues daily under a constant interest rate method which takes into account the
semi-annual compounding of accrued interest. In the case of the Stripped
Treasury Securities, this method will generally result in an increasing amount
of income to the Unitholders each year. Unitholders should consult their tax
advisors regarding the Federal income tax consequences of and accretion of
original issue discount.
<PAGE>
Limitations on Deductibility of Trust Expenses by Unitholders. Each
Unitholder's pro rata share of each expense paid by a Trust is deductible by the
Unitholder to the same extent as though the expense had been paid directly by
him. It should be noted that as a result of the Tax Reform Act of 1986, certain
miscellaneous itemized deductions, such as investment expenses, tax return
preparation fees and employee business expenses, will be deductible by an
individual only to the extent they exceed 2% of such individual's adjusted gross
income (similar limitations also apply to estates and trusts). Unitholders may
be required to treat some or all of the expenses paid by each Trust as
miscellaneous itemized deductions subject to this limitation.
Premium. If a Unitholder's tax basis of his pro rata portion in any
Securities held by a Trust exceeds the amount payable by the issuer of the
Obligation with respect to such pro rata interest upon the maturity of the
Obligation, such excess would be considered "premium" which may be amortized by
the Unitholder at the Unitholder's election as provided in Section 171 of the
Code. Unitholders should consult their tax advisors regarding whether such
election should be made and the manner of amortizing premium.
Original Issue Discount. Certain of the Obligations in a Trust may have
been acquired with "original issue discount." In the case of any Obligations in
a Trust acquired with "original issue discount" that exceeds a "de minimis"
amount as specified in the Code or in the case of the Stripped Treasury
Securities as specified in the Regulation, such discount is includible in
taxable income of the Unitholders on an accrual basis computed daily, without
regard to when payments of interest on such Obligations are received. The Code
provides a complex set of rules regarding the accrual of original issue
discount. These rules provide that original issue discount generally accrues on
the basis of a constant compound interest rate over the term of the Obligations.
Unitholders should consult their tax advisors as to the amount of original issue
discount which accrues.
Special original issue discount rules apply if the purchase price of
the Obligation by a Trust exceeds its original issue price plus the amount of
original issue discount which would have previously accrued based upon its issue
price (its "adjusted issue price"). Similarly, these special rules would apply
to a Unitholder if the tax basis of his pro rata portion of an Obligation issued
with original issue discount exceeds his pro rata portion of its adjusted issue
price. Unitholders should also consult their tax advisers regarding these
special rules.
It is possible that a Corporate Bond that has been issued at an
original issue discount may be characterized as a "high-yield discount
obligation" within the meaning of Section 163(e)(5) of the Code. To the extent
that such an obligation is issued at a yield in excess of six percentage points
over the applicable Federal rate, a portion of the original issue discount on
such obligation will be characterized as a distribution on stock (e.g.,
dividends) for purposes of the dividends received deduction which is available
to certain corporations with respect to certain dividends received by such
corporation.
<PAGE>
Market Discount. If a Unitholder's tax basis in his pro rata portion of
Securities is less than the allocable portion of such Security's stated
redemption price at maturity (or, if issued with original issue discount, the
allocable portion of its "revised issue price"), such difference will constitute
market discount unless the amount of market discount is "de minimis" as
specified in the Code. Market discount accrues daily computed on a straight-line
basis, unless the Unitholder elects to calculate accrued market discount under a
constant-yield method. The market discount rules do not apply to Stripped
Treasury Securities because they are stripped debt instruments subject to
special original issue discount rules discussed above. Unitholders should
consult their own tax advisers regarding whether an election should be made and
as to the amount of market discount which accrues.
Accrued market discount is generally includible in taxable income to
the Unitholders as ordinary income for Federal tax purposes upon the receipt of
serial principal payments on the Obligations, on the sale, maturity or
disposition of such Obligations by a Trust, and on the sale by a Unitholder of
Units, unless a Unitholder elects to include the accrued market discount in
taxable income as such discount accrues. If a Unitholder does not elect to
annually include accrued market discount in taxable income as it accrues,
deductions for any interest expense incurred by the Unitholder which is incurred
to purchase or carry his Units will be reduced by such accrued market discount.
In general, the portion of any interest expense which was not currently
deductible would ultimately be deductible when the accrued market discount is
included in income. Unitholders should consult their tax advisors regarding
whether an election should be made to include market discount in income as it
accrues and as to the amount of interest expense which may not be currently
deductible.
Computation of the Unitholder's Tax Basis. The tax basis of a
Unitholder with respect to his interest in an Obligation is increased by the
amount of original issue discount (and market discount, if the Unitholder elects
to include market discount, if any, on the Obligations held by a Trust in income
as it accrues) thereon properly included in the Unitholder's gross income as
determined for Federal income tax purposes and reduced by the amount of any
amortized premium which the Unitholder has properly elected to amortize under
Section 171 of the Code. A Unitholder's tax basis in his Units will equal his
tax basis in his pro rata portion of all of the assets of a Trust.
Recognition of Taxable Gain or Loss upon Disposition of Obligations by
a Trust or Disposition of Unit. A Unitholder will recognize taxable capital gain
(or loss) when all or part of his pro rata interest in an Obligation is disposed
of in a taxable transaction for an amount greater (or less) than his tax basis
therefor (subject to various non-recognition provisions of the Code). As
previously discussed, gain realized on the disposition of the interest of a
Unitholder in any Obligation deemed to have been acquired with market discount
will be treated as ordinary income to the extent the gain does not exceed the
amount of accrued market discount not previously taken into income. Any capital
gain or loss arising from the disposition of an Obligation by a Trust or the
disposition of Units by a Unitholder will generally be determined by the period
of time the Unitholder held his Unit and the period of time the Trust held the
Obligation. The Internal Revenue Service Restructuring and Reform Act of 1998
(the "1998 Tax Act") provides that for taxpayers other than corporations, net
capital gain (which is defined as net long-term capital gain over net short-term
capital loss for the taxable year) realized from property (with certain
exclusions) is subject to a maximum marginal stated tax rate of 20% (10% in the
case of certain taxpayers in the lowest tax bracket). Capital gain or loss is
long-term if the holding period for the asset is more than one year, and is
short-term if the holding period for the asset is one year or less. The date on
which a Unit is acquired (i.e., the "trade date") is excluded for purposes for
determining the holding period of the Unit. The legislation is generally
effective retroactively for amounts properly taken into account on or after
January 1, 1998. Capital gains realized from assets held for one year or less
are taxed at the same rates as ordinary income.
<PAGE>
If the Unitholder disposes of a Unit, he is deemed thereby to have
disposed of his entire pro rata interest in all Trust assets, including his pro
rata portion of all of the Obligations represented by the Unit. This may result
in a portion of the gain, if any, on such sale being taxable as ordinary income
under the market discount rules (assuming no election was made by the Unitholder
to include market discount in income as it accrues) as previously discussed. The
tax basis reduction requirements of the Code relating to amortization of
Obligation premium may, under some circumstances, result in the Unitholder's
realizing taxable gain when his Units are sold or redeemed for an amount equal
to or less than his original cost.
In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
considered "conversion transactions" effective for transactions entered into
after April 3, 1993. Unitholders and prospective investors should consult with
their tax advisers regarding the potential effect of this provision on their
investment in Units.
The Taxpayer Relief Act of 1997 (the "1997 Act") includes provisions
that treat certain transactions designed to reduce or eliminate risk of loss and
opportunities for gain (e.g., short sales, offsetting notional principal
contracts, futures or forward contracts, or similar transactions) as
constructive sales for purposes of recognition of gain (but not loss) and for
purposes of determining the holding period. Unitholders should consult their own
tax advisors with regard to any such constructive sales rules.
Foreign Investors. A Unitholder who is a foreign investor (i.e., an
investor other than a U.S. citizen or resident or a U.S. corporation,
partnership, estate or trust) will not be subject to United States federal
income taxes, including withholding taxes, on interest income (including any
original issue discount) on, or any gain from the sale or other disposition of,
his pro rata interest in any Obligation or the sale of his Units provided that
all of the following conditions are met (i) the interest income or gain is not
effectively connected with the conduct by the foreign investor of a trade or
business within the United States, (ii) if the interest is United States source
income (which is the case for most securities issued by United States issuers),
the Obligation is issued after July 18, 1984, then the foreign investor does not
own, directly or indirectly, 10% or more of the total combined voting power of
all classes of voting stock of the issuer of the Obligation and the foreign
investor is not a controlled foreign corporation related (within the meaning of
Section 864(d)(4) of the Code) to the issuer of the Obligation, or (iii) with
respect to any gain, the foreign investor (if an individual) is not present in
the United States for 183 days or more during his taxable year, and (iv) the
foreign investor provides all certification which may be required of his or her
status (foreign investors may contact the Sponsor to obtain a Form W-8 which
must be filed with the Trustee and refiled every three calendar years
thereafter). Foreign investors should consult their tax advisers with respect to
United States tax consequences of ownership of Units.
<PAGE>
It should be noted that the Revenue Reconciliation Act of 1993 includes
a provision which eliminates the exemption from United States taxation,
including withholding taxes, for certain "contingent interest." The provision
applies to interest received after December 31, 1993. No opinion is expressed
herein regarding the potential applicability of this provision and whether
United States taxation or withholding taxes could be imposed with respect to
income derived from the Units as a result thereof. Unitholders and prospective
investors should Consult with their tax advisers regarding the potential effect
of this provision on their investment in Units.
General. Each Unitholder (other than a foreign investor who has
properly provided the certifications described above) will be requested to
provide the Unitholder's taxpayer identification number to the Trustee and to
certify that the Unitholder has not been notified that payments to the
Unitholder are subject to back-up withholding. If the proper taxpayer
identification number and appropriate certification are not provided when
requested, distributions by a Trust to Such Unitholder including amounts
received upon the redemption of the Units will be subject to back-up
withholding.
The foregoing discussion relates only to United States federal income
taxes and applies only to the Trusts which are described in this Prospectus;
Unitholders may be subject to foreign, state and local taxation in other
jurisdictions (including a foreign investor's country of residence). Unitholders
should consult their tax advisers regarding potential state, local, or foreign
taxation with respect to the Units.
The Sponsor believes that investors who are individuals will not be
subject to any state or local personal income taxes on the interest received by
the U.S. Treasury Trusts and distributed to them. However, investors (including
individuals) may be subject to state and local taxes on any capital gains (or
market discount treated as ordinary income) derived from the U.S. Treasury
Trusts and other state and local taxes (including corporate income or franchise
taxes, personal property or intangibles taxes, and estate or inheritance taxes)
on their Units or the income derived therefrom. In addition, individual
investors (and any other investors which are not subject to state and local
taxes on the interest income derived from the U.S. Treasury Trusts) will
probably not be entitled to a deduction for state and local tax purposes for
their share of the fees and expenses paid by the U.S. Treasury Trusts, for any
amortized bond premium or for any interest on indebtedness incurred to purchase
or carry their Units. Therefore, even though the Sponsor believes that interest
income from the U.S. Treasury Trusts is exempt from state and local personal
income taxes in all states, investors should consult their own tax advisers with
respect to state and local taxation.
COUNSEL FOR TRUSTEE
At the time of the closing for each Trust, Carter, Ledyard & Milburn,
counsel for the Trustee and special counsel for such Series for New York tax
matters, rendered an opinion under then existing law substantially to the effect
that:
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.
<PAGE>
OPERATING EXPENSES
No annual advisory fee is charged to the Trusts by the Sponsor. The
Sponsor does, however, receive those fees as set forth in "Essential Information
Regarding the Trusts" in Part Two of this Prospectus for regularly evaluating
the Bonds and for maintaining surveillance over the portfolios (the "Sponsor's
Fee"). (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
Regarding the Trusts" in Part Two of this Prospectus. Each annual fee is per
$1,000 principal amount of the underlying Securities 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). The Sponsor's Fee and the Trustee's Fee may be
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, or if not available, in
a comparable index. 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 Corporate Bond issuers with respect to the Corporate Bonds in the Insured
Corporate Trusts have been paid in full prior to the deposit of the Corporate
Bonds in the Corporate Trusts, and the value of such insurance has been included
in the evaluation of the Corporate Bonds in each Corporate Trust and accordingly
in the Public Offering Price of Units of each Corporate 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 amortized and paid by the
Trust over the lesser of the first 60 months or the life of the Trust. 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 Securities 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 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 Securities in order to
pay these amounts if funds are not otherwise available in the applicable
Interest and Principal Accounts.
<PAGE>
The Indenture for certain Series 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 $0.05 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.
DISTRIBUTIONS TO UNITHOLDERS
Interest received by the Trustee on the Securities in each Trust,
including that part of the proceeds of any disposition of Securities which
represents accrued interest and including any insurance proceeds representing
interest due on defaulted Corporate 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. With the exception of proceeds received from
maturing U.S. Treasury Obligations by the U.S. Treasury Trusts, proceeds
received from the disposition, including sale, call or maturity, of any of the
Securities 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. Proceeds received by a U.S. Treasury Trust as a result
of the maturity of an underlying U.S. Treasury Obligation will be distributed
within five business days after such U.S. Treasury Obligation matures to
Unitholders of record on such maturity 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 as of each Record Date. 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 in effect. 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. The
amount of regular distributions will generally change when Securities are
redeemed, mature or are sold or when fees and expenses increase or decrease.
The plan of distribution selected by a Unitholder will remain in effect
until changed. Unitholders purchasing Units of a Trust 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
<PAGE>
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, return receipt requested, to minimize the
possibility of their being lost or stolen. If no notice is received by the
Trustee in proper form the Unitholder will be deemed to have elected to continue
the same plan.
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 accounts. 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. (See "How
Units May Be Redeemed Without Charge.") 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.
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.
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 receive future distributions on their Units in
cash. Such notice will be effective as of the next Record Date occurring at
least 10 days after the Trustee's receipt of the notice. 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.
<PAGE>
DETAILED 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. Within a reasonable period of time after the
end of each calendar year, the Trustee will furnish to each person, who at any
time during the calendar year was a 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), 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.
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,
(3) interest accrued thereon not subject to collection and distribution, and (4)
amounts representing organizational expenses paid less accrued organizational
expenses of the Trust, less (1) amounts representing taxes or governmental
charges payable out of the Trust, (2) the accrued expenses of the Trust, and (3)
cash held for distribution to Unitholders of record, and required for redemption
of Units tendered, as of a date prior to the date of evaluation. 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 the 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
Corporate Bonds with respect to the Corporate Bonds in the Insured Corporate
Trusts is effective so long as such Corporate Bonds are outstanding, such
insurance will be taken into account in determining the bid and offering prices
of such Corporate Bonds and therefore some value attributable to such insurance
will be included in the value of Units of Corporate Trusts that include such
Corporate Bonds.
DISTRIBUTION OF UNITS TO THE PUBLIC
To facilitate the handling of transactions, sales of Units shall be
limited to transactions involving a minimum of either of $5,000 or 50 Units
($1,000 or 10 Units for Traditional and Roth IRA purchases and $500 or nearest
whole number of Units whose value is less than $500 for Education IRA
purchases), whichever is less. The Sponsor reserves the right to reject, in
whole or in part, any order for the purchase of Units.
The Sponsor currently intends to maintain a secondary market for Units
of certain Trusts. (See "Market for Units" below.) 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 "Public Offering Price," 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:
<PAGE>
<TABLE>
<CAPTION>
CORPORATE DEALER CONCESSIONS
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 $5,000,000
YEARS TO MATURITY UNDER TO TO TO TO TO TO OR
$50,000 $99,999 $249,999 $499,999 $999,999 $2,499,999 $4,999,999 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
- --------------------
* 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.
</TABLE>
U.S. TREASURY TRUST DEALER CONCESSIONS
<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 $5,000,000
YEARS TO MATURITY UNDER TO TO TO TO TO TO OR
$50,000 $99,999 $249,999 $499,999 $999,999 $2,499,999 $4,999,999 MORE
Less than 1 0 0 0 0 0 0 0 0
1 but less than 2 0.715% 0.650% 0.585% 0.585% 0.520% 0.455% 0.390% 0.325
2 but less than 3 0.910 0.845 0.845 0.780 0.715 0.650 0.520 0.455
3 but less than 4 1.040 0.975 0.975 0.910 0.845 0.715 0.650 0.520
4 but less than 5 1.170 1.105 1.105 0.975 0.910 0.845 0.715 0.585
5 but less than 7 1.235 1.170 1.105 1.105 0.975 0.845 0.780 0.650
7 but less than 10 1.430 1.365 1.300 1.235 1.105 0.975 0.845 0.780
10 but less than 13 1.755 1.690 1.560 1.495 1.430 1.235 1.105 0.910
13 but less than 16 2.145 2.015 1.885 1.820 1.690 1.495 1.300 1.105
16 or more 2.340 2.210 2.145 2.015 1.885 1.625 1.430 1.235
- --------------------
* Breakpoint sales charges are computed both on a dollar basis and on
the basis of the number of Units purchased, using the equivalent of 5,000 Units
to $500,000 and 10,000 Units to $1 million, etc., and will be applied on that
basis which is more favorable to the purchaser.
</TABLE>
<PAGE>
The Sponsor reserves the right to change the foregoing dealer
concessions from time to time.
A volume incentive of $2.50 per $1,000 of Units sold can be earned by
dealer firms as a marketing allowance for secondary market sales of at least $1
million of Nuveen Unit Trust units per calendar quarter. Only sales through the
Sponsor qualify for volume incentives and for meeting minimum requirements. The
Sponsor reserves the right to modify or change the volume incentive schedule at
any time and make the determination as to which firms qualify for the marketing
allowance and the amount paid.
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" (see "Public Offering
Price").
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.
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 Tax-Free 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.
Reimbursement under this program will be made by the Sponsor and not by the
Funds or Trusts.
OWNERSHIP AND TRANSFER OF UNITS
Ownership of Units is evidenced by registered Certificates unless the
Unitholder expressly requests that ownership evidenced by book-entry positions
recorded on the books and records of the Trustee. 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 bear an appropriate notation on their face indicating which plan of
distribution has been selected. When a holder of certificated Units changes his
plan of distribution, the existing Certificate must be surrendered to the
Trustee and a new Certificate 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 the
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 the address provided herein, 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 Unitholders. 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.
<PAGE>
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.
The process of registration and delivery to the Unitholder of
Certificates or Book-Entry Position Confirmations may take up to 30 days.
Purchasers of Units will be unable to exercise any right to transfer or
redemption until they have received their Certificate(s) or Book-Entry Position
Confirmation(s). (See "How Units May Be Redeemed Without Charge.")
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. The
indemnification protects the Trustee, Sponsor, and Trust from risk if the
original Certificate is presented for transfer or redemption by a person who
purchased it in good faith, for value, and without notice of any fraud or
irregularity. This indemnification must be in the form of an Open Penalty Bond
of Indemnification. The premium for such an indemnity bond may vary from time to
time, 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 the address provided herein (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 by the
Trust, Sponsor or the Trustee. However, a Unitholder's financial adviser may
charge for serving as agent in the redemption of Units. 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 the 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.
<PAGE>
Accrued interest paid on redemption will 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 of the Trust. 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 canceled. 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.
The right of redemption may be suspended and payment postponed (1) for
any period in which the New York Stock Exchange is closed, other than customary
weekend and holiday closings or for any period during which the Securities and
Exchange Commission determines that trading in the New York Stock Exchange is
restricted, (2) for any period during which an emergency exists, as a result of
which disposal or evaluation of the Bonds is not reasonably practicable, or (3)
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.
<PAGE>
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 the "Schedule of Investments" in Part Two and
"Composition of Trusts" herein for a discussion of call provisions of Bonds in
the Trusts.
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 the
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.
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.
<PAGE>
INFORMATION ABOUT THE TRUSTEE
The Trustee is The Chase Manhattan Bank, 4 New York Plaza, New York,
New York 10004. 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 or 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.
<PAGE>
INFORMATION ABOUT THE SPONSOR
Since our founding in 1898, John Nuveen & Co. Incorporated has been
synonymous with investments that withstand the test of time. Today, we offer a
broad range of investments designed for mature investors whose portfolio is the
principal source of their ongoing financial security. More than 1.3 million
investors have entrusted Nuveen to help them maintain the lifestyle they
currently enjoy.
A value investing approach--purchasing securities of strong companies
and communities that represent good long-term value--is the cornerstone of
Nuveen's investment philosophy. It is a careful, long-term strategy that offers
the potential for attractive returns with moderated risk. Successful value
investing begins with in-depth research and a discerning eye for marketplace
opportunity. Nuveen's team of investment professionals is backed by the
discipline, resources and expertise of a century of investment experience,
including one of the most recognized research departments in the industry.
To meet the unique circumstances and financial planning needs of
mature investors, Nuveen offers a wide array of taxable and tax-free
investment products-- including equity and fixed-income mutual funds, unit
trusts, exchange-traded funds, customized asset management services and cash
management products. 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). Nuveen maintains eight regional offices.
To help advisers and investors better understand and more efficiently
use an investment in the Trust 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 Sponsor may produce
software or additional sales literature to promote the advantages of using the
Trust to meet these and other specific investor needs.
AMENDMENT AND TERMINATION 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 permit the deposit
or acquisition of bonds either in addition to, or in substitution for any of the
Bonds initially deposited in a Trust except as provided in the Indenture or the
Prospectus. The Trustee shall advise the Unitholders of any amendment promptly
after execution thereof.
A Trust may be liquidated at any time by the 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 the 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 the Trust to less
than 40% of the principal amount of the Bonds originally deposited in the
portfolio. 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
Long-Term, 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 or beyond the Mandatory Termination Date.
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 the 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. Carter,
Ledyard & Milburn, 2 Wall Street, New York, New York 10005, act as counsel for
the Trustee with respect to the Trusts and as special New York tax counsel with
respect to the Trusts.
AUDITORS
The "Statement of Condition" and the "Schedule of Investments" for each
Trust in a Series and the related "Statement of Operations" and "Statement of
Changes in Condition" and changes in the Trust Units have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report in
Part Two of this Prospectus with information pertaining to the specific Trusts
in the Series to which such report relates, and are set forth 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 their
respective Trust, which has been filed with the Securities and Exchange
Commission and is intended to supplement information contained in Part One and
Part Two of this Prospectus. This supplement includes additional general
information about the Sponsor and the Trusts.
<PAGE>
Prospectus Part One must be accompanied by Part Two
Sponsor John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606-1286
Trustee The Chase Manhattan Bank
4 New York Plaza
New York, New York 10004-2413
800/257-8787
Legal Counsel to Sponsor Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
Legal Counsel to Trustee Carter, Ledyard & Milburn
2 Wall Street
New York, New York 10005
Independent Public
Accountants for the Trust Arthur Andersen LLP
33 West Monroe Street
Chicago, Illinois 60603
- --------------------
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, as amended, and to which reference is made.
No person is authorized to give any information or to make any
representations not contained in this Prospectus or in supplementary sales
literature prepared by the Sponsor, and any information or representation not
contained herein 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.
NUVEEN UNIT TRUSTS
SERIES 1
<PAGE>
Nuveen U.S. Treasury Trust, Series 2 (Intermediate) 78,000 Units
Nuveen Insured Corporate Trust, Series 1 (Long-Term) 140,000 Units
FIXED INCOME PROSPECTUS - PART TWO
DATED SEPTEMBER 30, 1998
NOTE: This Prospectus Part Two may not be distributed unless accompanied by Part
One.
Currently Offered at Public Offering Price plus interest accrued to the date of
settlement. Minimum purchase -- either $5,000 or 50 Units ($1,000 or 10 Units
for Traditional and Roth IRA purchases and $500 or nearest whole number of Units
whose value is less than $500 for Education IRA purchases), whichever is less.
THE UNITS of fractional undivided interest in the Nuveen Unit Trusts
being offered hereby are issued and outstanding Units that have been reacquired
by John Nuveen & Co. Incorporated either by purchase of Units tendered to the
Trustee for redemption or by purchase in the open market. The price paid in each
instance was not less than the Redemption Price determined as provided in Part
One under the caption "How Units May Be Redeemed Without Charge." The Units are
being offered at the Public Offering Price computed in the manner described in
Part One under the caption "Public Offering Price." Any profit or loss resulting
from the sale of Units will accrue to John Nuveen & Co. Incorporated and no
proceeds from the sale will be received by the Trusts.
The NUVEEN U.S. TREASURY TRUST (the "Treasury Trust") consists of a portfolio of
U.S. Treasury Obligations that are backed by the full faith and credit of the
United States Government. The Treasury Trust passes through to Unitholders in
all states the exemption from state and local personal income taxes afforded to
direct owners of U.S. Treasury Obligations. The NUVEEN INSURED CORPORATE TRUST
(the "Insured Corporate Trust") consists primarily of a portfolio of corporate
debt obligations issued by utility companies (the "Corporate Bonds") and may
include zero coupon U.S. Treasury Obligations (which as of the initial date of
deposit represented less than 20% of the principal amount of the Securities
deposited in the Trust). Insurance guaranteeing the scheduled payment of
principal and interest on all of the Corporate Bonds in the Trust has been
obtained directly by the issuer of such Bonds or by the Sponsor from MBIA
Insurance Corporation ("MBIA"). THE INSURANCE DOES NOT RELATE TO THE UNITS
OFFERED HEREBY OR TO THEIR MARKET VALUE. As a result of such insurance, the
Corporate Bonds are rated "AAA" by Standard & Poor's. (See "SCHEDULE OF
INVESTMENTS"). Collectively, the U.S. Treasury Trust and the Insured Corporate
Trust shall be referred to herein as the "Trusts" and U.S. Treasury Obligations
and the Corporate Bonds shall be referred to herein as the "Bonds" or the
"Securities."
THE OBJECTIVE of the U.S. Treasury Trust is to provide current interest income
consistent with preservation of capital and investment flexibility. The
objective of the Insured Corporate Trust is to provide a high level of current
income consistent with preservation of capital provided primarily by an insured
portfolio of corporate debt obligations issued by utility companies, including
telephone companies.
The Trusts are available to non-resident aliens, and the income from the Trusts,
provided certain conditions are met, will be exempt from withholding for U.S.
federal income tax for such foreign investors.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF THE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
ESSENTIAL INFORMATION REGARDING THE TRUST(S)
AS OF AUGUST 31, 1998
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 electing to receive monthly distributions.
Unitholders choosing distributions quarterly or semi-annually will receive a
slightly higher net annual interest income because of the lower Trustee's fees
and expenses under such plans.
<TABLE>
<CAPTION>
<S> <C> <C>
U.S. INSURED
TREASURY TRUST, CORPORATE
SERIES 2 TRUST,
SERIES 1
Principal Amount of Bonds in Trust................................................. $7,800,000 $14,000,000
Number of Units.................................................................... 78,000 140,000
Fractional Undivided Interest in Trust Per Unit.................................... 1/78,000 1/140,000
Public Offering Price --
Less than 1,000 Units
Aggregate Bid Price of Bonds in Trust......................................... $8,124,779 $14,973,437
Plus Sales Charge (1)......................................................... $133,081 $870,363
Total....................................................................... $8,257,860 $15,843,800
Divided by Number of Units.................................................... $105.87 $113.17
Plus Cash Per Unit(2)......................................................... $0.0 $0.0
Public Offering Price Per Unit(3)............................................. $105.87 $113.17
Redemption Price Per Unit (exclusive of accrued interest).......................... $104.16 $106.95
Sponsor's Repurchase Price Per Unit (exclusive of accrued interest)................ $104.16 $106.95
Excess of Public Offering Price Per Unit over Redemption Price Per Unit............ $1.71 $6.22
Excess of Public Offering Price Per Unit over Sponsor's Repurchase Price Per Unit $1.71 $6.22
Par Value Per Unit(4).............................................................. $100.00 $100.00
Calculation of Net Annual Interest Income Per Unit.................................
Annual Interest Income........................................................ $6.2638 $7.4000
Less Estimated Annual Expense................................................. $0.1966 $0.2351
Net Annual Interest Income.................................................... $6.0672 $7.1649
Daily Rate of Accrual Per Unit..................................................... $0.01685 $0.01990
Trustee's Annual Fee per $1,000 principal(6)....................................... $1.4160 $1.6880
Estimated Current Return(5)........................................................ 5.73% 6.33%
Estimated Long Term Return(5)...................................................... 4.44% 5.78%
Evaluations for purpose of sale, purchase or redemption of Units are made as of
the close of trading on the New York Stock Exchange next following receipt by
John Nuveen & Co. Incorporated of an order for a sale or purchase of units or
receipt by the Trustee of units tendered for redemption.
</TABLE>
<PAGE>
ESSENTIAL INFORMATION REGARDING THE TRUST(S)
(CONTINUED)
<TABLE>
<CAPTION>
<S> <C>
GENERAL INFORMATION
Record Dates.........................................................See "Distributions to Unitholders" in Part One
Distribution Dates...................................................See "Distributions to Unitholders" in Part One
Minimum Principal Distribution.......................................................................$0.10 per Unit
Date Trust Established.................................................................................May 29, 1997
Mandatory Termination Date.................................See "Amendment and Termination of Indenture" in Part One
Minimum Value of Trust.....................................See "Amendment and Termination of Indenture" in Part One
Sponsor's Annual Evaluation Fee*.........................................$0.170 per $1000 principal amount of Bonds
- ----------------------
(1) See "Public Offering Price" in Part One for the method by which the sales
charge is calculated.
(2) This amount represents cash held by the Trust (or an advancement of cash to
the Trust by the Trustee) which may amount to less than $0.01 per Unit and
is added to (or deducted from) the Public Offering Price.
(3) Units are offered at the Public Offering Price plus accrued interest to the
date of settlement (three business days after purchase). On the above date
there was added to the Public Offering Price of the U.S. Treasury Trust,
Series 2 and Insured Corporate Trust, Series 1, respectively, $105.87 and
$113.17, accrued interest to the settlement date of $0.04 and $0.07, for a
total price of $105.91 and $113.24, respectively.
(4) Par value per Unit is each Unit's pro rata share of aggregate principal
amount of Bonds in the Trust adjusted to reflect cash, if any, held in or
advanced to the Principal Account.
(5) See "Estimated Long Term Return and Estimated Current Return" in Part One
for an explanation of these returns.
(6) The Trustee's Annual Fee per $1000 principal amount of Bonds set forth
above is calculated for Unitholders electing the monthly plan of
distribution. The Trustee's Annual Fee per $1000 principal amount of Bonds
for U.S. Treasury Trust, Series 2 and Insured Corporate Trust, Series 1,
will be $1.2960 and $1.3480, respectively, under the quarterly distribution
option and $1.1010 and $1.1530, respectively, under the semi-annual
distribution option.
</TABLE>
<PAGE>
NUVEEN UNIT TRUSTS, SERIES 1
NUVEEN U.S. TREASURY TRUST, SERIES 2 (INTERMEDIATE)
STATEMENT OF NET ASSETS
JUNE 30, 1998
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at market value
(Cost $7,814,044) (Note 1)..................................................... $7,993,882
Accrued interest receivable....................................................... 179,511
Organization costs (Note 1)....................................................... 7,052
-------------
Total assets.......................................................... 8,180,445
==========
LIABILITIES:
Advance from trustee.............................................................. 132,637
Accrued trustee and evaluator fees................................................ 221
Other accrued liabilities......................................................... 1,363
-------------
Total liabilities.................................................... 134,221
------------
Net assets, applicable to 78,000 units of fractional undivided
interest outstanding.............................................. $8,046,224
==========
NET ASSETS, REPRESENTED BY:
Cost to original investors of 78,000 units sold................................... $7,941,447
Less initial underwriting commission (Note 1)................................. (138,975)
------------
7,802,472
Undistributed net investment income............................................... 63,914
Unrealized appreciation of investments............................................ 179,838
-----------
$8,046,224
==========
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE PER UNIT:
NET ASSET VALUE PER UNIT
----------------------------------------------------
BEFORE
TYPE OF UNITS ACCRUED ACCRUED
INCOME DISTRIBUTION OUTSTANDING INTEREST INTEREST TOTAL
<S> <C> <C> <C> <C>
Monthly................................... 53,952 $102.49 0.52 $103.01
Quarterly................................. 4,240 102.49 1.02 103.51
Semi-Annual............................... 19,808 102.49 1.03 103.52
-------------- ============ ============ ==============
78,000
==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NUVEEN UNIT TRUSTS, SERIES 1
NUVEEN U.S. TREASURY TRUST, SERIES 2 (INTERMEDIATE)
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE PERIOD MAY 29, 1997 (COMMENCEMENT OF OPERATIONS) THROUGH JUNE 30, 1998
<TABLE>
<CAPTION>
<S> <C>
STATEMENT OF OPERATIONS
Investment income (Note 1):
Interest income.......................................................... $452,578
--------
Expenses (Note 3):
Trustee fees and expenses............................................ 10,535
Evaluator fees....................................................... 1,176
Organization costs (Note 1).......................................... 1,951
----------
Total expenses.................................................. 13,662
----------
Net investment income....................................... 438,916
Net change in unrealized appreciation or
depreciation of investments.............................................. 179,838
---------
Net increase in net assets
from operations............................................................ $618,754
========
STATEMENT OF CHANGES IN NET ASSETS
Operations:
Net investment income.................................................... $438,916
Net change in unrealized appreciation or
depreciation of investments........................................ 179,838
----------
Net increase in net assets from operations........................ 618,754
Issuance of additional units ................................................. 6,328,843
Distributions to unitholders from net investment income....................... (375,002)
-----------
Total increase in net assets.................................................. 6,572,595
Net assets at beginning of period............................................. 1,473,629
---------
Net assets at end of period (including undistributed net income of $63,914)... $8,046,224
==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NUVEEN UNIT TRUSTS, SERIES 1
NUVEEN U.S. TREASURY TRUST, SERIES 2 (INTERMEDIATE)
SCHEDULE OF INVESTMENTS
JUNE 30, 1998
<TABLE>
<CAPTION>
CARRYING
VALUE
AT MARKET
PRINCIPAL NAME OF ISSUER AND TITLE OF ISSUE COUPON MATURITY (BID PRICES)
<S> <C> <C> <C> <C>
$1,560,000 U.S. Treasury Note 6.250% Due 2-28-02 $1,595,350
1,326,000 U.S. Treasury Note 7.875% Due 8-15-01 1,412,601
1,560,000 U.S. Treasury Note 6.375% Due 8-15-02 1,607,049
1,560,000 U.S. Treasury Note 6.250% Due 2-15-03 1,604,850
1,560,000 U.S. Treasury Note 5.750% Due 8-15-03 1,576,583
U.S. Treasury Securities,
234,000 Stripped Interest Payments(3) 0.000% Due 8-15-01 197,449
---------- ----------
$7,800,000 $7,993,882
========== ==========
See accompanying notes to Financial Statements and Notes to Schedule of
Investments.
</TABLE>
For a discussion of the characteristics of bonds issued by various types of
issuers and of the risks associated with an investment therein, see "Composition
of Trusts" in Part One.
<PAGE>
<TABLE>
<CAPTION>
NUVEEN UNIT TRUSTS, SERIES 1
NUVEEN INSURED CORPORATE TRUST, SERIES 1, (LONG-TERM)
STATEMENT OF NET ASSETS
June 30, 1998
<S> <C>
ASSETS:
Investments in securities, at market value
(Cost $13,834,530) (Note 1).................................................... $14,870,625
Accrued interest receivable....................................................... 315,571
Organization costs (Note 1)....................................................... 16,528
--------------
Total assets.......................................................... 15,202,724
==========
LIABILITIES:
Advance from trustee.............................................................. 207,590
Accrued trustee and evaluator fees................................................ 396
Other accrued liabilities......................................................... 914
--------------
Total liabilities.................................................... 208,900
------------
Net assets, applicable to 140,000 units of fractional undivided
interest outstanding.............................................. $14,993,824
===========
NET ASSETS, REPRESENTED BY:
Cost to original investors of 140,000 units sold.................................. $14,547,350
Less initial underwriting commission (Note 1)................................. (712,820)
-------------
13,834,530
Undistributed net investment income............................................... 123,199
Unrealized appreciation of investments............................................ 1,036,095
------------
$14,993,824
===========
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE PER UNIT:
NET ASSET VALUE PER UNIT
----------------------------------
TYPE OF BEFORE
INCOME UNITS ACCRUED ACCRUED
DISTRIBUTION OUTSTANDING INTEREST INTEREST TOTAL
<S> <C> <C> <C> <C>
Monthly............................... 79,516 $106.22 $0.62 $106.84
Quarterly............................. 47,991 106.22 1.23 107.45
Semi-Annual........................... 12,493 106.22 1.23 107.45
--------
140,000
==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NUVEEN UNIT TRUSTS, SERIES 1
NUVEEN INSURED CORPORATE TRUST, SERIES 1 (LONG-TERM)
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE PERIOD MAY 29, 1997 (COMMENCEMENT OF OPERATIONS) THROUGH JUNE 30, 1998
<TABLE>
<CAPTION>
<S> <C>
STATEMENT OF OPERATIONS
Investment income (Note 1):
Interest income.............................................................. $969,729
--------
Expenses (Note 3):
Trustee fees and expenses................................................ 20,415
Evaluator fees........................................................... 2,189
Organization costs (Note 1).............................................. 4,572
----------
Total expenses...................................................... 27,176
----------
Net investment income........................................... 942,553
Net change in unrealized appreciation or
depreciation of investments.................................................. 1,036,095
---------
Net increase in net assets
from operations............................................................... $1,978,648
==========
STATEMENT OF CHANGES IN NET ASSETS
Operations:
Net investment income........................................................ $942,553
Net change in unrealized appreciation or
depreciation of investments................................................ 1,036,095
------------
Net increase in net assets
from operations.............................................. 1,978,648
Issuance of additional units...................................................... 10,025,000
Distributions to unitholders from net investment income........................... (819,354)
------------
Total increase in net assets...................................................... 11,184,294
Net assets at beginning of period................................................. 3,809,530
------------
Net assets at end of period (including undistributed net income of $123,199)...... $14,993,824
===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NUVEEN UNIT TRUSTS, SERIES 1
NUVEEN INSURED CORPORATE TRUST, SERIES 1
SCHEDULE OF INVESTMENTS
JUNE 30, 1998
<TABLE>
<CAPTION>
OPTIONAL CARRYING
REDEMPTION RATINGS(2) VALUE
PROVISIONS STANDARD AT MARKET
PRINCIPAL NAME OF ISSUER AND TITLE OF ISSUE (1) COUPON MATURITY & POOR'S MOODY'S (BID PRICES)
<S> <C> <C> <C> <C> <C> <C> <C>
- --------- ------------------------- ----------------- ------- -------- -------- ------ ------------
$1750,000 Bellsouth Telecommunications Company 2003 at $104.75 7.500% Due 6-15-33 AAA Aaa $1,868,125
1,750,000 Cincinnati Gas & Electric Company 2003 at $103.54 7.200% Due 10-01-23 AAA Aaa 1,824,375
1,750,000 Commonwealth Edison Company 2003 at $103.77 7.750% Due 7-15-23 AAA Aaa 1,931,563
1,750,000 New York Telephone Company 2004 at $103.06 7.250% Due 2-15-24 AAA Aaa 1,841,875
1,750,000 Pacific Bell Telephone Company 2003 at $102.94 7.500% Due 2-01-33 AAA Aaa 1,876,875
1,750,000 Texas Utilities Electric Company 2003 at $102.69 7.625% Due 7-01-25 AAA Aaa 1,887,813
1,750,000 U.S.0West Communications Company 2003 at $101.95 6.875% Due 9-15-33 AAA Aaa 1,747,813
1,750,000 Virginia Electric & Power Company 2003 at $103.16 7.500% Due 6-01-23 AAA Aaa 1,892,186
- ----------- -----------
$14,000,000 $14,870,625
=========== ===========
See accompanying notes to Financial Statements and Notes to Schedule of
Investments.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The Treasury Trust commenced operations on May 29, 1997 with the
initial deposit of 15,000 units having a value on that date of $1,473,629. The
Insured Corporate Trust also commenced operations on May 29, 1997 with the
initial deposit of 40,000 units having a value of $3,809,530.
The Trustee is responsible for maintaining the books and records of
each Trust on a cash basis and for safekeeping securities owned by each Trust.
The Sponsor is responsible for preparation of the financial statements in
accordance with generally accepted accounting principles based upon the books
and records provided by the Trustee. The following is a summary of the
significant accounting policies followed by each Trust.
Organizational and Offering Costs -- Each Trust (and therefore
Unitholders) will bear all or a portion of the estimated organizational and
offering costs which will be deferred and amortized over five years from the
Initial Date of Deposit or the life of the Trust, whichever comes first.
Security Valuation -- The Bonds are reflected at market value in the
accompanying statement of net assets. The Sponsor determines the market price of
the Bonds in each Trust (1) on the basis of current bid prices of the Bonds
obtained from dealers or brokers (including the Sponsor) who customarily deal in
bonds comparable to those held by the 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.
Unit Valuation -- On the Date of Deposit, the Public Offering Price of
Units was determined by adding a sales charge to the Trustee's determination of
the offering price of the Bonds. The value of Units offered in the secondary
market maintained by the Sponsor is based upon the pro rata share of the bid
price of the Bonds, plus a sales charge determined in accordance with the table
set forth in Part One under the caption "Public Offering Price" based on the
number of years remaining to the maturity of each Bond and adjusted for cash, if
any, held or owed by such Trust.
The initial underwriting commission and investors' original cost of
Units, as shown on the statement of net assets, are based upon the assumption
that the maximum sales commission was charged for each initial purchase of
Units.
Income and Expenses -- Income and expenses are recognized on the
accrual basis of accounting. Gains and losses from Bond transactions are
determined on a specific identification basis.
2. INCOME TAX STATUS:
Each trust is not an association taxable as a corporation for Federal
income tax purposes, and, therefore, has recorded no provision for Federal
income taxes. Each unitholder is considered to be the owner of a pro rata
portion of the Trust under Subpart E, subchapter J of Chapter 1 of the Internal
Revenue Code of 1986 and will have a taxable event each time the Trust disposes
of a bond.
3. OPERATING EXPENSES:
See "Operating Expenses" in Part One of this Prospectus for information
with respect to trustee and evaluator fees and expenses.
<PAGE>
4. USE OF ESTIMATES:
The preparation of the Trust's financial statements in conformity with
generally accepted accounting principles requires the Sponsor to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of increases and
decreases in net assets from operations during the reporting period.
NOTES TO SCHEDULE(S) OF INVESTMENTS
1. 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 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; for example, if
bond proceeds are not able to be used as contemplated, the project is condemned
or sold, or the project is destroyed and insurance proceeds are used to redeem
the bonds. (See Part One, "Composition of Trusts.")
The Trustee's determination of the offering price of Bonds in the Trust
may be greater or less than the amounts that may be received upon redemption or
maturity of such Bonds. Subject to rules concerning amortization of bond premium
and of original issue discount, gain or loss realized by the Trustee on
disposition of any Bonds will be recognized as taxable capital gain or loss by
Unitholders. (See Part One, "Tax Status of Unitholders.")
2. The ratings shown, which are covered by the report of independent
public accountants, are those assigned as of the date of the Schedule of
Investments. Any Bonds insured by MBIA are rated AAA by Standard & Poor's
Corporation and/or Aaa by Moody's Investors Service, Inc.
3. This Security has been purchased at a deep discount from the par
value because there is no stated interest income thereon. Securities which pay
no interest are normally described as "zero coupon" securities. Over the life of
Securities purchased at a deep discount, the value of such Securities will
increase such that, upon maturity, the holders of such Securities will receive
100% of the principal amount thereof.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of John Nuveen & Co. Incorporated and
Unitholders of Nuveen Unit Trusts, Series 1:
We have audited the accompanying statements of net assets and schedules
of investments of Nuveen Unit Trusts, Series 1 (consisting of Nuveen U.S.
Treasury Trust, Series 2 (Intermediate) and Nuveen Insured Corporate Trust,
Series 1 (Long-Term)) as of June 30, 1998 and the related statements of
operations and changes in net assets for the periods indicated on the face of
the financial statements. These financial statements are the responsibility of
the Sponsor (See Note 1). Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits 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. 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. In
addition, securities owned as of June 30, 1998 were confirmed by direct
correspondence with the Trustee. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the Trusts
constituting the Nuveen Unit Trusts, Series 1, as of June 30, 1998, the
results of their operations and changes in their net assets for the periods
indicated on the face of the financial statements, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
September 30, 1998
<PAGE>
PROSPECTUS -- PART TWO
Part Two must be accompanied by Part One.
Sponsor John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606
312-917-7700
Swiss Bank Tower
10 East 50th Street
New York, New York 10022
212-207-2000
Trustee The Chase Manhattan Bank
4 New York Plaza
New York, New York 10004-2413
800-257-8787
Legal Counsel Chapman and Cutler
to Sponsor 111 West Monroe Street
Chicago, Illinois 60603
Legal Counsel Carter, Ledyard & Milburn
to Trustee 2 Wall Street
New York, New York 10005
Independent Arthur Andersen LLP
Public Accountants 33 West Monroe Street
for the Trust Chicago, Illinois 60603
Except as to the 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 any
representations not contained in this Prospectus; and any information or
representation not contained herein must not be relied upon as having been
authorized by the Trust, the Trustee or the Sponsor. 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 Trust is registered as a Unit Investment Trust under the Investment
Company Act of 1940. Such registration does not imply that the Trust or any of
its Units has been guaranteed, sponsored, recommended or approved by the United
States or any state or agency or officer thereof.
<PAGE>
NUVEEN UNIT TRUSTS, SERIES 1
INFORMATION SUPPLEMENT
The Information Supplement provides additional information concerning
the structure and operations of a Nuveen 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 One of the Prospectus. This Information Supplement has been created to
supplement information contained in the Prospectus.
This Information Supplement is dated September 15, 1998. Capitalized
terms have been defined in the Prospectus.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Accumulation Plan................................................................................................................1
Information About the Sponsor....................................................................................................4
Description of Ratings...........................................................................................................5
Estimated Cash Flows.............................................................................................................8
How to Calculate Your Estimated Income..........................................................................................12
Effect of State Personal Income Tax Exemption...................................................................................13
How Laddering Manages Cash Flow.................................................................................................16
</TABLE>
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.
<PAGE>
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.
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
<PAGE>
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 Investment Trust
Nuveen Growth and Income Stock Fund
Nuveen Balanced Municipal and Stock Fund
Nuveen Balanced Stock and Bond Fund
Nuveen European Value Fund
Nuveen Investment Trust II
Nuveen Rittenhouse Growth 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.
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 nominally 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.
<PAGE>
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, 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
Since our founding in 1898, Nuveen has been synonymous with investments
that withstand the test of time. Today, we offer a broad range of investments
designed for mature investors whose portfolio is the principal source of their
ongoing financial security. More than 1.3 million investors have entrusted
Nuveen to help them maintain the lifestyle they currently enjoy.
A value investing approach--purchasing securities of strong companies
and communities that represent good long-term value--is the cornerstone of
Nuveen's investment philosophy. It is a careful, long-term strategy that offers
the potential for attractive returns with moderated risk. Successful value
investing begins with in-depth research and a discerning eye for marketplace
opportunity. Nuveen's team of investment professionals is backed by the
discipline, resources and expertise of a century of investment experience,
including one of the most recognized research departments in the industry.
To meet the unique circumstances and financial planning needs of mature
investors, Nuveen offers a wide array of taxable and tax-free investment
products--including equity and fixed-income mutual funds, unit trusts,
exchange-traded funds, customized asset management services and cash management
products. 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 office located in Chicago (333 West Wacker
Drive). Nuveen maintains 8 regional offices.
<PAGE>
To help advisers and investors better understand and more efficiently
use an investment in the Trusts 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 Trusts, 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 Sponsor may produce software or
additional sales literature to promote the advantages of using the Trusts 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.
A comparison of the estimated returns of the Trust and the historic
performance of corporate bonds to the returns and performance of other
investments is one element to consider in making an informed investment
decision. The Sponsor may compare the estimated returns of a Trust with the
current or historical yields or returns of other investments, including
Certificates of Deposit, U.S. Government Securities and money market funds. In
addition, the Sponsor may compare the returns of various indices with the
estimated returns of a Trust and the historical or current returns of Corporate
bonds and Corporate bond indices. The Sponsor may also quote various performance
measures and studies in order to compare the historical returns available from
an investment in Corporate bonds with investments in other tax-free and taxable
securities. Other types of fixed income securities 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 and local
personal 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.
DESCRIPTION OF RATINGS
STANDARD & POOR'S CORPORATION. A description of the applicable Standard
& Poor's Corporation rating symbols and their meanings follows:
<PAGE>
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.
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.
<PAGE>
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.
<PAGE>
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.
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,
ESTIMATED CASH FLOWS
The tables below set forth the estimated distributions per Unit of
interest and principal to Unitholders under each plan of distribution as of the
Initial Date of Deposit. The tables assume no changes in Trust expenses, no
redemptions or sales of the underlying Bonds prior to maturity and the receipt
of all principal due upon maturity. To the extent the foregoing assumptions
change, actual distributions will vary. There is no guarantee that the principal
amount distributed to a Unitholder by the Trust will be equivalent to the
investor's original investment.
<PAGE>
NUVEEN INSURED CORPORATE TRUST, SERIES I (LONG-TERM)
<TABLE>
<CAPTION>
MONTHLY
TOTAL PRINCIPAL & INTEREST
DATES PAYMENT
<S> <C>
7/15/97 $0.6358
8/15/97 - 6/15/02 0.5961
7/15/02 - 5/15/23 0.5976
6/15/23 13.0976
7/15/23 13.0217
8/15/23 - 9/15/23 0.4434
10/15/23 12.9434
11/15/23 - 01/15/24 0.3708
2/15/24 12.8708
3/15/24 - 06/15/25 0.2976
7/15/25 12.7976
8/15/25 - 01/15/33 0.2205
2/15/33 12.7205
3/15/33 - 5/15/33 0.1449
6/15/33 12.6449
7/15/33 - 8/15/33 0.0690
9/15/33 12.5346
QUARTERLY
TOTAL PRINCIPAL & INTEREST
DATES PAYMENT
7/15/97 $0.6358
8/15/97 0.5991
11/15/97 - 5/15/02 1.7973
8/15/02 - 5/15/23 1.8018
6/15/23 - 7/15/23 12.5000
8/15/23 1.5705
10/15/23 12.5000
11/15/23 1.2636
2/15/24 13.6178
5/15/24 - 5/15/25 0.8973
7/15/25 12.5000
8/15/25 0.8199
11/15/25 - 11/15/32 0.6651
2/15/33 13.1651
5/15/33 0.4365
6/15/33 12.5000
8/15/33 0.2844
9/15/33 12.6020
<PAGE>
SEMI-ANNUAL
TOTAL PRINCIPAL & INTEREST
DATES PAYMENT
7/15/97 $0.6358
11/15/97 2.4024
5/15/98 - 5/15/02 3.6036
11/15/02 - 5/15/23 3.6126
6/15/23 - 10/15/23 12.5000
11/15/23 2.8422
2/15/24 12.5000
5/15/24 2.0214
11/15/24 - 5/15/25 1.8000
7/15/25 12.5000
11/15/25 1.4886
5/15/26 - 11/15/32 1.3338
2/15/33 12.5000
5/15/33 1.1052
6/15/33 12.5000
9/15/33 12.9822
</TABLE>
NUVEEN U.S. TREASURY TRUST, SERIES 2 (INTERMEDIATE)
<TABLE>
<CAPTION>
MONTHLY
INTEREST DISTRIBUTION PRINCIPAL DISTRIBUTION
DATES
<S> <C> <C>
7/15/97 $0.5321
8/15/97-8/15/01 0.4989
8/22/01 $20.00
9/15/01-3/15/02 0.3921
3/07/02 20.00
4/15/02-6/15/02 0.2925
7/15/02-8/15/02 0.2931
8/22/02 20.00
9/15/02-2/15/03 0.1914
2/22/03 20.00
3/15/03-7/15/03 0.0915
8/15/03 0.0457
8/22/03 20.00
QUARTERLY
INTEREST DISTRIBUTION PRINCIPAL DISTRIBUTION
DATES
7/15/97 $0.5321
8/15/97 0.5019
11/15/97-8/15/01 1.5057
8/22/01 $20.00
11/15/01-2/15/02 1.1835
3/07/02 20.00
5/15/02 0.9828
8/15/02 0.8838
8/22/02 20.00
11/15/02-2/15/03 0.5778
2/22/03 20.00
5/15/03 0.2763
8/15/03 0.2305
8/22/03 20.00
SEMI-ANNUAL
INTEREST DISTRIBUTION PRINCIPAL DISTRIBUTION
DATES
7/15/97 $0.5321
11/15/97 2.0148
5/15/98-5/15/01 3.0222
8/22/01 $20.00
11/15/01 2.6982
3/07/02 20.00
5/15/02 2.1726
8/22/02 20.00
11/15/02 1.4670
2/22/03 20.00
5/15/03 0.8568
8/15/03 0.2323
8/22/03 20.00
</TABLE>
<PAGE>
HOW TO CALCULATE YOUR ESTIMATED INCOME
The example provided below illustrates how to calculate the estimated
annual income generated by a hypothetical $10,000 investment in each Trust. The
illustration assumes that the investment was made on the day prior to the date
of deposit by an investor electing the monthly distribution plan and that the
portfolio contains all of the Securities initially included in the Trust's
primary market Prospectus. This hypothetical example is for illustrative
purposes only and is not intended to reflect or predict the results of any
actual investment and does not reflect any potential changes to the portfolio or
expenses.
EXAMPLE OF HOW TO CALCULATE YOUR ESTIMATED INCOME (AS OF THE DAY PRIOR TO
INITIAL DATE OF DEPOSIT):
NUVEEN INSURED CORPORATE TRUST, SERIES 1 (LONG-TERM)
$10,000 DIVIDED BY $100.23 = 99.770
Offering price and
Investment (as of 5/28/97) accrued interest # of units purchased
99.770 x $7.1539 = $713.74
# of units purchased Annual income per unit annual income
(monthly plan)
NUVEEN U.S. TREASURY TRUST, SERIES 2 (INTERMEDIATE)
$10,000 DIVIDED BY $100.06 = 99.940
Investment (as of 5/28/97) Offering price and # of units purchased
accrued interest
99.940 x $5.9891 = $598.55
# of units purchased Annual income per unit annual income
(monthly plan)
EFFECT OF STATE PERSONAL INCOME TAX EXEMPTION
The following chart shows what the return on a security that is subject
to state personal income taxes would have to be in order to equal 5.00%
Estimated Current Return on a U.S. Treasury Series assuming monthly
distributions of interest. Unless otherwise noted, the tax rates provided are
for 1998. The chart assumes federal taxable income is equal to state income
subject to tax and that the taxpayers are married couples filing jointly with a
taxable income equal to $100,000. The state rates shown take into account the
effect of the federal deduction for state income taxes. In addition, the
calculations for Alabama, Iowa, Louisiana, Montana, North Dakota, Oklahoma
(Method 2) and Utah take into account the relevant state deduction for federal
income taxes. Moreover, except as specifically noted otherwise, the rates do not
reflect any (i) federal or state limitations (if any) on the amount of allowable
itemized deductions, phase-outs of personal or dependent exemption credits or
any other credits, (ii) taxes other than personal income taxes, or (iii) local
taxes.
<PAGE>
<TABLE>
<CAPTION>
FULLY TAXABLE RETURN
EQUIVALENT TO 5.00%
STATE PERSONAL INCOME ESTIMATED CURRENT RETURN ON
TAX RATE MONTHLY PAYMENT
STATE U.S. TREASURY SERIES
<S> <C> <C>
Alabama 4.03% 5.21%
Alaska(1) 0.00 5.00
Arizona(2) 2.54 5.13
Arkansas(3) 5.04 5.27
California(13) 6.70 5.36
Colorado 3.60 5.19
Connecticut 3.24 5.17
Delaware 4.97 5.26
Florida(4) 0.00 5.00
Georgia 4.32 5.23
Hawaii 7.20 5.39
Idaho 5.90 5.31
Illinois 2.16 5.11
Indiana 2.45 5.13
Iowa 7.29 5.39
Kansas 4.64 5.24
Kentucky 4.32 5.23
Louisiana(16) 3.22 5.17
Maine(5) 6.12 5.33
Maryland (State only) 3.51 5.18
Maryland (State and County)(6) 5.67 5.30
Massachusetts(17) 8.64 5.47
Michigan 3.17 5.16
Minnesota 6.12 5.33
Missouri 4.32 5.23
Mississippi 3.60% 5.19%
Montana 8.96 5.49
Nebraska 4.81 5.25
Nevada(l) 0.00 5.00
New Hampshire(7) 3.60 5.19
New Jersey 3.98 5.21
New Mexico(8) 5.69 5.30
New York State(18) 4.93 5.26
New York (State & City) (18)(19) 8.14 5.44
North Carolina(9) 5.04 5.27
North Dakota(10) 9.80 5.54
Ohio(20) 3.88 5.20
Oklahoma Method 1(11) 5.04 5.27
Oklahoma Method 2(11) 8.13 5.44
Oregon (12) 6.48 5.35
Pennsylvania 2.02 5.10
Rhode Island 5.44 5.29
South Carolina(5) 5.04 5.27
South Dakota(1) 0.00 5.00
Tennessee(14) 4.32 5.23
Texas(1) 0.00 5.00
Utah(15) 5.36 5.28
Vermont 5.04 5.27
Virginia 4.14 5.22
Washington(1) 0.00 5.00
Washington D.C. 6.84 5.37
West Virginia 4.68 5.25
Wisconsin 4.87 5.26
Wyoming(1) 0.00 5.00
<PAGE>
This chart incorporates current applicable State income tax rates. If
you live in a locality which imposes local personal income taxes, the fully
taxable equivalent return may be greater than as shown on this chart. Yield
figures are for example only.
</TABLE>
(1) This state does not impose a state income tax on individuals.
(2) Please note that if taxable income is equal to $100,001, the
state effective rate is equal to 3.14%. These rates take into account that, in
effect, state income taxes paid are deductible for Arizona personal income tax
purposes.
(3) The state tax rate shown does not include the income tax
surcharge imposed on residents of certain school districts.
(4) Florida does not impose an income tax on individuals. However,
Florida does impose an intangible personal property tax, which is not shown
because it is generally based upon property value rather than income.
(5) The state tax rate shown is based on brackets for 1997. The 1998
brackets may be adjusted for inflation. These adjustments have not yet been
released.
(6) The combined rate for Maryland and Maryland counties assumes a
maximum county income tax rate of 3% (which is the maximum allowed under state
law). Note, however, that counties may impose a county tax at a rate that is
less than 3%.
<PAGE>
(7) The state tax rate shown is the rate at which most interest and
dividends are taxed; other types of income are generally not subject to a New
Hampshire personal income tax.
(8) Please note that if taxable income is equal to $100,001, the
state effective rate is equal to 5.90%.
(9) Please note that if taxable income is equal to $100,001, the
state effective rate is equal to 5.58%.
(10) We have assumed that the taxpayer has not elected to pay an
alternative state income tax that is generally equal to 14%
of the taxpayer's federal income tax liability with certain adjustments.
(11) Individual taxpayers in the State of Oklahoma are entitled to
make the election as to whether Method 1 or Method 2 will be used in determining
state tax liability. If Method 1 is selected, Federal taxes may not be deducted
in determining state tax. If Method 2 is selected, Federal taxes may be deducted
in determining state tax.
(12) The state tax rate shown is based on brackets for 1997. The
1998 brackets may be indexed by a cost-of-living adjustment.
(13) The state tax brackets are those for 1997. The 1998 brackets will
be adjusted to take into account changes in the California Consumer Price Index.
These adjustments have not yet been released.
(14) The state tax rate shown is the rate at which dividends and
interest are taxed.
(15) Please note that 50%, rather than 100%, of Federal tax
payments are deductible for state tax purposes.
(16) Please note that if taxable income is equal to $100,001, the
state effective rate is equal to 4.84%.
(17) The Massachusetts state tax rate shown is the rate at which
interest is taxed. Certain other types of income are taxed
at other rates.
(18) The state tax rate for New York does not reflect the New York
state supplemental income tax based upon a taxpayer's New York State taxable
income and New York State adjusted gross income. This supplemental tax results
in an increased marginal State income tax rate to the extent a taxpayer's New
York State adjusted gross income ranges between $100,000 and $150,000.
(19) In addition to the New York state income tax, this includes
only the New York City income tax on resident individuals.
<PAGE>
(20) Please note that if taxable income is equal to $100,001, the
state effective rate is 4.50%.
HOW LADDERING MANAGES CASH FLOW
The Trusts use a "laddered" approach, strategically purchasing Treasury
securities with varying yields and maturities. Each time a security matures, a
portion of the principal is returned to Unitholders. Unitholders also receive
regular income payments along the way. Like Trust income, this repaid principal
is money Unitholders can anticipate, whether it is needed to meet every day
expenses or to help make payments such as college tuition or a mortgage. This
strategy provides Unitholders with a regular cash flow stream, as demonstrated
in the hypothetical illustration below.
Because the portfolio is defined, Unitholders can count on a steady
flow of income. This means Unitholders should be able to anticipate their income
based upon each Trust's distribution schedule, which shows that as bonds mature,
the income generated is reduced proportionately. Keep in mind that principal and
income distributions may be slightly affected by unscheduled changes to the
portfolio or expenses.
[STAIRSTEP CHART]
<PAGE>
CONTENTS OF POST-EFFECTIVE
REGISTRATION STATEMENT
This Post-Effective Amendment to the Registration Statement comprises the
following papers and documents:
The facing sheet
The Prospectus
The signatures
Consent of Independent Public Accountants
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Nuveen Unit Trusts, Series 1, certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Post-Effective
Amendment to its Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized in the City of Chicago and State of
Illinois on the 9th day of October, 1998.
NUVEEN UNIT TRUSTS, SERIES 1
----------------------------
(Registrant)
By JOHN NUVEEN & CO. INCORPORATED
------------------------------
(Depositor)
By LARRY W. MARTIN
-----------------------------
Vice President
Attest KAREN L. HEALY
-----------------------------
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the date indicated:
<PAGE>
SIGNATURE TITLE* DATE
Timothy R. Schwertfeger Chairman, Board of Directors )
Chief Executive Officer )
and Director )
)
)
Anthony T. Dean President, Chief Operating ) LARRY W. MARTIN
-----------------
Officer and Director ) Larry W. Martin
) Attorney-in-Fact**
)
John P. Amboian Chief Financial Officer and ) October 9th, 1998
Executive Vice President )
)
Margaret E. Wilson Vice President and Controller )
)
)
)
- -----------------------
* The titles of the persons named herein represent their capacity in and
relationship to John Nuveen & Co. Incorporated, the Depositor.
** The powers of attorney for Messrs. Amboian, Dean and Schwertfeger
were filed as Exhibit P to form N-8b-2 (File No. 811-08103) and for
Ms. Wilson as Exhibit 6.2 to Nuveen Unit Trusts, Series 12
(File No. 333-49197).
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Nuveen Insured Corporate Trust, Series 1 (Long-Term) which is incorporated
in the Prospectus dated June 30, 1998 and is qualified in its entirety by
reference to such prospectus.
</LEGEND>
<SERIES>
<NUMBER> 002
<NAME> Nuveen Insured Corporate Trust
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> JUN-30-1999
<INVESTMENTS-AT-COST> 13,834,530
<INVESTMENTS-AT-VALUE> 14,870,625
<RECEIVABLES> 315,571
<ASSETS-OTHER> 16,528
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 15,202,724
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 208,900
<TOTAL-LIABILITIES> 208,900
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 13,834,530
<SHARES-COMMON-STOCK> 140,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 123,199
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,036,095
<NET-ASSETS> 14,993,824
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 969,729
<OTHER-INCOME> 0
<EXPENSES-NET> 27,176
<NET-INVESTMENT-INCOME> 942,553
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 1,036,095
<NET-CHANGE-FROM-OPS> 1,978,648
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 819,354
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 100,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 11,184,294
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Nuveen U.S.Treasury Trust, Series 2 (Intermediate) which is incorporated
in the Prospectus dated June 30, 1998 and is qualified in its entirety by
reference to such prospectus.
</LEGEND>
<SERIES>
<NUMBER> 001
<NAME> Nuveen U.S. Treasury trust
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> JUN-30-1999
<INVESTMENTS-AT-COST> 7,802,472
<INVESTMENTS-AT-VALUE> 7,993,882
<RECEIVABLES> 179,511
<ASSETS-OTHER> 7,052
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,180,445
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 134,221
<TOTAL-LIABILITIES> 134,221
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,802,472
<SHARES-COMMON-STOCK> 78,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 52,342
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 191,410
<NET-ASSETS> 8,046,224
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 441,006
<OTHER-INCOME> 0
<EXPENSES-NET> 13,662
<NET-INVESTMENT-INCOME> 427,344
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 191,410
<NET-CHANGE-FROM-OPS> 618,754
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 375,002
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 63,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 6,572,595
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
