<PAGE>
FILE NO. 333-96067
40 ACT FILE NO. 811-2271
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-6
For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on
Form N-8B-2
<TABLE>
<S> <C> <C>
A. Exact name of Trust: NUVEEN TAX-FREE UNIT TRUST, SERIES 1149
B. Name of Depositor: JOHN NUVEEN & CO. INCORPORATED
C. Complete address of Depositor's principal executive offices:
333 West Wacker Drive
Chicago, Illinois 60606
D. Name and complete address of agents for service:
JOHN NUVEEN & CO. INCORPORATED
Attn: Alan G. Berkshire
333 West Wacker Drive
Chicago, Illinois 60606
CHAPMAN AND CUTLER
Attn: Eric F. Fess
111 West Monroe Street
Chicago, Illinois 60603
It is proposed that this filing will become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/ / on February 16, 2000 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ / on February 16, 2000 pursuant to paragraph (a) of rule 485 or 486
E. Title of securities being registered: Units of undivided fractional beneficial interest.
F. Approximate date of proposed sale to the public: As soon as practicable after the
effective date of the Registration Statement.
/X/ Check box if it is proposed that this filing will become effective on February 16, 2000
at 1:30 P.M. pursuant to Rule 487.
</TABLE>
<PAGE>
A
[LOGO]
Nuveen Arizona
Insured Trust 64
<TABLE>
<S> <C>
CUSIP NUMBERS:
MONTHLY: 67102A 434
QUARTERLY: 67102A 442
SEMI-ANNUALLY: 67102A 459
</TABLE>
Prospectus Part A dated February 16, 2000
- --------------------------------------------------------------------------------
Overview
Nuveen Arizona Insured Trust 64 (the "Trust") is a series of the Nuveen Tax-Free
Unit Trust, Series 1149. The Trust is a unit investment trust consisting of a
portfolio of bonds and seeks to provide income exempt from Federal and Arizona
income tax and to conserve capital.
THIS PART A PROSPECTUS MAY NOT BE DISTRIBUTED UNLESS ACCOMPANIED BY PART B OF
THE NUVEEN TAX-FREE UNIT TRUSTS PROSPECTUS WHICH IS DATED SEPTEMBER 1, 1998.
ADDITIONAL INFORMATION ABOUT THE TRUST MAY BE FOUND IN THE INFORMATION
SUPPLEMENT WHICH CAN BE OBTAINED FROM THE TRUSTEE AT 4 NEW YORK PLAZA, NEW YORK,
NY 10004-2413; (800) 257-8787.
<TABLE>
<S> <C>
Contents
1 Overview 6 Tax Status
2 Trust Summary and Financial Highlights 7 Volume Incentives
2 The Trust 8 Purchase Programs
2 Investment Objectives 8 Organization Expenses
2 The Portfolio 9 Schedule of Investments
3 Essential Information 10 Statement of Condition
5 Interest Distributions 11 Report of Independent Public Accountants
5 Risk Factors
</TABLE>
<TABLE>
<S> <C>
NOT FDIC MAY LOSE VALUE
INSURED NO BANK GUARANTEE
</TABLE>
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.
1
<PAGE>
TRUST SUMMARY AND FINANCIAL HIGHLIGHTS
THE TRUST
Arizona Insured Trust 64 (the "Trust") consists of a portfolio of
interest-bearing obligations issued by or on behalf of the State of Arizona,
certain United States Territories or authorities and political subdivisions
thereof which, in the opinion of recognized bond counsel to the issuing
authorities, provide income which is exempt from Federal income tax and Arizona
income tax, to the extent indicated below.
INVESTMENT OBJECTIVES
The objectives of the Trust are income exempt from Federal and state income
taxes, and conservation of capital. The objectives are, of course, dependent
upon the continuing ability of the issuers, obligors and/or insurers to meet
their respective obligations.
THE PORTFOLIO
The Portfolio of the Trust consists of 7 obligations issued by entities
located in Arizona. The bonds in the Trust are either general obligations of the
governmental entity issuing them and are backed by the taxing power thereof or
are payable as to principal and interest from the income of a specific project
or authority and are not supported by the issuer's power to levy taxes. The
sources of payment for the bonds are divided as follows:
<TABLE>
<CAPTION>
NUMBER OF PORTFOLIO
ISSUES PURPOSE OF ISSUE PERCENTAGE
- --------- ---------------- ----------
<C> <S> <C>
2 Health Care Facility Revenue 28.5%
1 Dedicated-Tax Supported Revenue 14.3
1 General Obligation 14.3
1 Multi-Family Housing Revenue 14.3
1 Power Revenue 14.3
1 Transportation 14.3
</TABLE>
Approximately 14.3% of the aggregate principal amount of the bonds in the
Trust (accounting for approximately 15.1% of the aggregate offering price of the
bonds) are original issue discount bonds. See "Risk Factors" herein and "SUMMARY
OF PORTFOLIOS" in Part B of this Prospectus for a discussion of the
characteristics of such obligations and of the risks associated therewith.
All of the bonds in the Trust are covered by policies of insurance obtained
from the MBIA Insurance Corporation guaranteeing payment of principal and
interest when due. As a result of such insurance, the bonds in the Trust have
received a rating of "Aaa" by Moody's, "AAA" by Fitch, and/or "AAA" by
Standard & Poor's. Insurance does not guarantee the market value of the bonds or
of Trust Units.
2
<PAGE>
ESSENTIAL INFORMATION, ON THE BUSINESS DAY PRIOR TO THE DATE OF DEPOSIT,
FEBRUARY 15, 2000
Sponsor and Evaluator....... John Nuveen & Co. Incorporated
Trustee........................... The Chase Manhattan Bank
-------------------------------------------
<TABLE>
<S> <C>
Principal Amount of Bonds in Trust.......................... $ 1,750,000
Number of Units............................................. 17,500
Fractional Undivided Interest in Trust Per Unit............. 1/17,500
Public Offering Price--Less than 500 Units
Aggregate Offering Price of Bonds in Trust.............. $ 1,575,067
Divided by Number of Units.............................. $ 90.00
Plus Sales Charge 4.9% (5.152% of the Aggregate Offering
Price of the Bonds per Unit)........................... $ 4.64
Plus Maximum Organization Costs Per Unit(1)............. $ .25000
Public Offering Price Per Unit(2)....................... $ 94.89
Redemption Price Per Unit (exclusive of accrued interest)... $ 89.88
Sponsor's Initial Repurchase Price Per Unit (exclusive of
accrued interest)......................................... $ 90.25
Excess of Public Offering Price Per Unit over Redemption
Price Per Unit............................................ $ 5.01
Excess of Public Offering Price Per Unit over Sponsor's
Repurchase Price Per Unit................................. $ 4.64
Average Maturity of Bonds in the Trust(3)................... 26.0 years
</TABLE>
The income, expense and distribution data set forth below have been calculated
for Unitholders receiving monthly, quarterly or semi-annual distribution
options.
<TABLE>
<CAPTION>
MONTHLY QUARTERLY SEMI-ANNUAL
--------- ---------- ------------
<S> <C> <C> <C>
Calculation of Estimated Net Annual Interest Income Per Unit
Annual Interest Income(4)............................... $ 5.2750 $ 5.2750 $ 5.2750
Less Estimated Annual Expense........................... $ .2392 $ .2072 $ .1882
--------- --------- ----------
Estimated Net Annual Interest Income(5)................. $ 5.0358 $ 5.0678 $ 5.0868
Daily Rate of Accrual Per Unit.............................. $ .01398 $ .01407 $ .01413
ESTIMATED CURRENT RETURN(6)................................. 5.31% 5.34% 5.36%
ESTIMATED LONG TERM RETURN(6)............................... 5.48% 5.51% 5.53%
Trustee's Annual Fees(7).................................... $ 1.5964 $ 1.2764 $ 1.0864
</TABLE>
<TABLE>
<S> <C>
Date of Deposit............................................................................February 16, 2000
Settlement Date............................................................................February 22, 2000
Mandatory Termination Date..............................See "OTHER INFORMATION" in Part B of this Prospectus
Minimum Value of Each Trust.............................See "OTHER INFORMATION" in Part B of this Prospectus
Sponsor's Annual Evaluation Fee(8)................................$0.17 per $1,000 principal amount of Bonds
</TABLE>
3
<PAGE>
NOTES TO ESSENTIAL INFORMATION:
(1) A portion of the Public Offering Price consists of an amount sufficient to
reimburse the Sponsor for all or a portion of the costs of establishing the
Trust. These costs have been estimated at $.25000 per Unit for the Trust. A
payment will be made as of the earlier of six months after the Initial Date
of Deposit or the end of the initial offering period to an account
maintained by the Trustee from which the obligations of the investors to the
Sponsor are dispensed. To the extent that actual organization costs are
greater than the estimated amount, only the estimated organization costs
added to the Public Offering Price will be reimbursed to the Sponsor and
deducted from the assets of the Trust.
(2) Units are offered at the Public Offering Price plus accrued interest from
the preceding Record Date to, but not including, the date of settlement
(normally three business days after purchase). The Date of Deposit of the
Fund has been designated as the First Record Date for all plans of
distribution of the Trust and, accordingly, for Units purchased on the Date
of Deposit, $.08 of accrued interest to the Settlement Date will be added to
the Public Offering Price. (See "WHAT IS ACCRUED INTEREST?" in Part B of
this Prospectus.) The evaluation time for purpose of sale, purchase or
redemption of Units is 4 p.m. Eastern time or as of any earlier time at
which the New York Stock Exchange closes. (See "HOW IS THE PUBLIC OFFERING
PRICE DETERMINED?" in Part B of this Prospectus.)
(3) The Average Maturity of bonds in the Trust is calculated based upon the
stated maturities of the bonds in the Trust (or, with respect to bonds for
which funds or securities have been placed in escrow to redeem such bonds on
a stated call date, based upon such call date). The Average Maturity of
bonds in the Trust may increase or decrease from time to time as bonds
mature or are called or sold.
(4) Assumes delivery of all bonds. (See "COMPOSITION OF TRUSTS" appearing in
Part B of this Prospectus.) Interest income does not include accretion of
original issue discount on "zero coupon" bonds, Stripped Obligations or
other original issue discount bonds. (See "SUMMARY OF PORTFOLIOS" in Part B
of this Prospectus.)
(5) The amount and timing of interest distributions from the Trust under the
various plans of distribution are set forth below. It is anticipated that
the amount of interest to be distributed per Unit in each year under each
plan of distribution will initially be substantially equal to the Estimated
Net Annual Interest Income per Unit for that plan. The amount of interest to
be distributed annually per Unit, will generally change as bonds are
redeemed, mature or are sold or as fees and expenses increase or decrease.
(6) Estimated Long Term Return for the Trust represents the average of the
yields to maturity (or call) of the bonds in the Trust's portfolio
calculated in accordance with accepted bond practices and adjusted to
reflect a compounding factor, expenses and sales charges. Estimated Current
Return is computed by dividing the Net Annual Interest Income per Unit by
the Public Offering Price, and in contrast to Estimated Long Term Return
does not reflect the amortization of premium or accretion of discount, if
any. For more information see "WHAT ARE ESTIMATED LONG TERM RETURN AND
ESTIMATED CURRENT RETURN?" in Part B of this Prospectus.
(7) Each Trustee annual fee is per $1,000 principal amount of the underlying
bonds in the Trust for that portion of the Trust that represents a
particular plan of distribution.
(8) The Sponsor's Annual Evaluation Fee may, from time to time, be adjusted
provided that the total adjustment upward does not, at the time of such
adjustment, exceed the percentage of the total increase, after the date
hereof, in consumer prices for services as measured by the United States
Department of Labor Consumer Price Index entitled "All Services Less Rent"
or if such index no longer exists, a comparable index. The consent or
concurrence of any Unitholder shall not be required for any such adjustment
or increase.
4
<PAGE>
INTEREST DISTRIBUTIONS
Details of interest distributions per Unit of the Trust under the various
plans appear in the following table based upon estimated Net Annual Interest
Income at the Date of Deposit:
<TABLE>
<CAPTION>
NORMAL
DISTRIBUTIONS
2000 PER YEAR
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------- -------------
Record Date*............................................... 4/1 5/1 8/1 11/1
Distribution Date.......................................... 4/15 5/15 8/15 11/15
- -------------------------------------------------------------------------------------------------------------------------
Monthly Distribution Plan.................................. $ .6291(1) ---- $.4194 every month ---- $5.0358
Quarterly Distribution Plan................................ $ .6291(1) $ .4221(2) $1.2663 $1.2663 $5.0678
Semi-Annual Distribution Plan.............................. $ .6291(1) $ .4239(3) $2.5434 $5.0868
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Record Dates for semi-annual distributions are May 1 and November 1; for
quarterly distributions, they are February 1, May 1, August 1 and
November 1. Record Dates for monthly distributions are the first day of each
month. Distribution Dates under each distribution plan are the fifteenth day
of the month in which the respective Record Date occurred. For additional
information see "WHEN ARE DISTRIBUTIONS MADE TO UNITHOLDERS?" in Part B of
this Prospectus.
(1) The first distribution will be paid to all Unitholders, regardless of the
distribution plan selected. Such distribution may be more or less than a
regular monthly distribution.
(2) The second distribution under the quarterly distribution plan represents a
1-month distribution; subsequent quarterly distributions will be regular
3-month distributions.
(3) The second distribution under the semi-annual distribution plan represents a
1-month distribution; subsequent semi-annual distributions will be regular
6-month distributions.
RISK FACTORS
Risk is inherent in all investing. Investing in a unit trust involves risk,
including the risk that you may receive little or no return on your investment
or even that you may lose part or all of your investment. Therefore, before
investing you should consider carefully the following risks that you assume when
you invest in this Trust. Because of these and other risks, the Trust should
only represent a portion of your overall portfolio and you should consider an
investment in the Trust to be a part of a longer term investment strategy that
will provide the best results when followed over a number of years. There is no
guarantee that the Trust will achieve its investment objective.
MARKET RISK: the risk that the market value of a bond or the Trust may
change rapidly and unpredictably, causing the bond or the Trust to be worth less
than its original price. Volatility in the market price of the bonds in the
Trust changes the value of the Units of the Trust. Market value may be affected
by a variety of factors including, among others, changes in the perceptions
about the issuers, changes in interest rates or inflation, changes in the
ratings of the issuers or changes in the financial condition of the issuers of
the bonds. Because the Trust is not managed, bonds in the Trust will generally
not be sold in response to market fluctuations, although bonds may be sold in
certain limited circumstances. Accordingly, an investor in the Trust may be
exposed to more market risk than an investor in certain managed investment
vehicles.
INFLATION RISK: the risk that the value of assets or income from investments
will be less in the future as inflation decreases the value of money. As
inflation increases, the value of the Trust's assets can decline as can the
value of the Trust's distributions.
INTEREST RATE RISK: the risk that bonds will decline in value because of a
rise in interest rates. Generally, bonds will increase in value when interest
rates decline and decrease in value when interest rates rise. Typically, bonds
with longer periods before maturity are more sensitive to interest rate changes.
CREDIT RISK: the risk that an issuer of a bond or an insurer is unable to
meet its obligation to make interest and principal payments.
CALL RISK: the risk that bonds can be prepaid or "called" by the issuer
before their stated maturity. If bonds are called, your income will decline and
you may not be able to reinvest the money you receive at as high a yield. Also,
an early call at par of a premium bond will reduce your return. Bonds in the
Trust are more likely to be called when interest rates decline. This would
result in early returns of principal to you and may result in early termination
of the Trust. The dates and prices upon which the bonds are first subject to
optional calls are provided in "Schedule of Investments." The bonds may also be
subject to special or extraordinary call provisions and "mandatory put" features
that may cause the bonds to be removed from the Trust prior to maturity.
LIQUIDITY RISK: the risk that the value of the bonds may be reduced if
trading in the bonds is limited or absent. Because the bonds will generally
trade in the over-the-counter market, there can be no assurance that a liquid
trading market will exist.
BOND QUALITY RISK: the risk that a reduction in a bond's rating may decrease
its value and the value of your investment in the Trust.
REDUCED DIVERSIFICATION RISK: the risk that the diversification of your
investment is reduced as bonds in the Trust are called, sold or mature. This
reduction in diversification may increase the risk of loss and increase your
share of Trust expenses.
5
<PAGE>
LITIGATION AND LEGISLATION RISKS: the risk that future litigation or
legislation could affect the value of the Trust. In particular, future tax
legislation could affect the value of the Trust by reducing tax rates, imposing
a flat or other form of tax, exempting investment income from tax or changing
the tax status of the bonds.
CONCENTRATION RISK: the risk that the Trust is less diversified, and
therefore subject to greater risk of loss, because the Trust is concentrated in
a certain type of bond. Typically, when a certain type of bond makes up 25% or
more of the portfolio, the Trust is considered to be "concentrated" in that bond
type.
The Trust is considered to be concentrated in bonds of Health Care Facility
Revenue Issuers whose revenues are subject to certain risks including increased
governmental regulation, fluctuating occupancy levels and increased competition.
The Trust is concentrated in the bonds of issuers located in the State of
Arizona. Such concentration may expose Unitholders to additional risks. The
financial condition of the State of Arizona is affected by various national and
local, economic, social and environmental policies and conditions and may have
an effect on the value of the Units. Additionally, Constitutional and statutory
limitations imposed on the State and its local governments concerning taxes,
bond indebtedness and other matters may constrain the revenue-generating
capacity of the State and its local governments and, therefore, the ability of
the issuers of the bonds to satisfy their obligations. Historically, the State
has experienced significant revenue shortfalls.
The economic vitality of the State and its various regions and, therefore,
the ability of the State and its local governments to satisfy the bonds, are
affected by numerous factors. The economy of the State continues to be dependent
on services, tourism and manufacturing. These sectors tend to be cyclical. In
1986, the value of Arizona real estate began a steady decline, reflecting a
market which had been overbuilt in the previous decade with a resulting surplus
of completed inventory. This decline adversely affected both the construction
industry and those Arizona financial institutions which had aggressively pursued
many facets of real estate lending. In the near future, Arizona's financial
institutions are likely to continue to experience problems until the excess
inventories of commercial and residential properties are resolved.
The State is a party to numerous lawsuits in which an adverse final decision
could materially affect the State's governmental operations and consequently its
ability to pay debt service on its obligations.
Further information concerning the various types of bonds contained in the
Trust is available in "SUMMARY OF PORTFOLIOS" in Part B of the Prospectus. An
additional discussion of potential risks may be obtained upon written or
telephonic request to the Trustee as described in "OTHER
INFORMATION--Supplemental Information" appearing in Part B of this Prospectus.
TAX STATUS
For a discussion of the Federal tax status of income earned on Trust Units,
see "WHAT IS THE TAX STATUS OF UNITHOLDERS?" in Part B of this Prospectus.
The assets of the Trust will consist of interest-bearing obligations issued
by or on behalf of the State of Arizona (the "State"), its political
subdivisions and authorities (the "Arizona Bonds"), and certain bonds issued by
Puerto Rico authorities (the "Possession Bonds") (collectively the Arizona Bonds
and Possession Bonds shall be referred to herein as the "Bonds"), provided the
interest on such Bonds received by the Trust is exempt from State income taxes.
Neither the Sponsor nor its counsel have independently examined the Bonds to
be deposited in and held in the Trust. However, although no opinion is expressed
herein regarding such matters, it is assumed that: (i) the Bonds were validly
issued, (ii) the interest thereon is excludable from gross income for federal
income tax purposes and (iii) interest on the Bonds, if received directly by a
Unitholder would be exempt from the Arizona income tax (the "Arizona Income
Tax"). We have assumed that at the respective times of issuance of the Bonds,
opinions relating to the validity thereof and to the exemption of interest
thereon from Federal income tax were rendered by bond counsel to the respective
issuing authorities. In addition, with respect to the Arizona Bonds, bond
counsel to the issuing authorities rendered opinions that the interest on the
Bonds is exempt from the Arizona Income Tax. Neither the Sponsor nor its counsel
has made any review for the Trust of the proceedings relating to the issuance of
the Bonds or of the bases for the opinions rendered in connection therewith.
In the opinion of Chapman and Cutler counsel to the Sponsor, under existing
law:
For Arizona income tax purposes, each Unitholder will be treated as the
owner of a pro rata portion of the Trust, and the income of the Trust
therefore will be treated as the income of the Unitholder under State law.
For Arizona income tax purposes, interest on the Arizona Bonds which is
excludable from Federal gross income and which is exempt from Arizona income
taxes when received by the Trust, and which would be excludable from Federal
gross income and exempt from Arizona income taxes if received directly by a
6
<PAGE>
Unitholder, will retain its status as tax-exempt interest when received by
the Trust and distributed to the Unitholders.
To the extent that interest derived from the Trust by a Unitholder with
respect to the Arizona Bonds is excludable from Federal gross income, such
interest will not be subject to Arizona income taxes.
Interest on the Possession Bonds which is excludible from gross income
for federal income tax purposes and is exempt from state and local taxation
pursuant to federal law when received by the Trust will be exempt from
Arizona income taxation and therefore will not be includible in the income
of the Unitholders for income tax purposes when distributed by the Trust and
received by the Unitholders.
Each Unitholder will receive taxable gain or loss for Arizona income tax
purposes when Bonds held in the Trust are sold, exchanged, redeemed or paid
at maturity, or when the Unitholder redeems or sells Units, at a price that
differs from original cost as adjusted for amortization of Bond discount or
premium and other basis adjustments, including any basis reduction that may
be required to reflect a Unitholder's share of interest, if any, accruing on
Bonds during the interval between the Unitholder's settlement date and the
date such Bonds are delivered to the Trust, if later.
Amounts paid by the Insurer under an insurance policy or policies issued
to the Trust, if any, with respect to the Bonds in the Trust which represent
maturing interest on defaulted Bonds held by the Trustee will be exempt from
State income taxes if, and to the same extent as, such interest would have
been so exempt if paid by the issuer of the defaulted Bonds provided that,
at the time such policies are purchased, the amounts paid for such policies
are reasonable, customary and consistent with the reasonable expectation
that the issuer of the Bonds, rather than the insurer, will pay debt service
on the Bonds.
Arizona law does not permit a deduction for interest paid or incurred on
indebtedness incurred or continued to purchase or carry Units in the Trust,
the interest on which is exempt from Arizona income taxes. Special rules
apply to financial institutions, and such institutions should consult their
own tax advisors with respect to deductions of interest.
Neither the Bonds nor the Units will be subject to Arizona property
taxes, sales tax or use tax.
Chapman and Cutler has expressed no opinion with respect to taxation
under any other provision of Arizona law. Ownership of the Units may result
in collateral Arizona tax consequences to certain taxpayers. Prospective
investors should consult their tax advisors as to the applicability of any
such collateral consequences.
VOLUME INCENTIVES
The Sponsor has made substantial enhancements to the volume incentive
program for dealer firms currently described in Part B of this Prospectus. The
following information replaces any discussion of volume incentives in Part B.
Volume incentives can be earned as a marketing allowance by eligible dealer
firms who reach cumulative firm sales or sales arrangement levels of a specified
dollar amount of Nuveen unit trusts (other than any series of the Nuveen--The
Dow 5-SM- Portfolios and Nuveen--The Dow 10-SM- Portfolios) sold in the primary
or secondary market during any quarter as set forth in the table below. Eligible
dealer firms are dealers that are providing marketing support for Nuveen unit
trusts in the form of 1) distributing or permitting the distribution of
marketing materials and other product information, 2) providing Nuveen
representatives access to the dealer's branch offices, and 3) generally
facilitating the placement of orders by the dealer's registered representatives
such as putting Nuveen unit trusts on their order entry screens. Eligible firms
will not include firms that solely provide clearing services to broker/dealer
firms. For purposes of determining the applicable volume incentive rate for a
given quarter, the dollar amount of all units sold over the current and three
previous quarters (the "Measuring Period") is aggregated. The volume incentive
received by the dealer firm will equal the dollar amount of units sold during
the current quarter times the highest applicable rate for the Measuring Period.
For firms that meet the necessary volume level, volume incentives may be given
on all applicable trades originated from or by that firm.
<TABLE>
<CAPTION>
TOTAL DOLLAR AMOUNT SOLD
OVER MEASURING PERIOD VOLUME INCENTIVE
- -------------------------- --------------------------------
<S> <C>
$ 5,000,000 to $ 9,999,999 0.10% of current quarter sales
$10,000,000 to $19,999,999 0.125% of current quarter sales
$20,000,000 to $49,999,999 0.1375% of current quarter sales
$50,000,000 or more 0.15% of current quarter sales
</TABLE>
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.
7
<PAGE>
PURCHASE PROGRAMS
Notwithstanding anything to the contrary in Part B of the Prospectus:
1. Units may NOT 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.,
Rittenhouse Financial Services, Inc. and The John Nuveen Company, including
in each case these individuals and their immediate family members (as
defined in this Prospectus).
2. Units may be purchased in the primary market with sales charges of
1.70% of the Public Offering Price for National and State Long Term Trusts,
1.35% of the Public Offering Price for Long Intermediate Trusts, 1.20% of
the Public Offering Price for National and State Intermediate Trusts, 1.0%
of the Public Offering Price for National and State Short Intermediate
Trusts and 1.0% of the Public Offering Price for Short Term Trusts by:
(1) investors who purchase Units through registered investment advisers,
certified financial planners and registered broker-dealers who in each case
either charge periodic fees for financial planning, investment advisory or
asset management services, or provide such services in connection with the
establishment of an investment account for which a comprehensive "wrap fee"
charge is imposed, (2) bank trust departments investing funds over which
they exercise exclusive discretionary investment authority and that are held
in a fiduciary, agency, custodial or similar capacity; (3) any person who
for at least 90 days, has been an officer, director or bona fide employee of
any firm offering Units for sale to investors, (4) officers and directors of
bank holding companies that make Units available directly or through
subsidiaries or bank affiliates, (5) officers or directors and bona fide,
full-time employees of Nuveen, Nuveen Advisory Corp., Nuveen Institutional
Advisory Corp., Rittenhouse Financial Services, Inc., and The John Nuveen
Company, including in each case these individuals and their spouses, minor
children, and parents, however, purchases by parents must be made through a
registered broker-dealer, and (6) any person who for at least 90 days, has
been an officer, director or bona fide employee of any vendor who provides
services to the Sponsor and who purchases Units through a registered
broker-dealer (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.
3. Sales charge discounts are no longer available for quantity
purchases of 50,000 or more Units (or $5,000,000). The last available
breakpoint is now for purchases of 25,000 or more Units (or $2,500,000).
ORGANIZATION EXPENSES
You will bear all or a portion of the expenses incurred in organizing your
Trust including the 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 the Trust portfolio, the
initial evaluation, legal fees, the initial fees and expenses of the Trustee and
any nonmaterial out-of-pocket expenses. Notwithstanding anything to the contrary
in Part B of the Prospectus:
1. During the period ending with the earlier of six months after the
Initial Date of Deposit or the end of the initial offering period, the
Public Offering Price includes organization costs incurred in establishing
your Trust. The Trustee will deduct these expenses from your Trust at the
close of this period. Also during this period, the price at which the
Sponsor expects to repurchase Units and the redemption price per Unit
include estimated organization costs. After this period, the Sponsor's
repurchase price and the redemption price per Unit do not include these
costs.
2. If bonds are purchased with the portion of the Public Offering Price
intended to be used to reimburse the Sponsor for the Trust's organization
costs, the bonds will be purchased in the same proportionate relationship as
all the bonds contained in the Trust. These bonds will be sold to reimburse
the Sponsor for the Trust's organization costs at the earlier of six months
after the Initial Date of Deposit or the end of the initial offering period.
Also, any cash received for these purposes will be paid to the Sponsor at
the earlier of six months after the Initial Date of Deposit or the end of
the initial offering period. The bonds may decrease in value during this
period. If proceeds from the sale of these bonds or any cash reserved is
insufficient to repay the Sponsor for these costs, the Trustee will sell
additional bonds. If this occurs, the net asset value per Unit will be
reduced by the amount of additional bonds sold. Although the dollar amount
of the Sponsor's reimbursement will remain fixed and never exceed the amount
per Unit set forth under "Statement of Condition" herein, this will result
in a greater effective cost per Unit to you. When bonds are sold to
reimburse the Sponsor for organization costs, the Trustee will sell the
bonds to maintain the same proportionate relationship among the bonds
contained in the Trust that existed prior to the sale.
3. The Sponsor deducts unpaid organization costs when determining the
value of the Trust.
8
<PAGE>
SCHEDULE OF INVESTMENTS AT THE DATE OF DEPOSIT, FEBRUARY 16, 2000
<TABLE>
<CAPTION>
Ratings(3) Trustee's
Optional -------------------- Determination
Aggregate Name of Issuer and Title of Issue Represented Redemption Standard of Offering
Principal by Sponsor's Contracts to Purchase Bonds(1) Provisions(2) & Poor's Moody's Price
<C> <C> <S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
$ 250,000 The Industrial Development Authority of the County of 2009 at 102 AAA Aaa $ 211,208
Maricopa (Arizona), Multifamily Housing Revenue
Bonds (Arborwood Apartments Project), Series 1999A,
5.05% Due 10/1/29.
250,000 The Industrial Development Authority of the County of 2008 at 101 AAA Aaa 214,848
Maricopa (Arizona), Hospital Revenue Bonds, Series
1998 (Mayo Clinic Hospital), 5.25% Due 11/15/37.
250,000 The Industrial Development Authority of the City of 2010 at 101 AAA Aaa 241,955
Mesa, Arizona, Revenue Bonds (Discovery Health
System), Series 1999A, 5.75% Due 1/1/25.
250,000 City of Phoenix Civic Improvement Corporation 2008 at 101 AAA Aaa 221,613
(Arizona), Senior Lien Airport Revenue Bonds,
Series 1998A, 5.00% Due 7/1/18.
250,000 City of Phoenix Civic Improvement Corporation 2009 at 101 AAA Aaa 228,525
(Arizona), Senior Lien Excise Tax Revenue Bonds,
Series 1999A (Phoenix Municipal Courthouse
Project), 5.375% Due 7/1/29.
250,000 Salt River Project Agricultural Improvement and Power 2008 at 101 AAA Aaa 219,865
District, Arizona, Salt River Project Electric
System Refunding Revenue Bonds, 1997 Series A,
5.00% Due 1/1/20.
250,000 City of Scottsdale, Arizona, Preservation General 2009 at 100 AAA Aaa 237,053
Obligation Bonds, Series 1999, 5.50% Due 7/1/22.
(Original issue discount bonds delivered on or
about November 16, 1999 at a price of 94.793% of
principal amount.)
- ----------- -----------
$ 1,750,000 $ 1,575,067
=========== ===========
</TABLE>
- ------------
(1) The Sponsor's contracts to purchase bonds were entered into during the
period from February 10, 2000 to February 14, 2000. Other information regarding
the bonds in the Trust on the Date of Deposit is as follows:
<TABLE>
<CAPTION>
COST TO PROFIT (OR LOSS) ANNUAL INTEREST BID PRICE
TRUST SPONSOR TO SPONSOR INCOME TO TRUST OF BONDS
----- ----------- ----------------- ---------------- ----------
<S> <C> <C> <C> <C>
Arizona Insured Trust 64................................. $ 1,568,358 $ 6,709 $ 92,313 $1,568,567
</TABLE>
In addition, the difference between the Trustee's determination of Offering
Price and Bid Price (as a percentage of principal amount) is .37%. Neither cost
to Sponsor nor profit (or loss) to Sponsor reflects underwriting profits or
losses received or incurred by the Sponsor through its participation in
underwriting syndicates. The Sponsor did not participate as either the sole
underwriter or as a manager or member of a syndicate that acted as the original
underwriter of any of the bonds.
(2) The bonds are first subject to optional redemption in the years, and at
the prices, shown. Unless otherwise indicated, the bonds, except for bonds
issued at a substantial original issue discount, are redeemable at declining
prices (but not below par value) in subsequent years. Original issue discount
bonds, including zero coupon bonds, are generally redeemable at prices based on
the issue price plus the amount of original issue discount accreted to
redemption plus, if applicable, some premium, the amount of which will decline
in subsequent years. The bonds may also be subject to sinking fund redemption
without premium prior to the dates shown. Certain bonds may be subject to
redemption without premium prior to the date shown pursuant to special or
mandatory call provisions specified in the instruments setting forth the terms
and provisions of such bonds. See "Risk Factors" herein and "COMPOSITION OF
TRUSTS" and "WHAT IS THE TAX STATUS OF UNITHOLDERS?" in Part B of this
Prospectus.
(3) All the bonds in the Insured Trusts, as insured by the Insurer, are
rated AAA by Standard & Poor's, AAA by Fitch and/or Aaa by Moody's. The
insurance obtained by the Trust guarantees the payment of interest and principal
on the bonds when due but does not cover certain market risks associated with
fixed income securities such as accelerated payments, premiums payable on
mandatory redemptions or interest rate risks. (See "WHY AND HOW ARE THE BONDS
INSURED?" in Part B of this Prospectus and "Description of Ratings" in the
Information Supplement.)
9
<PAGE>
STATEMENT OF CONDITION, AS OF FEBRUARY 16, 2000
<TABLE>
<S> <C>
TRUST PROPERTY
Sponsor's contracts to purchase bonds, backed by an
irrevocable letter of credit(1)(2)........................ $ 1,575,067
Accrued interest to February 16, 2000 on underlying
bonds(1).................................................. 18,664
Cash in Portfolio........................................... 4,375
-----------
Total........................................... $ 1,598,106
===========
LIABILITIES AND INTEREST OF UNITHOLDERS
LIABILITIES:
Accrued interest to February 16, 2000 on underlying
bonds(4)............................................... $ 18,664
Reimbursement of Sponsor for organization costs(3)...... 4,375
-----------
Total........................................... $ 23,039
===========
INTEREST OF UNITHOLDERS:
Units of fractional undivided interest outstanding
(17,500)
Cost to investors(5).................................. $ 1,660,589
Less: Gross underwriting commission(6).............. 81,147
Less: Organization costs(3)......................... $ 4,375
-----------
Net amount applicable to investors...................... $ 1,575,067
-----------
Total........................................... $ 1,598,106
===========
- ------------
</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 Date of Deposit. The amount of such letter of credit and
any cash deposited exceeds the amount necessary for the purchase of the
bonds plus accrued interest to the Date of Deposit. At the Date of Deposit,
bonds may have been delivered to the Sponsor pursuant to certain of these
contracts; the Sponsor has assigned to the Trustee all of its rights, title
and interest in and to such bonds.
(2) Aggregate value (at offering prices) as of the Date of Deposit of the bonds
listed under "Schedule of Investments" herein, and their aggregate cost to
the Trust are the same. Such offering prices were determined by Kenny S&P
Evaluation Services, a division of J. J. Kenny Co., Inc., as of the close of
business on the business day prior to the Date of Deposit. (See "HOW WAS THE
PRICE OF THE BONDS DETERMINED AT THE DATE OF DEPOSIT?" in Part B of this
Prospectus.) Insurance coverage providing for the timely payment, when due,
of all principal of and interest on the bonds in an Insured Trust has been
obtained by the Sponsor or by the issuers of such bonds. Such insurance does
not guarantee the market value of the bonds or the value of the Units. Both
the bid and the offering prices of the underlying bonds and of the Units may
include value attributable to such policies of insurance.
(3) A portion of the Public Offering Price consists of an amount sufficient to
reimburse the Sponsor for all or a portion of the costs of establishing the
Trust. These costs have been estimated at $.25000 per Unit for the Trust. A
payment will be made as of the earlier of six months after the Initial Date
of Deposit or the end of the initial offering period to an account
maintained by the Trustee from which the obligations of the investors to the
Sponsor are dispensed. To the extent that actual organization costs are
greater than the estimated amount, only the estimated organization costs
added to the Public Offering Price will be reimbursed to the Sponsor and
deducted from the assets of the Trust.
(4) Representing, as set forth in "WHAT IS ACCRUED INTEREST?" in Part B of this
Prospectus, advancement by the Trustee of an amount equal to the accrued
bond interest as of the Date of Deposit.
(5) Aggregate Public Offering Price (exclusive of accrued interest) computed as
set forth under "HOW IS THE PUBLIC OFFERING PRICE DETERMINED?" in Part B of
this Prospectus.
(6) The gross underwriting commission of 4.90% of the Public Offering Price has
been calculated on the assumption that the Units sold are not subject to a
reduction of sales charge for quantity purchases. In single transactions
involving 500 Units or more, the sales charge is reduced. (See "HOW IS THE
PUBLIC OFFERING PRICE DETERMINED?" in Part B of this Prospectus.)
10
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF JOHN NUVEEN & CO. INCORPORATED AND UNITHOLDERS OF
ARIZONA INSURED TRUST 64:
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
Arizona Insured Trust 64 (contained in Nuveen Tax-Free Unit Trust,
Series 1149), as of February 16, 2000. 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 Arizona Insured Trust 64 as of February 16, 2000, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
February 16, 2000
11
<PAGE>
[LOGO]
Nuveen Arizona
Insured Trust 64
PROSPECTUS -- PART A
FEBRUARY 16, 2000
<TABLE>
<C> <S> <C>
SPONSOR John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
Telephone: 312.917.7700
Swiss Bank Tower
10 East 50th Street
New York, NY 10022
212.207.2000
TRUSTEE The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
800.257.8787
LEGAL COUNSEL Chapman and Cutler
TO SPONSOR 111 West Monroe Street
Chicago, IL 60603
INDEPENDENT Arthur Andersen LLP
PUBLIC 33 West Monroe Street
ACCOUNTANTS Chicago, IL 60603
FOR THE TRUSTS
</TABLE>
--------------
This Prospectus does not contain complete information about the Unit Trust
filed with the Securities and Exchange Commission in Washington, DC under the
Securities Act of 1933 and the Investment Company Act of 1940.
To obtain copies at proscribed rates--
<TABLE>
<S> <C>
Write: Public Reference Section of the Commission, 450 Fifth Street
NW, Washington, DC 20549-6009
Call: (800) SEC-0330
Visit: http://www.sec.gov
</TABLE>
No person is authorized to give any information or representation about this
Trust not contained in Parts A or B of this Prospectus or the Information
Supplement, and you should not rely on any other information.
When Units of this Fund are no longer available, this Prospectus may be used
as a preliminary Prospectus for a future series, but some of the information in
this Prospectus will be changed for that series.
UNITS OF ANY FUTURE SERIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED
UNTIL THAT SERIES HAS BECOME EFFECTIVE WITH THE SECURITIES AND EXCHANGE
COMMISSION. NO UNITS CAN BE SOLD WHERE A SALE WOULD BE ILLEGAL.
<PAGE>
A
[LOGO]
Nuveen Georgia
Insured Trust 70
<TABLE>
<S> <C>
CUSIP NUMBERS:
MONTHLY: 67102H 611
QUARTERLY: 67102H 629
SEMI-ANNUALLY: 67102H 637
</TABLE>
Prospectus Part A dated February 16, 2000
- --------------------------------------------------------------------------------
Overview
Nuveen Georgia Insured Trust 70 (the "Trust") is a series of the Nuveen Tax-Free
Unit Trust, Series 1149. The Trust is a unit investment trust consisting of a
portfolio of bonds and seeks to provide income exempt from Federal and Georgia
income tax and to conserve capital.
THIS PART A PROSPECTUS MAY NOT BE DISTRIBUTED UNLESS ACCOMPANIED BY PART B OF
THE NUVEEN TAX-FREE UNIT TRUSTS PROSPECTUS WHICH IS DATED SEPTEMBER 1, 1998.
ADDITIONAL INFORMATION ABOUT THE TRUST MAY BE FOUND IN THE INFORMATION
SUPPLEMENT WHICH CAN BE OBTAINED FROM THE TRUSTEE AT 4 NEW YORK PLAZA, NEW YORK,
NY 10004-2413; (800) 257-8787.
<TABLE>
<S> <C>
Contents
1 Overview 6 Tax Status
2 Trust Summary and Financial Highlights 7 Volume Incentives
2 The Trust 8 Purchase Programs
2 Investment Objectives 8 Organization Expenses
2 The Portfolio 9 Schedule of Investments
3 Essential Information 10 Statement of Condition
5 Interest Distributions 11 Report of Independent Public Accountants
5 Risk Factors
</TABLE>
<TABLE>
<S> <C>
NOT FDIC MAY LOSE VALUE
INSURED NO BANK GUARANTEE
</TABLE>
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.
1
<PAGE>
TRUST SUMMARY AND FINANCIAL HIGHLIGHTS
THE TRUST
Georgia Insured Trust 70 (the "Trust") consists of a portfolio of
interest-bearing obligations issued by or on behalf of the State of Georgia,
certain United States Territories or authorities and political subdivisions
thereof which, in the opinion of recognized bond counsel to the issuing
authorities, provide income which is exempt from Federal income tax and Georgia
income tax, to the extent indicated below.
INVESTMENT OBJECTIVES
The objectives of the Trust are income exempt from Federal and state income
taxes, and conservation of capital. The objectives are, of course, dependent
upon the continuing ability of the issuers, obligors and/or insurers to meet
their respective obligations.
THE PORTFOLIO
The Portfolio of the Trust consists of 8 obligations issued by entities
located in Georgia. The bonds in the Trust are either general obligations of the
governmental entity issuing them and are backed by the taxing power thereof or
are payable as to principal and interest from the income of a specific project
or authority and are not supported by the issuer's power to levy taxes. The
sources of payment for the bonds are divided as follows:
<TABLE>
<CAPTION>
NUMBER OF PORTFOLIO
ISSUES PURPOSE OF ISSUE PERCENTAGE
- --------- ---------------- ----------
<C> <S> <C>
3 Water and/or Sewer Revenue 38.8%
2 Education Revenue 28.6
1 Municipal Lease Revenue 14.3
1 General Obligation 11.4
1 Health Care Facility Revenue 6.9
</TABLE>
Approximately 24.6% of the aggregate principal amount of the bonds in the
Trust (accounting for approximately 24.2% of the aggregate offering price of the
bonds) are original issue discount bonds. See "Risk Factors" herein and "SUMMARY
OF PORTFOLIOS" in Part B of this Prospectus for a discussion of the
characteristics of such obligations and of the risks associated therewith.
All of the bonds in the Trust are covered by policies of insurance obtained
from the MBIA Insurance Corporation guaranteeing payment of principal and
interest when due. As a result of such insurance, the bonds in the Trust have
received a rating of "Aaa" by Moody's, "AAA" by Fitch, and/or "AAA" by
Standard & Poor's. Insurance does not guarantee the market value of the bonds or
of Trust Units.
2
<PAGE>
ESSENTIAL INFORMATION, ON THE BUSINESS DAY PRIOR TO THE DATE OF DEPOSIT,
FEBRUARY 15, 2000
Sponsor and Evaluator....... John Nuveen & Co. Incorporated
Trustee........................... The Chase Manhattan Bank
-------------------------------------------
<TABLE>
<S> <C>
Principal Amount of Bonds in Trust.......................... $ 1,750,000
Number of Units............................................. 17,500
Fractional Undivided Interest in Trust Per Unit............. 1/17,500
Public Offering Price--Less than 500 Units
Aggregate Offering Price of Bonds in Trust.............. $ 1,528,393
Divided by Number of Units.............................. $ 87.34
Plus Sales Charge 4.9% (5.152% of the Aggregate Offering
Price of the Bonds per Unit)........................... $ 4.50
Plus Maximum Organization Costs Per Unit(1)............. $ .25000
Public Offering Price Per Unit(2)....................... $ 92.09
Redemption Price Per Unit (exclusive of accrued interest)... $ 87.20
Sponsor's Initial Repurchase Price Per Unit (exclusive of
accrued interest)......................................... $ 87.59
Excess of Public Offering Price Per Unit over Redemption
Price Per Unit............................................ $ 4.89
Excess of Public Offering Price Per Unit over Sponsor's
Repurchase Price Per Unit................................. $ 4.50
Average Maturity of Bonds in the Trust(3)................... 28.4 years
</TABLE>
The income, expense and distribution data set forth below have been calculated
for Unitholders receiving monthly, quarterly or semi-annual distribution
options.
<TABLE>
<CAPTION>
MONTHLY QUARTERLY SEMI-ANNUAL
--------- ---------- ------------
<S> <C> <C> <C>
Calculation of Estimated Net Annual Interest Income Per Unit
Annual Interest Income(4)............................... $ 5.1806 $ 5.1806 $ 5.1806
Less Estimated Annual Expense........................... $ .2428 $ .2108 $ .1918
--------- --------- ----------
Estimated Net Annual Interest Income(5)................. $ 4.9378 $ 4.9698 $ 4.9888
Daily Rate of Accrual Per Unit.............................. $ .01371 $ .01380 $ .01385
ESTIMATED CURRENT RETURN(6)................................. 5.36% 5.40% 5.42%
ESTIMATED LONG TERM RETURN(6)............................... 5.55% 5.58% 5.60%
Trustee's Annual Fees(7).................................... $ 1.6323 $ 1.3123 $ 1.1223
</TABLE>
<TABLE>
<S> <C>
Date of Deposit............................................................................February 16, 2000
Settlement Date............................................................................February 22, 2000
Mandatory Termination Date..............................See "OTHER INFORMATION" in Part B of this Prospectus
Minimum Value of Each Trust.............................See "OTHER INFORMATION" in Part B of this Prospectus
Sponsor's Annual Evaluation Fee(8)................................$0.17 per $1,000 principal amount of Bonds
</TABLE>
3
<PAGE>
NOTES TO ESSENTIAL INFORMATION:
BECAUSE CERTAIN OF THE BONDS IN THE TRUST WILL NOT BE DELIVERED TO THE TRUSTEE
UNTIL AFTER THE SETTLEMENT DATE FOR A PURCHASE OF UNITS MADE ON THE DATE OF
DEPOSIT, INTEREST THAT ACCRUES ON THOSE BONDS BETWEEN THE DATE OF DEPOSIT AND
SUCH DELIVERY DATE WILL BE TREATED AS A RETURN OF PRINCIPAL RATHER THAN AS
TAX-EXEMPT INCOME. THE AMOUNT OF ANY SUCH RETURN OF PRINCIPAL IS NOT INCLUDED IN
THE ANNUAL INTEREST INCOME SHOWN ABOVE. FOR THE TRUST, THE FOLLOWING SETS FORTH
THE LATEST SCHEDULED BOND DELIVERY DATE, THE AMOUNT PER UNIT THAT WILL BE
TREATED AS A RETURN OF PRINCIPAL TO UNITHOLDERS WHO PURCHASE ON THE DATE OF
DEPOSIT, AND THE ESTIMATED CURRENT RETURN UNDER THE MONTHLY DISTRIBUTION PLAN
AFTER THE FIRST YEAR, ASSUMING THE PORTFOLIO AND ESTIMATED ANNUAL EXPENSES DO
NOT VARY FROM THAT SET FORTH ABOVE (SEE "WHAT ARE NORMAL TRUST OPERATING
EXPENSES?" IN PART B OF THIS PROSPECTUS AND THE "SCHEDULE OF INVESTMENTS"). THE
ESTIMATED CURRENT RETURN AFTER THE FIRST YEAR WILL ALSO BE HIGHER UNDER THE
QUARTERLY AND SEMI-ANNUAL DISTRIBUTION PLANS:
<TABLE>
<S> <C> <C> <C>
ESTIMATED CURRENT
LATEST SCHEDULED PER UNIT RETURN
DELIVERY DATE RETURN OF PRINCIPAL AFTER THE FIRST YEAR
------------------------ ------------------- -----------------------
GEORGIA INSURED TRUST....................... FEBRUARY 25, 2000 $ .01 5.37%
</TABLE>
(1) A portion of the Public Offering Price consists of an amount sufficient to
reimburse the Sponsor for all or a portion of the costs of establishing the
Trust. These costs have been estimated at $.25000 per Unit for the Trust. A
payment will be made as of the earlier of six months after the Initial Date
of Deposit or the end of the initial offering period to an account
maintained by the Trustee from which the obligations of the investors to the
Sponsor are dispensed. To the extent that actual organization costs are
greater than the estimated amount, only the estimated organization costs
added to the Public Offering Price will be reimbursed to the Sponsor and
deducted from the assets of the Trust.
(2) Units are offered at the Public Offering Price plus accrued interest from
the preceding Record Date to, but not including, the date of settlement
(normally three business days after purchase). The Date of Deposit of the
Fund has been designated as the First Record Date for all plans of
distribution of the Trust and, accordingly, for Units purchased on the Date
of Deposit, $.08 of accrued interest to the Settlement Date will be added to
the Public Offering Price. (See "WHAT IS ACCRUED INTEREST?" in Part B of
this Prospectus.) The evaluation time for purpose of sale, purchase or
redemption of Units is 4 p.m. Eastern time or as of any earlier time at
which the New York Stock Exchange closes. (See "HOW IS THE PUBLIC OFFERING
PRICE DETERMINED?" in Part B of this Prospectus.)
(3) The Average Maturity of bonds in the Trust is calculated based upon the
stated maturities of the bonds in the Trust (or, with respect to bonds for
which funds or securities have been placed in escrow to redeem such bonds on
a stated call date, based upon such call date). The Average Maturity of
bonds in the Trust may increase or decrease from time to time as bonds
mature or are called or sold.
(4) Assumes delivery of all bonds. (See "COMPOSITION OF TRUSTS" appearing in
Part B of this Prospectus.) Interest income does not include accretion of
original issue discount on "zero coupon" bonds, Stripped Obligations or
other original issue discount bonds. (See "SUMMARY OF PORTFOLIOS" in Part B
of this Prospectus.)
(5) The amount and timing of interest distributions from the Trust under the
various plans of distribution are set forth below. It is anticipated that
the amount of interest to be distributed per Unit in each year under each
plan of distribution will initially be substantially equal to the Estimated
Net Annual Interest Income per Unit for that plan. The amount of interest to
be distributed annually per Unit, will generally change as bonds are
redeemed, mature or are sold or as fees and expenses increase or decrease.
(6) Estimated Long Term Return for the Trust represents the average of the
yields to maturity (or call) of the bonds in the Trust's portfolio
calculated in accordance with accepted bond practices and adjusted to
reflect a compounding factor, expenses and sales charges. Estimated Current
Return is computed by dividing the Net Annual Interest Income per Unit by
the Public Offering Price, and in contrast to Estimated Long Term Return
does not reflect the amortization of premium or accretion of discount, if
any. For more information see "WHAT ARE ESTIMATED LONG TERM RETURN AND
ESTIMATED CURRENT RETURN?" in Part B of this Prospectus.
(7) Each Trustee annual fee is per $1,000 principal amount of the underlying
bonds in the Trust for that portion of the Trust that represents a
particular plan of distribution.
(8) The Sponsor's Annual Evaluation Fee may, from time to time, be adjusted
provided that the total adjustment upward does not, at the time of such
adjustment, exceed the percentage of the total increase, after the date
hereof, in consumer prices for services as measured by the United States
Department of Labor Consumer Price Index entitled "All Services Less Rent"
or if such index no longer exists, a comparable index. The consent or
concurrence of any Unitholder shall not be required for any such adjustment
or increase.
4
<PAGE>
INTEREST DISTRIBUTIONS
Details of interest distributions per Unit of the Trust under the various
plans appear in the following table based upon estimated Net Annual Interest
Income at the Date of Deposit:
<TABLE>
<CAPTION>
NORMAL
DISTRIBUTIONS
2000 PER YEAR
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------- -------------
Record Date*............................................... 4/1 5/1 8/1 11/1
Distribution Date.......................................... 4/15 5/15 8/15 11/15
- -------------------------------------------------------------------------------------------------------------------------
Monthly Distribution Plan.................................. $ .6178(1) ---- $.4119 every month ---- $4.9443
Quarterly Distribution Plan................................ $ .6178(1) $ .4146(2) $1.2438 $1.2438 $4.9763
Semi-Annual Distribution Plan.............................. $ .6178(1) $ .4161(3) $2.4966 $4.9953
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Record Dates for semi-annual distributions are May 1 and November 1; for
quarterly distributions, they are February 1, May 1, August 1 and
November 1. Record Dates for monthly distributions are the first day of each
month. Distribution Dates under each distribution plan are the fifteenth day
of the month in which the respective Record Date occurred. For additional
information see "WHEN ARE DISTRIBUTIONS MADE TO UNITHOLDERS?" in Part B of
this Prospectus.
(1) The first distribution will be paid to all Unitholders, regardless of the
distribution plan selected. Such distribution may be more or less than a
regular monthly distribution.
(2) The second distribution under the quarterly distribution plan represents a
1-month distribution; subsequent quarterly distributions will be regular
3-month distributions.
(3) The second distribution under the semi-annual distribution plan represents a
1-month distribution; subsequent semi-annual distributions will be regular
6-month distributions.
RISK FACTORS
Risk is inherent in all investing. Investing in a unit trust involves risk,
including the risk that you may receive little or no return on your investment
or even that you may lose part or all of your investment. Therefore, before
investing you should consider carefully the following risks that you assume when
you invest in this Trust. Because of these and other risks, the Trust should
only represent a portion of your overall portfolio and you should consider an
investment in the Trust to be a part of a longer term investment strategy that
will provide the best results when followed over a number of years. There is no
guarantee that the Trust will achieve its investment objective.
MARKET RISK: the risk that the market value of a bond or the Trust may
change rapidly and unpredictably, causing the bond or the Trust to be worth less
than its original price. Volatility in the market price of the bonds in the
Trust changes the value of the Units of the Trust. Market value may be affected
by a variety of factors including, among others, changes in the perceptions
about the issuers, changes in interest rates or inflation, changes in the
ratings of the issuers or changes in the financial condition of the issuers of
the bonds. Because the Trust is not managed, bonds in the Trust will generally
not be sold in response to market fluctuations, although bonds may be sold in
certain limited circumstances. Accordingly, an investor in the Trust may be
exposed to more market risk than an investor in certain managed investment
vehicles.
INFLATION RISK: the risk that the value of assets or income from investments
will be less in the future as inflation decreases the value of money. As
inflation increases, the value of the Trust's assets can decline as can the
value of the Trust's distributions.
INTEREST RATE RISK: the risk that bonds will decline in value because of a
rise in interest rates. Generally, bonds will increase in value when interest
rates decline and decrease in value when interest rates rise. Typically, bonds
with longer periods before maturity are more sensitive to interest rate changes.
CREDIT RISK: the risk that an issuer of a bond or an insurer is unable to
meet its obligation to make interest and principal payments.
CALL RISK: the risk that bonds can be prepaid or "called" by the issuer
before their stated maturity. If bonds are called, your income will decline and
you may not be able to reinvest the money you receive at as high a yield. Also,
an early call at par of a premium bond will reduce your return. Bonds in the
Trust are more likely to be called when interest rates decline. This would
result in early returns of principal to you and may result in early termination
of the Trust. The dates and prices upon which the bonds are first subject to
optional calls are provided in "Schedule of Investments." The bonds may also be
subject to special or extraordinary call provisions and "mandatory put" features
that may cause the bonds to be removed from the Trust prior to maturity.
LIQUIDITY RISK: the risk that the value of the bonds may be reduced if
trading in the bonds is limited or absent. Because the bonds will generally
trade in the over-the-counter market, there can be no assurance that a liquid
trading market will exist.
BOND QUALITY RISK: the risk that a reduction in a bond's rating may decrease
its value and the value of your investment in the Trust.
5
<PAGE>
REDUCED DIVERSIFICATION RISK: the risk that the diversification of your
investment is reduced as bonds in the Trust are called, sold or mature. This
reduction in diversification may increase the risk of loss and increase your
share of Trust expenses.
LITIGATION AND LEGISLATION RISKS: the risk that future litigation or
legislation could affect the value of the Trust. In particular, future tax
legislation could affect the value of the Trust by reducing tax rates, imposing
a flat or other form of tax, exempting investment income from tax or changing
the tax status of the bonds.
CONCENTRATION RISK: the risk that the Trust is less diversified, and
therefore subject to greater risk of loss, because the Trust is concentrated in
a certain type of bond. Typically, when a certain type of bond makes up 25% or
more of the portfolio, the Trust is considered to be "concentrated" in that bond
type.
The Trust is considered to be concentrated in bonds of Water and/or Sewer
Revenue Issuers whose revenues are subject to certain risks including problems
obtaining timely and adequate rate increases and population decline resulting in
decreased user fees. In addition, the Trust is considered to be concentrated in
bonds of Education Revenue Issuers whose revenues are subject to certain risks
including declines in "college age" individuals and the possible inability to
raise tuition and fees.
The Trust is concentrated in the bonds of issuers located in the State of
Georgia. Such concentration may expose Unitholders to additional risks. The
financial condition of the State of Georgia is affected by various national and
local, economic, social and environmental policies and conditions and may have
an effect on the value of the Units. Additionally, Constitutional and statutory
limitations imposed on the State and its local governments concerning taxes,
bond indebtedness and other matters may constrain the revenue-generating
capacity of the State and its local governments and, therefore, the ability of
the issuers of the bonds to satisfy their obligations. Historically, the State
has experienced significant revenue shortfalls.
The economic vitality of the State and its various regions and, therefore,
the ability of the State and its local governments to satisfy the bonds, are
affected by numerous factors. Recent widespread flooding in central and southern
Georgia has caused extensive damage and destruction of farmland, private
residences, businesses and local and state government facilities.
The State is a party to numerous lawsuits in which an adverse final decision
could materially affect the State's governmental operations and consequently its
ability to pay debt service on its obligations.
All outstanding general obligation bonds of the State are rated "AAA" by
Standard and Poor's and "Aaa" by Moody's.
Further information concerning the various types of bonds contained in the
Trust is available in "SUMMARY OF PORTFOLIOS" in Part B of the Prospectus. An
additional discussion of potential risks may be obtained upon written or
telephonic request to the Trustee as described in "OTHER
INFORMATION--Supplemental Information" appearing in Part B of this Prospectus.
TAX STATUS
For a discussion of the Federal tax status of income earned on Trust Units,
see "WHAT IS THE TAX STATUS OF UNITHOLDERS?" appearing in Part B of this
Prospectus.
The assets of the Trust will consist of interest-bearing obligations issued
by or on behalf of the State of Georgia or counties, municipalities, authorities
or political subdivisions thereof (the "Georgia Bonds") and certain bonds issued
by Puerto Rico authorities (the "Possession Bonds", and collectively with the
Georgia Bonds, the "Bonds").
Neither the Sponsor nor its counsel have independently examined the Bonds to
be deposited in and held in the Trust. However, although no opinion is expressed
herein regarding such matters, it is assumed that: (i) the Bonds were validly
issued, (ii) the interest thereon is excludable from gross income for federal
income tax purposes and (iii) interest on the Bonds, if received directly by a
Unitholder would be exempt from the Georgia income tax (the "Georgia Income
Tax"). We have assumed that, at the respective times of issuance of the Bonds,
opinions relating to the validity thereof and to the exemption of interest
thereon from Federal income tax were rendered by bond counsel to the respective
issuing authorities. In addition, we have assumed that, with respect to the
Georgia Bonds, bond counsel to the issuing authorities rendered opinions that
interest on the Georgia Bonds is exempt from the Georgia Income Tax and, with
respect to the Possession Bonds, bond counsel to the issuing authorities
rendered opinions that the Possession Bonds and the interest thereon is exempt
from all state and local income taxation. Neither the Sponsor nor its counsel
has made any review for the Trust of the proceedings relating to the issuance of
the Bonds or of the bases for the opinions rendered in connection therewith.
6
<PAGE>
In the opinion of Chapman and Cutler, counsel to the Sponsor, under existing
Georgia law:
For Georgia income tax purposes, the Trust is not an association taxable
as a corporation, and the income of the Trust will be treated as the income
of the Unitholders. Interest on the Georgia Bonds which is exempt from
Georgia income tax when received by the Trust, and which would be exempt
from Georgia income tax if received directly by a Unitholder, will retain
its status as tax-exempt interest when distributed by the Trust and received
by the Unitholders. Interest on the Possession Bonds which is excludible
from gross income for federal income tax purposes and is exempt from state
and local taxation pursuant to federal law when received by the Trust will
be exempt from Georgia income taxation and therefore will not be includible
in the income of the Unitholder for Georgia income tax purposes when
distributed by the Trust and received by the Unitholders.
If the Trustee disposes of a Bond (whether by sale, exchange, payment on
maturity, retirement or otherwise) or if a Unitholder redeems or sells his
Unit, the Unitholder will recognize gain or loss for Georgia income tax
purposes to the same extent that gain or loss would be recognized for
federal income tax purposes (except in the case of Bonds issued before
March 11, 1987 issued with original issue discount owned by the Trust in
which case gain or loss for Georgia income tax purposes may differ from the
amount recognized for federal income tax purposes because original issue
discount on such Bonds may be determined by accruing said original issue
discount on a ratable basis). Due to the amortization of bond premium and
other basis adjustments required by the Internal Revenue Code, a Unitholder,
under some circumstances, may realize taxable gain when his or her Units are
sold or redeemed for an amount less than or equal to their original cost.
Amounts paid by the Insurer under an insurance policy or policies issued
to the Trust, if any, with respect to the Bonds in the Trust which represent
maturing interest on defaulted obligations held by the Trustee will be
exempt from State income taxes if, and to the extent as, such interest would
have been so exempt if paid by the issuer of the defaulted obligations
provided that, at the time such policies are purchased, the amounts paid for
such policies are reasonable, customary and consistent with the reasonable
expectation that the issuer of the obligations, rather than the insurer,
will pay debt service on the obligations.
Neither the Bonds nor the Units will be subject to Georgia sales or use
tax.
Chapman and Cutler has expressed no opinion with respect to taxation
under any other provision of Georgia law. Ownership of the Units may result
in collateral Georgia tax consequences to certain taxpayers. Prospective
investors should consult their tax advisors as to the applicability of any
such collateral consequences.
VOLUME INCENTIVES
The Sponsor has made substantial enhancements to the volume incentive
program for dealer firms currently described in Part B of this Prospectus. The
following information replaces any discussion of volume incentives in Part B.
Volume incentives can be earned as a marketing allowance by eligible dealer
firms who reach cumulative firm sales or sales arrangement levels of a specified
dollar amount of Nuveen unit trusts (other than any series of the Nuveen--The
Dow 5-SM- Portfolios and Nuveen--The Dow 10-SM- Portfolios) sold in the primary
or secondary market during any quarter as set forth in the table below. Eligible
dealer firms are dealers that are providing marketing support for Nuveen unit
trusts in the form of 1) distributing or permitting the distribution of
marketing materials and other product information, 2) providing Nuveen
representatives access to the dealer's branch offices, and 3) generally
facilitating the placement of orders by the dealer's registered representatives
such as putting Nuveen unit trusts on their order entry screens. Eligible firms
will not include firms that solely provide clearing services to broker/dealer
firms. For purposes of determining the applicable volume incentive rate for a
given quarter, the dollar amount of all units sold over the current and three
previous quarters (the "Measuring Period") is aggregated. The volume incentive
received by the dealer firm will equal the dollar amount of units sold during
the current quarter times the highest applicable rate for the Measuring Period.
For firms that meet the necessary volume level, volume incentives may be given
on all applicable trades originated from or by that firm.
<TABLE>
<CAPTION>
TOTAL DOLLAR AMOUNT SOLD
OVER MEASURING PERIOD VOLUME INCENTIVE
- -------------------------- --------------------------------
<S> <C>
$ 5,000,000 to $ 9,999,999 0.10% of current quarter sales
$10,000,000 to $19,999,999 0.125% of current quarter sales
$20,000,000 to $49,999,999 0.1375% of current quarter sales
$50,000,000 or more 0.15% of current quarter sales
</TABLE>
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.
7
<PAGE>
PURCHASE PROGRAMS
Notwithstanding anything to the contrary in Part B of the Prospectus:
1. Units may NOT 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.,
Rittenhouse Financial Services, Inc. and The John Nuveen Company, including
in each case these individuals and their immediate family members (as
defined in this Prospectus).
2. Units may be purchased in the primary market with sales charges of
1.70% of the Public Offering Price for National and State Long Term Trusts,
1.35% of the Public Offering Price for Long Intermediate Trusts, 1.20% of
the Public Offering Price for National and State Intermediate Trusts, 1.0%
of the Public Offering Price for National and State Short Intermediate
Trusts and 1.0% of the Public Offering Price for Short Term Trusts by:
(1) investors who purchase Units through registered investment advisers,
certified financial planners and registered broker-dealers who in each case
either charge periodic fees for financial planning, investment advisory or
asset management services, or provide such services in connection with the
establishment of an investment account for which a comprehensive "wrap fee"
charge is imposed, (2) bank trust departments investing funds over which
they exercise exclusive discretionary investment authority and that are held
in a fiduciary, agency, custodial or similar capacity; (3) any person who
for at least 90 days, has been an officer, director or bona fide employee of
any firm offering Units for sale to investors, (4) officers and directors of
bank holding companies that make Units available directly or through
subsidiaries or bank affiliates, (5) officers or directors and bona fide,
full-time employees of Nuveen, Nuveen Advisory Corp., Nuveen Institutional
Advisory Corp., Rittenhouse Financial Services, Inc., and The John Nuveen
Company, including in each case these individuals and their spouses, minor
children, and parents, however, purchases by parents must be made through a
registered broker-dealer, and (6) any person who for at least 90 days, has
been an officer, director or bona fide employee of any vendor who provides
services to the Sponsor and who purchases Units through a registered
broker-dealer (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.
3. Sales charge discounts are no longer available for quantity
purchases of 50,000 or more Units (or $5,000,000). The last available
breakpoint is now for purchases of 25,000 or more Units (or $2,500,000).
ORGANIZATION EXPENSES
You will bear all or a portion of the expenses incurred in organizing your
Trust including the 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 the Trust portfolio, the
initial evaluation, legal fees, the initial fees and expenses of the Trustee and
any nonmaterial out-of-pocket expenses. Notwithstanding anything to the contrary
in Part B of the Prospectus:
1. During the period ending with the earlier of six months after the
Initial Date of Deposit or the end of the initial offering period, the
Public Offering Price includes organization costs incurred in establishing
your Trust. The Trustee will deduct these expenses from your Trust at the
close of this period. Also during this period, the price at which the
Sponsor expects to repurchase Units and the redemption price per Unit
include estimated organization costs. After this period, the Sponsor's
repurchase price and the redemption price per Unit do not include these
costs.
2. If bonds are purchased with the portion of the Public Offering Price
intended to be used to reimburse the Sponsor for the Trust's organization
costs, the bonds will be purchased in the same proportionate relationship as
all the bonds contained in the Trust. These bonds will be sold to reimburse
the Sponsor for the Trust's organization costs at the earlier of six months
after the Initial Date of Deposit or the end of the initial offering period.
Also, any cash received for these purposes will be paid to the Sponsor at
the earlier of six months after the Initial Date of Deposit or the end of
the initial offering period. The bonds may decrease in value during this
period. If proceeds from the sale of these bonds or any cash reserved is
insufficient to repay the Sponsor for these costs, the Trustee will sell
additional bonds. If this occurs, the net asset value per Unit will be
reduced by the amount of additional bonds sold. Although the dollar amount
of the Sponsor's reimbursement will remain fixed and never exceed the amount
per Unit set forth under "Statement of Condition" herein, this will result
in a greater effective cost per Unit to you. When bonds are sold to
reimburse the Sponsor for organization costs, the Trustee will sell the
bonds to maintain the same proportionate relationship among the bonds
contained in the Trust that existed prior to the sale.
3. The Sponsor deducts unpaid organization costs when determining the
value of the Trust.
8
<PAGE>
SCHEDULE OF INVESTMENTS AT THE DATE OF DEPOSIT, FEBRUARY 16, 2000
<TABLE>
<CAPTION>
Ratings(3) Trustee's
Optional -------------------- Determination
Aggregate Name of Issuer and Title of Issue Represented Redemption Standard of Offering
Principal by Sponsor's Contracts to Purchase Bonds(1) Provisions(2) & Poor's Moody's Price
<C> <C> <S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
$ 250,000 Association County Commissioners of Georgia Leasing 2010 at 101 AAA Aaa $ 240,460
Program, Certificates of Participation (Rockdale
County, Georgia Public Purpose Projects), Series
1999, 5.625% Due 7/1/20.
250,000 City of Atlanta (Georgia), Water and Wastewater 2009 at 101 AAA Aaa 204,593
Revenue Bonds, Series 1999A, 5.00% Due 11/1/38.
120,000 Fulco Hospital Authority (Georgia), Health System 2008 at 102 AAA Aaa 100,079
Revenue Anticipation Certificates, Catholic Health
East Issue, Series 1998A, 5.00% Due 11/15/28.
180,000 Fulton County, Georgia, Water and Sewerage Revenue 2008 at 101 AAA Aaa 144,558
Bonds, Series 1998, 4.75% Due 1/1/28. (Original
issue discount bonds delivered on or about July 9,
1998 at a price of 93.966% of principal amount.)
200,000 Gwinnett County, Water and Sewerage Authority 2009 at 101 AAA Aaa 183,182
(Georgia), Revenue Bonds, Series 1999, 5.30% Due
8/1/20. (General Obligation Bonds.)
250,000 Private Colleges and Universities Authority 2009 at 101 AAA Aaa 200,495
(Georgia), Revenue Bonds (Agnes Scott College
Project), Series 1999, 4.75% Due 6/1/28.
250,000 * Private Colleges and Universities Authority 2009 at 101 AAA Aaa 229,043
(Georgia), Revenue Bonds (Emory University
Project), Series 1999A, 5.50% Due 11/1/31.
250,000 Rockdale County Water and Sewerage Authority 2010 at 101 AAA Aaa 225,983
(Georgia), Revenue Bonds, Series 1999 A, 5.375% Due
7/1/29. (Original issue discount bonds delivered on
or about October 28, 1999 at a price of 92.677% of
principal amount.)
- ----------- -----------
$ 1,750,000 $ 1,528,393
=========== ===========
</TABLE>
* These bonds, or a portion thereof, have delivery dates beyond the normal
settlement date. Their expected delivery date is February 25, 2000. Contracts
relating to bonds with delivery dates after the date of settlement for
purchase made on the Date of Deposit constitute approximately 14% of the
aggregate principal amount of the Trust. (See "COMPOSITION OF TRUSTS" in
Part B of this Prospectus.)
- ------------
(1) The Sponsor's contracts to purchase bonds were entered into during the
period from February 9, 2000 to February 15, 2000. Other information regarding
the bonds in the Trust on the Date of Deposit is as follows:
<TABLE>
<CAPTION>
COST TO PROFIT (OR LOSS) ANNUAL INTEREST BID PRICE
TRUST SPONSOR TO SPONSOR INCOME TO TRUST OF BONDS
----- ----------- ----------------- ---------------- ----------
<S> <C> <C> <C> <C>
Georgia Insured Trust 70................................. $ 1,521,085 $ 7,308 $ 90,775 $1,521,593
</TABLE>
In addition, the difference between the Trustee's determination of Offering
Price and Bid Price (as a percentage of principal amount) is .39%. Neither cost
to Sponsor nor profit (or loss) to Sponsor reflects underwriting profits or
losses received or incurred by the Sponsor through its participation in
underwriting syndicates. The Sponsor did not participate as either the sole
underwriter or as a manager or member of a syndicate that acted as the original
underwriter of any of the bonds.
(2) The bonds are first subject to optional redemption in the years, and at
the prices, shown. Unless otherwise indicated, the bonds, except for bonds
issued at a substantial original issue discount, are redeemable at declining
prices (but not below par value) in subsequent years. Original issue discount
bonds, including zero coupon bonds, are generally redeemable at prices based on
the issue price plus the amount of original issue discount accreted to
redemption plus, if applicable, some premium, the amount of which will decline
in subsequent years. The bonds may also be subject to sinking fund redemption
without premium prior to the dates shown. Certain bonds may be subject to
redemption without premium prior to the date shown pursuant to special or
mandatory call provisions specified in the instruments setting forth the terms
and provisions of such bonds. See "Risk Factors" herein and "COMPOSITION OF
TRUSTS" and "WHAT IS THE TAX STATUS OF UNITHOLDERS?" in Part B of this
Prospectus.
(3) All the bonds in the Insured Trusts, as insured by the Insurer, are
rated AAA by Standard & Poor's, AAA by Fitch and/or Aaa by Moody's. The
insurance obtained by the Trust guarantees the payment of interest and principal
on the bonds when due but does not cover certain market risks associated with
fixed income securities such as accelerated payments, premiums payable on
mandatory redemptions or interest rate risks. (See "WHY AND HOW ARE THE BONDS
INSURED?" in Part B of this Prospectus and "Description of Ratings" in the
Information Supplement.)
9
<PAGE>
STATEMENT OF CONDITION, AS OF FEBRUARY 16, 2000
<TABLE>
<S> <C>
TRUST PROPERTY
Sponsor's contracts to purchase bonds, backed by an
irrevocable letter of credit(1)(2)........................ $ 1,528,393
Accrued interest to February 16, 2000 on underlying
bonds(1).................................................. 24,590
Cash in Portfolio........................................... 4,375
-----------
Total........................................... $ 1,557,358
===========
LIABILITIES AND INTEREST OF UNITHOLDERS
LIABILITIES:
Accrued interest to February 16, 2000 on underlying
bonds(4)............................................... $ 24,590
Reimbursement of Sponsor for organization costs(3)...... 4,375
-----------
Total........................................... $ 28,965
===========
INTEREST OF UNITHOLDERS:
Units of fractional undivided interest outstanding
(17,500)
Cost to investors(5).................................. $ 1,611,511
Less: Gross underwriting commission(6).............. 78,743
Less: Organization costs(3)......................... $ 4,375
-----------
Net amount applicable to investors...................... $ 1,528,393
-----------
Total........................................... $ 1,557,358
===========
- ------------
</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 Date of Deposit. The amount of such letter of credit and
any cash deposited exceeds the amount necessary for the purchase of the
bonds plus accrued interest to the Date of Deposit. At the Date of Deposit,
bonds may have been delivered to the Sponsor pursuant to certain of these
contracts; the Sponsor has assigned to the Trustee all of its rights, title
and interest in and to such bonds.
(2) Aggregate value (at offering prices) as of the Date of Deposit of the bonds
listed under "Schedule of Investments" herein, and their aggregate cost to
the Trust are the same. Such offering prices were determined by Kenny S&P
Evaluation Services, a division of J. J. Kenny Co., Inc., as of the close of
business on the business day prior to the Date of Deposit. (See "HOW WAS THE
PRICE OF THE BONDS DETERMINED AT THE DATE OF DEPOSIT?" in Part B of this
Prospectus.) Insurance coverage providing for the timely payment, when due,
of all principal of and interest on the bonds in an Insured Trust has been
obtained by the Sponsor or by the issuers of such bonds. Such insurance does
not guarantee the market value of the bonds or the value of the Units. Both
the bid and the offering prices of the underlying bonds and of the Units may
include value attributable to such policies of insurance.
(3) A portion of the Public Offering Price consists of an amount sufficient to
reimburse the Sponsor for all or a portion of the costs of establishing the
Trust. These costs have been estimated at $.25000 per Unit for the Trust. A
payment will be made as of the earlier of six months after the Initial Date
of Deposit or the end of the initial offering period to an account
maintained by the Trustee from which the obligations of the investors to the
Sponsor are dispensed. To the extent that actual organization costs are
greater than the estimated amount, only the estimated organization costs
added to the Public Offering Price will be reimbursed to the Sponsor and
deducted from the assets of the Trust.
(4) Representing, as set forth in "WHAT IS ACCRUED INTEREST?" in Part B of this
Prospectus, advancement by the Trustee of an amount equal to the accrued
bond interest as of the Date of Deposit.
(5) Aggregate Public Offering Price (exclusive of accrued interest) computed as
set forth under "HOW IS THE PUBLIC OFFERING PRICE DETERMINED?" in Part B of
this Prospectus.
(6) The gross underwriting commission of 4.90% of the Public Offering Price has
been calculated on the assumption that the Units sold are not subject to a
reduction of sales charge for quantity purchases. In single transactions
involving 500 Units or more, the sales charge is reduced. (See "HOW IS THE
PUBLIC OFFERING PRICE DETERMINED?" in Part B of this Prospectus.)
10
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF JOHN NUVEEN & CO. INCORPORATED AND UNITHOLDERS OF
GEORGIA INSURED TRUST 70:
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
Georgia Insured Trust 70 (contained in Nuveen Tax-Free Unit Trust,
Series 1149), as of February 16, 2000. 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 Georgia Insured Trust 70 as of February 16, 2000, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
February 16, 2000
11
<PAGE>
[LOGO]
Nuveen Georgia
Insured Trust 70
PROSPECTUS -- PART A
FEBRUARY 16, 2000
<TABLE>
<C> <S> <C>
SPONSOR John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
Telephone: 312.917.7700
Swiss Bank Tower
10 East 50th Street
New York, NY 10022
212.207.2000
TRUSTEE The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
800.257.8787
LEGAL COUNSEL Chapman and Cutler
TO SPONSOR 111 West Monroe Street
Chicago, IL 60603
INDEPENDENT Arthur Andersen LLP
PUBLIC 33 West Monroe Street
ACCOUNTANTS Chicago, IL 60603
FOR THE TRUSTS
</TABLE>
--------------
This Prospectus does not contain complete information about the Unit Trust
filed with the Securities and Exchange Commission in Washington, DC under the
Securities Act of 1933 and the Investment Company Act of 1940.
To obtain copies at proscribed rates--
<TABLE>
<S> <C>
Write: Public Reference Section of the Commission, 450 Fifth Street
NW, Washington, DC 20549-6009
Call: (800) SEC-0330
Visit: http://www.sec.gov
</TABLE>
No person is authorized to give any information or representation about this
Trust not contained in Parts A or B of this Prospectus or the Information
Supplement, and you should not rely on any other information.
When Units of this Fund are no longer available, this Prospectus may be used
as a preliminary Prospectus for a future series, but some of the information in
this Prospectus will be changed for that series.
UNITS OF ANY FUTURE SERIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED
UNTIL THAT SERIES HAS BECOME EFFECTIVE WITH THE SECURITIES AND EXCHANGE
COMMISSION. NO UNITS CAN BE SOLD WHERE A SALE WOULD BE ILLEGAL.
<PAGE>
A
[LOGO]
Nuveen New York
Insured Trust 306
<TABLE>
<S> <C>
CUSIP NUMBERS:
MONTHLY: 67068D 133
QUARTERLY: 67068D 141
SEMI-ANNUALLY: 67068D 158
</TABLE>
Prospectus Part A dated February 16, 2000
- --------------------------------------------------------------------------------
Overview
Nuveen New York Insured Trust 306 (the "Trust") is a series of the Nuveen
Tax-Free Unit Trust, Series 1149. The Trust is a unit investment trust
consisting of a portfolio of bonds and seeks to provide income exempt from
Federal income tax and New York state and city income taxes and to conserve
capital.
THIS PART A PROSPECTUS MAY NOT BE DISTRIBUTED UNLESS ACCOMPANIED BY PART B OF
THE NUVEEN TAX-FREE UNIT TRUSTS PROSPECTUS WHICH IS DATED SEPTEMBER 1, 1998.
ADDITIONAL INFORMATION ABOUT THE TRUST MAY BE FOUND IN THE INFORMATION
SUPPLEMENT WHICH CAN BE OBTAINED FROM THE TRUSTEE AT 4 NEW YORK PLAZA, NEW YORK,
NY 10004-2413; (800) 257-8787.
<TABLE>
<S> <C>
Contents
1 Overview 6 Tax Status
2 Trust Summary and Financial Highlights 7 Volume Incentives
2 The Trust 7 Purchase Programs
2 Investment Objectives 8 Organization Expenses
2 The Portfolio 9 Schedule of Investments
3 Essential Information 10 Statement of Condition
5 Interest Distributions 11 Report of Independent Public Accountants
5 Risk Factors
</TABLE>
<TABLE>
<S> <C>
NOT FDIC MAY LOSE VALUE
INSURED NO BANK GUARANTEE
</TABLE>
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.
1
<PAGE>
TRUST SUMMARY AND FINANCIAL HIGHLIGHTS
THE TRUST
New York Insured Trust 306 (the "Trust") consists of a portfolio of
interest-bearing obligations issued by or on behalf of the State of New York,
certain United States Territories or authorities and political subdivisions
thereof which, in the opinion of recognized bond counsel to the issuing
authorities, provide income which is exempt from Federal income tax and New York
state and city income taxes, to the extent indicated below.
INVESTMENT OBJECTIVES
The objectives of the Trust are income exempt from Federal and state income
taxes, and conservation of capital. The objectives are, of course, dependent
upon the continuing ability of the issuers, obligors and/or insurers to meet
their respective obligations.
THE PORTFOLIO
The Portfolio of the Trust consists of 7 obligations issued by entities
located in New York. The bonds in the Trust are either general obligations of
the governmental entity issuing them and are backed by the taxing power thereof
or are payable as to principal and interest from the income of a specific
project or authority and are not supported by the issuer's power to levy taxes.
The sources of payment for the bonds are divided as follows:
<TABLE>
<CAPTION>
NUMBER OF PORTFOLIO
ISSUES PURPOSE OF ISSUE PERCENTAGE
- --------- ---------------- ----------
<C> <S> <C>
2 Education Revenue 28.5%
1 Dedicated-Tax Supported Revenue 14.3
1 General Obligation 14.3
1 Health Care Facility Revenue 14.3
1 Power Revenue 14.3
1 Water and/or Sewer Revenue 14.3
</TABLE>
Approximately 28.6% of the aggregate principal amount of the bonds in the
Trust (accounting for approximately 27.1% of the aggregate offering price of the
bonds) are original issue discount bonds. See "Risk Factors" herein and "SUMMARY
OF PORTFOLIOS" in Part B of this Prospectus for a discussion of the
characteristics of such obligations and of the risks associated therewith.
All of the bonds in the Trust are covered by policies of insurance obtained
from the MBIA Insurance Corporation guaranteeing payment of principal and
interest when due. As a result of such insurance, the bonds in the Trust have
received a rating of "Aaa" by Moody's, "AAA" by Fitch, and/or "AAA" by
Standard & Poor's. Insurance does not guarantee the market value of the bonds or
of Trust Units.
2
<PAGE>
ESSENTIAL INFORMATION, ON THE BUSINESS DAY PRIOR TO THE DATE OF DEPOSIT,
FEBRUARY 15, 2000
Sponsor and Evaluator....... John Nuveen & Co. Incorporated
Trustee........................... The Chase Manhattan Bank
-------------------------------------------
<TABLE>
<S> <C>
Principal Amount of Bonds in Trust.......................... $ 1,750,000
Number of Units............................................. 17,500
Fractional Undivided Interest in Trust Per Unit............. 1/17,500
Public Offering Price--Less than 500 Units
Aggregate Offering Price of Bonds in Trust.............. $ 1,517,529
Divided by Number of Units.............................. $ 86.72
Plus Sales Charge 4.9% (5.152% of the Aggregate Offering
Price of the Bonds per Unit)........................... $ 4.47
Plus Maximum Organization Costs Per Unit(1)............. $ .25000
Public Offering Price Per Unit(2)....................... $ 91.44
Redemption Price Per Unit (exclusive of accrued interest)... $ 86.57
Sponsor's Initial Repurchase Price Per Unit (exclusive of
accrued interest)......................................... $ 86.97
Excess of Public Offering Price Per Unit over Redemption
Price Per Unit............................................ $ 4.87
Excess of Public Offering Price Per Unit over Sponsor's
Repurchase Price Per Unit................................. $ 4.47
Average Maturity of Bonds in the Trust(3)................... 26.6 years
</TABLE>
The income, expense and distribution data set forth below have been calculated
for Unitholders receiving monthly, quarterly or semi-annual distribution
options.
<TABLE>
<CAPTION>
MONTHLY QUARTERLY SEMI-ANNUAL
--------- ---------- ------------
<S> <C> <C> <C>
Calculation of Estimated Net Annual Interest Income Per Unit
Annual Interest Income(4)............................... $ 5.1786 $ 5.1786 $ 5.1786
Less Estimated Annual Expense........................... $ .2424 $ .2104 $ .1914
--------- --------- ----------
Estimated Net Annual Interest Income(5)................. $ 4.9362 $ 4.9682 $ 4.9872
Daily Rate of Accrual Per Unit.............................. $ .01371 $ .01380 $ .01385
ESTIMATED CURRENT RETURN(6)................................. 5.40% 5.43% 5.45%
ESTIMATED LONG TERM RETURN(6)............................... 5.59% 5.63% 5.65%
Trustee's Annual Fees(7).................................... $ 1.6288 $ 1.3088 $ 1.1188
</TABLE>
<TABLE>
<S> <C>
Date of Deposit............................................................................February 16, 2000
Settlement Date............................................................................February 22, 2000
Mandatory Termination Date..............................See "OTHER INFORMATION" in Part B of this Prospectus
Minimum Value of Each Trust.............................See "OTHER INFORMATION" in Part B of this Prospectus
Sponsor's Annual Evaluation Fee(8)................................$0.17 per $1,000 principal amount of Bonds
</TABLE>
3
<PAGE>
NOTES TO ESSENTIAL INFORMATION:
(1) A portion of the Public Offering Price consists of an amount sufficient to
reimburse the Sponsor for all or a portion of the costs of establishing the
Trust. These costs have been estimated at $.25000 per Unit for the Trust. A
payment will be made as of the earlier of six months after the Initial Date
of Deposit or the end of the initial offering period to an account
maintained by the Trustee from which the obligations of the investors to the
Sponsor are dispensed. To the extent that actual organization costs are
greater than the estimated amount, only the estimated organization costs
added to the Public Offering Price will be reimbursed to the Sponsor and
deducted from the assets of the Trust.
(2) Units are offered at the Public Offering Price plus accrued interest from
the preceding Record Date to, but not including, the date of settlement
(normally three business days after purchase). The Date of Deposit of the
Fund has been designated as the First Record Date for all plans of
distribution of the Trust and, accordingly, for Units purchased on the Date
of Deposit, $.08 of accrued interest to the Settlement Date will be added to
the Public Offering Price. (See "WHAT IS ACCRUED INTEREST?" in Part B of
this Prospectus.) The evaluation time for purpose of sale, purchase or
redemption of Units is 4 p.m. Eastern time or as of any earlier time at
which the New York Stock Exchange closes. (See "HOW IS THE PUBLIC OFFERING
PRICE DETERMINED?" in Part B of this Prospectus.)
(3) The Average Maturity of bonds in the Trust is calculated based upon the
stated maturities of the bonds in the Trust (or, with respect to bonds for
which funds or securities have been placed in escrow to redeem such bonds on
a stated call date, based upon such call date). The Average Maturity of
bonds in the Trust may increase or decrease from time to time as bonds
mature or are called or sold.
(4) Assumes delivery of all bonds. (See "COMPOSITION OF TRUSTS" appearing in
Part B of this Prospectus.) Interest income does not include accretion of
original issue discount on "zero coupon" bonds, Stripped Obligations or
other original issue discount bonds. (See "SUMMARY OF PORTFOLIOS" in Part B
of this Prospectus.)
(5) The amount and timing of interest distributions from the Trust under the
various plans of distribution are set forth below. It is anticipated that
the amount of interest to be distributed per Unit in each year under each
plan of distribution will initially be substantially equal to the Estimated
Net Annual Interest Income per Unit for that plan. The amount of interest to
be distributed annually per Unit, will generally change as bonds are
redeemed, mature or are sold or as fees and expenses increase or decrease.
(6) Estimated Long Term Return for the Trust represents the average of the
yields to maturity (or call) of the bonds in the Trust's portfolio
calculated in accordance with accepted bond practices and adjusted to
reflect a compounding factor, expenses and sales charges. Estimated Current
Return is computed by dividing the Net Annual Interest Income per Unit by
the Public Offering Price, and in contrast to Estimated Long Term Return
does not reflect the amortization of premium or accretion of discount, if
any. For more information see "WHAT ARE ESTIMATED LONG TERM RETURN AND
ESTIMATED CURRENT RETURN?" in Part B of this Prospectus.
(7) Each Trustee annual fee is per $1,000 principal amount of the underlying
bonds in the Trust for that portion of the Trust that represents a
particular plan of distribution.
(8) The Sponsor's Annual Evaluation Fee may, from time to time, be adjusted
provided that the total adjustment upward does not, at the time of such
adjustment, exceed the percentage of the total increase, after the date
hereof, in consumer prices for services as measured by the United States
Department of Labor Consumer Price Index entitled "All Services Less Rent"
or if such index no longer exists, a comparable index. The consent or
concurrence of any Unitholder shall not be required for any such adjustment
or increase.
4
<PAGE>
INTEREST DISTRIBUTIONS
Details of interest distributions per Unit of the Trust under the various
plans appear in the following table based upon estimated Net Annual Interest
Income at the Date of Deposit:
<TABLE>
<CAPTION>
NORMAL
DISTRIBUTIONS
2000 PER YEAR
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------- -------------
Record Date*............................................... 4/1 5/1 8/1 11/1
Distribution Date.......................................... 4/15 5/15 8/15 11/15
- -------------------------------------------------------------------------------------------------------------------------
Monthly Distribution Plan.................................. $ .6169(1) ---- $.4113 every month ---- $4.9362
Quarterly Distribution Plan................................ $ .6169(1) $ .4140(2) $1.2420 $1.2420 $4.9682
Semi-Annual Distribution Plan.............................. $ .6169(1) $ .4155(3) $2.4930 $4.9872
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Record Dates for semi-annual distributions are May 1 and November 1; for
quarterly distributions, they are February 1, May 1, August 1 and
November 1. Record Dates for monthly distributions are the first day of each
month. Distribution Dates under each distribution plan are the fifteenth day
of the month in which the respective Record Date occurred. For additional
information see "WHEN ARE DISTRIBUTIONS MADE TO UNITHOLDERS?" in Part B of
this Prospectus.
(1) The first distribution will be paid to all Unitholders, regardless of the
distribution plan selected. Such distribution may be more or less than a
regular monthly distribution.
(2) The second distribution under the quarterly distribution plan represents a
1-month distribution; subsequent quarterly distributions will be regular
3-month distributions.
(3) The second distribution under the semi-annual distribution plan represents a
1-month distribution; subsequent semi-annual distributions will be regular
6-month distributions.
RISK FACTORS
Risk is inherent in all investing. Investing in a unit trust involves risk,
including the risk that you may receive little or no return on your investment
or even that you may lose part or all of your investment. Therefore, before
investing you should consider carefully the following risks that you assume when
you invest in this Trust. Because of these and other risks, the Trust should
only represent a portion of your overall portfolio and you should consider an
investment in the Trust to be a part of a longer term investment strategy that
will provide the best results when followed over a number of years. There is no
guarantee that the Trust will achieve its investment objective.
MARKET RISK: the risk that the market value of a bond or the Trust may
change rapidly and unpredictably, causing the bond or the Trust to be worth less
than its original price. Volatility in the market price of the bonds in the
Trust changes the value of the Units of the Trust. Market value may be affected
by a variety of factors including, among others, changes in the perceptions
about the issuers, changes in interest rates or inflation, changes in the
ratings of the issuers or changes in the financial condition of the issuers of
the bonds. Because the Trust is not managed, bonds in the Trust will generally
not be sold in response to market fluctuations, although bonds may be sold in
certain limited circumstances. Accordingly, an investor in the Trust may be
exposed to more market risk than an investor in certain managed investment
vehicles.
INFLATION RISK: the risk that the value of assets or income from investments
will be less in the future as inflation decreases the value of money. As
inflation increases, the value of the Trust's assets can decline as can the
value of the Trust's distributions.
INTEREST RATE RISK: the risk that bonds will decline in value because of a
rise in interest rates. Generally, bonds will increase in value when interest
rates decline and decrease in value when interest rates rise. Typically, bonds
with longer periods before maturity are more sensitive to interest rate changes.
CREDIT RISK: the risk that an issuer of a bond or an insurer is unable to
meet its obligation to make interest and principal payments.
CALL RISK: the risk that bonds can be prepaid or "called" by the issuer
before their stated maturity. If bonds are called, your income will decline and
you may not be able to reinvest the money you receive at as high a yield. Also,
an early call at par of a premium bond will reduce your return. Bonds in the
Trust are more likely to be called when interest rates decline. This would
result in early returns of principal to you and may result in early termination
of the Trust. The dates and prices upon which the bonds are first subject to
optional calls are provided in "Schedule of Investments." The bonds may also be
subject to special or extraordinary call provisions and "mandatory put" features
that may cause the bonds to be removed from the Trust prior to maturity.
LIQUIDITY RISK: the risk that the value of the bonds may be reduced if
trading in the bonds is limited or absent. Because the bonds will generally
trade in the over-the-counter market, there can be no assurance that a liquid
trading market will exist.
BOND QUALITY RISK: the risk that a reduction in a bond's rating may decrease
its value and the value of your investment in the Trust.
REDUCED DIVERSIFICATION RISK: the risk that the diversification of your
investment is reduced as bonds in the Trust are called, sold or mature. This
reduction in diversification may increase the risk of loss and increase your
share of Trust expenses.
5
<PAGE>
LITIGATION AND LEGISLATION RISKS: the risk that future litigation or
legislation could affect the value of the Trust. In particular, future tax
legislation could affect the value of the Trust by reducing tax rates, imposing
a flat or other form of tax, exempting investment income from tax or changing
the tax status of the bonds.
CONCENTRATION RISK: the risk that the Trust is less diversified, and
therefore subject to greater risk of loss, because the Trust is concentrated in
a certain type of bond. Typically, when a certain type of bond makes up 25% or
more of the portfolio, the Trust is considered to be "concentrated" in that bond
type.
The Trust is considered to be concentrated in bonds of Education Revenue
Issuers whose revenues are subject to certain risks including declines in
"college age" individuals and the possible inability to raise tuition and fees.
The Trust is concentrated in the bonds of issuers located in the State of
New York. Such concentration may expose Unitholders to additional risks. The
financial condition of the State of New York is affected by various national and
local, economic, social and environmental policies and conditions and may have
an effect on the value of the Units. Additionally, Constitutional and statutory
limitations imposed on the State and its local governments concerning taxes,
bond indebtedness and other matters may constrain the revenue-generating
capacity of the State and its local governments and, therefore, the ability of
the issuers of the bonds to satisfy their obligations. Historically, the State
has been one of the wealthiest states in the nation; however, for decades the
State economy has grown more slowly than that of the nation as a whole,
gradually eroding the State's relative economic affluence.
The economic vitality of the State and its various regions and, therefore,
the ability of the State and its local governments to satisfy the bonds, are
affected by numerous factors. The economy of the State continues to be
influenced by the financial health of the City of New York, which faces greater
competition as other major cities develop financial and business capabilities.
The State has for many years had a very high state and local tax burden relative
to other states. The burden of State and local taxation, in combination with the
many other causes of regional economic dislocation, has contributed to the
decisions of some businesses and individuals to relocate outside, or not locate
within, the State.
The State is party to numerous lawsuits in which an adverse final decision
could materially affect the State's governmental operations and consequently its
ability to pay debt service on its obligations. On January 21, 1994, the State
entered into a settlement with Delaware with respect to STATE OF DELAWARE V.
STATE OF NEW YORK. The State made an immediate $35 million payment and agreed to
make a $33 million annual payment in each of the next five fiscal years. The
State has not settled with other parties to the litigation and will continue to
incur litigation expenses as to those claims.
All outstanding general obligation bonds of the State are rated "A" by
Standard and Poor's and "Aa2" by Moody's.
Further information concerning the various types of bonds contained in the
Trust is available in "SUMMARY OF PORTFOLIOS" in Part B of the Prospectus. An
additional discussion of potential risks may be obtained upon written or
telephonic request to the Trustee as described in "OTHER
INFORMATION--Supplemental Information" appearing in Part B of this Prospectus.
TAX STATUS
For a discussion of the Federal tax status of income earned on Trust Units,
see "WHAT IS THE TAX STATUS OF UNITHOLDERS?" in Part B of this Prospectus.
In the opinion of Edwards & Angell, special counsel for the Trust for New
York tax matters, under existing law:
Interest on obligations issued by New York State, a political
subdivision thereof, Puerto Rico, the Virgin Islands, Guam, the Northern
Mariana Islands, or other possessions of the United States within the
meaning of Section 103(c) of the Internal Revenue Code of 1986, as amended
("New York Obligations"), which would be exempt from New York State or New
York City personal income tax if directly received by a Unitholder, will
retain its status as tax-exempt interest when received by the Trust and
distributed to such Unitholder. Thus, interest on bonds received by
Unitholders which is not subject to New York State tax is also exempt from
New York City personal income tax.
Interest (less amortizable premium, if any) derived from the Trust by a
resident of New York State (or New York City) in respect of obligations
issued by states other than New York (or their political subdivisions) will
be subject to New York State (or New York City) personal income tax.
A Unitholder who is a resident of New York State (or New York City) will
be subject to New York State (or New York City) personal income tax with
respect to gains realized when New York Obligations held in the Trust are
sold, redeemed or paid at maturity or when the Unitholder's Units are sold
or redeemed; such gain will equal the proceeds of sale, redemption or
payment less the tax basis of the New York Obligation or Unit (adjusted to
reflect (a) the amortization of premium or discount, if any, on New York
Obligations held by the Trust, (b) accrued original issue discount, with
respect to each New York Obligation which, at the time the New
6
<PAGE>
York Obligation was issued, had original issue discount, and (c) the deposit
of New York Obligations with accrued interest in the Trust after the
Unitholder's settlement date).
Interest or gain from the Trust derived by a Unitholder who is not a
resident of New York State (or New York City) will not be subject to New
York State (or New York City) personal income tax, unless the Units are
property employed in a business, trade, profession or occupation carried on
in New York State (or New York City).
In the case of the Trust, amounts paid under the insurance policies
representing maturing interest on defaulted New York Obligations held by the
Trustee in the Trust will be excludable from New York State and New York
City income if, and to the same extent as, such interest would have been
excludable if paid by the respective issuer.
For purposes of the New York State and New York City franchise tax on
corporations, Unitholders which are subject to such tax will be required to
include in their entire net income any interest or gains distributed to them
even though distributed in respect of obligations of any state or
subdivision thereof including New York.
If borrowed funds are used to purchase Units in the Trust, all (or part)
of the interest on such indebtedness will not be deductible for New York
State and New York City tax purposes. The purchase of Units may be
considered to have been made with borrowed funds even though such funds are
not directly traceable to the purchase of Units in the Trust.
VOLUME INCENTIVES
The Sponsor has made substantial enhancements to the volume incentive
program for dealer firms currently described in Part B of this Prospectus. The
following information replaces any discussion of volume incentives in Part B.
Volume incentives can be earned as a marketing allowance by eligible dealer
firms who reach cumulative firm sales or sales arrangement levels of a specified
dollar amount of Nuveen unit trusts (other than any series of the Nuveen--The
Dow 5-SM- Portfolios and Nuveen--The Dow 10-SM- Portfolios) sold in the primary
or secondary market during any quarter as set forth in the table below. Eligible
dealer firms are dealers that are providing marketing support for Nuveen unit
trusts in the form of 1) distributing or permitting the distribution of
marketing materials and other product information, 2) providing Nuveen
representatives access to the dealer's branch offices, and 3) generally
facilitating the placement of orders by the dealer's registered representatives
such as putting Nuveen unit trusts on their order entry screens. Eligible firms
will not include firms that solely provide clearing services to broker/dealer
firms. For purposes of determining the applicable volume incentive rate for a
given quarter, the dollar amount of all units sold over the current and three
previous quarters (the "Measuring Period") is aggregated. The volume incentive
received by the dealer firm will equal the dollar amount of units sold during
the current quarter times the highest applicable rate for the Measuring Period.
For firms that meet the necessary volume level, volume incentives may be given
on all applicable trades originated from or by that firm.
<TABLE>
<CAPTION>
TOTAL DOLLAR AMOUNT SOLD
OVER MEASURING PERIOD VOLUME INCENTIVE
- -------------------------- --------------------------------
<S> <C>
$ 5,000,000 to $ 9,999,999 0.10% of current quarter sales
$10,000,000 to $19,999,999 0.125% of current quarter sales
$20,000,000 to $49,999,999 0.1375% of current quarter sales
$50,000,000 or more 0.15% of current quarter sales
</TABLE>
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.
PURCHASE PROGRAMS
Notwithstanding anything to the contrary in Part B of the Prospectus:
1. Units may NOT 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.,
Rittenhouse Financial Services, Inc. and The John Nuveen Company, including
in each case these individuals and their immediate family members (as
defined in this Prospectus).
2. Units may be purchased in the primary market with sales charges of
1.70% of the Public Offering Price for National and State Long Term Trusts,
1.35% of the Public Offering Price for Long Intermediate Trusts, 1.20% of
the Public Offering Price for National and State Intermediate Trusts, 1.0%
of the Public Offering Price for National and State Short Intermediate
Trusts and 1.0% of the Public Offering Price for Short Term Trusts by:
(1) investors who purchase Units through registered investment advisers,
certified financial planners and registered broker-dealers who in each case
either charge periodic fees for financial planning, investment advisory or
asset management services, or provide such services in connection with the
establishment of an
7
<PAGE>
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, (4) officers and directors of
bank holding companies that make Units available directly or through
subsidiaries or bank affiliates, (5) officers or directors and bona fide,
full-time employees of Nuveen, Nuveen Advisory Corp., Nuveen Institutional
Advisory Corp., Rittenhouse Financial Services, Inc., and The John Nuveen
Company, including in each case these individuals and their spouses, minor
children, and parents, however, purchases by parents must be made through a
registered broker-dealer, and (6) any person who for at least 90 days, has
been an officer, director or bona fide employee of any vendor who provides
services to the Sponsor and who purchases Units through a registered
broker-dealer (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.
3. Sales charge discounts are no longer available for quantity
purchases of 50,000 or more Units (or $5,000,000). The last available
breakpoint is now for purchases of 25,000 or more Units (or $2,500,000).
ORGANIZATION EXPENSES
You will bear all or a portion of the expenses incurred in organizing your
Trust including the 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 the Trust portfolio, the
initial evaluation, legal fees, the initial fees and expenses of the Trustee and
any nonmaterial out-of-pocket expenses. Notwithstanding anything to the contrary
in Part B of the Prospectus:
1. During the period ending with the earlier of six months after the
Initial Date of Deposit or the end of the initial offering period, the
Public Offering Price includes organization costs incurred in establishing
your Trust. The Trustee will deduct these expenses from your Trust at the
close of this period. Also during this period, the price at which the
Sponsor expects to repurchase Units and the redemption price per Unit
include estimated organization costs. After this period, the Sponsor's
repurchase price and the redemption price per Unit do not include these
costs.
2. If bonds are purchased with the portion of the Public Offering Price
intended to be used to reimburse the Sponsor for the Trust's organization
costs, the bonds will be purchased in the same proportionate relationship as
all the bonds contained in the Trust. These bonds will be sold to reimburse
the Sponsor for the Trust's organization costs at the earlier of six months
after the Initial Date of Deposit or the end of the initial offering period.
Also, any cash received for these purposes will be paid to the Sponsor at
the earlier of six months after the Initial Date of Deposit or the end of
the initial offering period. The bonds may decrease in value during this
period. If proceeds from the sale of these bonds or any cash reserved is
insufficient to repay the Sponsor for these costs, the Trustee will sell
additional bonds. If this occurs, the net asset value per Unit will be
reduced by the amount of additional bonds sold. Although the dollar amount
of the Sponsor's reimbursement will remain fixed and never exceed the amount
per Unit set forth under "Statement of Condition" herein, this will result
in a greater effective cost per Unit to you. When bonds are sold to
reimburse the Sponsor for organization costs, the Trustee will sell the
bonds to maintain the same proportionate relationship among the bonds
contained in the Trust that existed prior to the sale.
3. The Sponsor deducts unpaid organization costs when determining the
value of the Trust.
8
<PAGE>
SCHEDULE OF INVESTMENTS AT THE DATE OF DEPOSIT, FEBRUARY 16, 2000
<TABLE>
<CAPTION>
Ratings(3) Trustee's
Optional -------------------- Determination
Aggregate Name of Issuer and Title of Issue Represented Redemption Standard of Offering
Principal by Sponsor's Contracts to Purchase Bonds(1) Provisions(2) & Poor's Moody's Price
<C> <C> <S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
$ 250,000 Dormitory Authority of the State of New York, State 2008 at 101 AAA Aaa $ 199,965
University Educational Facilities Revenue Bonds,
Series 1998 B, 4.75% Due 5/15/28. (Original issue
discount bonds delivered on or about September 3,
1998 at a price of 92.653% of principal amount.)
250,000 Town of Babylon, New York, Industrial Development 2010 at 101 AAA Aaa 248,405
Agency, Civic Facility Revenue Bonds, Series 2000 B
(WSNCHS East, Inc. Project), 6.00% Due 8/1/24.
(When issued.)
250,000 Long Island Power Authority (New York), Electric 2008 at 101 AAA Aaa 219,720
System General Revenue Bonds, Series 1998A, 5.25%
Due 12/1/26.
250,000 The City of New York, New York, General Obligation 2008 at 101 AAA Aaa 211,253
Bonds, Fiscal 1998 Series F, 5.00% Due 8/1/23.
(Original issue discount bonds delivered on or
about January 6, 1998 at a price of 93.435% of
principal amount.)
250,000 New York City Transitional Finance Authority (New 2009 at 101 AAA Aaa 209,135
York), Future Tax Secured Bonds, Fiscal 1999 Series
C, 5.00% Due 5/1/29.
250,000 New York City (New York), Municipal Water Finance 2008 at 101 AAA Aaa 198,133
Authority, Water and Sewer System Revenue Bonds,
Fiscal 1999 Series A, 4.75% Due 6/15/31.
250,000 Rensselaer County, New York, Industrial Development 2009 at 101 AAA Aaa 230,918
Agency, Civic Facility Revenue Bonds (Rensselaer
Polytechnic Institute Non-Residential Project),
Series 1999 B, 5.50% Due 8/1/22.
- ----------- -----------
$ 1,750,000 $ 1,517,529
=========== ===========
</TABLE>
- ------------
(1) The Sponsor's contracts to purchase bonds were entered into on February
15, 2000. Other information regarding the bonds in the Trust on the Date of
Deposit is as follows:
<TABLE>
<CAPTION>
COST TO PROFIT (OR LOSS) ANNUAL INTEREST BID PRICE
TRUST SPONSOR TO SPONSOR INCOME TO TRUST OF BONDS
----- ----------- ----------------- ---------------- ----------
<S> <C> <C> <C> <C>
New York Insured Trust 306............................... $ 1,511,877 $ 5,652 $ 90,625 $1,510,529
</TABLE>
In addition, the difference between the Trustee's determination of Offering
Price and Bid Price (as a percentage of principal amount) is .40%. Neither cost
to Sponsor nor profit (or loss) to Sponsor reflects underwriting profits or
losses received or incurred by the Sponsor through its participation in
underwriting syndicates. The Sponsor did not participate as either the sole
underwriter or as a manager or member of a syndicate that acted as the original
underwriter of any of the bonds.
(2) The bonds are first subject to optional redemption in the years, and at
the prices, shown. Unless otherwise indicated, the bonds, except for bonds
issued at a substantial original issue discount, are redeemable at declining
prices (but not below par value) in subsequent years. Original issue discount
bonds, including zero coupon bonds, are generally redeemable at prices based on
the issue price plus the amount of original issue discount accreted to
redemption plus, if applicable, some premium, the amount of which will decline
in subsequent years. The bonds may also be subject to sinking fund redemption
without premium prior to the dates shown. Certain bonds may be subject to
redemption without premium prior to the date shown pursuant to special or
mandatory call provisions specified in the instruments setting forth the terms
and provisions of such bonds. See "Risk Factors" herein and "COMPOSITION OF
TRUSTS" and "WHAT IS THE TAX STATUS OF UNITHOLDERS?" in Part B of this
Prospectus.
(3) All the bonds in the Insured Trusts, as insured by the Insurer, are
rated AAA by Standard & Poor's, AAA by Fitch and/or Aaa by Moody's. The
insurance obtained by the Trust guarantees the payment of interest and principal
on the bonds when due but does not cover certain market risks associated with
fixed income securities such as accelerated payments, premiums payable on
mandatory redemptions or interest rate risks. (See "WHY AND HOW ARE THE BONDS
INSURED?" in Part B of this Prospectus and "Description of Ratings" in the
Information Supplement.)
9
<PAGE>
STATEMENT OF CONDITION, AS OF FEBRUARY 16, 2000
<TABLE>
<S> <C>
TRUST PROPERTY
Sponsor's contracts to purchase bonds, backed by an
irrevocable letter of credit(1)(2)........................ $ 1,517,529
Accrued interest to February 16, 2000 on underlying
bonds(1).................................................. 13,113
Cash in Portfolio........................................... 4,375
-----------
Total........................................... $ 1,535,017
===========
LIABILITIES AND INTEREST OF UNITHOLDERS
LIABILITIES:
Accrued interest to February 16, 2000 on underlying
bonds(4)............................................... $ 13,113
Reimbursement of Sponsor for organization costs(3)...... 4,375
-----------
Total........................................... $ 17,488
===========
INTEREST OF UNITHOLDERS:
Units of fractional undivided interest outstanding
(17,500)
Cost to investors(5).................................. $ 1,600,087
Less: Gross underwriting commission(6).............. 78,183
Less: Organization costs(3)......................... $ 4,375
-----------
Net amount applicable to investors...................... $ 1,517,529
-----------
Total........................................... $ 1,535,017
===========
- ------------
</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 Date of Deposit. The amount of such letter of credit and
any cash deposited exceeds the amount necessary for the purchase of the
bonds plus accrued interest to the Date of Deposit. At the Date of Deposit,
bonds may have been delivered to the Sponsor pursuant to certain of these
contracts; the Sponsor has assigned to the Trustee all of its rights, title
and interest in and to such bonds.
(2) Aggregate value (at offering prices) as of the Date of Deposit of the bonds
listed under "Schedule of Investments" herein, and their aggregate cost to
the Trust are the same. Such offering prices were determined by Kenny S&P
Evaluation Services, a division of J. J. Kenny Co., Inc., as of the close of
business on the business day prior to the Date of Deposit. (See "HOW WAS THE
PRICE OF THE BONDS DETERMINED AT THE DATE OF DEPOSIT?" in Part B of this
Prospectus.) Insurance coverage providing for the timely payment, when due,
of all principal of and interest on the bonds in an Insured Trust has been
obtained by the Sponsor or by the issuers of such bonds. Such insurance does
not guarantee the market value of the bonds or the value of the Units. Both
the bid and the offering prices of the underlying bonds and of the Units may
include value attributable to such policies of insurance.
(3) A portion of the Public Offering Price consists of an amount sufficient to
reimburse the Sponsor for all or a portion of the costs of establishing the
Trust. These costs have been estimated at $.25000 per Unit for the Trust. A
payment will be made as of the earlier of six months after the Initial Date
of Deposit or the end of the initial offering period to an account
maintained by the Trustee from which the obligations of the investors to the
Sponsor are dispensed. To the extent that actual organization costs are
greater than the estimated amount, only the estimated organization costs
added to the Public Offering Price will be reimbursed to the Sponsor and
deducted from the assets of the Trust.
(4) Representing, as set forth in "WHAT IS ACCRUED INTEREST?" in Part B of this
Prospectus, advancement by the Trustee of an amount equal to the accrued
bond interest as of the Date of Deposit.
(5) Aggregate Public Offering Price (exclusive of accrued interest) computed as
set forth under "HOW IS THE PUBLIC OFFERING PRICE DETERMINED?" in Part B of
this Prospectus.
(6) The gross underwriting commission of 4.90% of the Public Offering Price has
been calculated on the assumption that the Units sold are not subject to a
reduction of sales charge for quantity purchases. In single transactions
involving 500 Units or more, the sales charge is reduced. (See "HOW IS THE
PUBLIC OFFERING PRICE DETERMINED?" in Part B of this Prospectus.)
10
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF JOHN NUVEEN & CO. INCORPORATED AND UNITHOLDERS OF
NEW YORK INSURED TRUST 306:
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 New
York Insured Trust 306 (contained in Nuveen Tax-Free Unit Trust, Series 1149),
as of February 16, 2000. 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 New York Insured Trust 306 as of February 16, 2000, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
February 16, 2000
11
<PAGE>
[LOGO]
Nuveen New York
Insured Trust 306
PROSPECTUS -- PART A
FEBRUARY 16, 2000
<TABLE>
<C> <S> <C>
SPONSOR John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
Telephone: 312.917.7700
Swiss Bank Tower
10 East 50th Street
New York, NY 10022
212.207.2000
TRUSTEE The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
800.257.8787
LEGAL COUNSEL Chapman and Cutler
TO SPONSOR 111 West Monroe Street
Chicago, IL 60603
INDEPENDENT Arthur Andersen LLP
PUBLIC 33 West Monroe Street
ACCOUNTANTS Chicago, IL 60603
FOR THE TRUSTS
</TABLE>
--------------
This Prospectus does not contain complete information about the Unit Trust
filed with the Securities and Exchange Commission in Washington, DC under the
Securities Act of 1933 and the Investment Company Act of 1940.
To obtain copies at proscribed rates--
<TABLE>
<S> <C>
Write: Public Reference Section of the Commission, 450 Fifth Street
NW, Washington, DC 20549-6009
Call: (800) SEC-0330
Visit: http://www.sec.gov
</TABLE>
No person is authorized to give any information or representation about this
Trust not contained in Parts A or B of this Prospectus or the Information
Supplement, and you should not rely on any other information.
When Units of this Fund are no longer available, this Prospectus may be used
as a preliminary Prospectus for a future series, but some of the information in
this Prospectus will be changed for that series.
UNITS OF ANY FUTURE SERIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED
UNTIL THAT SERIES HAS BECOME EFFECTIVE WITH THE SECURITIES AND EXCHANGE
COMMISSION. NO UNITS CAN BE SOLD WHERE A SALE WOULD BE ILLEGAL.
<PAGE>
B
<TABLE>
<S> <C>
Defined Portfolios
Nuveen Tax-Free Unit Trusts
Prospectus Part B dated September 1, 1998
</TABLE>
THE PROSPECTUS FOR A NUVEEN UNIT TRUST IS DIVIDED INTO TWO PARTS. PART A OF
THE PROSPECTUS RELATES EXCLUSIVELY TO A PARTICULAR TRUST AND PROVIDES SPECIFIC
INFORMATION REGARDING THE TRUST'S PORTFOLIO, INVESTMENT OBJECTIVE, EXPENSES,
FINANCIAL HIGHLIGHTS, INTEREST DISTRIBUTIONS, ESTIMATED RETURNS, RISK FACTORS
and tax status. Part B of the Prospectus provides more general information
regarding the Nuveen Tax-Free Unit Trusts. You should read both Parts of the
Prospectus and retain them for future reference. Except as provided in Part A of
the Prospectus, the information contained in this Part B will apply to each
Trust.
Additional information about the Trusts is provided in the Information
Supplement. You can receive an Information Supplement by calling The Chase
Manhattan Bank (the "TRUSTEE") at (800) 257-8787.
NUVEEN DEFINED PORTFOLIOS
TAX-FREE INCOME. Each Nuveen Tax-Free Unit Trust consists of a diversified
portfolio of municipal bonds. (See "Schedule of Investments" in Part A of the
Prospectus for a list of the Bonds included in a Trust.) Under existing law, the
interest income to a Trust and to Unitholders is exempt from federal income tax.
In addition, interest income of a State Trust is exempt to the extent indicated
in Part A of the Prospectus from state and, in some cases, local income taxes.
INSURED TRUSTS. All Bonds in each Nuveen Insured Trust are covered by insurance
policies obtained from MBIA Insurance Corporation. These policies guarantee the
payment of principal and interest when due. The insurance policies remain
effective for the entire life of a Bond. Because of the insurance, the Bonds in
an Insured Trust receive a "AAA" rating from Standard & Poor's Ratings Service,
a division of The McGraw-Hill Companies, Inc. ("STANDARD & POOR'S") and Fitch
IBCA, Inc. ("FITCH") and "Aaa" by Moody's Investors Service, Inc. ("MOODY'S").
Please note that the insurance relates only to the Bonds in the Insured Trusts
and not to the Units or the market value of the Units. (See "Why and How are the
Bonds Insured?")
TRADITIONAL TRUSTS. Each Traditional Trust consists of a diversified portfolio
of Bonds rated in the category of "A" or better by Standard & Poor's, Moody's or
Fitch.
MINIMUM INVESTMENT--$5,000 or 50 Units, whichever is less.
REDEEMABLE UNITS. Units of a Trust are redeemable at the offices of the Trustee
at prices based upon the bid prices of the Bonds. (See "How Units May be
Redeemed Without Charge.")
DISTRIBUTIONS. Interest received by a Trust will be paid semi-annually, unless
you elect to receive distributions monthly or quarterly. Distributions of funds
in the principal account will ordinarily be made semi-annually. (See "When are
Distributions Made to Unitholders?")
PUBLIC OFFERING PRICE. Public Offering Price of a Trust during the Initial
Offering Period is based upon the offering prices of the Bonds in the Trust plus
an upfront sales charge. For Units purchased in the secondary market, the Public
Offering Price is based upon the bid prices of the Bonds in the Trust. Accrued
interest on the Bonds in the Portfolio 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. (See "How is the Public Offering Price
Determined?")
------------------------
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF
THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
<C> <S> <C>
WHAT IS THE NUVEEN TAX-FREE UNIT TRUST? 4
WHAT ARE THE OBJECTIVES OF THE TRUSTS? 4
SUMMARY OF PORTFOLIOS 4
COMPOSITION OF TRUSTS 6
WHY AND HOW ARE THE BONDS INSURED? 8
HOW IS THE PUBLIC OFFERING PRICE DETERMINED? 9
MARKET FOR UNITS 12
WHAT IS ACCRUED INTEREST? 12
WHAT ARE ESTIMATED LONG TERM RETURN AND ESTIMATED
CURRENT RETURN? 13
HOW WAS THE PRICE OF THE BONDS DETERMINED AT THE
DATE
OF DEPOSIT? 14
WHAT IS THE TAX STATUS OF UNITHOLDERS? 14
WHAT ARE NORMAL TRUST OPERATING EXPENSES? 17
WHEN ARE DISTRIBUTIONS MADE TO UNITHOLDERS? 18
ACCUMULATION PLAN 19
HOW DETAILED ARE REPORTS TO UNITHOLDERS? 19
UNIT VALUE AND EVALUATION 19
HOW UNITS OF THE TRUSTS ARE DISTRIBUTED TO THE
PUBLIC 20
OWNERSHIP AND TRANSFER OF UNITS 21
HOW UNITS MAY BE REDEEMED WITHOUT CHARGE 22
HOW UNITS MAY BE PURCHASED BY THE SPONSOR 23
HOW BONDS MAY BE REMOVED FROM THE TRUSTS 23
INFORMATION ABOUT THE TRUSTEE 23
INFORMATION ABOUT THE SPONSOR 24
OTHER INFORMATION 25
</TABLE>
2
<PAGE>
J Tax-Free Unit Trusts
<TABLE>
<CAPTION>
TOPICAL INDEX PAGE
<C> <S> <C> <C>
Accrued Interest 12
Accumulation Plan 19
Information
Bond Ratings, Description of Supplement
Bonds, Initial Determination of Offering Price 14
Bonds, How Selected 4
Bonds, Limited Right of Substitution 7
Bonds, Removal from a Trust 23
Call Provisions of Portfolio Bonds 7
Capital Gains Taxability 14
Composition of Trusts 6
Dealer Discounts 20
Distributions to Unitholders 18
Part
Distribution Payment Dates A,18
Distribution of Units to the Public 20
Essential Information Regarding the Trusts Part A
Part
Estimated Long Term Return and Estimated Current Return A,13
Evaluation 19
Expenses for Normal Trust Operation 17
Indenture, Amendment of 25
Indenture, Termination of 25
Insurance on the Bonds 8
Part
Interest Account Distributions A,18
Legal Opinion 25
Limitations on Liabilities of Sponsor and Trustee 24
Market for Units 12
Minimum Transaction 20
Objectives of the Trusts 4
Optional Distribution Plan 18
Other Information 25
Ownership and Transfer of Units 21
Principal Account Distributions 18
Public Offering Price of Units 9
Purchase of Units by Sponsor 23
Quantity Purchases 9
Part
Record Dates A,18
Redemption of Units Without Charge 22
Report of Independent Public Accountants Part A
Reports to Unitholders 19
RISK FACTORS Part A
Sales Charge 10
Schedules of Investments Part A
Sponsor, Information About 24
State Tax Status Part A
Statements of Condition Part A
Successor Trustees and Sponsors 24
Supplemental Information 25
Tax Status of Unitholders 14
Trustee, Information About 23
Units, Description of 4
</TABLE>
3
<PAGE>
WHAT IS THE NUVEEN TAX-FREE UNIT TRUST?
This Nuveen Tax-Free Unit Trust is one of a series of separate but similar
investment companies created by the Sponsor, each of which is designated by a
different Series number. The underlying unit investment trusts contained in this
Series are combined under one Trust Indenture and Agreement. Specific
information regarding this Trust is set forth in Part A of this Prospectus. The
various Nuveen Tax-Free Unit Trusts are collectively referred to herein as the
"Trusts"; the trusts in which few or none of the Bonds are insured are sometimes
referred to as the "Traditional Trusts," the trusts in which all of the Bonds
are insured as described herein are sometimes referred to as the "Insured
Trusts," and the state trusts (both Traditional and Insured) are sometimes
referred to as the "State Trusts." This Series was created under the laws of the
State of New York pursuant to a Trust Indenture and Agreement dated the Date of
Deposit (the "Indenture") between John Nuveen & Co. Incorporated ("Nuveen" or
the "Sponsor") and The Chase Manhattan Bank (the "Trustee").
Sponsor has deposited with the Trustee delivery statements relating to
contracts for the purchase of municipal debt obligations together with funds
represented by an irrevocable letter of credit issued by a major commercial bank
in the amount, including accrued interest, required for their purchase (or the
obligations themselves) (the "Bonds"). See "Schedule of Investments" in Part A
of this Prospectus, for a description of the Bonds deposited in a Trust. See
"SUMMARY OF PORTFOLIOS" herein and "RISK FACTORS" in Part A of the Prospectus
for a discussion of zero coupon bonds and stripped obligations included in the
Trusts, if any. Some of the delivery statements may relate to contracts for the
purchase of "when issued" or other Bonds with delivery dates after the date of
settlement for a purchase made on the Date of Deposit. See the "Schedule of
Investments" in Part A of this Prospectus and "COMPOSITION OF TRUSTS." For a
discussion of the Sponsor's obligations in the event of a failure of any
contract for the purchase of any of the Bonds and its limited right to
substitute other bonds to replace any failed contract, see "COMPOSITION OF
TRUSTS."
Payment of interest on the Bonds in each Insured Trust, and of principal at
maturity, is guaranteed under policies of insurance obtained by the Sponsor or
by the issuers of the Bonds. (See "WHY AND HOW ARE THE BONDS INSURED?") AS A
GENERAL MATTER, NEITHER THE ISSUER NOR THE SPONSOR HAS OBTAINED INSURANCE WITH
RESPECT TO THE BONDS IN ANY TRADITIONAL TRUST.
The Trustee has delivered to the Sponsor registered Units which represent
ownership of the entire Trust, and which are offered for sale by this
Prospectus. Each Unit of a Trust represents a fractional undivided interest in
the principal and net income of such Trust in the ratio set forth in "Essential
Information" in Part A of this Prospectus. Units may only be sold in states in
which they are registered. To the extent that any Units of any Trust are
redeemed by the Trustee, the aggregate value of the Trust's assets will decrease
by the amount paid to the redeeming Unitholder, but the fractional undivided
interest of each unredeemed Unit in such Trust will increase proportionately.
The Sponsor will initially, and from time to time thereafter, hold Units in
connection with their offering.
WHAT ARE THE OBJECTIVES OF THE TRUSTS?
The objectives of the Trusts are income exempt from Federal income tax and, in
the case of State Trusts, where applicable, state income and intangibles taxes,
and conservation of capital, through an investment in obligations issued by or
on behalf of states and territories of the United States and authorities and
political subdivisions thereof, the interest on which is, in the opinion of
recognized bond counsel to the issuing governmental authorities, exempt from
Federal income tax under existing law and for State Trusts, from certain state
income taxes and intangibles taxes, if any, for purchasers who qualify as
residents of that State in which Bonds are issued. Insurance guaranteeing the
timely payment, when due, of all principal and interest on the Bonds in each
Insured Trust has been obtained by the Sponsor or by the issuers of such Bonds
from MBIA Insurance Corporation, and as a result of such insurance the Bonds in
the Insured Trusts are rated "Aaa" by Moody's, "AAA" by Fitch and/or "AAA" by
Standard & Poor's. (See "WHY AND HOW ARE THE BONDS INSURED?") All obligations in
each Traditional Trust are rated in the category "A" or better (SP-1, MIG 2 or
F-2 or better, respectively, in the case of short term obligations included in a
Short Term Traditional Trust) by Standard & Poor's, Moody's and/or Fitch
(including provisional or conditional ratings). In addition, certain Bonds in
certain Traditional Trusts may be covered by insurance guaranteeing the timely
payment, when due, of all principal and interest. There is, of course, no
guarantee that the Trusts' objectives will be achieved. For a comparison of net
after-tax return for various tax brackets, see the "TAXABLE EQUIVALENT ESTIMATED
CURRENT RETURN TABLES" included in the Appendices to the Information Supplement
of this Prospectus.
SUMMARY OF PORTFOLIOS
In selecting Bonds for the respective Trusts, the following factors, among
others, were considered: (i) the Standard & Poor's, Moody's and/or Fitch ratings
of the Bonds (see "WHAT ARE THE OBJECTIVES OF THE TRUSTS?" for a description of
minimum rating standards), (ii) the prices of the Bonds relative to other bonds
of comparable quality and maturity, (iii) the diversification of Bonds as to
purpose of issue and location of issuer, (iv) the maturity dates of the Bonds,
and (v) in the case of the Insured Trusts only, the availability of MBIA
Insurance Corporation insurance on such Bonds. (See "WHY AND HOW ARE THE BONDS
INSURED?")
4
<PAGE>
Each Trust consists of municipal bonds. As set forth in "RISK FACTORS" in Part A
of this Prospectus, the Trusts may contain or be concentrated in one or more of
the types of bonds discussed below. The following paragraphs briefly discuss
certain circumstances which may adversely affect the ability of issuers of Bonds
held in the portfolio of a Trust to make payments of principal and interest or
the ratings of such Bonds. For economic risks specific to the individual Trusts,
see "RISK FACTORS" in Part A of this Prospectus and the Appendices to the
Information Supplement of this Prospectus.
ESCROW SECURED OBLIGATIONS are typically secured by direct obligations of
the U.S. Government or in some cases obligations guaranteed by the U.S.
Government placed in an escrow account maintained by an independent trustee
until maturity or a predetermined redemption date. These obligations are
generally noncallable prior to maturity or the predetermined redemption date. In
a few isolated instances, however, bonds which were thought to be escrowed to
maturity have been called for redemption prior to maturity.
HEALTH CARE FACILITY OBLIGATIONS are obligations of issuers whose revenues
are derived from services provided by hospitals or other health care facilities,
including nursing homes. The ability of such issuers to make debt service
payments on these obligations is dependent on various factors, including
occupancy levels of the facility, demand for services, wages of employees,
overhead expenses, competition from other similar providers, government
regulation, the cost of malpractice insurance, and the degree of governmental
financial assistance, including Medicare and Medicaid.
HOUSING OBLIGATIONS are obligations of issuers whose revenues are primarily
derived from mortgage loans on single family residences or housing projects for
low to moderate income families. Housing obligations are generally prepayable at
any time and therefore their average life will ordinarily be less than their
stated maturities. The ability of such issuers to make debt service payments on
these obligations is dependent on various factors, including occupancy levels,
rental income, mortgage default rates, taxes, operating expenses, governmental
regulations and the appropriation of subsidies.
INDUSTRIAL REVENUE OBLIGATIONS are industrial revenue bonds ("IRBs"),
including pollution control revenue bonds, which are tax-exempt securities
issued by states, municipalities, public authorities or similar entities to
finance the cost of acquiring, constructing or improving various industrial
projects. Debt service payment on IRBs is dependent upon various factors,
including the creditworthiness of the corporate operator of the project and, if
applicable, corporate guarantor, revenues generated from the project, expenses
associated with the project and regulatory and environmental restrictions.
UTILITY OBLIGATIONS are obligations of issuers whose revenues are primarily
derived from the sale of several types of energy, including electric and natural
gas. The ability of such issuers to make debt service payments on these
obligations is dependent on various factors, including the rates for electricity
and natural gas, the demand for electricity and natural gas, the degree of
competition, governmental regulation, overhead expenses and variable costs, such
as fuel.
TRANSPORTATION FACILITY REVENUE OBLIGATIONS are obligations of issuers which
are payable from and secured by revenues derived from the ownership and
operation of airports, public transit systems and ports. The ability of issuers
to make debt service payments on airport obligations is dependent on the
capability of airlines to meet their obligations under use agreements. Due to
increased competition, deregulation, increased fuel costs and other factors,
many airlines may have difficulty meeting their obligations under these use
agreements. Bonds that are secured primarily by the revenue collected by a
public transit system typically are additionally secured by a pledge of sales
tax receipts collected at the state or local level, or of other governmental
financial assistance. The revenue of issuers of transit system obligations will
be affected by variations in utilization, which in turn may be affected by the
degree of local governmental subsidization, competition from other forms of
transportation, and increased costs. Port authorities derive their revenues
primarily from fees imposed on ships using the facilities which may fluctuate
depending on the local economy and on competition from competing forms of
transportation such as air, rail and trucks. The revenues of issuers which
derive their payments from bridge, road or tunnel toll revenues could be
adversely affected by increases in fuel costs, competition from toll-free
vehicular bridges and roads and alternative modes of transportation.
WATER AND/OR SEWERAGE OBLIGATIONS are obligations of issuers whose revenues
are payable from user fees from the sale of water and/or sewerage services. The
problems of such issuers include the ability to obtain rate increases,
population declines, the limitations on operations and increased costs and
delays attributable to environmental considerations, the difficulties obtaining
new supplies of fresh water, the effect of conservation programs and "no-growth"
zoning ordinances.
UNIVERSITY AND COLLEGE REVENUE OBLIGATIONS are obligations of issuers whose
revenues are derived mainly from tuition, dormitory revenues, grants and
endowments. General problems faced by such issuers include declines in the
number of "college" age individuals, possible inability to raise tuitions and
fees, the uncertainty of continued receipt of Federal grants and state funding,
and government legislation or regulations which may adversely affect the
revenues or costs of such issuers.
DEDICATED-TAX SUPPORTED OBLIGATIONS are obligations of issuers which are
payable from and secured by tax revenues from a designated source, which
revenues are pledged to secure the bonds. The various types of Bonds described
5
<PAGE>
below differ in structure and with respect to the rights of the bondholders to
the underlying property. Each type of dedicated-tax supported Bond has distinct
risks, only some of which are set forth below. One type of dedicated-tax
supported Bond is secured by the incremental tax received on either real
property or on sales within a specifically defined geographical area; such tax
generally will not provide bondholders with a lien on the underlying property or
revenues. Another type of dedicated-tax supported Bond is secured by a special
tax levied on real property within a defined geographical area in such a manner
that the tax is levied on those who benefit from the project; such bonds
typically provide for a statutory lien on the underlying property for unpaid
taxes. A third type of dedicated-tax supported Bond may be secured by a tax
levied upon the manufacture, sale or consumption of commodities or upon the
license to pursue certain occupations or upon corporate privileges within a
taxing jurisdiction. As to any of these types of Bonds, the ability of the
designated revenues to satisfy the interest and principal payments on such bonds
may be affected by changes in the local economy, the financial success of the
enterprise responsible for the payment of the taxes, the value of any property
on which taxes may be assessed and the ability to collect such taxes in a timely
fashion. Each of these factors will have a different affect on each distinct
type of dedicated-tax supported bonds.
MUNICIPAL LEASE OBLIGATIONS are obligations that are secured by lease
payments of a governmental entity and are normally subject to annual budget
appropriations of the leasing governmental entity. A governmental entity that
enters into such a lease agreement cannot obligate future governments to
appropriate for and make lease payments but covenants to take such action as is
necessary to include any lease payments due in its budgets and to make the
appropriations therefor. A governmental entity's failure to appropriate for and
to make payments under its lease obligation could result in insufficient funds
available for payment of the obligations secured thereby.
ORIGINAL ISSUE DISCOUNT OBLIGATIONS AND STRIPPED OBLIGATIONS are bonds which
were issued with nominal interest rates less than the rates then offered by
comparable securities and as a consequence were originally sold at a discount
from their face, or par, values. In a stable interest rate environment, the
market value of an original issue discount bond would tend to increase more
slowly in early years and in greater increments as the bond approached maturity.
Certain of the original issue discount obligations in a Trust may be zero
coupon bonds. Zero coupon bonds do not provide for the payment of any current
interest; the buyer receives only the right to receive a final payment of the
face amount of the bond at its maturity. Zero coupon bonds are subject to
substantially greater price fluctuations during periods of changing market
interest rates than are securities of comparable quality that pay interest
currently.
Original issue discount obligations, including zero coupon bonds, may be
subject to redemption at prices based on the issue price plus the amount of
original issue discount accreted to redemption (the "accreted value") plus, if
applicable, some premium. Pursuant to such call provisions, an original issue
discount bond may be called prior to its maturity date at a price less than its
face value. See the "Schedule of Investments" appearing in Part A of this
Prospectus for more information about the call provisions of portfolio Bonds.
Certain of the Bonds in a Trust may be stripped obligations, which represent
evidences of ownership with respect to either the principal amount of or a
payment of interest on a tax-exempt obligation ("Stripped Obligations"). Each
Stripped Obligation has been purchased at a discount from the amount payable at
maturity. A Stripped Obligation therefore has economic characteristics similar
to zero coupon bonds, as described above.
Unitholders should consult their own tax advisers with respect to the state
and local tax consequences of owning original issue discount bonds or Stripped
Obligations. Under applicable provisions governing determination of state and
local taxes, interest on original issue discount obligations or Stripped
Obligations may be deemed to be received in the year of accrual even though
there is no corresponding cash payment.
COMPOSITION OF TRUSTS
Each Trust initially consists of delivery statements relating to contracts to
purchase Bonds (or of such Bonds) as are listed under "Schedule of Investments"
in Part A of this Prospectus and, thereafter, of such Bonds as may continue to
be held from time to time (including certain securities deposited in the Trust
in substitution for Bonds not delivered to a Trust or in exchange or
substitution for Bonds upon certain refundings), together with accrued and
undistributed interest thereon and undistributed cash realized from the
disposition of Bonds.
"WHEN-ISSUED" AND "DELAYED DELIVERY" TRANSACTIONS. The contracts to
purchase Bonds delivered to the Trustee represent an obligation by issuers or
dealers to deliver Bonds to the Sponsor for deposit in the Trusts. Certain of
the contracts relate to Bonds which have not been issued as of the Date of
Deposit and which are commonly referred to as "when issued" or "when, as and if
issued" Bonds. Although the Sponsor believes it unlikely, if such Bonds, or
replacement bonds described below, are not acquired by a Trust or if their
delivery is delayed, the Estimated Current Returns and Estimated Long Term
Returns shown in Part A of this Prospectus may be reduced. Certain of the
contracts for the purchase of Bonds provide for delivery dates after the date of
settlement for purchases made on the Date of Deposit. Interest on such "when
issued" and "delayed delivery" Bonds accrues to the benefit of Unitholders
commencing with the first settlement
6
<PAGE>
date for the Units. However, in the opinion of counsel, Unitholders who purchase
their Units prior to the date such Bonds are actually delivered to the Trustee
must reduce the tax basis of their Units for interest accruing on such Bonds
during the interval between their purchase of Units and the delivery of the
Bonds because such amounts constitute a return of principal. As a result of such
adjustment, the Estimated Current Returns set forth in Part A of this Prospectus
(which are based on the Public Offering Price as of the business day prior to
the Date of Deposit) may be slightly lower than that which Unitholders will
receive after the first year, assuming the Portfolio does not change and
estimated annual expense does not vary from that set forth under "Essential
Information" in Part A of this Prospectus. Those Bonds in each Trust purchased
with delivery dates after the date of settlement for purchases made on the Date
of Deposit are so noted in the "Schedule of Investments" in Part A of this
Prospectus.
LIMITED REPLACEMENT OF CERTAIN BONDS. Neither the Sponsor nor the Trustee
shall be liable in any way for any default, failure or defect in any Bond. In
the event of a failure to deliver any Bond that has been purchased for a Trust
under a contract, including those Bonds purchased on a when, as and if issued
basis ("Failed Bonds"), the Sponsor is authorized under the Indenture to direct
the Trustee to acquire other specified Bonds ("Replacement Bonds") to make up
the original corpus of the Trust within 20 days after delivery of notice of the
failed contract and the cost to the Trust (exclusive of accrued interest) may
not exceed the amount of funds reserved for the purchase of the Failed Bonds.
The Replacement Bonds must satisfy the criteria previously described for the
Trusts and shall be substantially identical to the Failed Bonds they replace in
terms of (i) the exemption from federal and state taxation; (ii) maturity and;
(iii) cost to the Trust. In addition, Replacement Bonds shall not be "when, as
and if issued" Bonds. Whenever a Replacement Bond has been acquired for a Trust,
the Trustee shall, within five days after the delivery thereof, mail or deliver
a notice of such acquisition to all Unitholders of the Trust involved. Once the
original corpus of the Trust is acquired, the Trustee will have no power to vary
the investment of the Trust.
To the extent Replacement Bonds are not acquired, the Sponsor shall refund
to all Unitholders of the Trust involved the sales charge attributable to such
Failed Bonds not replaced, and the principal and accrued interest attributable
to such Bonds shall be distributed not more than 30 days after the determination
of such failure or at such earlier time as the Trustee in its sole discretion
deems to be in the interest of the Unitholders. Any such accrued interest paid
to Unitholders will be paid by the Sponsor and, accordingly, will not be treated
as tax-exempt income. In the event Failed Bonds in a Trust could not be
replaced, the Net Annual Interest Income per Unit for such Trust would be
reduced and the Estimated Current Return thereon might be lowered.
SALE, MATURITY AND REDEMPTION OF BONDS. Certain of the Bonds may from time
to time under certain circumstances be sold or redeemed or will mature in
accordance with their terms. The proceeds from such events will be used to pay
for Units redeemed or distributed to Unitholders and not reinvested;
accordingly, no assurance can be given that a Trust will retain for any length
of time its present size and composition.
All of the Bonds in each Trust are subject to being called or redeemed in
whole or in part prior to their stated maturities pursuant to the optional
redemption provisions described in the "Schedule of Investments" in Part A of
this Prospectus and in most cases pursuant to a sinking fund or special or
extraordinary redemption provisions. See the discussion of the various types of
bond issues, above, for information on the call provisions of such bonds,
particularly single family mortgage revenue bonds. Certain Bonds may carry a
"mandatory put" (also referred to as a "mandatory tender" or "mandatory
repurchase") feature pursuant to which the holder of such Bonds will receive
payment of the full principal amount thereof on a stated date prior to the
maturity date unless such holder affirmatively acts to retain the Bond. The
Trustee does not have the authority to act to retain Bonds with such features;
accordingly, it will receive payment of the full principal amount of any such
Bonds on the stated put date and such date is therefore treated as the maturity
date of such Bonds in selecting Bonds for the respective Trusts and for purposes
of calculating the average maturity of the Bonds in any Trust.
The exercise of redemption or call provisions will (except to the extent the
proceeds of the called Bonds are used to pay for Unit redemptions) result in the
distribution of principal and may result in a reduction in the amount of
subsequent interest distributions; it may also affect the current return on
Units of the Trust involved. The exercise of redemption or call provisions is
more likely to occur in situations where the Bonds have an offering side
evaluation which represents a premium over par (as opposed to a discount from
par). (In the case of original issue discount bonds, such redemption is
generally to be made at the issue price plus the amount of original issue
discount accreted to the date of redemption; such price is referred to herein as
"accreted value"). Because Bonds may have been valued at prices above or below
par value or the then current accreted value at the time Units were purchased,
Unitholders may realize gain or loss upon the redemption of portfolio Bonds.
(See "WHAT IS THE TAX STATUS OF UNITHOLDERS?" and "WHEN ARE DISTRIBUTIONS MADE
TO UNITHOLDERS?" in Part B and the "Schedule of Investments" in Part A of this
Prospectus.)
CERTAIN TAX MATTERS; LITIGATION. Certain of the Bonds in a Trust's
portfolio may be subject to continuing requirements regarding the actual use of
bond proceeds, the manner of operation of the project financed from bond
proceeds or the rebate of excess earnings on bond proceeds, any of which may
affect the exemption of interest on such Bonds from Federal
7
<PAGE>
income taxation. Although at the time of issuance of each of the Bonds in each
Trust an opinion of bond counsel was rendered as to the exemption of interest on
such obligations from Federal income taxation, and the issuers covenanted to
comply with all requirements necessary to retain the tax-exempt status of the
Bonds, there can be no assurance that the respective issuers or other obligors
on such obligations will fulfill the various continuing requirements established
upon issuance of the Bonds. A failure to comply with such requirements may cause
a determination that interest on such obligations is subject to Federal income
taxation, perhaps even retroactively from the date of issuance of such Bonds,
thereby reducing the value of the Bonds and subjecting Unitholders to
unanticipated tax liabilities.
To the best knowledge of the Sponsor, there is no litigation pending as of
the Date of Deposit in respect of any Bonds which might reasonably be expected
to have a material adverse effect on any of the Trusts. It is possible that
after the Date of Deposit, litigation may be initiated with respect to Bonds in
any Trust. Any such litigation may affect the validity of such Bonds or the
tax-exempt nature of the interest thereon, but while the outcome of litigation
of such nature can never be entirely predicted, the opinions of bond counsel to
the issuer of each Bond on the date of issuance state that such Bonds were
validly issued and that the interest thereon is, to the extent indicated, exempt
from Federal income tax.
WHY AND HOW ARE THE BONDS INSURED?
Insurance guaranteeing the timely payment, when due, of all principal and
interest on the Bonds in each Insured Trust has been obtained by the Sponsor or
by the issuers or underwriters of the Bonds from the MBIA Insurance Corporation
(the "Insurer"). Certain of the Bonds in an Insured Trust may be covered by a
policy or policies of insurance obtained by the issuers or underwriters of the
Bonds from Municipal Bond Insurance Association (the "Association") or Bond
Investors Guaranty Insurance Company ("BIG"). The claims-paying ability of both
the Insurer and the Association was rated "AAA Prime Grade" by Standard &
Poor's. Moody's rates all bond issues insured by either the Insurer or the
Association "Aaa" and short-term loans "MIG 1." Fitch, upon request, rates all
bond issues insured by the Insurer or the Association "AAA" and short-term loans
"F-1." All such ratings designate the highest quality. The Insurer has issued a
policy or policies of insurance covering each of the Bonds in the Insured
Trusts, each policy to remain in force until the payment in full of such Bonds
and whether or not the Bonds continue to be held by an Insured Trust. By the
terms of each policy the Insurer will unconditionally guarantee to the holders
or owners of the Bonds the payment, when due, required of the issuer of the
Bonds of an amount equal to the principal of and interest on the Bonds as such
payments shall become due but not be paid (except that in the event of any
acceleration of the due date of principal by reason of mandatory or optional
redemption, default or otherwise, the payments guaranteed will be made in such
amounts and at such times as would have been due had there not been an
acceleration).
Insurance guaranteeing the timely payment, when due, of all principal and
interest on certain Bonds in a Traditional Trust may have been obtained by the
Sponsor, issuer or underwriter of the particular Bonds involved or by another
party. Such insurance, which provides coverage substantially the same as that
obtained with respect to Bonds in Insured Trusts as described above, is
effective so long as the insured Bond is outstanding and the insurer remains in
business. Insurance relates only to the particular Bond and not to the Units
offered hereby or to their market value. Insured Bonds have received a rating of
"Aaa" by Moody's, "AAA" by Fitch and/or "AAA" by Standard & Poor's in
recognition of such insurance.
If a Bond in a Traditional Trust is insured, the "Schedule of Investments"
appearing in Part A of this Prospectus will identify the insurer. There can be
no assurance that any insurer listed therein will be able to satisfy its
commitments in the event claims are made in the future. However, Standard &
Poor's, Fitch and/or Moody's have rated the claims-paying ability of each
insurer "AAA," "AAA" or "Aaa," respectively.
The Insurer is the principal operating subsidiary of MBIA, Inc., a New York
Stock Exchange listed company. MBIA, Inc. is not obligated to pay the debts of
or claims against the Insurer. The Insurer is domiciled in the State of New York
and licensed to do business in and subject to regulation under the laws of all
50 states, the District of Columbia, the Commonwealth of Puerto Rico, the
Commonwealth of the Northern Mariana Islands, the Virgin Islands of the United
States and the Territory of Guam. The Insurer has two European branches, one in
the Republic of France and the other in the Kingdom of Spain. New York has laws
prescribing minimum capital requirements, limiting classes and concentrations of
investments and requiring the approval of policy rates and forms. State laws
also regulate the amount of both the aggregate and individual risks that may be
insured, the payment of dividends by the insurer, changes in control and
transactions among affiliates. Additionally, the Insurer is required to maintain
contingency reserves on its liabilities in certain amounts and for certain
periods of time.
Effective February 17, 1998, MBIA, Inc. acquired all of the outstanding
stock of Capital Markets Assurance Corporation ("CMAC"), a New York domiciled
financial guarantee insurance company, through a merger with its parent, CapMAC
Holdings, Inc. Pursuant to a reinsurance agreement, CMAC has ceded all of its
net insured risks (including any amounts due but unpaid from third party
reinsurers), as well as its unearned premiums and contingency reserves, to the
Insurer. The Company is not obligated to pay the debts of or claims against
CMAC.
8
<PAGE>
As of December 31, 1997 the Insurer had admitted assets of $5.3 billion
(audited), total liabilities of $3.5 billion (audited), and total capital and
surplus of $1.8 billion (audited) determined in accordance with statutory
accounting practices prescribed or permitted by insurance regulatory
authorities. As of March 31, 1998, the Insurer had admitted assets of $5.4
billion (unaudited), total liabilities of $3.6 billion (unaudited), and total
capital and surplus of $1.8 billion (unaudited) determined in accordance with
statutory accounting practices prescribed or permitted by insurance regulatory
authorities.
The Association is comprised of the five insurance companies set forth in
the following table, which provides certain unaudited financial information with
respect to each of the five insurance companies comprising the Association.
MUNICIPAL BOND INSURANCE ASSOCIATION
FIVE MEMBER COMPANIES ASSETS AND POLICYHOLDERS' SURPLUS (UNAUDITED)
AS OF MARCH 31, 1998.
(000'S OMITTED)
<TABLE>
<CAPTION>
NEW YORK NEW YORK NEW YORK
STATUTORY STATUTORY POLICYHOLDERS
ASSETS LIABILITIES SURPLUS
------------ ------------ --------------
<S> <C> <C> <C>
The Travelers Casualty & Surety Company (formerly The AEtna Casualty &
Surety Company)........................................................... $ 12,099,838 $ 9,318,112 $ 2,781,726
Fireman's Fund Insurance Company........................................... 10,380,078 7,327,508 3,052,570
The Travelers Indemnity Company............................................ 11,283,583 8,593,024 2,690,559
CIGNA Property and Casualty Company (formerly Aetna Insurance Company)..... 2,325,253 1,440,522 884,731
The Continental Insurance Company.......................................... 2,443,794 1,820,590 623,204
------------ ------------ --------------
Total.............................................................. $ 38,532,546 $ 28,499,756 $ 10,032,790
------------ ------------ --------------
------------ ------------ --------------
</TABLE>
Insurance companies are subject to extensive regulation and supervision
where they do business by state insurance commissioners who regulate the
standards of solvency which must be maintained, the nature of and limitations on
investments, reports of financial condition, and requirements regarding reserves
for unearned premiums, losses and other matters. A significant portion of the
assets of insurance companies is required by law to be held in reserve against
potential claims on policies and is not available to general creditors. Although
the federal government does not regulate the business of insurance, federal
initiatives including pension regulation, controls on medical care costs,
minimum standards for no-fault automobile insurance, national health insurance,
tax law changes affecting life insurance companies and repeal of the antitrust
exemption for the insurance business can significantly impact the insurance
business.
The above ratings are not recommendations to buy, sell or hold the Bonds,
and such ratings may be subject to revision or withdrawal at any time by the
rating agencies. Any downward revision or withdrawal of either or both ratings
may have an adverse effect on the market price of the Bonds. See the Information
Supplement for further information concerning insurance.
Because the insurance on the Bonds, if any, will be effective so long as the
Bonds are outstanding, such insurance will be taken into account in determining
the market value of the Bonds and therefore some value attributable to such
insurance will be included in the value of the Units of the Insured Trusts. The
insurance does not, however, guarantee the market value of the Bonds or of the
Units.
HOW IS THE PUBLIC OFFERING PRICE DETERMINED?
The Public Offering Price of the Units of each Trust is equal to the Trustee's
determination of the aggregate OFFERING prices of the Bonds deposited therein
(minus any advancement to the principal account of the Trust made by the
Trustee) plus a sales charge set forth in "Essential Information" in Part A of
this Prospectus, in each case adding to the total thereof cash held by the
Trust, if any, and dividing the sum so obtained by the number of Units
outstanding in the Trust. See "UNIT VALUE AND EVALUATION."
The sales charge applicable to quantity purchases is reduced on a graduated
scale for sales to any purchaser of at least $50,000 or 500 Units and will be
applied on whichever basis is more favorable to the purchaser. For purposes of
calculating the applicable sales charge, purchasers who have indicated their
intent to purchase a specified amount of Units of any Trust in the primary or
secondary offering period by executing and delivering a letter of intent to the
Sponsor, which letter of intent must be in a form acceptable to the Sponsor and
shall have a maximum duration of thirteen months, will be eligible to receive a
reduced sales charge according to the following tables based on the amount of
intended aggregate purchases as expressed in the letter of intent. Due to
administrative limitations and in order to permit adequate tracking, the only
secondary market purchases that will be permitted to be applied toward the
intended specified amount and that will
9
<PAGE>
receive the corresponding reduced sales charge are those Units that are acquired
through or from the Sponsor. By establishing a letter of intent, a Unitholder
agrees that the first purchase of Units following the execution of such letter
of intent will be at least 5% of the total amount of the intended aggregate
purchases expressed in such Unitholder's letter of intent. Further, through the
establishment of the letter of intent, such Unitholder agrees that Units
representing 5% of the total amount of the intended purchases will be held in
escrow by the Trustee pending completion of these purchases. All distributions
on Units held in escrow will be credited to such Unitholder's account. If total
purchases prior to the expiration of the letter of intent period equal or exceed
the amount specified in a Unitholder's letter of intent, the Units held in
escrow will be transferred to such Unitholder's account. A Unitholder who
purchases Units during the letter of intent period in excess of the number of
Units specified in a Unitholder's letter of intent, the amount of which would
cause the Unitholder to be eligible to receive an additional sales charge
reduction, will be allowed such additional sales charge reduction on the
purchase of Units which caused the Unitholder to reach such new breakpoint level
and on all additional purchases of Units during the letter of intent period. If
the total purchases are less than the amount specified, the Unitholder involved
must pay the Sponsor an amount equal to the difference between the amounts paid
for these purchases and the amounts which would have been paid if the higher
sales charge had been applied; the Unitholder will, however, be entitled to any
reduced sales charge qualified for by reaching any lower breakpoint level. If
such Unitholder does not pay the additional amount within 20 days after written
request by the Sponsor or the Unitholder's securities representative, the
Sponsor will instruct the Trustee to redeem an appropriate number of the
escrowed Units to meet the required payment. By establishing a letter of intent,
a Unitholder irrevocably appoints the Sponsor as attorney to give instructions
to redeem any or all of such Unitholder's escrowed Units, with full power of
substitution in the premises. A Unitholder or his securities representative must
notify the Sponsor whenever such Unitholder makes a purchase of Units that he
wishes to be counted towards the intended amount. Sales charges during the
primary offering period are as follows:
<TABLE>
<CAPTION>
NATIONAL AND
STATE
NATIONAL AND STATE LONG TERM INTERMEDIATE
TRUSTS LONG INTERMEDIATE TRUSTS TRUSTS
----------------------------- ----------------------------- ------------
PERCENT PERCENT PERCENT PERCENT PERCENT
OF OF NET OF OF NET OF
OFFERING AMOUNT OFFERING AMOUNT OFFERING
NUMBER OF UNITS* PRICE INVESTED PRICE INVESTED PRICE
- ---------------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Less than 500........................... 4.90 % 5.152 % 4.25 % 4.439 % 3.90%
500 but less than 1,000................. 4.75 4.987 4.15 4.330 3.70
1,000 but less than 2,500............... 4.50 4.712 3.85 4.004 3.50
2,500 but less than 5,000............... 4.25 4.439 3.60 3.734 3.25
5,000 but less than 10,000.............. 3.50 3.627 3.35 3.466 3.00
10,000 but less than 25,000............. 3.00 3.093 3.00 3.093 2.75
25,000 but less than 50,000............. 2.50 2.564 2.50 2.564 2.50
50,000 or more.......................... 2.00 2.041 2.00 2.041 2.00
<CAPTION>
PERCENT
OF NET
AMOUNT
NUMBER OF UNITS* INVESTED
- ---------------------------------------- ------------
<S> <C>
Less than 500........................... 4.058 %
500 but less than 1,000................. 3.842
1,000 but less than 2,500............... 3.627
2,500 but less than 5,000............... 3.359
5,000 but less than 10,000.............. 3.093
10,000 but less than 25,000............. 2.828
25,000 but less than 50,000............. 2.564
50,000 or more.......................... 2.041
</TABLE>
<TABLE>
<CAPTION>
NATIONAL AND STATE SHORT
INTERMEDIATE TRUSTS SHORT TERM TRUSTS
----------------------------- -----------------------------
PERCENT PERCENT PERCENT PERCENT
OF OF NET OF OF NET
OFFERING AMOUNT OFFERING AMOUNT
NUMBER OF UNITS* PRICE INVESTED PRICE INVESTED
- ---------------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Less than 500........................... 3.00 % 3.093 % 2.50 % 2.564 %
500 but less than 1,000................. 2.80 2.881 2.30 2.354
1,000 but less than 2,500............... 2.60 2.670 2.10 2.145
2,500 but less than 5,000............... 2.35 2.407 1.85 1.885
5,000 but less than 10,000.............. 2.10 2.145 1.60 1.626
10,000 but less than 25,000............. 1.85 1.885 1.35 1.368
25,000 but less than 50,000............. 1.80 1.833 1.25 1.266
50,000 or more.......................... 1.50 1.523 1.15 1.163
</TABLE>
*Breakpoint sales charges are computed both on a dollar basis and on the basis
of the number of Units purchased, using the equivalent of 500 Units to $50,000,
2,500 Units to $250,000 etc., and will be applied on that basis which is more
favorable to the purchaser.
For "secondary market" sales the Public Offering Price per Unit of each
Trust is determined by adding to the Trustee's determination of the BID price of
each Bond in the Trust a sales charge determined in accordance with the table
set forth below based upon the number of years remaining to the maturity of each
such Bond. See "UNIT VALUE AND EVALUATION." The effect of this method of sales
charge calculation will be that different sales charge rates will be applied to
the various Bonds in a Trust portfolio based upon the maturities of such Bonds.
As shown, the sales charge on Bonds in each
10
<PAGE>
maturity range (and therefore the aggregate sales charge on the purchase) is
reduced with respect to purchases of at least $50,000 or 500 Units:
<TABLE>
<CAPTION>
AMOUNT OF PURCHASE*
-----------------------------------------------------------------------------------------------------
$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
- ---------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Less than 1................... 0 0 0 0 0 0 0 0
1 but less than 2............. 1.523 % 1.446 % 1.369 % 1.317 % 1.215 % 1.061 % .900 % .750 %
2 but less than 3............. 2.041 1.937 1.833 1.729 1.626 1.420 1.225 1.030
3 but less than 4............. 2.564 2.433 2.302 2.175 2.041 1.781 1.546 1.310
4 but less than 5............. 3.093 2.961 2.828 2.617 2.459 2.175 1.883 1.590
5 but less than 7............. 3.627 3.433 3.239 3.093 2.881 2.460 2.165 1.870
7 but less than 10............ 4.167 3.951 3.734 3.520 3.239 2.828 2.489 2.150
10 but less than 13........... 4.712 4.467 4.221 4.004 3.788 3.253 2.842 2.430
13 but less than 16........... 5.263 4.988 4.712 4.439 4.167 3.627 3.169 2.710
16 or more.................... 5.820 5.542 5.263 4.987 4.603 4.004 3.500 3.000
</TABLE>
*Breakpoint sales charges are computed both on a dollar basis and on the basis
of the number of Units purchased, using the equivalent of 500 Units to
$50,000, 2,500 Units to $250,000, etc., and will be applied on that basis
which is more favorable to the purchaser.
The secondary market sales charges above are expressed as a percent of
the net amount invested; expressed as a percent of the Public Offering Price,
the maximum sales charge on a Trust, for instance one consisting entirely of
Bonds with 16 years or more to maturity, would be 5.50% (5.820% of the net
amount invested). The actual secondary market sales charge included in the
Public Offering Price of any particular Trust will depend on the maturities of
the Bonds in the portfolio of such Trust.
Pursuant to the terms of the Indenture, the Trustee may terminate a Trust if
the net asset value of such Trust, as shown by any evaluation, is less than 20%
of the original principal amount of the Trust.
At all times while Units are being offered for sale, the Sponsor will
appraise or cause to be appraised daily the value of the underlying Bonds in
each Trust as of 4:00 p.m. eastern time, or as of any earlier closing time on a
day on which the New York Stock Exchange (the "Exchange") is scheduled in
advance to close at such earlier time and will adjust the Public Offering Price
of the Units commensurate with such appraisal. Such Public Offering Price will
be effective for all orders received by a dealer or the Sponsor at or prior to
4:00 p.m. eastern time on each such day or as of any earlier closing time on a
day on which the Exchange is scheduled in advance to close at such earlier time.
Orders received after that time, or on a day when the Exchange is closed for a
scheduled holiday or weekend, will be held until the next determination of
price.
Accrued interest from the preceding Record Date to, but not including, the
settlement date of the transaction (three business days after purchase) will be
added to the Public Offering Price to determine the purchase price of Units. See
"WHAT IS ACCRUED INTEREST?"
The graduated sales charges set forth above will apply on all applicable
purchases of Nuveen investment company securities on any one day by the same
purchaser in the amounts stated, and for this purpose purchases of this Series
will be aggregated with concurrent purchases of any other Series or of shares of
any open-end management investment company of which the Sponsor is principal
underwriter and with respect to the purchase of which a sales charge is imposed.
Purchases by or for the account of individuals and their spouses, parents,
children, grandchildren, grandparents, parents-in-law, sons- and
daughters-in-law, siblings, a sibling's spouse and a spouse's siblings
("immediate family members") will be aggregated to determine the applicable
sales charge. The graduated sales charges are also applicable to a trustee or
other fiduciary purchasing securities for a single trust estate or single
fiduciary account. Units may be purchased at the Public Offering Price without a
sales charge by officers or directors and by bona fide, full-time employees of
Nuveen, Nuveen Advisory Corp., Nuveen Institutional Advisory Corp. and The John
Nuveen Company, including in each case these individuals and their immediate
family members (as defined above).
Units may be purchased in the primary market with sales charges of 1.70% of
the Public Offering Price for National and State Long Term Trusts, 1.35% of the
Public Offering Price for Long Intermediate Trusts, 1.20% of the Public Offering
Price for National and State Intermediate Trusts, 1.0% of the Public Offering
Price for National and State Short Intermediate Trusts and 1.0% of the Public
Offering Price for Short Term Trusts by (1) investors who purchase Units through
registered investment advisers, certified financial planners and registered
broker-dealers who in each case either charge periodic fees for financial
planning, investment advisory or asset management services, or provide such
services in connection with the establishment of an investment account for which
a comprehensive "wrap fee" charge is imposed, (2) bank trust departments
investing funds over which they exercise exclusive discretionary investment
authority and that are held in a fiduciary, agency, custodial or similar
capacity, (3) any person who for at least 90 days, has been an officer, director
or bona fide employee of any firm offering Units for sale to investors or their
immediate family members (as defined above) and (4) officers and directors of
bank holding companies that make Units available directly or through
subsidiaries or bank affiliates (collectively, the "Discounted Purchases"). In
addition, such investors may purchase Units in the secondary market at the
11
<PAGE>
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.
The initial or primary Public Offering Price of the Units in each Trust is
based upon a pro rata share of the OFFERING prices per Unit of the Bonds in such
Trust plus the applicable sales charge. The secondary market Public Offering
Price of each Trust is based upon a pro rata share of the BID prices per Unit of
the Bonds in such Trust plus the applicable sales charge. The OFFERING prices of
Bonds in a Trust may be expected to average between 1/2% to 2% more than the BID
prices of such Bonds. The difference between the bid side evaluation and the
offering side evaluation of the Bonds in each Trust on the business day prior to
the Date of Deposit is shown in the discussion of each Trust portfolio.
Whether or not Units are being offered for sale, the Sponsor will determine
the aggregate value of each Trust as of 4:00 p.m. eastern time: (i) on each June
30 or December 31 (or, if such date is not a business day, the last business day
prior thereto), (ii) on any day on which a Unit is tendered for redemption (or
the next succeeding business day if the date of tender is a non-business day)
and (iii) at such other times as may be necessary. For this purpose, a "business
day" shall be any day on which the Exchange is normally open. (See "UNIT VALUE
AND EVALUATION.")
MARKET FOR UNITS
During the initial public offering period, the Sponsor intends to offer to
purchase Units of each Trust at a price equivalent to the pro rata share per
Unit of the OFFERING prices of the Bonds in such Trust (plus accrued interest).
Afterward, although it is not obligated to do so, the Sponsor intends to
maintain a secondary market for Units of each Trust at its own expense and
continuously to offer to purchase Units of each Trust at prices, subject to
change at any time, which are based upon the BID prices of Bonds in the
respective portfolios of the Trusts. UNITHOLDERS WHO WISH TO DISPOSE OF THEIR
UNITS SHOULD INQUIRE OF THE TRUSTEE OR THEIR BROKER AS TO THE CURRENT REDEMPTION
PRICE. (See "HOW UNITS MAY BE REDEEMED WITHOUT CHARGE?") In connection with its
secondary marketmaking activities, the Sponsor may from time to time enter into
secondary market joint account agreements with other brokers and dealers.
Pursuant to such an agreement, the Sponsor will purchase Units from the broker
or dealer at the bid price and will place the Units into a joint account managed
by the Sponsor; sales from the account will be made in accordance with the then
current prospectus and the Sponsor and the broker or dealer will share profits
and losses in the joint account in accordance with the terms of their joint
account agreement.
Certificates, if any, for Units are delivered to the purchaser as promptly
after the date of settlement (three business days after purchase) as the Trustee
can complete the mechanics of registration, normally within 48 hours after
registration instructions are received. Purchasers of Units to whom Certificates
are issued will be unable to exercise any right of redemption until they have
received their Certificates, properly endorsed for transfer. (See "HOW UNITS MAY
BE REDEEMED WITHOUT CHARGE?")
WHAT IS ACCRUED INTEREST?
Accrued interest is the accumulation of unpaid interest on a bond from the last
day on which interest thereon was paid. Interest on Bonds in each Trust is
accounted for daily on an accrual basis. For this reason, the purchase price of
Units of a Trust will include not only the Public Offering Price but also the
proportionate share of accrued interest to the date of settlement. Accrued
interest does not include accrual of original issue discount on zero coupon
bonds, Stripped Obligations or other original issue discount bonds. Interest
accrues to the benefit of Unitholders commencing with the settlement date of
their purchase transaction.
In an effort to reduce the amount of accrued interest that investors would
have to pay in addition to the Public Offering Price, the Trustee has agreed to
advance to each Trust the amount of accrued interest due on the Bonds as of the
Date of Deposit (which has been designated the first Record Date for all plans
of distribution). This accrued interest will be paid to the Sponsor as the
holder of record of all Units on the Date of Deposit. Consequently, the amount
of accrued interest to be added to the Public Offering Price of Units will
include only accrued interest from the Date of Deposit to, but not including,
the date of settlement of the investor's purchase (three business days after
purchase), less any distributions from the related Interest Account. The Trustee
will recover its advancements (without interest or other cost to the Trusts)
from interest received on the Bonds deposited in each Trust.
The Trustee has no cash for distribution to Unitholders until it receives
interest payments on the Bonds in the Trusts. Since municipal bond interest is
accrued daily but paid only semi-annually, during the initial months of the
Trusts, the Interest Accounts, consisting of accrued but uncollected interest
and collected interest (cash), will be predominantly the uncollected accrued
interest that is not available for distribution. However, due to advances by the
Trustee, the Trustee will provide a first distribution between approximately 30
and 60 days after the Date of Deposit. Assuming each Trust retains its original
size and composition and expenses and fees remain the same, annual interest
collected and distributed will approximate the estimated Net Annual Interest
Income stated herein. However, the amount of accrued interest at any point in
time
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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
"WHEN ARE DISTRIBUTIONS MADE TO UNITHOLDERS?") As Bonds mature, or are redeemed
or sold, the accrued interest applicable to such bonds is collected and
subsequently distributed to Unitholders. Unitholders who sell or redeem all or a
portion of their Units will be paid their proportionate share of the remaining
accrued interest to, but not including, the third business day following the
date of sale or tender.
WHAT ARE ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN?
The Estimated Long Term Return for each Trust is a measure of the return to the
investor expected to be earned over the estimated life of the Trust. The
Estimated Long Term Return represents an average of the yields to maturity (or
call) of the Bonds in the Trust's portfolio calculated in accordance with
accepted bond practice and adjusted to reflect expenses and sales charges. Under
accepted bond practice, tax-exempt bonds are customarily offered to investors on
a "yield price" basis, which involves computation of yield to maturity or to an
earlier call date (whichever produces the lower yield), and which takes into
account not only the interest payable on the bonds but also the amortization or
accretion of any premium over, or discount from, the par (maturity) value
inherent in the bond's purchase price. In the calculation of Estimated Long Term
Return, the average yield for a Trust's portfolio is derived by weighting each
Bond's yield by the market value of the Bond and by the amount of time remaining
to the date to which the Bond is priced. This weighted average yield is then
adjusted to reflect estimated expenses, is compounded, and is reduced by a
factor which represents the amortization of the sales charge over the expected
average life of a Trust. The Estimated Long Term Return calculation does not
take into account the effect of a first distribution which may be less than a
regular distribution or may be paid at some point after 30 days (or a second
distribution which may be less than a normal distribution for Unitholders who
choose quarterly or semi-annual plans of distribution), and it also does not
take into account the difference in timing of payments to Unitholders who choose
quarterly or semi-annual plans of distribution, each of which will reduce the
return.
Estimated Current Return is computed by dividing the Net Annual Interest
Income per Unit by the Public Offering Price. In contrast to Estimated Long Term
Return, Estimated Current Return does not reflect the amortization of premium or
accretion of discount, if any, on the Bonds in a Trust's portfolio. Net Annual
Interest Income per Unit is calculated by dividing the annual interest income to
a Trust, less estimated expenses, by the number of Units outstanding.
Net Annual Interest Income per Unit, used to calculate Estimated Current
Return, will vary with changes in fees and expenses of the Trustee and the
Evaluator and with the redemption, maturity, exchange or sale of Bonds. A
Unitholder's actual return may vary significantly from the Estimated Long-Term
Return, based on their holding period, market interest rate changes, other
factors affecting the prices of individual bonds in the portfolio, and
differences between the expected remaining life of portfolio bonds and the
actual length of time that they remain in a Trust; such actual holding periods
may be reduced by termination of a Trust, as described in "OTHER INFORMATION."
Since both the Estimated Current Return and the Estimated Long Term Return
quoted herein are based on the market value of the underlying Bonds on the
business day prior to the Date of Deposit, subsequent calculations of these
performance measures will reflect the then current market value of the
underlying Bonds and may be higher or lower. The Sponsor will provide estimated
cash flow information relating to a Trust without charge to each potential
investor in a Trust who receives this prospectus and makes an oral or written
request to the Sponsor for such information.
A portion of the monies received by a Trust may be treated, in the first
year only, as a return of principal due to the inclusion in the Trust portfolio
of "when-issued" or other Bonds having delivery dates after the date of
settlement for purchases made on the Date of Deposit. A consequence of this
treatment is that in the computation of Estimated Current Return for the first
year, such monies are excluded from Net Annual Interest Income and treated as an
adjustment to the Public Offering Price. (See "Essential Information" appearing
in Part A of this Prospectus, "COMPOSITION OF TRUSTS" and "WHAT IS THE TAX
STATUS OF UNITHOLDERS?")
A comparison of tax-free and equivalent taxable estimated current returns
with the returns on various taxable investments is one element to consider in
making an investment decision. The Sponsor may from time to time in its
advertising and sales materials compare the then current estimated returns on a
Trust and returns over specified periods on other similar Nuveen Trusts with
returns on taxable investments such as corporate or U.S. Government bonds, bank
CD's and money market accounts or money market funds, each of which has
investment characteristics that may differ from those of the Trust. U.S.
Government bonds, for example, are backed by the full faith and credit of the
U.S. Government and bank CD's and money market accounts are insured by an agency
of the federal government. Money market accounts and money
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market funds provide stability of principal, but pay interest at rates that vary
with the condition of the short-term debt market. The investment characteristics
of the Trusts are described more fully elsewhere in the Prospectus.
HOW WAS THE PRICE OF THE BONDS DETERMINED AT THE DATE OF DEPOSIT?
The prices at which the Bonds deposited in the Trusts would have been offered to
the public on the business day prior to the Date of Deposit were determined by
the Trustee on the basis of an evaluation of such Bonds prepared by Kenny S&P
Evaluation Services, a division of J. J. Kenny Co., Inc. ("Kenny S&P"), a firm
regularly engaged in the business of evaluating, quoting or appraising
comparable bonds. With respect to Bonds in Insured Trusts and insured Bonds in
Traditional Trusts, Kenny S&P evaluated the Bonds as so insured. (See "WHY AND
HOW ARE THE BONDS INSURED?")
The amount by which the Trustee's determination of the OFFERING PRICES of
the Bonds deposited in the Trusts was greater or less than the cost of such
Bonds to the Sponsor was PROFIT OR LOSS to the Sponsor exclusive of any
underwriting profit. (See Part A of this Prospectus.) The Sponsor also may
realize FURTHER PROFIT OR SUSTAIN FURTHER LOSS as a result of fluctuations in
the Public Offering Price of the Units. Cash, if any, made available to the
Sponsor prior to the settlement date for a purchase of Units, or prior to the
acquisition of all Portfolio securities by a Trust, may be available for use in
the Sponsor's business, and may be of benefit to the Sponsor.
WHAT IS THE TAX STATUS OF UNITHOLDERS?
At the respective times of issuance of the Bonds, opinions relating to the
validity thereof and to the exclusion of interest thereon from Federal gross
income were rendered by bond counsel to the respective issuing authorities. In
addition, with respect to State Trusts, where applicable, bond counsel to the
issuing authorities rendered opinions as to the exemption of interest on such
Bonds, when held by residents of the state in which the issuers of such Bonds
are located, from state income taxes and certain state or local intangibles and
local income taxes. For a discussion of the tax status of State Trusts, see Part
A of this Prospectus. Neither the Sponsor nor Chapman and Cutler has made any
review of the Trusts proceedings relating to the issuance of the Bonds or of the
basis for the opinions rendered in connection therewith. If the interest on a
Bond should be determined to be taxable, the Bond would generally have to be
sold at a substantial discount. In addition, investors could be required to pay
income tax on interest received prior to the date of which interest is
determined to be taxable.
Gain realized on the sale or redemption of the Bonds by the Trustee or of a
Unit by a Unitholder is includable in gross income for Federal income tax
purposes, and may be includable in gross income for state tax purposes. (Such
gain does not include any amounts received in respect of accrued interest or
accrued original issue discount, if any.)
For purposes of the following opinions, it is assumed that each asset of the
Trusts is debt, the interest on which is excluded for Federal income tax
purposes.
In the opinion of Chapman and Cutler, Counsel to the Sponsor, under existing
law as of the date of this Prospectus:
(1) the Trusts are not associations taxable as corporations for Federal
income tax purposes, and interest and accrued original issue discount on
Bonds which is excludable from gross income under the Internal Revenue
Code of 1986, as amended (the "Code") will retain its status for Federal
income tax purposes when received by the Trusts and when distributed to
the Unitholders; however such interest may be taken into account in
computing the alternative minimum tax, an additional tax on branches of
foreign corporations and the environmental tax (the "Superfund Tax").
See "CERTAIN TAX MATTERS APPLICABLE TO CORPORATE UNITHOLDERS", below;
(2) each Unitholder of a Trust is considered to be the owner of a pro rata
portion of each asset of such Trust under Subpart E, subchapter J of
Chapter 1 of the Code and will have a taxable event when such Trust
disposes of a Bond or when the Unitholder redeems or sells Units. If the
Unitholder disposes of a Unit, he is deemed thereby to have disposed of
his entire pro rata interest in all the assets of the Trust involved
including his pro rata portion of all the Bonds represented by the Unit.
The Taxpayer Relief Act of 1997 includes provisions that treat certain
transactions designed to reduce or eliminate risk of loss and
opportunities for gain (e.g., short sales, offsetting notional principal
contracts, futures or forward contracts, or similar transactions) as
constructive sales for purposes of recognition of gain (but not loss)
and for purposes of determining the holding period. Unitholders should
consult their own tax advisors with regard to any such constructive
sales rules. Unitholders must reduce the tax basis of their Units for
their share of accrued interest received by the respective Trust, if
any, on Bonds delivered after the date the Unitholders pay for their
Units to the extent that such interest accrued on such Bonds before the
date the Trust acquired ownership of the Bonds (and the amount of this
reduction may exceed the amount of accrued interest paid to the seller)
and, consequently, such Unitholders may have an increase in taxable gain
or reduction in capital loss upon the disposition of such Units. Gain or
loss upon the sale or redemption of Units is measured by comparing the
proceeds of such sale or redemption with the adjusted basis of the
Units. If the Trustee disposes of Bonds (whether by sale, payment at
maturity, redemption or otherwise), gain or loss is recognized to the
Unitholder
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(subject to various non-recognition provisions of the Code). The amount
of any such gain or loss is measured by comparing the Unitholder's pro
rata share of the total proceeds from such disposition with the
Unitholder's basis for his or her fractional interest in the asset
disposed of. In the case of a Unitholder who purchases Units, such basis
(before adjustment for accrued original issue discount and amortized
bond premium, if any) is determined by apportioning the cost of the
Units among each of the Trust assets ratably according to value as of
the valuation date nearest the date of acquisition of the Units. The tax
basis reduction requirements of the Code relating to amortization of
bond premium may, under some circumstances, result in the Unitholder
realizing a taxable gain when his or her Units are sold or redeemed for
an amount less than or equal to their original cost; Unitholders should
consult their own tax advisors with regard to the calculation of basis;
and
(3) any amounts paid on defaulted Bonds held by the Trustee under policies
of insurance issued with respect to such Bonds which represent maturing
interest on defaulted Bonds held by the Trustee will be excludable from
Federal gross income if, and to the same extent as, such interest would
have been so excludable if paid in the normal course by the issuer of
the defaulted Bonds provided that, at the time such policies are
purchased, the amounts paid for such policies are reasonable, customary
and consistent with the reasonable expectation that the issuer of the
Bonds, rather than the insurer, will pay debt service on the Bonds.
Sections 1288 and 1272 of the Internal Revenue Code of 1986, as amended (the
"Code") provide a complex set of rules governing the accrual of original issue
discount. These rules provide that original issue discount accrues either on the
basis of a constant compound interest rate or ratably over the term of the Bond,
depending on the date the Bond was issued. In addition, special rules apply if
the purchase price of a Bond exceeds the original issue price plus the amount of
original issue discount which would have previously accrued based upon its issue
price (its "adjusted issue price") to prior owners. If a Bond is acquired with
accrued interest, that portion of the price paid for the accrued interest is
added to the tax basis of the Bond. When this accrued interest is received, it
is treated as a return of capital and reduces the tax basis of the Bond. If a
Bond is purchased for a premium, the amount of the premium is added to the tax
basis of the Bond. Bond premium is amortized over the remaining term of the
Bond, and the tax basis of the Bond is reduced each tax year by the amount of
the premium amortized in that tax year. The application of these rules will also
vary depending on the value of the Bonds on the date a Unitholder acquires his
Units and the price the Unitholder pays for his Units. Unitholders should
consult with their tax advisers regarding these rules and their application.
The "Revenue Reconciliation Act of 1993" (the "1993 Tax Act") subjects
tax-exempt bonds to the market discount rules of the Code, effective for bonds
purchased after April 30, 1993. In general, market discount is the amount (if
any) by which the stated redemption price at maturity exceeds an investor's
purchase price (except to the extent that such difference, if any, is
attributable to original issue discount not yet accrued), subject to a statutory
DE MINIMIS rule. Market discount can arise based on the price the Trust pays for
the Bonds or the price a Unitholder pays for his or her Units. Under the 1993
Tax Act, accretion of market discount is taxable as ordinary income; under prior
law, the accretion had been treated as capital gain. Market discount that
accretes while the Trust holds a Bond would be recognized as ordinary income by
the Unitholders when principal payments are received on the Bond, upon sale or
at redemption (including early redemption), or upon the sale or redemption of
his or her Units, unless a Unitholder elects to include market discount in
taxable income as it accrues. The market discount rules are complex and
Unitholders should consult their tax advisors regarding these rules and their
application.
CERTAIN TAX MATTERS APPLICABLE TO CORPORATE UNITHOLDERS. In the case of
certain corporations, the alternative minimum tax and the Superfund Tax for
taxable years beginning after December 31, 1986 depend upon the corporation's
alternative minimum taxable income ("AMTI"), which is the corporation's taxable
income with certain adjustments. One of the adjustment items used in computing
AMTI of a corporation (other than an S corporation, Regulated Investment
Company, Real Estate Investment Trust, REMIC or FASIT) is an amount equal to 75%
of the excess of such corporation's "adjusted current earnings" over an amount
equal to its AMTI (before such adjustment item and the alternative tax net
operating loss deduction). "Adjusted current earnings" includes all tax-exempt
interest, including interest on all Bonds in the Trust. Under current Code
provisions, the Superfund Tax does not apply to tax years beginning on or after
January 1, 1996. Legislative proposals have been introduced that would reinstate
the Superfund Tax for taxable years after December 31, 1997 and before January
1, 2009. Under the provisions of Section 884 of the Code, a branch profits tax
is levied on the "effectively connected earnings and profits" of certain foreign
corporations which include tax-exempt interest such as interest on the Bonds in
the Trust. Unitholders should consult their tax advisors with respect to the
particular tax consequences to them including the corporate alternative minimum
tax, the Superfund Tax and the branch profits tax imposed by Section 884 of the
Code.
Counsel for the Sponsor has also advised that under Section 265 of the Code,
interest on indebtedness incurred or continued to purchase or carry Units of a
Trust is not deductible for Federal income tax purposes. The Internal Revenue
Service has taken the position that such indebtedness need not be directly
traceable to the purchase or carrying of Units
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(however, these rules generally do not apply to interest paid on indebtedness
incurred to purchase or improve a personal residence). Also, under Section 265
of the Code, certain financial institutions that acquire Units would generally
not be able to deduct any of the interest expense attributable to ownership of
such Units. Legislative proposals have been made that would extend the financial
institution rules to certain other corporations, including securities dealers
and other financial intermediaries. Investors with questions regarding this
issue should consult with their tax advisers.
In the case of certain of the Bonds in the Trust, the opinions of bond
counsel indicate that interest on such Bonds received by a "substantial user" of
the facilities being financed with the proceeds of these Bonds, or persons
related thereto, for periods while such Bonds are held by such a user or related
person, will not be excludable from Federal gross income, although interest on
such Bonds received by others would be excludable from Federal gross income.
"Substantial user" and "related person" are defined under the Code and U.S.
Treasury Regulations. Any person who believes that he or she may be a
"substantial user" or a "related person" as so defined should contact his or her
tax adviser.
ALL STATEMENTS IN THE PROSPECTUS CONCERNING EXCLUSION FROM GROSS INCOME FOR
FEDERAL, STATE OR OTHER TAX PURPOSES ARE THE OPINION OF COUNSEL AND ARE TO BE SO
CONSTRUED.
At the respective times of issuance of the Bonds, opinions relating to the
validity thereof and to the exclusion of interest thereon from Federal gross
income are rendered by bond counsel to the respective issuing authorities.
Neither the Sponsor nor Chapman and Cutler has made any special review for the
Fund of the proceedings relating to the issuance of the Bonds or of the basis
for such opinions.
The Internal Revenue Service Restructuring and Reform Act of 1998 (the "1998
TAX ACT") provides that for taxpayers other than corporations, net capital gain
(which is defined as net long-term capital gain over net short-term capital loss
for the taxable year) realized from property (with certain exclusions) is
subject to a maximum marginal stated tax rate of 20% (10% in the case of certain
taxpayers in the lowest tax bracket). Capital gain or loss is long-term if the
holding period for the asset is more than one year, and is short-term if the
holding period for the asset is one year or less. The date on which a Unit is
acquired (i.e., the "trade date") is excluded for purposes for determining the
holding period of the Unit. The legislation is generally effective retroactively
for amounts properly taken into account on or after January 1, 1998. Capital
gains realized from assets held for one year or less are taxed at the same rates
as ordinary income.
In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
considered "conversion transactions" effective for transactions entered into
after April 30, 1993. Unitholders and prospective investors should consult with
their tax advisers regarding the potential effect of this provision on their
investment in Units.
For purposes of computing the alternative minimum tax for individuals and
corporations and the Superfund Tax for corporations, interest on certain private
activity bonds (which includes most industrial and housing revenue bonds) issued
on or after August 8, 1996 is included as an item of tax preference. However,
the assets of the Trust do not include any such private activity bonds issued on
or after that date.
In general, Section 86 of the Code, provides that 50% of Social Security
benefits are includible in gross income to the extent that the sum of "modified
adjusted gross income" plus 50% of the Social Security benefits received exceeds
a "base amount." The base amount is $25,000 for unmarried taxpayers, $32,000 for
married taxpayers filing a joint return and zero for married taxpayers who do
not live apart at all times during the taxable year and who file separate
returns. Modified adjusted gross income is adjusted gross income determined
without regard to certain otherwise allowable deductions and exclusions from
gross income and by including tax-exempt interest. To the extent that Social
Security benefits are includible in gross income, they will be treated as any
other item of gross income.
In addition, under the 1993 Tax Act, for taxable years beginning after
December 31, 1993, up to 85% of Social Security benefits are includible in gross
income to the extent that the sum of "modified adjusted gross income" plus 50%
of Social Security benefits received exceeds an "adjusted base amount." The
adjusted base amount is $34,000 for unmarried taxpayers, $44,000 for married
taxpayers filing a joint return, and zero for married taxpayers who do not live
apart at all times during the taxable year and who file separate returns.
Although tax-exempt interest is included in modified adjusted gross income
solely for the purpose of determining what portion, if any, of Social Security
benefits will be included in gross income, no tax-exempt interest, including
that received from the Trusts, will be subject to tax. A taxpayer whose adjusted
gross income already exceeds the base amount or the adjusted base amount must
include 50% or 85%, respectively, of his Social Security benefits in gross
income whether or not he receives any tax-exempt interest. A taxpayer whose
modified adjusted gross income (after inclusion of tax-exempt interest) does not
exceed the base amount need not include any Social Security benefits in gross
income.
Ownership of the Units may result in collateral federal income tax
consequences to certain taxpayers, including, without limitation, corporations
subject to either the environmental tax or the branch profits tax, financial
institutions, certain
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insurance companies, certain S corporations, individual recipients of Social
Security or Railroad Retirement benefits and taxpayers who may be deemed to have
incurred (or continued) indebtedness to purchase or carry tax-exempt
obligations. Prospective investors should consult their tax advisers as to the
applicability of any such collateral consequences.
EXCEPT AS NOTED ABOVE AND IN PART A OF THIS PROSPECTUS, THE EXEMPTION OF
INTEREST ON STATE AND LOCAL OBLIGATIONS FOR FEDERAL INCOME TAX PURPOSES
DISCUSSED ABOVE DOES NOT NECESSARILY RESULT IN EXEMPTION UNDER THE INCOME OR
OTHER TAX LAWS OF ANY STATE OR CITY. THE LAWS OF THE SEVERAL STATES VARY WITH
RESPECT TO THE TAXATION OF SUCH OBLIGATIONS.
In the opinion of Carter, Ledyard & Milburn, counsel to the Trustee, and, in the
absence of a New York Trust from the Series, special counsel for the Series for
New York tax matters, under existing law:
Under the income tax laws of the State and City of New York, each Trust
is not an association taxable as a corporation and the income of each Trust
will be treated as the income of the Unitholders.
For a summary of each opinion of special counsel to the respective State
Trusts for state tax matters, see Part A of this Prospectus.
WHAT ARE NORMAL TRUST OPERATING EXPENSES?
No annual advisory fee is charged to the Trusts by the Sponsor. The Sponsor
does, however, receive a fee as set forth in "Essential Information" in Part
A of this Prospectus for regularly evaluating the Bonds and for maintaining
surveillance over the portfolio (the "Sponsor's Evaluation Fee").
The Trustee receives for ordinary recurring services an annual fee for
each plan of distribution for each Trust as set forth in "Essential
Information" appearing in Part A of this Prospectus. Each annual fee is per
$1,000 principal amount of the underlying Bonds in a Trust for that portion
of the Trust that represents a particular plan of distribution, provided,
however, that for services performed prior to the record date for the second
distribution from the Interest Account indicated under "Interest
Distributions" in Part A of the Prospectus, the Trustee's compensation shall
be computed in respect of all Units outstanding at the rate specified for
the monthly plan of distribution. The Trustee's compensation with respect to
each Trust is computed on the basis of the largest principal amount of Bonds
in the Trust at any time during the period with respect to which such
compensation is being computed. 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). In addition, the Sponsor's Evaluation Fee and the
Trustee's Fee may be adjusted in accordance with the cumulative percentage
increase of the United States Department of Labor's Consumer Price Index
entitled "All Services Less Rent of Shelter" since the establishment of the
Trusts or if such index no longer exists, a comparable index. The Trustee
has the use of funds, if any, being held in the Interest and Principal
Accounts of each Trust for future distributions, payment of expenses and
redemptions. These Accounts are non-interest bearing to Unitholders.
Pursuant to normal banking procedures, the Trustee benefits from the use of
funds held therein. Part of the Trustee's compensation for its services to
the Trusts is expected to result from such use of these funds.
Premiums for the policies of insurance obtained by the Sponsor or by the
Bond issuers with respect to the Bonds in the Insured Trusts and with
respect to insured Bonds in Traditional Trusts have been paid in full prior
to the deposit of the Bonds in the Trusts, and the value of such insurance
has been included in the evaluation of the Bonds in each Trust and
accordingly in the Public Offering Price of Units of each Trust. There are
no annual continuing premiums for such insurance.
The Trusts (and therefore Unitholders) will bear all or a portion of
their offering costs, including costs of registering Units with the
Securities and Exchange Commission and states and legal fees but not
including the expenses incurred in the printing of preliminary and final
prospectuses, and expenses incurred in the preparation and printing of
brochures and other advertising materials and any other selling expenses) as
is common for mutual funds. Total offering costs will be amortized over the
first five years of such Trusts. The following are additional expenses of
the Trusts and, when paid by or are owed to the Trustee, are secured by a
lien on the assets of the Trust or Trusts to which such expenses are
allocable: (1) the expenses and costs of any action undertaken by the
Trustee to protect the Trusts and the rights and interests of the
Unitholders; (2) all taxes and other governmental charges upon the Bonds or
any part of the Trusts (no such taxes or charges are being levied or made
or, to the knowledge of the Sponsor, contemplated); (3) amounts payable to
the Trustee as fees for ordinary recurring services and for extraordinary
non-recurring services rendered pursuant to the Indenture, all disbursements
and expenses including counsel fees (including fees of bond counsel which
the Trustee may retain) sustained or incurred by the Trustee in connection
therewith; and (4) any losses or liabilities accruing to the Trustee without
negligence, bad faith or willful misconduct on its part. The Trustee is
empowered to sell Bonds in order to pay these amounts if funds are not
otherwise available in the applicable Interest and Principal Accounts.
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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.
WHEN ARE DISTRIBUTIONS MADE TO UNITHOLDERS?
Interest received by the Trustee on the Bonds in each Trust, including that
part of the proceeds of any disposition of Bonds which represents accrued
interest and including any insurance proceeds representing interest due on
defaulted Bonds, shall be credited to the "Interest Account" of such Trust
and all other moneys received by the Trustee shall be credited to the
"Principal Account" of such Trust.
The pro rata share of cash in the Principal Account in each Trust will
be computed as of each semi-annual Record Date and distributions to the
Unitholders as of such Record Date will be made on or shortly after the
fifteenth day of the month. Proceeds received from the disposition,
including sale, call or maturity, of any of the Bonds and all amounts paid
with respect to zero coupon bonds and Stripped Obligations will be held in
the Principal Account and either used to pay for Units redeemed or
distributed on the Distribution Date following the next semi-annual Record
Date. The Trustee is not required to make a distribution from the Principal
Account of any Trust unless the amount available for distribution in such
account equals at least ten cents per Unit.
The pro rata share of the Interest Account in each Trust will be
computed by the Trustee each month as of each Record Date and distributions
will be made on or shortly after the fifteenth day of the month to
Unitholders of such Trust as of the Record Date who are entitled to
distributions at that time under the plan of distribution chosen. Persons
who purchase Units between a Record Date and a Distribution Date will
receive their first distribution on the Distribution Date following the next
Record Date under the applicable plan of distribution.
Purchasers of Units who desire to receive interest distributions on a
monthly or quarterly basis may elect to do so at the time of purchase during
the initial public offering period. Those indicating no choice will be
deemed to have chosen the semi-annual distribution plan. All Unitholders,
however, who purchase Units during the initial public offering period and
who hold them of record on the first Record Date will receive the first
distribution of interest. Thereafter, Record Dates for monthly distributions
will be the first day of each month; Record Dates for quarterly
distributions will be the first day of February, May, August and November;
and Record Dates for semi-annual distributions will be the first day of May
and November. See Part A of this Prospectus for details of distributions per
Unit of each Trust under the various plans based upon estimated Net Annual
Interest Income at the Date of Deposit. The amount of the regular
distributions will generally change when Bonds are redeemed, mature or are
sold or when fees and expenses increase or decrease. For the purpose of
minimizing fluctuations in the distributions from the Interest Account of a
Trust, the Trustee is authorized to advance such amounts as may be necessary
to provide for interest distributions of approximately equal amounts. The
Trustee shall be reimbursed, without interest, for any such advances from
funds in the Interest Account of such Trust. The Trustee's fee takes into
account the costs attributable to the outlay of capital needed to make such
advances.
The plan of distribution selected by a Unitholder will remain in effect
until changed. Unitholders purchasing Units in the secondary market will
initially receive distributions in accordance with the election of the prior
owner. Unitholders desiring to change their plan of distribution may do so
by sending a written notice requesting the change, together with any
Certificate(s), to the Trustee. The notice and any Certificate(s) must be
received by the Trustee not later than the semi-annual Record Date to be
effective as of the semi-annual distribution following the subsequent
semi-annual Record Date. Unitholders are requested to make any such changes
within 45 days prior to the applicable Record Date. Certificates should only
be sent by registered or certified mail to minimize the possibility of their
being lost or stolen. (See "OWNERSHIP AND TRANSFER OF UNITS.")
As of the first day of each month the Trustee will deduct from the
Interest Account of a Trust or, to the extent funds are not sufficient
therein, from the Principal Account of a Trust, amounts needed for payment
of expenses of such Trust. The Trustee also may withdraw from said accounts
such amount, if any, as it deems necessary to establish a reserve for any
governmental charges payable out of such Trust. Amounts so withdrawn shall
not be considered a part of a Trust's assets until such time as the Trustee
shall return all or any part of such amounts to the appropriate account. In
addition, the Trustee shall withdraw from the Interest Account and the
Principal Account of a Trust such amounts as may be necessary to cover
redemptions of Units of such Trust by the Trustee. Funds which are available
for future distributions, redemptions and payment of expenses are held in
accounts which are non-interest bearing to Unitholders and are available for
use by the Trustee pursuant to normal banking procedures.
18
<PAGE>
ACCUMULATION PLAN
The Sponsor is also the principal underwriter of several open-end mutual
funds (the "Accumulation Funds") into which Unitholders may choose to
reinvest Trust distributions. Unitholders may elect to reinvest principal
distributions or interest and principal distributions automatically, without
any sales charge. Each Accumulation Fund has investment objectives which
differ in certain respects from those of the Trusts and may invest in
securities which would not be eligible for deposit in the Trusts. Further
information concerning the Accumulation Plan and a list of Accumulation
Funds is set forth in the Information Supplement of this Prospectus, which
may be obtained by contacting the Trustee at the phone number listed on the
back cover of this Prospectus.
Participants may at any time, by so notifying the Trustee in writing,
elect to change the Accumulation Fund into which their distributions are
being reinvested, to change from principal only reinvestment to reinvestment
of both principal and interest or vice versa, or to terminate their
participation in the Accumulation Plan altogether and receive future
distributions on their Units in cash. There will be no charge or other
penalty for such change of election or termination. The character of Trust
distributions for income tax purposes will remain unchanged even if they are
reinvested in an Accumulation Fund.
HOW DETAILED ARE REPORTS TO UNITHOLDERS?
The Trustee shall furnish Unitholders of a Trust in connection with each
distribution, a statement of the amount of interest, if any, and the amount
of other receipts (received since the preceding distribution) being
distributed, expressed in each case as a dollar amount representing the pro
rata share of each Unit of a Trust outstanding and a year to date summary of
all distributions paid on said Units. Within a reasonable period of time
after the end of each calendar year, the Trustee shall furnish to each
person, who at any time during the calendar year was a registered Unitholder
of a Trust, a statement with respect to such Trust (i) as to the Interest
Account: interest received (including amounts representing interest received
upon any disposition of Bonds), and, except for any State Trust, the
percentage of such interest by states in which the issuers of the Bonds are
located, deductions for fees and expenses of such Trust, redemption of Units
and the balance remaining after such distributions and deductions, expressed
in each case both as a total dollar amount and as a dollar amount
representing the pro rata share of each Unit outstanding on the last
business day of such calendar year; (ii) as to the Principal Account: the
dates of disposition of any Bonds and the net proceeds received therefrom
(excluding any portion representing accrued interest), the amount paid for
purchase of Replacement Bonds, the amount paid upon redemption of Units,
deductions for payment of applicable taxes and fees and expenses of the
Trustee, and the balance remaining after such distributions and deductions
expressed both as a total dollar amount and as a dollar amount representing
the pro rata share of each Unit outstanding on the last business day of such
calendar year; (iii) a list of the Bonds held and the number of Units
outstanding on the last business day of such calendar year; (iv) the Unit
Value based upon the last computation thereof made during such calendar
year; and (v) amounts actually distributed during such calendar year from
the Interest Account and from the Principal Account, separately stated,
expressed both as total dollar amounts and as dollar amounts representing
the pro rata share of each Unit outstanding. Each annual statement will
reflect pertinent information in respect of all plans of distribution so
that Unitholders may be informed regarding the results of other plans of
distribution.
UNIT VALUE AND EVALUATION
The value of each Trust is determined by the Sponsor on the basis of (1) the
cash on hand in the Trust or moneys in the process of being collected, (2)
the value of the Bonds in the Trust based on the BID prices of the Bonds and
(3) interest accrued thereon not subject to collection, LESS (1) amounts
representing taxes or governmental charges payable out of the Trust and (2)
the accrued expenses of the Trust. The result of such computation is divided
by the number of Units of such Trust outstanding as of the date thereof to
determine the per Unit value ("Unit Value") of such Trust. The Sponsor may
determine the value of the Bonds in each Trust (1) on the basis of current
BID prices of the Bonds obtained from dealers or brokers who customarily
deal in bonds comparable to those held by a Trust, (2) if bid prices are not
available for any of the Bonds, on the basis of bid prices for comparable
bonds, (3) by causing the value of the Bonds to be determined by others
engaged in the practice of evaluating, quoting or appraising comparable
bonds or (4) by any combination of the above. Although the Unit Value of
each Trust is based on the BID prices of the Bonds, the Units are sold
initially to the public at the Public Offering Price based on the OFFERING
prices of the Bonds.
Because the insurance obtained by the Sponsor or by the issuers of Bonds
with respect to the Bonds in the Insured Trusts and with respect to insured
Bonds in Traditional Trusts is effective so long as such Bonds are
outstanding, such insurance will be taken into account in determining the
bid and offering prices of such Bonds and therefore some value attributable
to such insurance will be included in the value of Units of Trusts that
include such Bonds.
19
<PAGE>
HOW UNITS OF THE TRUSTS ARE DISTRIBUTED TO THE PUBLIC
Nuveen, in addition to being the Sponsor, is the sole Underwriter of the
Units. It is the intention of the Sponsor to qualify Units of National, Long
Intermediate, Intermediate, Short Intermediate and Short Term Trusts for
sale under the laws of substantially all of the states of the United States
of America, and Units of State Trusts only in the state for which the Trust
is named and selected other states.
Promptly following the deposit of Bonds in exchange for Units of the
Trusts, it is the practice of the Sponsor to place all of the Units as
collateral for a letter or letters of credit from one or more commercial
banks under an agreement to release such Units from time to time as needed
for distribution. Under such an arrangement the Sponsor pays such banks
compensation based on the then current interest rate. This is a normal
warehousing arrangement during the period of distribution of the Units to
public investors. To facilitate the handling of transactions, sales of Units
shall be limited to transactions involving a minimum of either $5,000 or 50
Units, whichever is less. The Sponsor reserves the right to reject, in whole
or in part, any order for the purchase of Units.
The Sponsor plans to allow a discount to brokers and dealers in
connection with the primary distribution of Units and also in secondary
market transactions. The primary market discounts are as follows:
<TABLE>
<CAPTION>
DISCOUNT PER UNIT
--------------------------------------------------------------------
NATIONAL LONG INTER- SHORT INTER-
AND STATE MEDIATE INTERMEDIATE MEDIATE SHORT TERM
NUMBER OF UNITS* TRUSTS TRUSTS TRUSTS TRUSTS TRUSTS
- ------------------------------ ---------- ------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Less than 500................. $3.20 $2.90 $2.70 $2.00 $1.50
500 but less than 1,000....... 3.20 2.90 2.70 2.00 1.50
1,000 but less than 2,500..... 3.20 2.70 2.50 1.80 1.30
2,500 but less than 5,000..... 3.20 2.45 2.25 1.55 1.05
5,000 but less than 10,000.... 2.50 2.45 2.25 1.55 1.05
10,000 but less than 25,000... 2.00 2.00 2.00 1.30 .80
25,000 but less than 50,000... 1.75 1.75 1.75 1.30 .60
50,000 or more................ 1.75 1.50 1.50 1.00 .60
</TABLE>
*Breakpoint sales charges and related dealer concessions are computed both
on a dollar basis and on the basis of the number of Units purchased, using
the equivalent of 500 Units to $50,000, 2,500 Units to $250,000 etc. and
will be applied on that basis which is more favorable to the purchaser.
The Sponsor currently intends to maintain a secondary market for Units
of each Trust. See "MARKET FOR UNITS." The amount of the dealer concession
on secondary market purchases of Trust Units through the Sponsor will be
computed based upon the value of the Bonds in the Trust portfolio, including
the sales charge computed as described in "HOW IS THE PUBLIC OFFERING PRICE
DETERMINED?", and adjusted to reflect the cash position of the Trust
principal account, and will vary with the size of the purchase as shown in
the following table:
<TABLE>
<CAPTION>
AMOUNT OF PURCHASE*
-----------------------------------------------------------------------------------------
$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
- -------------------------- --------- --------- --------- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Less than 1............... 0 0 0 0 0 0 0 0
1 but less than 2......... 1.00% .90% .85% .80% .70% .55% .467% .389%
2 but less than 3......... 1.30% 1.20% 1.10% 1.00% .90% .73% .634% .538%
3 but less than 4......... 1.60% 1.45% 1.35% 1.25% 1.10% .90% .781% .662%
4 but less than 5......... 2.00% 1.85% 1.75% 1.55% 1.40% 1.25% 1.082% .914%
5 but less than 7......... 2.30% 2.15% 1.95% 1.80% 1.65% 1.50% 1.320% 1.140%
7 but less than 10........ 2.60% 2.45% 2.25% 2.10% 1.95% 1.70% 1.496% 1.292%
10 but less than 13....... 3.00% 2.80% 2.60% 2.45% 2.30% 2.00% 1.747% 1.494%
13 but less than 16....... 3.25% 3.15% 3.00% 2.75% 2.50% 2.15% 1.878% 1.606%
16 or more................ 3.50% 3.50% 3.40% 3.35% 3.00% 2.50% 2.185% 1.873%
</TABLE>
*Breakpoint sales charges and related dealer concessions are computed both
on a dollar basis and on the basis of the number of Units purchased,
using the equivalent of 500 Units to $50,000, 2,500 Units to $250,000,
etc., and will be applied on that basis which is more favorable to the
purchaser.
The Sponsor reserves the right to change the foregoing dealer
concessions from time to time.
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.
20
<PAGE>
Primary Market Volume Incentives
<TABLE>
<CAPTION>
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 "HOW IS THE PUBLIC
OFFERING PRICE DETERMINED?")
Certain commercial banks are making Units of the Trusts available to
their customers on an agency basis. A portion of the sales charge paid by
these customers is retained by or remitted to the banks in the amounts shown
in the above table. The Glass-Steagall Act prohibits banks from underwriting
Trust Units; the Act does, however, permit certain agency transactions and
banking regulators have not indicated that these particular agency
transactions are not permitted under the Act. In Texas and in certain other
states, any bank making Units available must be registered as a broker-
dealer under state law.
OWNERSHIP AND TRANSFER OF UNITS
The ownership of Units is evidenced in Certificated form unless the
Unitholder expressly requests that the purchased Units be evidenced by book
entry positions recorded on the books and records of the Trustee. The
Trustee is authorized to treat as the owner of Units that person who at the
time is registered as such on the books of the Trustee. Any Unitholder who
holds a Certificate may change to book entry ownership by submitting to the
Trustee the Certificate along with a written request that the Units
represented by such Certificate be held in book entry form. Likewise, a
Unitholder who holds Units in book entry form may obtain a Certificate for
such Units by written request to the Trustee. Units may be held in
denominations of one Unit or any multiple or fraction thereof. Fractions of
Units are computed to three decimal places. Any Certificates issued will be
numbered serially for identification, and are issued in fully registered
form, transferable only on the books of the Trustee. Book entry Unitholders
will receive a Book Entry Position Confirmation reflecting their ownership.
For Trusts allowing optional plans of distribution, Certificates for
Units will bear an appropriate notation on 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 Unitholder. Each Unitholder must sign such written
request, and such Certificate(s) or transfer instrument, exactly as his name
appears on (a) the face of the Certificate(s) representing the Units to be
transferred, or (b) the Book Entry Position Confirmation(s) relating to the
Units to be transferred. Such signature(s) must be guaranteed by a guarantor
acceptable to the Trustee. In certain instances the Trustee may require
additional documents such as, but not limited to, trust instruments,
certificates of death, appointments as executor or administrator or
certificates of corporate authority. Mutilated Certificates must be
surrendered to the Trustee in order for a replacement Certificate to be
issued. Although at the date hereof no charge is made and none is
contemplated, a Unitholder may be required to pay $2.00 to the Trustee for
each Certificate reissued or transfer of Units requested and to pay any
governmental charge which may be imposed in connection therewith.
21
<PAGE>
REPLACEMENT OF LOST, STOLEN OR DESTROYED CERTIFICATES.
To obtain a new Certificate replacing one that has been lost, stolen, or
destroyed, the Unitholder must furnish the Trustee with sufficient
indemnification and pay such expenses as the Trustee may incur. This
indemnification must be in the form of an Open Penalty Bond of
Indemnification. The premium for such an indemnity bond may vary, but
currently amounts to 1% of the market value of the Units represented by the
Certificate. In the case however, of a Trust as to which notice of
termination has been given, the premium currently amounts to 0.5% of the
market value of the Units represented by such Certificate.
HOW UNITS MAY BE REDEEMED WITHOUT CHARGE
Unitholders may redeem all or a portion of their Units by (1) making a
written request for such redemption (book entry Unitholders may use the
redemption form on the reverse side of their Book Entry Position
Confirmation) to the Trustee at its address listed on the back cover of this
Part B of the Prospectus (redemptions of 1,000 Units or more will require a
signature guarantee), (2) in the case of Units evidenced by a Certificate,
by also tendering such Certificate to the Trustee, duly endorsed or
accompanied by proper instruments of transfer with signatures guaranteed as
explained above, or provide satisfactory indemnity required in connection
with lost, stolen or destroyed Certificates and (3) payment of applicable
governmental charges, if any. Certificates should be sent only by registered
or certified mail to minimize the possibility of their being lost or stolen.
(See "OWNERSHIP AND TRANSFER OF UNITS.") No redemption fee will be charged.
A Unitholder may authorize the Trustee to honor telephone instructions for
the redemption of Units held in book entry form. Units represented by
Certificates may not be redeemed by telephone. The proceeds of Units
redeemed by telephone will be sent by check either to the Unitholder at the
address specified on his account or to a financial institution specified by
the Unitholder for credit to the account of the Unitholder. A Unitholder
wishing to use this method of redemption must complete a Telephone
Redemption Authorization Form and furnish the Form to the Trustee. Telephone
Redemption Authorization Forms can be obtained from a Unitholder's
registered representative or by calling the Trustee. Once the completed Form
is on file, the Trustee will honor telephone redemption requests by any
authorized person. The time a telephone redemption request is received
determines the "date of tender" as discussed below. The redemption proceeds
will be mailed within three business days following the telephone redemption
request. Only Units held in the name of individuals may be redeemed by
telephone; accounts registered in broker name, or accounts of corporations
or fiduciaries (including among others, trustees, guardians, executors and
administrators) may not use the telephone redemption privilege.
On the third business day following the date of tender, the Unitholder
will be entitled to receive in cash for each Unit tendered an amount equal
to the Unit Value of such Trust determined by the Trustee, as of 4:00 p.m.
eastern time, or as of any earlier closing time on a day on which the
Exchange is scheduled in advance to close at such earlier time, on the date
of tender as defined hereafter, plus accrued interest to, but not including,
the third business day after the date of tender ("Redemption Price"). The
price received upon redemption may be more or less than the amount paid by
the Unitholder depending on the value of the Bonds on the date of tender.
Unitholders should check with the Trustee or their broker to determine the
Redemption Price before tendering Units.
The "date of tender" is deemed to be the date on which the request for
redemption of Units is received in proper form by the Trustee, except that
as regards a redemption request received after 4:00 p.m. eastern time, or as
of any earlier closing time on a day on which the Exchange is scheduled in
advance to close at such earlier time, or on any day on which the Exchange
is normally closed, the date of tender is the next day on which such
Exchange is normally open for trading and such request will be deemed to
have been made on such day and the redemption will be effected at the
Redemption Price computed on that day.
Accrued interest paid on redemption shall be withdrawn from the Interest
Account of the appropriate Trust or, if the balance therein is insufficient,
from the Principal Account of such Trust. All other amounts paid on
redemption shall be withdrawn from the Principal Account. The Trustee is
empowered to sell underlying Bonds of a Trust in order to make funds
available for redemption. (See "HOW BONDS MAY BE REMOVED FROM THE TRUSTS.")
Units so redeemed shall be cancelled. To the extent that Bonds are sold from
a Trust, the size and diversity of such Trust will be reduced. Such sales
may be required at a time when Bonds would not otherwise be sold and might
result in lower prices than might otherwise be realized.
The Redemption Price is determined on the basis of the BID prices of the
Bonds in each Trust, while the initial Public Offering Price of Units will
be determined on the basis of the OFFERING prices of the Bonds as of 4:00
p.m. eastern time on any day on which the Exchange is normally open for
trading, or as of any earlier closing time on a day on which the Exchange is
scheduled in advance to close at such earlier time, and such determination
is made. As of any given time, the difference between the bid and offering
prices of such Bonds may be expected to average 1/2% to 2% of principal
amount. In the case of actively traded Bonds, the difference may be as
little as 1/4 to 1/2 of 1%, and in the case of inactively traded Bonds such
difference usually will not exceed 3%.
22
<PAGE>
The right of redemption may be suspended and payment postponed for any
period during which the Securities and Exchange Commission determines that
trading in the municipal bond market is restricted or an emergency exists,
as a result of which disposal or evaluation of the Bonds is not reasonably
practicable, or for such other periods as the Securities and Exchange
Commission may by order permit.
Under regulations issued by the Internal Revenue Service, the Trustee
will be required to withhold a specified percentage of the principal amount
of a Unit redemption if the Trustee has not been furnished the redeeming
Unitholder's tax identification number in the manner required by such
regulations. Any amount so withheld is transmitted to the Internal Revenue
Service and may be recovered by the Unitholder only when filing his or her
tax return. Under normal circumstances the Trustee obtains the Unitholder's
tax identification number from the selling broker at the time the
Certificate or Book Entry Return Confirmation is issued, and this number is
printed on the Certificate or Book Entry Return Confirmation and on
distribution statements. If a Unitholder's tax identification number does
not appear as described above, or if it is incorrect, the Unitholder should
contact the Trustee before redeeming Units to determine what action, if any,
is required to avoid this "back-up withholding."
HOW UNITS MAY BE PURCHASED BY THE SPONSOR
The Trustee will notify the Sponsor of any tender of Units for redemption.
If the Sponsor's bid in the secondary market at that time equals or exceeds
the Redemption Price it may purchase such Units by notifying the Trustee
before the close of business on the second succeeding business day and by
making payment therefor to the Unitholder not later than the day on which
payment would otherwise have been made by the Trustee. (See "HOW UNITS MAY
BE REDEEMED WITHOUT CHARGE.") The Sponsor's current practice is to bid at
the Redemption Price in the secondary market. Units held by the Sponsor may
be tendered to the Trustee for redemption as any other Units.
HOW BONDS MAY BE REMOVED FROM THE TRUSTS
Bonds will be removed from a Trust as they mature or are redeemed by the
issuers thereof. See "RISK FACTORS" in Part A of this Prospectus and
"SUMMARY OF PORTFOLIOS" herein for a discussion of call provisions of
portfolio Bonds.
The Indenture also empowers the Trustee to sell Bonds for the purpose of
redeeming Units tendered by any Unitholder, and for the payment of expenses
for which income may not be available. Under the Indenture, the Sponsor is
obligated to provide the Trustee with a current list of Bonds in each Trust
to be sold in such circumstances. In deciding which Bonds should be sold the
Sponsor intends to consider, among other things, such factors as: (1) market
conditions; (2) market prices of the Bonds; (3) the effect on income
distributions to Unitholders of the sale of various Bonds; (4) the effect on
principal amount of underlying Bonds per Unit of the sale of various Bonds;
(5) the financial condition of the issuers; and (6) the effect of the sale
of various Bonds on the investment character of the Trust. Such sales, if
required, could result in the sale of Bonds by the Trustee at prices less
than original cost to the Trust. To the extent Bonds are sold, the size and
diversity of such Trust will be reduced.
In addition, the Sponsor is empowered to direct the Trustee to liquidate
Bonds upon the happening of certain other events, such as default in the
payment of principal and/or interest, an action of the issuer that will
adversely affect its ability to continue payment of the principal of and
interest on its Bonds, or an adverse change in market, revenue or credit
factors affecting the investment character of the Bonds. If a default in the
payment of the principal of and/or interest on any of the Bonds occurs, and
if the Sponsor fails to instruct the Trustee whether to sell or continue to
hold such Bonds within 30 days after notification by the Trustee to the
Sponsor of such default, the Indenture provides that the Trustee shall
liquidate said Bonds forthwith and shall not be liable for any loss so
incurred. The Sponsor may also direct the Trustee to liquidate Bonds in a
Trust if the Bonds in the Trust are the subject of an advanced refunding,
generally considered to be when refunding bonds are issued and the proceeds
thereof are deposited in irrevocable trust to retire the refunded Bonds on
their redemption date.
Except as stated in "COMPOSITION OF TRUSTS" regarding the limited right
of substitution of Replacement Bonds for Failed Bonds, and except for
refunding securities that may be exchanged for Bonds under certain
conditions specified in the Indenture, the Indenture does not permit either
the Sponsor or the Trustee to acquire or deposit bonds either in addition
to, or in substitution for, any of the Bonds initially deposited in a Trust.
INFORMATION ABOUT THE TRUSTEE
The Trustee and its address are stated on the back cover of this Part B of
the Prospectus. The Trustee is subject to supervision and examination by the
Federal Deposit Insurance Corporation, the Board of Governors of the Federal
Reserve System and either the Comptroller of the Currency or state banking
authorities.
The Trustee has assumed no responsibility for the accuracy, adequacy and
completeness of the information not furnished by it contained in this
Prospectus.
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LIMITATIONS ON LIABILITIES OF SPONSOR AND TRUSTEE
The Sponsor and the Trustee shall be under no liability to Unitholders for
taking any action or for refraining from any action in good faith pursuant
to the Indenture, or for errors in judgment, but shall be liable only for
their own negligence, lack of good faith or willful misconduct. The Trustee
shall not be liable for depreciation or loss incurred by reason of the sale
by the Trustee of any of the Bonds. In the event of the failure of the
Sponsor to act under the Indenture, the Trustee may act thereunder and shall
not be liable for any action taken by it in good faith under the Indenture.
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Bonds or upon the interest thereon
or upon it as Trustee under the Indenture or upon or in respect of any Trust
which the Trustee may be required to pay under any present or future law of
the United States of America or of any other taxing authority having
jurisdiction. In addition, the Indenture contains other customary provisions
limiting the liability of the Trustee.
SUCCESSOR TRUSTEES AND SPONSORS
The Trustee or any successor trustee may resign by executing an instrument
of resignation in writing and filing same with the Sponsor and mailing a
copy of a notice of resignation to all Unitholders then of record. Upon
receiving such notice, the Sponsor is required to promptly appoint a
successor trustee. If the Trustee becomes incapable of acting or is adjudged
a bankrupt or insolvent, or a receiver or other public officer shall take
charge of its property or affairs, the Sponsor may remove the Trustee and
appoint a successor by written instrument. The resignation or removal of a
trustee and the appointment of a successor trustee shall become effective
only when the successor trustee accepts its appointment as such. Any
successor trustee shall be a corporation authorized to exercise corporate
trust powers, having capital, surplus and undivided profits of not less than
$5,000,000. Any corporation into which a trustee may be merged or with which
it may be consolidated, or any corporation resulting from any merger or
consolidation to which a trustee shall be a party, shall be the successor
trustee.
If upon resignation of a trustee no successor has been appointed and has
accepted the appointment within 30 days after notification, the retiring
trustee may apply to a court of competent jurisdiction for the appointment
of a successor.
If the Sponsor fails to undertake any of its duties under the Indenture,
and no express provision is made for action by the Trustee in such event,
the Trustee may, in addition to its other powers under the Indenture (1)
appoint a successor sponsor or (2) terminate the Indenture and liquidate the
Trusts.
INFORMATION ABOUT THE SPONSOR
Since our founding in 1898, Nuveen has been synonymous with investments that
withstand the test of time. Today, we offer a broad range of investments
designed for mature investors whose portfolio is the principal source of
their ongoing financial security. More than 1.3 million investors have
entrusted Nuveen to help them maintain the lifestyle they currently enjoy.
A value investing approach--purchasing securities of strong companies
and communities that represent good long-term value--is the cornerstone of
Nuveen's investment philosophy. It is a careful, long-term strategy that
offers the potential for attractive returns with moderated risk. Successful
value investing begins with in-depth research and a discerning eye for
marketplace opportunity. Nuveen's team of investment professionals is backed
by the discipline, resources and expertise of a century of investment
experience, including one of the most recognized research departments in the
industry.
To meet the unique circumstances and financial planning needs of mature
investors, Nuveen offers a wide array of taxable and tax-free investment
products--including equity and fixed-income mutual funds, unit trusts,
exchange-traded funds, customized asset management services and cash
management products. Nuveen is a subsidiary of The John Nuveen Company
which, in turn, is approximately 78% owned by the St. Paul Companies, Inc.
("ST. PAUL"). St. Paul is located in St. Paul, Minnesota and is principally
engaged in providing property-liability insurance through subsidiaries.
Nuveen is a member of the National Association of Securities Dealers, Inc.
and the Securities Industry Association and has its principal office located
in Chicago (333 West Wacker Drive). Nuveen maintains 8 regional offices.
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.
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OTHER INFORMATION
AMENDMENT OF INDENTURE
The Indenture may be amended by the Trustee and the Sponsor without the
consent of any of the Unitholders (1) to cure any ambiguity or to correct or
supplement any provision thereof which may be defective or inconsistent, or
(2) to make such other provisions as shall not adversely affect the
Unitholders, provided, however, that the Indenture may not be amended to
increase the number of Units in any Trust or to permit the deposit or
acquisition of bonds either in addition to, or in substitution for any of
the Bonds initially deposited in any Trust except as stated in "COMPOSITION
OF TRUSTS" regarding the limited right of substitution of Replacement Bonds
and except for the substitution of refunding bonds under certain
circumstances. The Trustee shall advise the Unitholders of any amendment
promptly after execution thereof.
TERMINATION OF INDENTURE
Each Trust may be liquidated at any time by written consent of 100% of the
Unitholders or by the Trustee when the value of such Trust, as shown by any
evaluation, is less than 20% of the original principal amount of such Trust
and will be liquidated by the Trustee in the event that Units not yet sold
aggregating more than 60% of the Units originally created are tendered for
redemption by the Sponsor thereby reducing the net worth of such Trust to
less than 40% of the principal amount of the Bonds originally deposited in
the portfolio. (See "Essential Information" appearing in Part A of this
Prospectus.) The sale of Bonds from the Trusts upon termination may result
in realization of a lesser amount than might otherwise be realized if such
sale were not required at such time. For this reason, among others, the
amount realized by a Unitholder upon termination may be less than the
principal amount of Bonds originally represented by the Units held by such
Unitholder. The Indenture will terminate upon the redemption, sale or other
disposition of the last Bond held thereunder, but in no event shall it
continue beyond the end of the calendar year preceding the fiftieth
anniversary of its execution for National and State Trusts, beyond the end
of the calendar year preceding the twentieth anniversary of its execution
for Long Intermediate, and Intermediate Trusts or beyond the end of the
calendar year preceding the tenth anniversary of its execution for Short
Intermediate and Short Term Trusts.
Written notice of any termination specifying the time or times at which
Unitholders may surrender their Certificates, if any, for cancellation shall
be given by the Trustee to each Unitholder at the address appearing on the
registration books of a Trust maintained by the Trustee. Within a reasonable
time thereafter, the Trustee shall liquidate any Bonds in the Trust then
held and shall deduct from the assets of the Trust any accrued costs,
expenses or indemnities provided by the Indenture which are allocable to
such Trust, including estimated compensation of the Trustee and costs of
liquidation and any amounts required as a reserve to provide for payment of
any applicable taxes or other governmental charges. The Trustee shall then
distribute to Unitholders of such Trust their pro rata share of the balance
of the Interest and Principal Accounts. With such distribution, the
Unitholders shall be furnished a final distribution statement, in
substantially the same form as the annual distribution statement, of the
amount distributable. At such time as the Trustee in its sole discretion
shall determine that any amounts held in reserve are no longer necessary, it
shall make distribution thereof to Unitholders in the same manner.
LEGAL OPINION
The legality of the Units offered hereby has been passed upon by Chapman and
Cutler, 111 West Monroe Street, Chicago, Illinois 60603. Special counsel for
the Trusts for respective state tax matters are named in "Tax Status" for
each Trust appearing in Part A of this Prospectus. Carter, Ledyard &
Milburn, 2 Wall Street, New York, New York 10005, has acted as counsel for
the Trustee with respect to the Series, and, in the absence of a New York
Trust from the Series, as special New York tax counsel for the Series.
AUDITORS
The "Statement of Condition" and "Schedule of Investments" at Date of
Deposit included in Part A of this Prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report
in Part A of this Prospectus, and are included herein in reliance upon the
authority of said firm as experts in giving said report.
SUPPLEMENTAL INFORMATION
Upon written or telephonic request to the Trustee, investors will receive at
no cost to the investor supplemental information about this Trust, which has
been filed with the Securities and Exchange Commission and is intended to
supplement information contained in Part A and Part B of this Prospectus.
The supplemental information includes more detailed information concerning
certain of the Bonds included in the Trusts contained in the applicable
Series and more specific risk information concerning the individual state
Trusts. This supplement also includes additional general information about
the Sponsor and the Trusts.
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<TABLE>
<S> <C>
J
Defined Portfolios
</TABLE>
J
Tax-Free Unit Trusts
PROSPECTUS -- PART B
SEPTEMBER 1, 1998
<TABLE>
<C> <S> <C>
SPONSOR John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
Telephone: 312.917.7700
Swiss Bank Tower
10 East 50th Street
New York, NY 10022
212.207.2000
TRUSTEE The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
800.257.8787
LEGAL COUNSEL Chapman and Cutler
TO SPONSOR 111 West Monroe Street
Chicago, IL 60603
INDEPENDENT Arthur Andersen LLP
PUBLIC 33 West Monroe Street
ACCOUNTANTS Chicago, IL 60603
FOR THE TRUSTS
</TABLE>
--------------
This Prospectus does not contain complete information about the Unit Trust
filed with the Securities and Exchange Commission in Washington, DC under the
Securities Act of 1933 and the Investment Company Act of 1940.
To obtain copies at proscribed rates--
<TABLE>
<S> <C>
Write: Public Reference Section of the Commission, 450 Fifth Street NW, Washington, DC 20549-6009
Call: (800) SEC-0330
Visit: http://www.sec.gov
</TABLE>
No person is authorized to give any information or representation about the
Trusts not contained in Parts A or B of this Prospectus or the Information
Supplement, and you should not rely on any other information.
When Units of this Fund are no longer available, this Prospectus may be used
as a preliminary Prospectus for a future series, but some of the information in
this Prospectus will be changed for that series.
UNITS OF ANY FUTURE SERIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED
UNTIL THAT SERIES HAS BECOME EFFECTIVE WITH THE SECURITIES AND EXCHANGE
COMMISSION. NO UNITS CAN BE SOLD WHERE A SALE WOULD BE ILLEGAL.
<PAGE>
NUVEEN TAX-FREE UNIT TRUSTS
---------------------------------------------
INFORMATION SUPPLEMENT
NUVEEN SERIES 1149
This Information Supplement provides additional
information concerning the structure, operations and risks
of a Nuveen Tax-Free Unit Trust not found in the
prospectuses for the Trusts. This Information Supplement
is not a prospectus and does not include all of the
information that a prospective investor should consider
before investing in a Trust. This Information Supplement
should be read in conjunction with the prospectus for the
Trust in which an investor is considering investing
("Prospectus"). Copies of the Prospectus can be obtained
by calling or writing the Trustee at the telephone number
and address indicated in Part B of the Prospectus. This
Information Supplement has been created to supplement
information contained in the Prospectus.
This Information Supplement is dated February 16,
2000. Capitalized terms have been defined in the
Prospectus.
TABLE OF CONTENTS
----------------------------------------------
<TABLE>
<S> <C>
GENERAL RISK DISCLOSURE..................................... 2
Health Care Facility Revenue Obligations.................. 2
Single Family and Multi-Family Housing Revenue
Obligations.............................................. 2
Single Family Mortgage Revenue Bonds...................... 2
Congregate Care Revenue Obligations....................... 3
Federally Enhanced Obligations............................ 3
Public Housing Authority Revenue Obligations.............. 3
Industrial Revenue Obligations............................ 3
Power Revenue Obligations................................. 4
Utility Obligations....................................... 4
Transportation Bonds...................................... 4
Water and/or Sewerage Revenue Obligations................. 4
Resource Recovery Revenue Obligations..................... 5
Education Revenue Obligations............................. 5
Bridge and Tollroad Revenue Obligations................... 5
Dedicated-Tax Supported Revenue Bonds..................... 5
Municipal Lease Revenue Bonds............................. 5
Special Obligation to Crossover........................... 5
Civic Organization Obligations............................ 5
Original Issue Discount Bonds and Stripped Obligations.... 5
WHY AND HOW ARE THE BONDS INSURED?.......................... 6
ACCUMULATION PLAN........................................... 8
INFORMATION ABOUT THE SPONSOR............................... 10
DESCRIPTION OF RATINGS...................................... 11
HOW THE TRUST COMPARES PERFORMANCE.......................... 13
HOW TO CALCULATE YOUR ESTIMATED INCOME...................... 14
Appendix A -- Arizona Disclosure............................ A-1
Appendix B -- Georgia Disclosure............................ B-1
Appendix C -- New York Disclosure........................... C-1
</TABLE>
<PAGE>
GENERAL RISK DISCLOSURE
An investment in Units of any Trust should be made with an understanding of
the risks that such an investment may entail. These include the ability of the
issuer, or, if applicable, an insurer, to make payments of interest and
principal when due, the effects of changes in interest rates generally, early
call provisions and the potential for changes in the tax status of the Bonds. As
set forth in the portfolio summaries in Part A of this Prospectus, the Trusts
may contain or be concentrated in one or more of the types of bonds discussed
below. The following paragraphs discuss certain circumstances which may
adversely affect the ability of issuers of Bonds held in the portfolio of a
Trust to make payment of principal and interest thereon or which may adversely
affect the ratings of such Bonds; with respect to Insured Trusts, however,
because of the insurance obtained by the Sponsor or by the issuers of the Bonds,
such changes should not adversely affect an Insured Trust's receipt of principal
and interest, the Standard & Poor's AAA or Moody's Aaa ratings of the Bonds in
the Insured Trust portfolio, or the Standard & Poor's AAA rating of the Units of
each such Insured Trust. For economic risks specific to the individual Trusts,
see "Risk Factors" for each Trust.
HEALTH CARE FACILITY REVENUE OBLIGATIONS. Some of the Bonds in a Trust may
be obligations of issuers whose revenues are derived from services provided by
hospitals or other health care facilities, including nursing homes. Ratings of
bonds issued for health care facilities are sometimes based on feasibility
studies that contain projections of occupancy levels, revenues and expenses. A
facility's gross receipts and net income available for debt service may be
affected by future events and conditions including, among other things, demand
for services, the ability of the facility to provide the services required, an
increasing shortage of qualified nurses or a dramatic rise in nursing salaries,
physicians' confidence in the facility, management capabilities, economic
developments in the service area, competition from other similar providers,
efforts by insurers and governmental agencies to limit rates, legislation
establishing state rate-setting agencies, expenses, government regulation, the
cost and possible unavailability of malpractice insurance, and the termination
or restriction of governmental financial assistance, including that associated
with Medicare, Medicaid and other similar third party payor programs. Medicare
reimbursements are currently calculated on a prospective basis and are not based
on a provider's actual costs. Such method of reimbursement may adversely affect
reimbursements to hospitals and other facilities for services provided under the
Medicare program and thereby may have an adverse effect on the ability of such
institutions to satisfy debt service requirements. In the event of a default
upon a bond secured by hospital facilities, the limited alternative uses for
such facilities may result in the recovery upon such collateral not providing
sufficient funds to fully repay the bonds.
Certain hospital bonds provide for redemption at par upon the damage,
destruction or condemnation of the hospital facilities or in other special
circumstances.
SINGLE FAMILY AND MULTI-FAMILY HOUSING REVENUE OBLIGATIONS. Some of the
Bonds in a Trust may be obligations of issuers whose revenues are primarily
derived from mortgage loans to housing projects for the elderly or for low to
moderate income families. Such issues are generally characterized by mandatory
redemption at par or, in the case of original issue discount bonds, accreted
value in the event of economic defaults and in the event of a failure of the
operator of a project to comply with certain covenants as to the operation of
the project. The failure of such operator to comply with certain covenants
related to the tax-exempt status of interest on the Bonds, such as provisions
requiring that a specified percentage of units be rented or available for rental
to low or moderate income families, potentially could cause interest on such
Bonds to be subject to Federal income taxation from the date of issuance of the
Bonds. The ability of such issuers to make debt service payments will be
affected by events and conditions affecting financed projects, including, among
other things, the achievement and maintenance of sufficient occupancy levels and
adequate rental income, employment and income conditions prevailing in local
labor markets, increases in taxes, utility costs and other operating expenses,
the managerial ability of project managers, changes in laws and governmental
regulations, the appropriation of subsidies, and social and economic trends
affecting the localities in which the projects are located. Occupancy of such
housing projects may be adversely affected by high rent levels and income
limitations imposed under Federal and state programs.
SINGLE FAMILY MORTGAGE REVENUE BONDS. Some of the Bonds in a Trust may be
single family mortgage revenue bonds, which are issued for the purpose of
acquiring from originating financial institutions notes secured by mortgages on
residences located within the issuer's boundaries and owned by persons of low or
moderate income. Mortgage loans are generally partially or completely prepaid
prior to their final maturities as a result of events such as sale of the
mortgaged premises, default, condemnation or casualty loss. Because these bonds
are subject to extraordinary mandatory redemption in whole or in part from such
prepayments of mortgage loans, a substantial portion of such bonds will probably
be redeemed prior to their scheduled maturities or even prior to their ordinary
call dates. Extraordinary mandatory redemption without premium could also result
from the failure of the originating financial institutions to make mortgage
loans in sufficient amounts within a specified time period. The redemption price
of such issues may be more or less than the offering price of such bonds.
Additionally, unusually high rates of default on the underlying mortgage loans
may reduce revenues available for the payment of principal of or interest on
such mortgage revenue
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<PAGE>
bonds. Single family mortgage revenue bonds issued after December 31, 1980 were
issued under Section 103A of the Internal Revenue Code of 1954, as amended, or
Section 143 of the Internal Revenue Code of 1986, which Sections contain certain
requirements relating to the use of the proceeds of such bonds in order for the
interest on such bonds to retain its tax-exempt status. In each case, the issuer
of the bonds has covenanted to comply with applicable requirements and bond
counsel to such issuer has issued an opinion that the interest on the bonds is
exempt from Federal income tax under existing laws and regulations. There can be
no assurance that such continuing requirements will be satisfied; the failure to
meet such requirements could cause interest on the Bonds to be subject to
Federal income taxation, possibly from the date of issuance of the Bonds.
CONGREGATE CARE REVENUE OBLIGATIONS. Some of the Bonds in a Trust may be
obligations of issuers whose revenues are primarily derived from loans to
finance the construction and/or acquisition of congregate care facilities,
including retirement facilities and nursing care units. A facility's gross
receipts and net income available for debt service may be affected by future
events and conditions, including, among other things, demand for services, the
ability of the facility to provide the services required, management
capabilities, an increasing shortage of qualified nurses or a dramatic rise in
nursing salaries, economic developments in the service area, competition from
other similar providers, efforts by insurers and governmental agencies to limit
rates, legislation establishing state rate-setting agencies, expenses,
government regulation and the termination or restriction of governmental
financial assistance.
FEDERALLY ENHANCED OBLIGATIONS. Some of the mortgages which secure the
various health care or housing projects which underlie the previously discussed
Health Care Facility Revenue, Single Family and Multi-Family Housing Revenue,
Single Family Mortgage Revenue Obligations and Congregate Care Revenue Bonds
(the "Obligations") in a Trust may be insured by the Federal Housing
Administration ("FHA"). Under FHA regulations, the maximum insurable mortgage
amount cannot exceed 90% of the FHA's estimated value of the project. The FHA
mortgage insurance does not constitute a guarantee of timely payment of the
principal of and interest on the Obligations. Payment of mortgage insurance
benefits may be (1) less than the principal amount of Obligations outstanding or
(2) delayed if disputes arise as to the amount of the payment or if certain
notices are not given to the FHA within the prescribed time periods. In
addition, some of the previously discussed Obligations may be secured by
mortgage-backed certificates guaranteed by the Government National Mortgage
Association ("GNMA"), a wholly owned corporate instrumentality of the United
States, and/or the Federal National Mortgage Association ("Fannie Mae") a
federally chartered and stockholder-owed corporation. GNMA and Fannie Mae
guarantee timely payment of principal and interest on the mortgage-backed
certificates, even where the underlying mortgage payments are not made. While
such mortgage-backed certificates are often pledged to secure payment of
principal and interest on the Obligations, timely payment of interest and
principal on the Obligations is not insured or guaranteed by the United States,
GNMA, Fannie Mae or any other governmental agency or instrumentality. The GNMA
mortgage-backed certificates constitute a general obligation of the United
States backed by its full faith and credit. The obligations of Fannie Mae,
including its obligations under the Fannie Mae mortgage-backed securities, are
obligations solely of Fannie Mae and are not backed by, or entitled to, the full
faith and credit of the United States.
PUBLIC HOUSING AUTHORITY REVENUE OBLIGATIONS. Some of the Bonds in a Trust
may be obligations of issuers whose revenues are primarily derived from loans to
finance public housing projects. These bonds are guaranteed by the federal
Department of Housing and Urban Development. Such issues are generally
characterized by mandatory redemption at par or, in the case of original issue
discount bonds, accreted value in the event of economic defaults. The ability of
such issuers to make debt service payments will be affected by events and
conditions affecting financed projects, including, among other things, the
achievement and maintenance of sufficient occupancy levels, employment and
income conditions prevailing in local labor markets, increases in taxes, utility
costs and other operating expenses, changes in laws and governmental
regulations, and social and economic trends affecting the localities in which
the projects are located. In addition, the federal Department of Housing and
Urban Development may impose regulations and/or limitations which may have an
adverse impact on the Bonds in a Trust.
INDUSTRIAL REVENUE OBLIGATIONS. Certain of the Bonds in a Trust may be
industrial revenue bonds ("IRBs"), which are tax-exempt securities issued by
states, municipalities, public authorities or similar entities to finance the
cost of acquiring, constructing or improving various industrial projects. These
projects are usually operated by corporate entities. Issuers are obligated only
to pay amounts due on the IRBs to the extent that funds are available from the
unexpended proceeds of the IRBs or receipts or revenues of the issuer under an
arrangement between the issuer and the corporate operator of a project. The
arrangement may be in the form of a lease, installment sale agreement,
conditional sale agreement or loan agreement, but in each case the payments to
the issuer are designed to be sufficient to meet the payments of amounts due on
the IRBs. Regardless of the structure, payment of IRBs is solely dependent upon
the creditworthiness of the corporate operator of the project and, if
applicable, corporate guarantor. Corporate operators or guarantors may be
affected by many factors which may have an adverse impact on the credit quality
of the particular company or industry. These include cyclicality of revenues and
earnings, regulatory and environmental restrictions, litigation resulting from
accidents or environmentally-caused illnesses, extensive competition and
financial deterioration resulting from a corporate restructuring pursuant to a
leveraged buy-out, takeover or otherwise. Such a restructuring may
3
<PAGE>
result in the operator of a project becoming highly leveraged which may have an
impact on such operator's creditworthiness which in turn would have an adverse
impact on the rating and/or market value of such Bonds. Further, the possibility
of such a restructuring may have an adverse impact on the market for and
consequently the value of such Bonds, even though no actual takeover or other
action is ever contemplated or effected. The IRBs in a Trust may be subject to
special or extraordinary redemption provisions which may provide for redemption
at par or, in the case of original issue discount bonds, accreted value. The
Sponsor cannot predict the causes or likelihood of the redemption of IRBs in a
Trust prior to the stated maturity of such Bonds.
POWER REVENUE OBLIGATIONS. Some of the Bonds in a Trust may be obligations
of issuers whose revenues are primarily derived from pollution control bonds as
well as the sale of electric energy and oil and gas. Some of these obligations
are backed by the credit of an investor owned utility (IOU). The problems faced
by such issuers include the difficulty in obtaining approval for timely and
adequate rate increases from the applicable public utility commissions, the
difficulty of financing large construction programs, increased competition,
reductions in estimates of future demand for electricity in certain areas of the
country, the limitations on operations and increased costs and delays
attributable to environmental considerations, the difficulty of the capital
market in absorbing utility debt, the difficulty in obtaining fuel at reasonable
prices and the effect of energy conservation. All of such issuers have been
experiencing certain of these problems in varying degrees. In addition, Federal,
state and municipal governmental authorities may from time to time review
existing, and impose additional, regulations governing the licensing,
construction and operation of nuclear power plants, which may adversely affect
the ability of the issuers of certain of the Bonds in a Trust to make payments
of principal and/or interest on such Bonds.
UTILITY OBLIGATIONS. Some of the Bonds in a Trust may be obligations of
issuers whose revenues are primarily derived from the sale of natural gas or the
combined net revenue of two or more municipal utility systems operating as a
single entity. The problems faced by such issuers include the difficulty in
obtaining approval for timely and adequate rate increases from the applicable
public utility commissions, the difficulty of financing large construction
programs, increased competition, reductions in estimates of future demands for
natural gas in certain areas of the country, the limitations on operations and
increased costs and delays attributable to environmental considerations, the
difficulty of the capital market in absorbing utility debt, the difficulty in
obtaining fuel at reasonable prices and the effect of energy conservation. In
addition, Federal, state and municipal governmental authorities may from time to
time review existing, and impose additional, regulations governing the
licensing, construction and operation of nuclear power plants, which may
adversely affect the ability of the issuers of certain of the Bonds in a Trust
to make payments of principal and/or interest on such Bonds.
TRANSPORTATION BONDS. Some of the Bonds in a Trust may be obligations of
issuers which are payable from and secured by revenues derived from the
ownership and operation of airports, public transit systems and ports. The major
portion of an airport's gross operating income is generally derived from fees
received from airlines pursuant to use agreements which consist of annual
payments for airport use, occupancy of certain terminal space, service fees and
leases. Airport operating income may therefore be affected by the ability of the
airlines to meet their obligations under the use agreements. The air transport
industry is experiencing significant variations in earnings and traffic, due to
increased competition, excess capacity, increased costs, deregulation, traffic
constraints and other factors, and several airlines are experiencing severe
financial difficulties. In particular, facilities with use agreements involving
airlines experiencing financial difficulty may experience a reduction in revenue
due to the possible inability of these airlines to meet their use agreement
obligations because of such financial difficulties and possible bankruptcy. The
Sponsor cannot predict what effect these industry conditions may have on airport
revenues which are dependent for payment on the financial condition of the
airlines and their usage of the particular airport facility. Bonds that are
secured primarily by the revenue collected by a public transit system typically
are additionally secured by a pledge of sales tax receipts collected at the
state or local level, or of other governmental financial assistance. Transit
system net revenues will be affected by variations in utilization, which in turn
may be affected by the degree of local governmental subsidization, demographic
and population shifts, and competition from other forms of transportation; and
by increased costs, including costs resulting from previous deferrals of
maintenance. Port authorities derive their revenues primarily from fees imposed
on ships using the facilities. The rate of utilization of such facilities may
fluctuate depending on the local economy and on competition from competing forms
of transportation such as air, rail and trucks.
WATER AND/OR SEWERAGE REVENUE OBLIGATIONS. Some of the Bonds in a Trust may
be obligations of issuers whose revenues are derived from the sale of water
and/or sewerage services. Such Bonds are generally payable from user fees. The
problems of such issuers include the ability to obtain timely and adequate rate
increases, population decline resulting in decreased user fees, the difficulty
of financing large construction programs, the limitations on operations and
increased costs and delays attributable to environmental considerations, the
increasing difficulty of obtaining or discovering new supplies of fresh water,
the effect of conservation programs and the impact of "no-growth" zoning
ordinances. All of such issuers have been experiencing certain of these problems
in varying degrees.
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<PAGE>
RESOURCE RECOVERY REVENUE OBLIGATIONS. Some of the Bonds in a Trust may be
obligations of issuers whose revenues are derived from the sale of sewerage or
solid waste disposal services. Such bonds are generally payable from user fees.
The problems of such issuers include the ability to obtain timely and adequate
rate increases, population decline resulting in decreased user fees, the
difficulty of financing large construction programs, the limitations on
operations and increased costs and delays attributable to environmental
considerations, the effect of conservation programs and the impact of
"no-growth" zoning ordinances. All of such issuers have been experiencing
certain of these problems in varying degrees.
EDUCATION REVENUE OBLIGATIONS. Some of the Bonds in a Trust may be
obligations of issuers which are, or which govern the operation of, colleges and
universities and whose revenues are derived mainly from tuition, dormitory
revenues, grants and endowments. General problems of such issuers include the
prospect of a declining percentage of the population consisting of "college" age
individuals, possible inability to raise tuitions and fees sufficiently to cover
increased operating costs, the uncertainty of continued receipt of Federal
grants and state funding, and government legislation or regulations which may
adversely affect the revenues or costs of such issuers. All of such issuers have
been experiencing certain of these problems in varying degrees.
BRIDGE AND TOLLROAD REVENUE OBLIGATIONS. Some of the Bonds in a Trust may
be obligations of issuers which derive their payments from bridge, road or
tunnel toll revenues. The revenues of such an issuer could be adversely affected
by competition from toll-free vehicular bridges and roads and alternative modes
of transportation. Such revenues could also be adversely affected by a reduction
in the availability of fuel to motorists or significant increases in the costs
thereof. Specifically, governmental regulations restricting the use of vehicles
in the New York City metropolitan area may adversely affect revenues of the
Triborough Bridge and Tunnel Authority.
DEDICATED-TAX SUPPORTED REVENUE BONDS. Some of the Bonds in a Trust may be
obligations of issuers which are payable from and secured by tax revenues from a
designated source, which revenues are pledged to secure the bonds. The various
types of Bonds described below differ in structure and with respect to the
rights of the bondholders to the underlying property. Each type of dedicated-tax
supported Bond has distinct risks, only some of which are set forth below. One
type of dedicated-tax supported Bond is secured by the incremental tax received
on either real property or on sales within a specifically defined geographical
area; such tax generally will not provide bondholders with a lien on the
underlying property or revenues. Another type of dedicated-tax supported Bond is
secured by a special tax levied on real property within a defined geographical
area in such a manner that the tax is levied on those who benefit from the
project; such bonds typically provide for a statutory lien on the underlying
property for unpaid taxes. A third type of dedicated-tax supported Bond may be
secured by a tax levied upon the manufacture, sale or consumption of commodities
or upon the license to pursue certain occupations or upon corporate privileges
within a taxing jurisdiction. As to any of these types of Bonds, the ability of
the designated revenues to satisfy the interest and principal payments on such
bonds may be affected by changes in the local economy, the financial success of
the enterprise responsible for the payment of the taxes, the value of any
property on which taxes may be assessed and the ability to collect such taxes in
a timely fashion. Each of these factors will have a different affect on each
distinct type of dedicated-tax supported bonds.
MUNICIPAL LEASE REVENUE BONDS. Some of the Bonds in a Trust may be
obligations that are secured by lease payments of a governmental entity. Such
payments are normally subject to annual budget appropriations of the leasing
governmental entity. A governmental entity that enters into such a lease
agreement cannot obligate future governments to appropriate for and make lease
payments but covenants to take such action as is necessary to include any lease
payments due in its budgets and to make the appropriations therefor. A
governmental entity's failure to appropriate for and to make payments under its
lease obligation could result in insufficient funds available for payment of the
obligations secured thereby.
SPECIAL OBLIGATION TO CROSSOVER. Some of the Bonds in a Trust may be issued
with the intention of crossover refunding an outstanding issue at a future date.
These bonds are secured to the crossover date by U.S. Government securities
purchased with the proceeds of the refunding bonds. The revenues of such an
issuer could be adversely affected by problems associated with the outstanding
issue, economic, social and environmental policies and conditions that are not
within the control of the issuer and governmental policies and regulations
affecting the issuer.
CIVIC ORGANIZATION OBLIGATIONS. Some of the Bonds in a Trust may be
obligations of issuers whose revenues are derived from the pledge of civic
organizations, including their assets. The problems faced by such issuers
include the ability to collect pledges made, the unpredictable nature of an
organization's composition and participation, the quality and skill of
management, increased costs and delays attributable to organizations, expenses,
and legislation regarding certain organizational purposes.
ORIGINAL ISSUE DISCOUNT BONDS AND STRIPPED OBLIGATIONS. Certain of the
Bonds in a Trust may be original issue discount bonds. These Bonds were issued
with nominal interest rates less than the rates then offered by comparable
securities and as a consequence were originally sold at a discount from their
face, or par, values. This original issue discount, the difference between the
initial purchase price and face value, is deemed under current law to accrue on
a
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daily basis and the accrued portion is treated as tax-exempt interest income for
federal income tax purposes. On sale or redemption, gain, if any, realized in
excess of the earned portion of original issue discount will be taxable as
capital gain. See "What is the Tax Status of Unitholders". The current value of
an original issue discount bond reflects the present value of its face amount at
maturity. In a stable interest rate environment, the market value of an original
issue discount bond would tend to increase more slowly in early years and in
greater increments as the bond approached maturity.
Certain of the original issue discount bonds in a Trust may be zero coupon
bonds. Zero coupon bonds do not provide for the payment of any current interest;
the buyer receives only the right to receive a final payment of the face amount
of the bond at its maturity. The effect of owning a zero coupon bond is that a
fixed yield is earned not only on the original investment but also, in effect,
on all discount earned during the life of the obligation. This implicit
reinvestment of earnings at the same rate eliminates the risk of being unable to
reinvest the income on such obligation at a rate as high as the implicit yield,
but at the same time also eliminates the holder's ability to reinvest at higher
rates in the future. For this reason, zero coupon bonds are subject to
substantially greater price fluctuations during periods of changing market
interest rates than are securities of comparable quality that pay interest
currently.
Original issue discount bonds, including zero coupon bonds, may be subject
to redemption at prices based on the issue price plus the amount of original
issue discount accreted to redemption (the "accreted value") plus, if
applicable, some premium. Pursuant to such call provisions an original issue
discount bond may be called prior to its maturity date at a price less than its
face value. See the "Schedules of Investments" for more information about the
call provisions of portfolio Bonds.
Certain of the Bonds in a Trust may be Stripped Obligations, which represent
evidences of ownership with respect to either the principal amount of or a
payment of interest on a tax-exempt obligation. An obligation is "stripped" by
depositing it with a custodian, which then effects a separation in ownership
between the bond and any interest payment which has not yet become payable, and
issues evidences of ownership with respect to such constituent parts. A Stripped
Obligation therefore has economic characteristics similar to zero coupon bonds,
as described above.
Each Stripped Obligation has been purchased at a discount from the amount
payable at maturity. With respect to each Unitholder, the Internal Revenue Code
treats as "original issue discount" that portion of the discount which produces
a yield to maturity (as of the date of purchase of the Unitholder's Units) equal
to the lower of the coupon rate of interest on the underlying obligation or the
yield to maturity on the basis of the purchase price of the Unitholder's Units
which is allocable to each Stripped Obligation. Original issue discount which
accrues with respect to a Stripped Obligation will be exempt from Federal income
taxation to the same extent as interest on the underlying obligations. (See
"WHAT IS THE TAX STATUS OF UNITHOLDERS?" in Part B of this Prospectus.)
Unitholders should consult their own tax advisers with respect to the state
and local tax consequences of owning original issue discount bonds or Stripped
Obligations. Under applicable provisions governing determination of state and
local taxes, interest on original issue discount bonds or Stripped Obligations
may be deemed to be received in the year of accrual even though there is no
corresponding cash payment.
WHY AND HOW ARE THE BONDS INSURED?
INSURANCE ON BONDS
INSURED TRUSTS--The Insurer's policy unconditionally and irrevocably guarantees
the full and complete payment required to be made by or on behalf of the Issuer
to the Paying Agent or its successor of an amount equal to (i) the principal of
(either at the stated maturity or by an advancement of maturity pursuant to a
mandatory sinking fund payment) and interest on, the Bonds as such payments
shall become due but shall not be so paid (except that in the event of any
acceleration of the due date of such principal by reason of mandatory or
optional redemption or acceleration resulting from default or otherwise, other
than any advancement of maturity pursuant to a mandatory sinking fund payment,
the payments guaranteed by the Insurer's policy shall be made in such amounts
and at such times as such payments of principal would have been due had there
not been any such acceleration); and (ii) the reimbursement of any such payment
which is subsequently recovered from any owner of the Bonds pursuant to a final
judgment by a court of competent jurisdiction that such payment constitutes an
avoidable preference to such owner within the meaning of any applicable
bankruptcy law (a "Preference").
The Insurer's policy does not insure against loss of any prepayment premium
which may at any time be payable with respect to any Bond. The Insurer's policy
does not, under any circumstance, insure against loss relating to: (i) optional
or mandatory redemptions (other than mandatory sinking fund redemptions);
(ii) any payments to be made on an accelerated basis; (iii) payments of the
purchase price of Bonds upon tender by an owner thereof; or (iv) any Preference
relating to (i) through (iii) above. The Insurer's policy also does not insure
against nonpayment of principal of or interest on the Bonds resulting from the
insolvency, negligence or any other act or omission of the Paying Agent or any
other paying agent for the Bonds.
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Upon receipt of telephonic or telegraphic notice, such notice subsequently
confirmed in writing by registered or certified mail, or upon receipt of written
notice by registered or certified mail, by the Insurer from the Paying Agent or
any owner of a Bond the payment of an insured amount for which is then due, that
such required payment has not been made, the Insurer on the due date of such
payment or within one business day after receipt of notice of such nonpayment,
whichever is later, will make a deposit of funds, in an account with State
Street Bank and Trust Company, N.A., in New York, New York, or its successor,
sufficient for the payment of any such insured amounts which are then due. Upon
presentment and surrender of such Bonds or presentment of such other proof of
ownership of the Bonds, together with any appropriate instruments of assignment
to evidence the assignment of the insured amounts due on the Bonds as are paid
by the Insurer, and appropriate instruments to effect the appointment of the
Insurer as agent for such owners of the Bonds in any legal proceeding related to
payment of insured amounts on the Bonds, such instruments being in a form
satisfactory to State Street Bank and Trust Company, N.A., State Street Bank and
Trust Company, N.A. shall disperse to such owners or the Paying Agent payment of
the insured amounts due on such Bonds, less any amount held by the Paying Agent
for the payment of such insured amounts and legally available therefor.
The Insurer is the principal operating subsidiary of MBIA, Inc., a New York
Stock Exchange listed company (the "Company"). The Company is not obligated to
pay the debts of or claims against the Insurer. The Insurer is domiciled in the
State of New York and licensed to do business in and subject to regulation under
the laws of all 50 states, the District of Columbia, the Commonwealth of Puerto
Rico, the Commonwealth of the Northern Mariana Islands, the Virgin Islands of
the United States and the Territory of Guam. The Insurer has two European
branches, one in the Republic of France and the other in the Kingdom of Spain.
New York has laws prescribing minimum capital requirements, limiting classes and
concentrations of investments and requiring the approval of policy rates and
forms. State laws also regulate the amount of both the aggregate and individual
risks that may be insured, the payment of dividends by the Insurer, changes in
control and transactions among affiliates. Additionally, the Insurer is required
to maintain contingency reserves on its liabilities in certain amounts and for
certain periods of time.
As of December 31, 1998, the Insurer had admitted assets of $6.5 billion
(audited), total liabilities of $4.2 billion (audited), and total capital and
surplus of $2.3 billion (audited) determined in accordance with statutory
accounting practices prescribed or permitted by insurance regulatory
authorities. As of September 30, 1999, MBIA had admitted assets of $6.9 billion
(unaudited), total liabilities of $4.5 billion (unaudited), and total capital
and surplus of $2.4 billion (unaudited) determined in accordance with statutory
accounting practices prescribed or permitted by insurance regulatory
authorities.
Furthermore, copies of the Insurer's year end financial statements prepared
in accordance with statutory accounting practices are available without charge
from the Insurer. A copy of the Annual Report on Form 10-K of the Company is
available from the Insurer or the Securities and Exchange Commission. The
address of the Insurer is 113 King Street, Armonk, New York 10504. The telephone
number of the Insurer is (914) 273-4545.
YEAR 2000 READINESS DISCLOSURE
MBIA, Inc. is actively managing a high-priority Year 2000 (Y2K) program
addressing the issue of whether its computer systems can correctly distinguish
between the years 1900 and 2000. The Company has established an independent Y2K
testing lab in its Armonk office, with a committee of business unit managers
overseeing the project. The Company has a budget of $1.13 million for its
1998-2000 Y2K efforts. As of September 30, 1999, the Company has spent $949,000
on the project. A recent review of efforts at certain subsidiaries has indicated
the need to spend an additional $1.03 million this year on remediation. As of
September 30, 1999, the company has spent $568,000 of this additional amount.
However, this increase will not have a material effect on the Company's
financial results.
The Company has initiated a comprehensive Y2K plan which includes the
following phases: assessment--completed in the second quarter of 1998;
remediation--completed in the fourth quarter of 1998; testing--completed in the
second quarter of 1999; and contingency planning--completed in the third quarter
of 1999, subject to final approval by senior management and any need for
revision that might arise in the future. This plan covers "mission-critical"
internally developed systems, vendor software, hardware and certain third-party
entities through which the Company conducts its business. Testing to date
indicates that functions critical to the financial guarantee business, both
domestic and international, were Y2K ready as of December 31, 1998. Additional
testing is being carried out throughout 1999.
Moody's Investors Service, Inc. rates the financial strength of the Insurer
"Aaa".
Standard & Poor's Ratings Services Group, a division of The McGraw-Hill
Companies, Inc., rates the financial strength of the Insurer "AAA".
Fitch IBCA, Inc. rates the financial strength of the Insurer "AAA".
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Each rating of the Insurer should be evaluated independently. The ratings
reflect the respective rating agency's current assessment of the
creditworthiness of the Insurer and its ability to pay claims on its policies of
insurance. Any further explanation as to the significance of the above ratings
may be obtained only from the applicable rating agency.
The above ratings are not recommendations to buy, sell or hold the Bonds,
and such ratings may be subject to revision or withdrawal at any time by the
rating agencies. Any downward revision or withdrawal of any of the above ratings
may have an adverse effect on the market price of the Bonds. The Insurer does
not guaranty the market price of the Bonds nor does it guaranty that the ratings
on the Bonds will not be revised or withdrawn.
TRADITIONAL TRUSTS--Insurance guaranteeing the timely payment, when due, of all
principal and interest on certain Bonds in a Traditional Trust may have been
obtained by the Sponsor, issuer or underwriter of the particular Bonds involved
or by another party. Such insurance, which provides coverage substantially the
same as that obtained with respect to Bonds in Insured Trusts as described
above, is effective so long as the insured Bond is outstanding and the insurer
remains in business. Insurance relates only to the particular Bond and not to
the Units offered hereby or to their market value. Insured Bonds have received a
rating of "Aaa" by Moody's Investors Service, Inc. and/or "AAA" by Standard &
Poor's Corporation in recognition of such insurance.
If a Bond in a Traditional Trust is insured, the Schedule of Investments in
Part A of this Prospectus will identify the insurer. Such insurance will be
provided by Financial Guaranty Insurance Company ("FGIC"), AMBAC Assurance
Corporation ("AMBAC"), Bond Investors Guaranty Insurance Company, now known as
MBIA Corp. of Illinois ("BIG"), Capital Guaranty Insurance Company ("CGIC"),
Financial Security Assurance, Inc. ("FSA"), Municipal Bond Insurance Association
(the "Association"), MBIA Insurance Corporation ("MBIA") or Connie Lee Insurance
Company ("ConnieLee"). The Sponsor to date has purchased and presently intends
to purchase insurance for Bonds in Traditional Trusts exclusively from MBIA (see
the preceding disclosure regarding MBIA). There can be no assurance that any
insurer listed therein will be able to satisfy its commitments in the event
claims are made in the future. However, Standard & Poor's Corporation has rated
the claims-paying ability of each insurer "AAA," and Moody's Investors Service
has rated all bonds insured by each such insurer, except ConnieLee, "Aaa."
Moody's Investor's Service gives no ratings for bonds insured by ConnieLee.
Because any such insurance will be effective so long as the insured Bonds
are outstanding, such insurance will be taken into account in determining the
market value of such Bonds and therefore some value attributable to such
insurance will be included in the value of the Units of the Trust that includes
such Bonds. The insurance does not, however, guarantee the market value of the
Bonds or of the Units.
ACCUMULATION PLAN
The Sponsor, John Nuveen & Co. Incorporated, is also the principal
underwriter of the Accumulation Funds listed in the following table. Each of
these funds is an open-end, diversified management investment company into which
Unitholders may choose to reinvest Trust distributions automatically, without
any sales charge. Unitholders may reinvest both interest and principal
distributions or principal distributions only. Each Accumulation Fund has
investment objectives which differ in certain respects from those of the Trusts
and may invest in securities which would not be eligible for deposit in the
Trusts. The investment adviser to each Accumulation Fund is a wholly-owned
subsidiary of the Sponsor. Unitholders should contact their financial adviser or
the Sponsor to determine which of the Accumulation Funds they may reinvest into,
as reinvestment in certain of the Accumulation Funds may be restricted to
residents of a particular state or states. Unitholders may obtain a prospectus
for each Accumulation Fund through their financial adviser or through the
Sponsor at (800) 621-7227. For a more detailed description, Unitholders should
read the prospectus of the Accumulation Fund in which they are interested.
The following is a complete list of the Accumulation Funds currently
available, as of the Date of Deposit of this Prospectus, to Unitholders under
the Accumulation Plan. The list of available Accumulation Funds is subject to
change without the consent of any of the Unitholders.
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
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NUVEEN FLAGSHIP MULTISTATE TRUST I
Nuveen Flagship Arizona Municipal Bond Fund
Nuveen Flagship Colorado Municipal Bond Fund
Nuveen Flagship Florida Municipal Bond Fund
Nuveen Flagship Florida Intermediate Municipal Bond Fund
Nuveen Maryland Municipal Bond Fund
Nuveen Flagship New Mexico Municipal Bond Fund
Nuveen Flagship Pennsylvania Municipal Bond Fund
Nuveen Flagship Virginia Municipal Bond Fund
NUVEEN FLAGSHIP MULTISTATE TRUST II
Nuveen California Municipal Bond Fund
Nuveen California Insured Municipal Bond Fund
Nuveen Flagship Connecticut Municipal Bond Fund
Nuveen Massachusetts Municipal Bond Fund
Nuveen Massachusetts Insured Municipal Bond Fund
Nuveen Flagship New Jersey Municipal Bond Fund
Nuveen Flagship New Jersey Intermediate Municipal Bond Fund
Nuveen Flagship New York Municipal Bond Fund
Nuveen New York Insured Municipal Bond Fund
NUVEEN FLAGSHIP MULTISTATE TRUST III
Nuveen Flagship Alabama Municipal Bond Fund
Nuveen Flagship Georgia Municipal Bond Fund
Nuveen Flagship Louisiana Municipal Bond Fund
Nuveen Flagship North Carolina Municipal Bond Fund
Nuveen Flagship South Carolina Municipal Bond Fund
Nuveen Flagship Tennessee Municipal Bond Fund
NUVEEN FLAGSHIP MULTISTATE TRUST IV
Nuveen Flagship Kansas Municipal Bond Fund
Nuveen Flagship Kentucky Municipal Bond Fund
Nuveen Flagship Kentucky Limited Term Municipal Bond Fund
Nuveen Flagship Michigan Municipal Bond Fund
Nuveen Flagship Missouri Municipal Bond Fund
Nuveen Flagship Ohio Municipal Bond Fund
Nuveen Flagship Wisconsin Municipal Bond Fund
Flagship Utility Income Fund
Nuveen Municipal Money Market Fund, Inc.
Nuveen Taxable Funds, Inc.
Nuveen Investment Trust
Nuveen Growth and Income Stock Fund
Nuveen Balanced Stock and Bond Fund
Nuveen Balanced Municipal and Stock Fund
Nuveen European Value Fund
Nuveen Investment Trust II
Nuveen Investment Trust III
Nuveen Rittenhouse Growth Fund
MONEY MARKET FUNDS
Nuveen California Tax-Free Money Market Fund
Nuveen Massachusetts Tax-Free Money Market Fund
Nuveen New York Tax-Free Money Market Fund
Nuveen Tax-Free Reserves, Inc.
Nuveen Tax-Exempt Money Market Fund, Inc.
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Each person who purchases Units of a Trust may become a participant in the
Accumulation Plan and elect to have his or her distributions on Units of the
Trust invested directly in shares of one of the Accumulation Funds. Reinvesting
Unitholders may select any interest distribution plan. Thereafter, each
distribution of interest income or principal on the participant's Units
(principal only in the case of a Unitholder who has chosen to reinvest only
principal distributions) will, on the applicable distribution date, or the next
day on which the New York Stock Exchange is normally open ("business day") if
the distribution date is not a business day, automatically be received by the
transfer agent for each of the Accumulation Funds, on behalf of such participant
and applied on that date to purchase shares (or fractions thereof) of the
Accumulation Fund chosen at net asset value as computed as of 4:00 p.m. eastern
time on each such date. All distributions will be reinvested in the Accumulation
Fund chosen and no part thereof will be retained in a separate account. These
purchases will be made without a sales charge.
The Transfer Agent of the Accumulation Fund will mail to each participant in
the Accumulation Plan a quarterly statement containing a record of all
transactions involving purchases of Accumulation Fund shares (or fractions
thereof) with Trust interest distributions or as a result of reinvestment of
Accumulation Fund dividends. Any distribution of principal used to purchase
shares of an Accumulation Fund will be separately confirmed by the Transfer
Agent. Unitholders will also receive distribution statements from the Trustee
detailing the amounts transferred to their Accumulation Fund accounts.
Participants may at any time, by so notifying the Trustee in writing, elect
to change the Accumulation Fund into which their distributions are being
reinvested, to change from principal only reinvestment to reinvestment of both
principal and interest or vice versa, or to terminate their participation in the
Accumulation Plan altogether and receive future distributions on their Units in
cash. There will be no charge or other penalty for such change of election or
termination. The character of Trust distributions for income tax purposes will
remain unchanged even if they are reinvested in an Accumulation Fund.
INFORMATION ABOUT THE SPONSOR
Since our founding in 1898, Nuveen has been synonymous with investments that
withstand the test of time. Today, we offer a broad range of investments
designed for mature investors whose portfolio is the principal source of their
ongoing financial security. More than 1.3 million investors have entrusted
Nuveen to help them maintain the lifestyle they currently enjoy.
A value investing approach--purchasing securities of strong companies and
communities that represent good long-term value--is the cornerstone of Nuveen's
investment philosophy. It is a careful, long-term strategy that offers the
potential for attractive returns with moderated risk. Successful value investing
begins with in-depth research and a discerning eye for marketplace opportunity.
Nuveen's team of investment professionals is backed by the discipline, resources
and expertise of a century of investment experience, including one of the most
recognized research departments in the industry.
To meet the unique circumstances and financial planning needs of mature
investors, Nuveen offers a wide array of taxable and tax-free investment
products--including equity and fixed-income mutual funds, unit trusts,
exchange-traded funds, customized asset management services and cash management
products. Nuveen is a subsidiary of The John Nuveen Company which, in turn, is
approximately 78% owned by the St. Paul Companies, Inc. ("ST. PAUL"). St. Paul
is located in St. Paul, Minnesota and is principally engaged in providing
property-liability insurance through subsidiaries. Nuveen is a member of the
National Association of Securities Dealers, Inc. and the Securities Industry
Association and has its principal office located in Chicago (333 West Wacker
Drive). Nuveen maintains 8 regional offices.
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.
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DESCRIPTION OF RATINGS*
STANDARD & POOR'S CORPORATION. A description of the applicable Standard &
Poor's Corporation rating symbols and their meanings follows:
A Standard & Poor's rating is a current assessment of the creditworthiness
of an obligor with respect to a specific debt obligation. This assessment may
take into consideration obligors such as guarantors, insurers or lessees.
The rating is not a recommendation to purchase, sell or hold a security,
inasmuch as it does not comment as to market price or suitability for a
particular investor.
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable.
Standard & Poor's does not perform an audit in connection with any rating and
may, on occasion, rely on unaudited financial information. The ratings may be
changed, suspended or withdrawn as a result of changes in, or unavailability of,
such information, or for other circumstances.
The ratings are based, in varying degrees, on the following considerations:
I. Likelihood of default--capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance
with the terms of the obligation;
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or other arrangements under
the laws of bankruptcy and other laws affecting creditors' rights.
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.
AA--Bonds rated AA have a very strong capacity to pay interest and repay
principal, and differ from the highest rated issues only in small degree.
A--Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in the higher rated categories.
PLUS (+) OR MINUS (-): The ratings from "AA" to "BB" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
PROVISIONAL RATINGS: The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful completion of the
project being financed by the issuance of the bonds being rated and indicates
that payment of debt service requirements is largely or entirely dependent upon
the successful and timely completion of the project. This rating, however, while
addressing credit quality subsequent to completion of the project, makes no
comment on the likelihood of, or the risk of default upon failure of, such
completion. Accordingly, the investor should exercise his own judgment with
respect to such likelihood and risk.
NOTE RATINGS: A Standard & Poor's note rating reflects the liquidity
concerns and market access risks unique to notes. Notes due in 3 years or less
will likely receive a note rating. Notes maturing beyond 3 years will most
likely receive a long-term debt rating.
Note rating symbols are as follows:
SP-1 Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety
characteristics will be given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
MOODY'S INVESTORS SERVICE, INC. A brief description of the applicable
Moody's Investors Service, Inc. rating symbols and their meanings follows:
Aaa--Bonds which are rated Aaa are judged to be the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues. Their safety is so absolute that,
- ---------
*As published by the rating companies.
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with the occasional exception of oversupply in a few specific instances,
characteristically, their market value is affected solely by money market
fluctuations.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities. Their market value is virtually immune to all but money market
influences, with the occasional exception of oversupply in a few specific
instances.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future. The market
value of A-rated bonds may be influenced to some degree by economic performance
during a sustained period of depressed business conditions, but, during periods
of normalcy, A-rated bonds frequently move in parallel with Aaa and Aa
obligations, with the occasional exception of oversupply in a few specific
instances.
Moody's bond rating symbols may contain numerical modifiers of a generic
rating classification. The modifier 1 indicates that the bond ranks at the high
end of its category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of its generic rating
category.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well. The market value of Baa-rated
bonds is more sensitive to changes in economic circumstances, and aside from
occasional speculative factors applying to some bonds of this class, Baa market
valuations move in parallel with Aaa, Aa and A obligations during periods of
economic normalcy, except in instances of oversupply.
Con. (--)--Bonds for which the security depends upon the completion of some
act or the fulfillment of some condition are rated conditionally. These are
bonds secured by (a) earnings of projects under construction, (b) earnings of
projects unseasoned in operation experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting condition
attaches. Parenthetical rating denotes probable credit stature upon completion
of construction or elimination of basis of condition.
NOTE RATINGS:
MIG 1 This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2 This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
FITCH IBCA, INC. (formerly Fitch Investors Service, L.P.) A brief
description of the applicable Fitch IBCA, Inc. rating symbols and their meanings
follow:
AAA--Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA--Bonds considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated AAA. Bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and therefore
impair timely payment. The likelihood that the ratings of these bonds will fall
below investment grade is higher than for bonds with higher ratings.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
NOTE RATINGS:
FIN-1 Notes assigned this rating are regarded as having the strongest
degree of assurance for timely payment.
12
<PAGE>
FIN-2 Notes assigned this rating reflect a degree of assurance for timely
payment only slightly less in degree than the highest category.
HOW THE TRUST COMPARES PERFORMANCE
The Sponsor may compare the estimated returns of the Trust with the returns
or yields of other tax-free and taxable investments, often on a taxable
equivalent basis. In addition, the Sponsor from time to time may quote various
performance measures and studies in order to compare the historical returns
available from an investment in municipal securities with investments in both
tax-free and taxable securities.
Nuveen Research prepared one such study which compared the after-tax value
of $100,000 initially invested in 1977 in various asset classes including
municipal bonds, treasury bonds and corporate bonds. As indicated in the chart
provided below, the 20-year study shows that municipal bonds significantly
outperformed corporate and treasury bonds once the effects of taxes were
factored in. In fact, over the 20-year period, municipal bond returns in dollars
were almost double those of treasury bonds.
AFTER-TAX VALUE OF $100,000 INVESTED IN 1977*
The graph appearing on this page of the Information Supplement compares
after-tax total returns of $100,000 initially in 1977 in each of the Lehman
Brothers MuniBond Index, Long-Term Treasury Index and Long-Term Corporate Index.
As indicated in the graph, such an investment in the Lehman Brothers MuniBond
Index, Long-Term Treasury Index and Long-Term Corporate Index would have
appreciated to $511,039, $274,434, and $298,682, respectively at the end of
1996. The graph assumes all proceeds of investment are reinvested at the
respective index rates at the time of reinvestment and also assumes that 20% of
the assets in each category are turned over annually and proceeds are reinvested
in the respective indexes. The tax rates assumed to generate the after-tax total
returns were based upon the income and capital gain rates applicable each year
from 1977-1996 for an investor who earned the inflation-adjusted equivalents of
$500,000 in 1996. In addition, treasury returns were "grossed up" an assumed 5%
to take into account the Treasuries' exemption from state income tax. The graph
is for illustrative purposes only, and does not represent the return or
performance of any Nuveen Tax-Free Unit Trust and is not intended to predict
future results.
* The graph compares after-tax total returns using the Lehman Brothers
MuniBond Index, Long-Term Treasury Index and Long-Term Corporate Index. The
graph assumes all proceeds of investment are reinvested at the respective index
rates at the time of reinvestment and also assumes that 20% of the assets in
each category are turned over annually and proceeds are reinvested in the
respective indexes. The tax rates assumed to generate the after-tax total
returns were based upon the income and capital gain rates applicable each year
from 1977-1996 for an investor who earned the inflation-adjusted equivalents of
$100,000 in 1996. In addition, treasury returns were "grossed up" an assumed 5%
to take into account the Treasuries' exemption from state income tax. The graph
is for illustrative purposes only, and does not represent the return or
performance of any Nuveen Tax-Free Unit Trust and is not intended to predict
future results.
A comparison of the estimated returns of the Trust and the historic
performance of municipal bonds to the returns and performance of other
investments is one element to consider in making an informed investment
decision. Taxable investments have investment characteristics that differ from
those of the Trust. U.S. Government bonds are long-term investments backed by
the full faith and credit of the U.S. Government and are subject to federal
income tax but are exempt from state income taxes. Bank CDs are generally
short-term FDIC insured investments, which pay fixed principal and interest but
are subject to fluctuating rollover rates. Both bank CDs and corporate bonds are
generally subject to both federal and state income taxes. Money market funds are
short term investments with stable net asset values, fluctuating yields and
special features that enhance liquidity.
13
<PAGE>
HOW TO CALCULATE YOUR ESTIMATED INCOME
The examples provided below illustrate how to calculate the estimated annual
income generated by a hypothetical $10,000 investment in each respective Trust.
The illustrations assume that the investment was made on the day prior to the
date of deposit by an investor electing the monthly distribution plan and that
the portfolio contains all the securities described in the portfolio. These
hypothetical examples are for illustrative purposes only and not intended to
reflect or predict the results of any actual investment and do not contemplate
changes to the portfolio or expenses.
<TABLE>
<S> <C> <C> <C> <C>
EXAMPLE OF HOW TO CALCULATE YOUR ESTIMATED INCOME:
ARIZONA INSURED TRUST 64
$10,000 DIVIDED BY $94.97 = 105.296
Investment Offering price and # of units purchased
(as of 02/15/00) accrued interest
105.296 X $5.0358 = $530.25
# of units purchased Annual income per unit annual income
(monthly plan)
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
EXAMPLE OF HOW TO CALCULATE YOUR ESTIMATED INCOME:
GEORGIA INSURED TRUST 70
$10,000 DIVIDED BY $92.17 = 108.495
Investment Offering price and # of units purchased
(as of 02/15/00) accrued interest
108.495 X $4.9443 = $536.43
# of units purchased Annual income per unit annual income
(monthly plan)
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
EXAMPLE OF HOW TO CALCULATE YOUR ESTIMATED INCOME:
NEW YORK INSURED TRUST 306
$10,000 DIVIDED BY $91.52 = 109.265
Investment Offering price and # of units purchased
(as of 02/15/00) accrued interest
109.265 X $4.9362 = $539.35
# of units purchased Annual income per unit annual income
(monthly plan)
</TABLE>
14
<PAGE>
APPENDIX A
ARIZONA DISCLOSURE
ECONOMIC FACTORS--ARIZONA
GENERAL ECONOMIC CONDITIONS. Progressing from its traditional reliance on a
cyclical construction industry, Arizona's economic base is maturing and
diversifying. One of the nation's leaders in employment growth, Arizona has been
among the top five employment growth states for more than four years, and it
should remain there through 1998. After climbing by 6.2% in 1994, during which
the state's economy produced the second-highest number of jobs of any year in
Arizona history, job creation in Arizona is leveling off with employment growth
of 5.6% in 1996-97, although this compares favorably with the national figure of
2.0%. Arizona's wage and salary employment grew 5.6% in 1996, 4.5% in 1997 and
is forecast to increase by 3.5% to 4.5% in 1998, and 3.5% in 1999. The
unemployment rate, around 4.5% for 1997, should remain low before increasing in
late 1998 and 1999.
Arizona ranked third in the nation in personal income growth during 1991-96.
Personal income, after growing 7.2% in 1997, is estimated at 6.7% in 1998 and
6.5% in 1999.
Overall, Arizona's forecast is for continued but moderate rates of growth in
employment and personal income. Employment growth will continue to be stronger
in the Phoenix area than in the balance of the state. Housing has probably
peaked and is likely to decline after seven extremely strong years. Retail sales
should also continue to slow.
Population, because of continued employment growth, will record
above-average growth rates. After population growth of 3.2% in 1996 and 3% in
1997, the forecast calls for 2.8% in 1998 and 2.5% in 1999. That translates into
almost 130,000 more people in the state in 1998 and 117,000 in 1999.
BUDGETARY PROCESS. The Budget Reform Act of 1997 made significant changes
to the State's planning and budgeting systems. Beginning with the Fiscal
biennium 2000-01, all State agencies, including capital improvement budgeting,
will be moved to a biennial budgeting system. From Fiscal Year 2000 to 2006, all
State agencies will move to a budget format that reflects the program structure
in the "Master List of State Government Programs."
The Budget Reform Act of 1993 established the current budgeting system of
one-and two-year budget reviews. Agencies selected for annual review and
appropriation are designated as Major Budget Units (MBUs). The 18 MBUs account
for over 90% of the total General Fund expenditures. Agencies selected for
biennial review and appropriation are designated as Other Budget Units (OBUs).
In 1997, combined MBU and OBU in the General Fund totaled $4.68 billion, and is
estimated at $5.1 billion in 1998.
REVENUES AND EXPENDITURES. The General Fund closed fiscal year 1997 with a
$515.9 million ending balance, setting a new record for the state, and the
Executive plan for fiscal year 1998 anticipates a $497.1 million balance.
Overall, fiscal year 1997 revenues totaled $5,028.2 million. Corporate income
tax revenue jumped by 34%, from $448 million in fiscal year 1996 to $600 million
in fiscal year 1997. Individual income tax revenues grew by 12% from fiscal year
1996 to fiscal year 1997. Expenditures for fiscal year 1997 totaled $4,826.5
million. Revertments totaled $80.17 million in fiscal year 1997.
The current Executive forecast for fiscal year 1998 revenue is $5.289
billion. The major revenue source, transaction privilege taxes, is forecast to
produce $2.3 billion for fiscal year 1998. All three major revenue
categories -- individual income taxes, corporate income taxes and transaction
privilege taxes -- showed gains on a year-over-year basis. The most significant
impact on fiscal year 1998 revenues will be the various tax cutting measures
enacted over the past several years, which has decreased revenues by some 3.2%.
Overall, the Executive estimates a 3.7% or $196.9 million increase in base
revenues of the current Fiscal year 1998 estimate. This compares to the 4.5%, or
$227.5 million increase in base revenues between fiscal year 1997 and fiscal
year 1998.
The Executive fiscal plan for Fiscal Year 1998 is based on revenue
estimates, yet still provides for Executive-initiated program changes and school
finance of $127.7 million; a $210 million tax reduction and a $96.0 million
capital program. The Executive projects a fiscal year 1998 ending balance of
$497.1 million.
For Fiscal year 1999, the Executive is recommending a base operating budget
of $5.4 billion, an increase of approximately $260.6 million. The majority of
recommended expenditures for fiscal year 1999 are in education. A projected
ending balance of $19.9 million is expected for Fiscal Year 1999. This amount
would ordinarily be considered "thin" at only 0.4% of expenditures. However,
given the prudent revenue forecast and the available reserves of $393 million in
the Budget Stabilization Fund, $95 million in the Medical Services Stabilization
Fund, and $42.4 million in the Temporary Assistance Stabilization Fund, the
$19.9 million amount seems appropriate.
LITIGATION. In response to the court's ruling in ROOSEVELT V. BISHOP in
1994, the Executive recommended $30 million for the first-year implementation of
a capital assistance program for Arizona's schools. The program is designed to
help school districts that lack bonding capacity due to low value or rapid
growth. Income is provided for in a Capital Equity
A-1
<PAGE>
Fund which contains monies appropriated by the Legislature and $30 million
annually from the Common School Land Fund (Permanent State School Fund). The
Permanent State School Fund consists of revenues from the proceeds of the sale
of natural resources or property from lands that have been granted by the United
States to the State of Arizona for the support of common schools. In future
years, the Capital Equity Fund may contain monies remitted by school districts
for the repayment of loans. Funds are used to assist school districts with
capital needs. For fiscal year 1999, the Governor recommends $40.5 million be
appropriated from the Permanent State School Fund, which includes the $30
million appropriated to the Capital Equity Fund.
DEBT ADMINISTRATION AND LIMITATION. The State is not permitted to issue
general obligation debt. The particular source of payment and security for each
of the Arizona Obligations is detailed in the debt instruments themselves and in
related offering materials. There can be no assurances with respect to whether
the market value or marketability of any of the Arizona Obligations issued by an
entity other than the State of Arizona will be affected by financial or other
conditions of the State or of any entity located within the State. In addition,
it should be noted that the State of Arizona, as well as counties,
municipalities, political subdivisions and other public authorities of the
State, are subject to limitations imposed by Arizona's Constitution with respect
to ad valorem taxation, bonded indebtedness and other matters. For example, the
State legislature cannot appropriate revenues in excess of 7% of the total
personal income of the State in any fiscal year. These limitations may affect
the ability of the issuers to generate revenues to satisfy their debt
obligations.
Although most of the Bonds in an Arizona Trust are revenue obligations of
local governments or authorities in the State, there can be no assurance that
the fiscal and economic conditions referred to above will not affect the market
value or marketability of the Bonds or the ability of the respective obligors to
pay principal of and interest on the Bonds when due.
ARIZONA TAXABLE ESTIMATED CURRENT RETURN TABLE
The following tables show the approximate taxable estimated current returns
for individuals that are equivalent to tax-exempt estimated current returns
under combined Federal and state taxes, using published 2000 marginal Federal
tax rates and marginal state tax rates currently available and scheduled to be
in effect. The table assumes that federal taxable income is equal to state
income subject to tax, and for cases in which more than one state rate falls
within a Federal bracket, the state rate corresponding to the highest income
within that Federal bracket is used. The combined state and Federal tax brackets
shown reflect the fact that state tax payments are currently deductible for
Federal tax purposes and for Arizona tax purposes. The tables do not reflect any
local taxes or any taxes other than personal income taxes. The tables illustrate
what you would have to earn on taxable investments to equal the tax-exempt
estimated current return for your income tax bracket. A taxpayer's marginal tax
rate is affected by both his taxable income and his adjusted gross income.
Locate your adjusted gross and your taxable income (which is your adjusted gross
income reduced by any deductions and exemptions), then locate your tax bracket
based on joint or single tax filing. Read across to the equivalent taxable
estimated current return you would need to match the tax-free income.
A-2
<PAGE>
COMBINED MARGINAL TAX RATES FOR JOINT TAXPAYERS WITH FOUR PERSONAL EXEMPTIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FEDERAL
FEDERAL ADJUSTED COMBINED
TAXABLE GROSS STATE AND TAX-FREE ESTIMATED CURRENT RETURN
INCOME INCOME FEDERAL ----------------------------------------------------------------------
(1,000'S) (1,000'S) TAX RATE1 4.50% 4.75% 5.00% 5.25% 5.50% 5.75% 6.00% 6.25%
- -------------- -------------- ------------ ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 43.85 $ 0-128.95 17.5% 5.45 5.76 6.06 6.36 6.67 6.97 7.27 7.58
43.85-105.95 0-128.95 31.5 6.57 6.93 7.30 7.66 8.03 8.39 8.76 9.12
128.95-193.40 32.0 6.62 6.99 7.35 7.72 8.09 8.46 8.82 9.19
105.95-161.45 0-128.95 34.0 6.82 7.20 7.58 7.95 8.33 8.71 9.09 9.47
128.95-193.40 35.0 6.92 7.31 7.69 8.08 8.46 8.85 9.23 9.62
193.40-315.90 37.5 7.20 7.60 8.00 8.40 8.80 9.20 9.60 10.00
161.45-288.35 128.95-193.40 40.0 7.50 7.92 8.33 8.75 9.17 9.58 10.00 10.42
193.40-315.90 43.0 7.89 8.33 8.77 9.21 9.65 10.09 10.53 10.96
Over 315.90 40.02 7.50 7.92 8.33 8.75 9.17 9.58 10.00 10.42
Over 288.35 193.40-315.90 47.0 8.49 8.96 9.43 9.91 10.38 10.85 11.32 11.79
Over 315.90 43.53 7.96 8.41 8.85 9.29 9.73 10.18 10.62 11.06
</TABLE>
COMBINED MARGINAL TAX RATES FOR SINGLE TAXPAYERS WITH ONE PERSONAL EXEMPTION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FEDERAL
FEDERAL ADJUSTED COMBINED
TAXABLE GROSS STATE AND TAX-FREE ESTIMATED CURRENT RETURN
INCOME INCOME FEDERAL ----------------------------------------------------------------------
(1,000'S) (1,000'S) TAX RATE1 4.50% 4.75% 5.00% 5.25% 5.50% 5.75% 6.00% 6.25%
- -------------- -------------- ------------ ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 26.25 $ 0-128.95 18.0% 5.49 5.79 6.10 6.40 6.71 7.01 7.32 7.62
26.25- 63.55 0-128.95 31.5 6.57 6.93 7.30 7.66 8.03 8.39 8.76 9.12
63.55-132.60 0-128.95 34.0 6.82 7.20 7.58 7.95 8.33 8.71 9.09 9.47
128.95-251.455 36.0 6.25 6.64 7.03 7.42 7.81 8.20 8.59 8.98
132.60-288.35 128.95-251.45 41.0 7.63 8.05 8.47 8.90 9.32 9.75 10.17 10.59
Over 251.45 40.04 7.50 7.92 8.33 8.75 9.17 9.58 10.00 10.42
Over 288.35 Over 251.45 43.53 7.96 8.41 8.85 9.29 9.73 10.18 10.62 11.06
</TABLE>
- ------------------
1 The table reflects the effect of the limitations on itemized deductions
and the deduction for personal exemptions. They were designed to phase out
certain benefits of these deductions for higher income taxpayers. These
limitations, in effect, raise the current maximum marginal combined Federal and
state tax rate to approximately 47.02 percent for taxpayers filing a joint
return and entitled to four personal exemptions and to approximately 43.72
percent for taxpayers filing a single return entitled to only one personal
exemption. These limitations are subject to certain maximums, which depend on
the number of exemptions claimed and the total amount of the taxpayer's itemized
deductions. For example, the limitation on itemized deductions will not cause a
taxpayer to lose more than 80% of his allowable itemized deductions, with
certain exceptions.
2 Combined Federal and state tax rate reverts to 38.88% after the 80% cap on
the limitation on itemized deductions has been met.
3 Combined Federal and state tax rate reverts to 42.50% after the 80% cap on
the limitation on itemized deductions has been met.
4 Combined Federal and state tax rate reverts to 39.07% after the 80% cap on
the limitation on itemized deductions has been met.
A-3
<PAGE>
APPENDIX B
GEORGIA DISCLOSURE
ECONOMIC FACTORS--GEORGIA
The following brief summary regarding the economy of Georgia is based upon
information drawn from publicly available sources and is included for purposes
of providing information about general economic conditions that may or may not
affect issuers of the Georgia obligations. The Sponsor has not independently
verified any of the information contained in such publicly available documents.
ECONOMIC OUTLOOK. Georgia's recovery from the economic recession of the
early 1990's has been steady and is better than regional trends. The nation's
economy expanded by 3.4% in 1997, while Georgia's economy increased by 3.6%,
slightly above the predicted gain of 3.3% but below its 4.4% growth in 1996.
The 1998 forecast anticipates that Georgia's real Gross State Product
(inflation adjusted) will increase by 3.1%, significantly less than in 1997, but
higher than the expected rate of growth in the national Gross Domestic Product
(2.3%). While this recovery does not meet the explosive patterns set in past
cycles, recent data reveal that Georgia ranks among the top six states in the
nation in employment and total population growth.
The State's inflation-adjusted personal income is expected to expand by
3.5%, compared with the 1997 increase of 4.1%. Higher employment will be the
most important factor in 1998 income gains, but a tight labor market will ensure
that wage and salary increases also will contribute substantially to income
growth. This reverses the pattern of the first five years of the current
expansion, when wages and salaries lagged behind increases in the number of
jobs, causing personal income to rise less rapidly than expected. Georgia's
above-average gain in personal income, at a rate even higher than the State's
above-average rate of population growth, will help lessen the diminishing gap
between the State's per capita personal income and that of the nation.
Total employment in Georgia rose by 4.2% in 1996, double the U.S. gain,
mainly due to activity related to Olympic preparations. Employment dipped
slightly in the six months after the Olympic games but has continued its upward
trend through the beginning of 1998. In 1997, the State's nonagricultural
employment expanded by 1.9%, compared with the 3.7% gain in 1996. In contrast,
the national rate of employment growth in 1996 and 1997 were 2% and 2.2%
respectively. During 1997, the State's total employment averaged 3.620 million,
up from 3.537 million in 1996. Preliminary figures for March 1998 indicate that
employment reached 3.704 million and growth is expected to reflect a 2.1% gain,
or 76,300 new jobs for the year.
Although prospects are best for services, the 1998 outlook for the other
sectors of the Georgia economy varies. Growth in the transportation,
communications and public utilities sector will come from cyclical gains, the
stimulative effects of deregulation and the opening of new markets by
technological advances. Wholesale and retail trade will see above-average
growth, and finance, insurance and real estate will expand moderately. Slow
growth is forecast for manufacturing and government, and activity in
construction and mining will decline moderately.
The 1996 and 1997 annual average unemployment rates (not seasonally
adjusted) for Georgia were 4.6% and 4.5%, respectively, as compared to the
national unemployment rates of 5.4% and 4.7%, respectively. Georgia's
unemployment rate has decreased every year since 1992 and has averaged 4.0%
during the first three months of 1998.
Because labor markets will remain stable, wages are not expected to climb
faster in Georgia than in the nation as a whole. Georgia's per capita personal
income (adjusted for price changes) climbed by 4.5% to $24,061 in 1997, compared
to the 5.0% increase in 1996. Among the states, Georgia currently ranks
twenty-fifth in the nation in per capita personal income and third among the
twelve states of the Southeast region. The national average increase in per
capita personal income was 4.8% during 1997, up from 4.6% in 1996.
The State's annual rate of population growth is dipping slightly--from 2.1%
in 1996, to 2% in 1997, to 1.9% in 1998. Georgia's total population, however,
will continue to grow faster than any state outside of the Rocky Mountain
region, at almost twice the national rate of about 1% annually. The State's
population has risen by 15.6% since 1990, more than twice the rate of the nation
as a whole. The Census Bureau estimates that in July 1997 Georgia's population
reached 7.49 million and will exceed 7.7 million by the end of 1998, a gain of
144,000 over the previous year.
REVENUES AND EXPENDITURES. Excluding net proceeds from the Georgia Lottery
and revenues from the Indigent Care Trust Fund, net collections received by the
Georgia Department of Revenue grew by 5.5% in Fiscal Year 1997, slightly lower
than the predicted rate of 6.1%. Revenue collections are projected to increase
by 5.1% in Fiscal 1998. This rate of growth reflects cyclical gains, an expected
loss from the gradual elimination of the State's sales tax on food, and an
expected boost from changes in the federal capital gains tax. Total revenue
collections in Fiscal 1999 are expected to rise by 4.8%.
B-1
<PAGE>
Receipts in Fiscal Year 1997 (ended June 30, 1997) reached $10.521 billion,
an increase of $580.8 million or 5.8% over Fiscal 1996. The top revenue producer
was the personal income tax, at $4.741 billion or 45.1% of total revenue. This
tax source increased 11.7% over Fiscal 1996. The sales and use tax was the
second largest source, at $4.079 billion or 38.8% of total receipts. Sales and
use tax collections were up 2.6% in Fiscal 1997. These two taxes, income and
sales, have accounted for roughly 85% of total revenues since 1989. Corporate
income tax accounted for 7.1% of total collections or $750.0 million, up 1.2%
over Fiscal Year 1996 receipts. The next two largest revenue producers were
motor fuel taxes at 3.7% or $389.7 million (down 1.9% from Fiscal 1996) and
motor vehicle taxes at 1.9% or $202.1 million (down 2.9%).
Two ongoing legislative measures were of significance for Fiscal Year 1997.
First, Georgia's four cent sales tax on eligible food and beverage was reduced
by half beginning October 1, 1996 and was reduced by an additional one cent on
October 1, 1997. The final one cent will be eliminated on October 1, 1998 (House
Bill 265). Second, in 1995, the Georgia Department of Revenue issued the first
of four, equal yearly refund checks to eligible federal and military retirees
pursuant to House Bill 90. House Bill 3 required the Department of Revenue, in
October 1996, to issue refunds to a second category of eligible retirees.
Expenditures and appropriations for State funds for Fiscal Year 1997 totaled
$11.793 billion, a 7.4% increase over Fiscal 1996 appropriations. Of these
appropriations, 55.8% was used for education, 10.4% for human resources, and
11.2% for Medicaid funding. The State's funds surplus reached $216.4 million at
the end of Fiscal 1997; combined with the lottery surplus and other additional
revenues, Georgia's total surplus for Fiscal 1997 was $493.9 million.
Though March 1998, the Georgia Department of Revenue has collected $8.124
billion, up $456.0 million over the same period in Fiscal 1997. The largest
increases occurred in the estate tax and the individual income tax, up 17.2% and
9.2%, respectively. The motor vehicle tax, however, is down 11.1% for this
period compared to the previous year. Estimated total revenue for Fiscal Year
1998 $11.778 billion, and appropriations totaling $11.772 billion are
recommended by the Governor for expenditure, a 0.2% decrease from Fiscal 1997
expenditures.
CONSTITUTIONAL CONSIDERATIONS. The Georgia Constitution permits the
issuance by the State of general obligation debt and of certain guaranteed
revenue debt. The State may incur guaranteed revenue debt by guaranteeing the
payment of certain revenue obligations issued by an instrumentality of the
State. The Georgia Constitution prohibits the incurring of any general
obligation debt or guaranteed revenue debt if the highest aggregate annual debt
service requirement for the then current year or any subsequent fiscal year for
outstanding general obligation debt and guaranteed revenue debt, including the
proposed debt, exceed 10% of the total revenue receipts, less refunds, of the
State treasury in the fiscal year immediately preceding the year in which any
such debt is to be incurred.
The Georgia Constitution also permits the State to incur public debt to
supply a temporary deficit in the State treasury in any fiscal year created by a
delay in collecting the taxes of that year. Such debt must not exceed, in the
aggregate, 5% of the total revenue receipts, less refunds, of the State treasury
in the fiscal year immediately preceding the year in which such debt is
incurred. The debt incurred must be repaid on or before the last day of the
fiscal year in which it is to be incurred out of the taxes levied for that
fiscal year. No such debt may be incurred in any fiscal year if there is then
outstanding unpaid debt from any previous fiscal year which was incurred to
supply a temporary deficit in the State treasury. No such short-term debt has
been incurred under this provision since the inception of the constitutional
authority referred to in this paragraph.
Virtually all of the issues of long-term debt obligations issued by or on
behalf of the State of Georgia and counties, municipalities and other political
subdivisions and public authorities thereof are required by law to be validated
and confirmed in a judicial proceeding prior to issuance. The legal effect of an
approved validation in Georgia is to render incontestable the validity of the
pertinent bond issue and the security therefor.
As of October 31, 1996, Georgia had authorized total aggregate general
obligation debt of $7,995,920,000. In the amended fiscal year 1996 and 1997
appropriations, $495,450,000 in general obligation debt was authorized. For
fiscal year 1998, the Governor recommended $508,800,000 in bonds, the proceeds
of which are to be used for various planned capital projects of the State, its
department and agencies. Total direct obligations issued for fiscal years ended
June 30, 1975 through June 30, 1997 is $8,189,495,000. Georgia has no direct
obligations authorized but unissued during that period.
Georgia's total outstanding debt as of October 31, 1996 is $4,727,630,000.
Georgia's aggregate fiscal year debt service on all outstanding bonds as of
October 31, 1996 is approximately $7.15 billion.
BOND RATINGS. Currently, Moody's Investors Service, Inc. rates State of
Georgia general obligation bonds Aaa; Standard & Poor's Ratings Services rates
such bonds AAA (upgraded from AA+ on July 29, 1997); and Fitch IBCA, Inc.
(formerly known as Fitch Investors Service, L.P.) rates such bonds as AAA.
LEGAL PROCEEDINGS. Georgia is involved in certain legal proceedings that,
if decided against the State, may require the State to make significant future
expenditures or may substantially impair revenues. An adverse final decision
could materially affect the State's governmental operations and, consequently,
its ability to pay debt service on its obligations.
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GEORGIA TAXABLE ESTIMATED CURRENT RETURN TABLE
The following tables show the approximate taxable estimated current returns
for individuals that are equivalent to tax-exempt estimated current returns
under combined Federal and state taxes, using published 2000 marginal Federal
tax rates and marginal state tax rates currently available and scheduled to be
in effect. The table assumes that federal taxable income is equal to state
income subject to tax, and for cases in which more than one state rate falls
within a Federal bracket, the state rate corresponding to the highest income
within that Federal bracket is used. The combined state and Federal tax brackets
shown reflect the fact that state tax payments are currently deductible for
Federal tax purposes and for Georgia tax purposes. The tables do not reflect any
local taxes or any taxes other than personal income taxes. The tables illustrate
what you would have to earn on taxable investments to equal the tax-exempt
estimated current return for your income tax bracket. A taxpayer's marginal tax
rate is affected by both his taxable income and his adjusted gross income.
Locate your adjusted gross and your taxable income (which is your adjusted gross
income reduced by any deductions and exemptions), then locate your tax bracket
based on joint or single tax filing. Read across to the equivalent taxable
estimated current return you would need to match the tax-free income.
COMBINED MARGINAL TAX RATES FOR JOINT TAXPAYERS WITH FOUR PERSONAL EXEMPTIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FEDERAL
FEDERAL ADJUSTED COMBINED
TAXABLE GROSS STATE AND TAX-FREE ESTIMATED CURRENT RETURN
INCOME INCOME FEDERAL ----------------------------------------------------------------------
(1,000'S) (1,000'S) TAX RATE1 4.50% 4.75% 5.00% 5.25% 5.50% 5.75% 6.00% 6.25%
- -------------- -------------- ------------ ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 43.85 $ 0-128.95 20.0% 5.63 5.94 6.25 6.56 6.88 7.19 7.50 7.81
43.85-105.95 0-128.95 32.0 6.62 6.99 7.35 7.72 8.09 8.46 8.82 9.19
128.95-193.40 33.0 6.72 7.09 7.46 7.84 8.21 8.58 8.96 9.33
105.95-161.45 0-128.95 35.0 6.92 7.31 7.69 8.08 8.46 8.85 9.23 9.62
128.95-193.40 36.0 7.03 7.42 7.81 8.20 8.59 8.98 9.38 9.77
193.40-315.90 38.5 7.32 7.72 8.13 8.54 8.94 9.35 9.76 10.16
161.45-288.35 128.95-193.40 41.0 7.63 8.05 8.47 8.90 9.32 9.75 10.17 10.59
193.40-315.90 44.0 8.04 8.48 8.93 9.38 9.82 10.27 10.71 11.16
Over 315.90 41.02 7.63 8.05 8.47 8.90 9.32 9.75 10.17 10.59
Over 288.35 193.40-315.90 47.5 8.57 9.05 9.52 10.00 10.48 10.95 11.43 11.90
Over 315.90 44.03 8.04 8.48 8.93 9.38 9.82 10.27 10.71 11.16
</TABLE>
COMBINED MARGINAL TAX RATES FOR SINGLE TAXPAYERS WITH ONE PERSONAL EXEMPTION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FEDERAL
FEDERAL ADJUSTED COMBINED
TAXABLE GROSS STATE AND TAX-FREE ESTIMATED CURRENT RETURN
INCOME INCOME FEDERAL ----------------------------------------------------------------------
(1,000'S) (1,000'S) TAX RATE1 4.50% 4.75% 5.00% 5.25% 5.50% 5.75% 6.00% 6.25%
- -------------- -------------- ------------ ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 26.25 $ 0-128.95 20.0 5.63 5.94 6.25 6.56 6.88 7.19 7.50 7.81
26.25- 63.55 0-128.95 32.0 6.62 6.99 7.35 7.72 8.09 8.46 8.82 9.19
63.55-132.60 0-128.95 35.0 6.92 7.31 7.69 8.08 8.46 8.85 9.23 9.62
128.95-251.45 36.5 7.09 7.48 7.87 8.27 8.66 9.06 9.45 9.84
132.60-288.35 128.95-251.45 41.5 7.69 8.12 8.55 8.97 9.40 9.83 10.26 10.68
Over 251.45 41.02 7.63 8.05 8.47 8.90 9.32 9.75 10.17 10.59
Over 288.35 Over 251.45 44.03 8.04 8.48 8.93 9.38 9.82 10.27 10.71 11.16
</TABLE>
- ------------------
1 The table reflects the effect of the limitations on itemized deductions
and the deduction for personal exemptions. They were designed to phase out
certain benefits of these deductions for higher income taxpayers. These
limitations, in effect, raise the current maximum marginal combined Federal and
state tax rate to approximately 47.59 percent for taxpayers filing a joint
return and entitled to four personal exemptions and to approximately 44.24
percent for taxpayers filing a single return entitled to only one personal
exemption. These limitations are subject to certain maximums, which depend on
the number of exemptions claimed and the total amount of the taxpayer's itemized
deductions. For example, the limitation on itemized deductions will not cause a
taxpayer to lose more than 80% of his allowable itemized deductions, with
certain exceptions.
2 Combined Federal and state tax rate reverts to 39.62% after the 80% cap on
the limitation on itemized deductions has been met.
3 Combined Federal and state tax rate reverts to 43.02% after the 80% cap on
the limitation on itemized deductions has been met.
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APPENDIX C
NEW YORK DISCLOSURE
ECONOMIC FACTORS--NEW YORK
The Portfolio of the New York Insured Trust includes obligations issued by
New York State (the "State"), by its various public bodies (the "Agencies"),
and/or by other entities located within the State, including the City of New
York (the "City").
Some of the more significant events and conditions relating to the financial
situation in New York are summarized below. This section provides only a brief
summary of the complex factors affecting the financial situation in New York and
is derived from sources that are generally available to investors and is
believed to be accurate. It is based in part on Official Statements and
prospectuses issued by, and on other information reported by the State, the City
and the Agencies in connection with the issuance of their respective securities.
There can be no assurance that current or future statewide or regional
economic difficulties, and the resulting impact on State or local government
finances generally, will not adversely affect the market value of New York
Municipal Obligations held in the portfolio of the Trust or the ability of
particular obligors to make timely payments of debt service on (or relating to)
those obligations.
(1) THE STATE: The State has historically been one of the wealthiest states
in the nation. For decades, however, the State economy has grown more slowly
than that of the nation as a whole, gradually eroding the State's relative
economic affluence. Statewide, urban centers have experienced significant
changes involving migration of the more affluent to the suburbs and an influx of
generally less affluent residents. Regionally, the older Northeast cities have
suffered because of the relative success that the South and the West have had in
attracting people and business. The City has also had to face greater
competition as other major cities have developed financial and business
capabilities which make them less dependent on the specialized services
traditionally available almost exclusively in the City.
The State has for many years had a very high state and local tax burden
relative to other states. The burden of State and local taxation, in combination
with the many other causes of regional economic dislocation, has contributed to
the decisions of some businesses and individuals to relocate outside, or not
locate within, the State.
SLOWDOWN OF REGIONAL ECONOMY. A national recession commenced in mid-1990.
The downturn continued throughout the State's 1990-91 fiscal year and was
followed by a period of weak economic growth during the 1991 calendar year. For
calendar year 1992, the national economy continued to recover, although at a
rate below all post-war recoveries. For calendar year 1993, the economy grew
faster than in 1992, but still at a very moderate rate, as compared to other
recoveries. Moderate economic growth continued in calendar year 1994. The State
has projected the rate of economic growth to slow within New York during 1995,
as the expansion of the national economy moderates. Economic recovery started
considerably later in the State than in the nation as a whole due in part to the
significant retrenchment in the banking and financial services industries,
downsizing by several major corporations, cutbacks in defense spending, and an
oversupply of office buildings. Many uncertainties exist in forecasts of both
the national and State economies and there can be no assurance that the State
economy will perform at a level sufficient to meet the State's projections of
receipts and disbursements.
1995-96 FISCAL YEAR. The Governor issued a proposed Executive Budget for
the 1995-96 fiscal year (the "Proposed Budget") on February 1, 1995, which
projected a balanced general fund and receipts and disbursements of $32.5
billion and $32.4 billion, respectively. As of May 29, 1995, the State
legislature had not yet enacted, nor had the Governor and the legislature
reached an agreement on, the budget for the 1995-96 fiscal year which commenced
on April 1, 1995. The delay in the enactment of the budget may negatively affect
certain proposed actions and reduce projected savings.
The Proposed Budget and the 1995-96 Financial Plan provide for the closing
of a projected $4.7 billion budget gap in the 1995-96 fiscal year by
cost-containment savings in social welfare programs, savings from State agency
restructurings, freezing the level of some categories of local aid and new
revenue measures.
The State's proposed budget and the 1995-96 Plan may be impacted negatively
by uncertainties relating to the economy and tax collections, although recent
signs of improvement in the national economy could lead to short-term increases
in State receipts.
1994-1995 FISCAL YEAR. The State Legislature enacted the State's 1994-95
fiscal year budget on June 7, 1994, more than two months after the start of that
fiscal year. As of February 1, 1995, the updated 1994-95 State Financial Plan
(the "Plan") projected total general fund receipts and disbursements of $33.3
billion and $33.5 billion, respectively, representing reductions in receipts and
disbursements of $1 billion and $743 million, respectively, from the amount set
forth in the 1994-95 budget. The Plan projected for a General Fund balance of
approximately $157 million at the close of the 1994-95 fiscal year.
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1993-94 FISCAL YEAR. The State ended the 1993-94 fiscal year with an
operating surplus of approximately $1.0 billion.
FUTURE FISCAL YEARS. There can be no assurance that the State will not face
substantial potential budget gaps in the future resulting from a significant
disparity between tax revenues projected from a lower recurring receipts base
and the spending required to maintain State programs at current levels. To
address any potential budgetary imbalance, the State may need to take
significant actions to align recurring receipts and disbursements.
INDEBTEDNESS. As of March 31, 1994, the total amount of long-term State
general obligation debt authorized but unissued stood at $2.0 billion. As of the
same date, the State had approximately $5.4 billion in general obligation bonds
including $224 million of Bond Anticipation Notes outstanding.
The State originally projected that its borrowings for capital purposes
during the State's 1994-95 fiscal year would consist of $374 million in general
obligation bonds and bond anticipation notes and $140 million in general
obligation commercial paper. The Legislature has authorized the issuance of up
to $69 million in certificates of participation in pools of leases for equipment
and real property to be utilized by State agencies. Through March 15, 1995, the
State had issued in excess of $590 million of its general obligation bonds
(including $430 million of refunding bonds). The projections of the State
regarding its borrowings for any fiscal year are subject to change if actual
receipts fall short of State projections or if other circumstances require.
In June 1990, legislation was enacted creating the "New York Local
Government Assistance Corporation" ("LGAC"), a public benefit corporation
empowered to issue long-term obligations to fund certain payments to local
governments traditionally funded through the State's annual seasonal borrowing.
As of March 31, 1994, LGAC has issued its bonds to provide net proceeds of $4.5
billion. The LGAC was authorized to provide net proceeds of $315 million, during
the State's 1994-95 fiscal year. The LGAC issued $347 million of bonds on
March 1, 1995 providing the authorized net proceeds.
Financing of capital programs by other public authorities of the State is
also obtained from lease-purchase and contractual-obligation financing
arrangements, the debt service for which is paid from State appropriations. As
of March 31, 1994, there were $16.6 billion of such other financing arrangements
outstanding and additional financings of this nature by public authorities are
projected to total $2.4 billion during the 1994-95 fiscal year. In addition,
certain agencies had issued and outstanding approximately $7.3 billion of "moral
obligation financings" as of March 31, 1994, which are to be repaid from project
revenues. While there has never been a default on moral obligation debt of the
State, the State would be required to make up any shortfall in debt service.
RATINGS. The $850 million in TRANS issued by the State in April 1993 were
rated SP-1-Plus by S&P and MIG-1 by Moody's which represent the highest ratings
given by such agencies and the first time the State's TRANS have received these
ratings since its May 1989 TRANS issuance. Both agencies cited the State's
improved fiscal position as a significant factor in the upgrading of the April
1993 TRANS.
Moody's rating of the State's general obligation bonds stood at A2 on
March 2, 1998 and S&P's rating was upgraded to A on August 28, 1997. Moody's
rating was A on February 28, 1994, and S&P's rating stood at A- with a positive
outlook on February 28, 1994, an improvement from S&P's stable outlook from
April 1993 through February 1994 and negative outlook prior to April 1993.
Previously, Moody's lowered its rating to A on June 6, 1990, its rating having
been A1 since May 27, 1986. S&P lowered its rating from A to A- on January 13,
1992. S&P's previous ratings were A from March 1990 to January 1992, AA- from
August 1987 to March 1990 and A+ from November 1982 to August 1987.
Moody's maintained its A rating and S&P continued its A- rating in
connection with the State's issuance of $537 million of its general obligation
bonds in March 1995.
(2) THE CITY AND THE MUNICIPAL ASSISTANCE CORPORATION ("MAC"): The City
accounts for approximately 40% of the State's population and personal income,
and the City's financial health affects the State in numerous ways.
In response to the City's fiscal crisis in 1975, the State took a number of
steps to assist the City in returning to fiscal stability. Among other actions,
the State Legislature (i) created MAC to assist with long-term financing for the
City's short-term debt and other cash requirements and (ii) created the State
Financial Control Board (the "Control Board") to review and approve the City's
budgets and City four-year financial plans (the financial plans also apply to
certain City-related public agencies (the "Covered Organizations")).
In recent years, the rate of economic growth in the City slowed
substantially as the City's economy entered a recession. While by some measures
the City's economy may have begun to recover, a number of factors, including
poor performance by the City's financial services companies, may prevent a
significant improvement in the City's economy and may in fact negatively impact
upon the City's finances by reducing tax receipts. The City Comptroller has
issued reports concluding that the recession of the City's economy may be
ending, but there is little prospect of any significant improvement in the near
term.
FISCAL YEAR 1996 AND THE 1995-1998 FINANCIAL PLAN. On February 14, 1995,
the Mayor released his preliminary $30.5 billion budget for fiscal year 1996,
which included $2.7 billion of deficit reduction measures. The Mayor is seeking
a
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$1.2 billion reduction in mandated welfare and Medicaid expenditures from the
State, a $569 million reduction in expenditures by city agencies and the Board
of Education budget, $600 million in personnel related savings partly through
the elimination of 15,000 jobs within 18 months, and other measures.
The 1995-1998 Financial Plan (the "Plan"), which was submitted to the
Control Board on February 23, 1995, projected budget gaps of $3.2 billion and
$3.8 billion for fiscal years 1997 and 1998, respectively. The City Comptroller
warned on March 7, 1995 that the budget gap for fiscal year 1996 could increase
by $500 million to as much as $3.2 billion. The Control Board reported on
March 17, 1995 that the proposed budget for fiscal year 1996 relies heavily on
risky assumptions such as $600 million in savings to be negotiated with City
unions and $1.4 billion in savings dependent on State legislative approval.
The City successfully negotiated concessions with a number of unions in
order to ensure that the fiscal year 1995 budget remained in balance. The Mayor
has indicated that to avoid additional lay-offs, higher than the number referred
to above, reductions will be necessary in the benefit plans of City employees to
close the budget gaps for fiscal years 1996 and thereafter. Union leadership has
publicly opposed such "givebacks". With respect to fiscal year 1995 the City was
also successful in obtaining additional funds and relief from certain mandated
expenditures from the State for various programs, including Medicaid. However,
the amount of gap closing measures requiring State action set forth in the Plan
is well in excess of proposed assistance to the City outlined in the Governor's
Proposed Budget.
The Mayor has directed City agencies to identify an additional $300 million
in cuts for fiscal year 1996 because of anticipated shortfalls of as much as
$500 million in State aid and budgetary actions. An extended delay by the State
in adopting its 1995-96 fiscal year budget would negatively impact upon the
City's financial condition and ability to close budget gaps for fiscal years
1996 and thereafter.
Given the foregoing factors, there can be no assurance that the City will
continue to maintain a balanced budget, or that it can maintain a balanced
budget without additional tax or other revenue increases or reductions in City
services, which could adversely affect the City's economic base.
Pursuant to State law, the City prepares a four-year annual financial plan,
which is reviewed and revised on a quarterly basis and which includes the City's
capital, revenue and expense projections. The City is required to submit its
financial plans to review bodies, including the Control Board. If the City were
to experience certain adverse financial circumstances, including the occurrence
or the substantial likelihood and imminence of the occurrence of an annual
operating deficit of more than $100 million or the loss of access to the public
credit markets to satisfy the City's capital and seasonal financial
requirements, the Control Board would be required by State law to exercise
certain powers, including prior approval of City financial plans, proposed
borrowings and certain contracts.
The City depends on the State for State aid both to enable the City to
balance its budget and to meet its cash requirements. If the State experiences
revenue shortfalls or spending increases beyond its projections during its
1995-96 fiscal year or subsequent years, such developments could result in
reductions in projected State aid to the City. In addition, there can be no
assurance that State budgets in the 1996-97 or future fiscal years will be
adopted by the April 1 statutory deadline and that there will not be adverse
effects on the City's cash flow and additional City expenditures as a result of
such delays.
The City projections set forth in the Plan are based on various assumptions
and contingencies which are uncertain and which may not materialize. Changes in
major assumptions could significantly affect the City's ability to balance its
budget as required by State law and to meet its annual cash flow and financing
requirements. Such assumptions and contingencies include the timing of any
regional and local economic recovery, the absence of wage increases in excess of
the increases assumed in its financial plan, employment growth, provision of
State and Federal aid and mandate relief, State legislative approval of future
State budgets, levels of education expenditures as may be required by State law,
adoption of future City budgets by the New York City Council, and approval by
the Governor or the State Legislature and the cooperation of MAC with respect to
various other actions proposed in the Plan.
The City's ability to maintain a balanced operating budget is dependant on
whether it can implement necessary service and personnel reduction programs
successfully. As discussed above, the City must identify additional expenditure
reductions and revenue sources to achieve balanced operating budgets for fiscal
years 1996 and thereafter. Any such proposed expenditure reductions will be
difficult to implement because of their size and the substantial expenditure
reductions already imposed on City operations in the past two years.
Attaining a balanced budget is also dependent upon the City's ability to
market its securities successfully in the public credit markets. The City's
financing program for fiscal years 1995 through 1998 contemplates capital
spending of $16.4 billion, which will be financed through issuance of $10.7
billion of general obligation bonds and the balance through Water Authority
Revenue Bonds and Covered Organization obligations, and will be utilized
primarily to reconstruct and rehabilitate the City's infrastructure and physical
assets and to make capital investments. A significant portion of such bond
financing is used to reimburse the City's general fund for capital expenditures
already incurred. In addition, the City
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<PAGE>
issues revenue and tax anticipation notes to finance its seasonal working
capital requirements. The terms and success of projected public sales of City
general obligation bonds and notes will be subject to prevailing market
conditions at the time of the sale, and no assurance can be given that the
credit markets will absorb the projected amounts of public bond and note sales.
In addition, future developments concerning the City and public discussion of
such developments, the City's future financial needs and other issues may affect
the market for outstanding City general obligation bonds and notes. If the City
were unable to sell its general obligation bonds and notes, it would be
prevented from meeting its planned operating and capital expenditures.
FISCAL YEAR 1995. New York City adopted its fiscal year 1995 budget on
June 21, 1994, which provided for spending of $31.6 billion and closed a budget
gap of $2.3 billion. However, following adoption of the fiscal year 1995 budget,
additional unexpected budget gaps totaling approximately $2.0 billion were
identified. The widening of the budget gap for fiscal year 1995 resulted from
shortfalls in tax revenues and State and federal aid. The Mayor and the City
Council were unable to reach agreement on additional cuts proposed by the Mayor
in October 1994. The City Council passed its own budget cut proposal in November
1994. The Mayor vetoed the City Council version, the City Council overrode his
veto and the Mayor implemented his original plan. A state court held in December
1994 that neither budget cut proposal could be implemented. The Mayor then
elected not to spend certain funds in order to keep the budget in balance.
FISCAL YEARS 1990 THROUGH 1994. The City achieved balanced operating
results as reported in accordance with GAAP for its fiscal years 1990 through
1994. The City was required to close substantial budget gaps in these fiscal
years to maintain balanced operating results.
The City is a defendant in a significant number of lawsuits. Such litigation
includes, but is not limited to, actions commenced and claims asserted against
the City arising out of alleged constitutional violations, torts, breaches of
contracts, and other violations of law and condemnation proceedings. While the
ultimate outcome and fiscal impact, if any, on the proceedings and claims are
not currently predictable, adverse determinations in certain of them might have
a material adverse effect upon the City's ability to carry out its financial
plan. As of June 30, 1994, the City estimated its potential future liability to
be $2.6 billion.
On January 30, 1995, Robert L. Schulz and other defendants commenced a
federal district court action seeking among other matters to cancel the issuance
on January 31, 1995 of $659 million of City bonds. While the federal courts have
rejected requests for temporary restraining orders and expedited appeals, the
case is still pending. The City has indicated that it believes the action to be
without merit as it relates to the City, but there can be no assurance as to the
outcome of the litigation and an adverse ruling or the granting of a permanent
injunction would have a negative impact on the City's financial condition and
its ability to fund its operations.
RATINGS. As of the date of this prospectus, Moody's rating of the City's
general obligation bonds stood at Baa1 and S&P's rating stood at BBB+. On
February 11, 1991, Moody's had lowered its rating from A. S&P's lowered its
rating from A- on July 10, 1995 after placing the City on "negative credit
watch" in January 1995.
On March 13, 1995, Moody's confirmed its Baa1 rating in connection with a
scheduled March 1995 sale of $795 million of the City's general obligation
bonds.
In dropping the City's rating in July 1995, S&P's cited the "sluggish"
economy and the poor outlook for job growth, as well as the continued use of
"one-time measures" to close budget gaps. The lowered rating could increase the
City's borrowing costs by forcing it to offer higher interest rates on its bonds
thereby adding further pressures to the City's budget problems. In addition, the
lowered rating may prevent certain institutional investors from purchasing the
City's bonds reducing demand for future offerings, which could also force the
City to increase interest rates on its bonds.
On October 12, 1993, Moody's increased its rating of the City's issuance of
$650 million of Tax Anticipation Notes ("TANs") to MIG-1 from MIG-2. Prior to
that date, on May 9, 1990, Moody's revised downward its rating on outstanding
City revenue anticipation notes from MIG-1 to MIG-2 and rated the $900 million
Notes then being sold MIG-2. S&P's rating of the October 1993 TANS issue
increased to SP-1 from SP-2. Prior to that date, on April 29, 1991, S&P revised
downward its rating on City revenue anticipation notes from SP-1 to SP-2.
As of December 31, 1994, the City and MAC had, respectively, $22.5 billion
and $4.1 billion of outstanding net long-term indebtedness.
(3) THE STATE AGENCIES: Certain Agencies of the State have faced substantial
financial difficulties which could adversely affect the ability of such Agencies
to make payments of interest on, and principal amounts of, their respective
bonds. The difficulties have in certain instances caused the State (under
so-called "moral obligation" provisions which are non-binding statutory
provisions for State appropriations to maintain various debt service reserve
funds) to appropriate funds on behalf of the Agencies. Moreover, it is expected
that the problems faced by these Agencies will continue and will require
increasing amounts of State assistance in future years. Failure of the State to
appropriate necessary amounts or to take other action to permit those Agencies
having financial difficulties to meet their obligations could result in a
default by one or more of the Agencies. Such default, if it were to occur, would
be likely to have a significant adverse effect on
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investor confidence in, and therefore the market price of, obligations of the
defaulting Agencies. In addition, any default in payment on any general
obligation of any Agency whose bonds contain a moral obligation provision could
constitute a failure of certain conditions that must be satisfied in connection
with Federal guarantees of City and MAC obligations and could thus jeopardize
the City's long-term financing plans.
As of September 30, 1993, the State reported that there were eighteen
Agencies that each had outstanding debt of $100 million or more and an aggregate
of $63.5 billion of outstanding debt, some of which was state-supported, state-
related debt.
(4) STATE LITIGATION: The State is a defendant in numerous legal proceedings
pertaining to matters incidental to the performance of routine governmental
operations. Such litigation includes, but is not limited to, claims asserted
against the State arising from alleged torts, alleged breaches of contracts,
condemnation proceedings and other alleged violations of State and Federal laws.
Included in the State's outstanding litigation are a number of cases challenging
the constitutionality or the adequacy and effectiveness of a variety of
significant social welfare programs primarily involving the State's mental
hygiene programs. Adverse judgments in these matters generally could result in
injunctive relief coupled with prospective changes in patient care which could
require substantial increased financing of the litigated programs in the future.
The State is also engaged in a variety of claims wherein significant
monetary damages are sought. Actions commenced by several Indian nations claim
that significant amounts of land were unconstitutionally taken from the Indians
in violation of various treaties and agreements during the eighteenth and
nineteenth centuries. The claimants seek recovery of approximately six million
acres of land as well as compensatory and punitive damages.
The State has entered into a settlement agreement with Delaware,
Massachusetts and all other parties with respect to STATE OF DELAWARE V. STATE
OF NEW YORK, an action by Delaware and other states to recover unclaimed
property from New York-based brokers, which has escheated to the State pursuant
to its ABANDONED PROPERTY LAW. Annual payments under this settlement will be
made through the State's 2002-03 fiscal year in amounts not exceeding $48.4
million in any fiscal year subsequent to the State's 1994-95 fiscal year.
In SCHULZ V. STATE OF NEW YORK, commenced May 24, 1993 ("SCHULZ 1993"),
petitioners have challenged the constitutionality of mass transportation bonding
programs of the New York State Thruway Authority and the Metropolitan
Transportation Authority. On May 24, 1993, the Supreme Court, Albany County,
temporarily enjoined the State from implementing those bonding programs.
Petitioners in SCHULZ asserted that issuance of bonds by the two Authorities
is subject to approval by statewide referendum. By decision dated October 21,
1993, the Appellate Division, Third Department, affirmed the order of the
Supreme Court, Albany County, granting the State's motion for summary judgment,
dismissing the complaint and vacating the temporary restraining order. On
June 30, 1994, the Court of Appeals, the State's highest court, upheld the
decisions of the Supreme Court and Appellate Division in SCHULZ, Plaintiffs'
motion for reargument was denied by the Court of Appeals on September 1, 1994
and their writ of certiorari to the U.S. Supreme Court was denied on
January 23, 1995.
Adverse developments in the foregoing proceedings or new proceedings could
adversely affect the financial condition of the State in the future.
(5) OTHER MUNICIPALITIES: Certain localities in addition to New York City
could have financial problems leading to requests for additional State
assistance. The potential impact on the State of such actions by localities is
not included in projections of State receipts and expenditures in the State's
1994-95 fiscal years.
Fiscal difficulties experienced by the City of Yonkers ("Yonkers") resulted
in the creation of the Financial Control Board for the City of Yonkers (the
"Yonkers Board") by the State in 1984. The Yonkers Board is charged with
oversight of the fiscal affairs of Yonkers. Future actions taken by the Governor
or the State Legislature to assist Yonkers could result in allocation of State
resources in amounts that cannot yet be determined.
Municipalities and school districts have engaged in substantial short-term
and long-term borrowings. In 1992, the total indebtedness of all localities in
the State was approximately $35.2 billion, of which $19.5 billion was debt of
New York City (excluding $5.9 billion in MAC debt). State law requires the
Comptroller to review and make recommendations concerning the budgets of those
local government units other than New York City authorized by State law to issue
debt to finance deficits during the period that such deficit financing is
outstanding. Seventeen localities had outstanding indebtedness for state
financing at the close of their fiscal year ending in 1992.
Certain proposed Federal expenditure reductions could reduce, or in some
cases eliminate, Federal funding of some local programs and accordingly might
impose substantial increased expenditure requirements on affected localities. If
the State, New York City or any of the Agencies were to suffer serious financial
difficulties jeopardizing their respective access to the public credit markets,
the marketability of notes and bonds issued by localities within the State,
including notes or
C-5
<PAGE>
bonds in the New York Insured Trust, could be adversely affected. Localities
also face anticipated and potential problems resulting from certain pending
litigation, judicial decisions, and long-range economic trends. The longer-range
potential problems of declining urban population, increasing expenditures, and
other economic trends could adversely affect localities and require increasing
State assistance in the future.
(6) OTHER ISSUERS OF NEW YORK MUNICIPAL OBLIGATIONS. There are a number of
other agencies, instrumentalities and political subdivisions of the State that
issue Municipal Obligations, some of which may be conduit revenue obligations
payable from payments from private borrowers. These entities are subject to
various economic risks and uncertainties, and the credit quality of the
securities issued by them may vary considerably from the credit quality of
obligations backed by the full faith and credit of the State.
C-6
<PAGE>
NEW YORK TAXABLE ESTIMATED CURRENT RETURN TABLE
The following tables show the approximate taxable estimated current returns
for individuals that are equivalent to tax-exempt estimated current returns
under combined Federal and state taxes, using published 2000 marginal Federal
tax rates and marginal state tax rates currently available and scheduled to be
in effect. The tables assume that federal taxable income is equal to state and
city income subject to tax and that federal adjusted gross income is equal to
state and city adjusted gross income, and for cases in which more than one state
rate falls within a Federal bracket, the state rate corresponding to the highest
income within that Federal bracket is used. The combined state and Federal tax
brackets shown reflect the fact that state tax payments are currently deductible
for Federal tax purposes. The tables do not reflect any local taxes, other than
New York City in Chart II, or any taxes other than personal income taxes. The
tables illustrate what you would have to earn on taxable investments to equal
the tax-exempt estimated current return for your income tax bracket. A
taxpayer's marginal tax rate is affected by both his taxable income and his
adjusted gross income. Locate your adjusted gross and your taxable income (which
is your adjusted gross income reduced by any deductions and exemptions), then
locate your tax bracket based on joint or single tax filing. Read across to the
equivalent taxable estimated current return you would need to match the tax-free
income.
I. COMBINED FEDERAL AND NEW YORK STATE INCOME TAXES
COMBINED MARGINAL TAX RATES FOR JOINT TAXPAYERS WITH FOUR PERSONAL EXEMPTIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FEDERAL
FEDERAL ADJUSTED COMBINED
TAXABLE GROSS STATE AND TAX-FREE ESTIMATED CURRENT RETURN
INCOME INCOME FEDERAL ----------------------------------------------------------------------
(1,000'S) (1,000'S) TAX RATE1 4.50% 4.75% 5.00% 5.25% 5.50% 5.75% 6.00% 6.25%
- -------------- -------------- ------------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 43.85 $ 0-100.00 21.0% 5.70 6.01 6.33 6.65 6.96 7.28 7.59 7.91
100.00-128.95 22.0 5.77 6.09 6.41 6.73 7.05 7.37 7.69 8.01
43.85-105.95 0-100.00 33.0 6.72 7.09 7.46 7.84 8.21 8.58 8.96 9.33
100.00-128.95 34.0 6.82 7.20 7.58 7.95 8.33 8.71 9.09 9.47
128.95-150.00 35.0 6.92 7.31 7.69 8.08 8.46 8.85 9.23 9.62
150.00-193.40 34.0 6.82 7.20 7.58 7.95 8.33 8.71 9.09 9.47
105.95-161.45 0-100.00 35.5 6.98 7.36 7.75 8.14 8.53 8.91 9.30 9.69
100.00-128.95 37.0 7.14 7.54 7.94 8.33 8.73 9.13 9.52 9.92
128.95-150.00 38.0 7.26 7.66 8.06 8.47 8.87 9.27 9.68 10.08
150.00-193.40 36.5 7.09 7.48 7.87 8.27 8.66 9.06 9.45 9.84
193.40-315.90 39.5 7.44 7.85 8.26 8.68 9.09 9.50 9.92 10.33
161.45-288.35 128.95-150.00 42.5 7.83 8.26 8.70 9.13 9.57 10.00 10.43 10.87
150.00-193.40 41.5 7.69 8.12 8.55 8.97 9.40 9.83 10.26 10.68
193.40-315.90 44.5 8.11 8.56 9.01 9.46 9.91 10.36 10.81 11.26
Over 315.90 41.5(2) 7.69 8.12 8.55 8.97 9.40 9.83 10.26 10.68
Over 288.35 193.40-315.90 48.5 8.74 9.22 9.71 10.19 10.68 11.17 11.65 12.14
Over 315.90 45.0(3) 8.18 8.64 9.09 9.55 10.00 10.45 10.91 11.36
</TABLE>
COMBINED MARGINAL TAX RATES FOR SINGLE TAXPAYERS WITH ONE PERSONAL EXEMPTION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FEDERAL
FEDERAL ADJUSTED COMBINED
TAXABLE GROSS STATE AND TAX-FREE ESTIMATED CURRENT RETURN
INCOME INCOME FEDERAL ----------------------------------------------------------------------
(1,000'S) (1,000'S) TAX RATE1 4.50% 4.75% 5.00% 5.25% 5.50% 5.75% 6.00% 6.25%
- -------------- -------------- ------------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 26.25 $ 0-100.00 21.0% 5.70 6.01 6.33 6.65 6.96 7.28 7.59 7.91
100.00-128.95 21.5 5.73 6.05 6.37 6.69 7.01 7.32 7.64 7.96
26.25-63.55 0-100.00 33.0 6.72 7.09 7.46 7.84 8.21 8.58 8.96 9.33
100.00-128.95 33.5 6.77 7.14 7.52 7.89 8.27 8.65 9.02 9.40
63.55-132.60 0-100.00 35.5 6.98 7.36 7.75 8.14 8.53 8.91 9.30 9.69
100.00-128.95 36.5 7.09 7.48 7.87 8.27 8.66 9.06 9.45 9.84
128.95-150.00 38.0 7.26 7.66 8.06 8.47 8.87 9.27 9.68 10.08
150.00-251.45 37.5 7.20 7.60 8.00 8.40 8.80 9.20 9.60 10.00
132.60-288.35 128.95-150.00 43.0 7.89 8.33 8.77 9.21 9.65 10.09 10.53 10.96
150.00-251.45 42.5 7.83 8.26 8.70 9.13 9.57 10.00 10.43 10.87
Over 251.45 41.5(2) 7.69 8.12 8.55 8.97 9.40 9.83 10.26 10.68
Over 288.35 Over 251.45 45.0(3) 8.18 8.64 9.09 9.55 10.00 10.45 10.91 11.36
</TABLE>
C-7
<PAGE>
II. COMBINED FEDERAL, NEW YORK STATE AND NEW YORK CITY INCOME TAXES
COMBINED MARGINAL TAX RATES FOR JOINT TAXPAYERS WITH FOUR PERSONAL EXEMPTIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FEDERAL
FEDERAL ADJUSTED COMBINED
TAXABLE GROSS STATE, LOCAL TAX-FREE ESTIMATED CURRENT RETURN
INCOME INCOME AND FEDERAL ----------------------------------------------------------------------
(1,000'S) (1,000'S) TAX RATE1 4.50% 4.75% 5.00% 5.25% 5.50% 5.75% 6.00% 6.25%
- -------------- -------------- ------------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 43.85 $ 0-100.00 24.0% 5.92 6.25 6.58 6.91 7.24 7.57 7.89 8.22
100.00-128.95 25.5 6.04 6.38 6.71 7.05 7.38 7.72 8.05 8.39
43.85-105.95 0-100.00 35.5 6.98 7.36 7.75 8.14 8.53 8.91 9.30 9.69
100.00-128.95 37.0 7.14 7.54 7.94 8.33 8.73 9.13 9.52 9.92
128.95-150.00 38.0 7.26 7.66 8.06 8.47 8.87 9.27 9.68 10.08
150.00-193.40 36.5 7.09 7.48 7.87 8.27 8.66 9.06 9.45 9.84
105.95-161.45 0-100.00 38.5 7.32 7.72 8.13 8.54 8.94 9.35 9.76 10.16
100.00-128.95 39.5 7.44 7.85 8.26 8.68 9.09 9.50 9.92 10.33
128.95-150.00 40.5 7.56 7.98 8.40 8.82 9.24 9.66 10.08 10.50
150.00-193.40 39.5 7.44 7.85 8.26 8.68 9.09 9.50 9.92 10.33
193.40-315.90 42.0 7.76 8.19 8.62 9.05 9.48 9.91 10.34 10.78
161.45-288.35 128.95-150.00 45.0 8.18 8.64 9.09 9.55 10.00 10.45 10.91 11.36
150.00-193.40 44.0 8.04 8.48 8.93 9.38 9.82 10.27 10.71 11.16
193.40-315.90 47.0 8.49 8.96 9.43 9.91 10.38 10.85 11.32 11.79
Over 315.90 44.0 8.04 8.48 8.93 9.38 9.82 10.27 10.71 11.16
Over 288.35 193.40-315.90 50.5 9.09 9.60 10.10 10.61 11.11 11.62 12.12 12.63
Over 315.90 47.5 8.57 9.05 9.52 10.00 10.48 10.95 11.43 11.90
</TABLE>
COMBINED MARGINAL TAX RATES FOR SINGLE TAXPAYERS WITH ONE PERSONAL EXEMPTION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FEDERAL
FEDERAL ADJUSTED COMBINED
TAXABLE GROSS STATE, LOCAL TAX-FREE ESTIMATED CURRENT RETURN
INCOME INCOME AND FEDERAL ----------------------------------------------------------------------
(1,000'S) (1,000'S) TAX RATE1 4.50% 4.75% 5.00% 5.25% 5.50% 5.75% 6.00% 6.25%
- -------------- -------------- ------------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 26.25 $ 0-100.00 24.0% 5.92 6.25 6.58 6.91 7.24 7.57 7.89 8.22
100.00-128.95 24.5 5.96 6.29 6.62 6.95 7.28 7.62 7.95 8.28
26.25-63.55 0-100.00 35.5 6.98 7.36 7.75 8.14 8.53 8.91 9.30 9.69
100.00-128.95 36.0 7.03 7.42 7.81 8.20 8.59 8.98 9.38 9.77
63.55-132.60 0-100.00 38.5 7.32 7.72 8.13 8.54 8.94 9.35 9.76 10.16
100.00-128.95 39.0 7.38 7.79 8.20 8.61 9.02 9.43 9.84 10.25
128.95-150.00 40.5 7.56 7.98 8.40 8.82 9.24 9.66 10.08 10.50
150.00-251.45 40.0 7.50 7.92 8.33 8.75 9.17 9.58 10.00 10.42
132.60-288.35 128.95-150.00 45.0 8.18 8.64 9.09 9.55 10.00 10.45 10.91 11.36
150.00-251.45 44.5 8.11 8.56 9.01 9.46 9.91 10.36 10.81 11.26
Over 251.45 44.0 8.04 8.48 8.93 9.38 9.82 10.27 10.71 11.16
Over 288.35 Over 251.45 47.5 8.57 9.05 9.52 10.00 10.48 10.95 11.43 11.90
</TABLE>
- ------------------
1 The table reflects the effect of the federal limitations on itemized
deductions (and the corresponding state limitations) and the deductions for
personal exemptions. They were designed to phase out certain benefits of these
deductions for higher income taxpayers. These limitations, in effect, raise the
marginal combined Federal and state tax rate to approximately 48.27 percent for
taxpayers filing a joint return and entitled to four personal exemptions and to
approximately 44.97 percent for taxpayers filing a single return entitled to
only one personal exemption and, in effect raise the marginal combined State,
New York City and Federal tax rate to approximately 50.43 percent for taxpayers
filing a joint return and entitled to four personal exemptions and to
approximately 47.27 percent, for taxpayers filing a single return entitled to
only one personal exemption. These limitations are subject to certain maximums,
which depend on the number of exemptions claimed and the total amount of the
taxpayer's itemized deductions. For example, the limitation on itemized
deductions will not cause a taxpayer to lose more than 80% of his allowable
Federal or state itemized deductions, with certain exceptions. The table also
reflects the New York State supplemental income tax based upon a taxpayer's New
York State taxable income and New York State adjusted gross income. This
supplemental tax results in an increased marginal state income tax rate to the
extent a taxpayer's New York State adjusted gross income ranges between $100,000
and $150,000. Although the table does reflect the effect of the state limitation
on itemized deductions that corresponds to the federal limitation, it does not
reflect additional limitations under which a New York taxpayer could lose up to
an additional 50 percent of his otherwise allowable itemized deductions, because
the affect of this limitation varies according to the particular amount of his
itemized deductions. The application of this limit may result in a higher tax
rate than indicated in the table for joint taxpayers with a New York adjusted
gross income of $200,000 to $250,000 or $475,000 to $525,000 or single taxpayers
with a New York adjusted gross income of $100,000 to $150,000 or $475,000 to
$525,000. The table assumes that a taxpayer's New York adjusted gross income
equals his Federal adjusted gross income. The table does not reflect the
treatment of various state and city tax credits that could affect the tax rate
of particular New York taxpayers.
2 Combined Federal and state tax rate reverts to 40.38% after the 80% cap on
the limitation on itemized deductions has been met. Combined state, New York
City and Federal tax rate reverts to 42.80% after the 80% cap on the limitation
on itemized deductions has been met.
3 Combined Federal and state tax rate reverts to 43.74% after the 80% cap on
the limitation on itemized deductions has been met. Combined state, New York
City and Federal tax rate reverts to 46.02% after the 80% cap on the limitation
on itemized deductions has been met.
C-8
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
A. BONDING ARRANGEMENTS OF DEPOSITOR:
The Depositor has obtained the following Stockbrokers Blanket Bonds for its
officers, directors and employees:
<TABLE>
<S> <C>
INSURER/POLICY NO. AMOUNT
Reliance Insurance Company $26,000,000
B 262 6895
</TABLE>
B. THIS AMENDMENT OF REGISTRATION STATEMENT COMPRISES THE FOLLOWING PAPERS AND
DOCUMENTS:
The facing sheet
The Prospectus
The signatures
Consents of Independent Public
Accountants and Counsel as indicated
Exhibits as listed on page S-5
C. EXPLANATORY NOTE:
This Amendment No. 1 to the Registration Statement may 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. The Information Supplement to the Trust will not include third party
financial information.
S-1
<PAGE>
SIGNATURES
The Registrant, Nuveen Tax-Free Unit Trust, Series 1149 hereby identifies
Series 401, 507, 512, 515, 517, 519, 723, 814 and 823 of the Nuveen Tax-Exempt
Unit Trust (the former name of the Nuveen Tax-Free Unit Trust) for purposes of
the representations required by Rule 487 and represents the following:
(1) that the portfolio securities deposited in the series as to the
securities of which this Registration Statement is being filed do not differ
materially in type or quality from those deposited in such previous series;
(2) that, except to the extent necessary to identify the specific portfolio
securities deposited in, and to provide essential financial information for, the
series with respect to the securities of which this Registration Statement is
being filed, this Registration Statement does not contain disclosures that
differ in any material respect from those contained in the registration
statements for such previous series as to which the effective date was
determined by the Commission or the staff; and
(3) that it has complied with Rule 460 under the Securities Act of 1933.
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Nuveen Tax-Free Unit Trust, Series 1149 has duly caused this Amendment to
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized in the City of Chicago and State of Illinois on February 16,
2000.
NUVEEN TAX-FREE UNIT TRUST, SERIES
1149
(Registrant)
By JOHN NUVEEN & CO. INCORPORATED
(Depositor)
By: Anna R. Kuscinskis
--------------------------------------
Vice President
Attest: Nicholas Dalmaso
--------------------------------------
Assistant Secretary
S-2
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
of Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE* DATE
<S> <C> <C> <C>
Timothy T. Schwertfeger Chairman, Board of Directors, )
Chief Executive Officer and )
Director )
)
John P. Amboian President and Director ) Larry W. Martin
) Attorney-In-Fact**
)
) February 16, 2000
Margaret E. Wilson Vice President and Controller )
)
)
)
</TABLE>
- --------------
* 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 and Schwertfeger were filed on
March 20, 1997 as Exhibit P to Form N-8B-2 (File No. 811-08103) and for
Ms. Wilson as Exhibit 6.2 to Nuveen Unit Trusts, Series 12 (File No. 333-49197)
filed on May 14, 1998.
S-3
<PAGE>
1149
CONSENT OF CHAPMAN AND CUTLER
The consent of Chapman and Cutler to the use of its name in the Prospectus
included in the Registration Statement is contained in its opinions filed by
this amendment 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 are
contained in their opinions filed by this amendment as Exhibit 3.3 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 the Registration Statement is filed by this amendment as
Exhibit 4.1 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 the Registration Statement is filed by this amendment as
Exhibit 4.2 to the Registration Statement.
CONSENT OF ARTHUR ANDERSEN LLP
The consent of Arthur Andersen LLP to the use of its name in the Prospectus
included in the Registration Statement is filed by this amendment as Exhibit 4.3
to the Registration Statement.
S-4
<PAGE>
LIST OF EXHIBITS
<TABLE>
<S> <C>
1.1(a) Copy of Standard Terms and Conditions of Trust between John
Nuveen & Co. Incorporated, Depositor, and The Chase
Manhattan Bank, Trustee (filed as Exibit 1.1 (a) to the
Sponsor's Amendment to the Registration Statement on
Form S-6 relating to Series 823 of the Fund [File
No. 33-62325] filed on September 7, 1995 and incorporated
herein by reference).
1.1(b) Trust Indenture and Agreement.
1.2 Copy of Certificate of Incorporation, as amended, of John
Nuveen & Co. Incorporated, Depositor (incorporated by
reference to Form N-8B-2 [File No. 811-1547] filed on
September 29, 1967 on behalf of Nuveen Tax-Exempt Unit
Trust, Series 16).
1.3 Copy of amendment of Certificate of Incorporation changing
name of Depositor to John Nuveen & Co. Incorporated
(incorporated by reference to Form N-8B-2 [File
No. 811-2198] filed on April 11, 1985 on behalf of Nuveen
Tax-Exempt Unit Trust, Series 37).
2.1 Copy of Certificate of Ownership (included in Exhibit 1.1(a)
on pages 2 to 8, inclusive, and incorporated herein by
reference).
3.1 Opinion of counsel as to legality of securities being
registered.
3.2 Opinion of counsel as to Federal income tax status of
securities being registered.
3.3 Opinions of special state counsel to the Fund for state tax
matters as to income tax status to residents of the
respective states of the units of the respective trusts and
consents to the use of their names in the Prospectus.
3.4 Corporate opinion of Trustee's counsel.
3.5 Opinion of Trustee's counsel as to New York tax status.
4.1 Consent of Kenny S&P Evaluation Services.
4.2 Consent of Carter, Ledyard & Milburn.
4.3 Consent of Arthur Andersen LLP
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to the
Amendment to the Registration Statement on Form S-6 [File
No. 33-62325] filed on September 7, 1995 on behalf of Nuveen
Tax-Exempt Unit Trust, Series 823).
</TABLE>
S-5
<PAGE>
EXHIBIT 1.1(B)
NUVEEN TAX-FREE UNIT TRUST, SERIES 1149
TRUST INDENTURE AND AGREEMENT
DATED FEBRUARY 16, 2000
This Trust Indenture and Agreement by and between John Nuveen & Co.
Incorporated, as Depositor and The Chase Manhattan Bank, as Trustee, sets forth
certain provisions in full and incorporates other provisions by reference to the
document entitled "Standard Terms and Conditions of Trust for Nuveen Tax-Free
Unit Trust, Series 823 and subsequent Series, effective September 7, 1995"
(herein called the "Standard Terms and Conditions of Trust"), and such
provisions as are set forth in full and such provisions as are incorporated by
reference constitute a single instrument. All references herein to Articles and
Sections are to Articles and Sections of the Standard Terms and Conditions of
Trust.
WITNESSETH THAT:
In consideration of the promises and of the mutual agreements herein
contained, the Depositor and the Trustee, agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the Provisions of Part II hereof, all the provisions contained in
the Standard Terms and Conditions of Trust are herein incorporated by reference
in their entirety and shall be deemed to be a part of this instrument as fully
and to the same extent as though said provisions had been set forth in full in
this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
(a) The Bonds defined in Section 1.01(1) listed in Schedule A hereto have
been deposited in trust under this Trust Indenture and Agreement.
(b) The fractional undivided interest in and ownership of the Trust Fund
represented by each Unit for a Trust on the Initial Date of Deposit is the
amount set forth under the captions "Essential Information -- Fractional
Undivided Interest in the Trust per Unit" in the Prospectus.
(c) The number of Units created of a Trust are as set forth under the
caption "Essential Information -- Number of Units" in the Prospectus for each
Trust.
(d) Notwithstanding anything to the contrary in the Standard Terms and
Conditions of Trust, the phrase "Nuveen Tax-Exempt Unit Trust" shall be hereby
replaced with the phrase "Nuveen Tax-Free Unit Trust."
(e) All references to "The Chase Manhattan Bank (National Association)" in
the Standard Terms and Conditions of Trust shall be replaced with "The Chase
Manhattan Bank."
(f) Section 3.01 shall be amended to read in its entirety as follows:
SECTION 3.01 INITIAL COST. Subject to reimbursement as hereinafter provided,
the cost of organizing the Trust and the sale of the Trust Units shall be borne
by the Depositor, provided, however, that the liability on the part of the
Depositor under this section shall not include any fees or other expenses
incurred in connection with the administration of the Trust subsequent to the
deposit referred to in Section 2.01. At the earlier of six months after the
Initial Date of Deposit or the conclusion of the primary offering period (as
certified by the Depositor to the Trustee), the Trustee shall withdraw from the
Account or Accounts specified in the Prospectus or, if no Account is therein
specified, from the Principal Account, and pay to the Depositor the Depositor's
reimbursable expenses of organizing the Trust in an amount certified to the
Trustee by the Depositor. In no event shall the amount paid by the Trustee to
the Depositor for the Depositor's reimbursable expenses of organizing the Trust
exceed the estimated per Unit amount of organization costs set forth in the
Prospectus for the Trust multiplied by the number of Units of the Trust
outstanding at the earlier of six months after the Initial Date of Deposit or
the end of the initial offering period; nor shall the Depositor be entitled to
or request reimbursement for expenses of organizing the Trust incurred after the
earlier of six months after the Initial Date of Deposit or the end of the
initial offering period. If the cash balance of the Principal Account is
insufficient to make such withdrawal, the Trustee shall, as directed by the
Depositor, sell Bonds identified by the Depositor, or distribute to the
Depositor securities having a value, as determined under Section 4.01 as of the
date of distribution, sufficient for such reimbursement. The reimbursement
provided for in this section shall be for the account of the Unitholders of
record at the earlier of six months after the Initial Date of Deposit or the
conclusion of the primary offering period. Any assets deposited with the Trustee
in respect of the expenses reimbursable under this Section 3.01
<PAGE>
shall be held and administered as assets of the Trust for all purposes
hereunder. The Depositor shall deliver to the Trustee any cash identified in the
Statement of Condition of the Trust included in the Prospectus not later than
the 10 calendar days following the Initial Date of Deposit or deposit of
additional Bonds, as applicable and the Depositor's obligation to make such
delivery shall be secured by the letter of credit deposited pursuant to
Section 2.01. Any cash which the Depositor has identified as to be used for
reimbursement of expenses pursuant to this Section 3.01 shall be held by the
Trustee, without interest, and reserved for such purpose and, accordingly, prior
to the earlier of six months after the Initial Date of Deposit or the conclusion
of the primary offering period, shall not be subject to distribution or, unless
the Depositor otherwise directs, used for payment of redemptions in excess of
the per Unit amount payable pursuant to the next sentence. If a Unitholder
redeems Units prior to the earlier of six months after the Initial Date of
Deposit or the conclusion of the primary offering period, the Trustee shall pay
to the Unitholder, in addition to the Redemption Value of the tendered Units,
unless otherwise directed by the Depositor, an amount equal to the estimated per
Unit cost of organizing the Trust set forth in the Prospectus, or such lower
revision thereof most recently communicated to the Trustee by the Depositor
pursuant to Section 4.01, multiplied by the number of Units tendered for
redemption; to the extent the cash on hand in the Trust is insufficient for such
payment, the Trustee shall have the power to sell Bonds in accordance with
Section 3.07. As used herein, the Depositor's reimbursable expenses of
organizing the Trust shall include the cost of the initial preparation and
typesetting of the registration statement, prospectuses (including preliminary
prospectuses), the indenture, and other documents relating to the Trust, SEC and
state blue sky registration fees, the cost of the initial valuation of the
portfolio and audit of the Trust, the initial fees and expenses of the Trustee,
and legal and other out-of-pocket expenses related thereto, but not including
the expenses incurred in the printing of preliminary prospectuses and
prospectuses, expenses incurred in the preparation and printing of brochures and
other advertising materials and any other selling expenses.
(g) The following two paragraphs shall be substituted for the first
paragraph of Section 4.01:
SECTION 4.01. EVALUATION: The Trustee shall make an evaluation of each Trust
as of that time set forth in the Prospectus (the "Evaluation Time"), (i) on the
last business day of each of the months of June and December, (ii) on the day on
which any Unit of a respective Trust is tendered for redemption, and (iii) on
any other day desired by the Trustee or requested by the Depositor. Such
evaluations shall take into account and itemize separately, (1) the cash on hand
in the respective Trust (other than cash declared held in trust to cover
contracts to purchase bonds) or moneys in the process of being collected from
matured interest coupons or bonds matured or called for redemption prior to
maturity, (2) the value of each issue of the Bonds in the Trust, and
(3) interest accrued thereon not subject to collection and distribution. In
making the evaluations the Trustee may determine the value of each issue of the
Bonds in the Trust by the following methods or any combination thereof which it
deems appropriate: (i) on the basis of current bid prices of such Bonds as
obtained from investment dealers or brokers (including the Depositor) who
customarily deal in bonds comparable to those held by the Trust, or (ii) if bid
prices are not available for any of such Bonds, on the basis of bid prices for
comparable bonds, or (iii) by causing the value of the Bonds in the Trust to be
determined by others engaged in the practice of evaluating, quoting or
appraising bonds. For each such evaluation there shall be deducted from the sum
of the above (i) amounts representing any applicable taxes or governmental
charges payable out of the Trust and for which no deductions shall have
previously been made for the purpose of addition to the Reserve Account of such
Trust, (ii) amounts representing accrued expenses of the Trust including but not
limited to unpaid fees and expenses of the Trustee, the Depositor and counsel,
in each case as reported by the Trustee to the Depositor on or prior to the date
of evaluation, (iii) amounts representing unpaid organization costs, and
(iv) cash held for distribution to Unitholders of such Trust of record, and
required for redemption of Units tendered, as of a date prior to the evaluation
then being made. The value of the pro rata share of each Unit of such Trust
determined on the basis of any such evaluation shall be referred to herein as
the "Unit Value."
Prior to the payment to the Depositor of its reimbursable organization costs
to be made at the earlier of six months after the Initial Date of Deposit or the
conclusion of the primary offering period in accordance with Section 3.01 for
purposes of determining the Trust Evaluation and Unit Value under this
Section 4.01, the Trustee shall rely upon the amounts representing unpaid
organization costs in the estimated amount per Unit set forth in the Prospectus
until such time as the Depositor notifies the Trustee in writing of a revised
estimated amount per Unit representing unpaid organization costs. Upon receipt
of such notice, the Trustee shall use this revised estimated amount per Unit
representing unpaid organization costs in determining the Trust Evaluation and
Unit Value but such revision of the estimated expenses shall not effect
calculations made prior thereto and no adjustment shall be made in respect
thereof.
(h) The following paragraph shall be added to Section 4.05:
The Depositor may employ agents in connection with its duties referenced in
Section 4.05 and shall not be answerable for the default or misconduct of such
agents if they shall have been selected with reasonable care. The fees of such
agents shall be reimbursable to the Depositor from the Trust Fund, provided,
however, that the
<PAGE>
amount of such reimbursement in any year (i) shall reduce the amount payable to
the Depositor for such year with respect to the service in question and shall
not exceed the maximum amount payable to the Depositor for such service for such
year and (ii) if such agent is an affiliate of the Depositor, the amount of the
reimbursement, when combined with (a) all compensation received by such agent
from other series of the Fund or other unit investment trusts sponsored by the
Depositor or its affiliates and (b) the amount payable to the Depositor from the
Trust Fund and from other series of the Fund or other unit investment trusts
sponsored by the Depositor or its affiliates in respect of the service in
question, shall not exceed the aggregate cost of such agent and the Depositor of
providing such service. The Trustee shall pay such reimbursement against the
Depositor's invoice therefor upon which the Trustee may rely as the Depositor's
certification that the amount claimed complies with the provisions of this
paragraph.
<PAGE>
In Witness Whereof, John Nuveen & Co. Incorporated, has caused this Trust
Indenture and Agreement for Nuveen Tax-Free Unit Trust, Series 1149 to be
executed by its President, one of its Vice Presidents or one of its Assistant
Vice Presidents and its corporate seal to be hereto affixed and attested by its
Secretary or its Assistant Secretary and The Chase Manhattan Bank has caused
this Trust Indenture and Agreement to be executed by one of its Vice Presidents
or Second Vice Presidents and its corporate seal to be hereto affixed and
attested to by one of its Assistant Treasurers; all as of the day, month and
year first above written.
John Nuveen & Co. Incorporated,
Depositor
By Robert K. Burke
Authorized Officer
(Seal)
Attest:
By Nicholas Dalmaso
Assistant Secretary
The Chase Manhattan Bank, Trustee
By Alfred Miller
Assistant Vice President
(Seal)
Attest:
By Robert E. Lisk
Assistant Treasurer
SCHEDULE A TO THE TRUST INDENTURE AND AGREEMENT
SECURITIES INITIALLY DEPOSITED
IN
NUVEEN TAX-FREE UNIT TRUST, SERIES 1149
(Note: Incorporated herein and made a part hereof is the "Schedule of
Investments" as set forth for each Trust in the Prospectus.)
<PAGE>
EXHIBIT 3.1
(ON CHAPMAN AND CUTLER LETTERHEAD)
February 16, 2000
John Nuveen & Co. Incorporated
333 W. Wacker Drive
Chicago, Illinois 60606
RE: NUVEEN TAX-FREE UNIT TRUST, SERIES 1149
Gentlemen:
We have served as counsel for you, as depositor of Nuveen Tax-Free Unit
Trust, Series 1149 (hereinafter referred to as the "Fund"), in connection with
the issuance under the Trust Indenture and Agreement dated the date hereof
between John Nuveen & Co. Incorporated, as Depositor, and The Chase Manhattan
Bank, as Trustee, of Units of fractional undivided interest in the one or more
Trusts of said Fund (hereinafter referred to as the "Units").
In connection therewith, we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to enable us
to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The execution and delivery of the Trust Indenture and Agreement and the
establishment of book entry positions and the execution and issuance of
certificates evidencing the Units in the Trusts of the Fund have been duly
authorized; and
2. The book entry positions and certificates evidencing the Units in the
Trusts of the Fund when duly established or duly executed and delivered by the
Depositor and the Trustee in accordance with the aforementioned Trust Indenture
and Agreement, will constitute valid and binding obligations of such Trusts and
the Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 333-96067) relating to the Units referred to
above and to the use of our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
<PAGE>
EXHIBIT 3.2
(ON CHAPMAN AND CUTLER LETTERHEAD)
February 16, 2000
John Nuveen & Co. Incorporated
333 W. Wacker Drive
Chicago, Illinois 60606
RE: Nuveen Tax-Free Unit Trust, Series 1149
Gentlemen:
We have served as counsel for you, as Depositor of Nuveen Tax-Free Unit
Trust, Series 1149 (the "Fund") in connection with the issuance under the Trust
Indenture and Agreement, dated the date hereof between John Nuveen & Co.
Incorporated, as Depositor, and The Chase Manhattan Bank, as Trustee, of Units
of fractional undivided interest (the "Units"), as evidenced by a book entry
position or certificate, if requested by the purchaser of Units, in the one or
more Trusts of said Fund.
We have also served as counsel for you in connection with all previous
Series of the Nuveen Tax-Free Unit Trust and as such have previously examined
such pertinent records and documents and matters of law as we have deemed
necessary, including (but not limited to) the Trust Indenture and Agreements
with respect to those series. We have also examined such pertinent records and
documents and matters of law as we have deemed necessary including (but not
limited to) the Trust Indenture and Agreement relating to Nuveen Tax-Free Unit
Trust, Series 1149.
We have concluded that the Trust Indenture and Agreement for the Fund and
its counterpart in each of the prior issues of Nuveen Tax-Free Unit Trust are in
all material respects substantially identical. For purposes of the following
opinions, it is assumed that each asset of the Trust is debt, the interest on
which is excluded from gross income for federal income tax purposes.
Based upon the foregoing, and upon such matters of law as we consider to be
applicable, we are of the opinion that, under existing federal income law:
(i) Each of the Trusts will not be an association taxable as a corporation
but will be governed by the provisions of Subchapter J (relating to Trusts) of
Chapter 1, Internal Revenue Code of 1986 (the "Code").
(ii) Each Unitholder will be considered as owning a pro rata share of each
asset of the respective Trust of the Fund in the proportion that the number of
Units of such Trust held by him bears to the total number of outstanding Units
of such Trust. Under Subpart E, Subchapter J of Chapter 1 of the Code, income of
each Trust will be treated as income of each Unitholder of the Trust in the
proportion described, and an item of Trust income will have the same character
in the hands of a Unitholder as it would have in the hands of the Trustee.
Accordingly, to the extent that the income of a Trust consists of interest and
original issue discount excludable from gross income under Section 103 of the
Code, such income will be excludable from Federal gross income of the
Unitholders, except in the case of a Unitholder who is a substantial user (or a
person related to such user) of a facility financed through issuance of any
industrial development bonds or certain private activity bonds held by the
Trust. In the case of such Unitholder who is a substantial user, interest
received with respect to his Units attributable to such industrial development
bonds or such private activity bonds is includable in his gross income.
Moreover, in the case of certain corporations, interest on all of the Bonds is
included in computing the alternative minimum tax pursuant to Sections 56(c) of
the Code and the branch profits tax imposed by Section 884 of the Code with
respect to U.S. branches of foreign corporations.
(iii) Gain or loss will be recognized to a Unitholder upon redemption or
sale of his Units. Such gain or loss is measured by comparing the proceeds of
such redemption or sale with the adjusted basis of the Units. If a Bond is
acquired with accrued interest, that portion of the price paid for the accrued
interest is added to the tax basis of the Bond. When this accrued interest is
received, it is treated as a return of capital and reduces the tax basis of the
Bond. If a Bond is purchased for a premium, the amount of the premium is added
to the tax basis of the Bond. Bond premium is amortized over the remaining term
of the Bond, and the tax basis of the Bond is reduced each tax year by the
amount of the premium amortized in that tax year. Accordingly, Unitholders must
reduce the tax basis of their Units for their share of accrued interest received
by the Trust, if any, on Bonds delivered after the Unitholders pay for their
Units to the extent that such interest accrued on such Bonds before the date the
Trust acquired ownership of the Bonds (and the amount of this reduction may
exceed the amount of accrued interest paid to the seller) and, consequently,
such Unitholders may have an increase in taxable gain or reduction in capital
loss upon the disposition of such Units. Such gain or loss is measured by
comparing the proceeds of such redemption or sale with the adjusted basis of
such Units. In addition, such basis will be increased by both the Unitholder's
aliquot share of the accrued original issue discount (and market discount, if
the Unitholder elects to include market discount in income as it accrues) with
respect to each Bond held by the
<PAGE>
Trust with respect to which there was original issue discount at the time the
Bond was issued (or which was purchased with market discount) and reduced by the
annual amortization of bond premium, if any, on Bonds held by the Trust.
(iv) If the Trustee disposes of a Trust asset (whether by sale, payment on
maturity, redemption or otherwise) gain or loss is recognized to the Unitholder
and the amount thereof is measured by comparing the Unitholder's aliquot share
of the total proceeds from the transaction with his basis for his fractional
interest in the asset disposed of. Such basis is ascertained by apportioning the
tax basis for his Units among each of the Trust assets (as of the date on which
his Units were acquired) ratably according to their values as of the valuation
date nearest the date on which he purchased such Units. A Unitholder's basis in
his Units and of his fractional interest in each Trust asset must be reduced by
the amount of his aliquot share of accrued interest received by the Trust, if
any, on Bonds delivered after the Unitholders pay for their Units to the extent
that such interest accrued on the Bonds before the Trust acquired ownership of
the Bonds (and the amount of this reduction may exceed the amount of accrued
interest paid to the seller) must be reduced by the annual amortization of bond
premium, if any, on Bonds held by the Trust; and must be increased by the
Unitholder's share of accrued original issue discount (and market discount, if
the Unitholder elects to include market discount in income as it accrues) with
respect to each Bond which, at the time the Bond was issued, had original issue
discount (or which was purchased with market discount).
(v) In the case of any Bond held by the Trust where the "stated redemption
price at maturity" exceeds the "issue price," such excess shall be original
issue discount. With respect to each Unitholder, upon the purchase of his Units
subsequent to the original issuance of Bonds held by the Trust
Section 1272(a)(7) of the Code provides for a reduction in the accrued "daily
portion" of such original issue discount upon the purchase of a Bond subsequent
to the Bond's original issue, under certain circumstances. In the case of any
Bond held by the Trust the interest on which is excludable from gross income
under Section 103 of the Code, any original issue discount which accrues with
respect thereto will be treated as interest which is excludable from gross
income under Section 103 of the Code.
(vi) In the case of Trusts for which MBIA Insurance Corporation ("MBIA")
insurance with respect to each of the Bonds deposited therein has been obtained
by the Depositor or the issuer or underwriter of the Bonds, we have examined the
form of MBIA's policy or several policies of insurance (the "Policies") which
have been delivered to the Trustee. Assuming issuance of Policies in such form,
in our opinion, any amounts paid under said Policies representing maturing
interest on defaulted Bonds held by the Trustee will be excludable from Federal
gross income if, and to the same extent as, such interest would have been so
excludable if paid in normal course of business by the respective issuer of the
defaulted Bonds, provided that, at the time such policies are purchased, the
amounts paid for such policies are reasonable, customary and consistent with the
reasonable expectation that the issuer of the Bonds, rather than the insurer,
will pay debt service on the Bonds. Paragraph (ii) of this opinion is
accordingly applicable to Policy proceeds representing maturing interest.
(vii) Certain bonds in the portfolio of the Trust have been insured by the
issuers, underwriters, the Sponsor or others against default in the prompt
payment of principal and interest (the "Insured Bonds"). Such Insured Bonds are
so designated on the portfolio pages in the Prospectus for each Trust. Insurance
on Insured Bonds is effective so long as such Bonds remain outstanding. For each
of these Insured Bonds, we have been advised that the aggregate principal amount
of such Bonds listed on the portfolio page was acquired by the Trust and are
part of the series of such Insured Bonds in the listed aggregate principal
amount. Based upon the assumption that the Insured Bonds of the Trust are part
of a series covered by an insurance policy, it is our opinion that any amounts
received by the Trust representing maturing interest on such Insured Bonds will
be excludable from Federal gross income if, and to the same extent as, such
interest would have been so excludable if paid in normal course by the Issuer
provided that, at the time such policies are purchased, the amounts paid for
such policies are reasonable, customary and consistent with the reasonable
expectation that the issuer of the Insured Bonds, rather than the insurer will
pay debt service on the Bonds. Paragraph (ii) of this opinion is accordingly
applicable to such payment representing maturing interest.
Because the Trusts do not include any "private activity bonds" within the
meaning of Section 57(a)(5) of the Code issued on or after August 8, 1986, none
of the Trust's interest income shall be treated as an item of tax preference
when computing the alternative minimum tax. In the case of corporations, for
taxable years beginning after December 31, 1986, the alternative minimum tax and
the Superfund Tax depend upon the corporation's alternative minimum taxable
income ("AMTI"), which is the corporation's taxable income with certain
adjustments.
Pursuant to Section 56(c) of the Code, one of the adjustment items used in
computing AMTI of a corporation (other than an S Corporation, Regulated
Investment Company, Real Estate Investment Trust, REMIC or FASIT) for tax years
beginning in 1989 is an amount equal to 75% of the excess of such corporation's
"adjusted current earnings" over an amount equal to its AMTI (before such
adjustment item and the alternative tax net
<PAGE>
operating loss deduction). "Adjusted current earnings" includes all tax-exempt
interest, including interest on all Bonds in the Trust, and tax-exempt original
issue discount.
Sections 1288 and 1272 of the Code provide a complex set of rules governing
the accrual of original issue discount. These rules provide that original issue
discount accrues either on the basis of a constant compound interest rate or
ratably over the term of the Bond, depending on the date the Bond was issued. In
addition, special rules apply if the purchase price of a Bond exceeds the
original issue price plus the amount of original issue discount which would have
previously accrued based upon its issue price (its "adjusted issue price"). The
application of these rules will also vary depending on the value of the Bond on
the date a Unitholder acquires his Units, and the price the Unitholder pays for
his Units.
Effective for tax returns filed after December 31, 1987, all taxpayers are
required to disclose to the Internal Revenue Service the amount of tax-exempt
interest earned during the year.
Section 265 of the Code provides for a reduction in each taxable year of
100% of the otherwise deductible interest on indebtedness incurred or continued
by financial institutions, to which either Section 585 or Section 593 of the
Code applies, to purchase or carry obligations acquired after August 7, 1986
(with certain exceptions), the interest on which is exempt from Federal income
taxes for such taxable year. Under rules prescribed by Section 265, the amount
of interest otherwise deductible by such financial institutions in any taxable
year which is deemed to be attributable to tax-exempt obligations acquired after
August 7, 1986, will generally be the amount that bears the same ratio to the
interest deduction otherwise allowable (determined without regard to
Section 265) to the taxpayer for the taxable year as the taxpayer's average
adjusted basis (within the meaning of Section 1016) of tax-exempt obligations
acquired after August 7, 1986, bears to such average adjusted basis for all
assets of the taxpayer.
We also call attention to the fact that, under Section 265 of the Code,
interest on indebtedness incurred or continued to purchase or carry Units is not
deductible for Federal income tax purposes. Under rules used by the Internal
Revenue Service for determining when borrowed funds are considered used for the
purpose of purchasing or carrying particular assets, the purchase of Units may
be considered to have been made with borrowed funds even though the borrowed
funds are not directly traceable to the purchase of Units. However, these rules
generally do not apply to interest paid on indebtedness incurred for
expenditures of a personal nature such as a mortgage incurred to purchase or
improve a personal residence.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") subjects tax-exempt
bonds to the market discount rules of the Code effective for bonds purchased
after April 30, 1993. In general, market discount is the amount (if any) by
which the stated redemption price at maturity exceeds an investor's purchase
price (except to the extent that such difference, if any, is attributable to
original issue discount not yet accrued) subject to a statutory de minimis rule.
Market discount can arise based on the price a Trust pays for Bonds or the price
a Unitholder pays for his or her Units. Under the Tax Act, accretion of market
discount is taxable as ordinary income; under prior law, the accretion had been
treated as capital gain. Market discount that accretes while a Trust holds a
Bond would be recognized as ordinary income by the Unitholders when principal
payments are received on the Bond, upon sale or at redemption (including early
redemption), or upon the sale or redemption of his or her Units, unless a
Unitholder elects to include market discount in taxable income as it accrues.
Chapman and Cutler has expressed no opinion with respect to taxation under
any other provisions of Federal law. Ownership of the Units may result in
collateral Federal income tax consequences to certain taxpayers. Prospective
investors should consult their tax advisors as to the applicability of any such
collateral consequences.
We have not examined any of the Bonds to be deposited and held in the Trust
or the proceedings for the issuance thereof or the opinions of bond counsel with
respect thereto, and therefore express no opinion as to the exemption from State
income taxes of interest on the Bonds if received directly by a Unitholder.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 333-96067) relating to the Units referred to
above and to the use of our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
<PAGE>
EXHIBIT 3.3
(ON CHAPMAN & CUTLER LETTERHEAD)
FEBRUARY 16, 2000
Nuveen Tax-Free Unit Trust, Series 1149
c/o John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606
The Chase Manhattan Bank,
as trustee for Nuveen Tax-Free Unit
Trust, Series 1149
4 New York Plaza - Third Floor
New York, NY 10004-2413
Re: Arizona Insured Trust 64
Gentlemen:
We have acted as counsel to Nuveen Tax-Free Unit Trust, Series 1149, with
respect to certain matters preliminary to the issuance and sale of units of
interest therein (the "Units") pursuant to a Trust Indenture and Agreement,
dated as of the date hereof (the "Indenture"), between John Nuveen & Co.
Incorporated, as depositor (the "Depositor"), and The Chase Manhattan Bank, as
trustee (the "Trustee"). The Units represent fractional undivided interests in
the principal of and net income on obligations deposited in one of several
separate trusts, including the above-captioned trust (the "Trust"), will be
evidenced by a certificate (the "Certificate") and will be sold to various
investors (the "Unitholders"). Each separate trust will be administered as a
distinct entity with separate certificates, investments, expenses, books and
records.
The assets of the Trust will consist of interest-bearing obligations issued
by or on behalf of the State of Arizona (the "State"), its political
subdivisions and authorities (the "Arizona Bonds"), and certain bonds issued by
Puerto Rico Authorities (the "Possession Bonds") (collectively the Arizona Bonds
and Possession Bonds shall be referred to herein as the "Bonds"), provided the
interest on such Bonds received by the Trust is exempt from State income taxes.
Distributions of interest on the Bonds received by the Trust will be made
semi-annually unless a Unitholder elects to receive them monthly or quarterly.
Neither the Sponsor nor its counsel have independently examined the Bonds to
be deposited in and held in the Trust. However, although no opinion is expressed
herein regarding such matters, it is assumed that: (i) the Bonds were validly
issued, (ii) the interest thereon is excludable from gross income for federal
income tax purposes and (iii) interest on the Bonds, if received directly by a
Unitholder would be exempt from the Arizona income tax (the "ARIZONA INCOME
TAX"). We have assumed that, at the respective times of issuance of the Bonds,
opinions relating to the validity thereof and to the exemption of interest
thereon from Federal income tax were rendered by bond counsel to the respective
issuing authorities. In addition, with respect to the Arizona Bonds, bond
counsel to the issuing authorities rendered opinions that the interest on the
Bonds is exempt from the Arizona Income Tax. Neither the Sponsor nor its counsel
has made any review for the Trust of the proceedings relating to the issuance of
the Bonds or of the bases for the opinions rendered in connection therewith.
Based on the foregoing, and review and consideration of existing State laws,
it is our opinion, and we herewith advise you, as follows:
(1)--For State income tax purposes, each Unitholder will be treated as the
owner of a pro rata portion of the Trust, and the income of the Trust will
therefore be treated as the income of the Unitholder under State law.
(2)--For State income tax purposes, interest on the Arizona Bonds which is
excludable from Federal gross income and which is exempt from State income taxes
when received by the Trust, and which would be excluable from Federal gross
income and exempt from State income taxes if recieved directly by a Unitholder,
will retain its status as tax-exempt interest when received by the Trust and
distributed to the Unitholders.
<PAGE>
(3)--To the extent that interest derived from the Trust by a Unitholder with
respect to the the Arizona Bonds is excludable from Federal gross income, such
interest will not be subject to State income taxes.
(4)--Interest on the Possession Bonds which is excludable from gross income
for federal income tax purposes and is exempt from state and local taxation
pursuant to federal law when received by the Trust will be exempt from Arizona
income taxation and therefore will not be includable in the income of the
Unitholders for income tax purposes when distributed by the Trust and received
by the Unitholders.
(5)--Each Unitholder will realize taxable gain or loss for State income tax
purposes when Bonds held in the Trust are sold, exchanged, redeemed prior to
maturity or paid at maturity, or when the Unitholder redeems or sells his
Unit(s), at a price that differs from original cost as adjusted for accretion of
any discount or amortization of any premium and other basis adjustments,
including any basis reduction that may be required to reflect a Unitholder's
share of interest, if any, accruing on Bonds during the interval between the
Unitholder's settlement date and the date such Bonds are delivered to the Trust,
if later.
(6)--State law does not permit a deduction for interest paid or incurred on
indebtedness incurred or continued to purchase or carry Units in the Trust, the
interest on which is exempt from State income taxes. Special rules apply to
financial institutions.
(7)--Neither the Bonds nor the Units will be subject to State property
taxes, sales taxes or use taxes.
(8)--In the case of Trusts for which an insurance policy or policies with
respect to the payment of principal and interest on the Arizona Bonds and
Possession Bonds has been obtained by the Depositor, any proceeds paid under
such policy or policies issued to the Trust, if any, with respect to the Bonds
in the Trust which represent maturing interest on defaulted Bonds held by the
Trustee will be exempt from State income taxes if, and to the same extent as,
such interest would have been so exempt if paid by the issuer of the defaulted
Bonds provided that, at the time such policies are purchased, the amounts paid
for such policies are reasonable, customary and consistent with the reasonable
expectation that the issuer of the bonds, rather than the insurer, will pay debt
service on the bonds.
We have not examined any of the Bonds to be deposited and held in the Trust
or the proceedings for the issuance thereof or the opinions of bond counsel with
respect thereto, and therefore express no opinion as to the exemption from State
income taxes of interest on the Bonds if received directly by a Unitholder.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (No. 333-96067) filed pursuant to the Securities Act of
1933, as amended (the "Act"), with respect to the registration of the sale of
the Units by Nuveen Tax-Free Unit Trust, Series 1149, and to the references to
our firm in such Registration Statement and the preliminary prospectus included
therein. In giving such consent, we do not thereby admit that we are persons
whose consent is required by Section 7 of the Act, or the rules and regulations
thereunder.
Very truly yours,
Chapman & Cutler
<PAGE>
EXHIBIT 3.3
(ON CHAPMAN & CUTLER LETTERHEAD)
FEBRUARY 16, 2000
Nuveen Tax-Free Unit Trust,
Series 1149
c/o John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606
The Chase Manhattan Bank
as Trustee for Nuveen Tax-Free Unit
Trust, Series 1149
Nuveen Administration Department
4 New York Plaza - 3rd Floor
New York, New York 10004-2413
Re:--Georgia Insured Trust 70
Gentlemen:
We have acted as counsel to Nuveen Tax-Free Unit Trust, Series 1149, with
respect to certain matters preliminary to the issuance and sale of units of
interest therein (the "Units") pursuant to a Trust Indenture and Agreement,
dated as of the date hereof (the "Indenture"), between John Nuveen & Co.
Incorporated, as depositor (the "Depositor"), and The Chase Manhattan Bank, as
trustee (the "Trustee"). The Units represent fractional undivided interests in
the principal of and net income on obligations deposited in one of several
separate trusts including the above-captioned trust (the "Trust"), will be
evidenced by a certificate (the "Certificate") and will be sold to various
investors (the "Unitholders"). Each separate trust will be administered as a
distinct entity with separate certificates, investments, expenses, books and
records.
The assets of the Trust will consist of interest-bearing obligations issued
by or on behalf of the State of Georgia (the "State") or counties,
municipalities, authorities or political subdivisions thereof (the "Georgia
Bonds") and certain bonds issued by Puerto Rico authorities (the "Possession
Bonds" and collectively with the Georgia Bonds, the "Bonds"). Distributions of
interest on the Bonds received by the Trust will be made semi-annually unless a
Unitholder elects to receive them monthly or quarterly.
Neither the Sponsor nor its counsel have independently examined the Bonds to
be deposited in and held in the Trust. However, although no opinion is expressed
herein regarding such matters, it is assumed that: (i) the Bonds were validly
issued, (ii) the interest thereon is excludable from gross income for federal
income tax purposes and (iii) interest on the Bonds, if received directly by a
Unitholder would be exempt from the Georgia income tax (the "GEORGIA INCOME
TAX"). We have assumed that,t the respective times of issuance of the Bonds,
opinions relating to the validity thereof and to the exemption of interest
thereon from Federal income tax were rendered by bond counsel to the respective
issuing authorities. In addition, we have assumed that, with respect to the
Georgia Bonds, bond counsel to the issuing authorities rendered opinions that
interest on the Georgia Bonds is exempt from the Georgia Income Tax and, with
respect to the Possession Bonds, bond counsel to the issuing authorities
rendered opinions that the Possession Bonds and the interest thereon is exempt
from all state and local income taxation of the Possession Bonds and the
interest thereon. Neither the Sponsor nor its counsel has made any review for
the Trust of the proceedings relating to the issuance of the Bonds or of the
bases for the opinions rendered in connection therewith.
Based on the foregoing, and review and consideration of existing State laws,
it is our opinion, and we herewith advise you, as follows:
1.--For purposes of income taxation by the State of Georgia or any of its
counties or municipalities:
(a)--The Trust is not an association taxable as a corporation and each
Unitholder of the Trust will be treated as the owner of a pro-rata portion of
the Trust, and the income of the Trust will therefore be treated as the income
of the Unitholders;
(b)--Interest on the Georgia Bonds which is excludable from gross income for
federal income tax purposes when received by the Trust will be exempt from
Georgia income taxation and therefore will not
<PAGE>
be includable in the income of the Unitholders for income tax purposes when
distributed by the Trust and received by the Unitholders;
(c)--Interest on the Possession Bonds which is excludable from gross income
for federal income tax purposes and is exempt from state and local taxation
pursuant to federal law when received by the Trust will be exempt from Georgia
income taxation, and therefore will not be includible in the income of the
Unitholder for income tax purposes when distributed by the Trust and received by
the Unitholders.
(d)--Each Unitholder of the Trust will recognize gain or loss for income tax
purposes if the Trustee disposes of a Bond (whether by sale, exchange, payment
on maturity, retirement or otherwise) or if the Unitholder redeems or sells
Units of the Trust to the extent that such transaction results in a recognized
gain or loss for federal income tax purposes;
(e)--Due to the amortization of bond premium and the basis adjustments
required by the Internal Revenue Code, a Unitholder, under some circumstances,
may realize taxable gain when his or her Units are sold or redeemed prior to the
maturity of Bonds held by the Trust for an amount less than or equal to such
Units' original cost;
(f)--In the case of Bonds issued before March 11, 1987 with original issue
discount, the amount of gain or loss recognized for income tax purposes upon
such sale or redemption of the Bonds or Units may differ from the amount
recognized for federal income tax purposes because original issue discount on
such Bonds may accrue on ratable basis under Georgia law; and
(g)--Interest on indebtedness incurred by a Unitholder to purchase or carry
Units of the Trust and Trustee fees and related expenses incurred by the Trust
which are not deductible for federal income tax purposes are also not deductible
under Georgia law;
2.--Units of the Trust are not subject to sales or use taxation by the State
of Georgia or any political subdivision thereof;
3.--Bonds are not subject to sales or use taxation by the State of Georgia
or any political subdivision thereof;
4.--In the case of Trusts for which an insurance policy or policies with
respect to the payment of principal and interest on the Bonds has been obtained
by the Depositor, any proceeds paid under such policy or policies issued to the
Trust, if any, with respect to the Bonds in the Trust which represent maturing
interest on defaulted obligations held by the Trustee will be exempt from State
income taxes if, and to the same extent as, such interest would have been so
exempt if paid by the issurer of the defaulted obligations provided that, at the
time such policies are purchased, the amounts paid for such policies are
reasonable, customary and consistent with the reasonable expectation that the
issuer of the Bonds, rather than the insurer, will pay debt service on the
Bonds. Paragraphs 1(b) and 1(c) of this opinion is accordingly applicable to
policy proceeds representing maturing interest.
We have not examined any of the Bonds to be deposited and held in the Trust
or the proceedings for the issuance thereof or the opinions of bond counsel with
respect thereto, and therefore express no opinion as to the exemption from State
income taxes of interest on the Bonds if received directly by a Unitholder.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (No. 333-96067) filed pursuant to the Securities Act of
1933, as amended (the "Act"), with respect to the registration of the sale of
the Units by Nuveen Tax-Free Unit Trust, Series 1149, and to the references to
our firm in such Registration Statement and the preliminary prospectus included
therein. In giving such consent, we do not thereby admit that we are persons
whose consent is required by Section 7 of the Act, or the rules and regulations
thereunder.
Very truly yours,
Chapman & Cutler
<PAGE>
EXHIBIT 3.3
(ON EDWARDS & ANGELL LETTERHEAD)
FEBRUARY 16, 2000
Nuveen Tax-Free Unit Trust,
Series 1149
In care of John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606
Attention of Gifford R. Zimmerman
Vice President, Assistant General Counsel
and Assistant Secretary
The Chase Manhattan Bank,
as Trustee of Nuveen Tax-Free Unit Trust,
Series 1149
4 New York Plaza, 3rd Floor
New York, NY 10004-2413
Re:--New York Insured Trust 306
Dear Sirs:
We have acted as special counsel, with respect to New York State and New
York City tax matters, to the above Trusts(s) ("New York Trust(s)") of Nuveen
Tax-Free Unit Trust, Series 1149 (the "Fund") concerning a Registration
Statement (No. 333-96067) on Form S-6 under the Securities Act of 1933, as
amended (the "Registration Statement"), covering the issuance by the New York
Trusts(s) of units of fractional undivided interest in the New York Trust(s)
("Units").
We have not been furnished with a copy of the Registration Statement or the
prospectus, which is a part of the Registration Statement, relating to the
issuance by the New York Trust(s) of the Units. However, John Nuveen & Co.
Incorporated has authorized us to assume that the proposed offer and sale of the
Units will be carried out in that same manner and upon the same terms and
conditions as that described in the prospectus for the Nuveen Tax Exempt Unit
Trust, Insured Series 193, dated May 19, 1989, which we were furnished and did
examine. In the case of a Fund which contains a New York Insured Trust or New
York Intermediate Insured Trust, we also were not furnished the Insurance
Agreement (the "Policy") between the Municipal Bond Investors Assurance
Corporation (the "Insurer"), the Depositor and the Trustee. However, John
Nuveen & Co. Incorporated has authorized us to assume that the Policy will be
implemented at the closing of the Trust and be in substance and form materially
similiar to the Policy applicable to New York Insured Trust 108, which we were
furnished and did examine.
We have not been furnished with a copy of the Opinion of Chapman & Cutler on
the Federal Tax status of the Fund, its constituent Trusts and their
Unitholders. However, John Nuveen & Co. Incorporated has authorized us to assume
that such Opinion will be in substance and form materially similar to that which
was issued in connection with Nuveen Tax Exempt Unit Trust, Insured Series 193
dated May 19, 1989, which we were furnished and did examine.
Based on the foregoing, we are of the opinion that, for purposes of New York
State and New York City franchise taxes, a New York Trust will be a trust not an
association taxable as a corporation; the proposed activities of a New York
Trust will not constitute doing business within the meaning of section 208.1 of
the New York Tax Law or section R46-3.0 of the N.Y.C. Administrative Code; a New
York Trust will not be subject to New York State or New York City franchise tax
imposed on business corporations; a New York Trust will not be subject to the
unincorporated business income tax imposed by Article 23 of the N.Y. Tax Law or
Chapter 46, Title S of the N.Y.C. Administrative Code; and the income of a New
York Trust will be treated as income of the Unitholders.
We are further of the opinion that, under existing laws and administration
of the affairs of the New York Trust(s):
(A)--Interest on obligations issued by New York State, a political
subdivision thereof, Puerto Rico, the Virgin Islands, Guam, the Northern Mariana
Islands, or other possessions of the United States within the
<PAGE>
meaning of Section 103(c) of the Internal Revenue Code of 1986, as amended,
("Obligations") which would be exempt from New York State or New York City
personal income tax if directly received by a Unitholder, will retain its status
as tax-exempt interest when received by a New York Trust and distributed to such
Unitholder;
(B)--Interest (less amortizable premium, if any) derived from a New York
Trust by a Unitholder who is a resident of New York State (or New York City) in
respect of Obligations issued by states other than New York (or their political
subdivisions) will be subject to New York State (or New York City) personal
income tax;
(C)--A Unitholder who is a resident of New York State (or New York City)
will be subject to New York State (or New York City) personal income tax with
respect to gains realized when Obligations held in the Unitholder's respective
New York Trust are sold, redeemed or paid at maturity or when the Unitholder's
Units are sold or redeemed; such gain will equal the proceeds of sale,
redemption or payment less the tax basis of the Obligation or Unit (adjusted to
reflect (a) the amortization of premium or discount (if any) on Obligations held
by the New York Trust, (b) accrued original issue discount with respect to each
Obligation which, at the time the Obligation was issued, had original issue
discount, and (c) the deposit of Obligations with accrued interest in the New
York Trust after the Unitholder's settlement date);
(D)--Interest or gain from a New York Trust derived by a Unitholder who is
not a resident of New York State (or New York City) will not be subject to New
York State (or New York City) personal income tax, unless the Units are property
employed in a business, trade, profession or occupation carried on in New York
State (or New York City);
(E)--In the case of a New York Insured Trust or New York Intermediate
Insured Trust, amounts paid under the Policies representing maturing interest on
defaulted Obligations held by the Trustee in the Trust will be excludable from
New York State and New York City income if, and to the same extent as, such
interest would have been excludable if paid by the respective issuer; and
(F)--Amounts distributable from a New York Trust which are, pursuant to a
Unitholder's election, automatically reinvested in Nuveen Municipal Bond Fund,
Inc. will be treated as if actually distributed to and reinvested by such
Unitholder.
Because of the requirement that tax cost basis be adjusted as discussed in
(C) above, under some circumstances a Unitholder may realize taxable gain when
his Units are sold or redeemed for an amount equal to or less than his original
cost.
Although interest on Obligations issued by New York (or a political
subdivision thereof) would generally be exempt from New York State and New York
City tax, a special limitation may apply with respect to private activity bonds
which are not qualified bonds within the meaning of section 103(b)(1) of the
Internal Revenue Code of 1986, as amended. The interest on such bonds, to the
extent received by a Unitholder who is a "substantial user" (or person related
to such user) of the facilities financed by such bonds, will not be exempt from
New York State and New York City tax for any period during which such bonds are
beneficially held by such "substantial user" or "related person".
As an additional matter, if borrowed funds are used to purchase Units in a
New York Trust, all (or part) of the interest on such indebtedness will not be
deductible for New York State and New York City tax purposes. The purchase of
Units may be considered to have been made with borrowed funds even though such
funds are not directly traceable to the purchase of Units in any New York Trust.
We are further of the opinion that, for purposes of the New York State and
New York City franchise tax on corporations, Unitholders which are subject to
such tax will be required to include in their entire net income any interest or
gains distributed to them in respect of obligations of any state or political
subdivision thereof, including New York. No opinion is rendered on the
includability in entire net income of interest distributed to such Unitholders
in respect of obligations issued by Puerto Rico, the Virgin Islands, Guam, the
Northern Mariana Islands or other possessions of the United States within the
meaning of Section 103(c) of the Internal Revenue Code of 1986, as amended.
The foregoing opinions are based upon present provisions of Federal, New
York State and New York City law, administrative interpretations thereof and
court decisions.
In connection with this offering, we have not examined any of the
obligations to be deposited in the New York Trust(s), and express no opinion
whether the interest on any such obligations is, in fact, exempt
<PAGE>
from Federal, New York State, or New York City income taxation, or that such
interest would be tax-exempt under Federal, New York State, or New York City law
if directly received by a Unitholder, nor have we made any review of the
proceedings relating to the issuance of any such obligations.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm in such Registration
Statement and the Prospectus included therein.
Very truly yours,
EDWARDS & ANGELL
<PAGE>
EXHIBIT 3.4
(ON CARTER, LEDYARD & MILBURN LETTERHEAD)
FEBRUARY 16, 2000
The Chase Manhattan Bank,
as Trustee of
Nuveen Tax-Free Unit Trust,
Series 1149
4 New York Plaza, 3rd Floor
New York, New York 10004
Attention: Mr. John W. Sweeney
Vice President
Re: Nuveen Tax-Free Unit Trust, Series 1149
Dear Sirs:
We are acting as counsel for The Chase Manhattan Bank ("Chase") in
connection with the execution and delivery of a Standard Terms and Conditions of
Trust for Nuveen Tax-Free Unit Trusts Series 823 and subsequent Series (the
"Standard Terms and Conditions of Trust") dated September 7, 1995, and a related
Trust Indenture and Agreement (the "Trust Indenture and Agreement") dated
today's date (such Standard Terms and Conditions of Trust and related Trust
Indenture and Agreement are collectively referred to as the "Indenture"), each
between John Nuveen & Co. Incorporated, as Depositor (the "Depositor"), and
Chase, as Trustee (the "Trustee"), establishing the Nuveen Tax-Free Unit Trust,
Series 1149 (the "Trust Fund"), and the confirmation by Chase, as Trustee under
the Indenture, that it has caused to be credited to the Depositor's account at
The Depository Trust Company a number of units constituting the entire interest
in the Trust Fund (such aggregate units being herein called "Units") each of
which represents an undivided interest in the Trust Fund, which consists of
tax-exempt bonds (including confirmations of contracts for the purchase of
certain bonds not yet delivered and cash, cash equivalents or an irrevocable
letter of credit in the amount required for such purchase upon the receipt of
such bonds) in the aggregate principal amount set forth in the Closing
Memorandum executed and delivered today by the Depositor and the Trustee (the
"Closing Memorandum"), such bonds being defined in the Indenture as Bonds and
listed in the Schedules to the Indenture.
We have examined the Indenture, the Closing Memorandum, the form of
certificate for the Units included in the Indenture and a specimen of the
certificates to be issued thereunder (the "Certificates") and such other
documents as we have deemed necessary in order to render this opinion. Based on
the foregoing, we are of the opinion that:
1. Chase is a duly organized and existing corporation having the powers of a
trust company under the laws of the State of New York.
2. The Indenture has been duly executed and delivered by Chase and, assuming
due execution and delivery by the Depositor, constitutes the valid and legally
binding obligation of Chase.
3. The Certificates are in proper form for execution and delivery by Chase,
as Trustee.
4. Chase, as Trustee, has registered on the registration books of the Trust
Fund the ownership of the Units by The Depository Trust Company, where it has
caused the Units to be credited to the account of the Depositor. Upon receipt of
confirmation of the effectiveness of the registration statement for the sale of
the Units filed with the Securities and Exchange Commission under the Securities
Act of 1933, the Trustee may cause the Units to be transferred on the
registration books of the Trust Fund to such other names, and in such
denominations, as the Depositor may order, and may deliver Certificates
evidencing such ownership.
<PAGE>
5. Chase, as Trustee, may lawfully advance to the Trust Fund amounts as may
be necessary to provide periodic interest distributions of approximately equal
amounts, and may be reimbursed, without interest, for any such advances from
funds in the interest account, as provided in the Indenture.
In rendering the foregoing opinion, we have not considered, among other
things, whether the Bonds have been duly authorized and delivered or the federal
tax status of the Bonds.
Very truly yours,
CARTER, LEDYARD & MILBURN
<PAGE>
EXHIBIT 3.5
(ON CARTER, LEDYARD & MILBURN LETTERHEAD)
FEBRUARY 16, 2000
Nuveen Tax-Free Unit Trust,
Series 1149
c/o The Chase Manhattan Bank,
as Trustee
4 New York Plaza, 3rd Floor
New York, New York 10004
Re: Nuveen Tax-Free Unit Trust, Series 1149
Dear Sirs:
We are acting as special counsel with respect to New York tax matters for
the Nuveen Tax-Free Unit Trust, Series 1149 (the "Trust Fund"), which will be
established under a Standard Terms and Conditions of Trust for Nuveen Tax-Free
Unit Trust Series 823 and subsequent Series dated September 7, 1995, and a
related Trust Indenture and Agreement dated as of today (such Standard Terms and
Conditions of Trust and related Trust Indenture and Agreement are referred to
collectively as the "Indenture"), between John Nuveen & Co. Incorporated, as
Depositor (the "Depositor"), and The Chase Manhattan Bank, as Trustee (the
"Trustee"). Pursuant to the terms of the Indenture, units of fractional
undivided interest in the Trust Fund will be issued in the aggregate amount set
forth in the Closing Memorandum dated today's date (the "Units"), which Units
may, in accordance with the Indenture, be represented by a certificate or
certificates (the "Certificates").
We have examined and are familiar with originals or certified copies, or
copies otherwise identified to our satisfaction, of such documents as we have
deemed necessary or appropriate for the purpose of this opinion. In giving this
opinion, we have relied upon the two opinions, each dated today and addressed to
the Trustee, of Chapman and Cutler, counsel for the Depositor, with respect to
the matters of law set forth therein.
Based upon the foregoing, we are of the opinion that:
1. The Trust Fund will not constitute an association taxable as a
corporation under New York law, and accordingly will not be subject to the New
York State franchise tax or the New York City general corporation tax.
2. Under the income tax laws of the State and City of New York, the income
of the Trust Fund will be considered the income of the holders of the Units.
Individual holders of Units who are residents of New York State or New York City
should compute their New York adjusted gross income in respect of the Trust Fund
in the same manner as Federal adjusted gross income, increased by interest on
obligations of states and political subdivisions thereof other than New York,
which is exempt for Federal income tax purposes, and reduced by amortization of
premium on such obligations. A New York State or City resident should determine
the basis and holding period of his Units in the same manner for New York
purposes as for Federal purposes for the purpose of computing gain or loss on
the sale or other disposition of his Units. Non-resident holders of Units will
not be taxable by New York State or City on any interest or gain derived from
the Trust Fund or upon any gain from the sale or other disposition of their
Units, since such income or gain will not be considered as derived from New York
State or City sources.
3. By reason of the exemption contained in paragraph (a) of Subdivision 8 of
Section 270 of the New York Tax Law, no New York State stock transfer tax will
be payable in respect of any transfer of the Certificates.
Very truly yours,
CARTER, LEDYARD & MILBURN
<PAGE>
EXHIBIT 4.1
(On J. J. Kenny Co., Inc. Letterhead)
February 16, 2000
John Nuveen & Company
333 West Wacker Drive
Chicago, IL 60606
Re: Nuveen Tax-Free Unit Trust, Series 1149
Gentlemen:
We have examined the registration statement File No. 333-96067 for the
above-captioned trust. We hereby acknowledge that Kenny S&P Evaluation Services,
a division of J. J. Kenny Co., Inc. is currently acting as the evaluator for the
trust. We hereby consent to the use in the Registration Statement of the
reference to Kenny S&P Evaluation Services, a division of J. J. Kenny Co., Inc.
as evaluator.
In addition, we hereby confirm that the ratings indicated in the
Registration Statement for the respective bonds comprising the trust portfolio
are the ratings currently indicated in our KENNYBASE database.
You are hereby authorized to file a copy of this letter with the Securities
and Exchange Commission.
Sincerely,
Frank A. Ciccotto
<PAGE>
EXHIBIT 4.2
(ON CARTER LEDYARD & MILBURN LETTERHEAD)
February 16, 2000
Nuveen Tax-Free Unit Trust, Series 1149
c/o John Nuveen & Co. Incorporated,
as Depositor of
Nuveen Tax-Free Unit Trust, Series 1149
333 W. Wacker Drive
Chicago, Illinois 60606
RE: Nuveen Tax-Free Unit Trust, Series 1149
Dear Sirs:
We hereby consent to the reference to our firm under the caption "What is
the Tax Status of Unitholders?" in the Registration Statement and related
Prospectus of Nuveen Tax-Free Unit Trust, Series 1149 for the registration of
units of fractional undivided interest in the Fund in the aggregate principal
amount as set forth in the Closing Memorandum dated today's date.
Very truly yours,
CARTER, LEDYARD & MILBURN
<PAGE>
EXHIBIT 4.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report and to all references to our Firm included in or made a part of this
Registration Statement.
ARTHUR ANDERSEN LLP
Chicago, Illinois
February 16, 2000
<PAGE>
MEMORANDUM
NUVEEN TAX-FREE UNIT TRUST, SERIES 1149
FILE NO. 333-96067
The Prospectus and the Indenture filed with Amendment No. 1 of the
Registration Statement on Form S-6 have been revised to reflect information
regarding the execution of the Indenture and the deposit of bonds on February
16, 2000, and to set forth certain statistical data based thereon. In addition,
there are a number of other changes from the Prospectus as originally filed to
which reference is made, including the increase in the size of the Fund, a
corresponding increase in the number of Units and a change in the individual
trusts constituting the Fund. All references to the Units, prices and related
statistical data will apply to each trust of the Fund and the Units thereof
individually.
Except for such updating, an effort has been made to set forth below each of
the changes and also to reflect the same by redlining the marked counterparts of
the Prospectus submitted with the Amendment.
FORM S-6
FACING SHEET. The file number is now shown.
THE PROSPECTUS
The "Estimated Long-Term Return" and "Estimated Current Return" to
Unitholders under each Trust under each of the distribution plans;
Essential information for each of the Trusts, including applicable
footnotes;
The Date of the Deposit;
The size and number of Units of each of the Trusts;
The estimated daily accrual of interest under the plans of distribution for
each of the Trusts;
Data regarding the composition of the portfolio of each Trust;
Disclosure regarding the states' economic and legislative matters relevant
to investors of state trusts;
Concentrations of issues by purpose in each Trust;
The approximate percentage of the bonds in the portfolio of each Trust
acquired in distributions where the Sponsor was either the sole underwriter
or manager or member of the underwriting syndicate;
The percentage of "when issued" bonds in the portfolio of each Trust;
The schedule of investments for each Trust, including the notes thereto;
Descriptions of the opinions of the special tax counsel for state trusts;
The Record Dates and Distribution Dates for interest distributions for each
Trust;
The Statements of Condition for each Trust and the Accountant's Report with
regard thereto; and
The amount of the Trustee's Fee.
CHAPMAN AND CUTLER
Chicago, Illinois
February 16, 2000
