<PAGE>
40 Act File No. 811-08103
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-6
For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N-8B-2.
A. Exact Name of Trust: NUVEEN UNIT TRUST, SERIES 2
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: Gifford R. Zimmerman
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 and amount of securities being registered: An indefinite number of
Units pursuant to Rule 24f-2 promulgated under the Investment Company Act
of 1940, as amended.
F. Proposed maximum offering price to the public of the securities being
registered: Indefinite
G. Amount of filing fee: $0.00
H. Approximate date of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE
DATE OF THE REGISTRATION STATEMENT
( ) Check box if it is proposed that this filing will become effective on
(date) at (time) pursuant to Rule 487.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
NUVEEN UNIT TRUST, SERIES 2
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)
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 ) Information About The Sponsor
Underwriter )
5. Organization of trust ) Nuveen Unit Trusts
6. Execution and termination of ) Nuveen Unit Trusts
Trust Agreement ) 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 ) Summary of Portfolios.
trust's securities ) 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
<PAGE>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
11. Type of securities comprising ) Nuveen Unit Trusts
units ) Summary Of Portfolios
) Composition Of Trusts
) Objectives Of The Trusts
)
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 Returnand
) 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. ) Evaluation of Securities at the
payable by holders ) Initial Date Of Deposit
) Normal Trust Operating Expenses
) Ownership and Transfer of Units
)
(e) Certain profits received by )
depositor, principal )
underwriter, trustee or )
affiliated persons ) Composition Of Trusts
) Purchase of Units by the Sponsor
)
(f) Ratio of annual charges to ) *
income )
-2-
<PAGE>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
14. Issuance of trust's securities ) Summary Of Portfolios
) Distributions To Unitholders
) How Certificates Are Issued
) Redemption
)
15. Receipt and handling of payments ) *
from purchasers )
16. Acquisition and Disposition of ) Nuveen Unit Trusts
Underlying Securities ) 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 ) Summary Of Portfolios
income ) 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 ) Information About the Trustee
of Trust Agreement ) Information About the Sponsor
) Other Information
21. Loans to security holders ) *
22. Limitations on liability ) Summary of Portfolios
) Composition of Trusts
) Information About the Trustee
23. Bond arrangements ) *
-3-
<PAGE>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
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 ) *
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 ) Information About the Sponsor
underwriter )
(b) NASD membership of principal )
underwriter )
40. Certain fees received by principal ) *
underwriter )
41. (a) Business of principal )
underwriter )
-4-
<PAGE>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
(b) Branch offices of principal ) *
underwriter )
(c) Salesmen of principal )
underwriter )
42. Ownership of trust's securities ) *
by certain persons )
43. Certain brokerage commissions ) *
received by principal )
underwriter )
44. (a) Method of valuation ) 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 ) Public Offering Price
to certain 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 ) Public Offering Price
underlying securities ) 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
-5-
<PAGE>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
50. Trustee's lien ) Trust Operating Expenses
) Distributions to Unitholders
VI. INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
51. Insurance of holders of trust's ) *
securities )
VII. POLICY OF REGISTRANT
52. (a) Provisions of trust agreement ) Trust Operating Expenses
with respect to selection or ) Redemption
elimination of underlying ) Removal of Securities from
securities ) the Trusts
)
(b) Transactions involving ) *
elimination of underlying )
securities )
(c) Policy regarding substitution ) Summary Of Portfolios
elimination of underlying or ) Composition Of Trusts
securities ) 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. )
_______________________
*Inapplicable, omitted, answer negative or not required.
-6-
<PAGE>
------------------------------------------------
PRELIMINARY PROSPECTUS DATED JULY 25, 1997
------------------------------------------------
NUVEEN UNIT TRUST--SERIES 2
- --------------------------------------------------------------------------------
10,000 UNITS (A UNIT INVESTMENT TRUST)
- --------------------------------------------------------------------------------
The attached final Prospectus for a prior Series is hereby used as a preliminary
Prospectus for the above-stated Series. The narrative information and structure
of the attached final Prospectus will be substantially the same as that of the
final Prospectus for this Series. Although the attached Prospectus includes
trusts as indicated therein, the specific trusts included in this Series when
deposited may differ from such trusts. Information with respect to the actual
trusts to be included, pricing, the number of Units, dates and summary
information regarding the characteristics of securities to be deposited in this
Series is not now available and will be different since each Series has a unique
Portfolio. Accordingly the information contained herein with regard to the
previous Series should be considered as being included for informational
purposes only. Ratings of the securities in this Series are expected to be
comparable to those of the securities deposited in the previous Series. However,
the Estimated Current Return for this Series will depend on the interest rates
and offering prices of the securities in this Series and may vary materially
from that of the previous Series.
A REGISTRATION STATEMENT RELATING TO THE UNITS OF THIS SERIES HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. SUCH UNITS
MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE
AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY
SALE OF THE UNITS IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD
BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
<PAGE>
<TABLE>
<S> <C>
NUVEEN Nuveen Insured
Unit Trusts Corporate Trust,
Series 1
(Long-Term)
CUSIP: 67090A
107-MONTHLY
CUSIP: 67090A
115-QUARTERLY
CUSIP: 67090A
123-SEMI-ANNUAL
PROSPECTUS PART A DATED JUNE 26, 1997,
AS AMENDED JULY 7, 1997
</TABLE>
A NUVEEN UNIT TRUST WITH A DOLLAR-WEIGHTED AVERAGE MATURITY OF 30.2 YEARS FOR
INDIVIDUAL INVESTORS SEEKING A HIGH LEVEL OF CURRENT INTEREST INCOME CONSISTENT
WITH PRESERVATION OF CAPITAL PROVIDED BY A PORTFOLIO PRIMARILY COMPOSED OF
INSURED CORPORATE DEBT OBLIGATIONS ISSUED BY UTILITY COMPANIES. THE TRUST MAY
ALSO CONTAIN ZERO COUPON U.S. TREASURY OBLIGATIONS.
Overview
The trust listed above (the "Trust") is a unit investment trust designed to
provide a high level of current income consistent with preservation of capital,
through investment in a portfolio consisting primarily of corporate debt
obligations issued by utility companies and zero coupon U.S. Treasury
Obligations (which will represent less than 20% of the principal amount of
securities deposited in the Trust) (collectively, the "Bonds"). 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. 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. In
addition, the Trust is available to non-resident aliens, and the income from the
Trust, provided certain conditions are met, will be exempt from withholding for
U.S. federal income tax for such foreign investors.
THIS PART A PROSPECTUS MAY NOT BE DISTRIBUTED UNLESS ACCOMPANIED BY THE FIXED
INCOME TRUST PROSPECTUS -- PART B WHICH IS DATED JUNE 26, 1997, AS AMENDED JULY
7, 1997.
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 FDIC OR
ANY OTHER FEDERAL AGENCY AND INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
<TABLE>
<CAPTION>
<S> <C>
CRIMINAL OFFENSE.
Contents
1 OVERVIEW 5 INVESTING IN THE TRUST
2 TRUST SUMMARY AND FINANCIAL HIGHLIGHTS 5 Sales Charges
2 Essential Information 6 Dealer Concessions
3 Expense Information 6 GENERAL INFORMATION
4 TRUST STRATEGIES 6 Optional Features
4 Investment Objective 6 The Sponsor
4 How the Trust Selects Investments 7 SCHEDULE OF INVESTMENTS
4 RISK FACTORS 8 STATEMENT OF CONDITION
4 DISTRIBUTIONS AND TAXES 9 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
4 Interest and Principal Distributions
5 Tax Status
</TABLE>
ECR-001-P 5/97
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1
<PAGE>
Nuveen Insured Corporate Trust, Series 1
(Long-Term)
TRUST SUMMARY AND FINANCIAL HIGHLIGHTS as of June 25, 1997
- --------------------------------------------------------------------------------
ESSENTIAL INFORMATION
Initial Date of Deposit: June 26, 1997
Principal Amount of Securities: $4,000,000
Principal Amount (Par Value) of
__Securities per Unit (1):______________________________________________$100
Number of Units: 40,000
Fractional Undivided Interest per Unit: 1/40,000
- --------------------------------------------------------------------------------
ESTIMATED RETURNS (2)
- ----------------------------------------------
<TABLE>
<CAPTION>
CURRENT LONG-TERM
RETURN RETURN
<S> <C> <C>
- ----------------------------------------------------
Monthly 7.14% 7.25 %
Quarterly 7.18% 7.29 %
Semi-Annual 7.20% 7.31 %
</TABLE>
- ----------------------------------------------
PUBLIC OFFERING PRICE (3)
Aggregate Offering Price of Securities: $3,809,530
Aggregate Offering Price of Securities per Unit: $95.24
Plus Maximum Sales Charge per Unit: $4.91
Public Offering Price per Unit: $100.15
- ----------------------------------------------
ESTIMATED ANNUAL INCOME (4)
- ----------------------------------------------
<TABLE>
<CAPTION>
SEMI-
MONTHLY QUARTERLY ANNUAL
<S> <C> <C> <C>
- ----------------------------------------------------
Gross Annual Income per
Unit: $ 7.4000 $ 7.4000 $ 7.4000
Less Annual Expense per
Unit: $ 0.2461 $ 0.2101 $ 0.1906
Net Annual Income per
Unit: $ 7.1539 $ 7.1899 $ 7.2094
</TABLE>
- ----------------------------------------------
ESTIMATED INTEREST DISTRIBUTIONS (4)
- ----------------------------------------------
<TABLE>
<CAPTION>
PAYMENT
DATE PAYMENT
<S> <C> <C>
- ----------------------------------------------------
Initial Distributions
(all plans) 7/15/97 $ .6358
Monthly Plan 8/15/97 $ .5961
Quarterly Plan
Partial Payment 8/15/97 $ .5991
Normal Payment 11/15/97 $ 1.7973
Semi-Annual Plan
Partial Payment 11/15/97 $ 2.4024
Normal Payment 5/15/98 $ 3.6036
</TABLE>
MATURITY (5)
Mandatory Termination Date:
October 1, 2033
Dollar-Weighted Average Maturity: 30.2 years
- ----------------------------------------------
INSURANCE
All of the Corporate Bonds in the Trust are insured either by the issuer of the
Corporate Bonds or by the Sponsor under a financial guaranty insurance policy
obtained from MBIA Insurance Corporation ("MBIA"). The insurance guarantees the
scheduled payment of principal and interest on all of the Corporate Bonds in the
Trust. It does not guarantee the market value of the Bonds or the value of the
Units of the Trust. See "INSURANCE ON THE CORPORATE BONDS" in Part B of this
Prospectus for further information. Any U.S. Treasury Obligations in the Trust
are not insured.
- ----------------------------------------------
RATINGS
Corporate Bonds in the Trust for which insurance has been obtained by the issuer
or the Sponsor have been rated "AAA" by Standard & Poor's and "Aaa" by Moody's.
------
2
<PAGE>
- --------------------------------------------------------------------------------
EXPENSE INFORMATION
SALES CHARGES (MAXIMUM) (6)
As a % of Public Offering Price: 4.90%
Amount per $1,000 invested: $49.00
- ----------------------------------------------
ESTIMATED ANNUAL OPERATING EXPENSES (7)
- ----------------------------------------------
<TABLE>
<CAPTION>
SEMI-
MONTHLY QUARTERLY ANNUAL
<S> <C> <C> <C>
- ----------------------------------------------------
Trustee's Fee: $ 1.791 $ 1.431 $ 1.236
Sponsor's Evaluation
Fee: $ 0.17 $ 0.17 $ 0.17
Organizational Expenses
(per Unit)(8): $ 0.02566 $ 0.02566 $ 0.02566
Total Annual Expenses
(per Unit): $ 0.2461 $ 0.2101 $ 0.1906
</TABLE>
- --------------------------------------------------------------------------------
Notes to Essential Information and Expense Information:
All information provided is as of the day prior to the Initial Date of Deposit
and has been calculated for Unitholders receiving monthly, quarterly or
semi-annual distribution options.
(1) Because certain of the Bonds in the Trust may from time to time be sold or
redeemed or will be called or mature in accordance with their terms, there
is no guarantee that the amount of principal a Unitholder receives per Unit
over the life of the Trust will be equal to the Principal Amount (Par Value)
of Securities per Unit stated above.
(2) The actual returns an investor will receive will vary due to the maturity,
redemption, call, exchange or sales of Bonds, changes in fees and expenses,
changes in interest income, the market value of the Bonds on the date an
investor purchases Units and how long Units are held. See "ESTIMATED LONG
TERM RETURN AND ESTIMATED CURRENT RETURN" in Part B of this Prospectus for
information concerning how Estimated Returns are calculated.
(3) The Public Offering Price will vary from that shown above due to changes in
the prices of the underlying Bonds subsequent to the Initial Date of
Deposit. In addition to the Public Offering Price, investors must also pay
accrued interest from the preceding Record Date to, but not including, the
date of settlement (normally three business days after purchase). For Units
purchased on the Initial Date of Deposit, $.08 per Unit of accrued interest
will be added to the Public Offering Price. See "PUBLIC OFFERING PRICE" and
"ACCRUED INTEREST," both in Part B of this Prospectus, for further
information.
(4) The Estimated Income figures reflected above are estimates determined as of
the business day prior to the Initial Date of Deposit and actual payments
may vary. It is anticipated that the amount of interest to be distributed
per Unit in each year will initially be substantially equal to the Estimated
Net Annual Interest Income per Unit provided. The amount of interest to be
distributed annually per Unit will generally change as Bonds are redeemed,
called, mature or are sold or as fees and expenses increase or decrease. See
"DISTRIBUTIONS TO UNITHOLDERS" in Part B of this Prospectus.
(5) The Mandatory Termination Date is shortly after the maturity date of the
Bond in the Trust's portfolio with the longest stated maturity. The Trust
may be terminated prior to the Mandatory Termination Date if all of the
Bonds in the Trust are redeemed, called or sold, or if the principal value
of the Trust is reduced below 20% of the aggregate principal amount of Bonds
deposited in the Trust during the primary offering period. See "OTHER
INFORMATION -- TERMINATION OF INDENTURE" in Part B of this Prospectus. The
Dollar-Weighted Average Maturity of the Bonds in the Trust is calculated
based upon the stated maturities of the Bonds in the Trust (or, with respect
to Bonds for which funds or securities have been placed in escrow to redeem
such Bonds on a stated call date, based upon such call date). The
Dollar-Weighted Average Maturity may increase or decrease from time to time
as Bonds mature or are called or sold.
(6) The sales charge is reduced for certain purchasers and for single
transactions of at least 500 Units or $50,000 (whichever is more favorable
to the investor). See "Sales Charges" and "PUBLIC OFFERING PRICE" in Part B
of this Prospectus.
(7) The Trustee's Fee and the Sponsor's Evaluation Fee are per $1,000 principal
amount of the underlying Bonds in the Trust.
(8) The Trust (and therefore Unitholders) will bear all or a portion of its
organizational and offering costs (but not the expenses incurred in the
printing of preliminary and final prospectuses, nor the expenses incurred in
the preparation and printing of brochures and other advertising materials or
any other selling expenses), as is common for mutual funds. See "TRUST
OPERATING EXPENSES" in Part B of this Prospectus and "Statement of
Condition."
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3
<PAGE>
Trust Strategies
INVESTMENT OBJECTIVE
The Trust is designed 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
Trust may also contain U.S. Treasury Obligations. There is no assurance that the
Trust will achieve its investment objective.
INVESTMENT PHILOSOPHY
The Trust is a non-managed investment vehicle and employs a buy and hold
investment strategy. The Trust plans to hold to maturity a portfolio of 8 Bonds.
INVESTOR SUITABILITY
The Trust is a suitable investment for investors seeking:
- - An opportunity for attractive, dependable income;
- - Insured, AAA-rated bonds;
- - A focus on long-term capital preservation;
- - Nuveen's professional research and selection;
- - An appropriate vehicle for retirement or other tax-deferred accounts;
- - Exemption from U.S. withholding for foreign (non-resident) investors that meet
certain conditions.
The Trust is not a suitable investment for individuals seeking:
- - An aggressive high-growth investment strategy.
HOW THE TRUST SELECTS INVESTMENTS
The Trust consists of a portfolio of Bonds having a dollar-weighted average
maturity of 30.2 years.
In selecting the Bonds for deposit in the Trust, the following factors, among
others, were considered by the Sponsor: (a) the prices and yields of such Bonds
relative to other Bonds of similar quality and maturity, including the extent to
which such 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 Trust; (e) whether the Bonds were issued after July
18, 1984; (f) the stated maturities and call provisions of the 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. A description of the Bonds included in the Trust is set
forth in the "Schedule of Investments," below.
Risk Factors
An investment in Units of the Trust should be made with an understanding of the
risks that an investment in fixed rate corporate debt obligations may entail.
These include credit risks and the risk that the value of the Bonds and
therefore the Units will decline, and may decline precipitously, 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.
The Sponsor cannot predict future economic policies or their consequences or,
therefore, the course or extent of any similar market fluctuations in the
future. General problems of utility company issuers include the imposition of
additional federal, state and municipal governmental regulations, possible
deregulation and the impact of stranded costs, increased costs 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. As such, there is no guarantee that the Trust
will achieve its objective. See "RISK FACTORS" in Part B of this Prospectus.
Certain of the Bonds included in the Trust may be original issue discount bonds
or "zero coupon" bonds, as noted in the "Schedule of Investments." These Bonds
are subject to greater price fluctuations with changing interest rates and
contain additional risks set forth in "RISK FACTORS" in Part B of this
Prospectus.
Distributions and Taxes
INTEREST AND PRINCIPAL DISTRIBUTIONS
The Trustee of the Trust (The Chase Manhattan Bank) will collect principal and
interest on the Bonds as they come due and hold such amounts for distribution to
Unitholders. The amount of the estimated Net Annual Income per Unit under each
plan of distribution, as set forth under "Essential Information -- Estimated
Annual Income," assumes that all of the Bonds are delivered to the Trust. See
"COMPOSITION OF TRUSTS" appearing in Part B of this Prospectus. The amount of
each Interest Distribution on a per Unit basis under each plan of distribution
will decrease as the underlying Bonds mature, are called or are sold. Interest
income does not include accretion of original issue discount on "zero coupon"
Bonds. See "RISK FACTORS" in Part B of this Prospectus. Distributions of income
will be paid by the Trustee under each plan of distribution on the respective
Distribution Dates to Unitholders of record on the applicable Record Dates as
set forth under "DISTRIBUTIONS TO UNITHOLDERS" in Part B of this
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4
<PAGE>
Prospectus. Distributions of principal will be paid on the semi-annual
Distribution Date to Unitholders of record on the semi-annual Record Date,
provided the amount available for distribution equals at least $0.10 per Unit.
The amount of interest you will receive on an annual basis will be reduced by
the expenses of the Trust and will generally change as Securities mature, are
called or are sold or as fees and expenses increase or decrease.
TAX STATUS
For non-resident aliens, income from the Trust will will be exempt from
withholding for U.S. federal income tax, PROVIDED certain conditions are met.
See "TAX STATUS" in Part B of this Prospectus for further tax information.
Investing in the Trust
SALES CHARGES
The maximum sales charge of 4.90% applies only to purchases of less than 500
Units. Sales charges for larger single transactions during the primary offering
period are as follows:
- ----------------------------------------------
PRIMARY MARKET SALES CHARGES
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
OFFERING NET AMOUNT
NUMBER OF UNITS* PRICE INVESTED
- ------------------------------------- ------------- -----------
<S> <C> <C>
Less than 500........................ 4.90% 5.152%
500 but less than 1,000.............. 4.75 4.987
1,000 but less than 2,500............ 4.50 4.712
2,500 but less than 5,000............ 4.25 4.439
5,000 but less than 10,000........... 3.50 3.627
10,000 but less than 25,000.......... 3.00 3.093
25,000 but less than 50,000.......... 2.50 2.564
50,000 or more....................... 2.00 2.041
Wrap Accounts........................ 1.70 1.729
</TABLE>
*Breakpoint sales charges are computed both on a dollar basis and on the basis
of the number of Units purchased, using the equivalent of 500 Units to $50,000,
2,500 Units to $250,000 etc., and will be applied on that basis which is more
favorable to the purchaser.
The sales charge assessed on Units sold in secondary market transactions is
determined in accordance with the table set forth below based upon the dollar
amount purchased and the number of years remaining to the maturity of each Bond.
See "PUBLIC OFFERING PRICE" in Part B of this Prospectus.
- --------------------------------------------------------------------------------
SECONDARY MARKET SALES CHARGES
<TABLE>
<CAPTION>
AMOUNT OF PURCHASE
----------------------------------------------------------------------------------------------------
UNDER $50,000 TO $100,000 TO $250,000 TO $500,000 TO $1,000,000 TO $2,500,000 TO
YEARS TO MATURITY $50,000 $99,999 $249,999 $499,999 $999,999 $2,499,999 $4,999,999
- --------------------- ------------ ------------ ------------ ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Less than 1.......... 0 0 0 0 0 0 0
1 but less than 2.... 1.523% 1.446% 1.369 % 1.317 % 1.215 % 1.061 % 0.900 %
2 but less than 3.... 2.041 1.937 1.833 1.729 1.626 1.420 1.225
3 but less than 4.... 2.564 2.433 2.302 2.175 2.041 1.781 1.546
4 but less than 5.... 3.093 2.961 2.828 2.617 2.459 2.175 1.883
5 but less than 7.... 3.627 3.433 3.239 3.093 2.881 2.460 2.165
7 but less than 10... 4.167 3.951 3.734 3.520 3.239 2.828 2.489
10 but less than 13.. 4.712 4.467 4.221 4.004 3.788 3.253 2.842
13 but less than 16.. 5.263 4.988 4.712 4.439 4.167 3.627 3.169
16 or more........... 5.820 5.542 5.263 4.987 4.603 4.004 3.500
<CAPTION>
$5,000,000
YEARS TO MATURITY OR MORE
- --------------------- --------------
<S> <C>
Less than 1.......... 0
1 but less than 2.... 0.750 %
2 but less than 3.... 1.030
3 but less than 4.... 1.310
4 but less than 5.... 1.590
5 but less than 7.... 1.870
7 but less than 10... 2.150
10 but less than 13.. 2.430
13 but less than 16.. 2.710
16 or more........... 3.000
</TABLE>
------
5
<PAGE>
DEALER CONCESSIONS
The Sponsor plans to allow a discount to dealer firms in connection with the
primary distribution of Units and also in secondary market transactions. The
primary market discounts, based on the number of Units sold, are as follows:
- ----------------------------------------------
PRIMARY MARKET DEALER CONCESSIONS
<TABLE>
<CAPTION>
DISCOUNT PER
NUMBER OF UNITS* UNIT
- ------------------------------------------------ -------------
<S> <C>
Less than 500................................... $ 3.20
500 but less than 1,000......................... 3.20
1,000 but less than 2,500....................... 3.20
2,500 but less than 5,000....................... 3.20
5,000 but less than 10,000...................... 2.50
10,000 but less than 25,000..................... 2.00
25,000 but less than 50,000..................... 1.75
50,000 or more.................................. 1.75
</TABLE>
Dealer concessions on secondary market purchases of Trust Units through the
Sponsor are based upon the value of the Bonds in the Trust portfolio, including
sales charges, adjusted to reflect cash in the Trust's principal account, and
will vary with the size of the purchases as shown in the following table:
- --------------------------------------------------------------------------------
SECONDARY MARKET DEALER CONCESSIONS
<TABLE>
<CAPTION>
AMOUNT OF PURCHASE
--------------------------------------------------------------------------------------------------------
UNDER $50,000 TO $100,000 TO $250,000 TO $500,000 TO $1,000,000 TO $2,500,000 TO
YEARS TO MATURITY $50,000 $99,999 $249,999 $499,999 $999,999 $2,499,999 $4,999,999
- --------------------- ------------ ------------ ------------- ------------- ------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Less than 1.......... 0 0 0 0 0 0 0
1 but less than 2.... 1.00% 0.90% 0.85% 0.80% 0.70% 0.55% 0.467 %
2 but less than 3.... 1.30 1.20 1.10 1.00 0.90 0.73 0.634
3 but less than 4.... 1.60 1.45 1.35 1.25 1.10 0.90 0.781
4 but less than 5.... 2.00 1.85 1.75 1.55 1.40 1.25 1.082
5 but less than 7.... 2.30 2.15 1.95 1.80 1.65 1.50 1.320
7 but less than 10... 2.60 2.45 2.25 2.10 1.95 1.70 1.496
10 but less than 13.. 3.00 2.80 2.60 2.45 2.30 2.00 1.747
13 but less than 16.. 3.25 3.15 3.00 2.75 2.50 2.15 1.878
16 or more........... 3.50 3.50 3.40 3.35 3.00 2.50 2.185
<CAPTION>
$5,000,000
YEARS TO MATURITY OR MORE
- --------------------- --------------
<S> <C>
Less than 1.......... 0
1 but less than 2.... 0.389 %
2 but less than 3.... 0.538
3 but less than 4.... 0.662
4 but less than 5.... 0.914
5 but less than 7.... 1.140
7 but less than 10... 1.292
10 but less than 13.. 1.494
13 but less than 16.. 1.606
16 or more........... 1.873
</TABLE>
General Information
OPTIONAL FEATURES
REDEMPTIONS
Units may be redeemed on any business day at no charge. Units are redeemed at
their current market value. See "REDEMPTION" in Part B of this Prospectus.
LETTER OF INTENT (LOI)
Investors may use a Letter of Intent to get reduced sales charges on purchases
made over a 13-month period (and to take advantage of dollar cost averaging).
The minimum LOI investment is $50,000. See "PUBLIC OFFERING PRICE" in Part B of
this Prospectus.
REINVESTMENT
Interest income and returned principal can be reinvested with no sales charge
into Nuveen mutual or money market funds. See "ACCUMULATION PLAN" in Part B of
this Prospectus. For more information, obtain a prospectus from your financial
adviser.
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 range of
equity and fixed-income unit trusts designed to suit the unique circumstances
and financial planning needs of mature investors. More than 1.3 million
investors have trusted Nuveen to help them maintain the life-style they
currently enjoy.
The prospectus describes in detail the investment objectives, policies and risks
of this unit trust. We invite you to discuss the contents with your financial
adviser, or you may call us at 800-257-8787 for additional information.
------
6
<PAGE>
- --------------------------------------------------------------------------------
NUVEEN INSURED CORPORATE TRUST, SERIES 1 (LONG-TERM)
(Nuveen Unit Trust, Series 1)
Schedule of Investments at the Initial Date of Deposit, June 26, 1997
<TABLE>
<CAPTION>
RATING(2)
---------------------
AGGREGATE STANDARD & REDEMPTION
PRINCIPAL NAME OF ISSUER (1)(6) COUPON MATURITY POOR'S MOODY'S PROVISIONS(3)
<C> <S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
$ 500,000 Bellsouth Telecommunications
Company 7.50% Due 6/15/33 AAA Aaa 2003 at 104.75
500,000 Cincinnati Gas and Electric
Company 7.20% Due 10/1/23 AAA Aaa 2003 at 103.54
500,000 Commonwealth Edison Company 7.75% Due 7/15/23 AAA Aaa 2003 at 103.77
500,000 New York Telephone Company 7.25% Due 2/15/24 AAA Aaa 2004 at 103.06
500,000 Pacific Bell Telephone Company 7.50% Due 2/1/33 AAA Aaa 2003 at 102.94
500,000 Texas Utilities Electric Company 7.625% Due 7/1/25 AAA Aaa 2003 at 102.69
500,000 US West Communications Company 6.875% Due 9/15/33 AAA Aaa 2003 at 101.95
500,000 Virginia Electric and Power
Company 7.50% Due 6/1/23 AAA Aaa 2003 at 103.16
- ------------
$ 4,000,000
- ------------
- ------------
<CAPTION>
AGGREGATE COST OF BONDS
PRINCIPAL TO TRUST(4)
<C> <C>
- ----------------------------------------------------
$ 500,000
$ 482,315
500,000
466,725
500,000 496,115
500,000 471,695
500,000 480,175
500,000 486,765
500,000 441,715
500,000
484,025
---------------
- ------------
$ 3,809,530
$ 4,000,000
---------------
---------------
- ------------
- ------------
</TABLE>
- -------------
(1) The Sponsor's contracts to purchase the Bonds were entered into on . All
Bonds are represented by regular way contracts, unless otherwise indicated,
for the performance of which an irrevocable letter of credit has been
deposited with the Trustee.
(2) A brief description of the applicable Standard & Poor's and Moody's rating
symbols and their meanings is set forth under "DESCRIPTION OF RATINGS" in
the Information Supplement to this Prospectus. "N.R." indicates that the
issue has not been rated by that rating agency.
(3) Under this heading, the year in which each issue of Bonds is initially or
currently redeemable and the redemption price for that year is shown.
Unless otherwise indicated, each issue continues to be redeemable at
declining prices thereafter, but not at a price below par value. The prices
at which the Bonds may be redeemed or called prior to maturity may or may
not include a premium and, in certain cases, may be less than the cost of
the Bonds to the Trust. In addition, certain Bonds in the portfolio may be
redeemed in whole or in part other than by operation of the stated
redemption provisions under certain unusual or extraordinary circumstances
specified in the instruments setting forth the terms and provisions of such
Bonds.
(4) During the Initial Offering Period, evaluations of Bonds are made on the
basis of current offering side evaluations of the Bonds.
(5) This Bond has been purchased at a deep discount from the par value because
there is no stated interest income thereon. Bonds which pay no interest are
normally described as "zero coupon" bonds. Over the life of Bonds purchased
at a deep discount, the value of such Bonds will increase such that upon
maturity the holders of such securities will receive 100% of the principal
amount thereof.
(6) Other information regarding the Bonds in the Trust on the Initial Date of
Deposit is as follows:
<TABLE>
<CAPTION>
ANNUAL
PROFIT INTEREST BID PRICE
COST TO (OR LOSS) INCOME TO OF
TRUST SPONSOR TO SPONSOR TRUST BONDS
- ----------------------------------------------------------------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
Nuveen Insured Corporate Trust, Series 1 (Long-Term)............. $ 3,803,990 $ 5,540 $ 296,000 $ 3,794,530
</TABLE>
In addition, the difference between the Trustee's determination of Offering
Price and Bid Price (as a percentage of principal amount) is 0.38% for the
Trust.
------
7
<PAGE>
- --------------------------------------------------------------------------------
NUVEEN INSURED CORPORATE TRUST, SERIES 1 (LONG-TERM)
(Nuveen Unit Trust, Series 1)
Statement of Condition at the Date of Deposit, June 26, 1997
<TABLE>
<S> <C>
TRUST PROPERTY
Sponsor's contracts to purchase Bonds, backed by an irrevocable letter of
credit(1)(2)................................................................. $3,809,530
Accrued interest to on underlying Bonds(1)..................................... 101,352
Organizational costs(3)........................................................ 38,500
----------
Total............................................................. $3,949,382
----------
----------
LIABILITIES AND INTEREST OF UNITHOLDERS
LIABILITIES:
Accrued interest to on underlying Bonds(4)................................. $ 101,352
Accrued organizational costs(3)............................................ 38,500
----------
Total............................................................. $ 139,852
----------
----------
INTEREST OF UNITHOLDERS:
Units of fractional undivided interest outstanding (40,000)
Cost to investors(5)....................................................... $4,005,797
Less: Gross underwriting commission(6)................................. (196,267)
----------
Net amount applicable to investors......................................... $3,809,530
----------
Total............................................................. $3,949,382
----------
----------
</TABLE>
- ------------
(1) Represented by contracts to purchase Bonds which include "when issued" or
"regular way" or "delayed delivery" contracts for which an irrevocable
letter of credit issued by a major commercial bank has been deposited with
the Trustee on the Initial Date of Deposit. The amount of such letter of
credit and any cash deposited exceeds the amount necessary for the purchase
of the Bonds plus accrued interest to the Initial Date of Deposit. At the
Initial Date of Deposit, Securities may have been delivered to the Sponsor
pursuant to certain of these contracts; the Sponsor has assigned to the
Trustee all of its rights, title and interest in and to such Bonds.
(2) Aggregate value (at offering prices) as of the Initial Date of Deposit of
the Bonds listed under "SCHEDULE OF INVESTMENTS" herein, and their aggregate
cost to the Trust is the same. Such offering prices were determined by Kenny
S&P Evaluation Services, a division of J.J. Kenny Co., Inc., as of the close
of business on the business day prior to the Initial Date of Deposit. (See
"EVALUATION OF SECURITIES AT THE INITIAL DATE OF DEPOSIT" in Part B of this
Prospectus.)
(3) The Trust (and therefore Unitholders) will bear all or a portion of its
estimated organizational costs which will be deferred and amortized over the
life of the Trust.
(4) Representing, as set forth in "ACCRUED INTEREST" in Part B of this
Prospectus, advancement by the Trustee of an amount equal to the accrued
Bond interest as of the Initial Date of Deposit.
(5) Aggregate Public Offering Price (exclusive of accrued interest) computed as
set forth under "PUBLIC OFFERING PRICE" in Part B of this Prospectus.
(6) The gross underwriting commission of 4.9% of the Public Offering Price has
been calculated on the assumption that the Units sold are not subject to a
reduction of sales charge for quantity purchases. In single transactions
involving 500 Units or more, the sales charge is reduced. (See "PUBLIC
OFFERING PRICE" in Part B of this Prospectus.)
------
8
<PAGE>
Report of Independent Public Accountants
TO THE BOARD OF DIRECTORS OF JOHN NUVEEN & CO. INCORPORATED AND UNITHOLDERS OF
NUVEEN UNIT TRUST, SERIES 1:
We have audited the accompanying statement of condition and the schedule of
investments at date of deposit (included in Part A of this Prospectus) of Nuveen
Unit Trust, Series 1 (Nuveen Insured Corporate Trust, Series 1 (Long-Term)), as
of June 26, 1997. These financial statements are the responsibility of the
Sponsor. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of the irrevocable letter of credit arrangement for the purchase of
securities, described in Note (1) to the statement of condition, by
correspondence with the Trustee. An audit also includes assessing the accounting
principles used and significant estimates made by the Sponsor, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the statement of condition and the schedule of investments at
date of deposit referred to above present fairly, in all material respects, the
financial position of Nuveen Unit Trust, Series 1 (Nuveen Insured Corporate
Trust, Series 1 (Long-Term)) as of June 26, 1997, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
June 26, 1997.
------
9
<PAGE>
NUVEEN UNIT TRUSTS
FIXED INCOME TRUST PROSPECTUS--PART B
MAY 29, 1997, AS AMENDED JULY 7, 1997
This Part B of the Prospectus may not be distributed unless accompanied by
Part A. Both Parts of this Prospectus should be retained for future reference.
FURTHER DETAIL REGARDING CERTAIN OF THE INFORMATION PROVIDED IN THE
PROSPECTUS MAY BE OBTAINED WITHIN FIVE BUSINESS DAYS OF WRITTEN OR TELEPHONIC
REQUEST TO THE TRUSTEE AT 4 NEW YORK PLAZA, NEW YORK, NY 10004-2413 OR (800)
257-8787.
CURRENTLY OFFERED AT PUBLIC OFFERING PRICE PLUS INTEREST ACCRUED TO THE DATE
OF SETTLEMENT. MINIMUM PURCHASE -- EITHER $5,000 OR 50 UNITS, WHICHEVER IS LESS
($1,000 FOR IRA ACCOUNTS).
THIS NUVEEN UNIT TRUST SERIES consists of the underlying separate unit
investment trusts set forth in Part A of this Prospectus. Each trust initially
consists of delivery statements relating to contracts to purchase securities
and, thereafter, will consist of a portfolio of securities (see "SCHEDULE OF
INVESTMENTS" appearing in Part A of this Prospectus). Except in specific
instances as noted in Part A of this Prospectus, the information contained in
this Part B shall apply to the Trust in its entirety.
Trusts consisting of a portfolio of U.S Treasury obligations ("U.S. 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" and the U.S.
Treasury Obligations and the Corporate Bonds shall be referred to herein as the
"SECURITIES."
THE OBJECTIVE of the U.S. Treasury Trusts is to provide current interest
income consistent with preservation of capital and investment flexibility. The
objective of the Corporate Trusts is to provide a high level of current income
consistent with preservation of capital provided primarily by a portfolio of
investment grade, corporate debt obligations issued after July 18, 1984.
DISTRIBUTIONS of interest received by a Trust will be made monthly,
quarterly or semi-annually, depending upon the Unitholder's selection. (See
"DISTRIBUTIONS TO UNITHOLDERS") Distribution of funds in the Principal Account,
if any, will ordinarily be made as set forth under "DISTRIBUTIONS TO
UNITHOLDERS."
FOR ESTIMATED LONG TERM RETURNS AND ESTIMATED CURRENT RETURNS to Unitholders
on the business day prior to the Initial Date of Deposit, see Part A of this
Prospectus and "ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN."
THE PUBLIC OFFERING PRICE per Unit of each Trust during the initial offering
period is based upon the pro rata share of the OFFERING prices of the Securities
in such Trust's portfolio plus a sales charge as set forth in Part A of this
Prospectus. The Secondary Market Public Offering Price per Unit for each Trust
is based upon the pro rata share of the sum of BID prices of the Securities in
such Trust plus the sales charges as set forth in Part A of this Prospectus.
Accrued interest from the preceding Record Date to, but not including, the
settlement date (normally three business days after purchase) is added to the
Public Offering Price. The sales charge is reduced on a graduated scale for
sales involving at least the number of Units set forth in Part A of this
Prospectus. See "PUBLIC OFFERING PRICE."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
A UNITHOLDER MAY REDEEM UNITS at the office of the Trustee at prices based
upon the BID prices of the Securities. The price received upon redemption may be
more or less than the amount paid by Unitholders, depending upon the value of
the Securities on the date of tender for redemption. (See "REDEMPTION.") The
Sponsor, although not required to do so, intends to make a secondary market for
the Units of certain of the Trusts at prices based upon the BID prices of the
Securities in the respective Trusts. (See "MARKET FOR UNITS.")
RISK FACTORS. An investment in a Trust should be made with an understanding
of the risks associated therewith, including, among other factors, the inability
of the issuer or an insurer (in the case of insured Corporate Bonds) to pay the
principal of or interest on a security when due, the general condition of the
relevant market, economic recession, volatile interest rates, early call
provisions and changes to the tax status of the Bonds. The value of the
underlying Securities will fluctuate inversely with changes in interest rates.
Although in recent years interest rates have been relatively stable, the
uncertain economic conditions of prior years, together with the monetary
policies and fiscal measures adopted in response to them, resulted in wide
fluctuations of interest rates and, thus, in the value of fixed rate debt
obligations. The Sponsor cannot predict the degree to which such fluctuations
will exist in the future. See Part A of this Prospectus and "RISK FACTORS."
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
NUVEEN UNIT TRUSTS..................................................................... 4
OBJECTIVE OF THE TRUSTS................................................................ 4
SUMMARY OF PORTFOLIOS.................................................................. 5
RISK FACTORS........................................................................... 5
COMPOSITION OF TRUSTS.................................................................. 8
INSURANCE ON THE CORPORATE BONDS....................................................... 9
PUBLIC OFFERING PRICE.................................................................. 10
MARKET FOR UNITS....................................................................... 13
ACCRUED INTEREST....................................................................... 14
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN................................ 15
EVALUATION OF SECURITIES AT THE INITIAL DATE OF DEPOSIT................................ 16
TAX STATUS............................................................................. 16
TRUST OPERATING EXPENSES............................................................... 20
DISTRIBUTIONS TO UNITHOLDERS........................................................... 21
ACCUMULATION PLAN...................................................................... 23
REPORTS TO UNITHOLDERS................................................................. 23
UNIT VALUE AND EVALUATION.............................................................. 23
DISTRIBUTIONS OF UNITS TO THE PUBLIC................................................... 24
OWNERSHIP AND TRANSFER OF UNITS........................................................ 26
REDEMPTION............................................................................. 26
PURCHASE OF UNITS BY THE SPONSOR....................................................... 28
REMOVAL OF SECURITIES FROM THE TRUSTS.................................................. 28
INFORMATION ABOUT THE TRUSTEE.......................................................... 29
INFORMATION ABOUT THE SPONSOR.......................................................... 29
OTHER INFORMATION...................................................................... 30
LEGAL OPINION.......................................................................... 31
AUDITORS............................................................................... 31
SUPPLEMENTAL INFORMATION............................................................... 31
</TABLE>
3
<PAGE>
NUVEEN UNIT TRUSTS
This Nuveen Unit Trust is one of a series of separate but similar investment
companies created by the Sponsor, each of which is designated by a different
Series number. The underlying unit investment trusts contained in this Series
are combined under one Trust Indenture and Agreement. Specific information
regarding each Trust is set forth in Part A of this Prospectus. The various
Nuveen Unit Trusts are collectively referred to herein as the "TRUSTS." This
Series was created under the laws of the State of New York pursuant to a Trust
Indenture and Agreement dated the Initial Date of Deposit (the "INDENTURE")
between John Nuveen & Co. Incorporated ("NUVEEN" or the "SPONSOR") and The Chase
Manhattan Bank (the "TRUSTEE").
The Sponsor has deposited with the Trustee delivery statements relating to
contracts for the purchase of the Securities together with funds represented by
an irrevocable letter of credit issued by a major commercial bank in the amount,
including accrued interest, required for their purchase (or the obligations
themselves). See "SCHEDULE OF INVESTMENTS" in Part A of this Prospectus, for a
description of the Securities deposited in a Trust. See "SUMMARY OF PORTFOLIO"
and "RISK FACTORS" for a discussion of zero coupon bonds and stripped
obligations included in the Trusts, if any. Some of the delivery statements may
relate to contracts for the purchase of "when issued" or other Securities with
delivery dates after the date of settlement for a purchase made on the Initial
Date of Deposit. See the "SCHEDULE OF INVESTMENTS" in Part A of this Prospectus
and "COMPOSITION OF TRUSTS." For a discussion of the Sponsor's obligations in
the event of a failure of any contract for the purchase of any of the Securities
and its limited right to substitute other securities to replace any failed
contract, see "COMPOSITION OF TRUSTS."
The Trustee has delivered to the Sponsor registered Units which represent
ownership of the entire Trust, and which are offered for sale by this
Prospectus. Each Unit of a Trust represents a fractional undivided interest in
the principal and net income of such Trust in the ratio set forth in "ESSENTIAL
INFORMATION" in Part A of this Prospectus. Units may only be sold in states in
which they are registered. To the extent that any Units of any Trust are
redeemed by the Trustee, the aggregate value of the Trust's assets will decrease
by the amount paid to the redeeming Unitholder, but the fractional undivided
interest of each unredeemed Unit in such Trust will increase proportionately.
The Sponsor will initially, and from time to time thereafter, hold Units in
connection with their offering.
Additional Units of each Trust may be issued from time to time following the
Initial Date of Deposit by depositing in such Trust additional Securities or
contracts for the purchase thereof together with irrevocable letters of credit
or cash. As additional Units are issued by a Trust as a result of the deposit of
additional Securities by the Sponsor, the aggregate value of the Securities in a
Trust will be increased and the fractional undivided interest in such Trust
represented by each Unit will be decreased. The Sponsor may continue to make
additional deposits of Securities into such Trust following the Initial Date of
Deposit, provided that such additional deposits will be in amounts which will
maintain the same original proportionate relationship among the Securities in
such Trust established on the Initial Date of Deposit. Thus, although additional
Units will be issued, each Unit will continue to represent the same
proportionate amount of each Security, and the percentage relationship among the
principal amounts of the Securities in the respective Trust will remain the
same. To the extent that any Units are redeemed by the Trustee or additional
Units are issued as a result of additional Securities being deposited by the
Sponsor, the fractional undivided interest in a Trust represented by each
unredeemed Unit will increase or decrease accordingly, although the actual
interest in such Trust represented by such fraction will remain unchanged. Units
will remain outstanding until redeemed upon tender to the Trustee by
Unitholders, which may include the Sponsor, or until termination of the Trust
Agreement.
4
<PAGE>
OBJECTIVE 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 Corporate Trusts is to provide a
high level of current income consistent with preservation of capital provided
primarily by a portfolio of 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 after July 18,
1984; (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
5
<PAGE>
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.
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 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. 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
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 (if any) recovered by a Corporate Trust
in payment under the defaulted Corporate Bond 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 any
portion of the 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.
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
6
<PAGE>
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
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.
7
<PAGE>
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
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.
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.
COMPOSITION OF TRUSTS
Each Trust initially consists of delivery statements relating to contracts
to purchase Securities (or of such Securities) as are listed under "SCHEDULE OF
INVESTMENTS" in Part A of this Prospectus and, thereafter, of such Securities as
may continue to be held from time to time (including certain Securities
deposited in a Trust to create additional Units, in substitution for Securities
not delivered to a Trust or in exchange or substitution for Securities upon
certain refundings), together with accrued and undistributed interest thereon
and undistributed cash realized from the disposition of Securities.
8
<PAGE>
"WHEN-ISSUED" AND "DELAYED DELIVERY" TRANSACTIONS. The contracts to
purchase Securities delivered to the Trustee represent an obligation by issuers
or dealers to deliver Securities to the Sponsor for deposit in the Trusts.
Certain of the contracts relate to Securities which have not been issued as of
the Initial Date of Deposit and which are commonly referred to as "when issued"
or "when, as and if issued" Securities. Although the Sponsor believes it
unlikely, if such Securities, or replacement Securities described below, are not
acquired by a Trust or if their delivery is delayed, the Estimated Current
Returns and Estimated Long Term Returns shown in Part A of this Prospectus may
be reduced. Certain of the contracts for the purchase of Securities provide for
delivery dates after the date of settlement for purchases made on the Initial
Date of Deposit. Interest on such "when issued" and "delayed delivery"
Securities accrues to the benefit of Unitholders commencing with the first
settlement date for the Units. However, in the opinion of counsel, Unitholders
who purchase their Units prior to the date such Securities are actually
delivered to the Trustee must reduce the tax basis of their Units for interest
accruing on such Securities during the interval between their purchase of Units
and the delivery of the Securities because such amounts constitute a return of
principal. As a result of such adjustment, the Estimated Current Returns set
forth in Part A of this Prospectus (which are based on the Public Offering Price
as of the business day prior to the Initial Date of Deposit) may be slightly
lower than that which Unitholders will receive after the first year, assuming
the Portfolio does not change and estimated annual expense does not vary from
that set forth under "ESSENTIAL INFORMATION" in Part A of this Prospectus. Those
Securities in each Trust purchased with delivery dates after the date of
settlement for purchases made on the Initial Date of Deposit are so noted in the
"SCHEDULE OF INVESTMENTS" in Part A of this Prospectus.
LIMITED REPLACEMENT OF CERTAIN SECURITIES. Neither the Sponsor nor the
Trustee shall be liable in any way for any default, failure or defect in any
Security. In the event of a failure to deliver any Security that has been
purchased for a Trust under a contract, including those Securities purchased on
a when, as and if issued basis ("FAILED SECURITIES"), the Sponsor is authorized
under the Indenture to direct the Trustee to acquire other specified securities
("REPLACEMENT SECURITIES") to make up the original corpus of the Trust within 20
days after delivery of notice of the failed contract and the cost to the Trust
(exclusive of accrued interest) may not exceed the amount of funds reserved for
the purchase of the Failed Securities. The Replacement Securities must satisfy
the criteria previously described for the Trusts and shall be substantially
identical to the Failed Securities they replace. For U.S. Treasury Trusts, the
Replacement Securities must be substantially identical to the Failed Securities
they replace in terms of (i) the exemption from state and local taxation; (ii)
maturity; and (iii) cost to the U.S. Treasury Trust. For Corporate Trusts, the
Replacement Securities (i) must be payable in United States currency, (ii) must
be purchased at a price that results in a yield to maturity and a current return
at least equal to that of the Failed Securities as of the Initial Date of
Deposit, (iii) must satisfy any rating criteria for Securities originally
included in the Corporate Trust, (iv) must be insured prior to acquisition by
the Corporate Trust, (v) must be corporate bonds, debentures, notes or other
straight debt obligations (whether secured or unsecured and whether senior or
subordinated) without equity or other conversion features, with fixed maturity
dates substantially the same as those or the Failed Securities having no
warrants or subscription privileges attached; and (vi) be issued after July 18,
1984. In addition, for any Trust, Replacement Securities shall not be "when, as
and if issued" Securities. Whenever a Replacement Security has been acquired for
a Trust, the Trustee shall, within five days after the delivery thereof, mail or
deliver a notice of such acquisition to all Unitholders of the Trust involved.
Once the original corpus of the Trust is acquired, the Trustee will have no
power to vary the investment of the Trust.
To the extent Replacement Securities are not acquired, the Sponsor shall
refund to all Unitholders of the Trust involved the sales charge attributable to
such Failed Securities not replaced, and the principal and accrued interest
attributable to such Securities shall be distributed not more than 30 days after
the determination of such failure or at such earlier time as the Trustee in its
sole discretion deems to be in the interest of the Unitholders. Any such accrued
interest paid to Unitholders will be paid by
9
<PAGE>
the Sponsor. In the event Failed Securities in a Trust could not be replaced,
the Net Annual Interest Income per Unit for such Trust would be reduced and the
Estimated Current Return thereon might be lowered.
SALE, MATURITY AND REDEMPTION OF SECURITIES. Certain of the Securities may
from time to time under certain circumstances be sold or will mature in
accordance with their terms. The proceeds from such events will be used to pay
for Units redeemed or distributed to Unitholders and not reinvested;
accordingly, no assurance can be given that a Trust will retain for any length
of time its present size and composition.
LITIGATION. To the best knowledge of the Sponsor, there is no litigation
pending as of the Initial Date of Deposit 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 Initial Date of Deposit, litigation may be initiated
with respect to Securities in any Trust. The Sponsor is unable to predict
whether any such litigation may be instituted, or if instituted, whether such
litigation might have a material adverse effect on the Trusts.
INSURANCE ON THE CORPORATE BONDS
All Bonds in an insured Corporate Trust ("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 either by the
issuer of the Corporate Bonds or by the Sponsor under a financial guaranty
insurance policy obtained 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-cancellable 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 to 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 one European branch in the
Republic of France.
As of December 31, 1996, MBIA had admitted assets of $4.4 billion (audited),
total liabilities of $3.0 billion (audited), and total capital and surplus of
$1.4 billion (audited) 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.
10
<PAGE>
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."
Because the Corporate Bonds in an Insured Corporate Trust (other than U.S.
Treasury Obligations) are insured as to the scheduled payment of principal and
interest and on the basis of the financial condition and the method of operation
of MBIA, Standard & Poor's has assigned to Units in such Insured Corporate
Trusts its "AAA" investment rating. This is the highest rating assigned to
securities by such rating agency and will remain in effect for a period of 13
months following an Insured Corporate Trust's Initial Date of Deposit, unless
renewed. These ratings should not be construed as an approval of the offering of
the Units by Standard & Poor's or as a guarantee of the market value of an
Insured Corporate Trust or the Units thereof.
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.
PUBLIC OFFERING PRICE
The Public Offering Price of the Units of each Trust is equal to the
Trustee's determination of the aggregate offering prices of the Securities
deposited therein (minus any advancement to the principal account of the Trust
made by the Trustee) plus a sales charge as set forth in Part A of this
Prospectus, in each case adding to the total thereof, accrued interest and the
cash held by the Trust, if any (minus accrued expenses and any advances to the
Trust made by the Trustee), and dividing the sum so obtained by the number of
Units outstanding in the Trust. See "UNIT VALUE AND EVALUATION."
The sales charge applicable to quantity purchases is reduced on a graduated
scale as set forth in Part A of this Prospectus. For purposes of calculating the
applicable sales charge, purchasers who have indicated their intent to purchase
a specified amount of Units of any Trust in the primary or secondary offering
period by executing and delivering a letter of intent to the Sponsor, which
letter of intent must be in a form acceptable to the Sponsor and shall have a
maximum duration of thirteen months, will be eligible to receive a reduced sales
charge according to the graduated scale provided in Part A of this Prospectus,
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 intended aggregate
purchases expressed in such Unitholder's letter of intent. Further, through the
establishment of the letter of intent, such Unitholder agrees that Units
representing 5% of the total amount of the intended purchases will be held in
escrow by the Trustee pending completion of these purchases. All distributions
on Units held in escrow will be credited to such Unitholder's account. If total
purchases prior to the expiration of the letter of intent period equal or exceed
the amount specified in a Unitholder's letter of intent, the Units held in
escrow will be transferred to such Unitholder's account. A Unitholder who
purchases Units during the letter of intent period in excess of the number of
Units specified in a Unitholder's letter of intent, the amount of which would
cause the Unitholder to be eligible to receive an additional sales charge
reduction, will be allowed such additional sales charge reduction on the
purchase of Units which caused the Unitholder to reach such new breakpoint level
and on all additional purchases of Units during the letter of intent period. If
the total purchases are less than the amount specified, the Unitholder involved
must pay the
11
<PAGE>
Sponsor an amount equal to the difference between the amounts paid for these
purchases and the amounts which would have been paid if the higher sales charge
had been applied; the Unitholder will, however, be entitled to any reduced sales
charge qualified for by reaching any lower breakpoint level. If such Unitholder
does not pay the additional amount within 20 days after written request by the
Sponsor or the Unitholder's securities representative, the Sponsor will instruct
the Trustee to redeem an appropriate number of the escrowed Units to meet the
required payment. By establishing a letter of intent, a Unitholder irrevocably
appoints the Sponsor as attorney to give instructions to redeem any or all of
such Unitholder's escrowed Units, with full power of substitution in the
premises. A Unitholder or his representative must notify the Sponsor whenever
such Unitholder makes a purchase of Units that he wishes to be counted towards
the intended amount.
For "secondary market" sales, the Public Offering Price per Unit of each
Trust is based on the Trustee's determination of the bid price of each Security
in the Trust and includes a sales charge as set forth below based upon the
number of years remaining to the maturity of each such Security. See "UNIT VALUE
AND EVALUATION." The effect of this method of sales charge calculation will be
that different sales charge rates will be applied to the various Securities in a
Trust portfolio based upon the maturities of such Securities. As shown, the
sales charge on Securities in each maturity range (and therefore the aggregate
sales charge on the purchase) is reduced with respect to volume purchases:
Corporate Trust Secondary Market Sales Charges
<TABLE>
<CAPTION>
AMOUNT OF PURCHASE*
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$50,000 $100,000 $250,000 $500,000 $1,000,000 $2,500,000
UNDER TO TO TO TO TO TO $5,000,000
YEARS TO MATURITY $50,000 $99,999 $249,999 $499,999 $999,999 $2,499,999 $4,999,999 OR MORE
- ---------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Less than 1................... 0 0 0 0 0 0 0 0
1 but less than 2............. 1.523 % 1.446 % 1.369 % 1.317 % 1.215 % 1.061 % .900 % .750 %
2 but less than 3............. 2.041 1.937 1.833 1.729 1.626 1.420 1.225 1.030
3 but less than 4............. 2.564 2.433 2.302 2.175 2.041 1.781 1.546 1.310
4 but less than 5............. 3.093 2.961 2.828 2.617 2.459 2.175 1.883 1.590
5 but less than 7............. 3.627 3.433 3.239 3.093 2.881 2.460 2.165 1.870
7 but less than 10............ 4.167 3.951 3.734 3.520 3.239 2.828 2.489 2.150
10 but less than 13........... 4.712 4.467 4.221 4.004 3.788 3.253 2.842 2.430
13 but less than 16........... 5.263 4.988 4.712 4.439 4.167 3.627 3.169 2.710
16 or more.................... 5.820 5.542 5.263 4.987 4.603 4.004 3.500 3.000
</TABLE>
*Breakpoint sales charges are computed both on a dollar basis and on the basis
of the number of Units purchased, using the equivalent of 500 Units to
$50,000, 2,500 Units to $250,000, etc., and will be applied on that basis
which is more favorable to the purchaser.
U.S. Treasury Trust Secondary Market Sales Charges
<TABLE>
<CAPTION>
AMOUNT OF PURCHASE*
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$50,000 $100,000 $250,000 $500,000 $1,000,000 $2,500,000
UNDER TO TO TO TO TO TO $5,000,000
YEARS TO MATURITY $50,000 $99,999 $249,999 $499,999 $999,999 $2,499,999 $4,999,999 OR MORE
- ---------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Less than 1................... 0 0 0 0 0 0 0 0
1 but less than 2............. 1.10 % 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
</TABLE>
*Breakpoint sales charges are computed both on a dollar basis and on the basis
of the number of Units purchased, using the equivalent of 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.
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
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<PAGE>
instance one consisting entirely of Bonds with 16 years or more to maturity,
would be 5.50% (5.820% of the net amount invested). The actual secondary market
sales charge included in the Public Offering Price of any particular Trust will
depend on the maturities of the Securities 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 Securities deposited in the Trust during
the initial offering period of the Trust.
At all times while Units are being offered for sale, the Sponsor will
appraise or cause to be appraised daily the value of the underlying Securities
in each Trust as of 4:00 p.m. eastern time, or as of any earlier closing time on
a day on which the New York Stock Exchange (the "EXCHANGE") is scheduled in
advance to close at such earlier time and will adjust the Public Offering Price
of the Units commensurate with such appraisal. Such Public Offering Price will
be effective for all orders received by a dealer or the Sponsor at or prior to
4:00 p.m. eastern time on each such day or as of any earlier closing time on a
day on which the Exchange is scheduled in advance to close at such earlier time.
Orders received after that time, or on a day when the Exchange is closed for a
scheduled holiday or weekend, will be held until the next determination of
price.
Accrued interest from the preceding Record Date to, but not including, the
settlement date of the transaction (three business days after purchase) will be
added to the Public Offering Price to determine the purchase price of Units. See
"ACCRUED INTEREST."
The graduated sales charges set forth in the tables provided in Part A of
this Prospectus will apply on all applicable purchases of Nuveen investment
company securities on any one day by the same purchaser in the amounts stated,
and for this purpose purchases of this Series will be aggregated with concurrent
purchases of any other Series or of shares of any open-end management investment
company of which the Sponsor is principal underwriter and with respect to the
purchase of which a sales charge is imposed. Purchases by or for the account of
individuals and their spouses, parents, children, grandchildren, grandparents,
parents-in-laws, 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. Units may be purchased at the Public Offering Price
without a sales charge by officers or directors and by bona fide, full-time
employees of Nuveen, Nuveen Advisory Corp., Nuveen Institutional Advisory Corp.
and The John Nuveen Company, including in each case these individuals and their
immediate family members (as defined above).
Units may be purchased in the primary market with a sales charge as provided
for "Wrap Accounts" as set forth in Part A of this Prospectus by (1) investors
who purchase Units through registered investment advisers, certified financial
planners and registered broker-dealers who in each case either charge periodic
fees for financial planning, investment advisory or asset management services,
or provide such services in connection with the establishment of an investment
account for which a comprehensive "wrap fee" charge is imposed; (2) bank trust
departments investing funds over which they exercise exclusive discretionary
investment authority and that are held in a fiduciary, agency, custodial or
similar capacity; (3) any person who for at least 90 days, has been an officer,
director or bona fide employee of any firm offering Units for sale to investors
or their immediate family members (as defined above); and, (4) officers and
directors of bank holding companies that make Units available directly or
through subsidiaries or bank affiliates (collectively, the "DISCOUNTED
PURCHASES"). In addition, such investors may purchase Units in the secondary
market at the Public Offering Price for non-breakpoint purchases minus the
concession the Sponsor typically allows to brokers and dealers for non-
breakpoint purchases. Notwithstanding anything to the contrary in this
Prospectus, investors who purchase Units as described in this paragraph will not
receive sales charge reductions for quantity purchases.
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The initial or primary Public Offering Price of the Units in each Trust is
based upon a pro rata share of the offering prices per Unit of the Securities in
such Trust plus the applicable sales charge. The secondary market Public
Offering Price of each Trust is based upon a pro rata share of the bid prices
per Unit of the Securities in such Trust plus the applicable sales charge. The
offering prices of Securities in a Trust may be expected to average between 1/2%
to 2% more than the bid prices of such Securities. The difference between the
bid side evaluation and the offering side evaluation of the Securities in each
Trust on the business day prior to the Initial Date of Deposit is shown in the
discussion of each Trust portfolio.
Whether or not Units are being offered for sale, the Sponsor will determine
the aggregate value of each Trust as of 4:00 p.m. eastern time: (i) on each June
30 or December 31 (or, if such date is not a business day, the last business day
prior thereto), (ii) on any day on which a Unit is tendered for redemption (or
the next succeeding business day if the date of tender is a non-business day)
and (iii) at such other times as may be necessary. For this purpose, a "business
day" shall be any day on which the Exchange is normally open. (See "UNIT VALUE
AND EVALUATION.")
MARKET FOR UNITS
During the initial public offering period, the Sponsor intends to offer to
purchase Units of each Trust at a price based upon the pro rata share per Unit
of the offering prices of the Securities in such Trust (plus accrued interest).
Afterward, although it is not obligated to do so, the Sponsor intends to
maintain a secondary market for Units of 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 Securities in the
respective portfolios of such Trusts. UNITHOLDERS WHO WISH TO DISPOSE OF THEIR
UNITS SHOULD INQUIRE OF THE TRUSTEE OR THEIR BROKER AS TO THE CURRENT REDEMPTION
PRICE. (See "REDEMPTION.") 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 broker or dealer will share profits and
losses in the joint account in accordance with the terms of their joint account
agreement.
Certificates, if any, for Units are delivered to the purchaser as promptly
after the date of settlement (three business days after purchase) as the Trustee
can complete the mechanics of registration, normally within 48 hours after
registration instructions are received. Purchasers of Units to whom Certificates
are issued will be unable to exercise any right of redemption until they have
received their Certificates, properly endorsed for transfer. (See "REDEMPTION.")
ACCRUED INTEREST
Accrued interest is the accumulation of unpaid interest on a security bond
from the last day on which interest thereon was paid. Interest on Securities 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. Unitholders will receive on the next distribution date of a Trust
the amount, if any, of accrued interest paid on their Units.
In an effort to reduce the amount of accrued interest that investors would
have to pay in addition to the Public Offering Price, the Trustee has agreed to
advance to each Trust the amount of accrued interest due on the Securities as of
the Initial Date of Deposit (which has been designated the first Record Date).
This accrued interest will be paid to the Sponsor as the holder of record of all
Units on the Initial Date of Deposit. Consequently, the amount of accrued
interest to be added to the Public
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Offering Price of Units will include only accrued interest from the preceding
Record Date to, but not including, the date of settlement of the investor's
purchase (three business days after purchase). The Trustee will recover its
advancements (without interest or other cost to the Trusts) from interest
received on the Securities deposited in each Trust.
The Trustee has no cash for distribution to Unitholders until it receives
interest payments on the Securities in the Trusts. Since interest is accrued
daily but paid only semi-annually, during the initial months of the Trusts, the
Interest Accounts, consisting of accrued but uncollected interest and collected
interest (cash), will be predominantly the uncollected accrued interest that is
not available for distribution. However, due to advances by the Trustee, the
Trustee will provide a first distribution approximately 30 to 60 days after the
Initial Date of Deposit. Assuming each Trust retains its original size and
composition and expenses and fees remain the same, annual interest collected and
distributed will approximate the estimated Net Annual Interest Income stated in
Part A of this Prospectus. However, the amount of accrued interest at any point
in time will be greater than the amount that the Trustee will have actually
received and distributed to the Unitholders. Therefore, there will always remain
an item of accrued interest that is included in the purchase price and the
redemption price of the Units.
Interest is accounted for daily and a proportionate share of accrued and
undistributed interest computed from the preceding Record Date is added to the
daily valuation of each Unit of each Trust. (See Part A of this Prospectus and
"DISTRIBUTIONS TO UNITHOLDERS.") As Securities mature, or are redeemed or sold,
the accrued interest applicable to such securities 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
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 Securities in the Trust's portfolio calculated in accordance with
accepted practice and adjusted to reflect expenses and sales charges. Under
accepted practice, securities 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 securities but also the amortization or
accretion of any premium over, or discount from, the par (maturity) value
inherent in the security's purchase price. In the calculation of Estimated Long
Term Return, the average yield for a Trust's portfolio is derived by weighting
each Security's yield by the market value of the Security and by the amount of
time remaining to the date to which the Security is priced. This weighted
average yield is then adjusted to reflect estimated expenses, is compounded, and
is reduced by a factor which represents the amortization of the sales charge
over the expected average life of a Trust. The Estimated Long Term Return
calculation does not take into account the effect of a first distribution which
may be less than 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 effect 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 Securities 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.
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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 Securities. 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 securities in the portfolio, and
differences between the expected remaining life of portfolio securities and the
actual length of time that they remain in a Trust; such actual holding periods
may be reduced by termination of a Trust, as described in "OTHER INFORMATION."
Since both the Estimated Current Return and the Estimated Long Term Return
quoted herein are based on the market value of the underlying Securities on the
business day prior to the Initial Date of Deposit, subsequent calculations of
these performance measures will reflect the then current market value of the
underlying Securities and may be higher or lower. The Sponsor will provide
estimated cash flow information relating to a Trust without charge to each
potential investor in a Trust who receives this prospectus and makes an oral or
written request to the Sponsor for such information.
A portion of the monies received by a Trust may be treated, in the first
year only, as a return of principal due to the inclusion in the Trust portfolio
of "when-issued" or other Securities having delivery dates after the date of
settlement for purchases made on the Initial Date of Deposit. A consequence of
this treatment is that in the computation of Estimated Current Return for the
first year, such monies are excluded from Net Annual Interest Income and treated
as an adjustment to the Public Offering Price. (See "Essential Information"
appearing in Part A of this Prospectus, "COMPOSITION OF TRUSTS" and "TAX
STATUS").
A comparison of estimated current returns with the returns on various other
taxable investments is one element to consider in making an investment decision.
The Sponsor may from time to time in its advertising and sales materials compare
the then current estimated returns on a Trust and returns over specified periods
on other similar Nuveen Trusts with returns on taxable investments such as
corporate or U.S. Government securities, bank CD's and money market accounts or
money market funds, each of which has investment characteristics that may differ
from those of the Trust. In addition, the Sponsor may compare the performance of
various indices with the performance of U.S. Government securities and bank CDs.
U.S. Government securities, for example, are backed by the full faith and credit
of the U.S. Government and bank CDs 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.
EVALUATION OF SECURITIES AT THE INITIAL DATE OF DEPOSIT
The prices at which the Securities deposited in the Trusts would have been
offered to the public on the business day prior to the Initial Date of Deposit
were determined by the Trustee on the basis of an evaluation of such securities
prepared by Kenny S&P Evaluation Services, a division of J.J. Kenny Co., Inc., a
firm regularly engaged in the business of evaluating, quoting or appraising
comparable securities.
The amount by which the Trustee's determination of the OFFERING PRICES of
the Securities deposited in the Trust was greater or less than the cost of such
Securities to the Sponsor was PROFIT OR LOSS to the Sponsor exclusive of any
underwriting profit. (See Part A of this Prospectus.) The Sponsor also may
realize FURTHER PROFIT OR SUSTAIN FURTHER LOSS as a result of fluctuations in
the Public Offering Price of the Units. Cash, if any, made available to the
Sponsor prior to the settlement date for a purchase of Units, or prior to the
acquisition of all Portfolio securities by a Trust, may be available for use in
the Sponsor's business, and may be of benefit to the Sponsor.
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TAX STATUS
For purposes of the following discussion and opinions, it is assumed that
each Security is debt 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 the Trust assets for federal income tax purposes under Subpart E,
Subchapter J of Chapter 1 of the Internal Revenue Code of 1986, as amended
(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 Security 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 a Security is
disposed of (whether by sale, exchange, liquidation, redemption, or payment
at maturity) 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
adjustments described below) by apportioning the tax basis for the Units
among each of the Trust 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 Securities delivered after the date on which the Unitholders pay for
their Units to the extent that such interest accrued on such Securities
before the date the Trust acquired ownership of the Securities (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. It should be noted that certain legislative proposals have been made
which could effect the calculation of basis for Unitholders holding
securities that are substantially identical to the Securities. 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 Securities, (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 Security which was issued with original issue discount
(including the U.S. Treasury obligations) (or which has market discount)
must be 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 Security 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 may, 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
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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 advisers regarding the Federal income tax consequences and
accretion of original issue discounts.
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, may 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
Security with respect to such pro rata interest upon the maturity of the
Security, 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 advisers regarding whether such
election should be made and the manner of amortizing premium.
Original Issue Discount -- Certain of the Securities in a Trust may have
been acquired with "original issue discount." In the case of any Securities 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 includable in taxable income of
the Unitholders on an accrual basis computed daily, without regard to when
payments of interest on such Securities 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 Securities. Unitholders
should consult their tax advisers as to the amount of original issue discount as
it accrues.
Special original issue discount rules apply if the purchase price of the
Security 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 a Security 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
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as a distribution of 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.
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 includable in taxable income to the
Unitholders as ordinary income for Federal tax purposes upon the receipt of
serial principal payments on the Securities, on the sale, maturity or
disposition of such Securities 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 a Security is increased by the amount of
original issue discount (and market discount, if the Unitholder elects to
include market discount, if any, on the Securities 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 a Security 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). (Any gain
recognized on a sale or exchange and not constituting a realization of accrued
"market discount," and any loss, will generally be capital gain or loss except
in the case of a dealer or financial institution.) As previously discussed, gain
realized on the disposition of the interest of a Unitholder in any Security
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 a Security by a Trust or the disposition of Units by a
Unitholder will be short-term capital gain (or loss) unless the Unitholder has
held his Units for more than one year in which case such capital gain or loss
will be long-term. For taxpayers other than corporations, net capital gains
(which is defined as net long-term capital gain over short-term capital loss for
a taxable year) are subject to a maximum marginal stated tax rate of 28%.
However, it should be noted that legislative proposals are introduced from time
to time that affect tax rates and could affect relative differences at which
ordinary income and capital gains are taxed. The tax basis reduction
requirements of the Code relating to amortization of Security 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.
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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 Securities 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 Revenue Reconciliation Act of 1993" (the "TAX ACT") raised tax rates on
ordinary income while capital gains remain subject to a 28% maximum stated rate
for taxpayers other than corporations. Because some or all capital gains are
taxed at a comparatively lower rate under the Tax Act, the Tax Act includes a
provision that recharacterizes capital gains as ordinary income in the case of
certain financial transactions that are "conversion transactions" effective for
transactions entered into after April 30, 1993. Unitholders and prospective
investors should consult with their tax advisers regarding the potential effect
of this provision on their investment in Units. Legislative proposals have been
made that would treat certain transactions designed to reduce or eliminate risk
of loss and opportunities for gain as constructive sales for purposes of
recognition of gain (but not loss). 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 amounts distributed from the Trust
(including any original issue discount) on, or any gain from the sale or other
disposition of, his pro rata interest in any Security or the sale of his Units
PROVIDED that (i) the interest income or gain is not effectively connected to
the conduct by the foreign investor of a trade or business within the United
States, (ii) 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, (iii) 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) and (iv) FURTHER PROVIDED that the exemption from
withholding for U.S. Federal income taxes for interest on any U.S. Securities
shall apply to the extent the securities were issued after July 18, 1984.
Foreign investors should consult their tax advisers with respect to United
States tax consequences of ownership of Units.
It should be noted that the Tax Act 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.
In the opinion of Carter, Ledyard & Milburn, special counsel to the Trusts
for New York tax matters 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 under the existing income tax laws of the State and City of New
York.
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 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.
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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 to 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.
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 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 and the tax treatment of Securities acquired at an
original issue discount or market discount and premium, if any.
TRUST 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 "EXPENSE INFORMATION" in Part
A of this Prospectus for regularly evaluating the Bonds and for maintaining
surveillance over the portfolio. (See "UNIT VALUE AND EVALUATION.")
The Trustee receives for ordinary recurring services an annual fee for each
plan of distribution for each Trust as set forth in "EXPENSE INFORMATION"
appearing in Part A 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) and may be further adjusted in accordance with the
cumulative percentage increase of the United States Department of Labor's
Consumer Price Index entitled "All Services Less Rent of Shelter" since the
establishment of the Trusts. The Trustee has the use of funds, if any, being
held in the Interest and Principal Accounts of each Trust for future
distributions, payment of expenses and redemptions. These Accounts are
non-interest bearing to Unitholders. Pursuant to normal banking procedures, the
Trustee benefits from the use of funds held therein. Part of the Trustee's
compensation for its services to the Trusts is expected to result from such use
of these funds.
Premiums for the policies of insurance obtained by the Sponsor or by the
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 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:
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<PAGE>
(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.
The Indenture requires each Trust to be audited on an annual basis at the
expense of the Trust by independent public accountants selected by the Sponsor.
The Trustee shall not be required, however, to cause such an audit to be
performed if its cost to a Trust shall exceed $.05 per Unit on an annual basis.
Unitholders of a Trust covered by an audit may obtain a copy of the audited
financial statements upon request.
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 and distributions will be made on or shortly
after the fifteenth day of the month to Unitholders of such Trust as of the
Record Date who are entitled to distributions at that time under the plan of
distribution chosen. Persons who purchase Units between a Record Date and a
Distribution Date will receive their first distribution on the Distribution Date
following the next Record Date under the applicable plan of distribution.
Purchasers of Units who desire to receive interest distributions on a
monthly or quarterly basis may elect to do so at the time of purchase during the
initial public offering period. Those indicating no choice will be deemed to
have chosen the semi-annual distribution plan. All Unitholders, however, who
purchase Units during the initial public offering period and who hold them of
record on the first Record Date after the Initial Date of Deposit will receive
the first distribution of interest. Thereafter, Record Dates for monthly
distributions will be the first day of each month; Record Dates for quarterly
distributions will be the first day of February, May, August and November; and
Record dates for semi-annual distributions will be the first day of May and
November. See Part A of this Prospectus for details
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<PAGE>
of distributions per Unit of each Trust based upon estimated Net Annual Interest
Income at the Initial Date of Deposit. The amount of the regular distributions
will generally change when Securities are redeemed, mature or are sold or when
fees and expenses increase or decrease. For the purpose of minimizing
fluctuations in the distributions from the Interest Account of a Trust, the
Trustee is authorized to advance such amounts as may be necessary to provide for
interest distributions of approximately equal amounts. The Trustee shall be
reimbursed, without interest, for any such advances from funds in the Interest
Account of such Trust. The Trustee's fee takes into account the costs
attributable to the outlay of capital needed to make such advances.
The plan of distribution selected by a Unitholder will remain in effect
until changed. Unitholders purchasing Units in the secondary market will
initially receive distributions in accordance with the election of the prior
owner. Unitholders desiring to change their plan of distribution may do so by
sending a written notice requesting the change, together with any
Certificate(s), to the Trustee. The notice and any Certificate(s) must be
received by the Trustee not later than the semi-annual Record Date to be
effective as of the semi-annual distribution following the subsequent
semi-annual Record Date. Unitholders are requested to make any such changes
within 45 days prior to the applicable Record Date. Certificates should only be
sent by registered or certified mail to minimize the possibility of their being
lost or stolen. See "OWNERSHIP AND TRANSFER OF UNITS."
As of the first day of each month the Trustee will deduct from the Interest
Account of a Trust or, to the extent funds are not sufficient therein, from the
Principal Account of a Trust, amounts needed for payment of expenses of such
Trust. The Trustee also may withdraw from said accounts such amount, if any, as
it deems necessary to establish a reserve for any governmental charges payable
out of such Trust. Amounts so withdrawn shall not be considered a part of a
Trust's assets until such time as the Trustee shall withdraw from the Interest
Account and the Principal Account of a Trust such amounts as may be necessary to
cover redemptions of Units of such Trust by the Trustee. Funds which are
available for future distributions, redemptions and payment of expenses are held
in accounts which are non-interest bearing to Unitholders and are available for
use by the Trustee pursuant to normal banking procedures.
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 includable 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."
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
23
<PAGE>
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.
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 shall furnish to each person, who at any
time during the calendar year was a registered Unitholder of a Trust, a
statement with respect to such Trust (i) as to the Interest Account: interest
received (including amounts representing interest received upon any disposition
of Securities), 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 Securities and the net proceeds received therefrom (excluding
any portion representing accrued interest), the amount paid for purchase of
Replacement Securities, 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 Securities 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 Securities in the Trust based on the BID prices of the Securities
and (3) interest accrued thereon not subject to collection, LESS (1) amounts
representing taxes or governmental charges payable out of the Trust and (2) the
accrued expenses of the Trust. The result of such computation is divided by the
number of Units of the 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 Securities in each Trust (1) on the basis of current BID prices of the
Securities obtained from dealers or brokers who customarily deal in securities
comparable to those held by the Trust, (2) if bid prices are not available for
any of the Securities, on the basis of bid prices for comparable securities, (3)
by causing the value of the Securities to be determined by others engaged in the
practice of evaluating, quoting or appraising comparable securities or (4) by
any combination of the above. Although the Unit Value of each Trust is based on
the BID prices of the
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<PAGE>
Securities, the Units are sold initially to the public at the Public Offering
Price based on the OFFERING prices of the Securities.
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.
DISTRIBUTIONS OF UNITS TO THE PUBLIC
Nuveen, in addition to being the Sponsor, is the sole Underwriter of the
Units. It is the intention of the Sponsor to qualify Units of the Trusts for
sale under the laws of substantially all of the states of the United States of
America.
Promptly following the deposit of Securities in exchange for Units of the
Trusts, it is the practice of the Sponsor to place all of the Units as
collateral for a letter or letters of credit from one or more commercial banks
under an agreement to release such Units from time to time as needed for
distribution. Under such an arrangement the Sponsor pays such banks compensation
based on the then current interest rate. This is a normal warehousing
arrangement during the period of distribution of the Units to public investors.
To facilitate the handling of transactions, sales of Units shall be limited to
transactions involving a minimum of either $5,000 or 50 Units, whichever is
less, ($1,000 for IRA Accounts). The Sponsor reserves the right to reject, in
whole or in part, any order for the purchase of Units.
The Sponsor plans to allow a discount to brokers and dealers in connection
with the primary distribution of Units. The amounts of such discounts are set
forth in Part A of this Prospectus.
The Sponsor currently intends to maintain a secondary market for Units of
certain Trusts. See "MARKET FOR UNITS." The amount of the dealer concession on
secondary market purchases of Trust Units through the Sponsor will be computed
based upon the value of the Bonds in the Trust portfolio, including the sales
charge computed as described in "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:
Corporate 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
UNDER TO TO TO TO TO TO $5,000,000
YEARS TO MATURITY $50,000 $99,999 $249,999 $499,999 $999,999 $2,499,999 $4,999,999 OR MORE
- -------------------------- --------- --------- --------- --------- --------- ---------- ---------- ----------
Less than 1............... 0 0 0 0 0 0 0 0
1 but less than 2......... 1.00% .90% .85% .80% .70% .55% .467% .389%
2 but less than 3......... 1.30 1.20 1.10 1.00 .90 .73 .634 .538
3 but less than 4......... 1.60 1.45 1.35 1.25 1.10 .90 .781 .662
4 but less than 5......... 2.00 1.85 1.75 1.55 1.40 1.25 1.082 .914
5 but less than 7......... 2.30 2.15 1.95 1.80 1.65 1.50 1.320 1.140
7 but less than 10........ 2.60 2.45 2.25 2.10 1.95 1.70 1.496 1.292
10 but less than 13....... 3.00 2.80 2.60 2.45 2.30 2.00 1.747 1.494
13 but less than 16....... 3.25 3.15 3.00 2.75 2.50 2.15 1.878 1.606
16 or more................ 3.50 3.50 3.40 3.35 3.00 2.50 2.185 1.873
</TABLE>
*Breakpoint sales charges and related dealer concessions are computed both on a
dollar basis and on the basis of the number of Units purchased, using the
equivalent of 500 Units to $50,000, 2,500 Units to $250,000, etc., and will be
applied on that basis which is more favorable to the purchaser.
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<PAGE>
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
UNDER TO TO TO TO TO TO $5,000,000
YEARS TO MATURITY $50,000 $99,999 $249,999 $499,999 $999,999 $2,499,999 $4,999,999 OR MORE
- -------------------------- --------- --------- --------- --------- --------- ---------- ---------- ----------
Less than 1............... 0 0 0 0 0 0 0 0
1 but less than 2......... 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
</TABLE>
*Breakpoint sales charges are computed both on a dollar basis and on the basis
of the number of Units purchased, using the equivalent of 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.
The Sponsor reserves the right to change the amounts of the dealer
concessions from time to time.
At the discretion of the Sponsor, volume incentives can be earned as a
marketing allowance by dealer firms who reach cumulative firm sales or sales
arrangement levels of a specified number of Units of an individual Trust during
the primary offering period as set forth in the table below. For firms that meet
the necessary volume level for a Trust, volume incentives may be given on all
trades involving that Trust originated from or by that firm during the primary
offering period.
Primary Market Volume Incentives
<TABLE>
<CAPTION>
DOLLAR-WEIGHTED PER TRUST SALES LEVEL
AVERAGE MATURITY DURING THE PRIMARY VOLUME INCENTIVE
OF TRUST OFFERING PERIOD PER UNIT
- ------------------------------- --------------------------- -------------------
<S> <C> <C>
Less than 6 years At least 5,000 Units $ 0.05
6 but less than 15 years At least 2,500 Units $ 0.10
15 years or more At least 2,500 Units $ 0.20
</TABLE>
In addition, 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" during the primary or
secondary market. (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
26
<PAGE>
Units; the Act does, however, permit certain agency transactions and banking
regulators have not indicated that these particular agency transactions are not
permitted under the Act. In Texas and in certain other states, any bank making
Units available must be registered as a broker-dealer under state law.
OWNERSHIP AND TRANSFER OF UNITS
The ownership of Units is evidenced by registered Certificates unless the
Unitholder expressly requests that ownership be evidenced by a book entry
position 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 Unitholder will receive a Book Entry Position Confirmation reflecting
their ownership.
For Trusts allowing optional plans of distribution, Certificates for Units
will bear an appropriate notation of their face indicating which plan of
distribution has been selected. When a change is made, the existing Certificates
must be surrendered to the Trustee and new Certificates issued to reflect the
currently effective plan of distribution. There will be no charge for this
service. Holders of book entry Units can change their plan of distribution by
making a written request to the Trustee, which will issue a new Book Entry
Position Confirmation to reflect such change.
Units are transferable by making a written request to the Trustee and, in
the case of Units evidenced by Certificate(s), by presenting and surrendering
such Certificate(s) to the Trustee, at its address listed on the back cover of
this Part B of the Prospectus, properly endorsed or accompanied by a written
instrument or instruments of transfer. The Certificate(s) should be sent
registered or certified mail for the protection of the 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. Although at
the date hereof no charge is made and none is contemplated, a Unitholder may be
required to pay $2.00 to the Trustee for each Certificate reissued or transfer
of Units requested and to pay any governmental charge which may be imposed in
connection therewith.
REPLACEMENT OF LOST, STOLEN OR DESTROYED CERTIFICATES
To obtain a new Certificate replacing one that has been lost, stolen, or
destroyed, the Unitholder must furnish the Trustee with sufficient
indemnification and pay such expenses as the Trustee may incur. This
indemnification must be in the form of an Open Penalty Bond of Indemnification.
The premium for such an indemnity bond may vary, but currently amounts to 1% of
the market value of the Units represented by the Certificate. In the case
however, of a Trust as to which notice of termination has been given, the
premium currently amounts to 0.5% of the market value of the Units represented
by such Certificate.
27
<PAGE>
REDEMPTION
Unitholders may redeem all or a portion of their Units by (1) making a
written request for such redemption (book entry Unitholders may use the
redemption form on the reverse side of their Book Entry Position Confirmation)
to the Trustee at its address listed on the back cover of this Part B of the
Prospectus (redemptions of 1,000 Units or more will require a signature
guarantee), (2) in the case of Units evidenced by a Certificate, by also
tendering such Certificate to the Trustee, duly endorsed or accompanied by
proper instruments of transfer with signatures guaranteed as explained above, or
provide satisfactory indemnity required in connection with lost, stolen or
destroyed Certificates and (3) payment of applicable governmental charges, if
any. Certificates should be sent only by registered or certified mail to
minimize the possibility of their being lost or stolen. (See "OWNERSHIP AND
TRANSFER OF UNITS.") No redemption fee will be charged. A Unitholder may
authorize the Trustee to honor telephone instructions for the redemption of
Units held in book entry form. Units represented by Certificates may not be
redeemed by telephone. The proceeds of Units redeemed by telephone will be sent
by check either to the Unitholder at the address specified on his account or to
a financial institution specified by the Unitholder for credit to the account of
the Unitholders. 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 Securities on the date of tender. Unitholders
should check with the Trustee or their broker to determine the Redemption Price
before tendering Units.
The "DATE OF TENDER" is deemed to be the date on which the request for
redemption of Units is received in proper form by the Trustee, except that as
regards a redemption request received after 4:00 p.m. eastern time, or as of any
earlier closing time on a day on which the Exchange is scheduled in advance to
close at such earlier time, or on any day on which the Exchange is normally
closed, the date of tender is the next day on which such Exchange is normally
open for trading and such request will be deemed to have been made on such day
and the redemption will be effected at the Redemption Price computed on that
day.
Accrued interest paid on redemption shall be withdrawn from the Interest
Account of the appropriate Trust or, if the balance therein is insufficient,
from the Principal Account of such Trust. All other amounts paid on redemption
shall be withdrawn from the Principal Account. The Trustee is empowered to sell
underlying Securities of a Trust in order to make funds available for
redemption. (See "REMOVAL OF SECURITIES FROM THE TRUSTS.") Units so redeemed
shall be cancelled. To the extent that Securities are sold from the Trusts, the
size and diversity of such Trust will be reduced. Such sales may be required at
a time when Securities would not otherwise be sold and might result in lower
prices than might otherwise be realized.
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The Redemption Price is determined on the basis of the BID prices of the
Securities in each Trust, while the initial Public Offering Price of Units will
be determined on the basis of the OFFERING prices of the Securities as of 4:00
p.m. eastern time on any day on which the Exchange is normally open for trading,
or as of any earlier closing time on a day on which the Exchange is scheduled in
advance to close at such earlier time, and such determination is made. As of any
given time, the difference between the bid and offering prices of such
Securities may be expected to average 1/2% to 2% of principal amount. In the
case of actively traded Securities, the difference may be as little as 1/4 to
1/2 of 1%, and in the case of inactively traded Securities such difference
usually will not exceed 3%.
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 on 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 Securities 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."
PURCHASE OF UNITS 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 "REDEMPTION.") 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.
REMOVAL OF SECURITIES FROM THE TRUSTS
Securities will be removed from a Trust as they mature or are redeemed by
the issuers thereof. The Indenture also empowers the Trustee to sell Securities
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
Securities in each Trust to be sold in such circumstances. In deciding which
Securities should be sold the Sponsor intends to consider, among other things,
such factors as: (1) market conditions; (2) market prices of the Securities; (3)
the effect on income distributions to Unitholders of the sale of various
Securities; (4) the effect on principal amount of underlying Securities per Unit
of the sale of various Securities; (5) the financial condition of the issuers;
and (6) the effect of the sale of various Securities on the investment character
of the Trust. Such sales, if required, could result in the sale of Securities by
the Trustee at prices less than original cost to the Trust. To the extent
Securities are sold, the size and diversity of such Trust will be reduced.
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In addition, the Sponsor is empowered to direct the Trustee to liquidate
Securities 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 Securities, or an adverse change in market, revenue or credit
factors affecting the investment character of the Securities. If a default in
the payment of the principal of and/or interest on any of the Securities occurs,
and if the Sponsor fails to instruct the Trustee whether to sell or continue to
hold such Securities within 30 days after notification by the Trustee to the
Sponsor of such default, the Indenture provides that the Trustee shall liquidate
said Securities forthwith and shall not be liable for any loss so incurred. The
Sponsor may also direct the Trustee to liquidate Securities in a Trust if the
Securities 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 Securities on their
redemption date.
Except as stated in "COMPOSITION OF THE TRUST" regarding the deposit of
additional securities or the limited right of substitution of Replacement
Securities for Failed Securities, and except for refunding Securities that may
be exchanged for Securities under certain conditions specified in the Indenture,
the Indenture does not permit either the Sponsor or the Trustee to acquire or
deposit securities either in addition to, or in substitution for, any of the
Securities initially deposited in a Trust.
INFORMATION ABOUT THE TRUSTEE
The Trustee and its address are stated on the back cover of this Part B of
the Prospectus. The Trustee is subject to supervision and examination by the
Federal Deposit Insurance Corporation, the Board of Governors of the Federal
Reserve System and either the Comptroller of the Currency or state banking
authorities.
LIMITATIONS ON LIABILITIES OF SPONSOR AND TRUSTEE
The Sponsor and the Trustee shall be under no liability to Unitholders for
taking any action or for refraining from any action in good faith pursuant to
the Indenture, or for errors in judgment, but shall be liable only for their own
negligence, lack of good faith or willful misconduct. The Trustee shall not be
liable for depreciation or loss incurred by reason of the sale by the Trustee of
any of the Securities. 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 Securities or upon the interest thereon or
upon it as Trustee under the Indenture or upon or in respect of any Trust which
the Trustee may be required to pay under any present or future law of the United
States of America or of any other taxing authority having jurisdiction. In
addition, the Indenture contains other customary provisions limiting the
liability of the Trustee.
SUCCESSOR TRUSTEES AND SPONSORS
The Trustee or any successor trustee may resign by executing an instrument
of resignation in writing and filing same with the Sponsor and mailing a copy of
a notice of resignation to all Unitholders then of record. Upon receiving such
notice, the Sponsor is required to promptly appoint a successor trustee. If the
Trustee becomes incapable of acting or is adjudged a bankrupt or insolvent, or a
receiver or other public officer shall take charge of its property or affairs,
the Sponsor may remove the Trustee and appoint a successor by written
instrument. The resignation or removal of a trustee and the appointment of a
successor trustee shall become effective only when the successor trustee accepts
its appointment as such. Any successor trustee shall be a corporation authorized
to exercise corporate trust powers, having capital, surplus and undivided
profits of not less than $5,000,000. Any corporation
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<PAGE>
into which a trustee may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which a trustee shall
be a party, shall be the successor trustee.
If upon resignation of a trustee no successor has been appointed and has
accepted the appointment within 30 days after notification, the retiring trustee
may apply to a court of competent jurisdiction for the appointment of a
successor.
If the Sponsor fails to undertake any of its duties under the Indenture, and
no express provision is made for action by the Trustee in such event, the
Trustee may, in addition to its other powers under the Indenture (1) appoint a
successor sponsor or (2) terminate the Indenture and liquidate the Trusts.
INFORMATION ABOUT THE SPONSOR
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 almost 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 11 regional offices.
To help advisers and investors better understand and more efficiently use an
investment in the Trusts to reach their investment goals, the Sponsor may
advertise and create specific investment programs and systems. For example, such
activities may include presenting information on how to use an investment in the
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.
OTHER INFORMATION
AMENDMENT OF INDENTURE
The Indenture may be amended by the Trustee and the Sponsor without the
consent of any of the Unitholders (1) to cure any ambiguity or to correct or
supplement any provision thereof which may be defective or inconsistent, or (2)
to make such other provisions as shall not adversely affect the Unitholders,
provided, however, that the Indenture may not be amended to permit the deposit
or acquisition of securities either in addition to, or in substitution for any
of the Securities initially deposited in any Trust except as stated in
"COMPOSITION OF THE TRUSTS" regarding the creation of
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additional Units and the limited right of substitution of Replacement Securities
and except for the substitution of refunding securities under certain
circumstances. The Trustee shall advise the Unitholders of any amendment
promptly after execution thereof.
TERMINATION OF INDENTURE
Each Trust may be liquidated at any time by written consent of 100% of the
Unitholders or by the Trustee when the value of such Trust, as shown by any
evaluation, is less than 20% of the aggregate principal amount of Securities
deposited in a Trust during the initial offering period of such Trust and will
be liquidated by the Trustee in the event that Units not yet sold aggregating
more than 60% of the Units originally created are tendered for redemption by the
Sponsor thereby reducing the net worth of such Trust to less than 40% of the
principal amount of the Securities originally deposited in the portfolio. (See
"ESSENTIAL INFORMATION" appearing in Part A of this Prospectus.) The sale of
Securities 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 Securities originally
represented by the Units held by such Unitholder. The Indenture will terminate
upon the redemption, sale or other disposition of the last Securities 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, 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 a Trust maintained by the Trustee. Within a reasonable
time thereafter, the Trustee shall liquidate any Securities 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, has acted as counsel for the
Trustee and special New York tax counsel with respect to the Trusts.
AUDITORS
The "Statement of Condition" and "Schedule of Investments" at Initial Date
of Deposit included in Part A of this Prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report in
Part A of this Prospectus, and are included herein in reliance upon the
authority of said firm as experts in giving said report.
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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 A and Part B of this Prospectus.
This supplement includes additional general information about the Sponsor and
the Trusts.
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NUVEEN UNIT TRUSTS
PROSPECTUS--PART B
MAY 29, 1997, AS AMENDED
JULY 7, 1997
<TABLE>
<C> <S>
Sponsor John Nuveen & Co.
Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
Trustee The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
Telephone: 800-257-8787
Legal Counsel to Chapman and Cutler
Sponsor 111 West Monroe Street
Chicago, IL 60603
Independent Arthur Andersen LLP
Public Accountants 33 West Monroe Street
for the Trusts Chicago, IL 60603
</TABLE>
Except as to statements made herein furnished by the Trustee, the Trustee
has assumed no responsibility for the accuracy, adequacy and completeness of the
information contained in this Prospectus.
This Prospectus does not contain all of the information set forth in the
registration statement and exhibits relating thereto, filed with the Securities
and Exchange Commission, Washington, D.C., under the Securities Act of 1933, and
to which reference is made.
No person is authorized to give any information or to make representations
not contained in this Prospectus or in supplemental information or sales
literature prepared by the Sponsor, and any information or representation not
contained therein must not be relied upon as having been authorized by either
the Trusts, the Trustee or the Sponsor. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, securities in any State to
any Person to whom it is not lawful to make such offer in such state. The Trusts
are registered as a Unit Investment Trusts under the Investment Company Act of
1940, as amended. Such registration does not imply that the Trusts or any of
their Units have been guaranteed, sponsored, recommended or approved by the
United States or any State or agency or officer thereof.
<PAGE>
NUVEEN UNIT TRUSTS
INFORMATION SUPPLEMENT
NUVEEN INSURED CORPORATE TRUST SERIES 1 (LONG-TERM)
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 B of the Prospectus. This Information Supplement has been created to
supplement information contained in the Prospectus.
This Information Supplement is dated May 29, 1997. Capitalized terms have
been defined in the Prospectus.
TABLE OF CONTENTS
<TABLE>
<S> <C>
ACCUMULATION PLAN...................................................................... 2
INFORMATION ABOUT THE SPONSOR.......................................................... 3
DESCRIPTION OF RATINGS................................................................. 5
ESTIMATED CASH FLOWS................................................................... 9
</TABLE>
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ACCUMULATION PLAN
The Sponsor, John Nuveen & Co. Incorporated, is also the principal
underwriter of the Accumulation Funds listed in the following table. Each of
these funds is an open-end, diversified management investment company into which
Unitholders may choose to reinvest Trust distributions automatically, without
any sales charge. Unitholders may reinvest both interest and principal
distributions or principal distributions only. Each Accumulation Fund has
investment objectives which differ in certain respects from those of the Trusts
and may invest in securities which would not be eligible for deposit in the
Trusts. The investment adviser to each Accumulation Fund is a wholly-owned
subsidiary of the Sponsor. Unitholders should contact their financial adviser or
the Sponsor to determine which of the Accumulation Funds they may reinvest into,
as reinvestment in certain of the Accumulation Funds may be restricted to
residents of a particular state or states. Unitholders may obtain a prospectus
for each Accumulation Fund through their financial adviser or through the
Sponsor at (800) 621-7227. For a more detailed description, Unitholders should
read the prospectus of the Accumulation Fund in which they are interested.
The following is a complete list of the Accumulation Funds currently
available, as of the Date of Deposit of this Prospectus, to Unitholders under
the Accumulation Plan. The list of available Accumulation Funds is subject to
change without the consent of any of the Unitholders.
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
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NUVEEN FLAGSHIP MULTISTATE TRUST III
Nuveen Flagship Alabama Municipal Bond Fund
Nuveen Flagship Georgia Municipal Bond Fund
Nuveen Flagship Louisiana Municipal Bond Fund
Nuveen Flagship North Carolina Municipal Bond Fund
Nuveen Flagship South Carolina Municipal Bond Fund
Nuveen Flagship Tennessee Municipal Bond Fund
NUVEEN FLAGSHIP MULTISTATE TRUST IV
Nuveen Flagship Kansas Municipal Bond Fund
Nuveen Flagship Kentucky Municipal Bond Fund
Nuveen Flagship Kentucky Limited Term Municipal Bond Fund
Nuveen Flagship Michigan Municipal Bond Fund
Nuveen Flagship Missouri Municipal Bond Fund
Nuveen Flagship Ohio Municipal Bond Fund
Nuveen Flagship Wisconsin Municipal Bond Fund
Flagship Utility Income Fund
Nuveen Growth and Income Stock Fund
Nuveen Balanced Municipal and Stock Fund
Nuveen Balanced Stock and Bond 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.
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
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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 almost 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.
The Sponsor is also principal underwriter of the registered open-end
investment companies set forth herein under "Accumulation Plan" as well as for
the Golden Rainbow A James Advised Mutual Fund, and acted as co-managing
underwriter of Nuveen Municipal Value Fund, Inc., Nuveen California Municipal
Value Fund, Inc., Nuveen New York Municipal Value Fund, Inc., Nuveen Municipal
Income Fund, Inc., Nuveen Premium Income Municipal Fund, Inc., Nuveen
Performance Plus Municipal Fund, Inc., Nuveen California Performance Plus
Municipal Fund, Inc., Nuveen New York Performance Plus Municipal Fund, Inc.,
Nuveen Municipal Advantage Fund, Inc., Nuveen Municipal Market Opportunity Fund,
Inc. Nuveen California Municipal Market Opportunity Fund, Inc., Nuveen
Investment Quality Municipal Fund, Inc., Nuveen California Investment Quality
Municipal Fund, Inc., Nuveen New York Investment Quality Municipal Fund, Inc.,
Nuveen Insured Quality Municipal Fund, Inc., Nuveen Florida Investment Quality
Municipal Fund, Nuveen Pennsylvania Investment Quality Municipal Fund, Nuveen
New Jersey Investment Quality Municipal Fund, Inc., and the Nuveen Select
Quality Municipal Fund, Inc., Nuveen California Select Quality Municipal Fund,
Inc., Nuveen New York Select Quality Municipal Fund, Inc., Nuveen Quality Income
Municipal Fund, Inc., Nuveen Insured Municipal Opportunity Fund, Inc., Nuveen
Florida Quality Income Municipal Fund, Nuveen Michigan Quality Income Municipal
Fund, Inc., Nuveen Ohio Quality Income Municipal Fund, Inc., Nuveen Texas
Quality Income Municipal Fund, Nuveen California Quality Income Municipal Fund,
Inc., Nuveen New York Quality Income Municipal Fund, Inc., Nuveen Premier
Municipal Income Fund, Inc., Nuveen Premier Insured Municipal Income Fund, Inc.,
Nuveen Select Tax-Free Income Portfolio, Nuveen Select Tax-Free Income Portfolio
2, Nuveen Insured California Select Tax-Free Income Portfolio, Nuveen Insured
New York Select Tax-Free Income Portfolio, Nuveen Premium Income Municipal Fund
2, Inc., Nuveen Select Tax-Free Income Portfolio 3,
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<PAGE>
Nuveen Select Maturities Municipal Fund, Nuveen Insured California Premium
Income Municipal Fund, Inc., Nuveen Arizona Premium Income Municipal Fund, Inc.,
Nuveen Insured Florida Premium Income Municipal Fund, Nuveen Michigan Premium
Income Municipal Fund, Inc., Nuveen New Jersey Premium Income Municipal Fund,
Inc., Nuveen Insured New York Premium Income Municipal Fund, Inc., Nuveen
Premium Income Municipal Fund 4, Inc., Nuveen Pennsylvania Premium Income
Municipal Fund 2, Nuveen Maryland Premium Income Municipal Fund, Nuveen Virginia
Premium Income Municipal Fund, Nuveen Massachusetts Premium Income Municipal
Fund, Nuveen Insured California Premium Income Municipal Fund 2, Inc., Nuveen
Washington Premium Income Municipal Fund, Nuveen Georgia Premium Income
Municipal Fund, Nuveen Missouri Premium Income Municipal Fund, Nuveen
Connecticut Premium Income Municipal Fund, Nuveen North Carolina Premium Income
Municipal Fund, Nuveen California Premium Income Municipal Fund, Nuveen Insured
Premium Income Municipal Fund 2, all registered closed-end management investment
companies. These registered open-end and closed-end investment companies
currently have approximately $35 billion in securities under management. 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 11
regional offices.
To help advisers and investors better understand and more efficiently use an
investment in the Trust to reach their investment goals, the Trust's sponsor,
John Nuveen & Co. Incorporated, may advertise and create specific investment
programs and systems. For example, such activities may include presenting
information on how to use an investment in the Trust, alone or in combination
with an investment in other mutual funds or unit investment trusts sponsored by
Nuveen, to accumulate assets for future education needs or periodic payments
such as insurance premiums. The Trust's sponsor may produce software or
additional sales literature to promote the advantages of using the Trust to meet
these and other specific investor needs.
The Sponsor offers a program of advertising support to registered
broker-dealer firms, banks and bank affiliates ("FIRMS") that sell Trust Units
or shares of Nuveen Open-End Mutual Funds (excluding money-market funds)
("FUNDS"). Under this program, the Sponsor will pay or reimburse the Firm for up
to one half of specified media costs incurred in the placement of advertisements
which jointly feature the Firm and the Nuveen Funds and Trusts. Reimbursements
to the Firm will be based on the number of the Firm's registered representatives
who have sold Fund Shares and/or Trust Units during the prior calendar year
according to an established schedule. Reimbursements under this program will be
made by the Sponsor and not by the Funds or Trusts.
DESCRIPTION OF RATINGS
Standard & Poor's Corporation;. A description of the applicable Standard &
Poor's Corporation rating symbols and their meanings follows:
A Standard & Poor's rating is a current assessment of the creditworthiness
of an obligor with respect to a specific debt obligation. This assessment may
take into consideration obligors such as guarantors, insurers or lessees.
The rating is not a recommendation to purchase, sell or hold a security,
inasmuch as it does not comment as to market price or suitability for a
particular investor.
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. Standard
& Poor's does not perform an audit in
S-5
<PAGE>
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.
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.
S-6
<PAGE>
RATINGS OF INSURED TRUST UNITS
A Standard & Poor's rating on the units of a unit investment trust
(hereinafter referred to collectively as 'units' and 'trusts') is a current
assessment of creditworthiness with respect to the investment held by such
trust. This assessment takes into consideration the financial capacity of the
issuers and of any guarantors, insurers, lessees or mortgagors with respect to
such investments. The assessment, however, does not take into account the extent
to which trust expenses or portfolio asset sales for less than the trust
purchase price will reduce payment to the unitholder of the interest and
principal required to be paid on the portfolio assets. In addition, the rating
is not a recommendation to purchase, sell or hold units, inasmuch as the rating
does not comment as to market price of the units or suitability for a particular
investor.
Units rated "AAA" are composed exclusively of assets that are rated "AAA" by
Standard & Poor's and/or certain short-term investments. Standard & Poor's
defines its AAA rating for such assets as the highest rating assigned by
Standard & Poor's to a debt obligation. Capacity to pay interest and repay
principal is very strong. However, unit ratings may be subject to revision or
withdrawal at any time by Standard & Poor's and each rating should be evaluated
independently of any other rating. Such rating is only available for the first
13 months after the initial Date of Deposit of a Trust, unless the Sponsor
elects to renew the rating.
MOODY'S INVESTORS SERVICE, INC. A brief description of the applicable
Moody's Investors Service, Inc. rating symbols and their meanings follows:
Aaa--Bonds which are rated Aaa are judged to be the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues. Their safety is so absolute that,
with the occasional exception of oversupply in a few specific instances,
characteristically, their market value is affected solely by money market
fluctuations.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities. Their market value is virtually immune to all but money market
influences, with the occasional exception of oversupply in a few specific
instances.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future. The market
value of A-rated bonds may be influenced to some degree by economic performance
during a sustained period of depressed business conditions, but, during periods
of normalcy, A-rated bonds frequently move in parallel with Aaa and Aa
obligations, with the occasional exception of oversupply in a few specific
instances.
Moody's bond rating symbols may contain numerical modifiers of a generic
rating classification. The modifier 1 indicates that the bond ranks at the high
end of its category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of its generic rating
category.
S-7
<PAGE>
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. 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.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
MONTHLY
Total
Principal
& Interest
Dates Payment
- --------------------------------------------------------------------------------------------
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 - 6/15/25........................................................... 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
</TABLE>
S-8
<PAGE>
<TABLE>
<S> <C>
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
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>
S-9
<PAGE>
APPENDIX B
STANDARD & POOR'S CORPORATE RATINGS CRITERIA
A Standard & Poor's issue credit rating is a current opinion of the
creditworthiness of an obligor with respect to a specific financial obligations,
a specific class of financial obligations, or a specific financial program
(including ratings on medium-term note programs and commercial paper programs).
It takes into consideration the creditworthiness of guarantors, insurers, or
other forms of credit enhancement on the obligation and takes into account the
currency in which the obligation is denominated. The issue credit rating is not
a recommendation to purchase, sell, or hold a financial obligation, inasmuch as
it does not comment as to market price or suitability for a particular investor.
Issue credit ratings are based on current information furnished by the
obligors or obtained by Standard & Poor's from other sources it considers
reliable. Standard & Poor's does not perform an audit in connection with any
credit rating and may, on occasion, rely on unaudited financial information.
Credit ratings may be changed, suspended, or withdrawn as a result of changes
in, or unavailability of, such information, or based on other circumstances.
Issue credit ratings can be either long-term or short-term. Short-term
ratings are generally assigned to those obligations considered short-term in the
relevant market. In the U.S., for example, that means obligations with an
original maturity of no more than 365 days--including commercial paper.
Short-term ratings are also used to indicate the creditworthiness of an obligor
with respect to put features on long-term obligations. The result is a dual
rating, in which the short-term rating addresses the put feature, in addition to
the usual long-term rating. Medium-term notes are assigned long-term ratings.
LONG-TERM ISSUE CREDIT RATINGS
Issue credit ratings are based, in varying degrees, on the following
considerations:
1. Likelihood of payment--capacity and willingness of the obligor to
meet its financial commitment on an obligation in accordance with the terms
of the obligation;
2. Nature of and provisions of the obligation; and
3. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization, or other arrangement under the laws
of bankruptcy and other laws affecting creditors' rights.
The issue rating definitions are expressed in terms of default risk. As
such, they pertain to senior obligations of an entity. Junior obligations are
typically rated lower than senior obligations, to reflect the lower priority in
bankruptcy, as noted above. (Such differentiation applies when an entity has
both senior and subordinated obligations, secured and unsecured obligations, or
operating company and
B-1
<PAGE>
holding company obligations.) Accordingly, in the case of junior debt, the
rating may not conform exactly with the category definition.
<TABLE>
<C> <S>
"AAA" An obligation rated "AAA" has the highest rating assigned by Standard & Poor's. The
obligor's capacity to meet its financial commitment on the obligation is extremely
strong.
"AA" An obligation rated "AA" differs from the highest rated obligations only in small
degree. The obligor's capacity to meet its financial commitment on the obligation
is very strong.
"A" An obligation rated "A" is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in higher rated
categories. However, the obligor's capacity to meet its financial commitment on the
obligation is still strong.
"BBB" An obligation rated "BBB" exhibits adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to lead to a weakened
capacity of the obligor to meet its financial commitment on the obligation.
</TABLE>
Obligations rated "BB," "B," "CCC," "CC," and "C" are regarded as having
significant speculative characteristics. "BB" indicates the least degree of
speculation and "C" the highest. While such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.
<TABLE>
<C> <S>
"BB" An obligation rated "BB" is less vulnerable to nonpayment than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse
business, financial, or economic conditions which could lead to the obligor's
inadequate capacity to meet its financial commitment on the obligation.
"B" An obligation rated "B" is more vulnerable to nonpayment than obligations rated
"BB," but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial, or economic conditions will likely
impair the obligor's capacity or willingness to meet its financial commitment on
the obligation.
"CCC" An obligation rated "CCC" is currently vulnerable to nonpayment, and is dependent
upon favorable business, financial, and economic conditions for the obligor to meet
its financial commitment on the obligation. In the event of adverse business,
financial, or economic conditions, the obligor is not likely to have the capacity
to meet its financial commitment on the obligation.
"CC" An obligation rated "CC" is currently highly vulnerable to nonpayment.
"C" The "C" rating may be used to cover a situation where a bankruptcy petition has
been filed or similar action has been taken, but payments on this obligation are
being continued.
"D" An obligation rated "D" is in payment default. The "D" rating category is used when
payments on an obligation are not made on the date due even if the applicable grace
period has not expired, unless Standard & Poor's believes that such payments will
be made during such grace period. The "D" rating also will be used upon the filing
of a bankruptcy petition or the taking of a similar action if payments on an
obligation are jeopardized.
Plus(+) or minus(-): The ratings from "AA" to "CCC" may be modified by the addition of a
plus or minus sign to show relative standing within the major rating categories.
r This symbol is attached to the ratings of instruments with significant noncredit
risks. It highlights risks to principal or volatility of expected returns which are
NOT addressed in the credit rating. Examples include: obligations linked or indexed
to equities, currencies, or commodities; obligations exposed to severe prepayment
risk--such as interest-only or principal-only mortgage securities; and obligations
with unusually risky interest terms, such as inverse floaters.
</TABLE>
B-2
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
A. Bonding Arrangements of Depositor:
The Depositor has obtained the following Stockbrokers Blanket Bonds for
its officers, directors and employees:
INSURER/POLICY NO. AMOUNT
United Pacific Insurance Co. $10,000,000
Reliance Insurance Company
B 74 92 20
Aetna Casualty and Surety $10,000,000
08 F10618BCA
St. Paul Insurance Co. $ 6,000,000
400 HC 1051
<PAGE>
B. This Registration Statement comprises the following papers and documents:
The facing sheet
The Prospectus
The signatures
Consents of Counsel
The following exhibits:
1.1(a) Copy of Standard Terms and Conditions of Trust between John Nuveen &
Co. Incorporated, Depositor, and The Chase Manhattan Bank, Trustee
(to be supplied by amendment).
1.1(b) Trust Indenture and Agreement (to be supplied by amendment).
1.2* Copy of Certificate of Incorporation, as amended, of John Nuveen &
Co. Incorporated, Depositor.
1.3** Copy of amendment of Certificate of Incorporation changing name of
Depositor to John Nuveen & Co. Incorporated.
2.1 Copy of Certificate of Ownership (included in Exhibit 1.1(a) and
incorporated herein by reference).
3.1 Opinion of counsel as to legality of securities being registered (to
be supplied by amendment).
3.2 Opinion of counsel as to Federal income tax status of securities
being registered (to be supplied by amendment).
4.1 Consent of Standard & Poor's Corporation (to be supplied by
amendment).
4.2 Consent of Kenny S & P Evaluation Services (to be supplied by
amendment).
4.3 Consent of Carter, Ledyard & Milburn (to be supplied by amendment).
6.1 List of Directors and Officers of Depositor (to be supplied
by amendment).
_________
* Incorporated by reference to Form N-8B-2 (File No. 811-1547) filed on
behalf of Nuveen Tax-Free Unit Trust, Series 16.
** Incorporated by reference to Form N-8B-2 (File No. 811-2198) filed on
behalf of Nuveen Tax-Free Unit trust, Series 37.
-2-
<PAGE>
C. EXPLANATORY NOTE
The Registration Statement will contain multiple separate prospectuses.
Each Prospectus will relate to an individual unit investment trust and will
consist of a Part A, a Part B and an Information Supplement. Each prospectus
will be identical with the exception of the respective Part A which will
contain the financial information specific to such underlying unit investment
trust.
D. UNDERTAKINGS
1. With the exception of the information included in the state specific
appendices to the Information Supplement, which will vary depending upon the
make-up of a Fund or updated to reflect current events, any amendment to a
Fund's Information Supplement will be subject to the review of the staff of
the Securities and Exchange Commission prior to distribution; and
2. The Information Supplement to the Trust will not include third party
financial information.
-3-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Nuveen Unit Trust, Series 2, has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized in the City of Chicago and State of Illinois on July 25, 1997.
NUVEEN UNIT TRUST, 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
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated:
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 ) July 21, 1997
Executive Vice President )
O. Walter Renfftlen Vice President and Controller )
(Principal Accounting Officer))
___________
* 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, Renfftlen, Dean and
Schwertfeger were filed as Exhibit 6 to Form N-8B-2 (File No. 811-08103).
-4-
<PAGE>
CONSENT OF CHAPMAN AND CUTLER
The consent of Chapman and Cutler to the use of its name in the
Prospectus included in this Registration Statement will be contained in its
opinions to be filed as Exhibits 3.1 and 3.2 to the Registration Statement.
CONSENT OF STATE COUNSEL
The consents of special counsel to the Fund for state tax matters to the
use of their names in the Prospectus included in the Registration Statement
will be filed as Exhibit 3.3 with Amendment No. 1 to the Registration
Statement.
CONSENT OF STANDARD & POOR'S CORPORATION
The consent of Standard & Poor's Corporation to the use of its name in
the Prospectus included in this Registration Statement will be filed as
Exhibit 4.1 to the Registration Statement.
CONSENT OF KENNY S & P EVALUATION SERVICES
The consent of Kenny S & P Evaluation Services to the use of its name in
the Prospectus included in this Registration Statement will be filed as
Exhibit 4.2 to the Registration Statement.
CONSENT OF CARTER, LEDYARD & MILBURN
The consent of Carter, Ledyard & Milburn to the use of its name in the
Prospectus included in this Registration Statement will be filed as Exhibit
4.3 to the Registration Statement.
CONSENT OF ARTHUR ANDERSEN LLP
The consent of Arthur Andersen LLP to the use of its report and to the
reference to such firm in the Prospectus included in this Registration
Statement will be filed by amendment.
-5-
<PAGE>
MEMORANDUM
Re: Nuveen Unit Trust, Series 2
----------------------------
The list of securities comprising each trust of the fund, the
evaluation, record and distribution dates and other changes pertaining
specifically to the new series, such as size and number of units of the
trusts in the fund and the statement of condition of the new fund will be
filed by amendment.
1940 ACT
FORMS N-8A AND N-8B-2
Form N-8A and Form N-8B-2 were filed in respect of Nuveen Unit Trust
Series 1 (File No. 811-08103).
1933 ACT
THE INDENTURE
The form of the proposed Trust Indenture and Agreement is expected to be
filed with the amendment to Nuveen Unit Trust, Series 1.
Chicago, Illinois
July 25, 1997
