<PAGE>
FILE NO. 333-53244
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 1216
B. Name of Depositor: NUVEEN INVESTMENTS
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:
NUVEEN INVESTMENTS
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 January 18, 2001 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ / on January 18, 2001 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 January 18,
2001 at 1:30 P.M. pursuant to Rule 487.
</TABLE>
<PAGE>
[LOGO]
NUVEEN TAX-FREE UNIT TRUST, SERIES 1216
NUVEEN NATIONAL INSURED PORTFOLIO, SERIES 442
PROSPECTUS PART A DATED JANUARY 18, 2001
--------------------------------------------------------------------------------
- Long-Term Municipal Bonds
- Insured AAA Rated Bonds
- Monthly, Quarterly or Semi-annual Distributions
- Federal Tax Exempt Income
INSURANCE ON INSURED PORTFOLIOS RELATES EXCLUSIVELY TO THE PAYMENT OF PRINCIPAL
AND INTEREST ON THE BONDS AND NOT TO THE MARKET VALUE OF THE BONDS OR THE UNITS.
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.
<PAGE>
<TABLE>
<CAPTION>
CUSIP NOS:
MONTHLY QUARTERLY SEMI-ANNUAL
<S> <C> <C> <C>
NUVEEN NATIONAL INSURED PORTFOLIO, SERIES 442 67067W 702 67067W 710 67067W 728
</TABLE>
OVERVIEW
Nuveen Tax-Free Unit Trust, Series 1216 includes the unit investment trust
listed above. The Portfolio seeks to provide income exempt from federal income
tax and to conserve capital by investing in insured municipal bonds. Nuveen
Investments ("Nuveen" or the "Sponsor") serves as the Sponsor of the Portfolio.
Units are not deposits or obligations of, or guaranteed by any bank. Units are
not FDIC insured and involve investment risk, including the possible loss of
principal.
CONTENTS
<TABLE>
<C> <S>
2 OVERVIEW
3 NUVEEN NATIONAL INSURED PORTFOLIO,
SERIES 442
3 RISK/RETURN SUMMARY
7 SCHEDULE OF INVESTMENTS
8 HOW TO BUY AND SELL UNITS
8 Investing in the Portfolio
8 Sales or Redemptions
8 RISK FACTORS
9 DISTRIBUTIONS
9 Interest Distributions
9 Principal Distributions
9 ESTIMATED RETURNS
10 GENERAL INFORMATION
10 Insurance
10 Ratings
10 Termination
10 The Sponsor
10 Optional Features
10 LETTER OF INTENT (LOI)
10 REINVESTMENT
10 NUVEEN MUTUAL FUNDS
11 STATEMENT OF CONDITION
12 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
For the Table of Contents of Part B, see Part B of
the Prospectus.
</TABLE>
------------
THIS PART A PROSPECTUS MAY NOT BE DISTRIBUTED UNLESS ACCOMPANIED BY PART B OF
THE NUVEEN TAX-FREE UNIT TRUST PROSPECTUS WHICH IS DATED AUGUST 23, 2000.
------
2
<PAGE>
NUVEEN NATIONAL INSURED PORTFOLIO,
SERIES 442
RISK/RETURN SUMMARY
INVESTMENT OBJECTIVE
The Portfolio seeks to provide income exempt from federal income tax and
conservation of capital.
INVESTMENT STRATEGY
The Portfolio consists of insured municipal bonds that generate income exempt
from federal income taxes. The bonds are expected to remain in the Portfolio
until they mature, are called or are sold to meet redemptions or expenses.
BOND SELECTION
The bonds selected for the Portfolio are:
- GENERAL OBLIGATION BONDS -- General obligation bonds are secured by the
pledge of the issuer's full faith, credit and, usually, taxing power; and/or
- REVENUE BONDS -- Revenue bonds have principal and interest payments derived
from the income of a specific project or authority such as utility projects,
airports, highways and healthcare facilities. Payments on these bonds are not
generally backed by the government's taxing power and are dependent on the
revenues generated by the project, excise taxes or appropriations.
All of the bonds in the Portfolio:
- Are insured prior to inclusion in the Portfolio by AMBAC, FGIC, FSA or MBIA
for the life of the bond. INSURANCE GUARANTEES THE PAYMENT OF PRINCIPAL AND
INTEREST ON THE BONDS (BUT NOT THE UNITS OR THE MARKET VALUE OF THE BONDS).
Each bond insurer's claim paying ability is rated triple A by Moody's,
Standard & Poor's or Fitch;
- Are rated "Aaa" by Moody's, "AAA" by Fitch, and/or "AAA" by Standard &
Poor's; and
- Generate income that is exempt from federal income taxes and, for most
investors, the federal Alternative Minimum Tax ("AMT").
The Sponsor considers the following factors in selecting bonds for the
Portfolio:
- Whether the bonds provide income exempt from federal income taxes and AMT;
- The prices and yields of the bonds relative to other bonds of comparable
quality and maturity;
- Whether the bonds are trading at a premium or discount from par;
- The present rating and credit quality of the issuers of the bonds and the
potential improvement in the credit quality of such issuers;
- The diversification of the bonds as to the purpose of issue and the location
of the issuers;
- The potential income generated by the bonds;
- The stated maturities and call provisions of the bonds; and
- Whether the bonds were insured and the availability and cost of insurance for
the bonds.
Through examining these factors, the Sponsor seeks to select a Portfolio that
has the potential to meet the Portfolio's investment objective.
A description of the bonds included in the Portfolio is provided in the
"Schedule of Investments."
The Portfolio consists of bonds having a dollar-weighted average maturity of
29.1 years.
INVESTOR SUITABILITY
The Portfolio may be suitable for you if you are seeking:
- Insured AAA-rated bonds;
- A focus on long-term capital preservation; and
- Income exempt from federal income taxes and AMT.
The Portfolio is not appropriate for you if you are seeking:
- An aggressive high-growth investment strategy.
INDUSTRY FOCUS
The Portfolio consists of the following types of bonds:
<TABLE>
<CAPTION>
APPROXIMATE
PORTFOLIO
PERCENTAGE
(BASED ON
NUMBER PRINCIPAL
TYPE OF ISSUER OF BONDS AMOUNT)
-------------- -------- ------------
<S> <C> <C>
Healthcare Facility Revenue 2 20.0%
Power Revenue 2 20.0%
Dedicated-Tax Supported
Revenue 2 15.0%
Civic Organizations 1 10.0%
Education Revenue 1 10.0%
Transportation 1 10.0%
Water and/or Sewer Revenue 1 10.0%
General Obligation 1 5.0%
-- -----
Total 11 100%
</TABLE>
------
3
<PAGE>
The Bonds were issued by entities located in the following states or
territories:
<TABLE>
<CAPTION>
APPROXIMATE PORTFOLIO
PERCENTAGE (BASED ON
STATE OR TERRITORY PRINCIPAL AMOUNT)
------------------ ---------------------
<S> <C>
Alabama 10.0%
Illinois 15.0
Indiana 10.0
North Dakota 10.0
Pennsylvania 5.0
Rhode Island 10.0
Texas 10.0
Utah 10.0
Washington 10.0
Washington D.C. 10.0
-----
100%
</TABLE>
PRIMARY RISKS
YOU CAN LOSE MONEY BY INVESTING IN THE PORTFOLIO. In addition, the Portfolio may
not perform as well as you hope. These things can happen for various reasons,
including:
- Unit prices and yields may decline during the life of the Portfolio;
- Rising interest rates will reduce the value of your Units. Typically, bonds
with longer periods before maturity are more sensitive to interest rate
changes;
- A bond issuer or an insurer may be unwilling or unable to meet its obligation
to make principal or interest payments, resulting in a reduction in the value
of your Units;
- The financial condition of a bond issuer or insurer may worsen or their
credit ratings may drop, resulting in a reduction in the value of your Units;
- Assuming no changes in interest rates, when you sell your Units they will
generally be worth less than your cost because your cost included a sales
charge;
- The Portfolio will receive early returns of principal if bonds are called or
sold before they mature. If this happens your income will decline and you may
not be able to reinvest the money you receive at as high a yield or as long a
maturity; and
- The Portfolio is not actively managed and may continue to hold a bond
included in the Portfolio even though the bond's outlook or its market value
or yield may have changed.
Further information concerning the various types of bonds contained in the
Portfolio 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 the Prospectus.
TAX STATUS
Under existing law, in the opinion of recognized bond counsel to the issuing
governmental authorities, interest on the bonds in the Portfolio is exempt from
federal income taxes for U.S. investors. You may receive principal payments if
bonds are sold or called, or mature. You will be subject to tax on any gain
realized by the Portfolio on the disposition of bonds.
Notwithstanding anything to the contrary in Part B of the Prospectus, for tax
years beginning after December 31, 2000, the 20% rate is reduced to 18% and the
10% rate is reduced to 8% for long-term gains from most property with a holding
period of five years or more. However, the reduction of the 20% rate to 18%
applies only if the holding period for the property begins after December 31,
2000.
See "Tax Status" in Part B of the Prospectus for further tax information.
PUBLIC OFFERING PRICE
As of January 18, 2001, the Initial Date of Deposit, the PER UNIT PUBLIC
OFFERING PRICE FOR THE PORTFOLIO is $99.15. As described below, Units are
subject to a maximum sales charge of up to 4.9% of the Public Offering Price.
The Public Offering Price includes the sales charge and the estimated
organization cost of $.29 per Unit. Any net accrued but undistributed interest
on the Units is added to the Public Offering Price. For Units purchased on the
Initial Date of Deposit, $.06 per Unit of accrued interest will be added to the
Public Offering Price. The Public Offering Price changes every day with changes
in the prices of the bonds.
See "Public Offering Price" in Part B of the Prospectus and "How to Buy and Sell
Units" for additional information.
ESTIMATED DISTRIBUTIONS
The Portfolio's estimated interest distributions per Unit are as follows:
<TABLE>
<CAPTION>
DISTRIBUTION
PLAN MONTHLY QUARTERLY SEMI-ANNUAL
--------------------- ---------- ---------- ------------
<S> <C> <C> <C>
Initial Payment $.5568 $.5568 $.5568
(Date) 03/15/01 03/15/01 03/15/01
Partial Payment N/A $.7824 $.7854
(Date) 05/15/01 05/15/01
First Normal Payment $.3885 $1.1736 $2.3562
(Date) 04/15/01 08/15/01 11/15/01
Normal Total Annual
Distributions $4.6633 $4.6953 $4.7143
</TABLE>
The amount of interest will generally change as bonds in the Portfolio mature,
are called or are sold or as fees and expenses increase or decrease. Estimated
distributions assume that all of the bonds are delivered to the Portfolio.
See "Distributions to Unitholders" in Part B of the Prospectus and
"Distributions" for more information.
------
4
<PAGE>
ESTIMATED RETURNS
(AS OF THE INITIAL DATE OF DEPOSIT)
<TABLE>
<CAPTION>
Current Long-Term
Distribution Plan Return Return
----------------- ---------------- ------------------
<S> <C> <C>
Monthly 4.70% 4.74%
Quarterly 4.74% 4.78%
Semi-annual 4.75% 4.80%
</TABLE>
These return quotations are designed to be comparative rather than predictive
and your actual return will vary with Unit price, how long you hold your
investment, and changes in the Portfolio, interest income and expenses. See
"Estimated Long-Term Return and Estimated Current Return" in Part B of the
Prospectus and "Estimated Returns."
TAXABLE EQUIVALENT YIELD
(AS OF THE INITIAL DATE OF DEPOSIT)
The table shows for investors in certain selective tax brackets, the approximate
yields such investors must get from a taxable investment to match the estimated
current return from this Portfolio. Please note that the taxable equivalent
yields provided below are for illustrative purposes only and that an investor's
actual taxable equivalent yield will depend upon the Portfolio's actual return
and the investor's tax circumstances.
<TABLE>
PORTFOLIO Taxable Equivalent Yield
ESTIMATED (by selective federal tax
CURRENT brackets)
RETURN 28.0% 31.0% 36.0% 39.6%
<C> <S> <C> <C> <C> <C>
(M) 4.70% 6.53% 6.81% 7.34% 7.78%
(Q) 4.74 6.58 6.87 7.41 7.85
(S/A) 4.75 6.60 6.88 7.42 7.86
</TABLE>
FEES AND EXPENSES
This table shows the fees and expenses you may pay, directly or indirectly, when
you invest in the Portfolio.
<TABLE>
<CAPTION>
AMOUNT PER
$1,000
INVESTED
PERCENT OF (AS OF
PUBLIC OFFERING INITIAL DATE
PRICE OF DEPOSIT)
--------------- ------------
<S> <C> <C>
INVESTOR FEES
Maximum Sales Charge..... 4.9% $49.00
</TABLE>
ESTIMATED ANNUAL OPERATING EXPENSES
<TABLE>
<CAPTION>
DISTRIBUTION PLAN
-----------------------------------
MONTHLY QUARTERLY SEMI-ANNUAL
-------- --------- ------------
<S> <C> <C> <C>
Trustee's Fee(1)..... $1.4308 $1.1108 $0.9208
Sponsor's Evaluation
Fee(1)............. $ .17 $ .17 $ .17
Other Operating
Expenses (per
Unit).............. $0.0254 $0.0254 $0.0254
TOTAL (per Unit as of
the Initial Date of
Deposit)........... $ .1855 $ .1535 $ .1345
MAXIMUM ORGANIZATION
COSTS (PER
UNIT)(2)........... $ .29 $ .29 $ .29
</TABLE>
-------------
(1) The Trustee's Fee and the Sponsor's Evaluation Fee are per $1,000 principal
amount of the bonds in the Portfolio for that portion of the Portfolio that
represents a particular plan of distribution. Kenny S&P Evaluation Services,
a division of J.J. Kenny Co., Inc., performs the initial evaluation of the
Portfolio. See "Evaluation of Bonds at the Date of Deposit" in Part B of the
Prospectus. The Sponsor serves as evaluator for all subsequent evaluations.
See "Portfolio Operating Expenses" in Part B of the Prospectus for
additional information.
(2) Organization costs are deducted from Portfolio assets at the earlier of the
close of the initial offering period or 6 months after Initial Date of
Deposit.
The maximum per Unit primary market sales charges are reduced as follows:
<TABLE>
<CAPTION>
PERCENT
OF
OFFERING
NUMBER OF UNITS* PRICE
------------------------------------- --------
<S> <C>
Less than 500....................... 4.90%
500 but less than 1,000............. 4.75
1,000 but less than 2,500........... 4.50
2,500 but less than 5,000........... 4.25
5,000 but less than 10,000.......... 3.50
10,000 but less than 25,000......... 3.00
25,000 or more...................... 2.50
</TABLE>
------------
* Sales charge reductions 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, 1,000 Units to $100,000 etc., and will be applied on that basis
which is more favorable to you.
As described in "Public Offering Price" in Part B of the Prospectus, certain
classes of investors are also entitled to reduced sales charges. Also see
"Public Offering Price" in Part B of the Prospectus for secondary market sales
charges.
EXAMPLE
This example may help you compare the cost of investing in the Portfolio to the
cost of investing in other funds.
The example assumes that you invest $10,000 in the Portfolio for the periods
indicated and then either redeem or do not redeem your Units at the end of those
periods. The example also assumes a 5% return on your investment each year and
that the Portfolio's operating expenses stay the same. The example does not
include brokerage costs and other transactional fees. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Monthly $536.59 $574.34 $615.82 $738.30
Quarterly $533.55 $564.81 $599.17 $700.74
Semi-annual $531.75 $559.15 $589.27 $678.39
</TABLE>
See "Portfolio Operating Expenses" in Part B of the Prospectus for additional
information regarding expenses.
------
5
<PAGE>
DEALER CONCESSIONS
The Sponsor plans to allow a concession of $3.20 per Unit for primary market,
non-breakpoint purchases of Units to dealer firms in connection with the sale of
Units in a given transaction.
The concession paid to dealers is reduced or eliminated in connection with Units
sold in transactions to investors that receive reduced sales charges based on
the number of Units sold or in connection with Units sold to Wrap Account
Purchasers and to other investors described in Part B of the Prospectus entitled
to the sales charge reduction applicable for Wrap Account Purchasers, as
follows:
----------------------------------------------
<TABLE>
<CAPTION>
CONCESSION
NUMBER OF UNITS* PER UNIT
---------------- ----------
<S> <C>
Less than 500......................... $3.20
500 but less than 1,000............... 3.20
1,000 but less than 2,500............. 3.20
2,500 but less than 5,000............. 3.20
5,000 but less than 10,000............ 2.50
10,000 but less than 25,000........... 2.00
25,000 or more........................ 1.75
Wrap Account Purchasers............... 0.00
</TABLE>
*Sales charge reductions 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,
1,000 Units to $100,000 etc., and will be applied on that basis which is more
favorable to you and may result in a reduction in the discount per Unit.
See "Distributions of Units to the Public" in Part B of the Prospectus for
additional information on dealer concessions, volume incentives, and secondary
market dealer concessions.
------
6
<PAGE>
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
------
7
<PAGE>
(AT THE INITIAL DATE OF DEPOSIT, JANUARY 18, 2001)
NUVEEN NATIONAL INSURED PORTFOLIO, SERIES 442
<TABLE>
<CAPTION>
RATINGS(2)
--------------------- TRUSTEE'S
OPTIONAL DETERMINATION
AGGREGATE REDEMPTION STANDARD & OF
PRINCIPAL NAME OF ISSUER, TITLE(1)(5) PROVISIONS(3) POOR'S MOODY'S OFFERING PRICE(4)
<C> <S> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------------------
$1,000,000 Jefferson County, Alabama, Sewer Revenue 2009 at 101 AAA Aaa $ 964,410
Capital Improvement Warrants, Series 1999-A,
5.00% Due 2/1/33. (FGIC Insured.)
1,000,000 District of Columbia, Fixed Rate Revenue 2009 at 102 AAA Aaa 966,930
Bonds (National Academy of Sciences Project),
Series 1999A, 5.00% Due 1/1/28. (AMBAC
Insured.)
500,000 Village of Bolingbrook, Illinois, General No Optional Call AAA Aaa 118,295
Obligation Refunding Bonds, Series 1999C,
0.00% Due 1/1/28. (Original issue discount
bonds delivered on or about May 6, 1999 at a
price of 21.724% of principal amount.)(MBIA
Insured.) (6)
1,000,000 City of Chicago (Illinois), Chicago Midway 2009 at 101 AAA Aaa 962,430
Airport, Revenue Bonds, Series 1998B, 5.00%
Due 1/1/31. (MBIA Insured.)
1,000,000 Hospital Authority of St. Joseph County 2011 at 100 AAA Aaa 1,031,370
(Indiana), Health System Revenue Bonds,
Series 2000 (Memorial Health System), 5.625%
Due 8/15/33. (AMBAC Insured.)
1,000,000 Oliver County, North Dakota (Square Butte 2009 at 102 AAA Aaa 1,007,660
Electric Cooperative), Pollution Control
Revenue Refunding Bonds, Series 1998A, 5.30%
Due 1/1/27. (AMBAC Insured.)
500,000 Public Auditorium Authority of Pittsburgh and 2009 at 101 AAA Aaa 492,460
Allegheny County (Allegheny County,
Pennsylvania), Hotel Room Excise Tax Revenue
Bonds, Series of 1999, 5.125% Due 2/1/35.
(AMBAC Insured.)
1,000,000 * Rhode Island Health and Educational Building 2011 at 100 AAA Aaa 969,360
Corporation, Higher Education Facility
Revenue Bonds, Bryant College Issue, Series
2001, 5.00% Due 12/1/31. (When issued.)
(AMBAC Insured.)
1,000,000 Matagorda County, Navigation District Number 2009 at 101 AAA Aaa 1,000,000
One (Texas), Revenue Refunding Bonds (Reliant
Energy, Incorporated Project), Series 1999A,
5.25% Due 6/1/26. (AMBAC Insured.)
1,000,000 Weber County, Utah, Hospital Revenue Bonds, 2009 at 101 AAA Aaa 959,720
Series 1999 (IHC Health Services, Inc.),
5.00% Due 8/15/30. (AMBAC Insured.)
1,000,000 The Central Puget Sound Regional Transit 2009 at 101 AAA Aaa 929,560
Authority (Washington), Sales Tax and Motor
Vehicle Excise Tax Bonds, Series 1999, 4.75%
Due 2/1/28. (FGIC Insured.)
----------- -----------
$10,000,000 $ 9,402,195
=========== ===========
</TABLE>
---------------
* These bonds, or a portion thereof, have delivery dates beyond the normal
settlement date. Their expected delivery date is January 24, 2001. Contracts
relating to bonds with delivery dates after the date of settlement for
purchase made on the Date of Deposit constitute approximately 10.0% of the
aggregate principal amount of the Portfolio. (See "Composition of Portfolios"
in Part B of the Prospectus.)
(1) The Sponsor's contracts to purchase the bonds were entered into on January
16, 2001 to January 17, 2001. All bonds are represented by contracts,
unless otherwise indicated, for the performance of which an irrevocable
letter of credit has been deposited with the Trustee.
(2) All the bonds in the Portfolio, as insured by AMBAC, FSA, FGIC or MBIA, are
rated AAA by Standard & Poor's, AAA by Fitch and/or Aaa by Moody's. The
insurance on the bonds 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. A brief description of the
applicable Standard & Poor's and Moody's rating symbols and their meanings
is set forth under "Description of Ratings" in Part B of the Prospectus.
See "Insurance on the Bonds" in Part B of the Prospectus.
(3) 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. Approximately 5.0% of the
aggregate principal amount of the bonds in the Trust (accounting for
approximately 1.3% of the aggregate offering price of the bonds) are
original issue discount obligations. Certain of these original issue
discount obligations, amounting to 5.0% of the aggregate principal amount
and 1.3% of the aggregate offering price of the bonds in the Trust, are
"zero coupon" bonds. See "Summary of Portfolios" in Part B of the
Prospectus for a discussion of the characteristics of such obligations and
of the risks associated therewith. 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 Portfolios" and "Tax Status" in Part B of the
Prospectus.
(4) During the initial offering period, evaluations of bonds are made on the
basis of current offering side evaluations of the bonds.
(5) Other information regarding the bonds in the Portfolio on the Initial Date
of Deposit is as follows:
<TABLE>
<CAPTION>
ESTIMATED
ANNUAL ESTIMATED ESTIMATED
PROFIT INTEREST GROSS ANNUAL NET ANNUAL
COST TO (OR LOSS) INCOME TO INCOME PER INCOME PER BID PRICE
SPONSOR TO SPONSOR PORTFOLIO UNIT UNIT OF BONDS
----------- ----------- ------------ ------------------------------ ------------------------------ -----------
<S> <C> <C> <C> <C> <C>
$9,376,830 $25,365 $484,875 $ 4.8488 -- Monthly $ 4.6633 -- Monthly $9,362,195
$ 4.8488 -- Quarterly $ 4.6953 -- Quarterly
$ 4.8488 -- Semi-annual $ 4.7143 -- Semi-annual
</TABLE>
In addition, the difference between the Trustee's determination of offering
price and bid price (as a percentage of principal amount) is .40% for the
Portfolio.
The estimated income figures reflected above are estimates determined as of
the business day prior to the Initial Date of Deposit and actual payments
may vary. It is anticipated that the amount of interest to be distributed
per Unit in each year will initially be substantially equal to the estimated
net annual income per Unit provided above. Interest income does not include
accretion of original issue discount on zero coupon bonds, if applicable.
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. See "Distribution to Unitholders" in Part B of the
Prospectus.
(6) This bond has been purchased at a deep discount from the par value because
there is no stated interest income thereon. Bonds which pay no interest are
normally described as "zero coupon" bonds. Over the life of bonds purchased
at a deep discount, the value of the bonds will increase such that upon
maturity the holders of such bonds will receive 100% of the principal
amount thereof.
PLEASE NOTE THAT IF THIS PROSPECTUS IS USED AS A PRELIMINARY PROSPECTUS FOR A
FUTURE NUVEEN DEFINED PORTFOLIO, THE PORTFOLIO WILL CONTAIN DIFFERENT BONDS THAN
THOSE DESCRIBED ABOVE.
--------------------------------------------------------------------------------
------
8
<PAGE>
HOW TO BUY AND SELL UNITS
INVESTING IN THE PORTFOLIO
The MINIMUM INVESTMENT is normally $5,000 or 50 Units, whichever is less.
YOU CAN BUY UNITS FROM ANY PARTICIPATING DEALER.
As described above, Units are subject to a maximum sales charge of up to 4.9% of
the Public Offering Price. The Public Offering Price includes the sales charge
and the estimated organization costs. Any net accrued but undistributed interest
on the Units is added to the Public Offering Price. The Public Offering Price
changes every day with changes in the prices of the bonds.
Wrap Account Purchasers and certain other investors described in Part B of the
Prospectus may buy Units in the primary market with a sales charge of 1.70% of
the Public Offering Price. Wrap account arrangements generally involve
additional fees charged by your broker, financial advisor or financial planner.
The Portfolio's securities are valued by the Sponsor, every business day.
See "Public Offering Price" and "Market for Units" in Part B for additional
information and secondary market sales charges.
SALES OR REDEMPTIONS
Units may be redeemed by the Trustee, The Chase Manhattan Bank, on any business
day at their current market value based on the bid prices of the bonds.
Although not obligated to do so, the Sponsor may maintain a market for Units and
offer to repurchase the Units at prices based on their current market value. If
a secondary market is not maintained, a Unitholder may still redeem Units
through the Trustee.
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 price at which the
Trustee will redeem Units and the price at which the Sponsor may repurchase
Units include estimated organization costs. After such period, the amount paid
will not include such estimated organization costs.
See "Redemption" and "Market for Units" in Part B of the Prospectus for details.
RISK FACTORS
You can lose money by investing in the Portfolio. Your investment is at risk
primarily because of:
- INTEREST RATE RISK
Interest rate risk is the risk that bonds in the Portfolio 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
Credit risk is the risk that an issuer of a bond in the Portfolio or an
insurer is unable or unwilling to meet its obligation to make interest and
principal payments.
- CALL RISK
Call risk is 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 Portfolio 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 Portfolio. 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 Portfolio prior to maturity or stated call dates.
- MARKET RISK
Market risk is the risk that the market value of a bond or the Portfolio may
change rapidly and unpredictably, causing the bond or the Portfolio to be
worth less than its original price. Volatility in the market price of the
bonds in the Portfolio changes the value of the Units of the Portfolio.
Market value may be affected by a variety of factors including, among others:
-- changes in the perceptions about the issuers or insurers;
-- changes in interest rates or inflation;
-- changes in the ratings of the issuers or insurers; or
-- changes in the financial condition of the issuers or insurers of the
bonds.
- LIQUIDITY RISK
Liquidity risk is 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, a liquid trading market may not exist.
- INFLATION RISK
Inflation risk is the risk that the value of assets or income from
investments will be less in the future as inflation decreases the value of
money.
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9
<PAGE>
- BOND QUALITY RISK
Bond quality risk is the risk that a reduction in a bond's rating may
decrease its value and the value of your investment in the Portfolio.
- REDUCED DIVERSIFICATION RISK
Reduced diversification risk is the risk that the diversification of your
investment is reduced as bonds in the Portfolio are called, sold or mature.
This reduction in diversification may increase the risk of loss and increase
your share of Portfolio expenses.
- LITIGATION AND LEGISLATION RISK
Litigation and legislation risk is the risk that future litigation or
legislation could affect the value of the Portfolio. In particular, future
tax legislation could affect the value of the Portfolio 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
When bonds in a particular industry make up 25% or more of the Portfolio, it
is said to be "concentrated" in that industry, which makes the Portfolio less
diversified and subject to more market risk. See "Risk/Return
Summary--Primary Risks" for the Portfolio for a description of any
concentrations and the related risks.
See "Summary of Portfolios" and "Composition of Portfolios" in Part B of the
Prospectus for an additional discussion of potential risks.
DISTRIBUTIONS
INTEREST DISTRIBUTIONS
Interest income received by the Portfolio, net of expenses, will be paid to
investors. You may choose to receive interest distributions on a monthly,
quarterly or semi-annual basis. Interest distributions will be paid on the
following dates to the applicable Unitholders of record:
<TABLE>
<CAPTION>
DISTRIBUTION
PLAN RECORD DATES DISTRIBUTION DATES
--------------------- ---------------------- ----------------------
<S> <C> <C>
Monthly 1st of each month 15th of each month
-----------------------------------------------------------------------
Quarterly 1st of February, May, 15th of February, May,
August and November August and November
-----------------------------------------------------------------------
Semi-annual 1st of May and 15th of May and
November November
</TABLE>
The initial interest payment will be made to all Unitholders of record on the
first Record Date, which shall be the first day of the month in which the
initial payment provided in "Risk/Return Summary -- Estimated Distributions" for
the applicable Portfolio is made. See "Distributions to Unitholders" in Part B
of the Prospectus and "Risk/Return Summary -- Estimated Distributions" for the
applicable Portfolio details.
PRINCIPAL DISTRIBUTIONS
Distributions of principal received by the Portfolio will be paid on or shortly
after each May 15 and November 15 to Unitholders of record on each May 1 and
November 1, respectively, provided the amount available for distribution equals
at least $0.10 per Unit. In certain circumstances additional distributions may
be made. See "Distributions to Unitholders" in Part B of the Prospectus for
additional information.
ESTIMATED RETURNS
The Portfolio uses two separate calculations to measure estimated returns:
estimated current return and estimated long-term return.
Estimated current return equals the estimated annual cash to be received from
the bonds in the Portfolio less estimated annual Portfolio expenses, divided by
the Unit price (including the maximum sales charge):
<TABLE>
<S> <C> <C>
Estimated Annual - Estimated
Interest Income Annual Expenses
--------------------------------------------
Unit Price
</TABLE>
Estimated long-term return is a measure of the estimated return over the
estimated life of the Portfolio. Unlike Estimated Current Return, Estimated
Long-Term Return reflects maturities, discounts and premiums of the bonds in the
Portfolio. It is an average of the yields to maturity (or in certain cases, to
an earlier call date) of the individual bonds in the Portfolio, adjusted to
reflect the Portfolio's maximum sales charge and estimated expenses. We
calculate the average yield for the Portfolio by weighting each bond's yield by
its market value and the time remaining to the call or maturity date.
The return quotations are designed to be comparative rather than predictive and
your actual return will vary with Unit price, how long you hold your investment,
and changes in the Portfolio, interest income and expenses.
Yields on individual bonds depend on many factors including the general
condition of the bond market, the size of a particular offering and the maturity
and quality rating of the particular issues. Yields can vary among bonds with
similar maturities, coupons and ratings.
See "Estimated Long-Term Return and Estimated Current Return" in Part B of the
Prospectus and "Risk/ Return Summary -- Estimated Returns" for details.
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10
<PAGE>
GENERAL INFORMATION
INSURANCE
All of the bonds in an Insured Portfolio are insured under financial guaranty
insurance policies obtained from MBIA Insurance Corporation ("MBIA"), AMBAC
Assurance Corporation ("AMBAC"), Financial Guaranty Insurance Company ("FGIC")
or Financial Security Assurance Inc. ("FSA") for as long as the bonds are
outstanding and the insurer remains in business. The insurance guarantees the
scheduled payment of principal and interest on all of the bonds in an Insured
Portfolio. It does not guarantee the market value of the bonds or the value of
the Units of the Portfolio. See "Insurance on the Bonds" in Part B of the
Prospectus for further information.
RATINGS
All bonds in an Insured Portfolio have received a rating of "Aaa" by Moody's
Investors Services, Inc. ("MOODY'S"), "AAA" by Fitch IBCA, Inc. ("FITCH") and/
or "AAA" by Standard & Poor's Rating Service, a division of The McGraw-Hill
Companies, Inc. ("STANDARD & POORS"), their highest ratings. Bonds in a
Traditional Portfolio are rated in the category of "A" or better by at least one
of the above rating agencies. See "Description of Ratings" in Part B of the
Prospectus for details.
TERMINATION
The Portfolio will terminate upon the sale, redemption or other disposition of
the last bond in the Portfolio. However, in no event will the Portfolio continue
after its Mandatory Termination Date set forth in "Other
Information--Termination of Indenture" in Part B of the Prospectus.
Unitholders will receive a cash distribution that represents their share of the
Portfolio's assets within a reasonable time after the Portfolio terminates. For
more details regarding termination, including a description of other
circumstances in which the Portfolio may terminate, see "Other Information --
Termination of Indenture" in Part B of the Prospectus.
THE SPONSOR
Since our founding in 1898, Nuveen Investments (formerly known as John Nuveen &
Co. Incorporated) has been synonymous with investments that withstand the test
of time. Today, we offer a range of equity and fixed-income unit trusts designed
to suit the unique circumstances and financial planning needs of our investors.
Nuveen began offering defined portfolios in 1961 and more than 1.5 million
investors have trusted Nuveen to help them maintain the lifestyle they currently
enjoy.
The Prospectus describes in detail the investment objectives, policies and risks
of the Portfolio. We invite you to discuss the contents with your financial
advisor, or you may call us at 800-257-8787 for additional information.
OPTIONAL FEATURES
LETTER OF INTENT (LOI)
Investors may use a Letter of Intent to get reduced sales charges on purchases
made over a 13-month period (and to take advantage of dollar cost averaging).
The minimum LOI investment is $50,000. See "Public Offering Price" in Part B of
the Prospectus.
REINVESTMENT
Interest income and returned principal can be reinvested with no sales charge
into Nuveen mutual or money market funds. See "Accumulation Plan" in Part B of
the Prospectus. For more information, obtain a prospectus from your financial
advisor.
NUVEEN MUTUAL FUNDS
Portfolio purchases may be applied toward breakpoint pricing discounts for
Nuveen Mutual Funds. For more information about Nuveen investment products,
obtain a prospectus from your financial advisor.
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11
<PAGE>
--------------------------------------------------------------------------------
STATEMENT OF CONDITION
(AT THE INITIAL DATE OF DEPOSIT, JANUARY 18, 2001)
<TABLE>
<CAPTION>
NATIONAL
-------------
<S> <C>
TRUST PROPERTY
Investment in bonds represented by purchase
contracts(1)(2)........................................... $ 9,402,195
Accrued interest to January 18, 2001 on underlying
bonds(1).................................................... $ 100,432
Cash in portfolio........................................... $ 29,000
-------------
Total........................................... $ 9,531,627
=============
LIABILITIES AND INTEREST OF UNITHOLDERS
LIABILITIES:
Accrued interest to January 18, 2001 on underlying
bonds(4)................................................ $ 100,432
Reimbursement of Sponsor for organization costs(3)...... $ 29,000
-------------
Total........................................... $ 129,432
=============
INTEREST OF UNITHOLDERS:
Units of fractional undivided interest outstanding 100,000
-------------
Cost to investors(5).................................... $ 9,915,596
Less: Gross underwriting commission(6).............. $ 484,401
Less: Organization costs(3)......................... $ 29,000
-------------
Net amount applicable to investors...................... $ 9,402,195
-------------
Total........................................... $ 9,531,627
=============
</TABLE>
------------
(1) An irrevocable letter of credit has been deposited with the Trustee as
collateral, which is sufficient to cover the monies necessary for the
purchase of the bonds pursuant to contracts for the purchase of such bonds.
The amount of such letter of credit and any cash deposited exceeds the
amount necessary for the purchase of the bonds plus accrued interest to the
Initial Date of Deposit.
(2) Aggregate value (at offering prices) as of the Initial Date of Deposit of
the bonds listed under "Schedule of Investments," and their aggregate cost
to the Portfolio is the same. These offering prices were determined by Kenny
S&P Evaluation Services, a division of J.J. Kenny Co., Inc., as of the close
of business on the business day prior to the Initial Date of Deposit. (See
"Evaluation of Securities at the Initial Date of Deposit" in Part B of the
Prospectus.)
(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
Portfolio. The per Unit estimated organization costs are set forth in "Fees
and Expenses" for the applicable Portfolio. 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 each Portfolio.
(4) Representing, as set forth in "Accrued Interest" in Part B of the
Prospectus, advancement by the Trustee of an amount equal to the accrued
bond interest as of the Initial Date of Deposit.
(5) Aggregate Public Offering Price (exclusive of accrued interest) computed as
set forth under "Public Offering Price" in Part B of the Prospectus.
(6) The gross underwriting commission of 4.9% of the Public Offering Price has
been calculated on the assumption that the Units sold are not subject to a
reduction of the sales charge for quantity purchases. In single transactions
involving 500 Units or more, the sales charge is reduced. (See "Public
Offering Price" in Part B of the Prospectus.)
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12
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF NUVEEN INVESTMENTS AND UNITHOLDERS OF NUVEEN
TAX-FREE UNIT TRUST, SERIES 1216:
We have audited the accompanying statement of condition and the schedule of
investments at date of deposit (included in Part A of this Prospectus) of Nuveen
Tax-Free Unit Trust, Series 1216, as of January 18, 2001. 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 auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of the irrevocable letter of credit arrangement
for the purchase of securities, described in Note (1) to the statement of
condition, by correspondence with the Trustee. An audit also includes assessing
the accounting principles used and significant estimates made by the Sponsor, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the statement of condition and the schedule of investments at
date of deposit referred to above present fairly, in all material respects, the
financial position of Nuveen Tax-Free Unit Trust, Series 1216, as of January 18,
2001, in conformity with accounting principles generally accepted in the United
States.
ARTHUR ANDERSEN LLP
Chicago, Illinois
January 18, 2001.
------
13
<PAGE>
[LOGO]
NUVEEN TAX-FREE UNIT TRUST, SERIES 1216
PROSPECTUS -- PART A
JANUARY 18, 2001
<TABLE>
<C> <S> <C>
Sponsor Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606-1286
Telephone: 312-917-7700
Trustee The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
Telephone: 800-257-8787
</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 (file no. 333-53244)
Investment Company Act of 1940 (file no. 811-2271)
More information about this Unit Trust, including the code of ethics adopted
by the Sponsor and the Unit Trust, can be found in the Commisssion's Public
Reference Room. Information about the operation of the Public Reference Room may
be obtained by calling the Commission at 1-202-942-8090. Trust information is
also available on the EDGAR Database on the Commission's website at
http://www.sec.gov, or may be obtained at prescribed rates by sending an e-mail
request to [email protected] or by writing to the Commission's Public Reference
Section at 450 Fifth Street NW, Washington, D.C. 20549-0102.
No person is authorized to give any information or representation about the
Unit 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 the Unit Trust are no longer available or for investors who
will reinvest into subsequent series of the Portfolio, this Prospectus may be
used as a preliminary Prospectus for a future series. If this is the case,
investors should note the following:
1. Information in this Prospectus is not complete and may be changed;
2. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective; and
3. This Prospectus is not an offer to sell the securities of a future
series and is not soliciting an offer to buy such securities in any state
where the offer or sale is not permitted.
<PAGE>
B
<TABLE>
<S> <C>
[NUVEEN LOGO]
Nuveen Tax-Free Unit Trusts
Prospectus Part B dated August 23, 2000
</TABLE>
THE PROSPECTUS FOR A NUVEEN UNIT TRUST ("DEFINED PORTFOLIO") IS DIVIDED INTO
TWO PARTS. PART A OF THE PROSPECTUS RELATES EXCLUSIVELY TO PARTICULAR PORTFOLIOS
AND PROVIDES SPECIFIC INFORMATION REGARDING THE PORTFOLIOS' INVESTMENTS,
INVESTMENT OBJECTIVES, 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 DEFINED
PORTFOLIOS. PART A OF THE PROSPECTUS MAY NOT BE DISTRIBUTED UNLESS ACCOMPANIED
BY PART B OF THE PROSPECTUS. 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
PORTFOLIO.
Additional information about the Portfolio 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 Defined Portfolio consists of a
diversified portfolio of municipal bonds (the "Bonds"). (See "Schedule of
Investments" in Part A of the Prospectus for a list of the Bonds included in a
Portfolio.) Under existing law, in the opinion of recognized bond counsel to the
issuing governmental authorities, the Bonds provide interest income exempt from
federal income tax and for State Portfolios, exempt to the extent indicated in
Part A of the Prospectus from state and, in some cases, local income taxes and
intangibles taxes, for residents of the state in which the Bonds are issued.
(See "TAX STATUS".)
INSURED PORTFOLIOS. All Bonds in each Nuveen Insured Portfolio are covered by
insurance policies obtained from Ambac Assurance Corporation ("AMBAC"),
Financial Guaranty Insurance Company ("FGIC"), Financial Security Assurance Inc.
("FSA") or MBIA Insurance Corporation ("MBIA"), guaranteeing payment of
principal and interest on the bonds when due. As a result of such insurance, the
Bonds in the Portfolio have received a rating of "Aaa" by Moody's Investors
Services, Inc. ("MOODY'S"), "AAA" by Fitch IBCA, Inc. ("FITCH") and/or "AAA" by
Standard & Poor's Ratings Service, a division of The McGraw-Hill Companies, Inc.
("STANDARD & POOR'S"). Please note that the insurance relates only to the Bonds
in the Insured Portfolios and not to the Units or the market value of the Bonds
or of the Units. (See "INSURANCE ON THE BONDS.")
TRADITIONAL PORTFOLIOS. Each Traditional Portfolio 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 Portfolio are redeemable at the offices of the
Trustee at prices based upon the bid prices of the Bonds. (See "REDEMPTION.")
DISTRIBUTIONS. Interest received by a Portfolio 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
"DISTRIBUTIONS TO UNITHOLDERS.")
PUBLIC OFFERING PRICE. Public Offering Price of a Portfolio during the Initial
Offering Period is based upon the offering prices of the Bonds in the Portfolio
plus an upfront sales charge. The Public Offering Price during the period ending
with the earlier of six months after the Initial Date of Deposit or the end of
the initial offering period also includes organization costs incurred in
establishing a Portfolio. These costs will be deducted from the assets of the
Portfolio as of the close of such period. For Units purchased in the secondary
market, the Public Offering Price is based upon the bid prices of the Bonds in
the Portfolio. 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 "PUBLIC
OFFERING PRICE and "ACCRUED INTEREST.")
------------------------
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>
NUVEEN TAX-FREE DEFINED PORTFOLIOS 4
OBJECTIVES OF THE PORTFOLIOS 4
SUMMARY OF PORTFOLIOS 4
COMPOSITION OF PORTFOLIOS 6
INSURANCE ON THE BONDS 8
PUBLIC OFFERING PRICE 9
MARKET FOR UNITS 12
ACCRUED INTEREST 12
ESTIMATED LONG TERM RETURN AND ESTIMATED
CURRENT RETURN 13
EVALUATION OF BONDS AT THE DATE OF DEPOSIT 13
TAX STATUS 14
PORTFOLIO OPERATING EXPENSES 17
DISTRIBUTIONS TO UNITHOLDERS 18
ACCUMULATION PLAN 18
REPORTS TO UNITHOLDERS 19
UNIT VALUE AND EVALUATION 19
DISTRIBUTION OF UNITS TO THE PUBLIC 19
OWNERSHIP AND TRANSFER OF UNITS 21
REDEMPTION 21
HOW UNITS MAY BE PURCHASED BY THE SPONSOR 22
HOW BONDS MAY BE REMOVED FROM THE PORTFOLIOS 23
INFORMATION ABOUT THE TRUSTEE 23
INFORMATION ABOUT THE SPONSOR 24
DESCRIPTION OF RATINGS 24
OTHER INFORMATION 26
</TABLE>
2
<PAGE>
[NUVEEN LOGO]
<TABLE>
<CAPTION>
TOPICAL INDEX PAGE
<C> <S> <C> <C>
Accrued Interest 12
Accumulation Plan 19
Bond Ratings, Description of 24
Bonds, Initial Determination of Offering Price 14
Bonds, How Selected 4
Bonds, Limited Right of Substitution 7
Bonds, Removal from a Portfolio 23
Call Provisions of Portfolio Bonds 7
Capital Gains Taxability 14
Composition of Portfolios 6
Dealer Discounts 20
Distributions to Unitholders 18
Distribution Payment Dates Part A,18
Distribution of Units to the Public 20
Essential Information Regarding the Portfolios Part A
Estimated Long Term Return and Estimated Current Return Part A,13
Evaluation 19
Expenses for Normal Portfolio Operation 17
Indenture, Amendment of 26
Indenture, Termination of 27
Insurance on the Bonds 8
Interest Account Distributions Part A,18
Legal Opinion 27
Limitations on Liabilities of Sponsor and Trustee 24
Market for Units 12
Minimum Transaction 20
Objectives of the Portfolios 4
Optional Distribution Plan 18
Other Information 26
Ownership and Transfer of Units 21
Principal Account Distributions 18
Public Offering Price of Units 9
Purchase of Units by Sponsor 23
Quantity Purchases 10
Record Dates Part 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 27
Tax Status of Unitholders 14
Trustee, Information About 23
Units, Description of 4
</TABLE>
3
<PAGE>
NUVEEN TAX-FREE DEFINED PORTFOLIOS
This Nuveen Tax-Free Defined Portfolio is one of a series of separate but
similar investment companies created by Nuveen Investments, 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 the Portfolios is set forth in Part A of this
Prospectus. The various Nuveen Tax-Free Defined Portfolios are collectively
referred to herein as the "Portfolios"; the Portfolios in which some or none of
the Bonds are insured are sometimes referred to as the "Traditional Portfolios,"
the Portfolios in which all of the Bonds are insured as described herein are
sometimes referred to as the "Insured Portfolios," and the state Portfolios
(both Traditional and Insured) are sometimes referred to as the "State
Portfolios." 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 Nuveen Investments ("Nuveen" or the "Sponsor") and The
Chase Manhattan Bank.
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 Portfolio.
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 PORTFOLIOS." 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 PORTFOLIOS."
Payment of interest on the Bonds in each Insured Portfolio, and of principal
at maturity, is guaranteed under policies of insurance obtained by the Sponsor,
certain third parties or by the issuers of the Bonds. (See "INSURANCE ON THE
BONDS.") AS A GENERAL MATTER, NEITHER THE ISSUER NOR THE SPONSOR HAS OBTAINED
INSURANCE WITH RESPECT TO MANY OF THE BONDS IN ANY TRADITIONAL PORTFOLIO.
The Trustee has delivered to the Sponsor registered Units which represent
ownership of the entire Portfolio, and which are offered for sale by this
Prospectus. Each Unit of a Portfolio represents a fractional undivided interest
in the principal and net income of such Portfolio. Units may only be sold in
states in which they are registered. To the extent that any Units of any
Portfolio are redeemed by the Trustee, the aggregate value of the Portfolio's
assets will decrease by the amount paid to the redeeming Unitholder, but the
fractional undivided interest of each unredeemed Unit in such Portfolio will
increase proportionately. The Sponsor will initially, and from time to time
thereafter, hold Units in connection with their offering.
OBJECTIVES OF THE PORTFOLIOS
The objectives of the Portfolios are income exempt from Federal income tax
and, in the case of State Portfolios, 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
Portfolios, 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 Portfolio has been obtained and as a
result of such insurance the Bonds in the Insured Portfolios are rated "AAA" by
Standard & Poor's, "Aaa" by Moody's and/or "AAA" by Fitch. (See "INSURANCE ON
THE BONDS.") All obligations in each Traditional Portfolio are rated in the
category "A" or better (SP-1, MIG 2 or F2 or better, respectively, in the case
of short term obligations included in a Short Term Traditional Portfolio) by
Standard & Poor's, Moody's and/or Fitch (including provisional or conditional
ratings). In addition, certain Bonds in certain Traditional Portfolios may be
covered by insurance guaranteeing the timely payment, when due, of all principal
and interest. There is, of course, no guarantee that the Portfolios' objectives
will be achieved. For a comparison of net after-tax returns 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 Portfolio, the following factors,
among others, were considered: (i) the Standard & Poor's, Moody's and/or Fitch
ratings of the Bonds, (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 Portfolios only, the availability of
insurance on such Bonds. (See "INSURANCE ON THE BONDS.")
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Each Portfolio consists of municipal bonds. As set forth in Part A of this
Prospectus, the Portfolios 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
a Portfolio to make payments of principal and interest or the ratings of such
Bonds. For economic risks specific to the individual Portfolios, see Part A of
this Prospectus and the Appendices to the Information Supplement of this
Prospectus.
ESCROW SECURED OBLIGATIONS are typically secured by direct obligations of
the U.S. Government or in some cases obligations guaranteed by the U.S.
Government placed in an escrow account maintained by an independent trustee
until maturity or a predetermined redemption date. These obligations are
generally noncallable prior to maturity or the predetermined redemption date. In
a few isolated instances, however, bonds which were thought to be escrowed to
maturity have been called for redemption prior to maturity.
HEALTH CARE FACILITY OBLIGATIONS are obligations of issuers whose revenues
are derived from services provided by hospitals or other health care facilities,
including nursing homes. The ability of such issuers to make debt service
payments on these obligations is dependent on various factors, including
occupancy levels of the facility, demand for services, wages of employees,
overhead expenses, competition from other similar providers, government
regulation, the cost of malpractice insurance, and the degree of governmental
financial assistance, including Medicare and Medicaid.
HOUSING OBLIGATIONS are obligations of issuers whose revenues are primarily
derived from mortgage loans on single family residences or housing projects for
low to moderate income families. Housing obligations are generally prepayable at
any time and therefore their average life will ordinarily be less than their
stated maturities. The ability of such issuers to make debt service payments on
these obligations is dependent on various factors, including occupancy levels,
rental income, mortgage default rates, taxes, operating expenses, governmental
regulations and the appropriation of subsidies.
INDUSTRIAL REVENUE OBLIGATIONS are industrial revenue bonds ("IRBs"),
including pollution control revenue bonds, which are tax-exempt securities
issued by states, municipalities, public authorities or similar entities to
finance the cost of acquiring, constructing or improving various industrial
projects. Debt service payment on IRBs is dependent upon various factors,
including the creditworthiness of the corporate operator of the project and, if
applicable, corporate guarantor, revenues generated from the project, expenses
associated with the project and regulatory and environmental restrictions.
UTILITY OBLIGATIONS are obligations of issuers whose revenues are primarily
derived from the sale of several types of energy, including electric and natural
gas. The ability of such issuers to make debt service payments on these
obligations is dependent on various factors, including the rates for electricity
and natural gas, the demand for electricity and natural gas, the degree of
competition, governmental regulation, overhead expenses and variable costs, such
as fuel.
TRANSPORTATION FACILITY REVENUE OBLIGATIONS are obligations of issuers which
are payable from and secured by revenues derived from the ownership and
operation of airports, public transit systems and ports. The ability of issuers
to make debt service payments on airport obligations is dependent on the
capability of airlines to meet their obligations under use agreements. Due to
increased competition, deregulation, increased fuel costs and other factors,
many airlines may have difficulty meeting their obligations under these use
agreements. Bonds that are secured primarily by the revenue collected by a
public transit system typically are additionally secured by a pledge of sales
tax receipts collected at the state or local level, or of other governmental
financial assistance. The revenue of issuers of transit system obligations will
be affected by variations in utilization, which in turn may be affected by the
degree of local governmental subsidization, competition from other forms of
transportation, and increased costs. Port authorities derive their revenues
primarily from fees imposed on ships using the facilities which may fluctuate
depending on the local economy and on competition from competing forms of
transportation such as air, rail and trucks. The revenues of issuers which
derive their payments from bridge, road or tunnel toll revenues could 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
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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.
MARKET DISCOUNTS OR PREMIUMS. Certain of the Bonds may have been deposited
at a market discount or premium principally because their interest rates are
lower or higher than prevailing rates on comparable securities. The current
returns of market discount securities are lower than comparably rated securities
selling at par because discount securities tend to increase in market value as
they approach maturity. The current returns of market premium securities are
higher than comparably rated securities selling at par because premium
securities tend to decrease in market value as they approach maturity. Because
part of the purchase price is returned through current income payments and not
at maturity, an early redemption at par of a premium security will result in a
reduction in yield to a Portfolio. Market premium or discount attributable to
interest rate changes does not indicate market confidence or lack of confidence
in the issue.
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 Portfolio 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 Portfolio 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 PORTFOLIOS
Each Portfolio 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 Portfolio in substitution for Bonds not delivered to a
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Portfolio 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 Portfolios. 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 Portfolio or if their
delivery is delayed, the Estimated Current Returns and Estimated Long Term
Returns shown in Part A of this Prospectus may be reduced. Certain of the
contracts for the purchase of Bonds provide for delivery dates after the date of
settlement for purchases made on the Date of Deposit. Interest on such "when
issued" and "delayed delivery" Bonds accrues to the benefit of Unitholders
commencing with the first settlement date for the Units. However, in the opinion
of counsel, Unitholders who purchase their Units prior to the date such Bonds
are actually delivered to the Trustee must reduce the tax basis of their Units
for interest accruing on such Bonds during the interval between their purchase
of Units and the delivery of the Bonds because such amounts constitute a return
of principal. As a result of such adjustment, the Estimated Current Returns set
forth in Part A of the 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
in Part A of the Prospectus. Those Bonds in each Portfolio 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
Portfolio 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 Portfolio within 20 days after delivery of
notice of the failed contract and the cost to the Portfolio (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 Portfolios 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 Portfolio. In addition,
Replacement Bonds shall not be "when, as and if issued" Bonds. Whenever a
Replacement Bond has been acquired for a Portfolio, the Trustee shall, within
five days after the delivery thereof, mail or deliver a notice of such
acquisition to all Unitholders of the Portfolio involved. Once the original
corpus of the Portfolio is acquired, the Trustee will have no power to vary the
investment of the Portfolio.
To the extent Replacement Bonds are not acquired, the Sponsor shall refund
to all Unitholders of the Portfolio 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 Portfolio
could not be replaced, the Net Annual Interest Income per Unit for such
Portfolio 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 Portfolio will retain for any
length of time its present size and composition.
All of the Bonds in each Portfolio 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 Portfolios and for
purposes of calculating the average maturity of the Bonds in any Portfolio.
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
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interest distributions; it may also affect the current return on Units of the
Portfolio 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 "TAX STATUS" and
"DISTRIBUTIONS TO UNITHOLDERS" and the "Schedule of Investments" in Part A of
this Prospectus.)
LEGISLATION. At any time after the Initial Date of Deposit, legislation may
be enacted, with respect to the Bonds in a Portfolio or the issuers of the
Bonds. Changing approaches to regulation, particularly with respect to the
environment, may have a negative impact on certain companies represented in a
Portfolio. There can be no assurance that future legislation, regulation or
deregulation will not have a material adverse effect on a Portfolio or will not
impair the ability of the issuers of the Bonds to meet their obligations.
CERTAIN TAX MATTERS; LITIGATION. Certain of the Bonds in a Portfolio may be
subject to continuing requirements regarding the actual use of bond proceeds,
the manner of operation of the project financed from bond proceeds or the rebate
of excess earnings on bond proceeds, any of which may affect the exemption of
interest on such Bonds from Federal income taxation. Although at the time of
issuance of each of the Bonds in each Portfolio 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 Portfolios. It is possible that
after the Date of Deposit, litigation may be initiated with respect to Bonds in
any Portfolio. 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.
INSURANCE ON THE BONDS
The bonds in the Insured Portfolios are covered by insurance policies
obtained by the Sponsor or by the issuers or underwriters of the bonds from
Ambac, FGIC, FSA or MBIA (the "Insurers"). The "Schedule of Investments" in Part
A of the Prospectus identifies the Insurer of each bond. Insurance guarantees
the timely payment, when due, of all principal and interest on the bonds. Such
insurance 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. The 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. There can be no assurance that any
Insurer listed 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 following are brief descriptions of the Insurers. See "INSURANCE ON THE
BONDS" and the Information Supplement for more complete descriptions. The
Information Supplement may be requested from the Trustee.
AMBAC ASSURANCE CORPORATION. Ambac is a Wisconsin-domiciled stock insurance
corporation regulated by the Office of the Commissioner of Insurance of the
State of Wisconsin and licensed to do business in all 50 states, the District of
Columbia, the Territory of Guam and the Commonwealth of Puerto Rico. Ambac is a
wholly owned subsidiary of Ambac Financial Group, Inc., a 100% publicly-held
company.
FINANCIAL GUARANTY INSURANCE COMPANY. FGIC is a wholly-owned subsidiary of
FGIC Corporation (the "Corporation"), a Delaware holding company. The
Corporation is a subsidiary of General Electric Capital Corporation ("GE
Capital"). Neither the Corporation nor GE Capital is obligated to pay the debts
of or the claims against FGIC. FGIC is a monoline financial guaranty insurer
domiciled in the State of New York and subject to regulation by the State of New
York Insurance Department. FGIC is currently licensed to write insurance in all
50 states and the District of Columbia.
FINANCIAL SECURITY ASSURANCE INC. FSA is a monoline insurance company
incorporated under the laws of the State of New York. FSA is licensed to engage
in the financial guaranty insurance business in all 50 states, the District of
Columbia and Puerto Rico. FSA and its subsidiaries are engaged in the business
of writing financial guaranty insurance, principally in respect of securities
offered in domestic and foreign markets. FSA and its subsidiaries principally
insure asset-backed,
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collateralized and municipal securities. FSA is a wholly-owned subsidiary of
Financial Security Assurance Holdings Ltd. ("Holdings"), a New York Stock
Exchange listed company. FSA participates in strategic partnerships with XL
Capital Ltd. and The Tokio Marine and Fire Insurance Company Limited.
MBIA INSURANCE CORPORATION. MBIA is the principal operating subsidiary of
MBIA, Inc., a New York Stock Exchange listed company. MBIA, Inc. is not
obligated to pay the debts of or claims against MBIA. MBIA is domiciled in the
State of New York and licensed to do business in 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.
Insurance guaranteeing the timely payment, when due, of all principal and
interest on certain Bonds in a Traditional Portfolio 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 Portfolio 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 Portfolio 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.
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 Portfolios.
The insurance does not, however, guarantee the market value of the Bonds or of
the Units.
PUBLIC OFFERING PRICE
The Public Offering Price of the Units of each Portfolio 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 Portfolio made by
the Trustee) plus a sales charge set forth in Part A of this Prospectus, in each
case adding to the total thereof cash held by the Portfolio (minus accrued
expenses and any advances to the Portfolio made by the Trustee), if any, and
dividing the sum so obtained by the number of Units outstanding in the
Portfolio. See "UNIT VALUE AND EVALUATION."In addition, a portion of the Public
Offering Price during the initial offering period also consists of cash and/or
Bonds in an amount sufficient to pay for all or a portion of the costs incurred
in establishing a Portfolio, including costs for preparing the registration
statement, the trust indenture and other closing documents, registering Units
with the Securities and Exchange Commission and states, the initial audit of
each Portfolio, the initial evaluation, legal fees, the initial fees and
expenses of the Trustee and any non-material out-of-pocket expenses.
If Bonds are purchased with the portion of the Public Offering Price
intended to be used to reimburse the Sponsor for the Portfolio's organization
costs, such Bonds will be purchased in the same proportionate relationship as
all the Bonds contained in the Portfolio. These Bonds will be sold to reimburse
the Sponsor for the Portfolio's organization costs at the earlier of six months
after the Initial Date of Deposit or the end of the initial offering period (a
shorter time period than the life of the Portfolio). Also, any cash reserved 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. During
the period ending with the earlier of six months
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after the Initial Date of Deposit or the end of the initial offering period,
there may be a decrease in the value of the Bonds. To the extent the proceeds
from the sale of these Bonds and any cash reserved are insufficient to repay the
Sponsor for the Portfolio organization costs, the Trustee will sell additional
Bonds to allow the Portfolio to fully reimburse the Sponsor. In that event, the
net asset value per Unit will be reduced by the amount of additional Bonds sold.
Although the dollar amount of the reimbursement due to the Sponsor will remain
fixed and will never exceed the amount per Unit set forth for the Portfolio in
Part A of the Prospectus, this will result in a greater effective cost per Unit
to Unitholders for the reimbursement to the Sponsor. 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 Portfolio in the primary
or secondary offering period by executing and delivering a letter of intent to
the Sponsor, which letter of intent must be in a form acceptable to the Sponsor
and shall have a maximum duration of thirteen months, will be eligible to
receive a reduced sales charge according to the following tables based on the
amount of intended aggregate purchases as expressed in the letter of intent. Due
to administrative limitations and in order to permit adequate tracking, the only
secondary market purchases that will be permitted to be applied toward the
intended specified amount and that will receive the corresponding reduced sales
charge are those Units that are acquired through or from the Sponsor. By
establishing a letter of intent, a Unitholder agrees that the first purchase of
Units following the execution of such letter of intent will be at least 5% of
the total amount of the intended aggregate purchases expressed in such
Unitholder's letter of intent. Further, through the establishment of the letter
of intent, such Unitholder agrees that Units representing 5% of the total amount
of the intended purchases will be held in escrow by the Trustee pending
completion of these purchases. All distributions on Units held in escrow will be
credited to such Unitholder's account. If total purchases prior to the
expiration of the letter of intent period equal or exceed the amount specified
in a Unitholder's letter of intent, the Units held in escrow will be transferred
to such Unitholder's account. A Unitholder who purchases Units during the letter
of intent period in excess of the number of Units specified in a Unitholder's
letter of intent, the amount of which would cause the Unitholder to be eligible
to receive an additional sales charge reduction, will be allowed such additional
sales charge reduction on the purchase of Units which caused the Unitholder to
reach such new breakpoint level and on all additional purchases of Units during
the letter of intent period. If the total purchases are less than the amount
specified, the Unitholder involved must pay the Sponsor an amount equal to the
difference between the amounts paid for these purchases and the amounts which
would have been paid if the higher sales charge had been applied; the Unitholder
will, however, be entitled to any reduced sales charge qualified for by reaching
any lower breakpoint level. If such Unitholder does not pay the additional
amount within 20 days after written request by the Sponsor or the Unitholder's
securities representative, the Sponsor will instruct the Trustee to redeem an
appropriate number of the escrowed Units to meet the required payment. By
establishing a letter of intent, a Unitholder irrevocably appoints the Sponsor
as attorney to give instructions to redeem any or all of such Unitholder's
escrowed Units, with full power of substitution in the premises. A Unitholder or
his securities representative must notify the Sponsor whenever such Unitholder
makes a purchase of Units that he wishes to be counted towards the intended
amount. Sales charges during the primary offering period are provided in Part A
of this Prospectus.
For "secondary market" sales the Public Offering Price per Unit of each
Portfolio is determined by adding to the BID price of each Bond in the Portfolio
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 Portfolio based upon the maturities of such Bonds. As shown, the sales
charge on Bonds in each maturity range (and therefore the aggregate sales charge
on the purchase) is reduced with respect to 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 WRAP
UNDER TO TO TO TO TO $2,500,000 ACCOUNT
YEARS TO MATURITY $50,000 $99,999 $249,999 $499,999 $999,999 $2,499,999 OR MORE PURCHASERS
----------------- -------- -------- -------- -------- -------- ---------- ---------- ----------
<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% 0.523%
2 but less than 3............ 2.041 1.937 1.833 1.729 1.626 1.420 1.225 0.741
3 but less than 4............ 2.564 2.433 2.302 2.175 2.041 1.781 1.546 0.964
4 but less than 5............ 3.093 2.961 2.828 2.617 2.459 2.175 1.883 1.093
5 but less than 7............ 3.627 3.433 3.239 3.093 2.881 2.460 2.165 1.327
7 but less than 10........... 4.167 3.951 3.734 3.520 3.239 2.828 2.489 1.567
10 but less than 13.......... 4.712 4.467 4.221 4.004 3.788 3.253 2.842 1.712
13 but less than 16.......... 5.263 4.988 4.712 4.439 4.167 3.627 3.169 2.013
16 or more................... 5.820 5.542 5.263 4.987 4.603 4.004 3.500 2.320
</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.
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<PAGE>
The secondary market sales charges above are expressed as a percent of
the net amount invested; expressed as a percent of the Public Offering Price,
the maximum sales charge on a Portfolio, 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 Portfolio will depend on the maturities
of the Bonds in the Portfolio.
Pursuant to the terms of the Indenture, the Trustee may terminate a
Portfolio if the net asset value of such Portfolio, as shown by any evaluation,
is less than 20% of the original principal amount of the Portfolio.
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 "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 in the primary market with the applicable reduced
sales charge provided for "Wrap Account Purchasers" under "HOW TO BUY AND SELL
UNITS" in Part A of the Prospectus by: (1) investors who purchase Units through
registered investment advisers, certified financial planners and registered
broker-dealers who in each case either charge periodic fees for financial
planning, investment advisory services, brokerage services, investment services
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, children, parents and spouses' parents,
however, purchases by parents and adult children who are not members of the
household of the officers, directors or full-time employees described above,
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, if such investors purchase Units through Discounted Purchases in the
secondary market, they are entitled to the reduced sales charges provided in the
table above for "Wrap Account Purchasers." 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 Portfolio
is based upon a pro rata share of the OFFERING prices per Unit of the Bonds in
such Portfolio plus the applicable sales charge. The secondary market Public
Offering Price of each Portfolio is based upon a pro rata share of the BID
prices per Unit of the Bonds in such Portfolio plus the applicable sales charge.
The OFFERING prices of Bonds in a Portfolio 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
Portfolio on the business day prior to the Date of Deposit is shown in the
discussion of each Portfolio.
Whether or not Units are being offered for sale, the Trustee will determine
the aggregate value of each Portfolio 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
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<PAGE>
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 Portfolio at a price equivalent to the pro rata share per
Unit of the OFFERING prices of the Bonds in such Portfolio (plus accrued
interest). Afterward, although it is not obligated to do so, the Sponsor intends
to maintain a secondary market for Units of each Portfolio at its own expense
and to continuously offer to purchase Units of each Portfolio at prices, subject
to change at any time, which are based upon the BID prices of Bonds in the
respective Portfolios. 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
price at which the Sponsor expects to repurchase Units (the "SPONSOR'S
REPURCHASE PRICE") includes estimated organization costs per Unit. After such
period, the Sponsor's Repurchase Price will not include such estimated
organization costs. See Part A of the Prospectus. UNITHOLDERS WHO WISH TO
DISPOSE OF THEIR UNITS SHOULD INQUIRE OF THE TRUSTEE OR THEIR BROKER AS TO THE
CURRENT REDEMPTION PRICE. (See "REDEMPTION.") In connection with its secondary
market-making activities, the Sponsor may from time to time enter into secondary
market joint account agreements with other brokers and dealers. Pursuant to such
an agreement, the Sponsor will purchase Units from the broker or dealer at the
bid price and will place the Units into a joint account managed by the Sponsor;
sales from the account will be made in accordance with the then current
prospectus and the Sponsor and the broker or dealer will share profits and
losses in the joint account in accordance with the terms of their joint account
agreement.
In maintaining a market for the Units, the Sponsor will realize profits or
sustain losses in the amount of any difference between the price at which Units
are purchased and the price at which Units are resold or redeemed. The secondary
market Public Offering Price of Units may be greater or less than the cost of
such Units to the Sponsor.
Certificates, if any, for Units are delivered to the purchaser as promptly
after the date of settlement (three business days after purchase) as the Trustee
can complete the mechanics of registration, normally within 48 hours after
registration instructions are received. Purchasers of Units to whom Certificates
are issued will be unable to exercise any right of redemption until they have
received their Certificates, properly endorsed for transfer. (See "REDEMPTION.")
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 Portfolio
is accounted for daily on an accrual basis. For this reason, the purchase price
of Units of a Portfolio 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 Portfolio 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 Portfolios)
from interest received on the Bonds deposited in each Portfolio.
The Trustee has no cash for distribution to Unitholders until it receives
interest payments on the Bonds in the Portfolios. Since municipal bond interest
is accrued daily but paid only semi-annually, during the initial months of the
Portfolios, 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 Portfolio
retains its original size and composition and expenses and fees remain the same,
annual interest collected and distributed will approximate the estimated Net
Annual Interest Income stated in Part A of the Prospectus. However, the amount
of accrued interest at any point in time will be greater than the amount that
the Trustee will have actually received and distributed to the Unitholders.
Therefore, there will always remain an item of accrued interest that is included
in the purchase price and the redemption price of the Units.
Interest is accounted for daily and a proportionate share of accrued and
undistributed interest computed from the preceding Record Date is added to the
daily valuation of each Unit of each Portfolio. (See Part A of the Prospectus
and "DISTRIBUTIONS TO UNITHOLDERS.") As Bonds mature, or are redeemed or sold,
the accrued interest applicable to such
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<PAGE>
Bonds is collected and subsequently distributed to Unitholders. Unitholders who
sell or redeem all or a portion of their Units will be paid their proportionate
share of the remaining accrued interest to, but not including, the third
business day following the date of sale or tender.
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN
The Estimated Long Term Return for each Portfolio is a measure of the return
to the investor expected to be earned over the estimated life of the Portfolio.
The Estimated Long Term Return represents an average of the yields to maturity
(or call) of the Bonds in the 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 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 Portfolio. 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 Portfolio. Net Annual Interest
Income per Unit is calculated by dividing the annual interest income to a
Portfolio, 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 Portfolio; such actual holding
periods may be reduced by termination of a Portfolio, as described in "OTHER
INFORMATION." Since both the Estimated Current Return and the Estimated Long
Term Return quoted in Part A of the Prospectus 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 Portfolio
without charge to each potential investor in a Portfolio 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 Portfolio may be treated, in the first
year only, as a return of principal due to the inclusion in the 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 Part A of the Prospectus, "COMPOSITION OF
PORTFOLIOS" and "TAX STATUS.")
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 and
taxable-equivalent returns on a Portfolio and returns over specified periods on
other similar Nuveen Portfolios 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 Portfolio. U.S. Government bonds, for example, are backed by the
full faith and credit of the U.S. Government and bank CD's and money market
accounts are insured by an agency of the federal government. Money market
accounts and money market funds provide stability of principal, but pay interest
at rates that vary with the condition of the short-term debt market. The
investment characteristics of the Portfolios are described more fully elsewhere
in the Prospectus.
EVALUATION OF BONDS AT THE DATE OF DEPOSIT
The prices at which the Bonds deposited in the Portfolios 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
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<PAGE>
evaluating, quoting or appraising comparable bonds. With respect to Bonds in
Insured Portfolios and insured Bonds in Traditional Portfolios, Kenny S&P
evaluated the Bonds as so insured. (See "INSURANCE ON THE BONDS.")
The amount by which the Trustee's determination of the OFFERING PRICES of
the Bonds deposited in the Portfolios 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 the 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 Portfolio, may be available for use
in the Sponsor's business, and may be of benefit to the Sponsor.
TAX STATUS
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 Portfolios, 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
Portfolios, see Part A of this Prospectus. Neither the Sponsor nor Chapman and
Cutler has made any review of the Portfolios 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.) 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.
For purposes of the following opinions, it is assumed that each asset of the
Portfolios is debt, the interest on which is excluded for Federal income tax
purposes.
In the opinion of Chapman and Cutler, Counsel with respect to the
Portfolios, under existing law as of the date of this Prospectus:
(1) the Portfolios 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 Portfolios and when distributed
to the Unitholders; however such interest may be taken into account in
computing the alternative minimum tax and the additional tax on branches
of foreign corporations. See "CERTAIN TAX MATTERS APPLICABLE TO
CORPORATE UNITHOLDERS", below;
(2) each Unitholder of a Portfolio is considered to be the owner of a pro
rata portion of each asset of such Portfolio under Subpart E, subchapter
J of Chapter 1 of the Code and will have a taxable event when such
Portfolio 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
Portfolio 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 Portfolio, 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 Portfolio 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 (subject to various non-recognition
provisions of the Code). The amount of any such
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<PAGE>
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
Portfolio 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 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 Portfolio 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 Portfolio 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.
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
Portfolio is not deductible for Federal income tax purposes. The Internal
Revenue Service has taken the position that such indebtedness need not be
directly traceable to the purchase or carrying of Units (however, these rules
generally do not apply to interest paid on indebtedness incurred to purchase or
improve a personal residence). Also, under Section 265 of the Code, certain
financial institutions that acquire Units would generally not be able to deduct
any of the interest expense attributable to ownership of such Units. 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 these issues should consult
with their tax advisors.
In the case of certain of the Bonds in the Portfolio, 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.
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
15
<PAGE>
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
beginning 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
Portfolio. 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.
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.
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. 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, 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 Portfolio 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 Portfolios, 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 the branch profits tax, financial institutions, certain insurance
companies, certain S corporations, individual recipients of Social Security or
Railroad Retirement benefits and taxpayers who may be deemed to have incurred
(or continued) indebtedness to purchase or carry tax-exempt obligations.
Prospective investors should consult their tax advisers as to the applicability
of any such collateral consequences.
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<PAGE>
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 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 Unit
Trust is not an association taxable as a corporation and the income of each
Portfolio will be treated as the income of the Unitholders.
For a summary of each opinion of special counsel to the respective State
Portfolio for state tax matters, see Part A of this Prospectus.
PORTFOLIO OPERATING EXPENSES
No annual advisory fee is charged to the Portfolios by the Sponsor. The
Sponsor does, however, receive a fee as set forth in Part A of the Prospectus
for regularly evaluating the Bonds and for maintaining surveillance over the
portfolio (the "Sponsor's Evaluation Fee"). Estimated annual Portfolio expenses
are as set forth in Part A of the Prospectus; if actual expenses are higher than
the estimate, the excess will be borne by the Portfolio.
The Trustee receives for ordinary recurring services an annual fee for each
plan of distribution for each Portfolio as set forth in in Part A of the
Prospectus. Each annual fee is per $1,000 principal amount of the underlying
Bonds in a Portfolio for that portion of the Portfolio 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,
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 and the Sponsor's Evaluation Fee with respect to each Portfolio is
computed on the basis of the largest principal amount of Bonds in the Portfolio
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 Portfolio 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 Portfolios or if such index no longer exists, a
comparable index. In addition, with respect to any fees payable to the Sponsor
or an affiliate of the Sponsor for providing bookkeeping and other
administrative services, supervisory services and evaluation services, such
individual fees may exceed the actual costs of providing such services for a
Portfolio, but at no time will the total amount received for such services, in
the aggregate, rendered to all unit investment trusts of which Nuveen
Investments is the Sponsor in any calendar year exceed the actual cost to the
Sponsor or its affiliates of supplying such services, in the aggregate, in such
year. The Trustee has the use of funds, if any, being held in the Interest and
Principal Accounts of each Portfolio 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 Portfolios 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 Portfolios and with
respect to insured Bonds in Traditional Portfolios have been paid in full prior
to the deposit of the Bonds in the Portfolios, and the value of such insurance
has been included in the evaluation of the Bonds in each Portfolio and
accordingly in the Public Offering Price of Units of each Portfolio. There are
no annual continuing premiums for such insurance.
The following are additional expenses of the Portfolios and, when paid by or
are owed to the Trustee, are secured by a lien on the assets of the Portfolio or
Portfolios to which such expenses are allocable: (1) the expenses and costs of
any action undertaken by the Trustee to protect the Portfolios and the rights
and interests of the Unitholders; (2) all taxes and other governmental charges
upon the Bonds or any part of the Portfolios (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.
Except as provided in the Indenture, the Indenture generally requires each
Portfolio to be audited on an annual basis at the expense of the Portfolio 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
Portfolio shall exceed $.05 per Unit on an annual basis. Unitholders of a
Portfolio covered by an audit may obtain a copy of the audited financial
statements upon request.
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<PAGE>
DISTRIBUTIONS TO UNITHOLDERS
Interest received by the Trustee on the Bonds in each Portfolio, 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 Portfolio
and all other moneys received by the Trustee shall be credited to the "Principal
Account" of such Portfolio.
The pro rata share of cash in the Principal Account in each Portfolio 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 Portfolio unless the
amount available for distribution in such account equals at least $0.10 per
Unit.
The pro rata share of the Interest Account in each Portfolio 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 Portfolio 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 the
Prospectus for details of distributions per Unit of each Portfolio 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 Portfolio, 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 Portfolio. 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 Portfolio or, to the extent funds are not sufficient therein, from
the Principal Account of a Portfolio, amounts needed for payment of expenses of
such Portfolio. 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 Portfolio. Amounts so withdrawn shall not be considered a
part of a Portfolio'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
Portfolio such amounts as may be necessary to cover redemptions of Units of such
Portfolio by the Trustee. Funds which are available for future distributions,
redemptions and payment of expenses are held in accounts which are non-interest
bearing to Unitholders and are available for use by the Trustee pursuant to
normal banking procedures.
ACCUMULATION PLAN
The Sponsor is also the principal underwriter of several open-end mutual
funds (the "Accumulation Funds") into which Unitholders may choose to reinvest
Portfolio 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 Portfolios and may invest in securities which
would not be eligible for deposit in the Portfolios. Further information
concerning the Accumulation Plan and a list of Accumulation
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<PAGE>
Funds is set forth in the Information Supplement of this Prospectus, which may
be obtained by contacting the Trustee at the phone number listed on the back
cover of this Prospectus.
Participants may at any time, by so notifying the Trustee in writing, elect
to change the Accumulation Fund into which their distributions are being
reinvested, to change from principal only reinvestment to reinvestment of both
principal and interest or vice versa, or to terminate their participation in the
Accumulation Plan altogether and receive future distributions on their Units in
cash. Such notice will be effected as of the next Record Date occuring at least
ten days after the Trustee's receipt of the notice. There will be no charge or
other penalty for such change of election or termination. The character of
Portfolio distributions for income tax purposes will remain unchanged even if
they are reinvested in an Accumulation Fund.
REPORTS TO UNITHOLDERS
The Trustee shall furnish Unitholders of a Portfolio 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 Portfolio 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 Portfolio, a
statement with respect to such Portfolio (i) as to the Interest Account:
interest received (including amounts representing interest received upon any
disposition of Bonds), and, except for any State Portfolio, the percentage of
such interest by states in which the issuers of the Bonds are located,
deductions for fees and expenses of such Portfolio, 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 Portfolio is determined by the Trustee on the basis of (1)
the cash on hand in the Portfolio or moneys in the process of being collected,
(2) the value of the Bonds in the Portfolio 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 Portfolio, (2)
amounts representing unpaid organization costs, and (3) the accrued expenses of
the Portfolio. The result of such computation is divided by the number of Units
of such Portfolio outstanding as of the date thereof to determine the per Unit
value ("Unit Value") of such Portfolio. The Sponsor may determine the value of
the Bonds in each Portfolio (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 Portfolio, (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 Portfolio is based on the BID prices of the
Bonds, the Units are sold initially to the public in the primary market 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 Portfolios and with respect to insured
Bonds in Traditional Portfolios 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 Portfolios that include such
Bonds.
DISTRIBUTION OF UNITS TO THE PUBLIC
Nuveen, in addition to being the Sponsor, is the sole Underwriter of the
Units. It is the intention of the Sponsor to qualify Units of National, Long
Intermediate, Intermediate, Short Intermediate and Short Term Portfolios for
sale under the laws of substantially all of the states of the United States of
America, and Units of State Portfolios only in the state for which the Portfolio
is named and selected other states.
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<PAGE>
Promptly following the deposit of Bonds in exchange for Units of the
Portfolios, 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 provided in Part A of this
Prospectus.
The Sponsor currently intends to maintain a secondary market for Units of
each Portfolio. See "MARKET FOR UNITS." The amount of the dealer concession on
secondary market purchases of Portfolio Units through the Sponsor will be
computed based upon the value of the Bonds in the Portfolio, including the sales
charge computed as described in "PUBLIC OFFERING PRICE", and adjusted to reflect
the cash position of the Portfolio 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
UNDER TO TO TO TO TO $2,500,000
YEARS TO MATURITY $50,000 $99,999 $249,999 $499,999 $999,999 $2,499,999 OR MORE
----------------- -------- -------- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Less than 1............................................ 0 0 0 0 0 0 0
1 but less than 2...................................... 1.00% .90% .85% .80% .70% .55% .467%
2 but less than 3...................................... 1.30% 1.20% 1.10% 1.00% .90% .73% .634%
3 but less than 4...................................... 1.60% 1.45% 1.35% 1.25% 1.10% .90% .781%
4 but less than 5...................................... 2.00% 1.85% 1.75% 1.55% 1.40% 1.25% 1.082%
5 but less than 7...................................... 2.30% 2.15% 1.95% 1.80% 1.65% 1.50% 1.320%
7 but less than 10..................................... 2.60% 2.45% 2.25% 2.10% 1.95% 1.70% 1.496%
10 but less than 13.................................... 3.00% 2.80% 2.60% 2.45% 2.30% 2.00% 1.747%
13 but less than 16.................................... 3.25% 3.15% 3.00% 2.75% 2.50% 2.15% 1.878%
16 or more............................................. 3.50% 3.50% 3.40% 3.35% 3.00% 2.50% 2.185%
</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 dealer concessions from time to
time.
Volume incentives can be earned as a marketing allowance by eligible dealer
firms who reach cumulative firm sales arrangement levels of a specified dollar
amount of Nuveen Defined Portfolios (other than any series of the Nuveen--The
Dow 5-TM- Portfolios and Nuveen--The Dow 10-TM- 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 Defined
Portfolios 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 Defined Portfolios 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.
Firms are not entitled to receive any dealer concession for any sales made
to investors which qualified as "Discounted Purchases" (as defined in PUBLIC
OFFERING PRICE) during the primary or secondary market. (See "PUBLIC OFFERING
PRICE.")
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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 Portfolios 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.
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 Portfolio 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.
REDEMPTION
Unitholders may redeem all or a portion of their Units by (1) making a
written request for such redemption (book entry Unitholders may use the
redemption form on the reverse side of their Book Entry Position Confirmation)
to the Trustee at its address listed on the back cover of this Part B of the
Prospectus (redemptions of 1,000 Units or more will require a signature
guarantee), (2) in the case of Units evidenced by a Certificate, by also
tendering such Certificate to the Trustee, duly endorsed or accompanied by
proper instruments of transfer with signatures guaranteed as explained above, or
by providing 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
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<PAGE>
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 Portfolio 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"). 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 Redemption Price per Unit includes
estimated organization costs per Unit. After such period, the Redemption Price
will not include such estimated organization costs. See Part A of the
Prospectus. 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 Portfolio or, if the balance therein is insufficient,
from the Principal Account of such Portfolio. All other amounts paid on
redemption shall be withdrawn from the Principal Account. The Trustee is
empowered to sell underlying Bonds of a Portfolio in order to make funds
available for redemption. (See "REMOVAL OF BONDS FROM THE PORTFOLIOS.") Units so
redeemed shall be cancelled. To the extent that Bonds are sold from a Portfolio,
the size and diversity of such Portfolio 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 Portfolio, 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. As of any given time, the difference
between the bid and offering prices of such Bonds may be expected to average
1/2% to 2% of principal amount. In the case of actively traded Bonds, the
difference may be as little as 1/4 to 1/2 of 1%, and in the case of inactively
traded Bonds such difference usually will not exceed 3%.
The right of redemption may be suspended and payment postponed for any
period during which the Securities and Exchange Commission determines that
trading in the municipal bond market is restricted or an emergency exists, as a
result of which disposal or evaluation of the Bonds is not reasonably
practicable, or for such other periods as the Securities and Exchange Commission
may by order permit.
Under regulations issued by the Internal Revenue Service, the Trustee will
be required to withhold a specified percentage of the principal amount of a Unit
redemption if the Trustee has not been furnished the redeeming Unitholder's tax
identification number in the manner required by such regulations. Any amount so
withheld is transmitted to the Internal Revenue Service and may be recovered by
the Unitholder only when filing his or her tax return. Under normal
circumstances the Trustee obtains the Unitholder's tax identification number
from the selling broker at the time the Certificate or Book Entry Return
Confirmation is issued, and this number is printed on the Certificate or Book
Entry Return Confirmation and on distribution statements. If a Unitholder's tax
identification number does not appear as described above, or if it is incorrect,
the Unitholder should contact the Trustee before redeeming Units to determine
what action, if any, is required to avoid this "back-up withholding."
HOW UNITS MAY BE PURCHASED BY THE SPONSOR
The Trustee will notify the Sponsor of any tender of Units for redemption.
If the Sponsor's bid in the secondary market at that time equals or exceeds the
Redemption Price it may purchase such Units by notifying the Trustee before the
close of business on the second succeeding business day and by making payment
therefor to the Unitholder not later than the day on which payment would
otherwise have been made by the Trustee. (See "REDEMPTION.") The Sponsor's
current practice is to bid at the Redemption Price in the secondary market.
Units held by the Sponsor may be tendered to the Trustee for redemption as any
other Units.
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HOW BONDS MAY BE REMOVED FROM THE PORTFOLIOS
Bonds will be removed from a Portfolio 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 Portfolio 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 Portfolio. Such sales, if required, could result in
the sale of Bonds by the Trustee at prices less than original cost to the
Portfolio. To the extent Bonds are sold, the size and diversity of such
Portfolio 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 Portfolio if the Bonds in the Portfolio 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, except for refunding
securities that may be exchanged for Bonds under certain conditions specified in
the Indenture and except as otherwise provided in the Prospectus or 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 Portfolio.
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.
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 Portfolio 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 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
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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 Portfolios.
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 investors seeking to build and sustain their wealth. More than 1.5
million investors have entrusted Nuveen to help them maintain the lifestyle they
currently enjoy.
To meet the unique circumstances and financial planning needs of our
investors, Nuveen offers a wide array of taxable and tax-free investment
products--including equity and fixed-income mutual funds, defined portfolios,
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).
To help advisors and investors better understand and more efficiently use an
investment in the Portfolios 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
Portfolios, 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 Portfolios to meet these and other specific investor needs.
DESCRIPTION OF RATINGS
The Bonds included in the Portfolios are rated by one of the rating agencies
provided below. The following descriptions are published by the rating agencies.
STANDARD & POOR'S CORPORATION. The following is a brief description of the
applicable Standard & Poor's rating symbols and their meanings:
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 based on other circumstances.
The ratings are based, in varying degrees, on the following considerations:
I. Likelihood of payment--capacity and willingness of the obligor to meet
its financial commitment on an obligation in accordance with the terms
of the obligation;
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--An obligation rated AAA has the highest rating assigned by Standard &
Poor's. The obligor's capacity to meet its financial commitment on an obligation
is extremely strong.
AA--An obligation rated AA differs from the highest rated issues only in
small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
---------
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A--An obligation rated A is somewhat more susceptible to changes in
circumstances and economic conditions than obligations in higher rated
categories. However, the obligor's capacity to meet its financial commitment on
the obligation is still strong.
BBB--An obligation rated BBB exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
PLUS (+) OR MINUS (-): The ratings from "AA" to "BBB" 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 financed by the debt being rated and indicates that payment of debt
service requirements is largely or entirely dependent upon the successful and
timely completion of the project.
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, with some
vulnerability to adverse financial and economic changes over the
term of the notes.
MOODY'S INVESTORS SERVICE, INC. The following is a description of the
applicable Moody's Investors Service, Inc. rating symbols and their meanings:
Aaa--Bonds that are rated Aaa are judged to be of 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.
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 that make the long-term risks appear somewhat larger than in Aaa
securities.
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.
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.
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.
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FITCH IBCA, INC. (formerly Fitch Investors Service, L.P.). The following is
a brief description of the applicable Fitch IBCA, Inc. rating symbols and their
meanings:
AAA--'AAA' ratings denote the lowest expectation of credit risk. They are
assigned only in case of exceptionally strong capacity for timely payment of
financial commitments. This capacity is highly unlikely to be adversely affected
by foreseeable events.
AA--'AA' ratings denote a very low expectation of credit risk. They indicate
very strong capacity for timely payment of financial commitments. This capacity
is not significantly vulnerable to foreseeable events.
A--'A' ratings denote a low expectation of credit risk. The capacity for
timely payment of financial commitments is considered strong. This capacity may,
nevertheless, be more vulnerable to changes in circumstances or economic
conditions than is the case for higher ratings.
BBB--'BBB' ratings indicate that there is currently a low expectation of
credit risk. The capacity for timely payment of financial commitments is
considered adequate, but adverse changes in circumstances and in economic
conditions are more likely to impair this capacity. This is the lowest
investment-grade category.
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:
F1 Indicates the Best capacity for timely payment of financial commitments;
may have an added "+" to denote any exceptionally strong credit feature.
F2 Good credit quality. A satisfactory capacity for timely payment of
financial commitments, but the margin of safety is not as great as in
the case of the higher ratings.
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 Portfolio 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 Portfolio except as stated in "COMPOSITION OF TRUSTS" regarding
the limited right of substitution of Replacement Bonds, except for the
substitution of refunding bonds under certain circumstances and except as
otherwise provided in the Prospectus or the Indenture. The Trustee shall advise
the Unitholders of any amendment promptly after execution thereof.
TERMINATION OF INDENTURE
Each Portfolio may be liquidated at any time by written consent of 100% of
the Unitholders or by the Trustee when the value of such Portfolio, as shown by
any evaluation, is less than 20% of the original principal amount of such
Portfolio 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 Portfolio to
less than 40% of the principal amount of the Bonds originally deposited in the
Portfolio. The sale of Bonds from the Portfolios 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 Portfolios, beyond the end of the calendar year preceding the
twentieth anniversary of its execution for Long Intermediate, and Intermediate
Portfolios or beyond the end of the calendar year preceding the tenth
anniversary of its execution for Short Intermediate and Short Term Portfolios.
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 Portfolio by the Trustee. Within a reasonable time
thereafter, the Trustee shall liquidate any Bonds in the Portfolio then held and
shall deduct from the assets of the Portfolio any accrued costs, expenses or
indemnities provided by the Indenture which are allocable to such Portfolios,
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 Portfolio 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
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<PAGE>
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.
CODE OF ETHICS
The Sponsor and the Portfolios have adopted a code of ethics requiring the
Sponsor's employees who have access to information on Portfolio transactions to
report personal securities transactions. The purpose of the code is to avoid
potential conflicts of interest and to prevent fraud, deception or misconduct
with respect to the Portfolios.
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
Portfolios for respective state tax matters are named in "Tax Status" for each
Portfolio 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 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 the Prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report in
Part A of the 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 the Portfolios, which has
been filed with the Securities and Exchange Commission and is intended to
supplement information contained in Part A and Part B of the Prospectus. The
supplemental information includes more detailed information concerning certain
of the Bonds included in the Portfolios, taxable-equivalent yield tables and
more specific risk information concerning the individual state Portfolios. This
supplement also includes additional general information about the Sponsor, the
accumulation plan and the Portfolios.
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<TABLE>
<S> <C>
[NUVEEN LOGO]
NUVEEN TAX-FREE
UNIT TRUST
PROSPECTUS -- PART B
AUGUST 23, 2000
</TABLE>
<TABLE>
<C> <S> <C>
SPONSOR Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606-1286
Telephone: 312.917.7700
TRUSTEE The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
Telephone: 800.257.8787
LEGAL COUNSEL Chapman and Cutler
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 Portfolios
filed with the Securities and Exchange Commission in Washington, DC under the
Securities Act of 1933 and the Investment Company Act of 1940.
More information about the Portfolios, including the code of ethics adopted
by the Sponsor and the Nuveen Tax-Free Unit Trust, can be found in the
Commission's Public Reference Room. Information about the operation of the
Public Reference Room may be obtained by calling the Commission at
1-202-942-8090. Portfolio information is also available on the EDGAR Database on
the Commission's website at http://www.sec.gov, or may be obtained at prescribed
rates by sending an e-mail request to [email protected] or by writing to the
Commission's Public Reference Section at 450 Fifth Street NW, Washington, D.C.
20549-0102.
No person is authorized to give any information or representation about the
Portfolios 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 a Portfolio are no longer available or for investors who will
reinvest into subsequent series of the Portfolios may be used as a preliminary
Prospectus for a future series. If this is the case, investors should note the
following:
1. Information in this Prospectus is not complete and may be changed;
2. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective; and
3. This Prospectus is not an offer to sell the securities of a future
series and is not soliciting an offer to buy such securities in any state
where the offer or sale is not permitted.
<PAGE>
NUVEEN TAX-FREE UNIT TRUSTS
---------------------------------------------
INFORMATION SUPPLEMENT
NUVEEN SERIES 1216
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 January 18, 2001.
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
HOW TO CALCULATE YOUR ESTIMATED INCOME...................... 11
Appendix A -- National Disclosure........................... A-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 Corporation ("Standard & Poor's") AAA or
Moody's Investors Service, Inc. ("Moody's") Aaa ratings of the Bonds in the
Insured Trust portfolio. For economic risks specific to the individual Trusts,
see "Risk Factors" for each Trust.
HEALTHCARE 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 bonds. Single family
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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 result in the
operator
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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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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 daily
basis and the accrued portion is treated as tax-exempt interest income for
federal income tax purposes. On sale or redemption,
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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 THE BONDS
INSURED TRUSTS--The bonds in the Trust are covered by insurance policies
obtained by the Sponsor or by the issuers or underwriters of the bonds from
AMBAC Assurance Corporation ("AMBAC"), Financial Guaranty Insurance Company
("FGIC"), Financial Security Assurance Inc. ("FSA") or MBIA Insurance
Corporation ("MBIA") (the "Insurers"). The "Schedule of Investments" in Part A
of the Prospectus identifies the Insurer of each bond. Insurance guarantees the
timely payment, when due, of all principal and interest on the bonds. Such
insurance 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. The 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. There can be no assurance
that any Insurer listed 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 following are brief descriptions of the Insurers.
AMBAC ASSURANCE CORPORATION. Effective July 14, 1997, AMBAC Indemnity
Corporation changed its name to AMBAC Assurance Corporation. AMBAC is a
Wisconsin-domiciled stock insurance corporation regulated by the Office of the
Commissioner of Insurance of the State of Wisconsin and licensed to do business
in 50 states, the District of Columbia, the Territory of Guam and the
Commonwealth of Puerto Rico, with admitted assets of approximately
$4,013,000,000 (unaudited) and statutory capital of approximately $2,402,000,000
(unaudited) as of December 31, 1999. Statutory capital consists of AMBAC's
policyholders' surplus and statutory contingency reserve. AMBAC is a wholly
owned subsidiary of AMBAC Financial Group, Inc., a 100% publicly-held company.
Moody's Investors Service, Inc., Fitch IBCA and Standard & Poor's have both
assigned a triple-A financial strength rating to AMBAC.
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Copies of its financial statements prepared in accordance with statutory
accounting standards are available from AMBAC. The address of AMBAC's
administrative offices and its telephone number are One State Street Plaza, 17th
Floor, New York, New York 10004 and (212) 668-0340.
AMBAC has entered into quota share reinsurance agreements under which a
percentage of the insurance underwritten pursuant to certain municipal bond
insurance programs of AMBAC has been and will be assumed by a number of foreign
and domestic unaffiliated reinsurers.
MBIA INSURANCE CORPORATION. MBIA is the principal operating subsidiary of
MBIA, Inc., a New York Stock Exchange listed company (the "Company"). MBIA, Inc.
is not obligated to pay the debts of or claims against MBIA. MBIA is domiciled
in the State of New York and licensed to do business in 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. MBIA 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 MBIA, changes
in control and transactions among affiliates. Additionally, MBIA is required to
maintain contingency reserves on its liabilities in certain amounts and for
certain periods of time.
As of December 31, 1999, MBIA had admitted assets of $7.0 billion (audited),
total liabilities of $4.6 billion (audited), and total capital and surplus of
$2.4 billion (audited) determined in accordance with statutory accounting
practices prescribed or permitted by insurance regulatory authorities. As of
March 31, 2000, MBIA had admitted assets of $7.1 billion (unaudited), total
liabilities of $4.7 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 MBIA's year end financial statements prepared in
accordance with statutory accounting practices are available without charge from
MBIA. 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.
Moody's Investors Service, Inc. rates the financial strength of MBIA "Aaa".
Standard & Poor's Ratings Services Group, a division of The McGraw-Hill
Companies, Inc., rates the financial strength of MBIA "AAA".
Fitch IBCA, Inc. rates the financial strength of MBIA "AAA".
Each rating of MBIA should be evaluated independently. The ratings reflect the
respective rating agency's current assessment of the creditworthiness of MBIA
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. MBIA 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.
FINANCIAL GUARANTY INSURANCE COMPANY. FGIC is a wholly-owned subsidiary of
FGIC Corporation (the "Corporation"), a Delaware holding company. The
Corporation is a subsidiary of General Electric Capital Corporation ("GE
Capital"). Neither the Corporation nor GE Capital is obligated to pay the debts
of or the claims against FGIC. FGIC is a monoline financial guaranty insurer
domiciled in the State of New York and subject to regulation by the State of New
York Insurance Department. As of June 30, 2000, the total capital and surplus of
FGIC was $1.293 billion. FGIC prepares financial statements on the basis of both
statutory accounting principles, and generally accepted accounting principles.
Copies of such financial statements may be obtained by writing to FGIC at 115
Broadway, New York, New York 10006, Attention: Communications Department,
telephone number: (212) 312-3000 or to the New York State Insurance Department
at 25 Beaver Street, New York, New York 10004-2319, Attention: Financial
Condition Property/Casualty Bureau, telephone number: (212) 480-5187.
In addition, FGIC is currently licensed to write insurance in all 50 states and
the District of Columbia.
FINANCIAL SECURITY ASSURANCE INC. FSA is a monoline insurance company
incorporated in 1984 under the laws of the State of New York. FSA is licensed to
engage in the financial guaranty insurance business in all 50 states, the
District of Columbia and Puerto Rico.
FSA and its subsidiaries are engaged in the business of writing financial
guaranty insurance, principally in respect of securities offered in domestic and
foreign markets. Financial guaranty insurance provides a guaranty of scheduled
payments of an issuer's securities--thereby enhancing the credit rating of those
securities--in consideration of payment
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of a premium to the insurer. FSA and its subsidiaries principally insure
asset-backed, collateralized and municipal securities. Asset-backed securities
are typically supported by residential mortgage loans, consumer or trade
receivables, securities or other asset having an ascertainable cash flow or
market value. Collateralized securities include public utility first mortgage
bonds and sale/leaseback obligation bonds. Municipal securities include general
obligation bonds, special revenue bonds and other special obligations of state
and local governments. FSA insures both newly issued securities sold in the
primary market and outstanding securities sold in the secondary market that
satisfy FSA underwriting criteria.
FSA is a wholly-owned subsidiary of Financial Security Assurance Holdings Ltd.
("Holdings"), a New York Stock Exchange listed company. Major shareholders of
Holdings include White Mountains Insurance Group, Ltd., The Tokio Marine and
Fire Insurance Co., Ltd. and XL Capital Ltd. No shareholder of FSA is obligated
to pay any debt of FSA or its subsidiaries or any claim under any insurance
policy issued by FSA or its subsidiaries or to make any additional contribution
to the capital of FSA. As of December 31, 1999, the total policyholders' surplus
and contingency reserves and the total unearned premium reserve, respectively,
of FSA and its consolidated subsidiaries were, in accordance with statutory
accounting principles, approximately $1,320,082,000 (unaudited) and $669,691,000
(unaudited), and the total shareholders' equity and the total unearned premium
reserve, respectively, of FSA and its consolidated subsidiaries were, in
accordance with generally accepted accounting principles, approximately
$1,294,946,000 (audited) and $559,041,000 (audited). Copies of FSA's financial
statements may be obtained by writing to FSA at 350 Park Avenue, New York, New
York 10022, Attention: Communications Department. Its telephone number is
(212) 826-0100.
Under an intercompany agreement, liabilities on financial guaranty insurance
written or reinsured from third parties by FSA or its domestic or Bermuda
operating insurance company subsidiaries are generally reinsured among such
companies on an agreed-upon percentage substantially proportional to their
respective capital, surplus and reserves, subject to applicable statutory risk
limitations. In addition, FSA reinsures a portion of its liabilities under
certain of its financial guaranty insurance policies with other reinsurers under
various quota share treaties and on a transaction-by-transaction basis. This
reinsurance is used by FSA as a risk management device and to comply with
certain statutory and rating agency requirements; it does not alter or limit
FSA's obligations under any financial guaranty insurance policy.
FSA's insurance financial strength is rated "Aaa" by Moody's Investors Service,
Inc. FSA's insurer financial strength is rated "AAA" by Standard & Poor's
Ratings Services and Standard & Poor's (Australia) Pty. Ltd. FSA's claims-paying
ability is rated "AAA" by Fitch IBCA Inc. and Japan Rating and Investment
Information, Inc. These ratings reflect only the views of the respective rating
agencies, are not recommendations to buy, sell or hold securities and are
subject to revision or withdrawal at any time by those rating agencies.
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 FGIC, AMBAC, Bond Investors Guaranty Insurance Company, now known as
MBIA Corp. of Illinois ("BIG"), FSA, Municipal Bond Insurance Association (the
"Association"), MBIA or Connie Lee Insurance Company ("ConnieLee"). 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, Nuveen Investments, 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
8
<PAGE>
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) 257-8787. For a more detailed description, Unitholders should read the
prospectus of the Accumulation Fund in which they are interested.
The following is a complete list of the Accumulation Funds currently available,
as of the Date of Deposit of this Prospectus, to Unitholders under the
Accumulation Plan. The list of available Accumulation Funds is subject to change
without the consent of any of the Unitholders.
ACCUMULATION FUNDS
MUTUAL FUNDS
NUVEEN FLAGSHIP MUNICIPAL TRUST
Nuveen Municipal Bond Fund
Nuveen Insured Municipal Bond Fund
Nuveen Flagship All-American Municipal Bond Fund
Nuveen Flagship Limited Term Municipal Bond Fund
Nuveen Flagship Intermediate Municipal Bond Fund
NUVEEN FLAGSHIP MULTISTATE TRUST I
Nuveen Flagship Arizona Municipal Bond Fund
Nuveen Flagship Colorado Municipal Bond Fund
Nuveen Flagship Florida Municipal Bond Fund
Nuveen Flagship Florida Intermediate Municipal Bond Fund
Nuveen Maryland Municipal Bond Fund
Nuveen Flagship New Mexico Municipal Bond Fund
Nuveen Flagship Pennsylvania Municipal Bond Fund
Nuveen Flagship Virginia Municipal Bond Fund
NUVEEN FLAGSHIP MULTISTATE TRUST II
Nuveen California Municipal Bond Fund
Nuveen California Insured Municipal Bond Fund
Nuveen Flagship Connecticut Municipal Bond Fund
Nuveen Massachusetts Municipal Bond Fund
Nuveen Massachusetts Insured Municipal Bond Fund
Nuveen Flagship New Jersey Municipal Bond Fund
Nuveen Flagship New Jersey Intermediate Municipal Bond Fund
Nuveen Flagship New York Municipal Bond Fund
Nuveen New York Insured Municipal Bond Fund
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.
9
<PAGE>
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 Rittenhouse Growth Fund
Nuveen Innovation Fund
Nuveen International Growth Fund
Nuveen Investment Trust III
Nuveen Income Fund
MONEY MARKET FUNDS
Nuveen California Tax-Free Money Market Fund
Nuveen Massachusetts Tax-Free Money Market Fund
Nuveen New York Tax-Free Money Market Fund
Nuveen Tax-Free Reserves, Inc.
Nuveen Tax-Exempt Money Market Fund, Inc.
Each person who purchases Units of a Trust may become a participant in the
Accumulation Plan and elect to have his or her distributions on Units of the
Trust invested directly in shares of one of the Accumulation Funds. Reinvesting
Unitholders may select any interest distribution plan. Thereafter, each
distribution of interest income or principal on the participant's Units
(principal only in the case of a Unitholder who has chosen to reinvest only
principal distributions) will, on the applicable distribution date, or the next
day on which the New York Stock Exchange is 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.
10
<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:
NATIONAL INSURED PORTFOLIO 442
$10,000 DIVIDED BY $99.21 = 100.796
Investment Offering price and # of units purchased
(as of 01/17/01) accrued interest
100.796 X $4.6633 = $470.04
# of units purchased Annual income per unit annual income
(monthly plan)
</TABLE>
11
<PAGE>
APPENDIX A
NATIONAL DISCLOSURE
NATIONALLY DIVERSIFIED TRUST TAXABLE ESTIMATED CURRENT RETURN TABLE
(NATIONAL INSURED TRUST)
The following tables show the approximate taxable estimated current returns for
individuals that are equivalent to tax-exempt estimated current returns under
published 2001 marginal Federal tax rates. 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 income 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.
MARGINAL FEDERAL TAX RATES FOR JOINT TAXPAYERS WITH FOUR PERSONAL EXEMPTIONS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FEDERAL
FEDERAL ADJUSTED
TAXABLE GROSS TAX-FREE ESTIMATED CURRENT RETURN
INCOME INCOME FEDERAL --------------------------------------------------------------
(1,000'S) (1,000'S) TAX RATE1 4.00% 4.25% 4.50% 4.75% 5.00% 5.25% 5.50% 5.75%
------------- ------------- ------------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 45.20 $ 0-132.95 15.0% 4.71 5.00 5.29 5.59 5.88 6.18 6.47 6.76
45.20-109.25 0-132.95 28.0 5.56 5.90 6.25 6.60 6.94 7.29 7.64 7.99
132.95-199.45 29.0 5.63 5.99 6.34 6.69 7.04 7.39 7.75 8.10
109.25-166.50 0-132.95 31.0 5.80 6.16 6.52 6.88 7.25 7.61 7.97 8.33
132.95-199.45 32.0 5.88 6.25 6.62 6.99 7.35 7.72 8.09 8.46
199.45-321.95 35.0 6.15 6.54 6.92 7.31 7.69 8.08 8.46 8.85
166.50-297.35 132.95-199.45 37.0 6.35 6.75 7.14 7.54 7.94 8.33 8.73 9.13
199.45-321.95 40.5 6.72 7.14 7.56 7.98 8.40 8.82 9.24 9.66
Over 321.95 37.02 6.35 6.75 7.14 7.54 7.94 8.33 8.73 9.13
Over 297.35 199.45-321.95 44.5 7.21 7.66 8.11 8.56 9.01 9.46 9.91 10.36
Over 321.95 41.03 6.78 7.20 7.63 8.05 8.47 8.90 9.32 9.75
</TABLE>
MARGINAL FEDERAL TAX RATES FOR SINGLE TAXPAYERS WITH ONE PERSONAL EXEMPTION
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FEDERAL
FEDERAL ADJUSTED
TAXABLE GROSS TAX-FREE ESTIMATED CURRENT RETURN
INCOME INCOME FEDERAL --------------------------------------------------------------
(1,000'S) (1,000'S) TAX RATE1 4.00% 4.25% 4.50% 4.75% 5.00% 5.25% 5.50% 5.75%
------------- ------------- ------------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 27.05 $ 0-132.95 15.0% 4.71 5.00 5.29 5.59 5.88 6.18 6.47 6.76
27.05- 65.55 0-132.95 28.0 5.56 5.90 6.25 6.60 6.94 7.29 7.64 7.99
65.55-136.75 0-132.95 31.0 5.80 6.16 6.52 6.88 7.25 7.61 7.97 8.33
132.95-255.45 32.5 5.93 6.30 6.67 7.04 7.41 7.78 8.15 8.52
136.75-297.35 132.95-255.45 38.0 6.45 6.85 7.26 7.66 8.06 8.47 8.87 9.27
Over 255.45 37.02 6.35 6.75 7.14 7.54 7.94 8.33 8.73 9.13
Over 297.35 Over 255.45 41.03 6.78 7.20 7.63 8.05 8.47 8.90 9.32 9.75
</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 state and Federal tax rate
to approximately 44.46 percent for taxpayers filing a joint return and entitled
to four personal exemptions and to approximately 40.79 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 Federal tax rate reverts to 36.0% after the 80% cap on the limitation on
itemized deductions has been met.
3 Federal tax rate reverts to 39.6% after the 80% cap on the limitation on
itemized deductions has been met.
A-1
<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 contains a prospectus
that may include separate unit investment trusts. The prospectus will consist of
a Part A and a Part B. An Information Supplement is also included in the
Registration Statement.
D. UNDERTAKINGS:
The Information Supplement to the Trust will not include third party
financial information.
S-2
<PAGE>
SIGNATURES
The Registrant, Nuveen Tax-Free Unit Trust, Series 1216 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) and Series 1178 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 1216 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 January 18,
2001.
NUVEEN TAX-FREE UNIT TRUST, SERIES
1216
(Registrant)
By NUVEEN INVESTMENTS
(Depositor)
By: /s/ Jennifer L. Bartenhagen
--------------------------------------
Vice President
Attest: /s/ Nicholas Dalmaso
--------------------------------------
Assistant Secretary
S-3
<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 ) /s/ Larry W. Martin
) Attorney-In-Fact**
)
) January 18, 2001
Margaret E. Wilson Vice President and Controller )
)
)
)
</TABLE>
--------------
* The titles of the persons named herein represent their capacity in and
relationship to Nuveen Investments, the Depositor.
** The powers of attorney for Messrs. Amboian and Schwertfeger and for
Ms. Wilson were filed on May 3, 2000 as Exhibit 6.2 to Nuveen Unit Trusts,
Series 94 (File No. 333-35488).
S-4
<PAGE>
1216
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-5
<PAGE>
LIST OF EXHIBITS
<TABLE>
<S> <C>
1.1(a) Copy of Standard Terms and Conditions of Trust between
Nuveen Investments, 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.
2.1 Copy of Certificate of Ownership (included in Exhibit 1.1(a)
on pages 2 to 8, inclusive, and incorporated herein by
reference).
2.2 Code of Ethics of the Trust(s) and Principal Underwriter
(filed as Exhibit 2.2 to Amendment No. 3 to the Registration
Statement on Form S-6 relating to Nuveen Unit Trusts,
Series 82 [File No. 333-96279] filed on March 6, 2000 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.
3.4 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 (filed as Exhibit 6.1 to Amendment
No. 3 to the Registration Statement on Form S-6 relating to
Nuveen Unit Trusts, Series 99 [File No. 333-41658] filed on
August 8, 2000 and incorporated herein by reference).
</TABLE>
S-6
