<PAGE>
40 ACT FILE NO. 811-2271
SEC NO. 33-52527
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-6
For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N-8B-2.
A. Exact Name of Trust: NUVEEN TAX-EXEMPT UNIT TRUST, SERIES 723
(FORMERLY FILED AS NUVEEN TAX-EXEMPT UNIT
TRUST, SERIES 724 ON MARCH 7, 1994)
B. Name of Depositor: JOHN NUVEEN & CO. INCORPORATED
C. Complete address of Depositor's principal executive offices:
333 West Wacker Drive
Chicago, Illinois 60606
D. Name and complete address of agents for service:
JOHN NUVEEN & CO. INCORPORATED
Attn: James J. Wesolowski
333 West Wacker Drive
Chicago, Illinois 60606
CHAPMAN AND CUTLER
Attn: Daniel C. Bird, Jr.
111 West Monroe Street
Chicago, Illinois 60603
It is proposed that this filing will become effective (check appropriate box)
_____
_____ immediately upon filing pursuant to paragraph (b)
_____
_____ on (date) pursuant to paragraph (b) of rule 485
_____
_____ 60 days after filing pursuant to paragraph (a)
_____
_____ on (date) pursuant to paragraph (a) of rule (485 or 486)
E. Title and amount of securities being registered: An indefinite number of
Units pursuant to Rule 24f-2 promulgated under the Investment Company Act of
1940, as amended.
F. Proposed maximum offering price to the public of the securities being
registered: Indefinite
G. Amount of filing fee: $500 (as required by Rule 24f-2)
H. Approximate date of proposed sale to the public:
As soon as practicable after the effective
date of the registration statement
- ----- Check box if it is proposed that this filing will become effective
- ----- on (Date) at (Time) pursuant to Rule 487.
______________________________________________________________________________
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a) may determine.
<PAGE>
MARCH 7, 1994
SUBJECT TO COMPLETION
NUVEEN Tax-Exempt Unit Trusts
PROSPECTUS
Series 724
March 7, 1994
INTEREST INCOME TO THE TRUSTS AND TO UNITHOLDERS, IN THE OPINION OF COUNSEL,
UNDER EXISTING LAW IS EXEMPT FROM FEDERAL INCOME TAX. CAPITAL GAINS, IF ANY, ARE
SUBJECT TO TAX. IN ADDITION, INTEREST INCOME OF STATE TRUSTS IS, IN THE OPINION
OF COUNSEL, EXEMPT, TO THE EXTENT INDICATED, FROM STATE AND LOCAL TAXES.
INTEREST INCOME OF ANY TRUST OTHER THAN A STATE TRUST MAY BE SUBJECT TO STATE
AND LOCAL TAXES.
CURRENTLY OFFERED AT PUBLIC OFFERING PRICE PLUS INTEREST ACCRUED TO THE DATE OF
SETTLEMENT. MINIMUM PURCHASE--EITHER $5,000 OR 50 UNITS, WHICHEVER IS LESS.
THE NUVEEN TAX-EXEMPT UNIT TRUST, SERIES 724 consists of three underlying
separate unit investment trusts designated as Maryland Traditional Trust 291,
National Insured Trust 265 and Arizona Insured Trust 31. Each Trust initially
consists of delivery statements relating to contracts to purchase Bonds and,
thereafter, will consist of a diversified portfolio of obligations issued by or
on behalf of states and territories of the United States and authorities and
political subdivisions thereof (see SCHEDULES OF INVESTMENTS), the interest on
which is, in the opinion of bond counsel to the issuers, exempt from Federal
income tax under existing law. In addition, the interest on Bonds in each State
Trust is, in the opinion of bond counsel to the issuers of the obligations,
exempt from such State's income taxes, if any. All obligations in each
Traditional Trust are rated in the category "A" or better by Standard & Poor's
Corporation or Moody's Investors Service, Inc. on the Date of Deposit. All
obligations in each Insured Trust are covered by policies of insurance obtained
from the Municipal Bond Investors Assurance Corporation guaranteeing payment of
principal and interest when due. All such policies of insurance remain effective
so long as the obligations are outstanding. As a result of such insurance, the
Bonds in each portfolio of the Insured Trusts have received a rating of "Aaa" by
Moody's Investors Service, Inc. and the Bonds in the Insured Trusts and the
Units of each such Trust have received a rating of "AAA" by Standard & Poor's
Corporation. INSURANCE RELATES ONLY TO THE BONDS IN THE INSURED TRUSTS AND NOT
TO THE UNITS OFFERED HEREBY OR TO THEIR MARKET VALUE. (See Section 5.)
THE OBJECTIVES of the Trusts are tax-exempt income and conservation of capital
through a diversified investment in tax-exempt Bonds. (SEE SECTIONS 2, 3 AND
11.) The payment of interest and the preservation of principal are, of course,
dependent upon the continuing ability of the issuers of Bonds and of any insurer
thereof to meet their obligations thereunder. There is no guarantee that the
Trusts' objectives will be achieved.
DISTRIBUTIONS of interest received by each Trust will be made semi-annually
unless the Unitholder elects to receive them monthly or quarterly. (SEE SECTION
13.) Distribution of funds in the Principal Account, if any, will ordinarily be
made semi-annually.
FOR ESTIMATED LONG TERM RETURNS AND ESTIMATED CURRENT RETURNS to Unitholders in
each Trust on the business day prior to the Date of Deposit. (SEE PAGE 3 AND
SECTION 9.) For Estimated Cash Flow Tables for Short Intermediate Insured Trust
, see page 21.
THE PUBLIC OFFERING PRICE per Unit of each Trust during the initial offering
period is equal to a pro rata share of the OFFERING prices of the Bonds in such
Trust's portfolio plus a sales charge of up to 4.90% of the Public Offering
Price (equivalent to 5.152% of the net amount invested); the sales charge is
somewhat lower on Trusts with lesser average maturities. (SEE SECTION 6.) The
Secondary Market Public Offering Price per Unit for each Trust will be equal to
a pro rata share of the sum of BID prices of the Bonds in such Trust plus the
sales charges determined based on the number of years remaining to the maturity
of each Bond. Accrued interest from the preceding Record Date to, but not
including, the settlement date (normally five business days after purchase) is
added to the Public Offering Price. The sales charge is reduced on a graduated
scale for sales involving at least $50,000 or 500 Units and will be applied on
whichever basis is more favorable to the purchaser. (SEE SECTION 6.)
A UNITHOLDER MAY REDEEM UNITS at the office of the Trustee, United States Trust
Company of New York, at prices based upon the BID prices of the Bonds. The price
received upon redemption may be more or less than the amount paid by
Unitholders, depending upon the value of the Bonds on the date of tender for
redemption. (SEE SECTION 19.) The Sponsor, although not required to do so,
intends to make a
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
secondary market for the Units of the Trusts at prices based upon the BID prices
of the Bonds in the respective Trusts. (SEE SECTION 7.) RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
NUVEEN Tax-Exempt Unit Trusts
<TABLE>
<CAPTION>
Index Section Page
<C> <S> <C> <C>
SPECIFIC TRUST MATTERS
Maryland Traditional Trust 291 3 8-14
National Insured Trust 265 3 15-19
Arizona Insured Trust 31 3 20-26
GENERAL MATTERS
Accrued Interest 8 A-16
Accumulation Plan 14 A-23
Bonds, How Selected 3 7
Bonds, Initial Determination of Offering Price 10 A-17
Bonds, Limited Right of Substitution 4 A-7
Bond Ratings 3 8-26
Bonds, Removal from Trust 21 A-32
Call Provisions of Portfolio Bonds 3, 4 8-26
Capital Gains Taxability 11 A-18
Dealer Discount 17 A-28
Description of Units of Trust 1 5
Distributions to Unitholders 13 A-22
Distribution Payment Dates 3, 13 8-26, A-22
Distribution of Units to the Public 17 A-27
Essential Information Regarding the Trusts -- 4
Estimated Long Term Return and Estimated Current
Return 9 3, A-16
Evaluation 16 A-27
Expenses to Fund 12 A-21
Insurance on Bonds in the Insured Trusts 5 A-9
Insurance on Certain Bonds in the Traditional
Trusts 5 A-12
Interest Income to Trust 3 8-26
Investments, Schedules of 3 8-26
Legality of Units 24 A-36
Limitations on Liabilities of Sponsor and Trustee 22 A-33
Market for Units 7 A-15
Minimum Transaction 17 A-29
Objectives of the Trusts 2 6
Optional Distribution Plan 13 A-22
Other Information 24 A-35
Ownership and Transfer of Units 18 A-29
Public Offering Price of Units 6 A-12
Quantity Purchases 6 A-13
Record Dates 13 A-22
Ratings, Description of 24 A-37
Redemption of Units by Trustee 19 A-29
Reports to Unitholders 15 A-26
Repurchase of Units by Sponsor 20 A-31
Sales Charge 6 A-12
Sponsor, Information About 23 A-33
State Tax Status 3 8-26
Successor Trustees and Sponsors 22 A-33
Tax Status of Unitholders 11 A-18
Trustee, Information About 22 A-32
Trust Indenture, Amendment and Termination 24 A-35
Unit Value 16 A-26
</TABLE>
2
<PAGE>
ESTIMATED LONG TERM RETURNS
AND
ESTIMATED CURRENT RETURNS FOR THE TRUSTS
Following are the Estimated Long Term and Estimated Current Returns for each
Trust on the business day prior to the Date of Deposit, under the monthly,
quarterly and semi-annual plans of distribution (SEE SECTION 3):
Estimated Long Term Returns
<TABLE>
<CAPTION>
PLAN OF DISTRIBUTION
----------------------------------------
TRUST MONTHLY QUARTERLY SEMI-ANNUAL
<S> <C> <C> <C>
--------------------------------------------------------------------------------------
Maryland Traditional Trust 291........... 4.82% 4.85% 4.87%
National Insured Trust 265............... 5.51% 5.54% 5.55%
Arizona Insured Trust 31................. 4.76% 4.78% 4.80%
</TABLE>
Estimated Current Returns
<TABLE>
<CAPTION>
PLAN OF DISTRIBUTION
----------------------------------------
TRUST MONTHLY QUARTERLY SEMI-ANNUAL
<S> <C> <C> <C>
--------------------------------------------------------------------------------------
Maryland Traditional Trust 291........... 4.79% 4.82% 4.83%
National Insured Trust 265............... 5.44% 5.47% 5.49%
Arizona Insured Trust 31................. 4.69% 4.72% 4.74%
</TABLE>
The Estimated Long Term Return for each Trust is a measure of the return to
the investor earned over the estimated life of the Trust. The Estimated Long
Term Return represents an average of the yields to maturity (or call) of the
Bonds in the Trust's portfolio calculated in accordance with accepted bond
practice and adjusted to reflect expenses and sales charges. Under accepted bond
practice, tax-exempt bonds are customarily offered to investors on a "yield
price" basis, which involves computation of yield to maturity or to an earlier
call date (whichever produces the lower yield), and which takes into account not
only the interest payable on the bonds but also the amortization or accretion to
a specified date of any premium over or discount from the par (maturity) value
in the bond's purchase price. In calculating Estimated Long Term Return, the
average yield for the Trust's portfolio is derived by weighting each Bond's
yield by the market value of the Bond and by the amount of time remaining to the
date to which the Bond is priced. Once the average portfolio yield is computed,
this figure is then reduced to reflect estimated expenses and the effect of the
maximum sales charge paid by investors. The Estimated Long Term Return and
Estimated Current Return calculations do 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 the Trust's portfolio. Net Annual
Interest Income per Unit is calculated by dividing the annual interest income to
the Trust, less estimated expenses, by the number of Units outstanding.
Net Annual Interest Income per Unit, used to calculate Estimated Current
Return, will vary with changes in fees and expenses of the Trustee and the
Evaluator and with the redemption, maturity, exchange or sale of Bonds. A Trust
may experience expenses and portfolio changes different from those assumed in
the calculation of Estimated Long Term Return. There thus can be no assurance
that the Estimated Current Returns or the Estimated Long Term Returns quoted
herein will be realized in the future. Both the Estimated Current Return and the
Estimated Long Term Return quoted herein are based on the market value of the
underlying Bonds on the business day prior to the Date of Deposit; subsequent
calculations of these performance measures will reflect the then current market
value of the underlying Bonds and may be higher or lower. For more information,
see Section 9. The Sponsor will provide estimated cash flow information relating
to a Trust without charge to each potential investor in a Trust who receives
this prospectus and makes an oral or written request to the Sponsor for such
information.
3
<PAGE>
ESSENTIAL INFORMATION REGARDING THE TRUSTS ON
MARCH 4, 1994+
Sponsor and Evaluator...... John Nuveen & Co. Incorporated
Trustee........... United States Trust Company of New York
-------------------------------------------
The income, expense and distribution data set forth below have been calculated
for Unitholders receiving MONTHLY distributions. Unitholders choosing
distributions quarterly or semi-annually will receive slightly higher returns
because of the lower Trustee's fees and expenses under such plans. (SEE SECTION
3 FOR DATA RELATING TO THESE PLANS.)
<TABLE>
<CAPTION>
Maryland National Arizona
Traditional Insured Insured
Trust 291 Trust 265 Trust 31
<S> <C> <C> <C>
--------------- --------------- ---------------
Principal Amount of Bonds in Trust................ $ 3,500,000 $ 7,500,000 $ 3,500,000
Number of Units................................... 35,000 75,000 35,000
Fractional Undivided Interest in Trust Per Unit... 1/35,000 1/75,000 1/35,000
Public Offering Price--Less than 500 Units
Aggregate Offering Price of Bonds in Trust.... $ 3,419,801 $ 7,323,112 $ 3,404,687
Divided by Number of Units.................... $ 97.71 $ 97.64 $ 97.28
Plus Sales Charge*............................ $ 5.03 $ 5.03 $ 5.01
Public Offering Price Per Unit(1)............. $ 102.74 $ 102.67 $ 102.29
Redemption Price Per Unit (exclusive of accrued
interest)....................................... $ 97.25 $ 97.16 $ 96.82
Sponsor's Initial Repurchase Price Per Unit
(exclusive of accrued interest)................. $ 97.71 $ 97.64 $ 97.28
Excess of Public Offering Price Per Unit over
Redemption Price Per Unit....................... $ 5.49 $ 5.51 $ 5.47
Excess of Public Offering Price Per Unit over
Sponsor's Repurchase Price Per Unit............. $ 5.03 $ 5.03 $ 5.01
Calculation of Estimated Net Annual Interest
Income Per Unit
Annual Interest Income(2)..................... $ 5.0870 $ 5.7424 $ 4.9744
Less Estimated Annual Expense................. $ .1711 $ .1598 $ .1751
--------------- --------------- ---------------
Estimated Net Annual Interest Income(3)....... $ 4.9159 $ 5.5826 $ 4.7993
Daily Rate of Accrual Per Unit.................... $ .01366 $ .01551 $ .01333
Estimated Current Return(4)....................... 4.79% 5.44% 4.69%
Estimated Long Term Return(4)..................... 4.82% 5.51% 4.76%
BECAUSE CERTAIN OF THE BONDS IN THE TRUSTS WILL NOT BE DELIVERED TO THE TRUSTEE UNTIL AFTER THE SETTLEMENT
DATE FOR A PURCHASE OF UNITS MADE ON THE DATE OF DEPOSIT, INTEREST THAT ACCRUES ON THOSE BONDS BETWEEN THE
DATE OF DEPOSIT AND SUCH DELIVERY DATE WILL BE TREATED AS A RETURN OF PRINCIPAL RATHER THAN AS TAX-EXEMPT
INCOME. THE AMOUNT OF ANY SUCH RETURN OF PRINCIPAL IS NOT INCLUDED IN THE ANNUAL INTEREST INCOME SHOWN
ABOVE. FOR THE VARIOUS TRUSTS, THE FOLLOWING SETS FORTH THE LATEST SCHEDULED BOND DELIVERY DATE, THE AMOUNT
PER UNIT THAT WILL BE TREATED AS A RETURN OF PRINCIPAL TO UNITHOLDERS WHO PURCHASE ON THE DATE OF DEPOSIT,
AND THE ESTIMATED CURRENT RETURN AFTER THE FIRST YEAR, ASSUMING THE PORTFOLIO AND ESTIMATED ANNUAL EXPENSES
DO NOT VARY FROM THAT SET FORTH ABOVE (SEE SECTIONS 3 AND 12 AND THE "SCHEDULES OF INVESTMENTS"):
LATEST SCHEDULED PER UNIT ESTIMATED CURRENT RETURN
DELIVERY DATE RETURN OF PRINCIPAL AFTER THE FIRST YEAR
------------------ -------------------- -------------------------
NATIONAL INSURED TRUST........ MARCH 24, 1994 $ .06 5.49 %
ARIZONA INSURED TRUST......... FEBRUARY 15, 1994 $ .01 4.70 %
<FN>
- ----------
Evaluations for purpose of sale, purchase or redemption of Units are made as of 4 p.m. Eastern time on the business day next
following receipt of an order by the Sponsor or Trustee. (See Section 6.)
+ The business day prior to the Date of Deposit.
* National and State, 5.152%; Long Intermediate, 4.439%; Intermediate, 4.058%; Short Intermediate, 3.093%; Short Term, 2.564%
(4.9%, 4.25%, 3.9%, 3.0% and 2.5% of the Public Offering Prices, respectively.)
(1) Units are offered at the Public Offering Price plus accrued interest from the preceding Record Date to, but not including,
the date of settlement (normally five business days after purchase). The Date of Deposit of the Fund has been designated as
the First Record Date for all plans of distribution of the Trusts and, accordingly, for Units purchased on the Date of
Deposit, the following amounts of accrued interest to the Settlement Date will be added to the Public Offering Prices:
Maryland Traditional Trust--$.10, National Insured Trust--$.11 and Arizona Insured Trust--$.09. (See Section 8.)
(2) Assumes delivery of all Bonds. (See Section 4.) Interest income does not include accretion of original issue discount on
"zero coupon" Bonds, Stripped Obligations or other original issue discount Bonds. (See "General Trust Information" in Section
3.)
(3) The amount and timing of interest distributions from each Trust under the various plans of distribution are shown in Section
3.
(4) Estimated Long Term Return for each Trust represents the average of the yields to maturity (or call) of the Bonds in the
Trust's portfolio calculated in accordance with accepted bond practices and adjusted to reflect expenses and sales charges.
Estimated Current Return is computed by dividing the Net Annual Interest Income per Unit by the Public Offering Price, and in
contrast to Estimated Long Term Return does not reflect the amortization of premium or accretion of discount, if any. For
more information see page 3 and Section 9.
</TABLE>
4
<PAGE>
ESSENTIAL INFORMATION REGARDING THE TRUSTS
(CONTINUED)
<TABLE>
<S> <C>
Settlement Date...........................................................................
Record Dates................................................................See Section 13
Distribution Dates..........................................................See Section 13
Minimum Principal Distribution..............................................$0.10 Per Unit
Date Trusts Established......................................................March 7, 1994
Mandatory Termination Date..................................................See Section 24
Minimum Value of Each Trust.................................................See Section 24
Trustee's Maximum Annual Fee
Traditional Trusts:..........................$ per $1,000 principal amount of Bonds
Insured Trusts:..............................$ per $1,000 principal amount of Bonds
Sponsor's Annual Evaluation Fee..................$ per $1,000 principal amount of Bonds
</TABLE>
---------------------
THE NUVEEN TAX-EXEMPT UNIT TRUST
SERIES 724
1. WHAT IS THE NUVEEN TAX-EXEMPT UNIT TRUST, SERIES 724?
Series 724 of the Nuveen Tax-Exempt Unit Trust is one of a series of separate
but similar investment companies created by the Sponsor, each of which is
designated by a different Series number. This Series consists of three
underlying separate unit investment trusts, combined under one trust indenture
and agreement, designated Maryland Traditional Trust 291, National Insured Trust
265 and Arizona Insured Trust 31. The various trusts are collectively referred
to herein as the "Trusts"; the trusts in which few or none of the Bonds are
insured are sometimes referred to as the "Traditional Trusts", the trusts in
which all of the Bonds are insured as described herein are sometimes referred to
as the "Insured Trusts", and the state trusts (both Traditional and Insured) are
sometimes referred to as the "State Trusts." This Series was created under the
laws of the State of New York pursuant to a Trust Indenture and Agreement dated
March 7, 1994 (the "Indenture") between John Nuveen & Co. Incorporated (the
"Sponsor") and United States Trust Company of New York (the "Trustee").
The Sponsor has deposited with the Trustee delivery statements relating to
contracts for the purchase of municipal debt obligations together with funds
represented by an irrevocable letter of credit issued by a major commercial bank
in the amount, including accrued interest, required for their purchase (or the
obligations themselves) in the principal amount of $22,000,000 (the "Bonds"),
which initially constitute the underlying securities of the Trusts. Bonds may
include fixed rate obligations with regularly scheduled interest payments, zero
coupon bonds and stripped obligations, which represent evidences of ownership
interests with respect to either a principal payment or a payment of interest on
a tax-exempt obligation ("Stripped Obligations"). See "SUMMARY OF PORTFOLIOS"
and "GENERAL TRUST INFORMATION" for a discussion of zero coupon bonds and
Stripped Obligations. The following principal amounts were deposited in each
Trust: $3,500,000 in the Maryland Traditional Trust,
5
<PAGE>
$7,500,000 in the National Insured Trust and $3,500,000 in the Arizona Insured
Trust. 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 "Schedules of Investments"
and Section 4. 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 Section 4.
Payment of interest on the Bonds in each Insured Trust, and of principal at
maturity, is guaranteed under policies of insurance obtained by the Sponsor or
by the issuers of the Bonds. (See Section 5.) AS A GENERAL MATTER, NEITHER THE
ISSUER NOR THE SPONSOR HAS OBTAINED INSURANCE WITH RESPECT TO THE BONDS IN ANY
TRADITIONAL TRUST.
The Trustee has delivered to the Sponsor registered Units for 35,000 Units
of the Maryland Traditional Trust, 75,000 Units of the National Insured Trust
and 35,000 Units of the Arizona Insured Trust, which together represent
ownership of the entire Series, and which are offered for sale by this
Prospectus. Each Unit of a Trust represents a fractional undivided interest in
the principal and net income of such Trust in the ratio of 10 Units for each
$1,000 principal value of Bonds initially deposited in such Trust. Only Units of
the National Insured Trust are offered for sale to Virginia and Washington
residents by this Prospectus.
2. WHAT ARE THE OBJECTIVES OF THE TRUSTS?
The objectives of the Trusts are income exempt from Federal income tax and, in
the case of State Trusts, where applicable, state income and intangibles taxes,
and conservation of capital, through an investment in obligations issued by or
on behalf of states and territories of the United States and authorities and
political subdivisions thereof, the interest on which is, in the opinion of
recognized bond counsel to the issuing governmental authorities, exempt from
Federal income tax under existing law. Bonds in any State Trust have been issued
primarily by or on behalf of the State for which such Trust is named and
counties, municipalities, authorities and political subdivisions thereof, the
interest on which Bonds is, in the opinion of bond counsel, exempt from Federal
and certain state income tax and intangibles taxes, if any, for purchasers who
qualify as residents of that State. Insurance guaranteeing the timely payment,
when due, of all principal and interest on the Bonds in each Insured Trust has
been obtained by the Sponsor or by the issuers of such Bonds from Municipal Bond
Investors Assurance Corporation, and as a result of such insurance the
obligations in the Insured Trusts are rated "Aaa" by Moody's Investors Service,
Inc. and "AAA" by Standard & Poor's Corporation. (SEE SECTION 5) All obligations
in each Traditional Trust are rated in the category "A" or better (SP-1 or MIG 2
or better in the case of short term obligations included in a Short Term
Traditional Trust) by Standard & Poor's Corporation or Moody's Investors
Service, Inc. (including provisional or conditional ratings). In addition,
certain Bonds in certain Traditional Trusts may be covered by insurance
guaranteeing the timely payment, when due, of all principal and interest. (SEE
SECTION 3.) The portfolios of National and State Trusts consist of long-term
(approximately 15 to 40 year maturities) obligations; those of Long Intermediate
Trusts consist of intermediate to long term (approximately 11 to 19 year
maturities) obligations; those of Intermediate Trusts consist of intermediate
term (approximately 5 to 15 year maturities) obligations; those of Short
Intermediate Trusts consist of short to intermediate term (approximately 3 to 7
year maturities) obligations; and those of Short Term Trusts consist of short
term (approximately 1 to 5 year maturities) obligations.
6
<PAGE>
There is, of course, no guarantee that the Trusts' objectives will be achieved.
For a comparison of net after-tax return for various tax brackets see the
"Taxable Equivalent Estimated Current Return Tables" included in this
Prospectus.
Each Trust consists of fixed-rate municipal debt obligations. Because of
this an investment in a Trust should be made with an understanding of the risks
which an investment in such debt obligations may entail, including the risk that
the value of the debt obligations and therefore of the Units will decline with
increases in interest rates. In general, the longer the period until the
maturity of a Bond, the more sensitive its value will be to fluctuations in
interest rates. During the past decade, there have been substantial fluctuations
in interest rates, and, accordingly, in the value of debt obligations. The
Sponsor cannot predict whether such fluctuations will recur.
3. SUMMARY OF PORTFOLIOS
In selecting Bonds for the respective Trusts, the following factors, among
others, were considered: (i) the Standard & Poor's Corporation rating of the
Bonds or the Moody's Investors Service, Inc. rating of the Bonds (see Section 2
for a description of minimum rating standards), (ii) the prices of the Bonds
relative to other bonds of comparable quality and maturity, (iii) the
diversification of Bonds as to purpose of issue and location of issuer, (iv) the
maturity dates of the Bonds, and (v) in the case of the Insured Trusts only, the
availability of Municipal Bond Investors Assurance Corporation insurance on such
Bonds.
In order for Bonds in the Insured Trusts to be eligible for Municipal Bond
Investors Assurance Corporation insurance, they must have credit characteristics
which, in the opinion of the insurer, would qualify them as "investment grade"
obligations. Insurance is not a substitute for the basic credit of an issuer,
but supplements the existing credit and provides additional security therefor.
(SEE SECTION 5.)
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. Under the Indenture, the Trustee does not have the authority to act to
retain Bonds with such features; accordingly, it will receive payment of the
full principal amount of any such Bonds on the stated put date and such date is
therefore treated as the maturity date of such Bonds in selecting Bonds for the
respective Trusts and for purposes of calculating the average maturity of the
Bonds in any Trust.
7
<PAGE>
MARYLAND TRADITIONAL TRUST 291
The Portfolio of Maryland Traditional Trust 291 consists of 8 obligations
issued by entities located in Maryland, one obligation issued by an entity
located in the District of Columbia and two obligations issued by an entity
located in the Territory of Puerto Rico. Four Bonds in the Trust are general
obligations of the governmental entities issuing them and are backed by the
taxing powers thereof. Seven Bonds in the Trust are payable as to principal and
interest from the income of a specific project or authority and are not
supported by the issuer's power to levy taxes. The sources of payment for these
Bonds are divided as follows: Bridge and Toll Road Revenue, 1; Electrical System
Revenue, 1; Health Care Facility Revenue, 3; Transportation Facility Revenue, 1;
Municipal Lease Revenue, 1. Eleven issues in the Trust were rated by Standard &
Poor's Corporation as follows: 7-- AAA, 1--AA, 1--AA-, 1--A+, 1--A. Eleven
issues were rated by Moody's Investors Service, Inc. as follows: 7--Aaa, 1--Aa1,
1--Aa, 2--A1.
At the Date of Deposit, the average maturity of the Bonds in the Maryland
Traditional Trust is 25.0 years. The average maturity of the Bonds in a Trust is
calculated based upon the stated maturities of the Bonds in such Trust (or, with
respect to Bonds for which funds or securities have been placed in escrow to
redeem such Bonds on a stated call date, based upon such call date). The average
maturity of the Bonds in a Trust may increase or decrease from time to time as
Bonds mature or are called or sold.
Approximately 51.1% of the aggregate principal amount of the Bonds in the
Trust (accounting for approximately 48.0% of the aggregate offering price of the
Bonds) are original issue discount obligations. Certain of these original issue
discount obligations, amounting to 5.9% of the aggregate principal amount and
2.3% of the aggregate offering price of the Bonds in the Trust, are "zero
coupon" bonds. See "GENERAL TRUST INFORMATION--ORIGINAL ISSUE DISCOUNT BONDS AND
STRIPPED OBLIGATIONS" for a discussion of the characteristics of such
obligations and of the risks associated therewith.
Approximately 32% of the aggregate principal amount of the Bonds in the
Trust are obligations of issuers whose revenues are primarily derived from
hospitals or other health care services. The source of payment for certain of
these Bonds, accounting for 14% of the Trust (included in the above percentage),
is insured by a commercial insurer. Consequently, the credit ratings of such
Bonds essentially reflect the strength of the insurance or guarantee and,
depending upon the actual structure of the bond issue, are typically rated "Aaa"
or "Aa" by Moody's or "AAA" or "AA" by Standard & Poor's.
For a discussion of the risks associated with investments in the bonds of
various issuers, see "General Trust Information" in this section.
The Sponsor entered into contracts to acquire the Bonds between January 6,
1994 and February 3, 1994. The following summarizes certain information about
the Bonds as of the business day prior to the Date of Deposit:
<TABLE>
<CAPTION>
Difference between Trustee's
Determination of Offering Price and
Cost to Profit (or loss) Annual Interest Bid Price the Bid Price
Sponsor to Sponsor Income to Trust of Bonds (as % of principal amount)
---------- ----------------- ---------------- ---------- -----------------------------------
<S> <C> <C> <C> <C>
$3,405,559 $14,242 $178,263 $3,403,620 .46%
</TABLE>
Neither cost to Sponsor nor profit (or loss) to Sponsor reflects
underwriting profits or losses received or incurred by the Sponsor through its
participation in underwriting syndicates. An underwriter or underwriting
syndicate purchases bonds from the issuer on
8
<PAGE>
a negotiated or competitive bid basis as principal with the motive of marketing
such bonds to investors at a profit. The Sponsor did not participate as either
the sole underwriter or as a manager or member of a syndicate that acted as the
original underwriter of any of the Bonds.
Unitholders may elect to have interest distributions made on a monthly,
quarterly or semi-annual basis. The interest on the Bonds initially deposited in
the Maryland Traditional Trust, less estimated expenses, is estimated to accrue
at the rate of $.01380 per Unit per day under the semi-annual plan of
distribution, $.01374 per Unit per day under the quarterly plan of distribution
and $.01366 per Unit per day under the monthly plan of distribution. It is
anticipated that the amount of interest to be distributed per Unit in each year
under each plan of distribution will initially be substantially equal to the
Estimated Net Annual Interest Income per Unit for that plan.
Details of interest distributions per Unit of the Maryland Traditional Trust
under the various plans appear in the following table based upon estimated Net
Annual Interest Income at the Date of Deposit:
<TABLE>
<CAPTION>
Normal
Distributions
Maryland Traditional Trust 1994 per Year
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------ --------------
Record Date*.......................... 4/1 5/1 8/1 11/1
Distribution Date..................... 4/15 5/15 8/15 11/15
- ----------------------------------------------------------------------------------------------------------------
Monthly Distribution Plan............. $ .2052(1) $ 4.9221
-------- $.4101 every month --------
Quarterly Distribution Plan........... $ .2052(1) $ .4128(2) $ 1.2385 $ 1.2385 $ 4.9541
Semi-Annual Distribution Plan......... $ .2052(1) $ .4144(3) $ 2.4865 $ 4.9731
- ----------------------------------------------------------------------------------------------------------------
<FN>
* Record Dates for semi-annual distributions are May 1 and November 1; for quarterly distributions, they are February 1, May 1,
August 1 and November 1. Record Dates for monthly distributions are the first day of each month.
(1) The first distribution will be paid to all Unitholders, regardless of the distribution plan selected. Such distribution may
be more or less than a regular monthly distribution.
(2) The second distribution under the quarterly distribution plan represents a 1-month distribution; subsequent quarterly
distributions will be regular 3-month distributions.
(3) The second distribution under the semi-annual distribution plan represents a 1-month distribution; subsequent semi-annual
distributions will be regular 6-month distributions.
</TABLE>
The accrual amounts set forth above, and in turn 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.
TAX STATUS--MARYLAND TRADITIONAL TRUST
For a discussion of the Federal tax status of income earned on Maryland
Traditional Trust Units, see Section 11.
The assets of the Maryland Traditional Trust will consist of
interest-bearing obligations issued by or on behalf of the State of Maryland,
its political subdivisions and authorities and, provided the interest thereon is
exempt from State income taxes by the laws or treaties of the United States,
obligations issued by or on behalf of the United States' territories or
possessions, including Puerto Rico, Guam and the Virgin Islands, their political
subdivisions and authorities (the "Maryland Bonds").
9
<PAGE>
In the opinion of Venable, Baetjer and Howard, special counsel for the
Series for Maryland tax matters, under existing law:
For Maryland state and local income tax purposes, the Maryland
Traditional Trust will not be taxable as an association, and the income of
the Maryland Traditional Trust will be treated as the income of the
Unitholders.
For Maryland state and local tax purposes, interest on the Maryland
Bonds which is exempt from Maryland state and local income tax when received
by the Maryland Traditional Trust, and which would be exempt from Maryland
state and local income tax if received directly by a Unitholder, will retain
its status as tax-exempt interest when received by the Maryland Traditional
Trust and distributed to the Unitholders.
Interest derived from the Maryland Traditional Trust by a Unitholder
with respect to the Maryland Bonds will not be subject to Maryland state or
local income taxes; provided that interest or profit derived from the
Maryland Traditional Trust by a financial institution, as defined in Section
8-101(c) of the Tax-General Article of the Annotated Code of Maryland, will
be subject to the Maryland state franchise tax on financial institutions,
except to the extent such interest is expressly exempt from the Maryland
state franchise tax by the statutes which authorize the issuance of such
Maryland Bonds (See Section 8-204 of the Tax General Article of the
Annotated Code of Maryland).
A Unitholder will not be subject to Maryland state or local income tax
with respect to gain realized when Maryland Bonds held in the Maryland
Traditional Trust are sold, redeemed, or paid at maturity, except with
respect to gain realized upon a sale, redemption or payment at maturity of
such Maryland Bonds as are issued by or on behalf of United States
territories or possessions, their political subdivisions and authorities;
such gain will equal the proceeds of sale, redemption or payment, less the
tax basis of the Maryland Bonds (adjusted to reflect (a) the amortization of
Bond premium or discount, and (b) the deposit in the Maryland Traditional
Trust after the Unitholder's settlement date of Maryland Bonds with accrued
interest).
Although the matter is not free from doubt, gain realized by a
Unitholder from the redemption, sale or other disposition of a Maryland
Traditional Trust Unit (i) will be subject to Maryland state income tax
except in the case of individual Unitholders who are not Maryland residents,
and (ii) will be subject to Maryland local income tax in the case of
individual Unitholders who are Maryland residents.
If interest on indebtedness incurred or continued by a Unitholder to
purchase Units in the Maryland Traditional Trust is not deductible for
Federal income tax purposes, it will also be nondeductible for Maryland
state income tax purposes and, if applicable, local income tax purposes.
Maryland Traditional Trust Units will be subject to Maryland inheritance
and estate tax only if held by Maryland residents. Neither the Maryland
Bonds nor the Maryland Traditional Trust Units will be subject to Maryland
personal property tax, sales tax or use tax.
ECONOMIC FACTORS--MARYLAND
Some of the significant financial considerations relating to the investments
of the Maryland Traditional Trust are summarized below. This information is
derived principally from official statements and preliminary official statements
released on or before May 13,
10
<PAGE>
1992, relating to issues of Maryland obligations and does not purport to be a
complete description.
The State's total expenditures for the fiscal years ending June 30, 1990,
June 30, 1991 and June 30, 1992 were $11.019, $11.304 and $11.657 billion,
respectively. As of January 13, 1993, it was estimated that total expenditures
for fiscal 1993 would be $11.897 billion. The State's General Fund, representing
approximately 55%-60% of each year's total budget, had a surplus on a budgetary
basis of $57 million in fiscal year 1990, $55 thousand in fiscal year 1991, and
a deficit of $56 million in fiscal 1992. The Governor of Maryland reduced fiscal
1993 appropriations by $56 million to offset the fiscal 1992 deficit. The State
Constitution mandates a balanced budget.
The 1993 fiscal year budget was enacted in April 1992 which, together with
legislation enacted in 1992, involved the transfer of certain funds, new fees
and taxes, and alteration of certain statutory State expenditure programs. When
the 1993 budget was enacted, it was estimated that the General Fund surplus at
June 30, 1993 would be approximately $10 million on a budgetary basis. During
the final months of fiscal year 1992 and the initial months of fiscal year 1993,
collections of State revenues were below the levels estimated at the time of the
adoption of the 1993 budget. The Governor proposed a cost containment plan to
address this revenue shortfall and to provide reserves to finance potential
deficiency appropriations. On September 30, 1992, the Board of Public Works
approved the Governor's proposal to reduce General Fund appropriations by $168
million. The Board of Public Works also approved the Governor's proposal to
reduce the special fund appropriations for the Department of Transportation by
$30 million. Legislation was introduced at the 1993 session of the General
Assembly to transfer this $30 million to the General Fund, as well as $10
million from various other special funds. In a special session held in November,
1992, the General Assembly enacted legislation reducing State aid to local
governments by $147 million. In addition, other elements of the governor's
original cost containment plan are in the process of being implemented or
revised.
The public indebtedness of Maryland and its instrumentalities is divided
into three basic types. The State issues general obligation bonds, to the
payment of which the State ad valorem property tax is exclusively pledged, for
capital improvements and for various State-sponsored projects. The Department of
Transportation of Maryland issues limited, special obligation bonds for
transportation purposes payable primarily from specific, fixed-rate excise taxes
and other revenues related mainly to highway use. Certain authorities issue
obligations payable solely from specific non-tax enterprise fund revenues and
for which the State has no liability and has given no moral obligation
assurance.
According to the most recent available ratings, general obligation bonds of
the State of Maryland are rated "Aaa" by Moody's and "AAA" by Standard & Poor's
Corporation, as are those of Baltimore County, a separate political entity
surrounding Baltimore City. General obligation bonds of Montgomery County,
located in the suburbs of Washington, D.C., are rated "Aaa" by Moody's and "AAA"
by Standard & Poor's Corporation. General obligation bonds of Prince George's
County, the second largest metropolitan county, which is also in the suburbs of
Washington, D.C., are rated "A1" by Moody's and "AA-" by Standard & Poor's
Corporation. The general obligation bonds of those other counties of the State
that are rated by Moody's carry an "A" rating or better except for those of
Allegany County, which are rated "Baa". The most populous municipality in
Maryland is Baltimore City, the general
11
<PAGE>
obligaton bonds of which are rated "A1" by Moody's and "A" by Standard & Poor's
Corporation. The majority of Maryland Health and Higher Education Authority and
State Department of Transportation revenue bond issues have received an "A"
rating or better from Moody's.
While the ratings and other factors mentioned above indicate that Maryland
and its principal subdivisions and agencies are addressing the effects of the
economic recession and, overall, are in satisfactory economic health, there can,
of course, be no assurance that this will continue or that particular bond
issues may not be adversely affected by changes in state or local economic or
political conditions.
MARYLAND TAXABLE ESTIMATED CURRENT RETURN TABLE
The following tables show the approximate taxable estimated current returns
for individuals that are equivalent to tax-exempt estimated current returns
under combined Federal and state taxes, using published 1994 marginal Federal
tax rates and marginal state tax rates currently available and scheduled to be
in effect*. The tables incorporate increased tax rates for higher-income
taxpayers that were included in the Revenue Reconciliation Act of 1993. Except
as indicated below, for cases in which more than one state bracket falls within
a Federal bracket, the highest state bracket is combined with the Federal
bracket. The combined state and Federal tax brackets shown reflect the fact that
state tax payments are currently deductible for Federal tax purposes. The tables
illustrate what you would have to earn on taxable investments to equal the
tax-exempt estimated current return for your income tax bracket. A taxpayer's
marginal tax rate is affected by both his taxable income and his adjusted gross
income. Locate your adjusted gross and your taxable income (which is your
adjusted gross income reduced by any deductions and exemptions), then locate
your tax bracket based on joint or single tax filing. Read across to the
equivalent taxable estimated current return you would need to match the tax-free
income.
12
<PAGE>
COMBINED MARGINAL TAX RATES FOR JOINT TAXPAYERS WITH FOUR PERSONAL EXEMPTIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Federal
Adjusted Combined
Taxable Gross State* and Tax-Exempt 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- 38.0 $ 0-111.8 21.5 % 5.10 5.41 5.73 6.05 6.37 6.69 7.01 7.32
38.0- 91.9 0-111.8 33.5 6.02 6.39 6.77 7.14 7.52 7.89 8.27 8.65
111.8-167.7 34.0 6.06 6.44 6.82 7.20 7.58 7.95 8.33 8.71
91.9-140.0 0-111.8 36.0 6.25 6.64 7.03 7.42 7.81 8.20 8.59 8.98
111.8-167.7 37.0 6.35 6.75 7.14 7.54 7.94 8.33 8.73 9.13
167.7-290.2 39.5 6.61 7.02 7.44 7.85 8.26 8.68 9.09 9.50
140.0-150.0 111.8-167.7 42.0 6.90 7.33 7.76 8.19 8.62 9.05 9.48 9.91
167.7-290.2 44.5 7.21 7.66 8.11 8.56 9.01 9.46 9.91 10.36
150.0-250.0 111.8-167.7 42.5 6.96 7.39 7.83 8.26 8.70 9.13 9.57 10.00
167.7-290.2 45.5 7.34 7.80 8.26 8.72 9.17 9.63 10.09 10.55
Over 290.2 42.5 2 6.96 7.39 7.83 8.26 8.70 9.13 9.57 10.00
Over 250.0 167.7-290.2 49.0 7.84 8.33 8.82 9.31 9.80 10.29 10.78 11.27
Over 290.2 46.0 3 7.41 7.87 8.33 8.80 9.26 9.72 10.19 10.65
COMBINED MARGINAL TAX RATES FOR SINGLE TAXPAYERS WITH ONE PERSONAL EXEMPTION
-----------------------------------------------------------------------------------------------------------
<CAPTION>
Federal
Adjusted Combined
Taxable Gross State* and Tax-Exempt 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- 22.8 $ 0-111.8 21.5 5.10 5.41 5.73 6.05 6.37 6.69 7.01 7.32
22.8- 55.1 0-111.8 33.5 6.02 6.39 6.77 7.14 7.52 7.89 8.27 8.65
55.1-100.0 0-111.8 36.0 6.25 6.64 7.03 7.42 7.81 8.20 8.59 8.98
111.8-234.3 37.5 6.40 6.80 7.20 7.60 8.00 8.40 8.80 9.20
100.0-115.0 111.8-234.3 38.5 6.50 6.91 7.32 7.72 8.13 8.54 8.94 9.35
115.0-250.0 111.8-234.3 43.5 7.08 7.52 7.96 8.41 8.85 9.29 9.73 10.18
Over 234.3 42.5 2 6.96 7.39 7.83 8.26 8.70 9.13 9.57 10.00
Over 250.0 Over 234.3 46.0 3 7.41 7.87 8.33 8.80 9.26 9.72 10.19 10.65
</TABLE>
- ------------------
* These tables approximate the effect of the exemption of distributions of
tax-exempt income from the Maryland Trust from county taxes, assuming a rate
equal to 50% of the applicable Maryland state income tax rate. In general,
Maryland local income taxes imposed by various counties are equal to
approximately 50% of the state income tax liability, although Worcester County
currently imposes an income tax equal to 30% of the state income tax liability.
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 Federal tax
rate to approximately 44.0 percent for taxpayers filing a joint return and
entitled to four personal exemptions and to approximately 41.0 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 comparison of tax-free and equivalent taxable estimated current returns
with the returns on various taxable investments is one element to consider in
making an investment decision. The Sponsor may from time to time in its
advertising and sales materials compare the then current estimated returns on
the Trust and returns over specified periods on other similar Nuveen Trusts with
returns on taxable investments such as corporate or U.S. Government bonds, bank
CD's and money market accounts or money market funds, each of which has
investment characteristics that may differ from those of the Trust. U.S.
Government bonds, for example, are backed by the full faith and credit of the
U.S. Government and bank CD's and money market accounts are insured by an agency
of the federal government. Money market accounts and money market funds provide
stability of principal, but pay interest at rates that vary with the condition
of the short-term debt market. The investment characteristics of the Trust are
described more fully elsewhere in this Prospectus.
13
<PAGE>
Nuveen Tax-Exempt Unit Trust
Schedule of Investments at Date of Deposit
March 7, 1994
MARYLAND TRADITIONAL TRUST 291
(Series 724)
<TABLE>
<CAPTION>
Ratings(3) Trustee's
Optional --------------------- Determination
Aggregate Name of Issuer and Title of Issue Represented Redemption Standard of Offering
Principal by Sponsor's Contracts to Purchase Bonds(1) Provisions(2) & Poor's Moody's Price(4)
<C> <C> <S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
$ 525,000 Washington Metropolitan Area Transit Authority 2004 at 102 AAA Aaa $ 527,625
(District of Columbia), Gross Revenue Transit
Refunding Bonds, Series 1993, 5.25% Due
7/1/14. (FGIC Insured.)
105,000 Maryland Health and Higher Educational No Optional Call AA- Aa 38,043
Facilities Authority, Revenue Bonds, The
Johns Hopkins Hospital Issue, Series 1990,
0.00% Due 7/1/13. (Original issue discount
bonds delivered on or about June 7, 1990 at a
price of 19.13% of principal amount.)
500,000 Maryland Health and Higher Educational 2003 at 100 AAA Aaa 493,750
Facilities Authority, Project and Refunding
Revenue Bonds, Sinai Hospital of Baltimore
Issue, Series 1993, 5.25% Due 7/1/23.
(Original issue discount bonds delivered on
or about June 29, 1993 at a price of 92.89%
of principal amount.)(AMBAC Insured.)
525,000 Maryland Health and Higher Educational 2003 at 102 A A1 508,085
Facilities Authority, Refunding Revenue
Bonds, Suburban Hospital Issue, Series 1993,
5.125% Due 7/1/21. (Original issue discount
bonds delivered on or about October 14, 1993
at a price of 94.689% of principal amount.)
100,000 Maryland Transportation Authority, No Optional Call AAA Aaa 41,263
Transportation Facilities Projects, Revenue
Bonds, Series 1992, 0.00% Due 7/1/11.
(Original issue discount bonds delivered on
or about September 9, 1992 at a price of
30.965% of principal amount.)(FGIC Insured.)
525,000 Industrial Development Authority of Prince 2003 at 102 AAA Aaa 526,313
George's County, Maryland, Refunding Lease
Revenue Bonds (Upper Marlboro Justice Center
Project), Series 1993, 5.25% Due 6/30/19.
(Original issue discount bonds delivered on
or about February 25, 1993 at a price of
91.667% of principal amount.)(MBIA Insured.)
120,000 Prince George's County, Maryland, General 2004 at 102 AAA Aaa 118,585
Obligation Consolidated Public Improvement
Bonds, Series 1994, 5.00% Due 3/15/12. (MBIA
Insured.)
500,000 Prince George's County, Maryland, Pollution 2002 at 102 A+ A1 536,405
Control Revenue Refunding Bonds (Potomac
Electric Project), 1992 Series, 6.00% Due
9/1/22.
120,000 Washington Suburban Sanitary District, 2004 at 102 AA Aa1 118,441
Maryland, General Construction Refunding
Bonds of 1994, 5.00% Due 6/1/15. (General
Obligation Bonds.) (When issued.)
35,000 Commonwealth of Puerto Rico, Public Improvement 2003 at 101 1/2 AAA Aaa 35,448
Refunding Bonds, Series 1993 (General
Obligation Bonds.), 5.25% Due 7/1/18.
(Original issue discount bonds delivered on
or about July 15, 1993 at a price of 93.414%
of principal amount.)(MBIA Insured.)
445,000 * Commonwealth of Puerto Rico, Public Improvement 2002 at 101 1/2 AAA Aaa 475,843
Bonds of 1993 (General Obligation Bonds.),
5.875% Due 7/1/18. (AMBAC Insured.)
- ----------- ---------------
$ 3,500,000 $ 3,419,801
- ----------- ---------------
- ----------- ---------------
</TABLE>
See Notes to Schedules of Investments, page 27.
* These Bonds, or a portion thereof, have delivery dates beyond the normal
settlement date. Their expected delivery date is February 14, 1994. Contracts
relating to Bonds with delivery dates after the date of settlement for
purchase made on the Date of Deposit constitute approximately 13% of the
aggregate principal amount of the Trust. (See Section 4.)
14
<PAGE>
NATIONAL INSURED TRUST 265
The Portfolio of National Insured Trust 265 consists of 13 long term
(approximately 15 to 40 year maturities) obligations issued by entities located
in 10 states. Thirteen Bonds in the Trust are payable as to principal and
interest from the income of a specific project or authority and are not
supported by the issuer's power to levy taxes. The sources of payment for these
Bonds are divided as follows: Dedicated-Tax Supported Revenue, 2; College and
University Revenue, 1; Electrical System Revenue, 3; Health Care Facility
Revenue, 4; Resource Recovery Revenue, 1; Combination Utility Revenue, 1;
Municipal Lease Revenue, 1. All of the Bonds in the Trust, as insured, are rated
AAA by Standard & Poor's Corporation and Aaa by Moody's Investors Service, Inc.
Twenty-four percent of the principal amount of Bonds in the Trust consists of
issues of entities located in the State of Illinois; such concentration may
involve more risk than if such Bonds were issued by issuers located in several
states.
At the Date of Deposit, the average maturity of the Bonds in the National
Insured Trust is 25.8 years. The average maturity of the Bonds in a Trust is
calculated based upon the stated maturities of the Bonds in such Trust (or, with
respect to Bonds for which funds or securities have been placed in escrow to
redeem such Bonds on a stated call date, based upon such call date). The average
maturity of the Bonds in a Trust may increase or decrease from time to time as
Bonds mature or are called or sold.
Approximately 26.7% of the aggregate principal amount of the Bonds in the
Trust (accounting for approximately 25.8% of the aggregate offering price of the
Bonds) are original issue discount bonds. See "GENERAL TRUST
INFORMATION--ORIGINAL ISSUE DISCOUNT BONDS AND STRIPPED OBLIGATIONS" for a
discussion of the characteristics of such bonds and of the risks associated
therewith.
Approximately 25% of the aggregate principal amount of the Bonds in the
Trust consists of obligations of issuers whose revenues are primarily derived
from the sale of electric energy.
Approximately 36% of the aggregate principal amount of the Bonds in the
Trust consists of obligations of issuers whose revenues are primarily derived
from services provided by hospitals or other health care facilities.
For a discussion of the risks associated with investments in the bonds of
various issuers, see "General Trust Information" in this section.
The Sponsor entered into contracts to acquire the Bonds between February 28,
1994 and March 3, 1994. The following summarizes certain information about the
Bonds as of the business day prior to the Date of Deposit:
<TABLE>
<CAPTION>
Difference between Trustee's
Determination of Offering Price and
Cost to Profit (or loss) Annual Interest Bid Price the Bid Price
Sponsor to Sponsor Income to Trust of Bonds (as % of principal amount)
---------- ----------------- ---------------- ---------- -----------------------------------
<S> <C> <C> <C> <C>
$7,301,035 $22,077 $434,859 $7,287,487 .48%
</TABLE>
Neither cost to Sponsor nor profit (or loss) to Sponsor reflects
underwriting profits or losses received or incurred by the Sponsor through its
participation in underwriting syndicates. An underwriter or underwriting
syndicate purchases bonds from the issuer on a negotiated or competitive bid
basis as principal with the motive of marketing such bonds to investors at a
profit. The Sponsor participated as either the sole underwriter or manager or as
a member of the syndicates which were the original underwriters of 28.7% of the
aggregate principal amount of the Bonds.
15
<PAGE>
Unitholders may elect to have interest distributions made on a monthly,
quarterly or semi-annual basis. The interest on the Bonds initially deposited in
the National Insured Trust, less estimated expenses, is estimated to accrue at
the rate of $.01565 per Unit per day under the semi-annual plan of distribution,
$.01560 per Unit per day under the quarterly plan of distribution and $.01551
per Unit per day under the monthly plan of distribution. It is anticipated that
the amount of interest to be distributed per Unit in each year under each plan
of distribution will initially be substantially equal to the Estimated Net
Annual Interest Income per Unit for that plan.
Details of interest distributions per Unit of the National Insured Trust
under the various plans appear in the following table based upon estimated Net
Annual Interest Income at the Date of Deposit:
<TABLE>
<CAPTION>
Normal
Distributions
National Insured Trust 1994 1995 per Year
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------- --------------
Record Date*.......................... 6/1 8/1 11/1 2/1 5/1
Distribution Date..................... 6/15 8/15 11/15 2/15 5/15
- ---------------------------------------------------------------------------------------------------------------------------------
Monthly Distribution Plan............. $ .4698(1) $ 5.6383
-------- $.4698 every month --------
Quarterly Distribution Plan........... $ .4698(1) $ .9450(2) $ 1.4175 $ 1.4175 $ 1.4175 $ 5.6703
Semi-Annual Distribution Plan......... $ .4698(1) $ 2.3705(3) $ 2.8446 $ 5.6893
- ---------------------------------------------------------------------------------------------------------------------------------
<FN>
* Record Dates for semi-annual distributions are May 1 and November 1; for quarterly distributions, they are February 1, May 1,
August 1 and November 1. Record Dates for monthly distributions are the first day of each month.
(1) The first distribution will be paid to all Unitholders, regardless of the distribution plan selected. Such distribution may
be more or less than a regular monthly distribution.
(2) The second distribution under the quarterly distribution plan represents a 2-month distribution; subsequent quarterly
distributions will be regular 3-month distributions.
(3) The second distribution under the semi-annual distribution plan represents a 5-month distribution; subsequent semi-annual
distributions will be regular 6-month distributions.
</TABLE>
The accrual amounts set forth above, and in turn 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.
TAX STATUS--NATIONAL INSURED TRUST
For a discussion of the tax status of income earned on National Insured
Trust Units, see Section 11.
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 1994 marginal Federal tax rates. The tables incorporate
increased tax rates for higher-income tax payers that were included in the
Revenue Reconciliation Act of 1993. 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.
16
<PAGE>
MARGINAL FEDERAL TAX RATES FOR JOINT TAXPAYERS WITH FOUR PERSONAL EXEMPTIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Federal
Federal Adjusted
Taxable Gross Tax-Exempt Estimated Current Return
Income Income Federal --------------------------------------------------------------
(1,000's) (1,000's) Tax Rate1 4.50% 4.75% 5.00% 5.25% 5.50% 5.75% 6.00% 6.25%
------------- ------------- ----------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 38.0 $ 0-111.8 15.0 % 5.29 5.59 5.88 6.18 6.47 6.76 7.06 7.35
38.0- 91.9 0-111.8 28.0 6.25 6.60 6.94 7.29 7.64 7.99 8.33 8.68
111.8-167.7 29.0 6.34 6.69 7.04 7.39 7.75 8.10 8.45 8.80
91.9-140.0 0-111.8 31.0 6.52 6.88 7.25 7.61 7.97 8.33 8.70 9.06
111.8-167.7 32.0 6.62 6.99 7.35 7.72 8.09 8.46 8.82 9.19
167.7-290.2 34.5 6.87 7.25 7.63 8.02 8.40 8.78 9.16 9.54
140.0-250.0 111.8-167.7 37.0 7.14 7.54 7.94 8.33 8.73 9.13 9.52 9.92
167.7-290.2 40.0 7.50 7.92 8.33 8.75 9.17 9.58 10.00 10.42
Over 290.2 37.0 2 7.14 7.54 7.94 8.33 8.73 9.13 9.52 9.92
Over 250.0 167.7-290.2 44.0 8.04 8.48 8.93 9.38 9.82 10.27 10.71 11.16
Over 290.2 41.0 3 7.63 8.05 8.47 8.90 9.32 9.75 10.17 10.59
</TABLE>
MARGINAL FEDERAL TAX RATES FOR SINGLE TAXPAYERS WITH ONE PERSONAL EXEMPTION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Federal
Federal Adjusted
Taxable Gross Tax-Exempt Estimated Current Return
Income Income Federal --------------------------------------------------------------
(1,000's) (1,000's) Tax Rate1 4.50% 4.75% 5.00% 5.25% 5.50% 5.75% 6.00% 6.25%
------------- ------------- ----------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 22.8 $ 0-111.8 15.0 % 5.29 5.59 5.88 6.18 6.47 6.76 7.06 7.35
22.8- 55.1 0-111.8 28.0 6.25 6.60 6.94 7.29 7.64 7.99 8.33 8.68
55.1-115.0 0-111.8 31.0 6.52 6.88 7.25 7.61 7.97 8.33 8.70 9.06
111.8-234.3 32.5 6.67 7.04 7.41 7.78 8.15 8.52 8.89 9.26
115.0-250.0 111.8-234.3 38.0 7.26 7.66 8.06 8.47 8.87 9.27 9.68 10.08
Over 234.3 37.0 2 7.14 7.54 7.94 8.33 8.73 9.13 9.52 9.92
Over 250.0 Over 234.3 41.0 3 7.63 8.05 8.47 8.90 9.32 9.75 10.17 10.59
<FN>
- ------------------
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 Federal tax rate to approximately 44.0 percent for taxpayers filing a joint return and entitled to
four personal exemptions and to approximately 41.0 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.
</TABLE>
A comparison of tax-free and equivalent taxable estimated current returns
with the returns on various taxable investments is one element to consider in
making an investment decision. The Sponsor may from time to time in its
advertising and sales materials compare the then current estimated returns on
the Trust and returns over specified periods on other similar Nuveen Trusts with
returns on taxable investments such as corporate or U.S. Government bonds, bank
CD's and money market accounts or money market funds, each of which has
investment characteristics that may differ from those of the Trust. U.S.
Government bonds, for example, are backed by the full faith and credit of the
U.S. Government and bank CD's and money market accounts are insured by an agency
of the federal government. Money market accounts and money market funds provide
stability of principal, but pay interest at rates that vary with the condition
of the short-term debt market. The investment characteristics of the Trust are
described more fully elsewhere in this Prospectus.
17
<PAGE>
Nuveen Tax-Exempt Unit Trust
Schedule of Investments at Date of Deposit
March 7, 1994
NATIONAL INSURED TRUST 265
(Series 724)
<TABLE>
<CAPTION>
Ratings(3) Trustee's
Optional --------------------- Determination
Aggregate Name of Issuer and Title of Issue Represented Redemption Standard of Offering
Principal by Sponsor's Contracts to Purchase Bonds(1) Provisions(2) & Poor's Moody's Price(4)
<C> <C> <S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
$ 750,000 * Broward County, Florida, Certificates of 2004 at 102 AAA Aaa $ 715,680
Participation, Series 1994A, 5.50% Due
6/1/13. (Original issue discount bonds will
be delivered on or about March 23, 1994 at a
price of 94.882% of principal amount.)(When
issued.)
550,000 Orlando (Florida) Utilities Commission, Water 2002 at 102 AAA Aaa 556,408
and Electric Subordinated Revenue Bonds,
Series 1992A, 6.00% Due 10/1/20.
1,000,000 * Illinois Health Facilities Authority, Revenue 2004 at 102 AAA Aaa 980,460
Bonds, Series 1994 (Southern Illinois
Hospital Services), 5.90% Due 3/1/20. (When
issued.)
400,000 Metropolitan Pier and Exposition Authority 2003 at 102 AAA Aaa 419,520
(Illinois), McCormick Place Expansion Project
Bonds, Series 1992A, 6.50% Due 6/15/27.
400,000 * Solid Waste Agency of Northern Cook County 2003 at 100 AAA Aaa 376,172
(Illinois), Contract Revenue Bonds, Series
1994, 5.50% Due 5/1/15. (When issued.)
750,000 Massachusetts Health and Educational Facilities 2003 at 102 AAA Aaa 695,325
Authority, Revenue Bonds, Lahey Clinic
Medical Center Issue, Series B, 5.375% Due
7/1/23. (Original issue discount bonds
delivered on or about April 27, 1993 at a
price of 94.511% of principal amount.)
305,000 North Carolina Municipal Power Agency Number 1, 2003 at 100 AAA Aaa 303,475
Catawba Electric Revenue Bonds, Series 1992,
5.75% Due 1/1/20. (Original issue discount
bonds delivered on or about December 10, 1992
at a price of 92.75% of principal amount.)
115,000 State of Ohio (Ohio Higher Educational Facility 2003 at 102 AAA Aaa 109,555
Commission), Higher Educational Facility
Revenue Bonds (Kenyon College Project),
5.375% Due 12/1/16.
750,000 Pennsylvania Intergovernmental Cooperation 2003 at 100 AAA Aaa 716,310
Authority, Special Tax Revenue Bonds (City of
Philadelphia Funding Program), Series of
1993, 5.625% Due 6/15/23.
780,000 Piedmont Municipal Power Agency (South 2003 at 102 AAA Aaa 798,346
Carolina), Electric Revenue Bonds, 1992
Refunding Series, 6.30% Due 1/1/22.
750,000 North Central Texas Health Facilities 2003 at 100 AAA Aaa 751,875
Development Corporation, Hospital Revenue
Refunding Bonds (Children's Medical Center of
Dallas Project), Series 1993, 6.00% Due
8/15/16.
</TABLE>
18
<PAGE>
NATIONAL INSURED TRUST 265 (Continued)
<TABLE>
<CAPTION>
Ratings(3) Trustee's
Optional --------------------- Determination
Aggregate Name of Issuer and Title of Issue Represented Redemption Standard of Offering
Principal by Sponsor's Contracts to Purchase Bonds(1) Provisions(2) & Poor's Moody's Price(4)
- ---------------------------------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C> <C> <C>
$ $
750,000 Washington Public Power Supply System, Nuclear 2003 at 102 AAA Aaa 721,868
Project No. 1 Refunding Revenue Bonds, Series
1993A, 5.70% Due 7/1/17.
200,000 Wisconsin Health and Educational Facilities 2003 at 102 AAA Aaa 178,118
Authority Revenue Bonds, Series 1993 (Aurora
Health Care Obligated Group), 5.25% Due
8/15/23. (Original issue discount bonds
delivered on or about December 8, 1993 at a
price of 92.911% of principal amount.)
- ----------- ---------------
$ 7,500,000 $ 7,323,112
- ----------- ---------------
- ----------- ---------------
</TABLE>
See Notes to Schedules of Investments, page 27.
* These Bonds, or a portion thereof, have delivery dates beyond the normal
settlement date. Their expected delivery dates range from March 22, 1994 to
March 24, 1994. Contracts relating to Bonds with delivery dates after the date
of settlement for purchase made on the Date of Deposit constitute
approximately 29% of the aggregate principal amount of the Trust. (See Section
4.)
19
<PAGE>
ARIZONA INSURED TRUST 31
The Portfolio of Arizona Insured Trust 31 consists of 7 obligations issued
by entities located in Arizona and one obligation issued by an entity located in
the Territory of Puerto Rico. One Bond in the Trust is a general obligation of
the governmental entity issuing it and is backed by the taxing power thereof.
Seven Bonds in the Trust are payable as to principal and interest from the
income of a specific project or authority and are not supported by the issuer's
power to levy taxes. The sources of payment for these Bonds are divided as
follows: Dedicated-Tax Supported Revenue, 2; Electrical System Revenue, 1;
Health Care Facility Revenue, 2; Water and/or Sewer Revenue, 2. All of the Bonds
in the Trust, as insured, are rated AAA by Standard & Poor's Corporation and Aaa
by Moody's Investors Service, Inc.
At the Date of Deposit, the average maturity of the Bonds in the Arizona
Insured Trust is 24.2 years. The average maturity of the Bonds in a Trust is
calculated based upon the stated maturities of the Bonds in such Trust (or, with
respect to Bonds for which funds or securities have been placed in escrow to
redeem such Bonds on a stated call date, based upon such call date). The average
maturity of the Bonds in a Trust may increase or decrease from time to time as
Bonds mature or are called or sold.
Approximately 33.6% of the aggregate principal amount of the Bonds in the
Trust (accounting for approximately 31.5% of the aggregate offering price of the
Bonds) are original issue discount obligations. Certain of these original issue
discount obligations, amounting to 4.3% of the aggregate principal amount and
1.7% of the aggregate offering price of the Bonds in the Trust, are "zero
coupon" bonds. See "GENERAL TRUST INFORMATION--ORIGINAL ISSUE DISCOUNT BONDS AND
STRIPPED OBLIGATIONS" for a discussion of the characteristics of such
obligations and of the risks associated therewith.
Approximately 21% of the aggregate principal amount of the Bonds in the
Trust consists of obligations of issuers whose revenues are primarily derived
from the sale of water and/or sewerage services.
Approximately 30% of the aggregate principal amount of the Bonds in the
Trust consists of obligations of issuers whose revenues are primarily derived
from services provided by hospitals or other health care facilities.
For a discussion of the risks associated with investments in the bonds of
various issuers, see "General Trust Information" in this section.
The Sponsor entered into contracts to acquire the Bonds between February 1,
1994 and February 2, 1994. The following summarizes certain information about
the Bonds as of the business day prior to the Date of Deposit:
<TABLE>
<CAPTION>
Difference between Trustee's
Determination of Offering Price and
Cost to Profit (or loss) Annual Interest Bid Price the Bid Price
Sponsor to Sponsor Income to Trust of Bonds (as % of principal amount)
---------- ----------------- ---------------- ---------- -----------------------------------
<S> <C> <C> <C> <C>
$3,390,741 $13,946 $174,394 $3,388,499 .46%
</TABLE>
Neither cost to Sponsor nor profit (or loss) to Sponsor reflects
underwriting profits or losses received or incurred by the Sponsor through its
participation in underwriting syndicates. An underwriter or underwriting
syndicate purchases bonds from the issuer on a negotiated or competitive bid
basis as principal with the motive of marketing such bonds to investors at a
profit. The Sponsor did not participate as either the sole underwriter or as a
manager or member of a syndicate that acted as the original underwriter of any
of the Bonds.
Unitholders may elect to have interest distributions made on a monthly,
quarterly or semi-annual basis. The interest on the Bonds initially deposited in
the Arizona Insured Trust, less estimated expenses, is estimated to accrue at
the rate of $.01347 per Unit per day under the semi-annual plan of distribution,
$.01342 per Unit per day under the quarterly plan of distribution and $.01333
per Unit per day under the monthly plan of distribution. It is anticipated that
the amount of interest to be distributed per Unit in each
20
<PAGE>
year under each plan of distribution will initially be substantially equal to
the Estimated Net Annual Interest Income per Unit for that plan.
Details of interest distributions per Unit of the Arizona Insured Trust
under the various plans appear in the following table based upon estimated Net
Annual Interest Income at the Date of Deposit:
<TABLE>
<CAPTION>
Normal
Distributions
Arizona Insured Trust 1994 1995 per Year
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------- --------------
Record Date*.......................... 5/1 8/1 11/1 2/1
Distribution Date..................... 5/15 8/15 11/15 2/15
- --------------------------------------------------------------------------------------------------------------------
Monthly Distribution Plan............. $ .4006(1) $ 4.8076
-------- $.4006 every month --------
Quarterly Distribution Plan........... $ .4006(1) $ 1.2099(2) $ 1.2099 $ 1.2099 $ 4.8396
Semi-Annual Distribution Plan......... $ .4006(1) $ 2.4293(3) $ 4.8586
- --------------------------------------------------------------------------------------------------------------------
<FN>
* Record Dates for semi-annual distributions are May 1 and November 1; for quarterly distributions, they are February 1, May 1,
August 1 and November 1. Record Dates for monthly distributions are the first day of each month.
(1) The first distribution will be paid to all Unitholders, regardless of the distribution plan selected. Such distribution may
be more or less than a regular monthly distribution.
(2) Regular 3-month distribution.
(3) Regular 6-month distribution.
</TABLE>
The accrual amounts set forth above, and in turn 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.
TAX STATUS--ARIZONA INSURED TRUST
For a discussion of the Federal tax status of income earned on Arizona
Insured Trust Units, see Section 11.
The assets of the Trust will consist of interest-bearing obligations issued
by or on behalf of the State of Arizona (the "State"), its political
subdivisions and authorities (the "Arizona Bonds"), and by or on behalf of the
government of Puerto Rico, the government of Guam, or the government of the
Virgin Islands (collectively the "Possession Bonds") (collectively the Arizona
Bonds and Possession Bonds shall be referred to herein as the "Bonds"), provided
the interest on such Bonds is exempt from State income taxes.
In the opinion of Chapman and Cutler counsel to the Sponsor, under existing
law:
For Arizona income tax purposes, each Unitholder will be treated as the
owner of a pro rata portion of the Arizona Insured Trust, and the income of
the Trust therefore will be treated as the income of the Unitholder under
State law.
For Arizona income tax purposes, interest on the Bonds which is
excludable from Federal gross income and which is exempt from Arizona income
taxes when received by the Arizona Insured Trust, and which would be
excludable from Federal gross income and exempt from Arizona income taxes if
received directly by a Unitholder, will retain its status as tax-exempt
interest when received by the Arizona Insured Trust and distributed to the
Unitholders.
To the extent that interest derived from the Arizona Insured Trust by a
Unitholder with respect to the Bonds is excludable from Federal gross
income, such interest will not be subject to Arizona income taxes.
Each Unitholder will receive taxable gain or loss for Arizona income tax
purposes when Bonds held in the Arizona Insured Trust are sold, exchanged,
redeemed or paid at maturity, or when the Unitholder redeems or sells Units,
at a price that differs from original cost as adjusted for amortization of
Bond discount or premium and other basis adjustments, including any basis
reduction that may be required to reflect a Unitholder's share of interest,
if any, accruing on Bonds during the interval between the Unitholder's
settlement date and the date such Bonds are delivered to the Arizona Insured
Trust, if later.
21
<PAGE>
Amounts paid by the Insurer under an insurance policy or policies issued
to the Trust, if any, with respect to the Bonds in the Trust which represent
maturing interest on defaulted obligations held by the Trustee will be
exempt from State income taxes if, and to the same extent as, such interest
would have been so exempt if paid by the issuer of the defaulted
obligations.
Arizona law does not permit a deduction for interest paid or incurred on
indebtedness incurred or continued to purchase or carry Units in the Arizona
Insured Trust, the interest on which is exempt from Arizona income taxes.
Neither the Bonds nor the Units will be subject to Arizona property
taxes, sales tax or use tax.
ECONOMIC FACTORS--ARIZONA
GENERAL ECONOMIC CONDITIONS. The following brief summary regarding the
economy of Arizona is based upon information drawn from publicly available
sources and is included for the purpose of providing the information about
general economic conditions that may or may not affect issuers of the Arizona
Bonds. The Sponsor has not independently verified any of the information
contained in such publicly available documents. Arizona is the nation's sixth
largest state in terms of area. Arizona's main economic/employment sectors
include services, tourism and manufacturing. Mining and agriculture are also
significant, although they tend to be more capital than labor intensive.
Services is the single largest economic sector. Many of these jobs are directly
related to tourism.
According to Arizona economic indicators released as of June 1992,
unemployment figures show 7.2 percent of Arizona's population are unemployed,
compared to a national level of 7.5 percent unemployment at the same time.
Maricopa County reported 6.1 percent unemployment and Pima County reported 5.0
percent unemployment. Significant employers in the state include the government,
the service industry and the trade industry. Building permits were down in all
areas of the state except for Pima County. In addition, home sales were down
approximately 28 percent from the previous year, and retail sales were down
approximately 7 percent from the previous year.
On June 27, 1991, America West Airlines filed a Chapter 11 reorganization
petition in bankruptcy. America West was at one time the sixth largest employer
in Maricopa County, employing approximately 10,000 persons within the county,
and 15,000 nationwide. The airline now employs close to 7,000 employees
nationwide. The effect of the America West bankruptcy on the state economy and,
more particularly, the Phoenix economy, is uncertain.
Similarly, jobs will be lost by the anticipated closing of Williams Air
Force Base in Chandler, Arizona, in 1993. Williams Air Force Base was selected
as one of the military installations to be closed as a cost-cutting measure by
the Defense Base Closure and Realignment Commission, whose recommendations were
subsequently approved by the President and the United States House of
Representatives. Williams Air Force Base injects approximately $340 million in
the local economy annually, and employs 1,851 civilians.
In 1986, the value of Arizona real estate began a steady decline, reflecting
a market which had been overbuilt in the previous decade with a resulting
surplus of completed inventory. This decline adversely affected both the
construction industry and those Arizona financial institutions which had
aggressively pursued many facets of real estate lending. In the near future,
Arizona's financial institutions are likely to continue to experience problems
until the excess inventories of commercial and residential properties are
absorbed. The problems of the financial institutions have adversely affected
employment and economic activity. Longer-term prospects are brighter, since
population growth is still strong by most standards, and Arizona's climate and
tourist industry still continue to stimulate the state's economy. However, the
previously robust pace of growth by financial institutions is not likely to be
repeated over an extended period.
22
<PAGE>
BUDGETARY PROCESS. Arizona operates on a fiscal year beginning July 1 and
ending June 30. Fiscal year 1992 refers to the year ending June 30, 1992.
Total General Fund revenues of $3.4 billion were expected during fiscal year
1992. Approximately 45.8% of this budgeted revenue comes from sales and use
taxes, 38.9% from income taxes (both individual and corporate) and 5.2% from
property taxes. All taxes total approximately $3.3 billion, or 93% of the
General Fund revenues. Non-tax revenue includes items such as income from the
state lottery, licenses, fees and permits, and interest. Lottery income totals
approximately 34.6% of non-tax revenue.
For fiscal year 1992, the budget called for expenditures of $2.7 billion.
These expenditures fell into the following major categories: education (51.3%),
health and welfare (29.3%), protection and safety (9.8%), general government
(7.6%) and inspection and regulation, natural resources and transportation
(2.0%). The State's general fund revenues for fiscal year 1993 are budgeted at
$3.6 billion and total general fund expenditures for fiscal year 1993 are
budgeted at $3.65 billion. Fiscal year 1993's proposed expenditures fall into
the following major categories: education (55.4%), health and welfare (27.8%),
protection and safety (9.0%), general government (6.2%) and inspection and
regulation and natural resources (1.6%).
Most or all of the Bonds of the Arizona Insured Trust are not obligations of
the State of Arizona, and are not supported by the State's taxing powers. The
particular source of payment and security for each of the Bonds is detailed in
the instruments themselves and in related offering materials. There can be no
assurances, however, with respect to whether the market value or marketability
of any of the Bonds issued by an entity other than the State of Arizona will be
affected by the financial or other condition of the State or of any entity
located within the State. In addition, it should be noted that the State of
Arizona, as well as counties, municipalities, political subdivisions and other
public authorities of the state, are subject to limitations imposed by Arizona's
constitution with respect to ad valorem taxation, bonded indebtedness and other
matters. For example, the state legislature cannot appropriate revenues in
excess of 7% of the total personal income of the state in any fiscal year. These
limitations may affect the ability of the issuers to generate revenues to
satisfy their debt obligations.
Although most of the Bonds in the Arizona Insured Trust are revenue
obligations of local governments or authorities in the State, there can be no
assurance that the fiscal and economic conditions referred to above will not
affect the market value or marketability of the Bonds or the ability of the
respective obligors to pay principal of and interest on the Bonds when due.
The State of Arizona was recently sued by four named school districts with
an additional fifty school districts within the state participating in the suit,
claiming that the state's funding system for school buildings and equipment is
unconstitutional. The lawsuit does not seek damages, but requests that the court
order the State to create a new financing system that sets minimum standards for
buildings and furnishings that apply on a statewide basis. A superior court
ruling has upheld the constitutionality of the State's school funding system.
This decision has been appealed and is currently in the State Court of Appeals.
It is unclear, at this time, what affect any judgment would have on state
finances or school district budgets. The U.S. Department of Education recently
determined that Arizona's educational funding system did not meet federal
requirements of equity. This determination could mean a loss in federal funds of
approximately $50 million.
Certain other circumstances are relevant to the market value, marketability
and payment of any hospital and health care revenue bonds in the Arizona Insured
Trust. The Arizona Legislature attempted unsuccessfully in its 1984 regular and
special sessions to enact legislation designed to control health care costs,
ultimately adopting three referenda measures placed on the November, 1984
general election ballot which in various ways would have regulated hospital and
health care facility expansions, rates and revenues. At the same time, a
coalition of Arizona employers proposed two initiatives voted on in the
November,
23
<PAGE>
1984 general election which would have created a State agency with power to
regulate hospital and health care facility expansions and rates generally. All
of these referenda and initiative propositions were rejected by the voters in
the November, 1984 general election. Pre-existing State certificate-of-need laws
regulating hospital and health care facilities' expansions and services have
expired, and a temporary moratorium prohibiting hospital bed increases and new
hospital construction projects and a temporary freeze on hospital rates and
charges at June, 1984 levels has also expired. Because of such expirations and
increasing health care costs, it is expected that the Arizona Legislature will
at future sessions continue to attempt to adopt legislation concerning these
matters. The effect of any such legislation or of the continued absence of any
legislation restricting hospital bed increases and limiting new hospital
construction on the ability of Arizona hospitals and other health care providers
to pay debt service on their revenue bonds cannot be determined at this time.
Arizona does not participate in the federally administered Medicaid program.
Instead, the state administers an alternative program, AHCCCS, which provides
health care to indigent persons meeting certain financial eligibility
requirements, through managed care programs. In fiscal year 1992, AHCCCS was
financed approximately 52.7% by federal funds, 33.1% by state funds, and 13.6%
by county funds.
Under state law, hospitals retain the authority to raise rates with
notification and review by, but not approval from, the Department of Health
Services. Hospitals in Arizona have experienced profitability problems along
with those in other states. At least two Phoenix based hospitals have defaulted
on or reported difficulties in meeting their bond obligations during the past
three years.
Insofar as tax-exempt Arizona public utility pollution control revenue bonds
are concerned, the issuance of such bonds and the periodic rate increases needed
to cover operating costs and debt service are subject to regulation by the
Arizona Corporation Commission, the only significant exception being the Salt
River Project Agricultural Improvement and Power District which, as a Federal
instrumentality, is exempt from rate regulation. On July 15, 1991, several
creditors of Tucson Electric Power Company ("Tucson Electric") filed involuntary
petitions under Chapter 11 of the U.S. Bankruptcy Code to force Tucson Power to
reorganize under the supervision of the bankruptcy court. On December 31, 1991,
the Bankruptcy Court approved the utility's motion to dismiss the July petition
after five months of negotiations between Tucson Electric and its creditors to
restructure the utility's debts and other obligations. In December 1992, Tucson
Electric announced that it had completed its financial restructuring. In January
1993, Tucson Electric asked the Arizona Corporation Commission for a 9.6%
average rate increase. Tucson Electric serves approximately 270,000 customers,
primarily in the Tucson area. Inability of any regulated public utility to
secure necessary rate increases could adversely affect, to an indeterminable
extent, its ability to pay debt service on its pollution control revenue bonds.
ARIZONA TAXABLE ESTIMATED CURRENT RETURN TABLE
The following tables show the approximate taxable estimated current returns
for individuals that are equivalent to tax-exempt estimated current returns
under combined Federal and state taxes, using published 1994 marginal Federal
tax rates and marginal state tax rates currently available and scheduled to be
in effect. The tables incorporate increased tax rates for higher-income
taxpayers that were included in the Revenue Reconciliation Act of 1993. For
cases in which more than one state bracket falls within a Federal bracket, the
highest state bracket is combined with the Federal bracket. The combined state
and Federal tax brackets shown reflect the fact that state tax payments are
currently deductible for Federal tax purposes. The tables illustrate what you
would have to earn on taxable investments to equal the tax-exempt estimated
current return for your income tax bracket. A taxpayer's marginal tax rate is
affected by both his taxable income and his adjusted gross income. Locate your
adjusted gross and your taxable income (which is your adjusted gross income
reduced by any deductions and exemptions), then locate your tax bracket based on
24
<PAGE>
joint or single tax filing. Read across to the equivalent taxable estimated
current return you would need to match the tax-free income.
COMBINED MARGINAL TAX RATES FOR JOINT TAXPAYERS WITH FOUR PERSONAL EXEMPTIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and Tax-Exempt 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- 38.0 $ 0-111.8 18.5 % 4.91 5.21 5.52 5.83 6.13 6.44 6.75 7.06
38.0- 91.9 0-111.8 32.0 5.88 6.25 6.62 6.99 7.35 7.72 8.09 8.46
111.8-167.7 32.5 5.93 6.30 6.67 7.04 7.41 7.78 8.15 8.52
91.9-140.0 0-111.8 35.5 6.20 6.59 6.98 7.36 7.75 8.14 8.53 8.91
111.8-167.7 36.5 6.30 6.69 7.09 7.48 7.87 8.27 8.66 9.06
167.7-290.2 38.5 6.50 6.91 7.32 7.72 8.13 8.54 8.94 9.35
140.0-250.0 111.8-167.7 41.0 6.78 7.20 7.63 8.05 8.47 8.90 9.32 9.75
167.7-290.2 44.0 7.14 7.59 8.04 8.48 8.93 9.38 9.82 10.27
Over 290.2 41.0 2 6.78 7.20 7.63 8.05 8.47 8.90 9.32 9.75
Over 250.0 167.7-290.2 48.0 7.69 8.17 8.65 9.13 9.62 10.10 10.58 11.06
Over 290.2 45.0 3 7.27 7.73 8.18 8.64 9.09 9.55 10.00 10.45
</TABLE>
COMBINED MARGINAL TAX RATES FOR SINGLE TAXPAYERS WITH ONE PERSONAL EXEMPTION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and Tax-Exempt 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- 22.8 $ 0-111.8 18.5 % 4.91 5.21 5.52 5.83 6.13 6.44 6.75 7.06
22.8- 55.1 0-111.8 32.5 5.93 6.30 6.67 7.04 7.41 7.78 8.15 8.52
55.1-115.0 0-111.8 35.5 6.20 6.59 6.98 7.36 7.75 8.14 8.53 8.91
111.8-234.3 37.0 6.35 6.75 7.14 7.54 7.94 8.33 8.73 9.13
115.0-250.0 111.8-234.3 42.0 6.90 7.33 7.76 8.19 8.62 9.05 9.48 9.91
Over 234.3 41.5 2 6.84 7.26 7.69 8.12 8.55 8.97 9.40 9.83
Over 250.0 Over 234.3 45.0 3 7.27 7.73 8.18 8.64 9.09 9.55 10.00 10.45
<FN>
- ------------------
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 Federal tax rate to approximately 44.0 percent for taxpayers filing a joint return and entitled to
four personal exemptions and to approximately 41.0 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.
</TABLE>
A comparison of tax-free and equivalent taxable estimated current returns
with the returns on various taxable investments is one element to consider in
making an investment decision. The Sponsor may from time to time in its
advertising and sales materials compare the then current estimated returns on
the Trust and returns over specified periods on other similar Nuveen Trusts with
returns on taxable investments such as corporate or U.S. Government bonds, bank
CD's and money market accounts or money market funds, each of which has
investment characteristics that may differ from those of the Trust. U.S.
Government bonds, for example, are backed by the full faith and credit of the
U.S. Government and bank CD's and money market accounts are insured by an agency
of the federal government. Money market accounts and money market funds provide
stability of principal, but pay interest at rates that vary with the condition
of the short-term debt market. The investment characteristics of the Trust are
described more fully elsewhere in this Prospectus.
25
<PAGE>
Nuveen Tax-Exempt Unit Trust
Schedule of Investments at Date of Deposit
March 7, 1994
ARIZONA INSURED TRUST 31
(Series 724)
<TABLE>
<CAPTION>
Ratings(3) Trustee's
Optional --------------------- Determination
Aggregate Name of Issuer and Title of Issue Represented Redemption Standard of Offering
Principal by Sponsor's Contracts to Purchase Bonds(1) Provisions(2) & Poor's Moody's Price(4)
<C> <C> <S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
$ 525,000 The Industrial Development Authority of the 2003 at 102 AAA Aaa $ 543,989
County of Maricopa (Arizona), Insured Health
Facility Revenue Bonds (Catholic Healthcare
West), 1993 Series A, 5.625% Due 7/1/23.
525,000 Peoria Municipal Development Authority, Inc. 2003 at 101 AAA Aaa 527,216
(Arizona), Municipal Facilities Revenue
Bonds, Series 1993, 5.20% Due 7/1/13.
525,000 City of Phoenix Civic Improvement Corporation 2004 at 102 AAA Aaa 510,547
(Arizona), Wastewater System Lease Revenue
Refunding Bonds, Series 1993, 5.00% Due
7/1/18.
150,000 City of Phoenix, Arizona, Junior Lien Street No Optional Call AAA Aaa 56,754
and Highway User, Revenue Refunding Bonds,
Series 1992A, 0.00% Due 7/1/12. (Original
issue discount bonds delivered on or about
January 6, 1993 at a price of 28.482% of
principal amount.)
225,000 Pima County, Arizona, Sewer Revenue Refunding 2004 at 102 AAA Aaa 223,745
Bonds, Series 1994A, 5.00% Due 7/1/10. (When
issued.)
525,000 Salt River Project Agricultural Improvement and 2003 at 102 AAA Aaa 526,313
Power District, Arizona, Salt River Project
Electric System Refunding Revenue Bonds, 1993
Series B, 5.25% Due 1/1/19.
525,000 * University Medical Center Corporation (Tucson, 2003 at 102 AAA Aaa 509,723
Arizona), Hospital Revenue Refunding Bonds,
Series 1993, 5.00% Due 7/1/21. (Original
issue discount bonds delivered on or about
June 8, 1993 at a price of 90.122% of
principal amount.)
500,000 Commonwealth of Puerto Rico, Public Improvement 2003 at 101 1/2 AAA Aaa 506,400
Refunding Bonds, Series 1993 (General
Obligation Bonds.), 5.25% Due 7/1/18.
(Original issue discount bonds delivered on
or about July 15, 1993 at a price of 93.414%
of principal amount.)
- ----------- ---------------
$ 3,500,000 $ 3,404,687
- ----------- ---------------
- ----------- ---------------
</TABLE>
See Notes to Schedules of Investments, page 27.
* These Bonds, or a portion thereof, have delivery dates beyond the normal
settlement date. Their expected delivery date is February 15, 1994. Contracts
relating to Bonds with delivery dates after the date of settlement for
purchase made on the Date of Deposit constitute approximately 15% of the
aggregate principal amount of the Trust. (See Section 4.)
26
<PAGE>
NOTES TO SCHEDULES OF INVESTMENTS
(1) Contracts, which are "when-issued" or "regular way" contracts or
contracts having delivery dates beyond the normal settlement date, have
been deposited with the Trustee on the Date of Deposit. The performance
of such contracts is secured by an irrevocable letter of credit, issued
by a major commercial bank, which has been deposited with the Trustee.
At the Date of Deposit, Bonds may have been delivered to the Sponsor
pursuant to certain of these contracts; the Sponsor has assigned to the
Trustee all of its right, title and interest in and to such Bonds.
(2) The Bonds are first subject to optional redemption in the years, and at
the prices, shown. Unless otherwise indicated, the Bonds, except for
Bonds issued at a substantial original issue discount, are redeemable at
declining prices (but not below par value) in subsequent years. Original
issue discount bonds, including zero coupon bonds, are generally
redeemable at prices based on the issue price plus the amount of
original issue discount accreted to redemption plus, if applicable, some
premium, the amount of which will decline in subsequent years. The Bonds
may also be subject to sinking fund redemption without premium prior to
the dates shown.
Certain Bonds may be subject to redemption without premium prior to the
date shown pursuant to special or mandatory call provisions; for
example, if bond proceeds are not able to be used as contemplated, the
project is condemned or sold, or the project is destroyed and insurance
proceeds are used to redeem the bonds. Single family mortgage revenue
bonds and housing authority bonds are most likely to be called subject
to such provisions, but other bonds may have similar call features. See
Section 4 and "General Trust Information" in this Section.
The Trustee's determination of the offering prices of Bonds in the Fund
may be greater or less than the amounts that may be received upon
redemption or maturity of such Bonds. Subject to rules concerning
amortization of bond premium and of original issue discount, gain or
loss realized by the Trustee on disposition of any Bonds will be
recognized as taxable capital gain or loss by Unitholders. (See Section
4.)
(3) See "Description of Ratings" herein. All the Bonds in the Insured
Trusts, as insured by the Insurer, are rated AAA by Standard & Poor's
Corporation and Aaa by Moody's Investors Service, Inc. (See Section 5.)
(4) As determined by Kenny S&P Evaluation Services on behalf of the Trustee
as of the close of business on the business day preceding the Date of
Deposit. The prices as determined by Kenny S&P Evaluation Services have
been rounded to the nearest dollar.
27
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF JOHN NUVEEN & CO. INCORPORATED AND
UNITHOLDERS OF NUVEEN TAX-EXEMPT UNIT TRUST, SERIES 724:
We have audited the accompanying statements of condition and the
related schedules of investments at date of deposit (included in the
prospectus herein) of Nuveen Tax-Exempt Unit Trust, Series 724
(comprising Maryland Traditional Trust 291, National Insured Trust 265
and Arizona Insured Trust 31), as of March 7, 1994. These financial
statements are the responsibility of the Sponsor. Our responsibility
is to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of the irrevocable letter of credit arrangement for the
purchase of securities, described in Note (1) to the statements 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 audits provide a
reasonable basis for our opinion.
In our opinion, the statements of condition and the related
schedules of investments at date of deposit referred to above present
fairly, in all material respects, the financial position of each of
the trusts constituting the Nuveen Tax-Exempt Unit Trust, Series 724
as of March 7, 1994, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN & CO.
Chicago, Illinois,
March 7, 1994.
28
<PAGE>
Statements of Condition
NUVEEN TAX-EXEMPT UNIT TRUST, SERIES 724
(Maryland Traditional Trust 291, National Insured Trust 265 and Arizona Insured
Trust 31)
As of March 7, 1994
<TABLE>
<CAPTION>
Maryland National Arizona
Traditional Insured Insured
TRUST PROPERTY Trust 291 Trust 265 Trust 31
<S> <C> <C> <C>
--------------- --------------- ---------------
Sponsor's contracts to purchase
Tax-Exempt Bonds, backed by an
irrevocable letter of credit(1)(2)..... $ 3,419,801 $ 7,323,112 $ 3,404,687
Accrued interest to March 7, 1994 on
underlying Bonds(1)................... 30,544 61,990 22,549
--------------- --------------- ---------------
Total....................... $ 3,450,345 $ 7,385,102 $ 3,427,236
--------------- --------------- ---------------
--------------- --------------- ---------------
LIABILITY AND INTEREST OF UNITHOLDERS
Liability:
Accrued interest to March 7, 1994 on
underlying Bonds(3)............... $ 30,544 $ 61,990 $ 22,549
--------------- --------------- ---------------
Interest of Unitholders:
Units of fractional undivided
interest outstanding (Maryland
Traditional Trust 291 --35,000;
National Insured Trust 265--
75,000; Arizona Insured Trust
31--35,000)
Cost to investors(4).............. $ 3,595,989 $ 7,700,399 $ 3,580,096
Less: Gross underwriting
commission(5)................. (176,188) (377,287) (175,409)
--------------- --------------- ---------------
Net amount applicable to
investors......................... $ 3,419,801 $ 7,323,112 $ 3,404,687
--------------- --------------- ---------------
Total....................... $ 3,450,345 $ 7,385,102 $ 3,427,236
--------------- --------------- ---------------
--------------- --------------- ---------------
<FN>
(1) Represented by contracts to purchase Tax-Exempt Bonds which include "when issued" or "regular way" or "delayed delivery"
contracts for which an irrevocable letter of credit issued by a major commercial bank has been deposited with the Trustee.
The amount of such letter of credit and any cash deposited exceeds the amount necessary for the purchase of the Bonds plus
accrued interest to the Date of Deposit. At the Date of Deposit, Bonds may have been delivered to the Sponsor pursuant to
certain of these contracts; the Sponsor has assigned to the Trustee all of its rights, title and interest in and to such
Bonds.
(2) Aggregate value (at offering prices) as of the Date of Deposit of the Bonds listed under "Schedules of Investments" herein,
and their aggregate cost to the Trusts are the same. Such offering prices were determined by Kenny S&P Evaluation Services as
of the close of business on the business day prior to the Date of Deposit. (See Section 10.) Insurance coverage providing for
the timely payment, when due, of all principal of and interest on the Bonds in the Insured Trusts has been obtained by the
Sponsor or by the issuers of such Bonds. Such insurance does not guarantee the market value of the Bonds or the value of the
Units. Both the bid and the offering prices of the underlying Bonds and of the Units may include value attributable to such
policies of insurance.
(3) Representing, as set forth in Section 8, advancement by the Trustee of an amount equal to the accrued Bond interest as of the
Date of Deposit from the later of the last payment date on the Bonds or the date of issuance thereof.
(4) Aggregate Public Offering Price (exclusive of accrued interest) computed as set forth under Section 6.
(5) The gross underwriting commission has been calculated on the assumption that the Units offered by this prospectus are sold in
single transactions involving less than $50,000 or 500 Units. At this level, the sales charge is 4.90% of the Public Offering
Price in the case of National and State Trusts, 4.25% thereof in the case of Long Intermediate Trusts, 3.90% in the case of
Intermediate Trusts, 3.00% in the case of Short Intermediate Trusts and 2.50% in the case of Short Term Trusts. In single
transactions involving 500 Units or more, the sales charge is reduced. (See Section 6.)
</TABLE>
29
<PAGE>
GENERAL TRUST INFORMATION
An investment in Units of any Trust should be made with an understanding of
the risks that such an investment may entail. As set forth in the portfolio
summaries above, the Trusts may contain or be concentrated in one or more of the
types of bonds discussed below. The following paragraphs discuss certain
circumstances which may adversely affect the ability of issuers of Bonds held in
the portfolio of a Trust to make payment of principal and interest thereon or
which may adversely affect the ratings of such Bonds; with respect to Insured
Trusts, however, because of the insurance obtained by the Sponsor or by the
issuers of the Bonds, such changes should not adversely affect an Insured
Trust's receipt of principal and interest, the Standard & Poor's AAA or Moody's
Aaa ratings of the Bonds in the Insured Trust portfolio, or the Standard &
Poor's AAA rating of the Units of each such Insured Trust.
HEALTH FACILITY OBLIGATIONS. Some of the Bonds in a Trust may be
obligations of issuers whose revenues are derived from services provided by
hospitals or other health care facilities, including nursing homes. Ratings of
bonds issued for health care facilities are sometimes based on feasibility
studies that contain projections of occupancy levels, revenues and expenses. A
facility's gross receipts and net income available for debt service may be
affected by future events and conditions including, among other things, demand
for services, the ability of the facility to provide the services required, an
increasing shortage of qualified nurses or a dramatic rise in nursing salaries,
physicians' confidence in the facility, management capabilities, economic
developments in the service area, competition from other similar providers,
efforts by insurers and governmental agencies to limit rates, legislation
establishing state rate-setting agencies, expenses, government regulation, the
cost and possible unavailability of malpractice insurance, and the termination
or restriction of governmental financial assistance, including that associated
with Medicare, Medicaid and other similar third party payor programs. Medicare
reimbursements are currently calculated on a prospective basis and are not based
on a provider's actual costs. Such method of reimbursement may adversely affect
reimbursements to hospitals and other facilities for services provided under the
Medicare program and thereby may have an adverse effect on the ability of such
institutions to satisfy debt service requirements. In the event of a default
upon a bond secured by hospital facilities, the limited alternative uses for
such facilities may result in the recovery upon such collateral not providing
sufficient funds to fully repay the bonds.
Certain hospital bonds provide for redemption at par upon the damage,
destruction or condemnation of the hospital facilities or in other special
circumstances.
HOUSING OBLIGATIONS. Some of the Bonds in a Trust may be obligations of
issuers whose revenues are primarily derived from mortgage loans to housing
projects for low to moderate income families. Such issues are generally
characterized by mandatory redemption at par or, in the case of original issue
discount bonds, accreted value in the event of economic defaults and in the
event of a failure of the operator of a project to comply with certain covenants
as to the operation of the project. The failure of such operator to comply with
certain covenants related to the tax-exempt status of interest on the Bonds,
such as provisions requiring that a specified percentage of units be rented or
available for rental to low or moderate income families, potentially could cause
interest on such Bonds to be subject to Federal income taxation from the date of
issuance of the Bonds. The ability of such issuers to make debt service payments
will be affected by events and conditions affecting financed projects,
including, among other things, the achievement and maintenance of sufficient
occupancy levels and adequate rental income, employment and income conditions
prevailing in local labor markets, increases in taxes, utility costs and other
operating expenses, the managerial ability of project managers, changes in laws
and
A-1
<PAGE>
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 mortgage revenue bonds issued after
December 31, 1980 were issued under Section 103A of the Internal Revenue Code of
1954, as amended, or Section 143 of the Internal Revenue Code of 1986, which
Sections contain certain requirements relating to the use of the proceeds of
such bonds in order for the interest on such bonds to retain its tax-exempt
status. In each case, the issuer of the bonds has covenanted to comply with
applicable requirements and bond counsel to such issuer has issued an opinion
that the interest on the bonds is exempt from Federal income tax under existing
laws and regulations. There can be no assurance that such continuing
requirements will be satisfied; the failure to meet such requirements could
cause interest on the Bonds to be subject to Federal income taxation, possibly
from the date of issuance of the Bonds.
FEDERALLY ENHANCED OBLIGATIONS. Some of the mortgages which secure the
various health care or housing projects which underlie the previously discussed
Health Facility, Housing, and Single Family Mortgage Revenue Obligations (the
"Obligations") in a Trust may be insured by the Federal Housing Administration
("FHA"). Under FHA regulations, the maximum insurable mortgage amount cannot
exceed 90% of the FHA's estimated value of the project. The FHA mortgage
insurance does not constitute a guarantee of timely payment of the principal of
and interest on the Obligations. Payment of mortgage insurance benefits may be
(1) less than the principal amount of Obligations outstanding or (2) delayed if
disputes arise as to the amount of the payment or if certain notices are not
given to the FHA within the prescribed time periods. In addition, some of the
previously discussed Obligations may be secured by mortgage-backed certificates
guaranteed by the Government National Mortgage Association ("GNMA"), a wholly
owned corporate instrumentality of the United States, and/or the Federal
National Mortgage Association ("Fannie Mae") a federally chartered and
stockholder-owed corporation. GNMA and Fannie Mae guarantee timely payment of
principal and interest on the mortgage-backed certificates, even where the
underlying mortgage payments are not made. While such mortgage-backed
certificates are often pledged to secure payment of principal and interest on
the Obligations, timely payment of interest and principal on the Obligations is
not insured or guaranteed by the United States, GNMA, Fannie Mae or any other
governmental agency or instrumentality. The GNMA mortgage-backed certificates
constitute a general obligation of the United States backed by its full faith
and credit. The obligations of Fannie Mae, including its obligations under the
Fannie Mae mortgage-backed securities, are obligations
A-2
<PAGE>
solely of Fannie Mae and are not backed by, or entitled to, the full faith and
credit of the United States.
INDUSTRIAL REVENUE OBLIGATIONS. Certain of the Bonds in a Trust may be
industrial revenue bonds ("IRBs"), including pollution control revenue bonds,
which are tax-exempt securities issued by states, municipalities, public
authorities or similar entities to finance the cost of acquiring, constructing
or improving various industrial projects. These projects are usually operated by
corporate entities. Issuers are obligated only to pay amounts due on the IRBs to
the extent that funds are available from the unexpended proceeds of the IRBs or
receipts or revenues of the issuer under an arrangement between the issuer and
the corporate operator of a project. The arrangement may be in the form of a
lease, installment sale agreement, conditional sale agreement or loan agreement,
but in each case the payments to the issuer are designed to be sufficient to
meet the payments of amounts due on the IRBs. Regardless of the structure,
payment of IRBs is solely dependent upon the creditworthiness of the corporate
operator of the project and, if applicable, corporate guarantor. Corporate
operators or guarantors may be affected by many factors which may have an
adverse impact on the credit quality of the particular company or industry.
These include cyclicality of revenues and earnings, regulatory and environmental
restrictions, litigation resulting from accidents or environmentally-caused
illnesses, extensive competition and financial deterioration resulting from a
corporate restructuring pursuant to a leveraged buy-out, takeover or otherwise.
Such a restructuring may result in the operator of a project becoming highly
leveraged which may have an impact on such operator's creditworthiness which in
turn would have an adverse impact on the rating and/or market value of such
Bonds. Further, the possibility of such a restructuring may have an adverse
impact on the market for and consequently the value of such Bonds, even though
no actual takeover or other action is ever contemplated or effected. The IRBs in
a Trust may be subject to special or extraordinary redemption provisions which
may provide for redemption at par or, in the case of original issue discount
bonds, accreted value. The Sponsor cannot predict the causes or likelihood of
the redemption of IRBs in a Trust prior to the stated maturity of such Bonds.
ELECTRIC UTILITY OBLIGATIONS. Some of the Bonds in a Trust may be
obligations of issuers whose revenues are primarily derived from the sale of
electric energy. The problems faced by such issuers include the difficulty in
obtaining approval for timely and adequate rate increases from the applicable
public utility commissions, the difficulty of financing large construction
programs, increased competition, reductions in estimates of future demand for
electricity in certain areas of the country, the limitations on operations and
increased costs and delays attributable to environmental considerations, the
difficulty of the capital market in absorbing utility debt, the difficulty in
obtaining fuel at reasonable prices and the effect of energy conservation. All
of such issuers have been experiencing certain of these problems in varying
degrees. In addition, Federal, state and municipal governmental authorities may
from time to time review existing, and impose additional, regulations governing
the licensing, construction and operation of nuclear power plants, which may
adversely affect the ability of the issuers of certain of the Bonds in a Trust
to make payments of principal and/or interest on such Bonds.
TRANSPORTATION FACILITY REVENUE BONDS. Some of the Bonds in a Trust may be
obligations of issuers which are payable from and secured by revenues derived
from the ownership and operation of airports, public transit systems and ports.
The major portion of an airport's gross operating income is generally derived
from fees received from airlines pursuant to use agreements which consist of
annual payments for airport use, occupancy of certain terminal space, service
fees and leases. Airport operating income may therefore be affected by the
ability of the airlines to meet their obligations under the use agreements. The
air transport industry is experiencing significant variations in earnings and
A-3
<PAGE>
traffic, due to increased competition, excess capacity, increased costs,
deregulation, traffic constraints and other factors, and several airlines are
experiencing severe financial difficulties. In particular, facilities with use
agreements involving airlines experiencing financial difficulty may experience a
reduction in revenue due to the possible inability of these airlines to meet
their use agreement obligations because of such financial difficulties and
possible bankruptcy. The Sponsor cannot predict what effect these industry
conditions may have on airport revenues which are dependent for payment on the
financial condition of the airlines and their usage of the particular airport
facility. Bonds that are secured primarily by the revenue collected by a public
transit system typically are additionally secured by a pledge of sales tax
receipts collected at the state or local level, or of other governmental
financial assistance. Transit system net revenues will be affected by variations
in utilization, which in turn may be affected by the degree of local
governmental subsidization, demographic and population shifts, and competition
from other forms of transportation; and by increased costs, including costs
resulting from previous deferrals of maintenance. Port authorities derive their
revenues primarily from fees imposed on ships using the facilities. The rate of
utilization of such facilities may fluctuate depending on the local economy and
on competition from competing forms of transportation such as air, rail and
trucks.
WATER AND/OR SEWERAGE OBLIGATIONS. Some of the Bonds in a Trust may be
obligations of issuers whose revenues are derived from the sale of water and/or
sewerage services. Such Bonds are generally payable from user fees. The problems
of such issuers include the ability to obtain timely and adequate rate
increases, population decline resulting in decreased user fees, the difficulty
of financing large construction programs, the limitations on operations and
increased costs and delays attributable to environmental considerations, the
increasing difficulty of obtaining or discovering new supplies of fresh water,
the effect of conservation programs and the impact of "no-growth" zoning
ordinances. All of such issuers have been experiencing certain of these problems
in varying degrees.
UNIVERSITY AND COLLEGE REVENUE OBLIGATIONS. Some of the Bonds in a Trust
may be obligations of issuers which are, or which govern the operation of,
colleges and universities and whose revenues are derived mainly from tuition,
dormitory revenues, grants and endowments. General problems of such issuers
include the prospect of a declining percentage of the population consisting of
"college" age individuals, possible inability to raise tuitions and fees
sufficiently to cover increased operating costs, the uncertainty of continued
receipt of Federal grants and state funding, and government legislation or
regulations which may adversely affect the revenues or costs of such issuers.
All of such issuers have been experiencing certain of these problems in varying
degrees.
BRIDGE AUTHORITY AND TOLLROAD OBLIGATIONS. Some of the Bonds in a Trust may
be obligations of issuers which derive their payments from bridge, road or
tunnel toll revenues. The revenues of such an issuer could be adversely affected
by competition from toll-free vehicular bridges and roads and alternative modes
of transportation. Such revenues could also be adversely affected by a reduction
in the availability of fuel to motorists or significant increases in the costs
thereof. Specifically, governmental regulations restricting the use of vehicles
in the New York City metropolitan area may adversely affect revenues of the
Triborough Bridge and Tunnel Authority.
DEDICATED-TAX SUPPORTED BONDS. Some of the Bonds in a Trust may be
obligations of issuers which are payable from and secured by tax revenues from a
designated source, which revenues are pledged to secure the bonds. The various
types of Bonds described below differ in structure and with respect to the
rights of the bondholders to the underlying property. Each type of dedicated-tax
supported Bond has distinct risks, only some of which are set forth below. One
type of dedicated-tax supported Bond is secured by the incremental tax received
on either real property or on sales within a specifically defined
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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 BONDS. Some of the Bonds in a Trust may be obligations that
are secured by lease payments of a governmental entity. Such payments are
normally subject to annual budget appropriations of the leasing governmental
entity. A governmental entity that enters into such a lease agreement cannot
obligate future governments to appropriate for and make lease payments but
covenants to take such action as is necessary to include any lease payments due
in its budgets and to make the appropriations therefor. A governmental entity's
failure to appropriate for and to make payments under its lease obligation could
result in insufficient funds available for payment of the obligations secured
thereby.
ORIGINAL ISSUE DISCOUNT BONDS AND STRIPPED OBLIGATIONS. Certain of the
Bonds in a Trust may be original issue discount bonds. These Bonds were issued
with nominal interest rates less than the rates then offered by comparable
securities and as a consequence were originally sold at a discount from their
face, or par, values. This original issue discount, the difference between the
initial purchase price and face value, is deemed under current law to accrue on
a daily basis and the accrued portion is treated as tax-exempt interest income
for federal income tax purposes. On sale or redemption, gain, if any, realized
in excess of the earned portion of original issue discount will be taxable as
capital gain. See "What is the Tax Status of Unitholders". The current value of
an original issue discount bond reflects the present value of its face amount at
maturity. In a stable interest rate environment, the market value of an original
issue discount bond would tend to increase more slowly in early years and in
greater increments as the bond approached maturity.
Certain of the original issue discount bonds in a Trust may be zero coupon
bonds. Zero coupon bonds do not provide for the payment of any current interest;
the buyer receives only the right to receive a final payment of the face amount
of the bond at its maturity. The effect of owning a zero coupon bond is that a
fixed yield is earned not only on the original investment but also, in effect,
on all discount earned during the life of the obligation. This implicit
reinvestment of earnings at the same rate eliminates the risk of being unable to
reinvest the income on such obligation at a rate as high as the implicit yield,
but at the same time also eliminates the holder's ability to reinvest at higher
rates in the future. For this reason, zero coupon bonds are subject to
substantially greater price fluctuations during periods of changing market
interest rates than are securities of comparable quality that pay interest
currently.
Original issue discount bonds, including zero coupon bonds, may be subject
to redemption at prices based on the issue price plus the amount of original
issue discount accreted to redemption (the "accreted value") plus, if
applicable, some premium. Pursuant to such call provisions an original issue
discount bond may be called prior to its maturity date at a price less than its
face value. See the "Schedules of Investments" for more information about the
call provisions of portfolio Bonds.
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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
Section 11, " What Is The Tax Status of Unitholders".)
Unitholders should consult their own tax advisers with respect to the state
and local tax consequences of owning original issue discount bonds or Stripped
Obligations. Under applicable provisions governing determination of state and
local taxes, interest on original issue discount bonds or Stripped Obligations
may be deemed to be received in the year of accrual even though there is no
corresponding cash payment.
4. COMPOSITION OF TRUSTS
Each Trust initially consists of delivery statements relating to contracts to
purchase Bonds (or of such Bonds) as are listed under "Schedules of Investments"
and, thereafter, of such Bonds as may continue to be held from time to time
(including certain securities deposited in the Trust in substitution for Bonds
not delivered to the Trust or in exchange or substitution for Bonds upon certain
refundings), together with accrued and undistributed interest thereon and
undistributed cash realized from the disposition of Bonds.
"WHEN-ISSUED" AND "DELAYED DELIVERY" TRANSACTIONS. The contracts to
purchase Bonds delivered to the Trustee represent an obligation by issuers or
dealers to deliver Bonds to the Sponsor for deposit in the Trusts. Normally,
"regular way" contracts are settled and the Bonds delivered to the Trustee
within a relatively short period of time. However, 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 does not believe it is likely, one or more of the issuers
of such Bonds might decide not to proceed with such offerings. If such Bonds, or
replacement bonds described below, are not acquired by a Trust or if their
delivery is delayed, the Estimated Current Returns and Estimated Long Term
Returns shown herein 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 herein (which are
based on the Public Offering Price as of the business day prior to the Date of
Deposit) may be slightly lower than Unitholders will receive after the first
year, assuming the Portfolio does not change
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and estimated annual expense does not vary from that set forth under "Essential
Information Regarding the Trusts." Those Bonds in each Trust purchased with
delivery dates after the date of settlement for purchases made on the Date of
Deposit are so noted in the Schedules of Investments.
LIMITED REPLACEMENT OF CERTAIN BONDS. Neither the Sponsor nor the Trustee
shall be liable in any way for any default, failure or defect in any Bond. In
the event of a failure to deliver any Bond that has been purchased for a Trust
under a contract, including those Bonds purchased on a when, as and if issued
basis ("Failed Bonds"), the Sponsor is authorized under the Indenture to direct
the Trustee to acquire other specified Bonds ("Replacement Bonds") to make up
the original corpus of the Trust. The Replacement Bonds must be purchased within
20 days after delivery of notice of the failed contract and the cost to the
Trust (exclusive of accrued interest) may not exceed the amount of funds
reserved for the purchase of the Failed Bonds. The Replacement Bonds (i) must
satisfy the criteria previously described for Bonds originally included in the
Trust and, with respect to Bonds purchased for a State Trust, shall have the
benefit of an exemption from state taxation of interest to an extent equal to or
greater than that of the Bonds they replace, (ii) must have a fixed maturity
date after the date of purchase of not less than approximately 15 years in the
case of National or State Trusts, approximately 11 years in the case of a Long
Intermediate Trust, approximately 5 years in the case of Intermediate or State
Intermediate Trusts, approximately 3 years in the case of a Short Intermediate
Trust and approximately 1 year in the case of a Short Term Trust, but not later
than the maturity date of the Failed Bonds, (iii) must be acquired at a cost to
the Trust equal to the cost of the same principal amount of Bonds provided in
the failed contract and have a current return and yield to maturity not less
than the current return and yield to maturity of the Failed Bonds and (iv) shall
not be "when, as and if issued" Bonds. Whenever a Replacement Bond has been
acquired for a Trust, the Trustee shall, within five days after the delivery
thereof, mail or deliver a notice to all Unitholders of the Trust involved of
such acquisition. Once the original corpus of the Trust is acquired, the Trustee
will have no power to vary the investment of the Trust; i.e., the Trust will
have no managerial power to take advantage of market variation to improve a
Unitholder's investment.
To the extent the right of limited substitution described in the preceding
paragraph shall not be utilized to acquire Replacement Bonds for the entire
principal amount of Failed Bonds, the Sponsor shall refund to all Unitholders of
the Trust involved the sales charge attributable to such Failed Bonds not
replaced, and the principal and accrued interest attributable to such Bonds
shall be distributed not more than 30 days after the determination of such
failure or at such earlier time as the Trustee in its sole discretion deems to
be in the interest of the Unitholders. Any such accrued interest paid to
Unitholders will be paid by the Sponsor and, accordingly, will not be treated as
tax-exempt income. In the event Failed Bonds in a Trust could not be replaced,
the Net Annual Interest Income per Unit for such Trust would be reduced and the
Estimated Current Return thereon might be lowered.
SALE, MATURITY AND REDEMPTION OF BONDS. Certain of the Bonds may from time
to time under certain circumstances be sold or redeemed or will mature in
accordance with their terms. The proceeds from such events will be used to pay
for Units redeemed or distributed to Unitholders and not reinvested;
accordingly, no assurance can be given that a Trust will retain for any length
of time its present size and composition.
All of the Bonds in each Trust are subject to being called or redeemed in
whole or in part prior to their stated maturities pursuant to the optional
redemption provisions described in the "Schedules of Investments" and in most
cases pursuant to sinking fund, special or extraordinary redemption provisions.
A bond subject to optional call is one which is subject to redemption or
refunding prior to maturity at the option of the issuer. A
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refunding is a method by which a bond issue is redeemed, at or before maturity,
by the proceeds of a new bond issue. A bond subject to sinking fund redemption
is one which is subject to partial call from time to time from a fund
accumulated for the scheduled retirement of a portion of an issue prior to
maturity. Special or extraordinary redemption provisions may provide for
redemption of all or a portion of an issue upon the occurrence of certain
circumstances related to defaults or unanticipated changes in circumstances.
Events that may permit or require the special or extraordinary redemption of
bonds include, among others: substantial damage to or destruction of the project
for which the proceeds of the bonds were used; exercise by a local, state or
federal governmental unit of its power of eminent domain to take all or
substantially all of the project for which the proceeds of the bonds were used;
a final determination that the interest on the bonds is taxable; changes in the
economic availability of raw materials, operating supplies or facilities or
technological or other changes which render the operation of the project for
which the proceeds of the bonds were used uneconomical; changes in law or an
administrative or judicial decree which render the performance of the agreement
under which the proceeds of the bonds were made available to finance the project
impossible or which create unreasonable burdens or which impose excessive
liabilities, such as taxes, not imposed on the date the bonds are issued on the
issuer of the bonds or the user of the proceeds of the bonds; an administrative
or judicial decree which requires the cessation of a substantial part of the
operations of the project financed with the proceeds of the bonds; an
overestimate of the costs of the project to be financed with the proceeds of the
bonds resulting in excess proceeds which may be applied to redeem bonds; or an
underestimate of a source of funds securing the bonds resulting in excess funds
which may be applied to redeem bonds. The Sponsor is unable to predict all of
the circumstances which may result in such redemption of an issue of Bonds. 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.
The exercise of redemption or call provisions will (except to the extent the
proceeds of the called Bonds are used to pay for Unit redemptions) result in the
distribution of principal and may result in a reduction in the amount of
subsequent interest distributions; it may also affect the current return on
Units of the Trust involved. Redemption pursuant to optional call provisions is
more likely to occur, and redemption pursuant to sinking fund or special or
extraordinary redemption provisions may occur, when the Bonds have an offering
side evaluation which represents a premium over par. Redemption pursuant to
optional call provisions may be, and redemption pursuant to sinking fund or
special or extraordinary redemption provisions is likely to be, at a price equal
to the par value of the bonds without any premium (in the case of original issue
discount bonds, such redemption is generally to be made at the issue price plus
the amount of original issue discount accreted to the date of redemption; such
price is referred to 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 Sections 11 and 13 and the "Schedules of
Investments.")
CERTAIN TAX MATTERS; LITIGATION. Certain of the Bonds in each Trust
portfolio may be subject to continuing requirements such as the actual use of
bond proceeds, manner of operation of the project financed from bond proceeds or
rebate of excess earnings on bond proceeds that may affect the exemption of
interest on such Bonds from Federal income taxation. Although at the time of
issuance of each of the Bonds in each Trust an opinion of bond counsel was
rendered as to the exemption of interest on such obligations from Federal income
taxation, and the issuers covenanted to comply with all requirements necessary
to retain the tax-exempt status of the Bonds, there can be no assurance that the
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respective issuers or other obligors on such obligations will fulfill the
various continuing requirements established upon issuance of the Bonds. A
failure to comply with such requirements may cause a determination that interest
on such obligations is subject to Federal income taxation, perhaps even
retroactively from the date of issuance of such Bonds, thereby reducing the
value of the Bonds and subjecting Unitholders to unanticipated tax liabilities.
To the best knowledge of the Sponsor, there is no litigation pending as of
the Date of Deposit in respect of any Bonds which might reasonably be expected
to have a material adverse effect on any of the Trusts. It is possible that
after the Date of Deposit, litigation may be initiated with respect to Bonds in
any Trust. Any such litigation may affect the validity of such Bonds or the
tax-exempt nature of the interest thereon, but while the outcome of litigation
of such nature can never be entirely predicted, the opinions of bond counsel to
the issuer of each Bond on the date of issuance state that such Bonds were
validly issued and that the interest thereon is, to the extent indicated, exempt
from Federal income tax.
5. WHY AND HOW ARE THE BONDS INSURED?
INSURANCE ON BONDS IN INSURED TRUSTS
Insurance guaranteeing the timely payment, when due, of all principal and
interest on the Bonds in each Insured Trust has been obtained by the Sponsor or
by the issuers or underwriters of Bonds from the Municipal Bond Investors
Assurance Corporation (the "Insurer"). Some of the Bonds in each Insured Trust
may be covered by a policy or policies of insurance obtained by the issuers or
underwriters of the Bonds from Municipal Bond Insurance Association (the
"Association") or Bond Investors Guaranty Insurance Company ("BIG"). The Insurer
has issued a policy or policies of insurance covering each of the Bonds in the
Insured Trusts, each policy to remain in force until the payment in full of such
Bonds and whether or not the Bonds continue to be held by an Insured Trust. By
the terms of each policy the Insurer will unconditionally guarantee to the
holders or owners of the Bonds the payment, when due, required of the issuer of
the Bonds of an amount equal to the principal of and interest on the Bonds as
such payments shall become due but not be paid (except that in the event of any
acceleration of the due date of principal by reason of mandatory or optional
redemption, default or otherwise, the payments guaranteed will be made in such
amounts and at such times as would have been due had there not been an
acceleration). The Insurer will be responsible for such payments, less any
amounts received by the holders or owners of the Bonds from any trustee for the
bond issuers or from any other sources other than the Insurer. The Insurer's
policies relating to small industrial development bonds and pollution control
revenue bonds also guarantee the full and complete payments required to be made
by or on behalf of an issuer of Bonds pursuant to the terms of the Bonds if
there occurs an event which results in the loss of the tax-exempt status of the
interest on such Bonds, including principal, interest or premium payments, if
any, as and when thereby required. The Insurer has indicated that its insurance
policies do not insure the payment of principal or interest on bonds which are
not required to be paid by the issuer thereof because the bonds were not validly
issued; as indicated under "What is the Tax Status of Unitholders?" the
respective issuing authorities have received opinions of bond counsel relating
to the valid issuance of each of the Bonds in the Insured Trusts. The Insurer's
policy also does not insure against non-payment of principal of or interest on
the Bonds resulting from the insolvency, negligence or any other act or omission
of the trustee or other paying agent for the Bonds. The policy is not covered by
the Property/ Casualty Insurance Security Fund specified in Article 76 of the
New York Insurance Law. The policies are non-cancellable and the insurance
premiums have been fully paid on or
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prior to the Date of Deposit, either by the Sponsor or, if a policy has been
obtained by a Bond issuer, by such issuer.
Upon notification from the trustee for any bond issuer or any holder or
owner of the Bonds or coupons that such trustee or paying agent has insufficient
funds to pay any principal or interest in full when due, the Insurer will be
obligated to deposit funds promptly with State Street Bank and Trust Company,
N.A., New York, New York, as fiscal agent for the Insurer, sufficient to fully
cover the deficit. If notice of nonpayment is received on or after the due date,
the Insurer will provide for payment within one business day following receipt
of the notice. Upon payment by the Insurer of any Bonds, coupons, or interest
payments, the Insurer shall succeed to the rights of the owner of such Bonds,
coupons or interest payments with respect thereto.
The Insurer is the principal operating subsidiary of MBIA, Inc., a New York
Stock Exchange listed company. MBIA, Inc. is not obligated to pay the debts of
or claims against the Insurer. The Insurer is a limited liability corporation
rather than a several liability association. The Insurer is domiciled in the
State of New York and licensed to do business in all 50 states, the District of
Columbia and the Commonwealth of Puerto Rico.
As of December 31, 1992 the Insurer had admitted assets of $2.6 billion
(audited), total liabilities of $1.7 billion (audited), and total capital and
surplus of $896 million (audited) determined in accordance with statutory
accounting practices prescribed or permitted by insurance regulatory
authorities. As of December 31, 1993, the Insurer had admitted assets of $3.1
billion (unaudited), total liabilities of $2.1 billion (unaudited), and total
capital and surplus of $978 million (unaudited) determined in accordance with
statutory accounting practices prescribed or permitted by insurance regulatory
authorities. Copies of the Insurer's year end financial statements prepared in
accordance with statutory accounting practices are available from the Insurer.
The address of the Insurer is 113 King Street, Armonk, New York 10504.
Effective December 31, 1989, MBIA Inc. acquired Bond Investors Group, Inc.
On January 5, 1990, the Insurer acquired all of the outstanding stock of Bond
Investors Group, Inc., the parent of BIG, now known as MBIA Insurance Corp. of
Illinois. Through a reinsurance agreement, BIG has ceded all of its net insured
risks, as well as its unearned premium and contingency reserves, to the Insurer
and the Insurer has reinsured BIG's net outstanding exposure.
Each insurance company comprising the Association will be severally and not
jointly obligated under the Association policy in the following respective
percentages: The AEtna Casualty and Surety Company, 33%; Fireman's Fund
Insurance Company, 30%; The Travelers Indemnity Company, 15%; AEtna Insurance
Company (now known as CIGNA Property and Casualty Company), 12%; and The
Continental Insurance Company, 10%. As a several obligor, each such insurance
company will be obligated only to the extent of its percentage of any claim
under the Association policy and will not be obligated to pay any unpaid
obligation of any other member of the Association. Each insurance company's
participation is backed by all of its assets. However, each insurance company is
a multiline insurer involved in several lines of insurance other than municipal
bond insurance, and the assets of each insurance company also secure all of its
other insurance policy and surety bond obligations.
The following table sets forth certain unaudited financial information with
respect to the five insurance companies comprising the Association. The
statistics, which have been furnished by the Association, are as reported by the
insurance companies to the New York State Insurance Department and are
determined in accordance with statutory accounting principles. No representation
is made herein as to the accuracy or adequacy of such
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information or as to the absence of material adverse changes in such information
subsequent to the date thereof. In addition, these numbers are subject to
revision by the New York State Insurance Department which, if revised, could
either increase or decrease the amounts.
MUNICIPAL BOND INSURANCE ASSOCIATION
FIVE MEMBER COMPANIES ASSETS AND POLICYHOLDERS' SURPLUS
AS OF JUNE 30, 1993.
(000's omitted)
<TABLE>
<CAPTION>
New York New York New York
Statutory Statutory Policyholders'
Assets Liabilities Surplus
--------------- --------------- ---------------
<S> <C> <C> <C>
The AEtna Casualty & Surety Company..................... $ 9,670,645 $ 8,278,113 $ 1,392,532
Fireman's Fund Insurance Company........................ 6,571,313 4,880,776 1,690,537
The Travelers Indemnity Company......................... 10,194,126 8,280,211 1,913,915
CIGNA Property and Casualty Company (formerly AEtna
Insurance Company).................................... 6,198,088 5,634,331 563,757
The Continental Insurance Company....................... 2,574,504 2,223,194 351,310
--------------- --------------- ---------------
Total........................................... $ 35,208,676 $ 29,296,625 $ 5,912,051
--------------- --------------- ---------------
--------------- --------------- ---------------
</TABLE>
Standard & Poor's Corporation rates all new issues insured by the
Association "AAA" Prime Grade.
Moody's Investors Service rates all bond issues insured by the Association
"Aaa" and short term loans "MIG 1", both designated to be of the highest
quality.
Each such rating should be evaluated independently of any other rating. No
application has been made to any other rating agency in order to obtain
additional ratings on the Bonds. The ratings reflect the respective rating
agency's current assessment of the creditworthiness of the Association 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.
Moody's Investors Service rates all bond issues insured by the Insurer "Aaa"
and short-term loans "MIG 1," both designated to be of the highest quality.
Standard & Poor's Ratings Group, a division of McGraw Hill ("Standard &
Poor's") rates all new issues insured by the Insurer "AAA" Prime Grade."
The Moody's Investors Service rating of the Insurer should be evaluated
independently of the Standard & Poor's Corporation rating of the Insurer. No
application has been made to any other rating agency in order to obtain
additional ratings on the Bonds. The ratings reflect the respective rating
agency's current assessment of the creditworthiness of the Insurer and its
ability to pay claims on its policies of insurance (See "Description of
Ratings.") Any further explanation as to the significance of the above ratings
may be obtained only from the applicable rating agency.
The above ratings are not recommendations to buy, sell or hold the Bonds,
and such ratings may be subject to revision or withdrawal at any time by the
rating agencies. Any downward revision or withdrawal of either or both ratings
may have an adverse effect on the market price of the Bonds.
Because the insurance on the Bonds will be effective so long as the Bonds
are outstanding, such insurance will be taken into account in determining the
market value of
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the Bonds and therefore some value attributable to such insurance will be
included in the value of the Units of the Insured Trusts. The insurance does
not, however, guarantee the market value of the Bonds or of the Units.
INSURANCE ON CERTAIN BONDS IN 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
will identify the insurer. Such insurance will be provided by Financial Guaranty
Insurance Company ("FGIC"), AMBAC Indemnity Corporation ("AMBAC"), Bond
Investors Guaranty Insurance Company, now known as MBIA Corp. of Illinois
("BIG"), Capital Guaranty Insurance Company ("CGIC"), Financial Security
Assurance, Inc. ("FSA"), Municipal Bond Insurance Association (the
"Association"), Municipal Bond Investors Assurance Corporation ("MBIA") or
Connie Lee Insurance Company ("ConnieLee"). The Sponsor to date has purchased
and presently intends to purchase insurance for Bonds in Traditional Trusts
exclusively from MBIA (see the preceding disclosure regarding MBIA). There can
be no assurance that any insurer listed therein will be able to satisfy its
commitments in the event claims are made in the future. However, Standard &
Poor's Corporation has rated the claims-paying ability of each insurer "AAA,"
and Moody's Investors Service has rated all bonds insured by each such insurer,
except ConnieLee, "Aaa." Moody's Investor's Service gives no ratings for bonds
insured by ConnieLee.
Because any such insurance will be effective so long as the insured Bonds
are outstanding, such insurance will be taken into account in determining the
market value of such Bonds and therefore some value attributable to such
insurance will be included in the value of the Units of the Trust that includes
such Bonds. The insurance does not, however, guarantee the market value of the
Bonds or of the Units.
6. HOW IS THE PUBLIC OFFERING PRICE DETERMINED?
The Public Offering Price of the Units of each Trust is equal to the Trustee's
determination of the aggregate OFFERING prices of the Bonds deposited therein
(minus any advancement to the principal account of the Trust made by the
Trustee) plus a sales charge of 5.152% of the aggregate offering prices in the
case of National and State Trusts, 4.439% of the aggregate offering prices in
the case of Long Intermediate Trusts, 4.058% of the aggregate offering prices in
the case of Intermediate Trusts, 3.093% of the aggregate offering prices in the
case of Short Intermediate Trusts and 2.564% of the aggregate offering prices in
the case of Short Term Trusts, in each case adding to the total thereof cash
held by the Trust, if any, and dividing the sum so obtained by the number of
Units outstanding in the Trust. This computation produces a gross underwriting
profit equal to 4.90% of the Public Offering Price in the case of National and
State Trusts, 4.25% of the Public Offering Price in the case of Long
Intermediate Trusts, 3.90% of the Public Offering Price in the case of
Intermediate Trusts, 3.00% of the Public Offering Price in the case of Short
Intermediate Trusts and 2.50% of the Public Offering Price in the case of Short
Term Trusts.
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The sales charge applicable to quantity purchases is reduced on a graduated
scale for sales to any purchaser of at least $50,000 or 500 Units and will be
applied on whichever basis is more favorable to the purchaser. For purposes of
calculating the applicable sales charge, purchasers who have indicated their
intent to purchase a specified amount of Units of any Trust described herein in
the primary offering period or units of any other series of Nuveen Tax-Exempt
Unit Trusts in the primary 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 table
based on the amount of intended aggregate purchases as expressed in the letter
of intent. By establishing a letter of intent, a Unitholder agrees that units
representing 5% of the total amount of the intended purchases will be held in
escrow pending completion of these purchases. All distributions on units held in
escrow will be credited to such Unitholder's account. If total purchases, less
redemptions, 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. If the total
purchases, less redemption, 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. If such Unitholder does not pay the
additional amount within 20 days after written request by the Sponsor or the
Unitholder's securities representative, the Sponsor will instruct the Trustee to
redeem an appropriate number of the escrowed units to meet the required payment.
By establishing a letter of intent, a Unitholder irrevocably appoints the
Sponsor as attorney to give instructions to redeem any or all of such
Unitholder's escrowed units, with full power of substitution in the premises. A
Unitholder or his securities representative must notify the Sponsor whenever
such Unitholder makes a purchase of Units that he wishes to be counted towards
the intended amount. Sales charges during the primary offering period are as
follows:
<TABLE>
<CAPTION>
National and State Long Intermediate Trusts
Trusts Intermediate Trusts
------------------------ ------------------------ ------------------------
<S> <C> <C> <C> <C> <C> <C>
Percent Percent Percent Percent Percent Percent
of of Net of of Net of of Net
Offering Amount Offering Amount Offering Amount
Number of Units* Price Invested Price Invested Price Invested
- ----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Less than 500........................................ 4.90% 5.152% 4.25% 4.439% 3.90% 4.058%
500 but less than 1,000.............................. 4.75 4.987 4.15 4.330 3.70 3.842
1,000 but less than 2,500............................ 4.50 4.712 3.85 4.004 3.50 3.627
2,500 but less than 5,000............................ 4.25 4.439 3.60 3.734 3.25 3.359
5,000 but less than 10,000........................... 3.50 3.627 3.35 3.466 3.00 3.093
10,000 but less than 25,000.......................... 3.00 3.093 3.00 3.093 2.75 2.828
25,000 but less than 50,000.......................... 2.50 2.564 2.50 2.564 2.50 2.564
50,000 or more....................................... 2.00 2.041 2.00 2.041 2.00 2.041
</TABLE>
<TABLE>
<CAPTION>
Short Intermediate
Trusts Short Term Trusts
------------------------ ------------------------
<S> <C> <C> <C> <C>
Percent Percent Percent Percent
of of Net of of Net
Offering Amount Offering Amount
Number of Units* Price Invested Price Invested
- ----------------------------------------------------- ----------- ----------- ----------- -----------
Less than 500........................................ 3.00% 3.093% 2.50% 2.564%
500 but less than 1,000.............................. 2.80 2.881 2.30 2.354
1,000 but less than 2,500............................ 2.60 2.670 2.10 2.145
2,500 but less than 5,000............................ 2.35 2.407 1.85 1.885
5,000 but less than 10,000........................... 2.10 2.145 1.60 1.626
10,000 but less than 25,000.......................... 1.85 1.885 1.35 1.368
25,000 but less than 50,000.......................... 1.80 1.833 1.25 1.266
50,000 or more....................................... 1.50 1.523 1.15 1.163
</TABLE>
*Breakpoint sales charges are computed both on a dollar basis and on the basis
of the number of Units purchased, using the equivalent of 500 Units to $50,000,
2,500 Units to $250,000 etc., and will be applied on that basis which is more
favorable to the purchaser.
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<PAGE>
For "secondary market" sales the Public Offering Price per Unit of each
Trust is determined by adding to the Trustee's determination of the BID price of
each Bond in the Trust a sales charge determined in accordance with the table
set forth below based upon the number of years remaining to the maturity of each
such Bond, adjusting the total to reflect the amount of any cash held in or
advanced to the principal account of the Trust and dividing the result by the
number of Units then outstanding. For purposes of this calculation, Bonds will
be deemed to mature on their stated maturity dates unless: (a) the Bonds have
been called for redemption or funds or securities have been placed in escrow to
redeem them on an earlier call date, in which case such call date shall be
deemed to be the date upon which they mature; or (b) such Bonds are subject to a
"mandatory put," in which case such mandatory put date shall be deemed to be the
date upon which they mature.
Pursuant to the terms of the Indenture, the Trustee may terminate a Trust if
the net asset value of such Trust, as shown by any semi-annual evaluation, is
less than 20% of the original principal amount of the Trust. In the course of
regularly appraising the value of Bonds in each Trust, the Sponsor will attempt
to estimate the date on which a Trust's value will fall below the 20% level
based on anticipated bond events over a five year period, including maturities,
escrow calls and current calls or refundings, assuming certain market rates. The
Sponsor intends from time to time to recommend that certain Trusts whose values
have fallen or are anticipated to fall below the 20% level be terminated based
on certain criteria which could adversely affect the Trust's diversification.
Once the Sponsor has determined that a Trust's value has or may fall below the
20% level within a five-year period, for purposes of computing the sales charge
using the table set forth below, the maturity of each bond in such Trust will be
deemed to be the earlier of the estimated termination date of the Trust, or the
actual date used when pricing the bond under Municipal Securities Rulemaking
Board rules and interpretations issued thereunder.
The effect of this method of sales charge calculation will be that different
sales charge rates will be applied to the various Bonds in a Trust portfolio
based upon the maturities of such Bonds, in accordance with the following
schedule. As shown, the sales charge on Bonds in each maturity range (and
therefore the aggregate sales charge on the purchase) is reduced with respect to
purchases of at least $50,000 or 500 Units:
<TABLE>
<CAPTION>
Amount of Purchase*
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$50,000 $100,000 $250,000 $500,000 $1,000,000 $1,500,000
Under to to to to to to
Years to Maturity $50,000 $99,999 $249,999 $499,999 $999,999 $1,499,999 $2,999,999
- --------------------------- ----------- ----------- ----------- ----------- ----------- ------------- -------------
Less than 1................ 0 0 0 0 0 0 0
1 but less than 2.......... 1.523% 1.446% 1.369% 1.317% 1.215% 1.061% .900%
2 but less than 3.......... 2.041 1.937 1.833 1.729 1.626 1.420 1.225
3 but less than 4.......... 2.564 2.433 2.302 2.175 2.041 1.781 1.546
4 but less than 5.......... 3.093 2.961 2.828 2.617 2.459 2.175 1.883
5 but less than 7.......... 3.627 3.433 3.239 3.093 2.881 2.460 2.165
7 but less than 10......... 4.167 3.951 3.734 3.520 3.239 2.828 2.489
10 but less than 13........ 4.712 4.467 4.221 4.004 3.788 3.253 2.842
13 but less than 16........ 5.263 4.988 4.712 4.439 4.167 3.627 3.169
16 or more................. 5.820 5.542 5.263 4.987 4.603 4.004 3.500
<CAPTION>
<S> <C>
-------------
$3,000,000
Years to Maturity or more
- --------------------------- -------------
Less than 1................ 0
1 but less than 2.......... .750%
2 but less than 3.......... 1.030
3 but less than 4.......... 1.310
4 but less than 5.......... 1.590
5 but less than 7.......... 1.870
7 but less than 10......... 2.150
10 but less than 13........ 2.430
13 but less than 16........ 2.710
16 or more................. 3.000
</TABLE>
*Breakpoint sales charges are computed both on a dollar basis and on the basis
of the number of Units purchased, using the equivalent of 500 Units to
$50,000, 2,500 Units to $250,000, etc., and will be applied on that basis
which is more favorable to the purchaser.
The secondary market sales charges above are expressed as a percent of the
net amount invested; expressed as a percent of the Public Offering Price, the
maximum sales charge on any Trust, including one consisting entirely of Bonds
with 16 years or more to maturity, would be 5.50% (5.820% of the net amount
invested). For purposes of illustration, the sales charge on a Trust consisting
entirely of Bonds maturing in 13 to 16 years
A-14
<PAGE>
would be 5% (5.263% of the net amount invested); that on a Trust consisting
entirely of Bonds maturing in five to seven years would be 3.5% (3.627% of the
net amount invested); and that on a Trust consisting entirely of Bonds maturing
in three to four years would be 2.5% (2.564% of the net amount invested). The
actual secondary market sales charge included in the Public Offering Price of
any particular Trust will depend on the maturities of the Bonds in the portfolio
of such Trust.
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 on each day on which the New York Stock
Exchange (the "Exchange") is normally open 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. 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.
As more fully set forth in Section 8, accrued interest from the preceding
Record Date to, but not including, the settlement date of the transaction (five
business days after purchase) will be added to the Public Offering Price to
determine the purchase price of Units.
The above graduated sales charges will apply on all purchases of Nuveen
investment company securities on any one day by the same purchaser in the
amounts stated, and for this purpose purchases of this Series will be aggregated
with concurrent purchases of any other Series or of shares of any open-end
management investment company of which the Sponsor is principal underwriter and
with respect to the purchase of which a sales charge is imposed.
Purchases by or for the account of an individual and his or her spouse and
children under 21 years of age will be aggregated to determine the applicable
sales charge. The graduated sales charges are also applicable to a trustee or
other fiduciary purchasing securities for a single trust estate or single
fiduciary account.
Units may be purchased at the Public Offering Price without a sales charge
by officers or directors and by bona fide, full-time employees of Nuveen, Nuveen
Advisory Corp., Nuveen Institutional Advisory Corp. and The John Nuveen Company,
including in each case these individuals and their immediate family members (as
defined above).
The initial or primary Public Offering Price of the Units in each Trust is
based upon a pro rata share of the OFFERING prices per Unit of the Bonds in such
Trust plus the applicable sales charge. The secondary market Public Offering
Price of each Trust is based upon a pro rata share of the BID prices per Unit of
the Bonds in such Trust plus the applicable sales charge. The OFFERING prices of
Bonds in a Trust may be expected to average approximately 1% to 2% more than the
BID prices of such Bonds in the case of National, Long Intermediate and State
Trusts, 3/4% to 1 1/2% in the case of Intermediate and Short Intermediate
Trusts, and 1/2% to 3/4% in the case of Short Term Trusts. The difference
between the bid side evaluation and the offering side evaluation of the Bonds in
each Trust on the business day prior to the Date of Deposit is shown in the
discussion of each Trust portfolio.
Whether or not Units are being offered for sale, the Sponsor will determine
the aggregate value of each Trust as of 4:00 p.m. eastern time: (i) on each June
30 or December 31 (or, if such date is not a business day, the last business day
prior thereto), (ii) on any day on which a Unit is tendered for redemption (or
the next succeeding business day if the date of tender is a non-business day)
and (iii) at such other times as may be necessary. For this purpose, a "business
day" shall be any day on which the Exchange is normally open. (See Section 16.)
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<PAGE>
7. MARKET FOR UNITS
During the initial public offering period, the Sponsor intends to offer to
purchase Units of each Trust at a price equivalent to the pro rata share per
Unit of the OFFERING prices of the Bonds in such Trust (plus accrued interest).
Afterward, although it is not obligated to do so, the Sponsor intends to
maintain a secondary market for Units of each Trust at its own expense and
continuously to offer to purchase Units of each Trust at prices, subject to
change at any time, which are based upon the BID prices of Bonds in the
respective portfolios of the Trusts. If the supply of Units of any of the Trusts
of this Series exceeds demand, or for some other business reason, the Sponsor
may discontinue purchases of Units of such Trust at such prices. UNITHOLDERS WHO
WISH TO DISPOSE OF THEIR UNITS SHOULD INQUIRE OF THE TRUSTEE OR THEIR BROKER AS
TO THE CURRENT REDEMPTION PRICE (SEE SECTION 19). In connection with its
secondary marketmaking activities, the Sponsor may from time to time enter into
secondary market joint account agreements with other brokers and dealers.
Pursuant to such an agreement the Sponsor will purchase Units from the broker or
dealer at the bid price and will place the Units into a joint account managed by
the Sponsor; sales from the account will be made in accordance with the then
current prospectus and the Sponsor and the broker or dealer will share profits
and losses in the joint account in accordance with the terms of their joint
account agreement.
Certificates, if any, for Units are delivered to the purchaser as promptly
after the date of settlement (five business days after purchase) as the Trustee
can complete the mechanics of registration. Normally, Certificates, if any, are
mailed by the Trustee 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 as
tender of the Certificate, properly endorsed for transfer. (See Section 19.)
Each Unit of each respective Trust initially offered by this Prospectus
represents that fractional undivided interest in such Trust as is set forth
under "Essential Information Regarding the Trusts." To the extent that any Units
of any Trust are redeemed by the Trustee, the aggregate value of the Trust's
assets will decrease by the amount paid to the redeeming Unitholder, but the
fractional undivided interest of each unredeemed Unit in such Trust will
increase proportionately. The Sponsor will initially, and from time to time
thereafter, hold Units in connection with their offering.
8. WHAT IS ACCRUED INTEREST?
Accrued interest is the accumulation of unpaid interest on a bond from the last
day on which interest thereon was paid. Interest on Bonds in each Trust is
accounted for daily on an accrual basis. For this reason, the purchase price of
Units of a Trust will include not only the Public Offering Price but also the
proportionate share of accrued interest to the date of settlement. Interest
accrues to the benefit of Unitholders commencing with the settlement date of
their purchase transaction.
Accrued interest does not include accrual of original issue discount on zero
coupon bonds, Stripped Obligations or other original issue discount bonds. (See
"Summary of Portfolios--General Trust Information" and "What Is The Tax Status
of Unitholders.")
In an effort to reduce the amount of accrued interest that investors would
have to pay in addition to the Public Offering Price, the Trustee has agreed to
advance to each Trust the amount of accrued interest due on the Bonds as of the
Date of Deposit (which has been designated the first Record Date for all plans
of distribution). This accrued interest will be paid to the Sponsor as the
holder of record of all Units on the Date of Deposit. Consequently, when the
Sponsor sells Units of a Trust, the amount of accrued interest to be added to
the Public Offering Price to determine the purchase price of the Units of such
Trust purchased by an investor will include only accrued interest from the Date
of Deposit to, but
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<PAGE>
not including, the date of settlement of the investor's purchase (five business
days after purchase), less any distributions from the related Interest Account.
The Trustee will recover its advancements (without interest or other cost to the
Trusts) from interest received on the Bonds deposited in each Trust.
The Trustee has no cash for distribution to Unitholders until it receives
interest payments on the Bonds in the Trusts. Since municipal bond interest is
accrued daily but paid only semi-annually, during the initial months of the
Trusts, the Interest Accounts, consisting of accrued but uncollected interest
and collected interest (cash), will be predominantly the uncollected accrued
interest that is not available for distribution. However, due to advances by the
Trustee, the Trustee will provide a first distribution between approximately 30
and 60 days after the Date of Deposit. Assuming each Trust retains its original
size and composition and expenses and fees remain the same, annual interest
collected and distributed will approximate the estimated Net Annual Interest
Income stated herein. However, the amount of accrued interest at any point in
time will be greater than the amount that the Trustee will have actually
received and distributed to the Unitholders. Therefore, there will always remain
an item of accrued interest that is included in the Purchase Price and the
redemption price of the Units.
Interest is accounted for daily and a proportionate share of accrued and
undistributed interest computed from the preceding Record Date is added to the
daily valuation of each Unit of each Trust. (See Sections 3 and 13.) As Bonds
mature, or are redeemed or sold, the accrued interest applicable to such bonds
is collected and subsequently distributed to Unitholders. Unitholders who sell
or redeem all or a portion of their Units will be paid their proportionate share
of the remaining accrued interest to, but not including, the fifth business day
following the date of sale or tender.
9. WHAT ARE ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN?
The Estimated Long Term Return for each Trust is a measure of the return to the
investor earned over the estimated life of the Trust. The Estimated Long Term
Return represents an average of the yields to maturity (or call) of the Bonds in
the Trust's portfolio calculated in accordance with accepted bond practice and
adjusted to reflect expenses and sales charges. Under accepted bond practice,
tax-exempt bonds are customarily offered to investors on a "yield price" basis,
which involves computation of yield to maturity or to an earlier call date
(whichever produces the lower yield), and which takes into account not only the
interest payable on the bonds but also the amortization or accretion to a
specified date of any premium over or discount from the par (maturity) value in
the bond's purchase price. In calculating Estimated Long Term Return, the
average yield for the Trust's portfolio is derived by weighting each Bond's
yield by the market value of the Bond and by the amount of time remaining to the
date to which the Bond is priced. Once the average portfolio yield is computed,
this figure is then reduced to reflect estimated expenses and the effect of the
maximum sales charge paid by investors. 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
A-17
<PAGE>
any, on the Bonds in the Trust's portfolio. Net Annual Interest Income per Unit
is calculated by dividing the annual interest income to the Trust, less
estimated expenses, by the number of Units outstanding.
Net Annual Interest Income per Unit, used to calculate Estimated Current
Return, will vary with changes in fees and expenses of the Trustee and the
Evaluator and with the redemption, maturity, exchange or sale of Bonds. A Trust
may experience expenses and portfolio changes different from those assumed in
the calculation of Estimated Long Term Return. There thus can be no assurance
that the Estimated Current Returns or Estimated Long Term Returns quoted herein
will be realized in the future. Since both the Estimated Current Return and the
Estimated Long Term Return quoted herein are based on the market value of the
underlying Bonds on the business day prior to the Date of Deposit, subsequent
calculations of these performance measures will reflect the then current market
value of the underlying Bonds and may be higher or lower.
A portion of the monies received by a Trust may be treated, in the first
year only, as a return of principal due to the inclusion in the Trust portfolio
of "when-issued" or other Bonds having delivery dates after the date of
settlement for purchases made on the Date of Deposit. A consequence of this
treatment is that in the computation of Estimated Current Return for the first
year, such monies are excluded from Net Annual Interest Income and treated as an
adjustment to the Public Offering Price. (See "Essential Information Regarding
the Trusts" and Sections 4 and 11.)
For a statement of the Net Annual Interest Income per Unit under the monthly
plan of distribution, and Estimated Long Term Yield and Estimated Current
Returns based on the Public Offering Prices of the Trusts in this Series, all as
of the day prior to the Date of Deposit, see "Essential Information Regarding
the Trusts."
10. HOW WAS THE PRICE OF THE BONDS DETERMINED AT THE DATE OF DEPOSIT?
The prices at which the Bonds deposited in the Trusts would have been offered to
the public on the business day prior to the Date of Deposit were determined by
the Trustee on the basis of an evaluation of such Bonds prepared by Kenny S&P
Evaluation Services, a firm regularly engaged in the business of evaluating,
quoting or appraising comparable bonds. With respect to Bonds in Insured Trusts
and insured Bonds in Traditional Trusts, Kenny S&P Evaluation Services evaluated
the Bonds as so insured. (See Section 5).
The amount by which the Trustee's determination of the OFFERING PRICES of
the Bonds deposited in the Trusts was greater or less than the cost of such
Bonds to the Sponsor was PROFIT OR LOSS to the Sponsor exclusive of any
underwriting profit. (See Section 3.) The Sponsor also may realize FURTHER
PROFIT OR SUSTAIN FURTHER LOSS as a result of fluctuations in the Public
Offering Price of the Units. Cash, if any, made available to the Sponsor prior
to the settlement date for a purchase of Units, or prior to the acquisition of
all Portfolio securities by a Trust, may be available for use in the Sponsor's
business, and may be of benefit to the Sponsor.
11. WHAT IS THE TAX STATUS OF UNITHOLDERS?
At the respective times of issuance of the Bonds opinions relating to the
validity thereof and to the exemption of interest thereon from Federal income
tax were rendered by bond counsel to the respective issuing authorities. In
addition, with respect to State Trusts, where applicable, bond counsel to the
issuing authorities rendered opinions as to the exemption of interest on such
Bonds, when held by residents of the state in which the issuers of such Bonds
are located, from state income taxes and certain state or local intangibles and
local income taxes. For a discussion of the tax status of State Trusts see
"Summary of Portfolios-- Tax Status" for the respective State Trust. (See
Sections 2 and 3.) Neither the Sponsor nor its
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<PAGE>
counsel have made any special review for the Trusts of the proceedings relating
to the issuance of the Bonds or of the basis for the opinions rendered in
connection therewith.
Taxpayers must disclose on their Federal tax returns the amount of
tax-exempt interest earned during the year. Federally tax-exempt income,
including income on Units of the Trusts, will be taken into consideration in
computing the portion, if any, of social security benefits received that will be
included in a taxpayer's gross income subject to the Federal income tax.
Gain realized on the sale or redemption of the Bonds by the Trustee or of a
Unit by a Unitholder is includable in gross income for Federal income tax
purposes, and may be includable in gross income for state tax purposes. (Such
gain does not include any amounts received in respect of accrued interest or
accrued original issue discount, if any.) It should be noted that under
provisions of the Revenue Reconciliation Act of 1993 (the "Tax Act") described
below that subject accretion of market discount on tax-exempt bonds to taxation
as ordinary income, gain realized on the sale or redemption of Bonds by the
Trustee or of Units by a Unitholder that would have been treated as capital gain
under prior law is treated as ordinary income to the extent it is attributable
to accretion of market discount. Market discount can arise based on the price
the Trust pays for the Bonds or the price a Unitholder pays for his or her
Units.
In the opinion of Chapman and Cutler, Counsel to the Sponsor, under existing
law:
(1) the Trusts are not associations taxable as corporations for Federal
income tax purposes. Tax-exempt interest received by each of the Trusts
on Bonds deposited therein will retain its status as tax-exempt
interest, for Federal income tax purposes, when received by the Trusts
and when distributed to the Unitholders, except that the alternative
minimum tax and environmental tax (the "Superfund Tax") applicable to
corporate Unitholders may, in certain circumstances, include in the
amount on which such taxes are calculated a portion of the interest
income received by the Trust. See "Certain Tax Matters Applicable to
Corporate Unitholders", below;
(2) each Unitholder of a Trust is considered to be the owner of a pro rata
portion of such Trust under Subpart E, subchapter J of Chapter 1 of the
Internal Revenue Code of 1986 (the "Code") and will have a taxable event
when the Trust disposes of a Bond or when the Unitholder redeems or
sells Units. Unitholders must reduce the tax basis of their Units for
their share of accrued interest received by the Trust, if any, on Bonds
delivered after the date the Unitholders pay for their Units and,
consequently, such Unitholders may have an increase in taxable gain or
reduction in capital loss upon the disposition of such Units. Gain or
loss upon the sale or redemption of Units is measured by comparing the
proceeds of such sale or redemption with the adjusted basis of the
Units. If the Trustee disposes of Bonds (whether by sale, payment at
maturity, redemption or otherwise), gain or loss is recognized to the
Unitholder. The amount of any such gain or loss is measured by comparing
the Unitholder's pro rata share of the total proceeds from such
disposition with the Unitholder's basis for his or her fractional
interest in the asset disposed of. In the case of a Unitholder who
purchases Units, such basis (before adjustment for earned original issue
discount and amortized bond premium, if any) is determined by
apportioning the cost of the Units among each of the Trust assets
ratably according to value as of the date of acquisition of the Units.
The tax cost reduction requirements of said Code relating to
amortization of bond premium may, under some circumstances, result in
the Unitholder realizing a taxable gain when his or her Units are sold
or redeemed for an amount equal to their original cost; and
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<PAGE>
(3) any amounts paid on defaulted Bonds held by the Trustee under policies
of insurance issued with respect to such Bonds will be excludable from
Federal gross income if, and to the same extent as, such interest would
have been so excludable if paid by the respective issuer. Paragraph (2)
of this opinion is accordingly applicable to policy proceeds
representing maturing interest.
In the opinion of Carter, Ledyard & Milburn, counsel to the Trustee, and, in the
absence of a New York Trust from the Series, special counsel for the Series for
New York tax matters, under existing law:
Under the income tax laws of the State and City of New York, each Trust
is not an association taxable as a corporation and the income of each Trust
will be treated as the income of the Unitholders.
For a summary of each opinion of special counsel to the respective State
Trusts for state tax matters, see Section 3.
ALL STATEMENTS IN THE PROSPECTUS CONCERNING EXEMPTION FROM FEDERAL, STATE OR
OTHER TAXES ARE THE OPINION OF COUNSEL AND ARE TO BE SO CONSTRUED.
The redemption of Units in a Trust by a Unitholder would result in each of
the remaining Unitholders of said Trust owning a greater proportionate interest
in the remaining assets of said Trust. Although present law does not directly
address this matter, it would appear reasonable that a remaining Unitholder's
tax basis in his Units would include his proportionate share of any proceeds
received by the Trust on the sale of bonds which were not distributed to him but
were instead used by the Trust to redeem Units and that his tax basis in the
remaining assets of the Trust would accordingly be increased by such share of
proceeds, based on the relative fair market value of the remaining assets of the
Trust as of the date of such redemption.
Sections 1288 and 1272 of the Code provide a complex set of rules governing
the accrual of original issue discount. These rules provide that original issue
discount accrues either on the basis of a constant compound interest rate or
ratably over the term of the Bond, depending on the date the Bond was issued. In
addition, special rules apply if the purchase price of a Bond exceeds the
original issue price plus the amount of original issue discount which would have
previously accrued based upon its issue price (its "adjusted issue price"). The
application of these rules will also vary depending on the value of the Bond on
the date a Unitholder acquires his Units, and the price the Unitholder pays for
his Units. The accrual of tax-exempt original issue discount on zero coupon
bonds and other original issue discount bonds will result in an increase in the
Unitholder's basis in such obligations and, accordingly, in his basis in his
Units.
The Tax Act subjects tax-exempt bonds to the market discount rules of the
Code effective for bonds purchased after April 30, 1993. In general, market
discount is the amount (if any) by which the stated redemption price at maturity
exceeds an investor's purchase price (except to the extent that such difference,
if any, is attributable to original issue discount not yet accrued). Under the
Tax Act, accretion of market discount is taxable as ORDINARY INCOME; under prior
law, the accretion had been treated as capital gain. Market discount that
accretes while the Trust holds a Bond would be recognized as ordinary income by
the Unitholders when principal payments are received on the Bond, upon sale or
at redemption (including early redemption), or upon the sale or redemption of
his or her Units, unless a Unitholder elects to include market discount in
taxable income as it accrues. The market discount rules are complex and
Unitholders should consult their tax advisors regarding these rules and their
application.
The Internal Revenue Code provides that interest on indebtedness incurred or
continued to purchase or carry obligations, the interest on which is wholly
exempt from Federal
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income taxes, is not deductible. Because each Unitholder is treated for Federal
income tax purposes as the owner of a pro rata share of the Bonds owned by the
applicable Trust, interest on borrowed funds used to purchase or carry Units of
such Trust will not be deductible for Federal income tax purposes. Under rules
used by the Internal Revenue Service for determining when borrowed funds are
considered used for the purpose of purchasing or carrying particular assets, the
purchase of Units may be considered to have been made with borrowed funds even
though the borrowed funds are not directly traceable to the purchase of Units
(however, these rules generally do not apply to interest paid on indebtedness
incurred to purchase or improve a personal residence). Similar rules are
generally applicable for state tax purposes. Special rules apply in the case of
certain financial institutions that acquire Units. Investors with questions
regarding these issues should consult with their tax advisers.
In general, each issue of bonds in the Trusts is subject to certain
post-issuance requirements which must be met in order for the interest on the
Bonds to be and remain exempt from Federal income taxation. Bond counsel to each
issuer generally has opined that, assuming continuing compliance by such issuers
with certain covenants, interest on such Bonds will continue to be exempt from
Federal income taxation (other than with respect to the application to corporate
Unitholders of the alternative minimum tax or the Superfund Tax, as discussed
below).
For purposes of computing the alternative minimum tax for individuals and
corporations, interest on certain specified tax-exempt private activity bonds is
included as a preference item. The Trusts do not include any such bonds.
For taxpayers other than corporations, net capital gains are presently
subject to a maximum tax rate of 28 percent. However, it should be noted that
legislative proposals are introduced from time to time that affect tax rates and
could affect relative differences at which ordinary income and capital gains are
taxed.
CERTAIN TAX MATTERS APPLICABLE TO CORPORATE UNITHOLDERS. In the case of
certain corporations, the alternative minimum tax and the Superfund Tax depend
upon the corporation's alternative minimum taxable income ("AMTI"), which is the
corporation's taxable income with certain adjustments. One of the adjustment
items used in computing AMTI and the Superfund Tax of a corporation (other than
an S corporation, Regulated Investment Company, Real Estate Investment Trust, or
REMIC) is an amount equal to 75% of the excess of such corporation's "adjusted
current earnings" over an amount equal to its AMTI (before such adjustment item
and the alternative tax net operation loss deduction). Although tax-exempt
interest received by each of the Trusts on Bonds deposited therein will not be
included in the gross income of corporations for Federal income tax purposes,
"adjusted current earnings" includes all tax-exempt interest, including interest
on all Bonds in the Trust and tax-exempt original issue discount.
Corporate Unitholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them resulting under the Federal
tax law, including the corporate alternative minimum tax, the Superfund Tax and
the branch profits tax imposed by Section 884 of the Code.
EXCEPT AS NOTED ABOVE AND IN SECTION 3, THE EXEMPTION OF INTEREST ON STATE
AND LOCAL OBLIGATIONS FOR FEDERAL INCOME TAX PURPOSES 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.
12. WHAT ARE NORMAL TRUST OPERATING EXPENSES?
No annual advisory fee is charged the Trusts by the Sponsor. The Sponsor does,
however, receive a fee of $0.17 per annum per $1,000 principal amount of the
underlying Bonds in
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each Trust for regularly evaluating the Bonds and for maintaining surveillance
over the portfolio. (See Section 16.)
For Traditional Trusts, the Trustee receives for ordinary recurring services
an annual fee computed at $ per $1,000 principal amount of underlying Bonds
in the Trusts for that portion of each Trust under the monthly distribution plan
and $ and $ per $1,000 principal amount of underlying Bonds, respectively,
for those portions of each Trust representing quarterly and semi-annual
distribution plans; for Insured Trusts, the Trustee receives for ordinary
recurring services an annual fee computed at $ per $1,000 principal amount of
underlying Bonds in the Trusts for that portion of each Trust under the monthly
distribution plan and $ and $ per $1,000 principal amount of underlying
Bonds, respectively, for those portions of each Trust representing quarterly and
semi-annual distribution plans. The Trustee's fee may be periodically adjusted
in response to fluctuations in short-term interest rates (reflecting the cost to
the Trustee of advancing funds to a Trust to meet scheduled distributions) and
may be further adjusted in accordance with the cumulative percentage increase of
the United States Department of Labor's Consumer Price Index entitled "All
Services Less Rent" since the establishment of the Trusts. The Trustee has the
use of funds, if any, being held in the Interest and Principal Accounts of each
Trust for future distributions, payment of expenses and redemptions. These
Accounts are non-interest bearing to Unitholders. Pursuant to normal banking
procedures, the Trustee benefits from the use of funds held therein. Part of the
Trustee's compensation for its services to the Fund is expected to result from
such use of these funds.
Premiums for the policies of insurance obtained by the Sponsor or by the
Bond issuers with respect to the Bonds in the Insured Trusts and with respect to
insured Bonds in Traditional Trusts have been paid in full prior to the deposit
of the Bonds in the Trusts, and the value of such insurance has been included in
the evaluation of the Bonds in each Trust and accordingly in the Public Offering
Price of Units of each Trust. There are no annual continuing premiums for such
insurance.
The Sponsor has borne all costs of creating and establishing the Trusts. The
following are expenses of the Trusts and, when paid by or are owed to the
Trustee, are secured by a lien on the assets of the Trust or Trusts to which
such expenses are allocable: (1) the expenses and costs of any action undertaken
by the Trustee to protect the Trusts and the rights and interests of the
Unitholders; (2) all taxes and other governmental charges upon the Bonds or any
part of the Trusts (no such taxes or charges are being levied or made or, to the
knowledge of the Sponsor, contemplated); (3) amounts payable to the Trustee as
fees for ordinary recurring services and for extraordinary non-recurring
services rendered pursuant to the Indenture, all disbursements and expenses
including counsel fees (including fees of bond counsel which the Trustee may
retain) sustained or incurred by the Trustee in connection therewith; and (4)
any losses or liabilities accruing to the Trustee without negligence, bad faith
or willful misconduct on its part. The Trustee is empowered to sell Bonds in
order to pay these amounts if funds are not otherwise available in the
applicable Interest and Principal Accounts.
The Indenture requires each Trust to be audited on an annual basis at the
expense of the Trust by independent public accountants selected by the Sponsor.
The Trustee shall not be required, however, to cause such an audit to be
performed if its cost to a Trust shall exceed $.05 per Unit on an annual basis.
Unitholders of a Trust covered by an audit may obtain a copy of the audited
financial statements upon request.
13. WHEN ARE DISTRIBUTIONS MADE TO UNITHOLDERS?
Interest received by the Trustee on the Bonds in each Trust, including that part
of the proceeds of any disposition of Bonds which represents accrued interest
and including any
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insurance proceeds representing interest due on defaulted Bonds, shall be
credited to the "Interest Account" of such Trust and all other moneys received
by the Trustee shall be credited to the "Principal Account" of such Trust.
The pro rata share of cash in the Principal Account in each Trust will be
computed as of each semi-annual Record Date and distributions to the Unitholders
as of such Record Date will be made on or shortly after the fifteenth day of the
month. Proceeds received from the disposition, including sale, call or maturity,
of any of the Bonds and all amounts paid with respect to zero coupon bonds and
Stripped Obligations will be held in the Principal Account and either used to
pay for Units redeemed or distributed on the Distribution Date following the
next semi-annual Record Date. The Trustee is not required to make a distribution
from the Principal Account of any Trust unless the amount available for
distribution in such account equals at least ten cents per Unit.
The pro rata share of the Interest Account in each Trust will be computed by
the Trustee each month as of each Record Date and distributions will be made on
or shortly after the fifteenth day of the month to Unitholders of such Trust as
of the Record Date who are entitled to distributions at that time under the plan
of distribution chosen. Persons who purchase Units between a Record Date and a
Distribution Date will receive their first distribution on the Distribution Date
following the next Record Date under the applicable plan of distribution.
Purchasers of Units who desire to receive interest distributions on a
monthly or quarterly basis may elect to do so at the time of purchase during the
initial public offering period. Those indicating no choice will be deemed to
have chosen the semi-annual distribution plan. All Unitholders, however, who
purchase Units during the initial public offering period and who hold them of
record on the first Record Date will receive the first distribution of interest.
Thereafter, Record Dates for monthly distributions will be the first day of each
month; Record Dates for quarterly distributions will be the first day of
February, May, August and November; and Record Dates for semi-annual
distributions will be the first day of May and November.
Details of distributions per Unit of each Trust under the various plans
based upon estimated Net Annual Interest Income at the Date of Deposit are shown
in the tables appearing in Section 3. The amount of the regular distributions
will remain the same so long as each Trust portfolio remains the same and fees
and expenses remain the same, and will generally change when Bonds are redeemed,
mature or are sold or when fees and expenses increase or decrease.
The plan of distribution selected by a Unitholder will remain in effect
until changed. Unitholders purchasing Units 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 Section 18.) If no notice is received in proper form by the
Trustee, the Unitholder will be deemed to have elected to continue the same
plan.
As of the first day of each month the Trustee will deduct from the Interest
Account of a Trust or, to the extent funds are not sufficient therein, from the
Principal Account of a Trust, amounts needed for payment of expenses of such
Trust. The Trustee also may withdraw from said accounts such amount, if any, as
it deems necessary to establish a reserve for any
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governmental charges payable out of such Trust. Amounts so withdrawn shall not
be considered a part of the Trust's assets until such time as the Trustee shall
return all or any part of such amounts to the appropriate account.
For the purpose of minimizing fluctuations in the distributions from the
Interest Account of a Trust, the Trustee is authorized to advance such amounts
as may be necessary to provide for interest distributions of approximately equal
amounts. The Trustee shall be reimbursed, without interest, for any such
advances from funds in the Interest Account of such Trust. The Trustee's fee
takes into account the costs attributable to the outlay of capital needed to
make such advances.
The Trustee shall withdraw from the Interest Account and the Principal
Account of a Trust such amounts as may be necessary to cover redemptions of
Units of such Trust by the Trustee. (See Section 19.)
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.
14. ACCUMULATION PLAN
The Sponsor, John Nuveen & Co. Incorporated, is also the principal underwriter
of the Nuveen Municipal Bond Fund, Inc. (the "Bond Fund"), Nuveen Tax-Free
Reserves, Inc. ("Tax-Free Reserves"), Nuveen California Tax-Free Fund, Inc. (the
"California Fund"), Nuveen Tax-Free Bond Fund, Inc. ("Tax-Free Bond Fund"),
Nuveen Insured Tax-Free Bond Fund, Inc. (the "Insured Bond Fund") and Nuveen
Tax-Free Money Market Fund, Inc. (the "Money Market Fund") and the Nuveen
Multistate Tax-Free Trust (the "Multistate Trust"). Each of these funds
(together, the "Accumulation Funds") is an open-end, diversified management
investment company into which Unitholders may choose to reinvest Trust
distributions automatically, without any sales charge. (Reinvestment in the
California Fund is available only to Unitholders who are California residents.
Reinvestment in the State Portfolios of the Tax-Free Bond Fund, the Insured Bond
Fund, the Money Market Fund and the Multistate Trust is available only to
Unitholders who are residents of the states for which such portfolios are
named.) 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 Nuveen Advisory Corp., a wholly-owned
subsidiary of the Sponsor. The following is a general description of the
investment objectives and policies of each Accumulation Fund. For a more
detailed description, Unitholders should read the prospectus of the Accumulation
Fund in which they are interested.
THE BOND FUND
The Bond Fund has the objective of providing, through investment in a
professionally managed portfolio of long-term municipal bonds, as high a level
of current interest income exempt from Federal income tax as is consistent with
preservation of capital. The Bond Fund may include in its portfolio tax-exempt
bonds rated Baa or BBB or better by Moody's or Standard & Poor's, unrated bonds
which, in the opinion of the investment adviser, have credit characteristics
equivalent to bonds rated Baa or BBB or better, and certain temporary
investments, including securities the interest income from which may be subject
to Federal income tax.
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<PAGE>
TAX-FREE RESERVES
Tax-Free Reserves is a "money market" fund that includes in its portfolio
only obligations maturing within one year from the date of acquisition,
maintains an average maturity of all investments of 120 days or less, values its
portfolio at amortized cost and seeks to maintain a net asset value of $1.00 per
share. It provides checkwriting and expedited wire redemption privileges for its
shareholders. Tax-Free Reserves has the objective of providing, through
investment in a professionally managed portfolio of high quality short-term
municipal obligations, as high a level of current interest income exempt from
Federal income tax as is consistent with preservation of capital and the
maintenance of liquidity. Tax-Free Reserves may include in its portfolio
municipal obligations rated Aaa, Aa, MIG-1, VMIG-1 or Prime-1 by Moody's or AAA,
AA, SP-1 or A-1 by Standard & Poor's, unrated municipal obligations that, in the
opinion of the investment adviser, have credit characteristics equivalent to
obligations rated as above, tax-exempt obligations backed by the U.S.
Government, and temporary investments that may be subject to Federal income tax.
THE CALIFORNIA FUND
The California Fund has the objective of providing, through investment in
professionally managed portfolios of California municipal obligations, as high a
level of current interest income exempt from both Federal and California income
taxes as is consistent with the investment policies of each of the portfolios of
the California Fund and with preservation of capital. Each portfolio of the
California Fund may include temporary investments that may be subject to tax.
California Unitholders may reinvest in one of three portfolios of the California
Fund: The Nuveen California Tax-Free Value Fund, the Nuveen California Insured
Tax-Free Value Fund and the Nuveen California Tax-Free Money Market Fund.
The Nuveen California Tax-Free Value Fund invests primarily in long-term
investment grade California tax-exempt bonds (I.E., bonds rated in the four
highest categories by Moody's or Standard & Poor's or, if unrated, that have
equivalent credit characteristics). The Nuveen California Insured Tax-Free Value
Fund invests primarily in the same type of investments as the Special Bond
Portfolio, each of which is covered by insurance guaranteeing the timely payment
of principal and interest or is backed by a deposit of U.S. Government
securities.
The Nuveen California Tax-Free Money Market Fund invests primarily in
high-quality short term California tax-exempt money market instruments (I.E.,
obligations rated in the two highest categories by Moody's or Standard & Poor's
or, if unrated, that have equivalent credit characteristics). This portfolio
will include only obligations maturing within one year from the date of
acquisition, will maintain an average maturity of all investments of 120 days or
less, will value its portfolio at amortized cost and will seek to maintain a net
asset value of $1.00 per share. The Nuveen California Tax-Free Money Market Fund
provides for an expedited wire redemption privilege.
THE TAX-FREE BOND FUND
The Tax-Free Bond Fund consists of the Nuveen Massachusetts Tax-Free Value
Fund, the Nuveen New York Tax-Free Value Fund, the Nuveen Ohio Tax-Free Value
Fund, and the Nuveen New Jersey Tax-Free Value Fund, which are each available
for reinvestment to Unitholders who are residents of the state for which such
portfolio is named. The Tax-Free Bond Fund has the objective of providing,
through investment in a professionally managed portfolio of municipal bonds, as
high a level of current interest income exempt both from Federal income tax and
from the income tax imposed by each portfolio's designated state as is
consistent with preservation of capital. The Tax-Free Bond Fund may include in
each of its portfolios tax-exempt bonds rated Baa or BBB or better; unrated
bonds which, in the opinion
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of the investment adviser, have credit characteristics equivalent to bonds rated
Baa or BBB or better; and certain temporary investments, including securities
the interest income from which may be subject to Federal and state income tax.
THE INSURED BOND FUND
The Insured Bond Fund consists of the Nuveen Insured Municipal Bond Fund,
the Nuveen Massachusetts Insured Tax-Free Value Fund and the Nuveen New York
Insured Tax-Free Value Fund, which are each available for reinvestment to
Unitholders. (The Massachusetts and New York Portfolios are available only to
those Unitholders who are residents of the state for which the portfolio is
named.) The Insured Bond Fund has the objective of providing, through investment
in professionally managed portfolios of municipal bonds, as high a level of
current interest income exempt from both Federal income tax and, in the case of
designated state portfolios, from the income tax imposed by each portfolio's
designated state, as is consistent with preservation of capital. The Insured
Bond Fund may include in each of its portfolios the same type of investments as
the Tax-Free Bond Fund, each of which is covered by insurance guaranteeing the
timely payment of principal and interest or is backed by a deposit of U.S.
Government securities.
THE MONEY MARKET FUND
The Money Market Fund consists of the Nuveen Massachusetts Tax-Free Money
Market Fund and the Nuveen New York Tax-Free Money Market Fund, which are each
available for reinvestment to Unitholders who are residents of the state for
which such portfolio is named. The Money Market Fund includes in its portfolios
only obligations maturing within one year from the date of acquisition,
maintains an average maturity of 120 days or less, values its portfolios at
amortized cost and seeks to maintain a net asset value of $1.00 per share. The
Money Market Fund has the objective of providing, through investment in
professionally managed portfolios of high quality short-term municipal
obligations, as high a level of current interest income exempt both from Federal
income tax and from the income tax imposed by each portfolio's designated state
as is consistent with stability of principal and the maintenance of liquidity.
The Money Market Fund may include in each of its portfolios municipal
obligations rated Aaa, Aa, MIG-1, MIG-2, VMIG-1, VMIG-2, Prime 1 or Prime 2 by
Moody's or AAA, AA, SP-1, SP-2, A-1 or A-2 by Standard & Poor's; unrated
municipal obligations that, in the opinion of the investment adviser, have
credit characteristics equivalent to obligations rated as above; and temporary
investments that may be subject to Federal and state income tax.
THE MULTISTATE TRUST
The Multistate Trust consists of the Nuveen Arizona Tax-Free Value Fund, the
Nuveen Florida Tax-Free Value Fund, the Nuveen Maryland Tax-Free Value Fund, the
Nuveen Michigan Tax-Free Value Fund, the Nuveen New Jersey Tax-Free Value Fund,
the Nuveen Pennsylvania Tax-Free Value Fund and the Nuveen Virginia Tax Free
Value Fund, which are each available for reinvestment to Unitholders who are
residents of the state for which such portfolio is named. The Multistate Trust
has the objective of providing, through investment in a professionally managed
portfolio of municipal bonds, as high a level of current interest income exempt
from both regular Federal income tax and the applicable state personal income
tax as is consistent with preservation of capital. The Multistate Trust may
include in each of its portfolios tax-exempt bonds rated "Baa" or "BBB" or
better, unrated bonds which, in the opinion of the investment advisor, have
credit characteristics equivalent to bonds rated "baa" or "BBB" or better,
limited to no more than 20% of the Multistate Trust's assets, and certain
temporary investments that may be subject to Federal and state income tax.
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Each person who purchases Units of a Trust may become a participant in the
Accumulation Plan and elect to have his or her distributions on Units of the
Trust invested directly in shares of one of the Accumulation Funds. Reinvesting
Unitholders may select any interest distribution plan. Thereafter, each
distribution of interest income or principal on the participant's Units
(principal only in the case of a Unitholder who has chosen to reinvest only
principal distributions) will, on the applicable distribution date, or the next
day on which the New York Stock Exchange is normally open ("business day") if
the distribution date is not a business day, automatically be received by
Shareholder Services, Inc., 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.
Shareholder Services, Inc. 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 Shareholder Services, Inc. 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.
15. HOW DETAILED ARE REPORTS TO UNITHOLDERS?
The Trustee shall furnish Unitholders of a Trust in connection with each
distribution, a statement of the amount of interest and, if any, the amount of
other receipts (received since the preceding distribution) being distributed,
expressed in each case as a dollar amount representing the pro rata share of
each Unit of a Trust outstanding and a year to date summary of all distributions
paid on said Units. Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish to each person who at any time during
the calendar year was a registered Unitholder of a Trust a statement with
respect to such Trust (i) as to the Interest Account: interest received
(including amounts representing interest received upon any disposition of
Bonds), and, except for any State Trust, the percentage of such interest by
states in which the issuers of the Bonds are located, deductions for fees and
expenses of such Trust, redemption of Units and the balance remaining after such
distributions and deductions, expressed in each case both as a total dollar
amount and as a dollar amount representing the pro rata share of each Unit
outstanding on the last business day of such calendar year; (ii) as to the
Principal Account: the dates of disposition of any Bonds and the net proceeds
received therefrom (excluding any portion representing accrued interest), the
amount paid for purchase of Replacement Bonds, the amount paid upon redemption
of Units, deductions for payment of applicable taxes and fees and expenses of
the Trustee, and the balance remaining after such distributions and deductions
expressed both as a total dollar amount and as a dollar amount representing the
pro rata share of each Unit outstanding on the last business day of such
calendar year; (iii) a list of the Bonds held and the number of Units
outstanding on the last business day of such calendar year; (iv) the
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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.
16. UNIT VALUE AND EVALUATION
The value of each Trust is determined by the Sponsor on the basis of (1) the
cash on hand in the Trust or moneys in the process of being collected, (2) the
value of the Bonds in the Trust based on the BID prices of the Bonds and (3)
interest accrued thereon not subject to collection, LESS (1) amounts
representing taxes or governmental charges payable out of the Trust and (2) the
accrued expenses of the Trust. The result of such computation is divided by the
number of Units of such Trust outstanding as of the date thereof to determine
the per Unit value ("Unit Value") of such Trust. The Sponsor may determine the
value of the Bonds in each Trust (1) on the basis of current BID prices of the
Bonds obtained from dealers or brokers who customarily deal in bonds comparable
to those held by the Trust, (2) if bid prices are not available for any of the
Bonds, on the basis of bid prices for comparable bonds, (3) by causing the value
of the Bonds to be determined by others engaged in the practice of evaluating,
quoting or appraising comparable bonds or (4) by any combination of the above.
Although the Unit Value of each Trust is based on the BID prices of the Bonds,
the Units are sold initially to the public at the Public Offering Price based on
the OFFERING prices of the Bonds.
Because the insurance obtained by the Sponsor or by the issuers of Bonds
with respect to the Bonds in the Insured Trusts and with respect to insured
Bonds in Traditional Trusts is effective so long as such Bonds are outstanding,
such insurance will be taken into account in determining the bid and offering
prices of such Bonds and therefore some value attributable to such insurance
will be included in the value of Units of Trusts that include such Bonds.
17. HOW UNITS OF THE TRUSTS ARE DISTRIBUTED TO THE PUBLIC
John Nuveen & Co. Incorporated is the Sponsor and sole Underwriter of the Units.
It is the intention of the Sponsor to qualify Units of National, Long
Intermediate, Intermediate, Short Intermediate and Short Term Trusts for sale
under the laws of substantially all of the states, and Units of State Trusts
only in the state for which the Trust is named and selected other states.
Promptly following the deposit of Bonds in exchange for Units of the Trusts,
it is the practice of the Sponsor to place all of the Units as collateral for a
letter or letters of credit from one or more commercial banks under an agreement
to release such Units from time to time as needed for distribution. Under such
an arrangement the Sponsor pays such banks compensation based on the then
current interest rate. This is a normal warehousing arrangement during the
period of distribution of the Units to public investors.
The Sponsor plans to allow a discount to brokers and dealers in connection
with the primary distribution of Units and also in secondary market
transactions. The primary market discounts are as follows:
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<TABLE>
<CAPTION>
Discount per Unit
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
National Long Inter- Short Inter-
and State mediate Intermediate mediate Short Term
Number of Units* Trusts Trusts Trusts Trusts Trusts
- ------------------------------ ---------- ------------- ------------- ------------- -----------
Less than 500................. $3.20 $2.90 $2.70 $2.00 $1.50
500 but less than 1,000....... 3.20 2.90 2.70 2.00 1.50
1,000 but less than 2,500..... 3.20 2.70 2.50 1.80 1.30
2,500 but less than 5,000..... 3.20 2.45 2.25 1.55 1.05
5,000 but less than 10,000.... 2.50 2.45 2.25 1.55 1.05
10,000 but less than 25,000... 2.00 2.00 2.00 1.30 .80
25,000 but less than 50,000... 1.75 1.75 1.75 1.30 .60
50,000 or more................ 1.75 1.50 1.50 1.00 .60
</TABLE>
*Breakpoint sales charges and related dealer concessions are computed both on a
dollar basis and on the basis of the number of Units purchased, using the
equivalent of 500 Units to $50,000, 2,500 Units to $250,000 etc. and will be
applied on that basis which is more favorable to the purchaser.
The Sponsor currently intends to maintain a secondary market for Units of
each Trust. See Section 7. The amount of the dealer concession on secondary
market purchases of Trust Units through the Sponsor will be computed based upon
the value of the Bonds in the Trust portfolio, including the sales charge
computed as described in Section 6, and adjusted to reflect the cash position of
the Trust principal account, and will vary with the size of the purchase as
shown in the following table:
<TABLE>
<CAPTION>
Amount of Purchase*
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$50,000 $100,000 $250,000 $500,000 $1,000,000 $1,500,000
Under to to to to to to $3,000,000
Years to Maturity $50,000 $99,999 $249,999 $499,999 $999,999 $1,499,999 $2,999,999 or more
- -------------------------- --------- --------- --------- --------- --------- ---------- ---------- ----------
Less than 1............... 0 0 0 0 0 0 0 0
1 but less than 2......... 1.00% .90% .85% .80% .70% .55% .467% .389%
2 but less than 3......... 1.30% 1.20% 1.10% 1.00% .90% .70% .634% .538%
3 but less than 4......... 1.60% 1.45% 1.35% 1.25% 1.10% .90% .781% .662%
4 but less than 5......... 2.00% 1.85% 1.75% 1.55% 1.40% 1.25% 1.082% .914%
5 but less than 7......... 2.30% 2.15% 1.95% 1.80% 1.65% 1.50% 1.320% 1.140%
7 but less than 10........ 2.60% 2.45% 2.25% 2.10% 1.95% 1.70% 1.496% 1.292%
10 but less than 13....... 3.00% 2.80% 2.60% 2.45% 2.30% 2.00% 1.747% 1.494%
13 but less than 16....... 3.25% 3.15% 3.00% 2.75% 2.50% 2.15% 1.878% 1.606%
16 or more................ 3.50% 3.50% 3.50% 3.35% 3.00% 2.50% 2.185% 1.873%
</TABLE>
*Breakpoint sales charges and related dealer concessions are computed both on a
dollar basis and on the basis of the number of Units purchased, using the
equivalent of 1,000 Units to $100,000, 2,500 Units to $250,000, etc., and will
be applied on that basis which is more favorable to the purchaser.
The Sponsor reserves the right to change the foregoing dealer concessions
from time to time.
Certain commercial banks are making Units of the Trusts available to their
customers on an agency basis. A portion of the sales charge paid by these
customers is retained by or remitted to the banks in the amounts shown in the
above table. The Glass-Steagall Act prohibits banks from underwriting Trust
Units; the Act does, however, permit certain agency transactions and banking
regulators have not indicated that these particular agency transactions are not
permitted under the Act. In Texas and in certain other states, any bank making
Units available must be registered as a broker-dealer under state law.
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.
18. OWNERSHIP AND TRANSFER OF UNITS
The ownership of Units is evidenced by book entry positions recorded on the
books and records of the Trustee unless the Unitholder expressly requests that
the purchased Units be evidenced in Certificate form. The Trustee is authorized
to treat as the owner of Units that
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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.
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 corporate trust office in New York
City, 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 member of an approved
Medallion Guarantee Program or in such other manner as may be 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.
The indemnification protects the Trustee, Sponsor, and Trust from risk if
the original Certificate is presented for transfer or redemption by a person who
purchased it in good faith, for value and without notice of any fraud or
irregularity.
This indemnification must be in the form of an Open Penalty Bond of
Indemnification. The premium for such an indemnity bond may vary from time to
time, but currently amounts to 1 1/2% of the market value of the Units
represented by the Certificate. In the case however, of a Trust as to which
notice of termination has been given, the premium currently amounts to 1% of the
market value of the Units represented by such Certificate.
19. HOW UNITS MAY BE REDEEMED WITHOUT CHARGE
Unitholders may redeem all or a portion of their Units by (1) making a written
request for such redemption (book entry Unitholders may use the redemption form
on the reverse side
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of their Book Entry Position Confirmation) to the Trustee at its corporate trust
office in New York City (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 in
Section 18 above, 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. In order to effect a redemption of
Units evidenced by a Certificate, a Unitholder must tender the Certificate to
the Trustee or provide satisfactory indemnity required in connection with lost,
stolen or destroyed Certificates (See Section 18). 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 person. If the telephone redemption request
is received prior to 4:00 p.m. eastern time, the Unitholder will be entitled to
receive for each Unit tendered the Redemption Price as determined above. A
telephone redemption request received after 4:00 p.m. eastern time will be
treated as having been received the following business day. The redemption
proceeds will be mailed within seven calendar days following the telephone
redemption request. Telephone redemptions are limited to 1,000 Units or less.
Only Units held in the name of individuals may be redeemed by telephone;
accounts registered in broker name, or accounts of corporations or fiduciaries
(including among others, trustees, guardians, executors and administrators) may
not use the telephone redemption privilege.
On the seventh calendar day following the date of tender, or if the seventh
calendar day is not a business day, on the first business day prior thereto, the
Unitholder will be entitled to receive in cash for each Unit tendered an amount
equal to the Unit Value of such Trust determined by the Trustee, as of 4:00 p.m.
eastern time on the date of tender as defined hereafter, plus accrued interest
to, but not including, the fifth business day after the date of tender
("Redemption Price"). The price received upon redemption may be more or less
than the amount paid by the Unitholder depending on the value of the Bonds on
the date of tender. Such value will vary with market and credit conditions,
including changes in interest rate levels. Unitholders should check with the
Trustee or their broker to determine the Redemption Price before tendering
Units.
While the Trustee has the power to determine Redemption Price when Units are
tendered, the authority has by practice been delegated by the Trustee to John
Nuveen & Co. Incorporated, which determines the Redemption Price on a daily
basis.
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 on any day
on which the New York Stock Exchange (the "Exchange") is normally closed, the
date of tender is the next day on which such Exchange is normally open for
trading and such request will be deemed to have been made on such day and the
redemption will be effected at the Redemption Price computed on that day.
Accrued interest paid on redemption shall be withdrawn from the Interest
Account of the appropriate Trust or, if the balance therein is insufficient,
from the Principal Account of such Trust. All other amounts paid on redemption
shall be withdrawn from the Principal
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Account. The Trustee is empowered to sell underlying Bonds of a Trust in order
to make funds available for redemption. (See Section 21.) Units so redeemed
shall be cancelled.
To the extent that Bonds are sold from a Trust, the size and diversity of
such Trust will be reduced. Such sales may be required at a time when Bonds
would not otherwise be sold and might result in lower prices than might
otherwise be realized.
The Redemption Price is determined on the basis of the BID prices of the
Bonds in each Trust, while the initial Public Offering Price of Units will be
determined on the basis of the OFFERING prices of the Bonds as of 4:00 p.m.
eastern time on any day on which the Exchange is normally open for trading and
such determination is made. As of any given time, the difference between the bid
and offering prices of such Bonds may be expected to average 1% to 2% of
principal amount in the case of Bonds in National, Long Intermediate and State
Trusts, 3/4% to 1 1/2% in the case of Bonds in Intermediate, and Short
Intermediate Trusts and 1/2% to 3/4% in the case of Bonds in Short Term Trusts.
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 difference between the aggregate offering prices of the
Bonds in each Trust and the aggregate bid prices thereof on the business day
prior to the Date of Deposit is shown in the discussion of specific trust
matters.
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 31% 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."
20. 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 Section 19.) 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.
The Public Offering Price upon resale of any Units thus acquired by the
Sponsor will be calculated in accordance with the procedure described in the
then currently effective prospectus relating to such Units. Any profit resulting
from the resale of such Units will belong to the Sponsor which likewise will
bear any loss resulting from a lower Public Offering Price or Redemption Price
subsequent to its acquisition of such Units.
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21. HOW BONDS MAY BE REMOVED FROM THE TRUSTS
Bonds will be removed from a Trust as they mature or are redeemed by the issuers
thereof. See the "Schedules of Investments" and "General Trust Information"
under Section 3 for a discussion of call provisions of portfolio Bonds.
The Indenture also empowers the Trustee to sell Bonds for the purpose of
redeeming Units tendered by any Unitholder, and for the payment of expenses for
which income may not be available. Under the Indenture the Sponsor is obligated
to provide the Trustee with a current list of Bonds in each Trust to be sold in
such circumstances. In deciding which Bonds should be sold the Sponsor intends
to consider, among other things, such factors as: (1) market conditions; (2)
market prices of the Bonds; (3) the effect on income distributions to
Unitholders of the sale of various Bonds; (4) the effect on principal amount of
underlying Bonds per Unit of the sale of various Bonds; (5) the financial
condition of the issuers; and (6) the effect of the sale of various Bonds on the
investment character of the Trust. Such sales, if required, could result in the
sale of Bonds by the Trustee at prices less than original cost to the Trust. To
the extent Bonds are sold, the size and diversity of such Trust will be reduced.
In addition, the Sponsor is empowered to direct the Trustee to liquidate
Bonds upon the happening of certain other events, such as default in the payment
of principal and/or interest, an action of the issuer that will adversely affect
its ability to continue payment of the principal of and interest on its Bonds,
or an adverse change in market, revenue or credit factors affecting the
investment character of the Bonds. If a default in the payment of the principal
of and/or interest on any of the Bonds occurs, and if the Sponsor fails to
instruct the Trustee whether to sell or continue to hold such Bonds within 30
days after notification by the Trustee to the Sponsor of such default, the
Indenture provides that the Trustee shall liquidate said Bonds forthwith and
shall not be liable for any loss so incurred.
In connection with its determination as to the sale or liquidation of any
Bonds, the Sponsor will consider the Bond's then current rating, but because
such ratings are the opinions of the rating agencies as to the quality of Bonds
they undertake to rate and not absolute standards of quality, the Sponsor will
exercise its independent judgment as to Bond creditworthiness.
The Sponsor may also direct the Trustee to liquidate Bonds in a Trust if the
Bonds in the Trust are the subject of an advanced refunding, generally
considered to be when refunding bonds are issued and the proceeds thereof are
deposited in irrevocable trust to retire the refunded Bonds on their redemption
date.
Except as stated in Section 4 regarding the limited right of substitution of
Replacement Bonds for Failed Bonds, and except for refunding securities that may
be exchanged for Bonds under certain conditions specified in the Indenture, the
Indenture does not permit either the Sponsor or the Trustee to acquire or
deposit bonds either in addition to, or in substitution for, any of the Bonds
initially deposited in a Trust.
22. INFORMATION ABOUT THE TRUSTEE
The Trustee is United States Trust Company of New York, with its principal place
of business at 114 West 47th Street, New York, New York 10036 and its corporate
trust office at 770 Broadway, New York, New York 10003. United States Trust
Company of New York, established in 1853, has, since its organization, engaged
primarily in the management of trust and agency accounts for individuals and
corporations. The Trustee is a member of the New York Clearing House Association
and is subject to supervision and examination by the Superintendent of Banks of
the State of New York, the Federal Deposit Insurance Corporation and the Board
of Governors of the Federal Reserve System. In connection with the storage and
handling of certain Bonds deposited in the Trusts, the Trustee may use the
services of The Depository Trust Company. These services would include
safekeeping of the Bonds and
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coupon-clipping, computer book-entry transfer and institutional delivery
services. The Depository Trust Company is a limited purpose trust company
organized under the Banking Law of the State of New York, a member of the
Federal Reserve System and a clearing agency registered under the Securities
Exchange Act of 1934.
LIMITATIONS ON LIABILITIES OF SPONSOR AND TRUSTEE
The Sponsor and the Trustee shall be under no liability to Unitholders for
taking any action or for refraining from any action in good faith pursuant to
the Indenture, or for errors in judgment, but shall be liable only for their own
negligence, lack of good faith or willful misconduct. The Trustee shall not be
liable for depreciation or loss incurred by reason of the sale by the Trustee of
any of the Bonds. In the event of the failure of the Sponsor to act under the
Indenture, the Trustee may act thereunder and shall not be liable for any action
taken by it in good faith under the Indenture.
The Trustee shall not be liable for any taxes or other governmental charges
imposed upon or in respect of the Bonds or upon the interest thereon or upon it
as Trustee under the Indenture or upon or in respect of any Trust which the
Trustee may be required to pay under any present or future law of the United
States of America or of any other taxing authority having jurisdiction. In
addition, the Indenture contains other customary provisions limiting the
liability of the Trustee.
SUCCESSOR TRUSTEES AND SPONSORS
The Trustee or any successor trustee may resign by executing an instrument
of resignation in writing and filing same with the Sponsor and mailing a copy of
a notice of resignation to all Unitholders then of record. Upon receiving such
notice, the Sponsor is required to promptly appoint a successor trustee. If the
Trustee becomes incapable of acting or is adjudged a bankrupt or insolvent, or a
receiver or other public officer shall take charge of its property or affairs,
the Sponsor may remove the Trustee and appoint a successor by written
instrument. The resignation or removal of a trustee and the appointment of a
successor trustee shall become effective only when the successor trustee accepts
its appointment as such. Any successor trustee shall be a corporation authorized
to exercise corporate trust powers, having capital, surplus and undivided
profits of not less than $5,000,000. Any corporation into which a trustee may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which a trustee shall be a party, shall be the
successor trustee.
If upon resignation of a trustee no successor has been appointed and has
accepted the appointment within 30 days after notification, the retiring trustee
may apply to a court of competent jurisdiction for the appointment of a
successor.
If the Sponsor fails to undertake any of its duties under the Indenture, and
no express provision is made for action by the Trustee in such event, the
Trustee may, in addition to its other powers under the Indenture (1) appoint a
successor sponsor or (2) terminate the Indenture and liquidate the Trusts.
23. INFORMATION ABOUT THE SPONSOR
John Nuveen & Co. Incorporated, the Sponsor and Underwriter, was founded in 1898
and is the oldest and largest investment banking firm specializing in the
underwriting and distribution of tax-exempt securities and maintains the largest
research department in the investment banking community devoted exclusively to
the analysis of municipal securities. In 1961 the Sponsor began sponsoring the
Nuveen Tax-Exempt Unit Trust and, since this time, it has issued more than $30
billion in tax-exempt unit trusts, including over $8 billion in insured trusts.
The Sponsor is also principal underwriter of the Nuveen Municipal Bond Fund,
Inc., the Nuveen Tax-Exempt Money Market Fund, Inc., Nuveen Tax-Free Reserves,
Inc., Nuveen California Tax-Free Fund, Inc., Nuveen Tax-Free Bond Fund, Inc.,
Nuveen
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Insured Tax-Free Bond Fund, Inc. and Nuveen Tax-Free Money Market Fund, Inc.,
all registered open-end management investment companies, and acted as
co-managing underwriter of Nuveen Municipal Value Fund, Inc., Nuveen California
Municipal Value Fund, Inc., Nuveen New York Municipal Value Fund, Inc., Nuveen
Municipal Income Fund, Inc., Nuveen California Municipal Income Fund, Inc.,
Nuveen New York Municipal Income Fund, Inc., Nuveen Premium Income Municipal
Fund, Inc., Nuveen Performance Plus Municipal Fund, Inc., Nuveen California
Performance Plus Municipal Fund, Inc., Nuveen New York Performance Plus
Municipal Fund, Inc., Nuveen Municipal Advantage Fund, Inc., Nuveen Municipal
Market Opportunity Fund, Inc., Nuveen California Municipal Market Opportunity
Fund, Inc., Nuveen New York Municipal Market Opportunity Fund, Inc., Nuveen
Investment Quality Municipal Fund, Inc., Nuveen California Investment Quality
Municipal Fund, Inc., Nuveen New York Investment Quality Municipal Fund, Inc.,
Nuveen Insured Quality Municipal Fund, Inc., Nuveen Florida Investment Quality
Municipal Fund, Nuveen Pennsylvania Investment Quality Municipal Fund, Nuveen
New Jersey Investment Quality Municipal Fund, Inc., and the Nuveen Select
Quality Municipal Fund, Inc., Nuveen California Quality Municipal Fund, Inc.,
Nuveen New York Select Quality Municipal Fund, Inc., Nuveen Quality Income
Municipal Fund, Inc., Nuveen Insured Municipal Opportunity Fund, Inc., Nuveen
Florida Quality Income Municipal Fund, Nuveen Michigan Quality Income Municipal
Fund, Inc., Nuveen New Jersey Quality Income Municipal Fund, Inc., Nuveen Ohio
Quality Income Municipal Fund, Inc., Nuveen Pennsylvania Quality Income
Municipal Fund, Nuveen Texas Quality Income Municipal Fund, Nuveen California
Quality Income Municipal Fund, Inc., Nuveen New York Quality Income Municipal
Fund, Inc., Nuveen Premier Insured Municipal Income Fund, Inc., Nuveen Select
Tax Free Income Portfolio, Nuveen Select Tax Free Income Portfolio 2, Nuveen
Insured California Select Tax-Free Income Portfolio, Nuveen Insured New York
Select Tax-Free Income Portfolio, Nuveen Premium Income Municipal Fund 2, Inc.,
Nuveen Select Tax Free Income Portfolio 3, Nuveen Select Maturities Municipal
Fund, Nuveen Select Tax Free Income Portfolio 4, Nuveen Premium Income Municipal
Fund 3, Inc., Nuveen Insured California Premium Income Municipal Fund, Inc.,
Nuveen Arizona Premium Income Municipal Fund, Inc., Nuveen Insured Premium
Income Municipal Fund, Inc., Nuveen Insured Florida Premium Income Municipal
Fund, Nuveen Michigan Premium Income Municipal Fund, Inc., Nuveen New Jersey
Premium Income Municipal Fund, Inc., Nuveen Insured New York Premium Income
Municipal Fund, Inc., Nuveen Ohio Premium Income Municipal Fund, Inc., Nuveen
Pennsylvania Premium Income Municipal Fund, Nuveen Texas Premium Income
Municipal Fund, Nuveen Premium Income Municipal Fund 4, Inc., Nuveen
Pennsylvania Premium Income Municipal Fund 2, Nuveen Insured Florida Premium
Income Municipal Fund 2, Nuveen Maryland Premium Income Municipal Fund, Nuveen
Virginia Premium Income Municipal Fund, Nuveen Massachusetts Premium Income
Municipal Fund, Nuveen Insured California Premium Income Municipal Fund 2, Inc.,
Nuveen Insured New York Premium Income Municipal Fund 2, Nuveen New Jersey
Premium Income Municipal Fund 2, Nuveen Washington Premium Income Municipal
Fund, Nuveen Michigan Premium Income Municipal Fund 2, Nuveen Premium Income
Municipal Fund 5, Nuveen Georgia Premium Income Municipal Fund, Nuveen Missouri
Premium Income Municipal Fund, Nuveen Connecticut Premium Income Municipal Fund,
Nuveen North Carolina Premium Income Municipal Fund, Nuveen New Jersey Premium
Income Municipal Fund 3, Nuveen Florida Premium Income Municipal Fund, Nuveen
New York Premium Income Municipal Fund, Nuveen California Premium Income
Municipal Fund, Nuveen Pennsylvania Premium Income Municipal Fund 3, Nuveen
Maryland Income Municipal Fund 2, Nuveen Virginia Premium Income Municipal Fund
2, Nuveen Ohio Premium Income Municipal Fund 2, Nuveen Insured Premium Income
Municipal Fund 2, Nuveen California Premium Income Municipal Fund 2, Nuveen
Premium Income Municipal Fund 6, registered closed-end management investment
companies. These registered open-end and closed-end investment companies
currently have approximately $32.8 billion in tax-exempt securities under
management. Nationwide, more than 1,000,000 individual investors have purchased
Nuveen's tax exempt trusts and funds. The present corporation was organized in
1967 as a wholly-owned subsidiary of Nuveen
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Corporation, successor to the original John Nuveen & Co. founded in 1898 as a
sole proprietorship and incorporated in 1953. In 1974, John Nuveen & Co.
Incorporated became a wholly-owned subsidiary of The St. Paul Companies, Inc., a
financial services management company located in St. Paul, Minnesota. On May 19,
1992, common shares comprising a minority interest in The John Nuveen Company
("JNC"), a newly organized corporation which holds all of the shares of Nuveen,
were sold to the general public in an initial public offering. St. Paul retains
a controlling interest in JNC with over 70% of JNC's shares. The Sponsor is a
member of the National Association of Securities Dealers, Inc. and the
Securities Industry Association and has its principal offices located in Chicago
(333 W. Wacker Drive) and New York (140 Broadway). It maintains 12 regional
offices.
24. OTHER INFORMATION
AMENDMENT OF INDENTURE
The Indenture may be amended by the Trustee and the Sponsor without the
consent of any of the Unitholders (1) to cure any ambiguity or to correct or
supplement any provision thereof which may be defective or inconsistent, or (2)
to make such other provisions as shall not adversely affect the Unitholders,
provided, however, that the Indenture may not be amended to increase the number
of Units in any Trust or to permit the deposit or acquisition of bonds either in
addition to, or in substitution for any of the Bonds initially deposited in any
Trust except as stated in Section 4 regarding the limited right of substitution
of Replacement Bonds and except for the substitution of refunding bonds under
certain circumstances. The Trustee shall advise the Unitholders of any amendment
promptly after execution thereof.
TERMINATION OF INDENTURE
Each Trust may be liquidated at any time by written consent of 100% of the
Unitholders or by the Trustee when the value of such Trust, as shown by any
semi-annual evaluation, is less than 20% of the original principal amount of
such Trust and will be liquidated by the Trustee in the event that Units not yet
sold aggregating more than 60% of the Units originally created are tendered for
redemption by the Sponsor thereby reducing the net worth of such Trust to less
than 40% of the principal amount of the Bonds originally deposited in the
portfolio. (See "Essential Information Regarding the Trusts.") The sale of Bonds
from the Trusts upon termination may result in realization of a lesser amount
than might otherwise be realized if such sale were not required at such time.
For this reason, among others, the amount realized by a Unitholder upon
termination may be less than the principal amount of Bonds originally
represented by the Units held by such Unitholder. The Indenture will terminate
upon the redemption, sale or other disposition of the last Bond held thereunder,
but in no event shall it continue beyond the end of the calendar year preceding
the fiftieth anniversary of its execution for National and State Trusts, beyond
the end of the calendar year preceding the twentieth anniversary of its
execution for Long Intermediate, and Intermediate Trusts or beyond the end of
the calendar year preceding the tenth anniversary of its execution for Short
Intermediate and Short Term Trusts.
Written notice of any termination specifying the time or times at which
Unitholders may surrender their Certificates, if any, for cancellation shall be
given by the Trustee to each Unitholder at the address appearing on the
registration books of the Trust maintained by the Trustee. Within a reasonable
time thereafter the Trustee shall liquidate any Bonds in the Trust then held and
shall deduct from the assets of the Trust any accrued costs, expenses or
indemnities provided by the Indenture which are allocable to such Trust,
including estimated compensation of the Trustee and costs of liquidation and any
amounts required as a reserve to provide for payment of any applicable taxes or
other governmental charges. The Trustee shall then distribute to Unitholders of
such Trust their pro rata share of the balance of the Interest and Principal
Accounts. With such distribution the Unitholders shall be furnished a final
distribution statement, in substantially the same form as the annual
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distribution statement, of the amount distributable. At such time as the Trustee
in its sole discretion shall determine that any amounts held in reserve are no
longer necessary, it shall make distribution thereof to Unitholders in the same
manner.
LEGAL OPINION
The legality of the Units offered hereby has been passed upon by Chapman and
Cutler, 111 West Monroe Street, Chicago, Illinois 60603. Special counsel for the
Trusts for respective state tax matters are named in "Tax Status" for each Trust
under Section 3. Carter, Ledyard & Milburn, 2 Wall Street, New York, New York
10005, has acted as counsel for the Trustee with respect to the Series, and, in
the absence of a New York Trust from the Series, as special New York tax counsel
for the Series.
AUDITORS
The Statements of Condition and Schedules of Investments at Date of Deposit
included in this Prospectus have been audited by Arthur Andersen & Co.,
independent public accountants, as indicated in their report in this Prospectus,
and are included herein in reliance upon the authority of said firm as experts
in giving said report.
A-37
<PAGE>
DESCRIPTION OF RATINGS*
STANDARD & POOR'S CORPORATION. A description of the applicable Standard &
Poor's Corporation rating symbols and their meanings follows:
A Standard & Poor's rating is a current assessment of the creditworthiness
of an obligor with respect to a specific debt obligation. This assessment may
take into consideration obligors such as guarantors, insurers or lessees.
The rating is not a recommendation to purchase, sell or hold a security,
inasmuch as it does not comment as to market price or suitability for a
particular investor.
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. Standard
& Poor's does not perform an audit in connection with any rating and may, on
occasion, rely on unaudited financial information. The ratings may be changed,
suspended or withdrawn as a result of changes in, or unavailability of, such
information, or for other circumstances.
The ratings are based, in varying degrees, on the following considerations:
I. Likelihood of default--capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance
with the terms of the obligation;
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or other arrangements under
the laws of bankruptcy and other laws affecting creditors' rights.
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.
AA--Bonds rated AA have a very strong capacity to pay interest and repay
principal, and differ from the highest rated issues only in small degree.
A--Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in the higher rated categories.
Plus (+) or Minus (-): The ratings from "AA" to "BB" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
Provisional Ratings: The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful completion of the
project being financed by the issuance of the bonds being rated and indicates
that payment of debt service requirements is largely or entirely dependent upon
the successful and timely completion of the project. This rating, however, while
addressing credit quality subsequent to completion of the project, makes no
comment on the likelihood of, or the risk of default upon failure of, such
completion. Accordingly, the investor should exercise his own judgment with
respect to such likelihood and risk.
- ----------
*As published by the rating companies.
A-38
<PAGE>
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.
RATINGS OF INSURED TRUST UNITS.
A Standard & Poor's Corporation's rating on the units of an insured
investment trust (hereinafter referred to collectively as "units" and "trusts")
is a current assessment of creditworthiness with respect to the investment held
by such trust. This assessment takes into consideration the financial capacity
of the issuers and of any guarantors, insurers, lessees or mortgagors with
respect to such investments. The assessment, however, does not take into account
the extent to which trust expenses or portfolio asset sales for less than the
trust purchase price will reduce payment to the unitholder of the interest and
principal required to be paid on the portfolio assets. In addition, the rating
is not a recommendation to purchase, sell or hold units, inasmuch as the rating
does not comment as to market price of the units or suitability for a particular
investor.
Units rated "AAA" are composed exclusively of assets that are rated "AAA" by
Standard & Poor's and/or certain short-term investments. Standard & Poor's
defines its AAA rating for such assets as the highest rating assigned by
Standard & Poor's to a debt obligation. Capacity to pay interest and repay
principal is very strong. However, unit ratings may be subject to revision or
withdrawal at any time by Standard & Poor's and each rating should be evaluated
independently of any other rating.
MOODY'S INVESTORS SERVICE, INC. A brief description of the applicable
Moody's Investors Service, Inc. rating symbols and their meanings follows:
Aaa--Bonds which are rated Aaa are judged to be the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues. Their safety is so absolute that,
with the occasional exception of oversupply in a few specific instances,
characteristically, their market value is affected solely by money market
fluctuations.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities. Their market value is virtually immune to all but money market
influences, with the occasional exception of oversupply in a few specific
instances.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future. The market
value of A-rated bonds may be
A-39
<PAGE>
influenced to some degree by economic performance during a sustained period of
depressed business conditions, but, during periods of normalcy, A-rated bonds
frequently move in parallel with Aaa and Aa obligations, with the occasional
exception of oversupply in a few specific instances.
Moody's bond rating symbols may contain numerical modifiers of a generic
rating classification. The modifier 1 indicates that the bond ranks at the high
end of its category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of its generic rating
category.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well. The market value of Baa-rated
bonds is more sensitive to changes in economic circumstances, and aside from
occasional speculative factors applying to some bonds of this class, Baa market
valuations move in parallel with Aaa, Aa and A obligations during periods of
economic normalcy, except in instances of oversupply.
Con. (--)--Bonds for which the security depends upon the completion of some
act or the fulfillment of some condition are rated conditionally. These are
bonds secured by (a) earnings of projects under construction, (b) earnings of
projects unseasoned in operation experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting condition
attaches. Parenthetical rating denotes probable credit stature upon completion
of construction or elimination of basis of condition.
Note Ratings:
MIG 1--This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2--This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
A-40
<PAGE>
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A-41
<PAGE>
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A-42
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
A-43
<PAGE>
<TABLE>
<C> <S> <C>
NUVEEN Tax-Exempt Unit Trusts
PROSPECTUS
220,000 Units
Maryland Traditional Trust
291
National Insured Trust 265
Arizona Insured Trust 31
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
NUVEEN Tax-Exempt Unit Trusts
Sponsor John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
Telephone: 312.917.7700
Swiss Bank Tower
10 East 50th Street
New York, NY 10022
212.207.2000
Trustee United States Trust Company
of New York
770 Broadway
New York, NY 10003
800.257.8787
Legal Counsel Chapman and Cutler
to Sponsor 111 West Monroe Street
Chicago, IL 60603
Independent Arthur Andersen & Co.
Public 33 West Monroe Street
Accountants Chicago, IL 60603
for the Trusts
</TABLE>
Except as to statements made herein furnished by the Trustee, the Trustee has
assumed no responsibility for the accuracy, adequacy and completeness of the
information contained in this Prospectus.
This Prospectus does not contain all of the information set
forth in the registration statement and exhibits relating thereto, filed with
the Securities and Exchange Commission, Washington, D.C., under the
Securities Act of 1933, and to which reference is made.
No person is authorized to give any information or to make
representations not contained in this Prospectus or in supplementary sales
literature prepared by the Sponsor, and any information or representation not
contained therein must not be relied upon as having been authorized by either
the Trusts, the Trustee or the Sponsor. This Prospectus does not constitute
an offer to sell, or a solicitation of an offer to buy, securities in any
State to any person to whom it is not lawful to make such offer in such
state. The Trusts are registered as a Unit Investment Trust under the
Investment Company Act of 1940. Such registration does not imply that the
Trusts or any of their Units has been guaranteed, sponsored, recommended or
approved by the United States or any State or agency or officer thereof.
724
<PAGE>
*********************************************
* PRELIMINARY PROSPECTUS DATED 03/07/94 *
*********************************************
NUVEEN TAX-EXEMPT UNIT TRUST
- ------------------------------------------------------------------------------
100,000 UNITS SERIES 724
(A Unit Investment Trust)
- ------------------------------------------------------------------------------
The attached Preliminary Prospectus is based on a final Prospectus
for a prior Series. Although the attached Prospectus includes trusts as
indicated therein, the specific trusts included in this Series when deposited
may differ from such trusts. Information with respect to the actual trusts to
be included, pricing, the number of Units, dates and summary information
regarding the characteristics of securities to be deposited in this Series
is not now available and will be different since each Series has a unique
Portfolio. Accordingly the information contained herein with regard to the
previous Series should be considered as being included for informational
purposes only. Ratings of the securities in this Series are expected to be
comparable to those of the securities deposited in the previous Series.
However, the Estimated Current Return for this Series will depend on the
interest rates and offering prices of the securities in this Series and may
vary materially from that of the previous Series.
**************************************************************************
* A registration statement relating to the units of this Series has been *
* filed with the Securities and Exchange Commission but has not yet *
* become effective. Information contained herein is subject to comple- *
* tion or amendment. Such Units may not be sold nor may offers to buy *
* be accepted prior to the time the registration statement becomes *
* effective. This Prospectus shall not constitute an offer to sell *
* or the solicitation of an offer to buy nor shall there be any sale *
* of the Units in any state in which such offer, solicitation or sale *
* would be unlawful prior to registration or qualification under the *
* securities laws of any such state. *
**************************************************************************
<PAGE>
Statement of differences between electronic filing and printed document.
Pursuant to Rule 499(c) (7) under the Securities Act of 1933 and Rule
0-11 under the Investment Company Act of 1940, Registrant hereby identifies
those differences in the foregoing document between the electronic format in
which it is filed and the printed form in which it will be circulated:
(1) The printed and distributed prospectus may be paged differently
because the printed document may contain a different amount of information on
each page from that contained in the electronic transmission.
(2) On the cover page, in the index and on the last page of the printed
document, solid vertical bars will appear.
(3) In the printed document, footnote symbols may include a "dagger" or
multiple "dagger". The "dagger" symbol is represented as # in the electronic
document.
(4) The printed and distributed prospectus will not contain the
preliminary prospectus legend included at the beginning of the first
prospectus page.
<PAGE>
NUVEEN TAX-EXEMPT UNIT TRUST, SERIES 724
Cross-Reference Sheet
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items Required by Instruction 1 as
to Prospectus on Form S-6)
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust ) Prospectus Cover Page
(b) Title of securities issued )
2. Name and address of Depositor )23 Information About the Sponsor
3. Name and address of Trustee )22 Information About the Trustee
4. Name and address of principal )23 Information About the Sponsor
Underwriter )
5. Organization of trust ) 1 What Is The Nuveen Tax-Exempt
) Unit Trust?
6. Execution and termination of ) 1 What Is The Nuveen Tax-Exempt
Trust Agreement ) Unit Trust?
)22 Information About the Trustee
)24 Other Information
7. Changes of Name *
8. Fiscal Year
9. Litigation
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
10. General Information regarding ) 3 Summary of Portfolios
trust's securities ) 5 Why and How are the Bonds
Insured?
13 When Are Distributions
Made to Unitholders?
)18 Ownership and Transfer of Units
)19 How Units May Be Redeemed
Without Charge
)21 How Bonds May Be Removed From
) The Trusts
)22 Information About the Trustee
)23 Information About the Sponsor
)24 Other Information
)11 What Is The Tax Status of
) Unitholders?
11. Type of securities comprising ) 1 What Is The Nuveen Tax-Exempt
units ) Unit Trust?
) 3 Summary of Portfolios
) 4 Composition of Trusts
) 2 What Are The Objectives Of
) The Trusts?
5 Why and How are the Bonds
Insured?
12. Certain information regarding ) *
periodic payment certificates )
13. (a)Load, fees, expenses, etc. )ii Essential Information Regarding
) the Trusts on Date of Deposit of
Bonds
) 6 How Is The Public Offering Price
) Determined?
) 7 Market For Units
) 8 What Is Accrued Interest?
) 9 What Is The Estimated Current
) Return?
)10 How Was The Price Of The Bonds
) Determined At Date of Deposit?
)12 What Are Normal Trust Operating
) Expenses?
) 3 Summary of Portfolios
)13 When Are Distributions Made
) to Certificateholders?
)15 How Detailed Are Reports To
Certificateholders?
<PAGE>
(b)Certain information regarding ) *
periodic payment certificates )
(c)Certain percentages ) 6 How Is the Public Offering Price
) Determined?
) 7 Market For Units
) 9 What Is The Estimated Current
) Return?
)10 How Was The Price of the Bonds
) Determined At Date of Deposit?
) 8 What is Accrued Interest?
(d)Certain other fees, etc. )10 How Was The Price Of The Bonds
payable by holders ) Determined At Date of Deposit?
)12 What Are Normal Trust Operating
) Expenses?
)18 Ownership and Transfer of Units
(e)Certain profits receivable ) 4 Composition of Trusts
by depositor, principal under- )
writer, trustee or affiliated )20 How Units May Be Purchased By
persons ) The Sponsor
(f)Ratio of annual charges
to income *
14. Issuance of trust's securities ) 3 Summary of Portfolios
)13 When Are Distributions Made
) To Unitholders?
)18 Ownership and Transfer of Units
)19 How Units May Be Redeemed
) Without Charge
15. Receipt and handling of payments ) *
from purchasers )
16. Acquisition and Disposition of ) 1 What Is The Nuveen Tax-Exempt
Underlying Securities ) Unit Trust?
) 3 Summary of Portfolios
) 4 Composition of Trusts
) 5 Why and How are the Bonds
Insured?
)19 How Units May Be Redeemed
Without Charge
)21 How Bonds May Be Removed From
) The Trusts
)24 Other Information
17. Withdrawal or redemption ) 7 Market For Units
)19 How Units May Be Redeemed
) Without Charge
)20 How Units May Be Purchased By
) The Sponsor
18. (a)Receipt and disposition of income ) 3 Summary of Portfolios
)13 When Are Distributions
Made To Unitholders?
)15 How Detailed Are Reports To
) Unitholders?
(b)Reinvestment of distributions )14 Accumulation Plan
(c)Reserves or special funds ) 3 Summary of Portfolios
)13 When Are Distributions
) Made To Certificateholders?
(d)Schedule of distributions ) *
19. Records, accounts and reports )13 When Are Distributions Made
) To Certificateholders?
)15 How Detailed Are Reports To
) Certificateholders?
20. Certain miscellaneous provisions of )22 Information About the Trustee
Trust Agreement )23 Information About the Sponsor
)24 Other Information
<PAGE>
21. Loans to security holders ) *
22. Limitations on liability ) 3 Summary of Portfolios
) 4 Composition of Trusts
)22 Information About The Trustee
23. Bond arrangements ) *
24. Other material provisions of Trust ) *
Agreement. )
III. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
25. Organization of Depositor )23 Information About the Sponsor
26. Fees received by Depositor ) *
27. Business of Depositor )23 Information About the Sponsor
28. Certain information as to officials ) *
and affiliated persons of Depositor )
29. Voting Securities of Depositor )23 Information About the Sponsor
30. Persons controlling Depositor )
)
31. Payments by Depositor for certain )
services rendered to trust )
) *
32. Payments by Depositor for certain )
other services rendered to trust )
)
33. Remuneration of employees of Depositor)
for certain services rendered to trust)
)
34. Remuneration of other persons for )
certain services rendered to trust )
<PAGE>
IV. DISTRIBUTION AND REDEMPTION OF SECURITIES
35. Distribution of trust's securities by )
states )
) *
36. Suspension of sales of trust's )
securities )
)
37. Revocation of authority to distribute )
38. (a)Method of distribution )
)
(b)Underwriting agreements )17 How Units of The Trusts Are
) Distributed To The Public
(c)Selling agreements )
39. (a)Organization of principal )
underwriter )
)23 Information About The Sponsor
(b)NASD membership of principal )
underwriter )
40. Certain fees received by principal ) *
underwriter
41. (a)Business of principal underwriter )
)
(b)Branch offices of principal under- ) *
writer )
)
(c)Salesmen of principal underwriter )
42. Ownership of trust's securities by ) *
certain persons )
)
43. Certain brokerage commissions received) *
by principal underwriter )
44. (a)Method of valuation )ii Essential Information Regarding
) The Trusts On Date Of Deposit Of
) Bonds
) 6 How Is The Public Offering Price
) Determined?
)10 How Was The Price Of The Bonds
) Determined At Date of Deposit?
)12 What Are Normal Trust Operating
) Expenses?
(b)Schedule as to offering price ) *
(c)Variation in offering price to ) 6 How Is the Public Offering Price
certain persons ) Determined?
) 8 What Is Accrued Interest?
)10 How Was The Price Of The Bonds
) Determined At Date of Deposit?
<PAGE>
45. Suspension of redemption rights ) *
46. (a)Redemption valuation )16 Unit Value and Evaluation
)19 How Units May Be Redeemed
) Without Charge
)20 How Units May Be Purchased By
) The Sponsor
(b)Schedule as to redemption price ) *
47. Maintenance of position in underlying ) 5 How Is the Public Offering Price
securities ) Determined?
)20 How Units May Be Purchased By
) The Sponsor
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation of Trustee)21 Information About The Trustee
49. Fees and expenses of Trustee )ii Essential Information Regarding
) The Trusts On Date of Deposit Of
) Bonds
)12 What Are Normal Trust Operating
) Expenses?
50. Trustee's lien )12 What Are Normal Trust Operating
) Expenses?
)13 When Are Distributions Made
) To Unitholders?
VI. INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
51. Insurance of holders of trust's ) *
securities )
VII. POLICY OF REGISTRANT
52. (a)Provisions of trust agreement with )12 What Are Normal Trust Operating
respect to selection or elimination) Expenses?
of underlying securities )19 How Units May Be Redeemed With-
) out Charge
)21 How Bonds May Be Removed From
) The Trusts
(b)Transactions involving elimination ) *
of underlying securities )
(c)Policy regarding substitution or ) 3 Summary of Portfolio
elimination of underlying ) 4 Composition of Trusts
securities )21 How Bonds May Be Removed From
) The Trusts
(d)Fundamental policy not otherwise ) *
covered )
53. Tax status of trust )11 What Is The Tax Status Of
) Unitholders?
VIII. FINANCIAL AND STATISTICAL INFORMATION
54. Trust's securities during last ten years) *
55.) ) *
56.)Certain information regarding )
57.)periodic payment certificates )
58.) )
__________
*Inapplicable, omitted, answer negative or not required.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
A. BONDING ARRANGEMENTS OF DEPOSITOR:
The Depositor has obtained the following Stockbrokers Blanket Bonds for
its officers, directors and employees:
INSURER/POLICY NO. AMOUNT
United Pacific Insurance Co. $10,000,000
Reliance Insurance Company
B 74 92 20
Aetna Casualty and Surety $10,000,000
08 F10618BCA
St. Paul Insurance Co. $ 6,000,000
400 HC 1051
B. This Registration Statement comprises the following papers and documents:
The facing sheet
The Prospectus
The signatures
Consents of Counsel
Exhibits
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Nuveen Tax-Exempt Unit Trust, Series 723 (formerly filed as
Nuveen Tax-Exempt Unit Trust, Series 724 on March 7, 1994), has duly caused
this Pre-effective Amendment No. 1 to the Registration Statement to be
signed on its behalf by the undersigned thereunto duly authorized in the
City of Chicago and State of Illinois on 03/29/94.
NUVEEN TAX-EXEMPT UNIT TRUST, SERIES 723
(Registrant)
By JOHN NUVEEN & CO. INCORPORATED
(Depositor)
By: James J. Wesolowski
_______________________
Vice President
Attest: Larry Woods Martin
___________________
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated:
SIGNATURE *TITLE DATE
Richard J. Franke Chairman, Board of Directors, )
Chief Executive Officer and )
Director )
)
Donald E. Sveen President, Chief Operating )
Officer and Director )
)
Anthony T. Dean Executive Vice President and )James J. Wesolowski
Director )Attorney-in-Fact**
)
Timothy T. Schwertfeger Executive Vice President and )
Director )
)
O. Walter Renfftlen Vice President and Controller )
(Principal Accounting Officer))
)
) 03/29/94
- ------------------------------------------------------------------------------
*The titles of the persons named herein represent their capacity in and
relationship to John Nuveen & Co. Incorporated, the Depositor.
**The powers of attorney were filed on Form SE for Messrs. Franke, Sveen,
Renfftlen, Dean and Schwerfeger with the Amendment to the Registration
Statement on Form S-6 of Nuveen Tax-Exempt Unit Trust, Series 671
(File No. 33-49175).
<PAGE>
CONSENT OF CHAPMAN AND CUTLER
The consent of Chapman and Cutler to the use of its name in the Prospectus
included in the Registration Statement will be filed by Amendment.
CONSENT OF STATE COUNSEL
The consents of special counsel to the Fund for state tax matters to the
use of their names in the Prospectus included in the Registration Statement
will be filed by Amendment.
CONSENT OF STANDARD + POOR'S CORPORATION
The consent of Standard + Poor's Corporation to the use of its name
in the Prospectus included in the Registration Statement will be filed by
Amendment.
CONSENT OF KENNY S+P EVALUATION SERVICES
The consent of Kenny S+P Evaluation Services to the use of its name in the
Prospectus included in the Registration Statement will be filed by Amendment.
CONSENT OF CARTER, LEDYARD & MILBURN
The consent of Carter, Ledyard & Milburn to the use of its name in the
Prospectus included in the Registration Statement will be filed by Amendment.
CONSENT OF ARTHUR ANDERSEN & CO.
The consent of Arthur Andersen & Co. to the use of its report and to the
reference to such firm in the Prospectus included in the Registration
Statement will be filed by Amendment.
<PAGE>
LIST OF EXHIBITS:
1.1(a) Copy of Trust Indenture and Agreement between John Nuveen & Co.
Incorporated, Depositor, and United States Trust Company of
New York, Trustee.
1.1(b) Schedules to Trust Indenture and Agreement (to be supplied by
amendment).
1.2* Copy of Certificate of Incorporation, as amended, of John Nuveen
& Co. Incorporated, Depositor.
1.3** Copy of amendment of Certificate of Incorporation changing name
of Depositor to John Nuveen & Co. Incorporated.
2.1 Copy of Certificate of Ownership (to be supplied by amendment).
3.1 Opinion of counsel as to legality of securities being registered
(to be supplied by amendment).
3.2 Opinion of counsel as to Federal income tax status of securities
being registered (to be supplied by amendment).
3.3 Consents of special state counsel to the Fund for state tax
matters to use of their names in the Prospectus (to be supplied
by amendment).
4.1 Consent of Standard + Poor's Corporation (to be supplied by
amendment).
4.2 Consent of Kenny S+P Evaluation Services (to be supplied by
amendment).
4.3 Consent of Carter, Ledyard & Milburn (to be supplied by
amendment).
6.1*** List of Directors and Officers of Depositor and other related
information.
- ------------------------------------------------------------------------------
*Incorporated by reference to Form N-8B-2 (File No. 811-1547) filed on behalf
of Nuveen Tax-Exempt Unit Trust, Series 16.
**Incorporated by reference to Form N-8B-2 (File No. 811-2198) filed on behalf
of Nuveen Tax-Exempt Unit Trust, Series 37.
***Previously filed by Initial Registration Statement for the Trust.
<PAGE>
Chapman and Cutler
Draft dated March 4, 1994
EXHIBIT 1.1(a)
NUVEEN TAX-EXEMPT UNIT TRUST
______________________________
TRUST INDENTURE AND AGREEMENT
Between
JOHN NUVEEN & CO. INCORPORATED
As Depositor
And
UNITED STATES TRUST COMPANY
OF NEW YORK
As Trustee
______________________________
<PAGE>
TRUST INDENTURE AND AGREEMENT
NUVEEN TAX-EXEMPT UNIT TRUST
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION HEADING PAGE
<C> <S> <C>
PREAMBLES.....................................................................1
Form of Certificates ......................................................2
Form of Assignment.........................................................6
Statement Regarding Distributions - Trusts other than Compound
Interest Trusts..........................................................6
ARTICLE I DEFINITIONS.................................................7
ARTICLE II DEPOSIT OF BONDS; ACCEPTANCE OF TRUST; FORM AND
ISSUANCE OF CERTIFICATES; INSURED TRUST BOND
INSURANCE..................................................11
Section 2.01. Deposit of Bonds.........................................11
Section 2.02. Acceptance of Trust......................................11
Section 2.03. Issue of Certificates and Establishment of Book Entry
Positions................................................11
Section 2.04. Separate Trusts..........................................11
Section 2.05. Form of Certificates.....................................12
Section 2.06. Insured Trust Bond Insurance.............................12
ARTICLE III ADMINISTRATION OF FUND.....................................13
Section 3.01. Initial Cost.............................................13
Section 3.02. Interest Account.........................................13
Section 3.03. Principal Account........................................13
Section 3.04. Reserve Account..........................................13
Section 3.05. Distributions............................................14
Section 3.06. Distribution Statements..................................18
Section 3.07. Sale of Bonds............................................19
Section 3.08. Refunding Bonds..........................................21
Section 3.09. Bond Counsel.............................................21
Section 3.10. Notice and Sale by Trustee...............................21
Section 3.11. Trustee Not to Amortize..................................22
Section 3.12. Liability of Depositor...................................22
Section 3.13. Notice to Depositor......................................22
Section 3.14. Limited Replacement of Special Bonds.....................22
</TABLE>
-i-
<PAGE>
<TABLE>
<C> <S> <C>
ARTICLE IV EVALUATION, REDEMPTION, PURCHASE, TRANSFER OR
INTERCHANGE
OF UNITS AND REPLACEMENT OF CERTIFICATES...................24
Section 4.01. Evaluation...............................................24
Section 4.02. Redemptions by Trustee; Purchases by Depositor...........25
Section 4.03. Transfer or Interchange of Units.........................27
Section 4.04. Certificates Mutilated, Destroyed, Stolen or Lost........28
Section 4.05. Compensation of Depositor................................29
ARTICLE V TRUSTEE....................................................29
Section 5.01. General Definition of Trustee's Liabilities, Rights and
Duties...................................................29
Section 5.02. Books, Records and Reports...............................32
Section 5.03. Indenture and List of Bonds on File......................32
Section 5.04. Compensation.............................................32
Section 5.05. Removal and Resignation of Trustee; Successor............33
Section 5.06. Qualifications of Trustee................................35
ARTICLE VI RIGHTS OF UNITHOLDERS......................................35
Section 6.01. Beneficiaries of Trust...................................35
Section 6.02. Rights, Terms and Conditions.............................35
ARTICLE VII ADDITIONAL COVENANTS; MISCELLANEOUS
PROVISIONS.............36
Section 7.01. Amendments...............................................36
Section 7.02. Termination..............................................36
Section 7.03. Construction.............................................38
Section 7.04. Registration of Units....................................38
Section 7.05. Written Notice...........................................38
Section 7.06. Severability.............................................38
Section 7.07. Dissolution of Depositor Not to Terminate................38
EXECUTION....................................................................40
CERTAIN INFORMATION..................................................Schedule A
BONDS INITIALLY DEPOSITED............................Schedule B thru Schedule Q
</TABLE>
__________________________
This Contents does not constitute part of the Indenture.
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<PAGE>
TRUST INDENTURE AND AGREEMENT dated as of the date indicated in
Item 2 of Schedule A hereto, between JOHN NUVEEN & CO. INCORPORATED,
as
Depositor, and UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee.
WITNESSETH that:
WHEREAS, it is desired to expand the market for certain obligations
the interest income on which is not includible in gross income pursuant
to the applicable provisions of the United States Internal Revenue Code
of 1986 or pursuant to other provisions of law, some of which
obligations, as individual issues or parts thereof, might be unavailable
or impracticable as investments to certain individual investors, and to
provide proper diversification to such investors, particularly those with
limited investment capital; and
WHEREAS, the Depositor desires to provide for the collection and
distribution of the principal of and interest on such obligations by the
Trustee to such persons as shall purchase an interest therein, as
hereinafter provided; and
WHEREAS, the Depositor has acquired and, concurrently with the
execution and delivery hereof, has deposited in trust with the Trustee
the Tax-exempt bonds and/or evidences of ownership interests in principal
and/or interest payments on such Tax-exempt bonds (the "BONDS") listed in
the Schedules attached hereto (or delivery statements relating to
contracts for the purchase thereof), which Schedules set forth the
respective portfolios of the Nuveen Tax-Exempt Unit Trust of that Series
indicated in Item 1 of Schedule A hereto hereinafter referred to as the
National Traditional Trust, the Long Intermediate Traditional Trust, the
Intermediate Traditional Trust, the Short Intermediate Traditional Trust,
the Short Term Traditional Trust, the Compound Interest Traditional
Trust, the National Insured Trust, the Long Intermediate Insured Trust,
the Intermediate Insured Trust, the Short Intermediate Insured Trust, the
Short Term Insured Trust and individual trusts consisting of Bonds the
interest on which is exempt from certain taxation in specific states
("[State] Traditional Trust" or "[State] Intermediate Traditional Trust"
or "[State] Insured Trust" or "[State] Intermediate Insured Trust" or
"[State] Short Intermediate Insured Trust"), or any one or two of such
Trusts, included in the Fund, such Trusts being created hereunder and to
be held by the Trustee in separate Trusts upon the terms and conditions
hereinafter set forth for the use and benefit of all owners of units of
the respective Trusts of the Nuveen Tax-Exempt Unit Trust of that Series
indicated in Item 1 of Schedule A hereto (hereinafter called the
"UNITS"); and
WHEREAS, concurrently with the delivery to the Trustee of the Bonds
listed in the Schedules attached hereto, the Insurer has delivered to and
deposited with the Trustee, a Municipal Bond Fund Insurance Policy or
Policies to protect each Insured Trust and the Unitholders thereof
against nonpayment of principal and interest when due on any Bond or
Bonds; and
WHEREAS, concurrently with the receipt of the aforesaid deposit the
Trustee has executed, in the name of the Depositor, a Certificate for
<PAGE>
each of the monthly, quarterly and semi-annual plans of distribution
representing the ownership of all units of fractional undivided interest
in such Bonds and in the respective Interest Accounts and Principal
Accounts maintained under this Indenture in the manner hereinafter
provided, and will, upon receipt of confirmation of the effectiveness of
the registration of the aforementioned Units with the Securities and
Exchange Commission, deliver said certificates to the Depositor or, upon
the order of the Depositor, to the Depository Trust Company ("DTC"),
which will establish book entry positions in the aforementioned Units;
and
WHEREAS, for those Units which at any time or from time to time may
be held in certificated form, the form of the certificates of ownership
in the respective Trusts ("CERTIFICATES") shall be substantially as
follows:
Number Units
CERTIFICATE OF OWNERSHIP Plan of
Distribution:
--Evidencing-- Monthly
Quarterly
An Undivided Interest Semi-Annual
Not Applicable
--in the-- CUSIP ____
NUVEEN TAX-EXEMPT UNIT TRUST,
SERIES [the Series as indicated in Item 1
of Schedule A to the Indenture]
_________________________ Trust ___
This is to certify that _______________________________________ is
the owner and registered holder of this Certificate evidencing the
ownership of ______ unit(s) of undivided interest ("UNITS") in the above
Trust (herein called the "TRUST") of the related Series of the Nuveen Tax-
Exempt Unit Trust created by the Trust Indenture and Agreement pertaining
to such Series (hereinafter called the "INDENTURE"), between JOHN NUVEEN
& CO. INCORPORATED (hereinafter called the "DEPOSITOR") and UNITED
STATES
TRUST COMPANY OF NEW YORK (hereinafter called the "TRUSTEE"). The
Trust
consists of: (1) such of the Bonds deposited in Trust and listed in the
appropriate Schedule to the Indenture and any other obligations that may
be deposited in the Trust in exchange or substitution therefor by reason
of replacement of failed contracts or refunding of the obligations
initially deposited, in accordance with the Indenture, as may from time
to time continue to be held as part of the Trust, (2) with respect to
Insured Trusts, contracts or policies of insurance purchased by the
Depositor from Municipal Bond Investors Assurance Corporation and (3)
such cash amounts as from time to time may be held in the Interest
Account and the Principal Account maintained under the Indenture in the
manner described below.
At any given time this Certificate shall represent a fractional
undivided interest in the Trust, the numerator of which fraction shall be
the number of full and fractional Units set forth on the face hereof and
the denominator of which shall be the total number of Units of undivided
fractional interest of the Trust which are outstanding at such time.
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<PAGE>
The Depositor hereby grants and conveys all of its rights, title and
interest in and to the Trust to the extent of the fractional undivided
interest represented hereby to the registered holder of this Certificate
subject to and in pursuance of the Indenture, all the terms, conditions
and covenants of which are incorporated herein as if fully set forth at
length.
The registered holder of the Units represented by this Certificate
is entitled at any time upon tender of this Certificate to the Trustee at
its corporate trust office in the City of New York, and upon payment of
any tax or other governmental charges, to receive on the seventh calendar
day following the day on which such tender is made, or, if such calendar
day is not a business day, on the first business day prior to such
calendar date, an amount in cash equal to the value of the Units of
fractional undivided interest in the Trust evidenced by this Certificate,
upon the basis provided for in the Indenture. The right of redemption
may be suspended and the date of payment may be postponed for any period
during which the New York Stock Exchange is closed or trading on that
Exchange is restricted, for any period during which an emergency exists
so that disposal of the obligations held in the Trust is not reasonably
practicable or it is not reasonably practicable fairly to determine the
value of such obligations, or for such other periods as the Securities
and Exchange Commission may by order permit.
Interest received by the Trustee as part of the Trust (including
interest accrued and unpaid prior to the day of deposit of any obligation
in the Trust and that part of the proceeds of the sale, liquidation,
redemption or maturity of any such obligation or from any insurance
thereon which represents accrued interest but not accrued original issue
discount, if any) shall be credited by the Trustee to the Interest
Account. The fractional undivided interest represented by this
Certificate in the balance in the Interest Account (after the deductions
referred to below) shall be computed as of the date of the Indenture and
paid on such date. The next computation shall be made as of the "First
General Record Date" as defined in the Indenture and thereafter in
accordance with the plan of distribution shown above. For Trusts other
than Compound Interest Trusts, an amount in cash equal to said fractional
undivided interest in the Interest Account shall be distributed on the
fifteenth day of the month in which each such computation is made, or
within a reasonable period of time thereafter, to or upon the order of
the registered holder of the Units represented by this Certificate at the
close of business on the first day of the month in which such
distribution is made.
All moneys (other than interest) received by the Trustee as part of
the Trust (including original issue discount and amounts received from
the sale, liquidation, redemption or maturity of any obligations held in
the Trust or from any insurance thereon) shall be credited by the Trustee
to a separate Principal Account. The fractional undivided interest
represented by this Certificate in the cash balance in the Principal
Account (after the deductions referred to below) shall be computed as of
the applicable Record Dates as defined in the Indenture in each year,
commencing with the first such date occurring subsequent to the date of
the Indenture. An amount in cash equal to said undivided fractional
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<PAGE>
interest in the Principal Account shall be distributed on the fifteenth
day of the months in which the Record Dates occur, or within a reasonable
period of time thereafter, to or upon the order of the registered holder
of the Units represented by this Certificate at the close of business on
the first day of the month in which such distribution is made. The
Trustee shall not be required to make a distribution from the Principal
Account unless the cash balance on deposit therein available for such
distribution shall be sufficient to distribute at least 10 cents per
Unit.
Distributions from the Interest and Principal Accounts shall be made
by mail at the post office address of the holder hereof appearing in the
registration books of the Trustee or otherwise as directed by the holder.
From time to time deductions shall be made from the Interest Account
and Principal Account, as more fully set forth in the Indenture, for
redemptions, compensation of the Trustee, reimbursement of certain
expenses incurred by or on behalf of the Trustee, certain legal expenses
and payment of or the establishment of a reserve for, applicable taxes,
if any.
Within a reasonable period of time after the end of each calendar
year the Trustee shall furnish to the registered holder of the Units
represented by this Certificate a statement setting forth, among other
things, the amounts received and deductions therefrom and the amounts
distributed during the preceding year in respect of interest on, and
sales, redemptions or maturities of, and proceeds from insurance on,
obligations held in the Trust.
The Units represented by this Certificate shall be transferable by
the registered holder hereof by presentation and surrender of this
Certificate at the corporate trust office of the Trustee properly
endorsed on the reverse hereof or accompanied by a written instrument or
instruments of transfer in form satisfactory to the Trustee and executed
by the registered holder hereof or his authorized attorney. Certificates
are interchangeable for (i) one or more Certificates or (ii) a Book Entry
Position, in each case in an equal aggregate number of Units of undivided
interest in denominations of a single Unit of undivided interest or any
multiple and fraction thereof, all in the manner provided in the
Indenture.
The holder hereof may be required to pay a charge of $2.00 per
Certificate issued in connection with the transfer or interchange of the
Units represented by this Certificate and any tax or other governmental
charge that may be imposed in connection with the transfer, interchange
or other surrender of this Certificate.
The holder of the Units represented by this Certificate, by virtue
of the acceptance of this Certificate, assents to and shall be bound by
the terms of the Indenture, a copy of which is on file and available for
inspection at the corporate trust office of the Trustee, to which
reference is made for all the terms, conditions and covenants thereof.
The Trustee may deem and treat the person in whose name this
Certificate is registered upon the books of the Trustee as the owner of
the Units represented by this Certificate for all purposes and the
Trustee shall not be affected by any notice to the contrary.
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<PAGE>
The Trust shall terminate upon the maturity, redemption, sale or
other disposition of the last bond held therein, PROVIDED, HOWEVER, that
in no event shall the Trust continue beyond the date specified in the
Indenture. The Indenture also provides that the Trust may be terminated
at any time by the written consent of One hundred per cent (100%) of the
Unitholders of the Trust and under certain circumstances which include a
decrease in the value of the Trust to less than Twenty per cent (20%) of
the aggregate principal amount of bonds initially deposited in the Trust
or a redemption by the Depositor of Units not theretofore sold in an
amount aggregating more than Sixty per cent (60%) of the initial number
of Units thereby reducing the net worth of the Trust to less than Forty
per cent (40%) of the aggregate principal amount of bonds initially
deposited in the Trust. Upon any termination the Trustee shall fully
liquidate the bonds then held, if any, and distribute pro rata the funds
then held in the Trust upon surrender of the Units, all in the manner
provided in the Indenture. No such distribution shall be made with
respect to Units represented by a Certificate until surrender of such
Certificate. Upon termination, the Trustee shall be under no further
obligation with respect to the Trust, except to hold the funds in trust
without interest until distribution as aforesaid and shall have no duty
upon any such termination to communicate with the holder hereof other
than by mail at the address of such holder appearing on the registration
books of the Trustee.
This Certificate shall not become valid or binding for any purpose
until properly executed by the Trustee under the Indenture.
IN WITNESS WHEREOF, John Nuveen & Co. Incorporated has caused this
Certificate to be executed in facsimile by its Chairman of the Board and
United States Trust Company of New York, as Trustee, has caused this
Certificate to be executed manually or in facsimile in its corporate name
by an authorized officer.
Date: JOHN NUVEEN & CO. INCORPORATED,
DEPOSITOR
By_______________________________
Chairman of the Board
UNITED STATES TRUST COMPANY OF NEW
YORK, TRUSTEE
By_______________________________
Authorized Officer
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<PAGE>
FORM OF ASSIGNMENT
For Value Received _________________________________ hereby sells,
assigns and transfers unto _________________________ the Units
represented by the within Certificate and does hereby irrevocably
constitute and appoint _________________________ attorney, to transfer
the Units represented by the within Certificate on the books of the
Trustee, with full power of substitution in the premises.
Date:
STATEMENT REGARDING DISTRIBUTIONS - TRUSTS OTHER THAN
COMPOUND INTEREST
TRUSTS
On the face of this Certificate it is indicated whether the
registered holder hereof has elected to receive distributions from the
Interest Account monthly, quarterly or semi-annually.
This Certificate by its terms provides that (after the initial
computation and payment on the date of the Indenture) distributions from
the Interest Account shall be computed as of the First General Record
Date, and thereafter in accordance with the plan of distribution chosen,
and an amount in cash equal to the share of the Interest Account
represented by this Certificate distributed on the fifteenth day of each
month in which such computation is made, or within a reasonable period of
time thereafter, to or upon the order of the registered holder of this
Certificate at the close of business on the first day of the month in
which the distribution is made.
All Unitholders of record on the First General Record Date,
regardless of the plan of distribution selected, will receive the first
distribution to be made and thereafter distributions will be made
monthly, quarterly or semi-annually, depending upon the plan of
distribution chosen by the holder hereof.
If monthly distributions have been selected, the fractional
undivided interest represented by this Certificate in the balance in the
Interest Account, after the first distribution and after the deductions
referred to in the Certificate, will be computed as of the first day of
each month of each year, commencing with the first such day after the
First General Record Date, and subsequent to the date of this
Certificate, and an amount in cash as thus computed distributed to or
upon the order of the holder hereof at such date of computation (which
also is the Record Date) on or shortly after the fifteenth day of each
month.
If quarterly distributions have been selected, the fractional
undivided interest represented by this Certificate in the balance in the
Interest Account, after the first distribution and after the deductions
referred to in the Certificate, will be computed quarterly as of the
quarterly Record Dates in each year, commencing with the first such day
after the First General Record Date and subsequent to the date of this
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<PAGE>
Certificate, and an amount in cash as thus computed distributed to or
upon the order of the holder hereof at such date of computation (which
also is the Record Date) on or shortly after the fifteenth day of each
month in which such computation is made.
If semi-annual distributions have been selected, the fractional
undivided interest represented by this Certificate in the balance in the
Interest Account, after the first distribution and after the deductions
referred to in the Certificate will be computed semi-annually as of the
semi-annual Record Dates in each year, commencing with the first such day
after the First General Record Date and subsequent to the date of this
Certificate, and an amount in cash as thus computed distributed to or
upon the order of the holder hereof at such date of computation (which
also is the Record Date) on or shortly after the fifteenth day of each
month in which such computation is made.
The plan of distribution chosen by the registered holder hereof may
be changed by written notice to the Trustee, by surrender to the Trustee
of this Certificate. A plan of distribution shall continue in effect
until changed as herein provided. A change in a plan of distribution
will be effective as of the day following the semi-annual Record Date if
made by such Record Date.
In the event the amount on deposit in the Interest Account is not
sufficient for the payment of the amount of interest to be distributed to
Unitholders participating in a distribution, the Trustee shall advance
its own funds and cause to be deposited in and credited to the Interest
Account such amounts as may be required to permit payment of the
distribution to be made and shall be entitled to be reimbursed, without
interest, out of interest received by the Fund subsequent to the date of
such advance and subject to the condition that any such reimbursement
shall be made only under conditions which will not reduce the funds in or
available for the Interest Account to an amount less than required for
the next ensuing distribution of interest. Distributions to Unitholders
who are participating in one of the optional plans for distribution of
interest shall not be affected because of advancements by the Trustee for
the purpose of equalizing distributions to Unitholders participating in a
different plan.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the Depositor and the Trustee agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Whenever used in this Indenture the following words and
phrases, unless the context clearly indicates otherwise, shall have the
following meanings:
(1) "BONDS" shall mean such of the Tax-exempt Obligations,
including, the delivery statements relating to contracts (which may
include "when-issued contracts"), if any, for the purchase of
certain bonds and certified or bank check or checks or letter of
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<PAGE>
credit or letters of credit sufficient in amount and availability
required for such purchase, deposited in irrevocable trust and
listed in the Schedules attached hereto, and any obligation received
in exchange for an obligation originally so deposited pursuant to
the terms thereof such that without exception every holder of the
originally deposited obligation must exchange such obligation at a
date not determined by the holder for a new obligation of the same
maturity and bearing the same interest rate as the originally
deposited obligation, and any obligation received in exchange or
substitution for such obligations pursuant to Sections 3.08 or 3.14
hereof, as may from time to time continue to be held as a part of
the Trust Fund.
(2) "BOOK ENTRY DEALER" shall mean those dealers including
banks, trust companies and other investment advisers for whose
customers the Depositor executes and confirms trades, and
broker/dealers that clear trades in Units through the Depositor,
through whom purchasers of Units will automatically be book entry
Unitholders.
(3) "BOOK ENTRY POSITION" shall mean any position in Units of
a Trust which ownership is recorded on the books of the Trustee
which notation evidences ownership of an undivided fractional
Interest in a Trust in book entry form.
(4) "BOOK ENTRY POSITION CONFIRMATION" shall mean the notice
sent out by the Depositor to a purchaser of Units through a Book
Entry Dealer, or a Unitholder who converts certificated Units to a
Book Entry Position which confirms such purchase or conversion.
(5) "BOOK ENTRY UNITHOLDER" shall mean the registered holder
of any Book Entry Position as recorded on the books of the Trustee,
his legal representatives and heirs and the successors of any
corporation, partnership or other legal entity which is a registered
holder of any Book Entry Position and as such shall be deemed a
beneficiary of the related Trust created by this Indenture to the
extent of his pro rata share thereof.
(6) "BUSINESS DAY" shall mean any day other than a Sunday or,
in the City of New York, a legal holiday or a day on which banking
institutions are authorized by law to close.
(7) "CERTIFICATE" shall mean any one of the certificates
executed by the Trustee and the Depositor evidencing ownership of an
undivided fractional interest in a Trust.
(8) "CERTIFICATED UNITHOLDER" shall mean the registered holder
of any Certificate, his legal representatives and heirs and the
successors of any corporation, partnership or other legal entity
which is a registered holder of any Certificate and as such shall be
deemed a beneficiary of the related Trust created by this Indenture
to the extent of his pro rata share thereof.
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<PAGE>
(9) "DEPOSITOR" shall mean John Nuveen & Co. Incorporated and
its successors in interest, or any successor depositor as
hereinafter provided for.
(10) "ELIGIBLE BOOK ENTRY UNITHOLDER" shall have the meaning
ascribed to such term in Section 4.02 of this Indenture.
(11) "INDENTURE" shall mean this Trust Indenture and Agreement
as originally executed or, if amended as hereinafter provided, as so
amended.
(12) "INSURANCE" shall mean the contract or contracts or policy
or policies of insurance guaranteeing the payment when due of the
principal of and interest on the Bonds (except Bonds held pursuant
and subject to this Indenture which are insured by individual
policies of insurance issued by the Municipal Bond Insurance
Association ("MBIA") or the Municipal Bond Investors Assurance
Corporation (the "CORPORATION") which have been obtained by the
issuers or underwriters of such Bonds (the "PRE-INSURED BONDS"))
held pursuant and subject to this Indenture, together with the
proceeds, if any, thereof payable to or received by the Trustee for
the benefit of each Insured Trust in the Fund and the respective
Unitholders thereof.
(13) "INSURED TRUST" shall mean any separate trust created by
this Indenture, each Bond contained in the portfolio of which is
either a Pre-Insured Bond or guaranteed by insurance obtained by the
Depositor from the Insurer.
(14) "INSURER" shall mean the Municipal Bond Investors
Assurance Corporation (the "CORPORATION"), its successors and
assigns, having its headquarters in Armonk, New York, and issuing
the contracts or policies of insurance protecting the owners of the
Bonds against nonpayment when due of the principal thereof and
interest thereon (except for Pre-Insured Bonds).
(15) "NEW BONDS" shall have the meaning ascribed to such term
in Section 3.14 of this Indenture.
(16) "SPECIAL BONDS" shall have the meaning ascribed to such
term in Section 3.14 of this Indenture.
(17) "STRIPPED OBLIGATION" shall mean a certificate, receipt or
other evidence of ownership with respect to either the principal
amount of or an installment of interest payable on a Tax-exempt
Obligation.
(18) "TAX-EXEMPT OBLIGATION" shall include interest-bearing
obligations, Zero Coupon Obligations and Stripped Obligations, the
interest income and/or accrued original issue discount on which is
not includible in the determination of gross income under federal
income tax law.
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<PAGE>
(19) "TELEPHONE REDEMPTION AUTHORIZATION FORM" shall mean
any
form approved by the Trustee for use by Book Entry Unitholders
redeeming 1,000 Units or less.
(20) "TRADITIONAL TRUST" shall mean any Trust which is not an
Insured Trust.
(21) "TRUST" or "TRUSTS" shall mean the separate trust or
trusts created by this Indenture, the Bonds constituting the
portfolios of which are listed in the various separate Schedules
attached hereto.
(22) "TRUSTEE" shall mean United States Trust Company of New
York, or any successor trustee as hereinafter provided for.
(23) "TRUST FUND" shall mean the collective Trusts created by
this Indenture, which shall consist of all the Bonds held pursuant
and subject to this Indenture together with all undistributed
interest received or accrued thereon, and any undistributed cash
realized from the sale, redemption, liquidation, or maturity thereof
or the proceeds of insurance received in respect thereof. Such
amounts as may be on deposit in the Reserve Account hereinafter
established shall be excluded from the Trust Fund.
(24) "UNIT" in respect of any Trust shall mean the fractional
undivided interest in and ownership of the Trust equal to that
fraction of the respective Trust such that 1 shall be the numerator
and the number of Units as indicated in Item 4 of Schedule A hereto
shall be the denominator, said denominator of which shall be
decreased by the number of any such Units redeemed as provided in
Section 4.02.
(25) "UNITHOLDER" shall mean any Book Entry Unitholder or any
Certificated Unitholder.
(26) "ZERO COUPON OBLIGATION" shall mean a bond which does not
provide for the payment of any current interest.
(27) Words importing singular number shall include the plural
number in each case and vice versa, and words importing person shall
include corporations and associations, as well as natural persons.
(28) The words "HEREIN", "HEREBY", "HEREWITH", "HEREOF",
"HEREINAFTER", "HEREUNDER", "HEREINABOVE", "HEREAFTER",
"HERETOFORE"
and similar words or phrases of reference and association shall
refer to this Indenture in its entirety.
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<PAGE>
ARTICLE II
DEPOSIT OF BONDS; ACCEPTANCE OF TRUST; FORM AND ISSUANCE
OF CERTIFICATES; INSURED TRUST BOND INSURANCE
SECTION 2.01. DEPOSIT OF BONDS: The Depositor, concurrently with the
execution and delivery hereof, has deposited with the Trustee in trust
the Bonds listed in the Schedules attached to this Indenture (or delivery
statements relating to contracts for the purchase thereof) in bearer form
or duly endorsed in blank or accompanied by all necessary instruments of
assignment and transfer in proper form to be held, managed and applied by
the Trustee as herein provided. If the seller in any contract to buy any
such Bonds fails to perform for any reason beyond the control of the
Depositor and the Depositor does not obtain these Bonds from any other
source, the Depositor shall forthwith give the Trustee the Failed
Contract Notice as defined in Section 3.14 and may take the remedial
action specified in said Section 3.14.
SECTION 2.02. ACCEPTANCE OF TRUST: The Trustee hereby accepts the
trust herein created for the use and benefit of the Unitholders in the
Trusts, subject to the terms and conditions of this Indenture.
SECTION 2.03. ISSUE OF CERTIFICATES AND ESTABLISHMENT OF BOOK
ENTRY
POSITIONS: The Trustee hereby acknowledges receipt of the deposit
referred to in Section 2.01, and simultaneously with the receipt of said
deposit, will register on the transfer books of the Trust, for each of
the monthly, quarterly and semi-annual plans of distribution, the
Depositor's ownership of all Units of each Trust. The Trustee may not
transfer such Units to a holder other than the Depositor until the
Trustee receives evidence satisfactory to it of the registration of the
Units under the Securities Act of 1933.
Upon the sale of Units to a purchaser, the Units will be evidenced
by a Book Entry Position unless such purchaser expressly requests that
the purchased Units be evidenced in Certificate form. Upon sale of the
Units to a purchaser who requests Units in certificated form, the Trustee
shall issue a Certificate or Certificates in the name of the purchaser
and note that such Unitholder is a Certificated Unitholder on the books
of the Trustee.
SECTION 2.04. SEPARATE TRUSTS: The Trusts created by this Indenture
are separate and distinct trusts for all purposes and the assets of one
trust may not be commingled with the assets of any other nor shall the
expenses of any trust be charged against the other. The Certificates
and/or Book Entry Positions representing the ownership of Units of
undivided fractional interest in one Trust shall not be exchangeable for
certificates or book entry positions representing ownership of Units of
undivided fractional interest in any other Trust.
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<PAGE>
SECTION 2.05. FORM OF CERTIFICATES: Each Certificate referred to in
Section 2.03 is, and each Certificate hereafter issued shall be, in
substantially the form hereinabove recited, numbered serially for
identification, in fully registered form, transferable only on the books
of the Trustee as herein provided, executed either manually or in
facsimile by an authorized officer of the Trustee and in facsimile by the
Chairman of the Board, President or one of the Vice Presidents of the
Depositor and dated the date of execution and delivery by the Trustee.
In case any authorized officer of the Trustee or the Depositor who has
signed or whose facsimile signature has been placed upon any Certificate
shall have ceased to be such officer before any such Certificate is
issued, it may be issued with the same effect as if he were such officer
at the date of issue.
SECTION 2.06. INSURED TRUST BOND INSURANCE: Concurrently with the
delivery to the Trustee of the Bonds listed in the Schedules for Insured
Trusts attached to the Indenture, the Insurer has delivered to and
deposited with the Trustee, a Municipal Bond Insurance Policy or Policies
(the "Insurance") to protect each Bond and the Unitholders of the
respective Insured Trust in which such Bond is held against nonpayment of
principal and interest when due on any such Bond or Bonds (except for Pre-
Insured Bonds).
The Trustee shall take all action deemed necessary or advisable in
connection with the Insurance to continue the Insurance in full force and
effect, all in such manner as in its sole discretion shall appear to
result in the most protection and least expense to each Insured Trust.
At all times during the existence of the Insured Trust, the
Insurance policies shall provide for payment by the Insurer to the
Trustee of any amounts of principal and interest due, but not paid, by
the issuer of an insured Bond. The Trustee shall promptly notify the
Insurer of any nonpayment or threatened nonpayment of principal or
interest and the Insurer shall in accordance with the terms of the
policies make payment to the Trustee of all amounts of principal and
interest at that time due, but not paid.
Upon the making of any payment referred to in the preceding
paragraphs, the Insurer shall succeed to the rights of the Trustee under
the Bond or Bonds involved to the extent of the payments made.
Concurrently with the payment of any amounts by the Insurer occasioned by
the nonpayment of principal and/or interest by the issuer, the Trustee
shall execute and deliver to the Insurer any receipt, instrument or
document required to evidence the right of the Insurer to payment of
principal and/or interest under the Bond or Bonds involved to the extent
of the payments made by the Insurer to the Trustee.
The Trustee shall promptly notify the Corporation of any nonpayment
of principal of or interest on any Bonds and if the Corporation should
fail to make payment to the Trustee within 30 days after receipt of such
notice, the Trustee shall take all action against the Corporation and/or
the issuer deemed necessary to collect all amounts of principal and
interest at that time due, but not collected.
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ARTICLE III
ADMINISTRATION OF FUND
SECTION 3.01. INITIAL COST: The cost of the initial preparation,
printing and execution of the Certificates and this Indenture, the
initial fees of the Trustee and the Trustee's counsel and other
reasonable expenses in connection therewith, shall be paid by the
Depositor, PROVIDED, HOWEVER, that the liability on the part of the
Depositor for such initial costs, fees and expenses shall not include any
fees, costs or other expenses incurred in connection herewith after the
execution of this Indenture and the deposit referred to in Section 2.01.
SECTION 3.02. INTEREST ACCOUNT: The Trustee shall collect the interest
on the Bonds in each Trust as such becomes payable (including all
interest accrued but unpaid prior to the date of deposit of the Bonds in
trust and including that part of the proceeds of the sale, liquidation,
redemption or maturity of any Bonds or insurance thereon which represents
accrued interest thereon but not accrued original issue discount, if any)
and credit such interest to a separate account for each Trust to be known
as the "Interest Account". For purposes of this Indenture, interest to
be credited to the Interest Account shall not be deemed to include
original issue discount accrued or paid or any amounts accrued or paid in
respect of Stripped Obligations.
SECTION 3.03. PRINCIPAL ACCOUNT: The Bonds in each Trust and all
moneys (including moneys delivered to the Trustee for the purchase of
bonds pursuant to contracts, which moneys are no longer required for such
purchase and all amounts received with respect to Zero Coupon Obligations
and Stripped Obligations) other than amounts credited to the Interest
Account, received by the Trustee in respect of the Bonds in each Trust,
including insurance thereon, shall be credited to a separate account for
each Trust to be known as the "Principal Account." Moneys which are
required to cover contracts to purchase bonds are hereby declared to be
held in trust by the Trustee for such purchase until the Depositor shall
have notified the Trustee that such contracts, and if applicable, any
contracts for New Bonds as permitted by Section 3.14, have failed and
shall have directed the Trustee to distribute such moneys as provided in
Section 3.05. For this purpose if the Depositor shall deposit New Bonds
in a principal amount less than the principal amount of Special Bonds,
such event shall be treated as a failure as to the principal amount of
Special Bonds not replaced by an equal principal amount of New Bonds.
SECTION 3.04. RESERVE ACCOUNT: From time to time the Trustee shall
withdraw from the cash on deposit in the Interest Account or the
Principal Account of the appropriate Trust such amounts as it, in its
sole discretion, shall deem requisite to establish a reserve for any
applicable taxes or other governmental charges that may be payable out of
such Trust. Such amounts so withdrawn shall be credited to a separate
account for each Trust which shall be known as the "Reserve Account.
The Trustee shall not be required to distribute to the Unitholders any of
the amounts in the Reserve Account; PROVIDED, HOWEVER, that if it shall,
in its sole discretion, determine that such amounts are no longer
necessary for payment of any applicable taxes or other governmental
charges, then it shall promptly deposit such amounts in the appropriate
account.
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SECTION 3.05. DISTRIBUTIONS: For Trusts other than Compound Interest
Trusts, the Trustee, as of the date indicated in Item 2 of Schedule A
hereto, shall advance from its own funds and shall pay to the Unitholders
of the respective Trusts then of record the amount of interest accrued on
the Bonds deposited in the respective Trusts. The Trustee shall be
entitled to reimbursement, without interest, for such advancement from
interest received by the respective Trusts before any further
distributions shall be made from the Interest Account to Unitholders of
the respective Trusts. Subsequent distributions shall be made as
hereinafter provided. For Trusts other than Compound Interest Trusts,
the second distribution of funds from the Interest Accounts of the
respective Trusts shall be in the amounts as indicated in Item 5(a) of
Schedule A hereto and shall be made on the date as indicated in Item 5(b)
of said Schedule A to or upon the order of all Unitholders of record of
the respective Trusts as of the dates as indicated in Item 5(c) of said
Schedule A. For all subsequent semi-annual distributions to Unitholders
of any Trust (other than Compound Interest Trusts), the "Record Date" is
hereby fixed to be the first day of the months of each year as indicated
in Item 6 of said Schedule A.
As of the first day of each month of each year commencing with the
dates as indicated in Item 10 of Schedule A hereto, the Trustee shall
with respect to each Trust:
(a) deduct from the Interest Account or, to the extent funds
are not available in such Account, from the Principal Account and
pay to itself individually the amounts that it is at the time
entitled to receive pursuant to Section 5.04;
(b) deduct from the Interest Account, or, to the extent funds
are not available in such Account, from the Principal Account and
pay to the Depositor the amount that it is at the time entitled to
receive pursuant to Section 4.05; and
(c) deduct from the Interest Account, or, to the extent funds
are not available in such Account, from the Principal Account and
pay to bond counsel, as hereinafter provided for, an amount equal to
unpaid fees and expenses, if any, of such bond counsel as certified
to by the Depositor.
For Trusts other than Compound Interest Trusts, on or shortly after
the 15th day of each of the months as indicated in Item 6(a) of
Schedule A hereto (the "SEMI-ANNUAL DISTRIBUTION DATE") commencing on
the
date as indicated in Item 5(b) of said Schedule A, the Trustee shall,
with respect to any Trust, distribute by mail to or upon the order of
each Unitholder of record of such trust as of the close of business on
the preceding Record Date at the post office address appearing on the
registration books of the Trustee such Unitholder's pro rata share of the
balance of the Interest Account of such Trust calculated as of the Record
Date for such Semi-Annual payment on the basis of one-half of the
estimated annual interest income to such Trust for the ensuing twelve
months, after deduction of the estimated costs and expenses of such Trust
to be incurred during the twelve month period for which the interest
income has been estimated.
For Trusts other than Compound Interest Trusts, in the event the
amount on deposit in the Interest Account of any Trust on a Semi-Annual
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Distribution Date is not sufficient for the payment of the amount of
interest to be distributed on the basis of the aforesaid computation, the
Trustee shall advance out of its own funds and cause to be deposited in
and credited to such Interest Account such amount as may be required to
permit payment of the semi-annual interest distribution to be made on
such Semi-Annual Distribution Date and shall be entitled to be
reimbursed, without interest, out of interest received by such Trust
subsequent to the date of such advance and subject to the condition that
any such reimbursement shall be made only under conditions which will not
reduce the funds in or available for the Interest Account to an amount
less than required for the next ensuing distribution of interest. The
Trustee's fee takes into account the costs attributable to the outlay of
capital needed to make such advances.
In lieu of the semi-annual distributions of interest provided above,
a Unitholder of any Trust (other than a Compound Interest Trust) may
elect to receive payments from the Interest Account of such Trust monthly
or quarterly. The second distribution hereinbefore PROVIDED, HOWEVER,
shall be made to or upon the order of all holders of Units of such Trust
(other than a Compound Interest Trust) who have chosen to receive
subsequent distributions on a different basis.
Unitholders of any Trust (other than a Compound Interest Trust)
desiring to receive monthly or quarterly distributions and who purchase
their Certificates prior to the Record Date for the second distribution
may elect at the time of purchase to receive distributions on a monthly
or quarterly basis by notice to the Trustee. Unitholders must furnish
written notice to the Trustee indicating their desire to receive monthly
or quarterly distributions. The Trustee, within five business days of
receiving such notice, shall issue to the Book Entry Unitholder a new
Book Entry Position Confirmation indicating such Unitholder's preferred
distribution plan. Such notice shall be effective with respect to
subsequent distributions until changed by further notice to the Trustee.
Those wishing to change their plan of distribution must do so by sending
written notice at any time to the Trustee; Certificated Unitholders must
also send to the Trustee the Certificate to which the requested change
relates. Changes may be made only as herein provided and will become
effective as of the following May 2 if received by May 1 of such year, or
as of November 2 if received by November 1 of such year and such
distributions will continue until further notice.
For monthly distributions the share of the balance in the Interest
Account to be distributed to or upon the order of a Unitholder of any
Trust (other than a Compound Interest Trust) who has elected to receive
monthly distributions, after the second distribution, shall be computed
as of the first day of each month commencing with the first such day
subsequent to the date of the Certificate or to the date of the recording
of the Book Entry Position on the books of the Trustee and distribution
made as provided herein on or shortly after the 15th day of the month of
computation to the Unitholder of record on such date of computation.
Such computation shall be made on the basis of one-twelfth of the
estimated annual interest income to the related Trust for the ensuing
twelve months for the account of Unitholders of any Trust (other than a
Compound Interest Trust) who have elected to receive monthly
distributions, after deduction of the estimated costs and expenses to be
incurred on behalf of such Unitholders during the twelve month period for
which such interest income has been estimated.
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For quarterly distributions the share of the balance in the Interest
Account to be distributed to or upon the order of a Unitholder of any
Trust (other than a Compound Interest Trust) who has elected to receive
quarterly distributions, after the second distribution, shall be computed
as of the first day of each of the months as indicated in Item 9 of
Schedule A hereto, commencing with the first such day subsequent to the
date of the Certificate or to the date of the recording of the Book Entry
Position on the books of the Trustee and distribution made as provided
herein on or shortly after the 15th day of the month of computation to
the Unitholder of record on such date of computation. Such computation
shall be made on the basis of one-fourth of the estimated annual interest
income to the related Trust for the ensuing twelve months for the account
of Unitholders of any Trust (other than a Compound Interest Trust) who
have elected to receive quarterly distributions, after deduction of the
estimated costs and expenses to be incurred on behalf of such Unitholders
during the twelve month period for which such interest income has been
estimated.
To the extent practicable, the Trustee shall allocate the expenses
of each Trust among Units of such Trust within any Trust and with respect
to Trusts other than Compound Interest Trusts, giving effect within any
Trust to differences in administrative and operational cost among those
who have chosen to receive distributions monthly, quarterly or semi-
annually.
If the Trustee determines that an event has occurred as a result of
which there has resulted an excessive distribution from the Interest
Account, it shall reduce subsequent distributions so as to reconcile, as
promptly as practicable, the aggregate net income and distributions from
such Account.
For Trusts other than Compound Interest Trusts, in the event the
amount on deposit in the Interest Account of a Trust for a monthly or
quarterly distribution is not sufficient for the payment of the amount of
interest to be distributed to Unitholders participating in such
distributions on the basis of the aforesaid computations, the Trustee
shall advance its own funds and cause to be deposited in and credited to
such Interest Account such amounts as may be required to permit payment
of the monthly or quarterly interest distribution to be made as aforesaid
and shall be entitled to be reimbursed, without interest, out of interest
received by such Trust subsequent to the date of such advance and subject
to the condition that any such reimbursement shall be made only under
conditions which will not reduce the funds in or available for such
Interest Account to an amount less than required for the next ensuing
distribution of interest. The Trustee's fee takes into account the costs
attributable to the outlay of capital needed to make such advances.
Distributions to Unitholders of any Trust who are participating in one of
the optional plans for distribution of interest shall not be affected
because of advancements by the Trustee for the purpose of equalizing
distributions to Unitholders of any Trust participating in a different
plan.
With respect to Compound Interest Trusts, the share of the balance
in the Interest Account to be distributed to or upon the order of a
Unitholder, shall be computed as of the first day of each month
commencing with the first such day subsequent to the date of the
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Certificate or to the date of the recording of the Book Entry Position on
the books of the Trustee and distribution made as provided herein on or
shortly after the 15th day of the month of computation to the Unitholder
of record on such date of computation. Distributions from the Interest
Account to Unitholders will only be made if the amount available for
distribution shall amount to at least $1.00 per Unit. In the event the
net amount after deduction of the reasonably anticipated costs and
expenses to be incurred during the ensuing six-month period from the date
of computation available for distribution in the Interest Account equals
at least $1.00 per Unit, such amount shall be distributed to Unitholders
as provided above.
For Trusts other than Compound Interest Trusts, distributions of
amounts represented by the cash balance in the Principal Account for each
Trust shall be computed as of the date as indicated in Item 7(b) of
Schedule A hereto, and thereafter as of the first day of the months of
each year as indicated in Item 7(a) of said Schedule A. With respect to
Compound Interest Trusts, distributions of amounts represented by the
cash balance in the Principal Account for such Trust shall be computed as
of the first day of each month. On the fifteenth day of each month, in
which such computation is made, or within a reasonable period of time
thereafter, the Trustee shall distribute by mail to or upon the order of
each Unitholder of record at the close of business on the date of
computation (the Record Date) at his post office address such holder's
pro rata share of the cash balance of such Principal Account as thus
computed. The Trustee shall not be required to make a distribution from
such Principal Account unless the cash balance on deposit therein
available for distribution shall be sufficient to distribute at least 10
cents per Unit.
Notwithstanding the foregoing, if the Depositor fails to replace any
Special Bond (as defined in Section 3.14) in a Trust by delivering an
equal principal amount of New Bonds to the Trustee prior to the
expiration of the Purchase Period as defined in Section 3.14, the Trustee
shall distribute to all Unitholders of Units in the respective Trust the
entire amount of principal and accrued interest attributable to such
Special Bonds which have not been so replaced at the next monthly
distribution date which is more than thirty days after the expiration of
the Purchase Period or at such earlier time as the Trustee in its sole
discretion deems to be in the best interest of the Unitholders.
The Trustee may, in its discretion, adjust the amount of subsequent
distributions from the Trust to take account of any difference in
interest accrued on the New Bond at the time of its deposit and the
interest which would have accrued on the Special Bond as of such date.
The amounts to be so distributed to each Unitholder of a Trust shall
be that pro rata share of the cash balance of the Interest and Principal
Accounts of such Trust, computed as set forth above, as shall be
represented by the Units evidenced by the outstanding Certificate or
Certificates registered in the name of such Unitholders and/or Book Entry
Positions recorded in the names of such Unitholders on the books of the
Trustee.
In the computation of each such share, fractions of less than one
cent shall be omitted. After any such distribution provided for above,
any cash balance remaining in the Interest Account or the Principal
Account of a Trust shall be held in the same manner as other amounts
subsequently deposited in each of such Accounts, respectively.
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For the purpose of distribution as herein provided, the holders of
record on the registration books of the Trustee at the close of business
on each Record Date shall be conclusively entitled to such distribution,
and no liability shall attach to the Trustee by reason of payment to or
upon the order of any such registered Unitholder of record. Nothing
herein shall be construed to prevent the payment of amounts from the
Interest Account and the Principal Account of a Trust to individual
Unitholders by means of one check, draft or other proper instrument,
provided that the appropriate statement of such distribution shall be
furnished therewith as provided in Section 3.06 hereof (unless waived as
set forth in said Section 3.06).
SECTION 3.06. DISTRIBUTION STATEMENTS: With each distribution from the
Interest or Principal Accounts of a Trust the Trustee shall set forth,
either in the instrument by means of which payment of such distribution
is made or in an accompanying statement, the amount being distributed
from each such account expressed as a dollar amount per Unit of such
Trust except that such information need not be furnished to a Unitholder
who has waived receipt thereof in writing. In the event that the issuer
or insurer of any of the Bonds in a Trust shall fail to make payment when
due of any interest or principal and such failure results in a change in
the amount which would otherwise be distributed as a monthly
distribution, the Trustee shall, with the first distribution relating to
such Trust following such failure, set forth in an accompanying statement
(a) the name of the issuer and the Bond, (b) the amount of the reduction
in the distribution per unit resulting from such failure, (c) the
percentage of the aggregate principal amount of Bonds which such Bond
represents and (d) to the extent then determined, information regarding
any disposition or legal action with respect to such Bond.
Within a reasonable period of time after the last business day of
each calendar year, the Trustee shall furnish to each person who at any
time during such calendar year was a Unitholder of a Trust a statement
setting forth, with respect to such calendar year and with respect to
such Trust:
(A) as to the Interest Account:
(1) the amount of interest received on the Bonds,
(2) the amounts paid for purchases of New Bonds pursuant
to Section 3.14 and for redemptions pursuant to Section 4.02,
(3) the deductions for applicable taxes and fees and
expenses of the Trustee and bond counsel, and
(4) the balance remaining after such distributions and
deductions, expressed both as a total dollar amount and as a
dollar amount per Unit outstanding on the last business day of
such calendar year;
(B) as to the Principal Account:
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(1) the dates of the sale, maturity, liquidation or
redemption of any of the Bonds and the net proceeds received
therefrom excluding any portion thereof credited to the
Interest Account,
(2) the amounts received with respect to Zero Coupon
Obligations and Stripped Obligations which, based on the
Evaluator's price therefor on the Date of Deposit, constitute
tax-exempt original issue discount to a Unitholder who
purchased his Units on the Day of Deposit,
(3) the amount paid for purchases of New Bonds pursuant
to Section 3.14 and for redemptions pursuant to Section 4.02,
(4) the deductions for payment of applicable taxes and
fees and expenses of the Trustee and bond counsel, and
(5) the balance remaining after such distributions and
deductions, expressed both as a total dollar amount and as a
dollar amount per Unit outstanding on the last business day of
such calendar year; and
(C) the following information:
(1) a list of the Bonds as of the last business day of
such calendar year,
(2) the number of Units outstanding on the last business
day of such calendar year,
(3) the Unit Value based on the last evaluation of such
Trust made during such calendar year,
(4) the amounts actually distributed during such calendar
year from the Interest and Principal Accounts, separately
stated, expressed both as total dollar amounts and as dollar
amounts per Unit outstanding on the record dates for such
distributions, and
(5) for Compound Interest Trusts only, the amount of
original issue discount earned on portfolio Bonds, based on the
valuation of such Bonds on the Date of Deposit.
SECTION 3.07. SALE OF BONDS: If necessary, in order to maintain the
sound investment character of a Trust, the Depositor may direct the
Trustee to sell or liquidate Bonds in such Trust at such price and time
and in such manner as shall be determined by the Depositor, provided that
the Depositor has determined that any one or more of the following
conditions exist:
(a) that there has been a default on such Bonds in the payment
of principal or interest, or both, when due and payable;
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(b) that any action or proceeding has been instituted in law
or equity seeking to restrain or enjoin the payment of principal or
interest on any such Bonds, attacking the constitutionality of any
enabling legislation or alleging and seeking to have judicially
determined the illegality of the issuing body or the constitution of
its governing body or officers, the illegality, irregularity or
omission of any necessary acts or proceedings preliminary to the
issuance of such Bonds, or seeking to restrain or enjoin the
performance by the officers or employees of any such issuing body of
any improper or illegal act in connection with the administration of
funds necessary for debt service on such Bonds or otherwise; or that
there exists any other legal question or impediment affecting such
Bonds or the payment of debt service on the same;
(c) that there has occurred any breach of covenant or warranty
in any resolution, ordinance, trust indenture or other document,
which would adversely affect either immediately or contingently the
payment of debt service on such Bonds, or their general credit
standing, or otherwise impair the sound investment character of such
Bonds;
(d) that there has been a default in the payment of principal
of or interest on any other outstanding obligations of an issuer of
such Bonds;
(e) that in the case of revenue Bonds, the revenues and income
of the facility or project or other special funds expressly charged
and pledged for debt service on any such Bonds shall fall
substantially below the estimated revenues or income calculated by
the engineers or other proper officials charged with the
acquisition, construction or operation of such facility or project,
so that, in the opinion of the Depositor, the retention of such
Bonds would be detrimental to the sound investment character of such
Trust and to the interest of the Unitholders thereof;
(f) that the price of any such Bonds has declined to such an
extent, or such other market or credit factor exists, so that in the
opinion of the Depositor the retention of such Bonds would be
detrimental to such Trust and to the interest of the Unitholders
thereof;
(g) that such Bonds are the subject of an advanced refunding.
For the purposes of this Section 3.07(g), "an advanced refunding"
shall mean when refunding bonds are issued and the proceeds thereof
are deposited in an irrevocable trust to retire the Bonds on or
before their redemption date; or
(h) that as of any Record Date any of the Bonds are scheduled
to be redeemed and paid prior to the next succeeding Monthly
Distribution Date; PROVIDED, HOWEVER, that as the result of such
redemption the Trustee will receive funds in an amount sufficient to
enable the Trustee to include in the distribution from the Principal
Account on such next succeeding Monthly Distribution Date at least
$.50 per Unit.
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Upon receipt of such direction from the Depositor, upon which the
Trustee shall rely, the Trustee shall proceed to sell or liquidate the
specified Bonds in accordance with such direction; PROVIDED, HOWEVER,
that the Trustee shall not sell or liquidate any Bonds upon receipt of a
direction from the Depositor that it has determined that the conditions
in subdivision (h) above exist, unless the Trustee shall receive on
account of such sale or liquidation the full principal amount of such
Bonds, plus the premium, if any, and the interest accrued and to accrue
thereon to the date of the redemption of such Bonds. The Trustee shall
not be liable or responsible in any way for depreciation or loss incurred
by reason of any sale made pursuant to any such direction or by reason of
the failure of the Depositor to give any such direction, and in the
absence of such direction the Trustee shall have no duty to sell or
liquidate any Bonds under this Section 3.07 except to the extent
otherwise required by Section 3.10 of this Indenture.
SECTION 3.08. REFUNDING BONDS: In the event that an offer shall be
made by an obligor of any of the Bonds in a Trust to issue new
obligations in exchange and substitution for any issue of Bonds pursuant
to a plan for the refunding or refinancing of such Bonds, the Depositor
shall instruct the Trustee in writing to reject such offer and either to
hold or sell such Bonds, except that if (1) the issuer is in default with
respect to such Bonds or (2) in the opinion of the Depositor, given in
writing to the Trustee, the issuer will probably default with respect to
such Bonds in the reasonably foreseeable future, the Depositor shall
instruct the Trustee in writing to accept or reject such offer or take
any other action with respect thereto as the Depositor may deem proper.
Any obligation so received in exchange shall be deposited hereunder and
shall be subject to the terms and conditions of this Indenture to the
same extent as the Bonds originally deposited hereunder. Within five
days after such deposit, notice of such exchange and deposit shall be
given by the Trustee to each Unitholder of such Trust, including an
identification of the Bonds eliminated and the bonds substituted
therefor.
SECTION 3.09. BOND COUNSEL: The Depositor may employ from time to time
as it may deem necessary a firm of municipal bond attorneys for any legal
services that may be required in connection with the disposition of
underlying bonds pursuant to Section 3.07 or the substitution of any
securities for underlying bonds as the result of any refunding permitted
under Section 3.08. The fees and expenses of such bond counsel shall be
paid by the Trustee from the Interest and Principal Accounts of the
applicable Trust as provided for in Section 3.05(c) hereof.
SECTION 3.10. NOTICE AND SALE BY TRUSTEE: If at any time the principal
of or interest on any of the Bonds shall be in default and not paid or
provision for payment thereof shall not have been duly made, either
pursuant to any Insurance thereon or otherwise, the Trustee shall notify
the Depositor thereof. If within thirty days after such notification the
Depositor has not given any instruction to sell or to hold or has not
taken any other action in connection with such Bonds, the Trustee shall
sell such Bonds forthwith, and the Trustee shall not be liable or
responsible in any way for depreciation or loss incurred by reason of
such sale.
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SECTION 3.11. TRUSTEE NOT TO AMORTIZE: Nothing in this Indenture, or
otherwise, shall be construed to require the Trustee to make any
adjustments between the Interest and Principal Accounts of any Trust by
reason of any premium or discount in respect of any of the Bonds.
SECTION 3.12. LIABILITY OF DEPOSITOR: The Depositor shall be under no
liability to the Unitholders for any action taken or for refraining from
the taking of any action in good faith pursuant to this Indenture or for
errors in judgment, but shall be liable only for its own negligence, lack
of good faith or willful misconduct. The Depositor may rely in good faith
on any paper, order, notice, list, affidavit, receipt, opinion,
endorsement, assignment, draft or any other document of any kind prima
facie properly executed and submitted to it by the Trustee, bond counsel,
or any other persons pursuant to this Indenture and in furtherance of its
duties.
SECTION 3.13. NOTICE TO DEPOSITOR: In the event that the Trustee shall
have been notified at any time of any action to be taken or proposed to
be taken by holders of the Bonds (including but not limited to the making
of any demand, direction, request, giving of any notice, consent or
waiver or the voting with respect to any amendment or supplement to any
indenture, resolution, agreement or other instrument under or pursuant to
which the Bonds have been issued) the Trustee shall promptly notify the
Depositor and shall thereupon take such action or refrain from taking any
action as the Depositor shall in writing direct; PROVIDED, HOWEVER, that
if the Depositor shall not within five business days of the giving of
such notice to the Depositor direct the Trustee to take or refrain from
taking any action, the Trustee shall take such action as it, in its sole
discretion, shall deem advisable. Neither the Depositor nor the Trustee
shall be liable to any person for any action or failure to take action
with respect to this Section 3.13.
SECTION 3.14. LIMITED REPLACEMENT OF SPECIAL BONDS: If any contract
in
respect of Bonds in a Trust other than a contract to purchase New Bonds
(as defined below), including those purchased on a when, as and if issued
basis, shall have failed due to any occurrence, act or event beyond the
control of the Depositor or the Trustee (such failed Bonds being herein
called the "Special Bonds"), the Depositor shall notify the Trustee (such
notice being herein called the "Failed Contract Notice") of its inability
to deliver the Special Bonds to the Trustee promptly after it is notified
that the Special Bonds will not be delivered to it by the seller thereof.
The Depositor shall have until the earlier of twenty days after giving
the Failed Contract Notice or ninety days after the date indicated in
Item 2 of Schedule A to this Indenture (such twenty-day or ninety-day
period being herein called the "Purchase Period") to deliver to the
Trustee an obligation to be held as Bonds hereunder (herein called the
"New Bonds") as part of such Trust in replacement of an equal principal
amount of the Special Bonds, subject to the satisfaction of all of the
following conditions in the case of any such new Bonds:
(a) The New Bonds (i) shall be tax-exempt obligations issued
by states, territories or their political subdivisions, (ii) shall
have a fixed maturity date (whether or not entitled to the benefits
of any sinking redemption, purchase or similar fund) not exceeding
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the date of maturity of the Special Bonds they replace and not less
than approximately 1 year in the case of a Short Term Trust,
approximately 3 years in the case of a Short Intermediate Trust,
approximately 5 years in the case of an Intermediate Trust, State
Intermediate Trust or Compound Interest Trust, approximately 11
years in the case of a Long Intermediate Trust and approximately 15
years in the case of any other Trust, in each case after the date of
purchase, (iii) shall be acquired by the Trust at a cost
("ACQUISITION COST") equal to the "Trustee's Determination of
Offering Price" of the respective Trust indicated in the "Schedule
of Investments" set forth in the Prospectus dated the Date of
Deposit and relating to the Series of the Nuveen Tax-Exempt Unit
Trust as indicated in Item 1 of Schedule A to this Indenture,
attributable to the principal amount of Special Bonds they replace,
(iv) must have a current return based on their Acquisition Cost at
least equal to the current return as of the Date of Deposit of the
Special Bonds they replace, (v) must have a yield to maturity based
on their Acquisition Cost at least equal to the yield to maturity as
of the Date of Deposit of the Special Bonds they replace, (vi) shall
be payable as to principal and interest, if any, in United States
currency, (vii) shall not be when, as and if issued Bonds,
(viii) with respect to a State Trust, shall have benefit of
exemption from state taxation to an equal or greater extent than the
Special Bonds they replace, (ix) with respect to a Compound Interest
Trust, shall be non-interest bearing (unless the New Bond is
replacing the current interest paying Special Bond or Special Bonds
to be used to pay expenses of such Trust) and (x) with respect to a
New Bond replacing the current interest paying Special Bond or
Special Bonds to be used to pay expenses of a Compound Interest
Trust, such New Bond shall not be subject to redemption prior to its
maturity.
(b) Each New Bond shall be rated at least "A" or better by
Standard & Poor's Corporation or "A" or better by Moody's Investors
Service, Inc.
(c) The principal amount of the New Bonds (exclusive of
accrued interest) shall not exceed the principal amount of the
Special Bonds.
(d) In the case of Insured Trusts, each New Bond shall be a
Pre-Insured Bond or shall be acceptable to the Insurer to be insured
under policies of insurance identical in form and substance to the
Insurance included and will be so included upon acquisition by the
Trust.
(e) The Depositor shall furnish a notice to the Trustee (which
may be part of the Failed Contract Notice) in respect of the New
Bond purchased or to be purchased that shall (i) identify the New
Bonds, (ii) state that the contract to purchase, if any, entered
into by the Depositor is satisfactory in form and substance, and
(iii) state that the foregoing conditions of clauses (a) through (d)
have been satisfied with respect to the New Bonds.
Upon satisfaction of the foregoing conditions with respect to any
New Bonds, the Depositor shall pay the purchase price for the New Bonds
from its own resources or if and to the extent that the Trustee has
credited any moneys and/or letters of credit attributable to the Special
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Bonds to the Principal Account of such Trust, the Trustee shall pay the
purchase price of the New Bonds upon directions from the Depositor from
the moneys and/or letters of credit so credited. If the Depositor has
paid the purchase price and, in addition, the Trustee has credited moneys
of the Depositor to the Principal Account of such Trust, the Trustee
shall forthwith return to the Depositor the portion of such moneys that
is not properly distributable to Unitholders pursuant to Section 3.05.
Whenever any New Bond is acquired by the Depositor pursuant to the
provisions of this Section 3.14, the Trustee shall, within five days
after the delivery thereof to the Trustee mail to all Unitholders of the
respective Trust notices of such acquisition, including an identification
of the Special Bonds and the New Bonds acquired. The Trustee shall not
be liable or responsible in any way for depreciation or loss incurred by
reason of any purchase of Special Bonds or New Bonds made by the
Depositor and in the absence of a purchase by the Depositor the Trustee
shall have no duty to purchase any New Bonds under this Indenture. The
Depositor shall not be liable for any failure to purchase any New Bonds
or for errors of judgment in respect of this Section 3.14; PROVIDED,
HOWEVER, that these provisions shall not protect the Depositor against
any liability to which it would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and
duties hereunder.
Notwithstanding anything to the contrary in this Section 3.14, no
deposit of New Bonds will be made without an opinion of counsel that such
substitution will not adversely affect the federal income tax status of
the Trust, if such New Bonds when added to all previously purchased New
Bonds in the Trust exceeds 15% of the principal amount of Bonds initially
deposited in the Trust.
ARTICLE IV
EVALUATION, REDEMPTION, PURCHASE, TRANSFER OR
INTERCHANGE OF UNITS AND REPLACEMENT OF CERTIFICATES
SECTION 4.01. EVALUATION: The Trustee shall make an evaluation of each
Trust as of 4 p.m. eastern time, (i) on the last business day of each of
the months of June and December, (ii) on the day on which any Unit of a
respective Trust is tendered for redemption, and (iii) on any other day
desired by the Trustee or requested by the Depositor. Such evaluations
shall take into account and itemize separately, (1) the cash on hand in
the respective Trust (other than cash declared held in trust to cover
contracts to purchase bonds) or moneys in the process of being collected
from matured interest coupons or bonds matured or called for redemption
prior to maturity, (2) the value of each issue of the Bonds in the Trust,
and (3) interest accrued thereon not subject to collection and
distribution. In making the evaluations the Trustee may determine the
value of each issue of the Bonds in the Trust by the following methods or
any combination thereof which it deems appropriate: (i) on the basis of
current bid prices of such Bonds as obtained from investment dealers or
brokers (including the Depositor) who customarily deal in bonds
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comparable to those held by the Trust, or (ii) if bid prices are not
available for any of such Bonds, on the basis of bid prices for
comparable bonds, or (iii) by causing the value of the Bonds in the Trust
to be determined by others engaged in the practice of evaluating, quoting
or appraising bonds. For each such evaluation there shall be deducted
from the sum of the above (i) amounts representing any applicable taxes
or governmental charges payable out of the Trust and for which no
deductions shall have previously been made for the purpose of addition to
the Reserve Account of such Trust, (ii) amounts representing accrued
expenses of the Trust including but not limited to unpaid fees and
expenses of the Trustee, the Depositor and bond counsel, in each case as
reported by the Trustee to the Depositor on or prior to the date of
evaluation, and (iii) cash held for distribution to Unitholders of such
Trust of record as of a date prior to the evaluation then being made.
The value of the pro rata share of each Unit of such Trust determined on
the basis of any such evaluation shall be referred to herein as the "Unit
Value".
The Depositor shall make an evaluation of each Trust as of 4 p.m.
eastern time, (i) on the last business day of each of the months of June
and December, (ii) on the day in which any Unit of such Trust is tendered
for redemption, and (iii) on any other day such an evaluation is desired
by the Trustee or is deemed necessary by the Depositor. Such evaluation
shall be made on the same basis as set forth in the preceding paragraph.
The Trustee, in lieu of making the evaluation provided in the preceding
paragraph, may use the evaluation made by the Depositor for all purposes
of this Indenture, except as provided in the following paragraph, and in
so doing, shall not be liable or responsible, under any circumstances
whatever, for the accuracy or correctness thereof or for any error or
omission therein.
The Trustee shall make an evaluation of the Bonds deposited in each
Trust as of the day preceding the day on which said Bonds are deposited
under this Indenture. Such evaluation shall be made on the same basis as
set forth in the second preceding paragraph except that it shall be based
upon offering prices of said Bonds. In addition to the methods of
determining the value of the Bonds described above, the Trustee may make
the initial evaluation in whole or in part by reference to the Blue List
of Current Municipal Offerings (a daily publication containing the
current public offering prices of bonds of all grades currently being
offered by dealers and banks). The Trustee's determination of the
offering price of the Bonds on the date of deposit shall be included in
the Schedules attached hereto.
SECTION 4.02. REDEMPTIONS BY TRUSTEE; PURCHASES BY DEPOSITOR:
A Certificated Unitholder may redeem his Units by sending a written
redemption request and tendering his Certificate to the Trustee at its
corporate trust office in the City of New York. Any individual Book
Entry Unitholder redeeming 1,000 Units or less may do so by telephone
upon completion and submission to the Trustee of a Telephone Redemption
Authorization Form prior to the date of redemption (the "ELIGIBLE BOOK
ENTRY UNITHOLDERS"). All other Book Entry Unitholders must make their
redemption request in writing to the Trustee at its corporate trust
office in the City of New York, and may do so by (i) completing the form
on the reverse side of their Book Entry Position Confirmation or (ii)
sending a written redemption request which includes (a) the tax
identification number for the account, (b) the name and address of the
redeeming Unitholder, (c) a complete description of the Units to be
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redeemed with the Trust number and payment option, (d) the number of
Units to be redeemed, (e) a notation that the Units are in Book Entry
form and (f) the number of Units remaining, if the redemption is a
partial redemption. Any proper request for redemption made in one of the
manners provided for above shall be effected by the Trustee on the
seventh calendar day following the day on which such request for
redemption is made, provided that if such day of redemption is not a
business day, then such Units shall be redeemed on the first business day
prior thereto (being herein called the "REDEMPTION DATE"). Subject to
payment by any redeeming Unitholder of any tax or other governmental
charges which may be imposed thereon, such redemption is to be made by
payment on the Redemption Date of cash equivalent to the Unit Value,
determined by the Trustee as of 4:00 p.m. eastern time, on the date of
tender, multiplied by the number of Units owned by the Unitholder plus a
sum equivalent to the amount of accrued interest which would have been
payable on such Units to, but not including, the fifth business day
following the date of tender (herein called the "REDEMPTION PRICE").
Unit redemption requests received by telephone or in writing by the
Trustee on any day after 4:00 p.m. eastern time will be treated by the
Trustee as received on the next day on which the New York Stock Exchange
is open for trading and will be deemed to have been received on such day
for redemption at the Redemption Price computed on that day.
The Trustee may in its discretion, and shall when so directed by the
Depositor, suspend the right of redemption for Units of a Trust or
postpone the date of payment of the Redemption Price therefor for more
than seven calendar days following the day on which a proper request for
redemption is made in the manner provided for in this Section 4.02 (1)
for any period during which the New York Stock Exchange is closed other
than customary weekend and holiday closings or during which trading on
the New York Stock Exchange is restricted; (2) for any period during
which an emergency exists as a result of which disposal by such Trust of
the Bonds is not reasonably practicable or it is not reasonably
practicable fairly to determine in accordance herewith the value of the
Bonds; or (3) for such other period as the Securities and Exchange
Commission may by order permit, and shall not be liable to any person or
in any way for any loss or damage which may result from any such
suspension or postponement.
Not later than the close of business on the day a proper request for
redemption in the manner provided for in this Section 4.02 by a
Unitholder other than the Depositor is received, the Trustee shall notify
the Depositor of such request. The Depositor shall have the right to
purchase such Units by notifying the Trustee of its election to make such
purchase as soon as practicable thereafter but in no event subsequent to
the close of business on the second business day after the day on which
the request for redemption of such Units was received. Such purchase
shall be made by payment for such Units by the Depositor to the
Unitholder not later than the close of business on the Redemption Date of
an amount equal to the Redemption Price which would otherwise be payable
by the Trustee to such Unitholder.
Any Unit so purchased by the Depositor may at the option of the
Depositor be tendered to the Trustee for redemption at the corporate
trust office of the Trustee in the manner provided in the first paragraph
of this Section 4.02.
If the Depositor does not elect to purchase any Unit of a Trust
tendered to the Trustee for redemption, or if a Unit is being tendered by
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the Depositor for redemption, that portion of the Redemption Price which
represents interest shall be withdrawn from the Interest Account of such
Trust to the extent available. The balance paid on any redemption,
including accrued interest, if any, shall be withdrawn from the Principal
Account of such Trust to the extent that funds are available for such
purpose. If such available balance shall be insufficient the Trustee
shall sell such of the Bonds held in such Trust currently designated for
such purposes by the Depositor as the Trustee in its sole discretion
shall deem necessary. In the event that funds are withdrawn from such
Principal Account for payment of accrued interest, such Principal Account
shall be reimbursed for such funds so withdrawn when sufficient funds are
next available in such Interest Account.
The Depositor shall maintain with the Trustee a current list of
Bonds held in each Trust designated to be sold for the purpose of
redemption of Units of each Trust tendered for redemption and not
purchased by the Depositor, and for payment of expenses hereunder,
provided that if the Depositor shall for any reason fail to maintain such
a list, the Trustee, in its sole discretion, may designate a current list
of Bonds for such purposes. The net proceeds of any sales of Bonds from
such list representing principal shall be credited to the Principal
Account of such Trust and the proceeds of such sales representing accrued
interest, if any, but not accrued original issue discount, if any, shall
be credited to the Interest Account of such Trust.
The Trustee shall not be liable or responsible in any way for
depreciation or loss incurred by reason of any sale of Bonds made
pursuant to this Section 4.02.
Certificates evidencing Units redeemed pursuant to this Section 4.02
shall be canceled by the Trustee and the Unit or Units evidenced by such
Certificates or Book Entry Positions recorded on the books of the Trustee
shall be terminated by such redemptions.
SECTION 4.03. TRANSFER OR INTERCHANGE OF UNITS: Units represented
by a
Certificate may be transferred to another person by the registered holder
thereof by written request to the Trustee accompanied by presentation and
surrender of the Certificate at the corporate trust office of the Trustee
properly endorsed or accompanied by a written instrument or instruments
of transfer in form satisfactory to the Trustee and executed by the
Certificated Unitholder. Units represented by a Book Entry Position may
be transferred by delivery of written transfer instructions to the
corporate trust office of the Trustee in such form and accompanied by
such documents as the Trustee may require. Units transferred, whether
represented prior to the transfer in certificated form or book entry
form, shall after the transfer be represented in the same form, unless
otherwise requested by the transferor. Upon such transfer, either (i)
new Book Entry Position Confirmation(s), (ii) new registered
Certificate(s) or (iii) any combination thereof, representing the same
number of Units as were transferred, will be issued in exchange and
substitution therefor. Any Certificated Unitholder may change to book
entry ownership upon submitting to the Trustee such Unitholder's
Certificate or Certificates along with a written request in form
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satisfactory to the Trustee that the Units represented by such
Certificate or Certificates thereafter be held in book entry form. Upon
such surrender, an appropriate notation will be made in the registration
books of the Trust to indicate that the Units formerly evidenced by
Certificates are held in a Book Entry Position. Any Book Entry
Unitholder may change to Certificate ownership of the same Trust by
submitting a written request to the Trustee in form satisfactory to the
Trustee.
Certificates issued pursuant to this Indenture are interchangeable
for one or more other Certificates representing an equal aggregate number
of Units of the same Trust. All Units shall be issued in denominations
of one Unit or any multiple and fraction thereof as may be requested by
the Unitholder. Fractions of Units shall be computed to three decimal
places.
The Trustee may deem and treat the person in whose name any
Certificate or Book Entry Position shall be registered upon the books of
the Trustee as the owner of the related Units for all purposes hereunder
and the Trustee shall not be affected by any notice to the contrary, nor
be liable to any person or in any way for so deeming and treating the
person in whose name any Certificate or Book Entry Position shall be so
registered.
A sum sufficient to pay any tax or other governmental charge that
may be imposed in connection with any such transfer or interchange shall
be paid by the Unitholder to the Trustee. The Trustee may require a
Unitholder to pay $2.00 for each new Certificate issued on any such
transfer or interchange.
All Units canceled pursuant to this Indenture shall be disposed of
by the Trustee without liability on its part.
SECTION 4.04. CERTIFICATES MUTILATED, DESTROYED, STOLEN OR LOST:
In
case any Certificate shall become mutilated or be destroyed, stolen or
lost, the Trustee shall execute and deliver a new Certificate or, at the
Certificated Unitholder's written request in a form satisfactory to the
Trustee to thereafter hold the Units in a Book Entry Position, enter an
equivalent Book Entry Position on the records of the Trustee pursuant to
Section 4.03 in exchange and substitution therefor upon the Unitholder's
furnishing the Trustee with proper identification and satisfactory
indemnity, complying with such other reasonable regulations and
conditions as the Trustee may prescribe and paying such expenses as the
Trustee may incur. Any mutilated Certificate shall be duly surrendered
and cancelled before any new Certificate or Book Entry Position shall be
issued or recorded in exchange and substitution therefor. Upon the
issuance of any new Certificate or recording of any Book Entry Position
on the books of the Trustee a sum sufficient to pay any tax or other
governmental charge and the fees and expenses of the Trustee may be
imposed. Any such new Certificate issued or Book Entry Position recorded
on the books of the Trustee pursuant to this Section shall constitute
complete and indefeasible evidence of ownership of Units in the related
Trust, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time. In the event the
related Trust has terminated or is in the process of termination, the
Trustee may, instead of issuing a new Certificate or recording of a Book
Entry Position in exchange and substitution for any Certificate which
shall have become mutilated or shall have been destroyed, stolen or lost,
make the distributions in respect of such mutilated, destroyed, stolen or
lost Certificate (without surrender thereof except in the case of a
mutilated Certificate) as provided in Section 7.02 hereof if the Trustee
is furnished with such security or indemnity as it may require to save it
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harmless, and in the case of destruction, loss or theft of a Certificate,
evidence to the satisfaction of the Trustee of the destruction, loss or
theft of such Certificate and of the ownership thereof.
SECTION 4.05. COMPENSATION OF DEPOSITOR: For services performed
under
this Indenture in evaluating and for maintaining surveillance over the
Bonds in each Trust, the Depositor shall be paid $0.17 per annum per
$1,000 principal amount of Bonds in each Trust. Such compensation shall
be computed on the basis of the greatest amount of such principal amount
of Bonds in each Trust at any time during the period with respect to
which such compensation is being computed and may, from time to time, be
adjusted provided that the total adjustment upward does not, at the time
of such adjustment, exceed the percentage of the total increase, after
the date hereof, in consumer prices for services as measured by the
United States Department of Labor Consumer Price Index entitled "All
Services Less Rent" or if such index no longer exists, a comparable
index. The consent or concurrence of any Unitholder hereunder shall not
be required for any such adjustment or increase. The Depositor shall in
addition be compensated for its costs incurred in providing such other
services to the Trust as the Trustee shall request. Such compensation
shall be charged by the Trustee, upon receipt of invoice therefor from
the Depositor, against the Interest and Principal Accounts of the
respective Trusts on or before the Distribution Date on which such period
terminates. If the cash balances in the Interest and Principal Accounts
of any Trust shall be insufficient to provide for amounts payable
pursuant to this Section 4.05, the Trustee shall have the power to sell
(i) Bonds of such Trust from the current list of Bonds designated to be
sold pursuant to Section 4.02 hereof, or (ii) if no such Bonds have been
so designated such Bonds of such Trust as the Trustee may see fit to sell
in its own discretion, and to apply the proceeds of any such sale in
payment of the amounts payable pursuant to this Section 4.05. Any moneys
payable to the Depositor pursuant to this Section 4.05 shall be secured
by a prior lien on such Trust except that no such lien shall be prior to
any lien in favor of the Trustee under the provisions of Section 5.04.
ARTICLE V
TRUSTEE
SECTION 5.01. GENERAL DEFINITION OF TRUSTEE'S LIABILITIES, RIGHTS
AND
DUTIES: The Trustee shall in its discretion undertake such action as it
may deem necessary at any and all times to protect each Trust and the
rights and interests of the Unitholders pursuant to the terms of this
Indenture, PROVIDED, HOWEVER, that the expenses and costs of such
actions, undertakings or proceedings shall be reimbursable to the Trustee
from the Interest and Principal Accounts of such Trust and the payment of
such costs and expenses shall be secured by a prior lien on such Trust.
In addition to and notwithstanding the other duties, rights, privileges
and liabilities of the Trustee as otherwise set forth the liabilities of
the Trustee are further defined as follows:
(a) All moneys deposited with or received by the Trustee
hereunder related to a Trust shall be held by it without interest in
trust as part of such Trust or the Reserve Account of such Trust
until required to be disbursed in accordance with the provisions of
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this Indenture and such moneys will be segregated by separate
recordation on the trust ledger of the Trustee so long as such
practice preserves a valid preference under applicable law, or if
such preference is not so preserved the Trustee shall handle such
moneys in such other manner as shall constitute the segregation and
holding thereof in trust within the meaning of the Investment
Company Act of 1940.
(b) The Trustee shall be under no liability for any action
taken in good faith on any appraisal, paper, order, list, demand,
request, consent, affidavit, notice, opinion, direction, evaluation,
endorsement, assignment, resolution, draft or other document whether
or not of the same kind prima facie properly executed, or for the
disposition of moneys, Bonds, Certificates or Book Entry Positions
pursuant to this Indenture, or in respect of any evaluation which it
is required to make or is required or permitted to have made by
others under this Indenture or otherwise, except by reason of its
own negligence, lack of good faith or willful misconduct, provided
that the Trustee shall not in any event be liable or responsible for
any evaluation made by the Depositor. The Trustee may construe any
of the provisions of this Indenture, insofar as the same may appear
to be ambiguous or inconsistent with any other provisions hereof,
and any construction of any such provisions hereof by the Trustee in
good faith shall be binding upon the parties hereto.
(c) The Trustee shall not be responsible for or in respect of
the recitals herein, the validity or sufficiency of this Indenture
or for the due execution hereof by the Depositor, or for the form,
character, genuineness, sufficiency, value or validity of any Bonds
(except that the Trustee shall be responsible for the exercise of
due care in determining the genuineness of Bonds delivered to it
pursuant to contracts for the purchase of such Bonds) or for or in
respect of the validity or sufficiency of any Certificates or of the
due execution thereof by the Depositor, or for the payment by the
Insurer of amounts due under or the performance by the Insurer of
its obligations in accordance with the Insurance, and the Trustee
shall in no event assume or incur any liability, duty, or obligation
to any Unitholder or the Depositor other than as expressly provided
for herein. The Trustee shall not be responsible for or in respect
of the validity of any signature by or on behalf of the Depositor.
(d) The Trustee shall not be under any obligation to appear
in, prosecute or defend any action, which in its opinion may involve
it in expense or liability, unless as often as required by the
Trustee, it shall be furnished with reasonable security and
indemnity against such expense or liability, and any pecuniary cost
of the Trustee from such actions shall be deductible from and a
charge against the Interest and Principal Accounts of the affected
Trust or Trusts.
(e) The Trustee may employ agents, attorneys, accountants and
auditors and shall not be answerable for the default or misconduct
of any such agents, attorneys, accountants or auditors if such
agents, attorneys, accountants or auditors shall have been selected
with reasonable care. The Trustee shall be fully protected in
respect of any action under this Agreement taken, or suffered, in
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good faith by the Trustee, in accordance with the opinion of its
counsel. The fees and expenses charged by such agents, attorneys,
accountants or auditors shall constitute an expense of the Trustee
reimbursable from the Interest and Principal Accounts of the
affected Trust as set forth in Section 5.04 hereof.
(f) If at any time the Depositor shall fail to undertake or
perform any of the duties which by the terms of this Indenture are
required by it to be undertaken or performed, or such Depositor
shall become incapable of acting or shall be adjudged a bankrupt or
insolvent, or a receiver of such Depositor or of its property shall
be appointed, or any public officer shall take charge or control of
such Depositor or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then in any such case,
the Trustee may: (1) appoint a successor depositor who shall act
hereunder in all respects in place of such Depositor which successor
shall be satisfactory to the Trustee, and which may be compensated
at rates deemed by the Trustee to be reasonable under the
circumstances, by deduction ratably from the Interest Accounts of
the affected Trusts or, to the extent funds are not available in
such Account, from the Principal Accounts of the affected Trusts but
no such deduction shall be made exceeding such reasonable amount as
the Securities and Exchange Commission may prescribe in accordance
with Section 26(a)(2)(C) of the Investment Company Act of 1940, or
(2) terminate and liquidate the affected Trust in the manner
provided in Section 7.02.
(g) If (i) the value of any Trust as shown by any evaluation
by the Trustee pursuant to Section 4.01 hereof shall be less than
twenty per cent (20%) of the aggregate principal amount of Bonds
initially deposited in such Trust, or (ii) by reason of the
Depositor's redemption of Units of a Trust not theretofore sold, the
net worth of the Trust is reduced to less than forty per cent (40%)
of the aggregate principal amount of Bonds initially deposited
therein, the Trustee may in its discretion, and shall when so
directed by the Depositor, terminate this Indenture and the trust
created hereby insofar as they related to such Trust and liquidate
such Trust, all in the manner provided in Section 7.02.
(h) In no event shall the Trustee 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 hereunder or upon
or in respect of any Trust which it 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 the premises. For all
such taxes and charges and for any expenses, including counsel fees,
which the Trustee may sustain or incur with respect to such taxes or
charges, the Trustee shall be reimbursed and indemnified out of the
Interest and Principal Accounts of the affected Trust, and the
payment of such amounts so paid by the Trustee shall be secured by a
prior lien on such Trust.
(i) The Trustee except by reason of its own negligence or
willful misconduct shall not be liable for any action taken or
suffered to be taken by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred
upon it by this Indenture.
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SECTION 5.02. BOOKS, RECORDS AND REPORTS: The Trustee shall keep
proper books of record and account of all the transactions of each Trust
and Book Entry Positions recorded on the books of the Trustee under this
Indenture at its unit investment trust office including a record of the
name and address of, and the Certificates issued by each Trust and held
by, every Unitholder, and such books and records of each Trust shall be
open to inspection by any Unitholder of such Trust at all reasonable
times during the Trustee's usual business hours. The Trustee shall
cause audited statements as to the assets and income of each Trust to be
prepared on an annual basis by independent public accountants selected by
the Depositor, PROVIDED, HOWEVER, (i) if the Sponsor shall provide to the
Trustee a written representation concluding that in the best judgment of
the Sponsor ceasing to prepare such annual audited statement would not
have a material adverse impact on the marketability of the Units in the
secondary market or (ii) if the cost to a Trust for preparation of such
statements shall exceed an amount equivalent to $.05 per Unit on an
annual basis then the Trustee shall not be required to have such
statements prepared.
To the extent permitted under the Investment Company Act of 1940 as
evidenced by an opinion of counsel to the Depositor, the Trustee shall
pay, or reimburse to the Depositor or others, the costs of the
preparation of documents and information with respect to each Trust
required by law or regulation in connection with the maintenance of a
secondary market in units of each Trust. Such costs may include but are
not limited to accounting and legal fees, blue sky registration and
filing fees, printing expenses and other reasonable expenses related to
documents required under Federal and state securities laws.
The Trustee shall make such annual or other reports as may from time
to time be required under any applicable state or federal statute or rule
or regulation thereunder.
SECTION 5.03. INDENTURE AND LIST OF BONDS ON FILE: The Trustee shall
keep a certified copy or duplicate original of this Indenture on file at
its corporate trust office available for inspection at all reasonable
times during the Trustee's usual business hours by any Unitholder,
together with a current list of the Bonds in each Trust.
SECTION 5.04. COMPENSATION: With respect to Insured Trusts and
Traditional Trusts (other than Compound Interest Traditional Trusts), for
services performed under this Indenture prior to the date indicated in
Item 5(c) of Schedule A hereto, the Trustee shall be paid at the rate
specified in Item 11(a) of Schedule A hereto, and on and after such date,
the Trustee shall be paid at the rates specified in Item 11(b) of such
Schedule A. With respect to Compound Interest Traditional Trusts, after
the 15th day of the month next succeeding the month in which the
Indenture was entered into as indicated in Item 2(a) of Schedule A, the
Trustee shall be paid $0.20 per annum per $1,000 principal amount payable
at maturity of Bonds in such Compound Interest Traditional Trust. Such
compensation with respect to each Trust shall be computed on the basis of
the largest principal amount of Bonds in such trust at any time during
the period with respect to which such compensation is being computed.
The Trustee may periodically adjust the compensation provided for
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pursuant to this paragraph in response to fluctuations in short-term
interest rates and average cash balances of the Trust accounts
(reflecting the cost to the Trustee of advancing funds to a Trust to meet
scheduled distributions and changes in anticipated earnings on cash
balances) and may, in addition, adjust such portion of its fee as is not
computed by reference to the cash balances in the Trust accounts in
accordance with the percentage of the total increase, after the date
hereof, in consumer prices for services as measured by the United States
Department of Labor Consumer Price Index entitled "All Services Less
Rent" or, if such index no longer exists, a comparable index. The
consent or concurrence of any Unitholder hereunder shall not be required
for any such adjustment or increase. Such compensation shall be charged
by the Trustee against the Interest and Principal Accounts of each Trust
on or before the Distribution Date on which such period terminates;
PROVIDED, HOWEVER, that such compensation shall be deemed to provide
only
for the usual, normal and proper functions undertaken as Trustee pursuant
to this Indenture. The Trustee shall charge the Interest and Principal
Accounts relating to such Trust for any and all expenses, including the
fees of counsel which may be retained by the Trustee in connection with
its activities hereunder and disbursements incurred hereunder and any
extraordinary services performed by the Trustee hereunder relating to
such Trust. The Trustee shall be indemnified ratably by the affected
Trust and held harmless against any loss or liability accruing to it
without negligence, bad faith or willful misconduct on its part, arising
out of or in connection with the acceptance or administration of this
trust, including the costs and expenses (including counsel fees) of
defending itself against any claim of liability in the premises. If the
cash balances in the Interest and Principal Accounts of the affected
Trust shall be insufficient to provide for amounts payable pursuant to
this Section 5.04 the Trustee shall have the power to sell (i) Bonds of
the affected Trust from the current list of Bonds designated to be sold
pursuant to Section 4.02 hereof, or (ii) if no such Bonds have been so
designated such Bonds of the affected Trust as the Trustee may see fit to
sell in its own discretion, and to apply the proceeds of any such sale in
payment of the amounts payable pursuant to this Section 5.04. The
Trustee shall not be liable or responsible in any way for depreciation or
loss incurred by reason of any sale of Bonds made pursuant to this
Section 5.04. Any moneys payable to the Trustee pursuant to this Section
shall be secured by a prior lien on the affected Trust.
SECTION 5.05. REMOVAL AND RESIGNATION OF TRUSTEE; SUCCESSOR:
The
following provisions shall provide for the removal and resignation of the
Trustee and the appointment of any successor trustee:
(a) The Trustee or any trustee or trustees hereafter appointed
may resign and be discharged of the trusts created by this
Indenture, by executing an instrument in writing resigning as
Trustee of such trusts and filing the same with the Depositor and
mailing a copy of a notice of resignation to all Unitholders then of
record, not less than sixty days before the date specified in such
instrument when, subject to Section 5.05(e), such resignation is to
take effect. Upon receiving such notice of resignation, the
Depositor shall promptly appoint a successor trustee as hereinafter
provided, by written instrument, in duplicate, one copy of which
shall be delivered to the resigning Trustee and one copy to the
successor trustee. In case at any time the Trustee shall become
incapable of acting, or shall be adjudged a bankrupt or insolvent,
or a receiver of the Trustee or of its property shall be appointed,
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or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purposes of rehabilitation,
conservation or liquidation, then in any such case the Depositor may
remove the Trustee and appoint a successor trustee by written
instrument, in duplicate, one copy of which shall be delivered to
the Trustee so removed and one copy to the successor trustee;
provided that a notice of such removal and appointment of a
successor trustee shall be mailed by the Depositor to each
Unitholder then of record.
(b) Any successor trustee appointed hereunder shall execute,
acknowledge and deliver to the Depositor and to the retiring Trustee
an instrument accepting such appointment hereunder, and such
successor trustee without any further act, deed or conveyance shall
become vested with all the rights, powers, duties and obligations of
its predecessor hereunder with like effect as if originally named
Trustee herein and shall be bound by all the terms and conditions of
this Indenture. Upon the request of such successor trustee, the
Depositor and the retiring Trustee shall, upon payment of any
amounts due the retiring Trustee, or provision therefor to the
satisfaction of such retiring Trustee, execute and deliver an
instrument acknowledged by it transferring to such successor trustee
all the rights and powers of the retiring Trustee; and the retiring
Trustee shall transfer, deliver and pay over to the successor
trustee all Bonds and moneys at the time held by it hereunder,
together with all necessary instruments of transfer and assignment
or other documents properly executed necessary to effect such
transfer and such of the records or copies thereof maintained by the
retiring Trustee in the administration hereof as may be requested by
the successor trustee, and shall thereupon be discharged from all
duties and responsibilities under this Indenture. The retiring
Trustee shall, nevertheless, retain a lien upon all Bonds and moneys
at the time held by it hereunder to secure any amounts then due the
retiring Trustee.
(c) In case at any time the Trustee shall resign and no
successor trustee shall have been appointed and have accepted
appointment within thirty days after notice of resignation has been
received by the Depositor, the retiring Trustee may forthwith apply
to a court of competent jurisdiction for the appointment of a
successor trustee. Such court may thereupon, after such notice, if
any, as it may deem proper and prescribe, appoint a successor
trustee.
(d) Any corporation into which any trustee hereunder may be
merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which any trustee
hereunder shall be a party, shall be the successor trustee under
this Indenture without the execution or filing of any paper,
instrument or further act to be done on the part of the parties
hereto, anything herein, or in any agreement relating to such merger
or consolidation, by which any such trustee may seek to retain
certain powers, rights and privileges theretofore obtaining for any
period of time following such merger or consolidation, to the
contrary notwithstanding.
(e) Any resignation or removal of the Trustee and appointment
of a successor trustee pursuant to this Section shall become
effective upon acceptance of appointment by the successor trustee as
provided in subsection (b) hereof.
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SECTION 5.06. QUALIFICATIONS OF TRUSTEE: The Trustee shall be a
corporation organized and doing business under the laws of the United
States or any state thereof, which is authorized under such laws to
exercise corporate trust powers and having at all times an aggregate
capital, surplus, and undivided profits of not less than $5,000,000.
ARTICLE VI
RIGHTS OF UNITHOLDERS
SECTION 6.01. BENEFICIARIES OF TRUST: By the purchase and acceptance
or other lawful delivery and acceptance of a Certificate of a Trust or
the purchase and acceptance of any Book Entry Position or other lawful
delivery and acceptance of such Book Entry Position including receipt of
a Book Entry Confirmation, the Unitholder (i) shall be deemed to be a
beneficiary of such Trust and vested with all right, title and interest
in such Trust to the extent of the Unit or Units or fraction thereof set
forth and evidenced by such Certificate or Book Entry Position and (ii)
shall assent to and be bound by the terms and conditions of this
Indenture.
SECTION 6.02. RIGHTS, TERMS AND CONDITIONS: In addition to the other
rights and powers set forth in the other provisions and conditions of
this Indenture the Unitholders shall have the following rights and powers
and shall be subject to the following terms and conditions:
(a) A Unitholder may at any time prior to the termination of
the Trust tender his Units to the Trustee for redemption in
accordance with Section 4.02.
(b) The death or incapacity of any Unitholder shall not
operate to terminate this Indenture or the related Trust, nor
entitle his legal representatives or heirs to claim an accounting or
to take any action or proceeding in any court of competent
jurisdiction for a partition or winding up of the Trust Fund or the
related Trust, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them. Each Unitholder
expressly waives any right he may have under any rule of law, or the
provisions of any statute, or otherwise, to require the Trustee at
any time to account, in any manner other than as expressly provided
in this Indenture, in respect of the Bonds or moneys from time to
time received, held and applied by the Trustee hereunder.
(c) No Unitholder shall have any right to vote or in any
manner otherwise control the operation and management of the Trust
Fund, the related Trust or the obligations of the parties hereto,
nor shall anything herein set forth, or contained in the terms of
the Certificates, be construed so as to constitute the Unitholders
from time to time as partners or members of an association; nor
shall any Unitholder ever be under any liability to any third
persons by reason of any action taken by the parties to this
Indenture, or any other cause whatsoever.
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ARTICLE VII
ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS
SECTION 7.01. AMENDMENTS: This Indenture may be amended from time to
time by the parties hereto or their respective successors, without the
consent of any of the Unitholders (a) to cure any ambiguity or to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provision contained herein; or (b) to make
such other provision in regard to matters or questions arising hereunder
as shall not adversely affect the interests of the Unitholders; PROVIDED,
HOWEVER, that the parties hereto may not amend this Indenture so as to
(1) increase the number of Units issuable hereunder above the number of
Units as indicated in Item 4 of Schedule A hereto except as provided in
Section 4.04 hereof or such lesser amount as may be outstanding at any
time during the term of this Indenture or (2) subject to Sections 3.08
and 3.14, permit the deposit or acquisition hereunder of obligations or
other securities either in addition to or in substitution for any of the
Bonds.
Promptly after the execution of any such amendment the Trustee shall
furnish written notification to all the outstanding Unitholders of the
substance of such amendment.
SECTION 7.02. TERMINATION: Each Trust shall terminate upon the
maturity, redemption, sale or other disposition as the case may be of the
last Bond held in such Trust unless sooner terminated as hereinbefore
specified and may be terminated at any time by the written consent of one
hundred per cent of the Unitholders of the respective Trust; PROVIDED,
that in no event shall any Trust continue beyond the date as indicated in
Item 8 of Schedule A hereto. Written notice of any termination,
specifying for Certificated Unitholders the time or times at which the
Certificated Unitholders of such Trust may surrender their Certificates
for cancellation shall be given by the Trustee to each such Certificated
Unitholder at his address appearing on the registration books of the
Trustee. Written notice of any termination shall be given by the Trustee
to each Book Entry Unitholder at his address appearing on the
registration books of the Trustee. Within a reasonable period of time
after the termination of a Trust the Trustee shall fully liquidate the
Bonds of such Trust then held, if any, and shall:
(a) deduct from the Interest Account of such Trust or, to the
extent that funds are not available in such Account, from the
Principal Account of such Trust and pay to itself individually an
amount equal to the sum of (1) its accrued compensation for its
ordinary recurring services in connection with such Trust, (2) any
compensation due it for its extraordinary services in connection
with such Trust and (3) any costs, expenses or indemnities in
connection with such Trust as provided herein;
(b) deduct from the Interest Account of such Trust or, to the
extent that funds are not available in such Account, from the
Principal Account of such Trust and pay accrued and unpaid fees of
bond counsel in connection with such Trust, if any, as directed and
certified to by the Depositor;
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(c) deduct from the Interest Account of such Trust or the
Principal Account of such Trust any amounts which may be required to
be deposited in the Reserve Account of such Trust to provide for
payment of any applicable taxes or other governmental charges and
any other amounts which may be required to meet expenses incurred
under this Indenture in connection with such Trust;
(d) distribute to each Unitholder of such Trust, upon
surrender for cancellation of his Certificate or Certificates, if
any, such holder's pro rata share of the balance of the Interest
Account of such Trust;
(e) distribute to each Unitholder of such Trust, upon
surrender, for cancellation by the Unitholder of his Certificate or
Certificates, if any, such Unitholder's pro rata share of the
balance of the Principal Account of such Trust; and
(f) together with such distribution to each Unitholder as
provided for in (d) and (e), furnish to each such Unitholder a final
distribution statement as of the date of the computation of the
amount distributable to Unitholders, setting forth the data and
information in substantially the form and manner provided for in
Section 3.06 hereof.
The amounts to be so distributed to each Unitholder shall be that
pro rata share of the balance of the total Interest and Principal
Accounts of such Trust as shall be represented by the Units therein
evidenced by the outstanding Certificate or Certificates held of record
by such Unitholder and/or as evidenced on the records of the Trustees as
Book Entry Positions.
The Trustee shall be under no liability with respect to moneys held
by it in the Interest, Reserve and Principal Accounts of a Trust upon
termination except to hold the same in trust without interest until
disposed of in accordance with the terms of this Indenture.
In the event that all of the Certificated Unitholders of such Trust
shall not surrender their Certificates for cancellation within six months
after the time specified in the above-mentioned written notice, the
Trustee shall give a second written notice to such remaining Certificated
Unitholders to surrender their written Certificates for cancellation and
receive the liquidation distribution with respect thereto. If within one
year after the second notice all the Certificates of such Trust shall not
have been surrendered for cancellation, the Trustee may take steps, or
may appoint an agent to take appropriate steps, to contact such remaining
Certificated Unitholders concerning surrender of their Certificates and
the cost thereof shall be paid out of the moneys and other assets which
remain in such Trust hereunder.
SECTION 7.03. CONSTRUCTION: This Indenture is executed and delivered
in the State of New York, and all laws or rules of construction of such
State shall govern the rights of the parties hereto and the Unitholders
and the interpretation of the provisions hereof.
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SECTION 7.04. REGISTRATION OF UNITS: The Depositor agrees and
undertakes to register the Units with the Securities and Exchange
Commission or other applicable governmental agency pursuant to applicable
Federal or State statutes, if such registration shall be required, and to
do all things that may be necessary or required to comply with this
provision during the term of the Trust Fund created hereunder, and the
Trustee shall incur no liability or be under any obligation or expense in
connection therewith.
SECTION 7.05. WRITTEN NOTICE: Any notice, demand, direction or
instruction to be given to the Depositor hereunder shall be in writing
and shall be duly given if mailed or delivered to the Depositor at 333
West Wacker Drive, Chicago, Illinois 60606, or at such other address as
shall be specified by the Depositor to the Trustee in writing. Any
notice, demand, direction or instruction to be given to the Trustee shall
be in writing and shall be duly given if mailed or delivered to the
corporate trust office of the Trustee, 770 Broadway, New York, New York
10003, Attention: Unit Investment Trust Division or such other address
as shall be specified to the Depositor by the Trustee in writing. Any
notice to be given to the Unitholders shall be duly given if mailed or
delivered to each Unitholder at the address of such holder appearing on
the registration books of the Trustee.
SECTION 7.06. SEVERABILITY: If any one or more of the covenants,
agreements, provisions or terms of this Indenture shall be held contrary
to any express provision of law or contrary to policy of express law,
though not expressly prohibited, or against public policy, or shall for
any reason whatsoever be held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Indenture and shall in
no way affect the validity or enforceability of the other provisions of
this Indenture or of the Certificates or the rights of the Unitholders.
SECTION 7.07. DISSOLUTION OF DEPOSITOR NOT TO TERMINATE:
The
dissolution of the Depositor from or for any cause whatsoever shall not
operate to terminate this Indenture insofar as the duties and obligations
of the Trustee are concerned.
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TRUST INDENTURE AND AGREEMENT
This Indenture between John Nuveen & Co. Incorporated, as Depositor,
and United States Trust Company of New York, as Trustee, is entered into
as of the date stated in Item 2 of Schedule A hereto and consists of the
Schedules relating to Series ____ attached hereto and the terms of the
Trust Indenture and Agreement (not including the Schedules thereto) filed
as Exhibit 1.1(a) to the Depositor's Registration Statement on Form S-6
relating to Series ____, File No. _______, and such documents and the
provisions thereof as incorporated herein by this reference thereto as
fully as if they were set forth herein in their entirety and such
documents and provisions so incorporated by reference constitute a single
instrument.
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<PAGE>
IN WITNESS WHEREOF, John Nuveen & Co. Incorporated, has caused this
Trust Indenture and Agreement to be executed by its President, one of its
Vice Presidents or one of its Assistant Vice Presidents and its corporate
seal to be hereto affixed and attested by its Secretary or its Assistant
Secretary and United States Trust Company of New York has caused this
Trust Indenture and Agreement to be executed by one of its Vice
Presidents or Assistant Vice Presidents and its corporate seal to be
hereto affixed and attested to by one of its Assistant Secretaries; all
as of the day, month and year first above written.
JOHN NUVEEN & CO. INCORPORATED,
Depositor
By_____________________________
Authorized Officer
(SEAL)
Attest:
By_______________________________
Assistant Secretary
UNITED STATES TRUST COMPANY OF NEW
YORK, TRUSTEE
By_________________________________
Assistant Vice President
(SEAL)
Attest:
By_______________________________
Assistant Secretary
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SCHEDULE A
Series _____ ___________________, 198__
Item 1. This Indenture relates to the Nuveen Tax-Exempt Unit Trust,
Series _____.
Item 2. The date of this Indenture is ______________, 198__.
Item 3. Series ______ shall initially contain Trusts as follows:
(1) National Traditional Trust ______
(2) Long Intermediate Traditional Trust ______
(3) Intermediate Traditional Trust ______
(4) Short Intermediate Traditional Trust ______
(5) Short Term Traditional Trust ______
(6) [State] Traditional Trust ______
(7) [State] Intermediate Traditional Trust ______
(8) Compound Interest Trust ______
(9) National Insured Trust ______
(10) Long Intermediate Insured Trust ______
(11) Intermediate Insured Trust ______
(12) Short Intermediate Insured Trust ______
(13) Short Term Insured Trust ______
(14) [State] Insured Trust ______
(15) [State] Intermediate Insured Trust ______
(16) [State] Short Intermediate Insured Trust ______
Item 4. Each Trust shall initially consist of the following Units:
The National Traditional Trust shall initially consist of ___
Units.
The Long Intermediate Traditional Trust shall initially consist
of ___ Units.
The Intermediate Traditional Trust shall initially consist of
___ Units.
The Short Intermediate Traditional Trust shall initially
consist of ___ Units.
The Short Term Traditional Trust shall initially consist of ___
Units.
The [State] Traditional Trust shall initially consist of ______
Units.
The [State] Intermediate Traditional Trust shall initially
consist of _____ Units.
The Compound Interest Traditional Trust shall initially consist
of ______ Units.
The National Insured Trust shall initially consist of ___
Units.
The Long Intermediate Insured Trust shall initially consist of
___ Units.
The Intermediate Insured Trust shall initially consist of ___
Units.
The Short Intermediate Insured Trust shall initially consist of
___ Units.
The Short Term Insured Trust shall initially consist of ___
Units.
The [State] Insured Trust shall initially consist of ___ Units.
The [State] Intermediate Insured Trust shall initially consist
of ___ Units.
The [State] Short Intermediate Insured Trust shall initially
consist of ___ Units.
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<PAGE>
Item 5. (a) The amount of the second distribution from the Interest
Account of the respective Trusts will be as follows:
(1) National Traditional Trust; $____________ per Unit
(2) Long Intermediate Traditional Trust; $____________ per Unit
(3) Intermediate Traditional Trust; $____________ per Unit
(4) Short Intermediate Traditional Trust; $____________ per Unit
(5) Short Term Traditional Trust; $____________ per Unit
(6) [State] Traditional Trust; $____________ per Unit
(7) [State] Intermediate Traditional Trust; $____________ per Unit
(8) Compound Interest Traditional Trust; $____________ per Unit
(9) National Insured Trust; $____________ per Unit
(10) Long Intermediate Insured Trust; $____________ per Unit
(11) Intermediate Insured Trust; $____________ per Unit
(12) Short Intermediate Insured Trust; $____________ per Unit
(13) Short Term Insured Trust; $____________ per Unit
(14) [State] Insured Trust; $____________ per Unit
(15) [State] Intermediate Insured Trust; $____________ per Unit
(16) [State] Short Intermediate Insured $____________ per Unit
Trust;
(b) The date of the second distribution for the Interest
Account of the respective Trusts will be as follows:
(1) National Traditional Trust; ____________, 198___
(2) Long Traditional Intermediate ____________, 198___
Trust;
(3) Intermediate Traditional Trust; ____________, 198___
(4) Short Intermediate Traditional ____________, 198___
Trust;
(5) Short Term Traditional Trust; ____________, 198___
_________
(6) [State] Traditional Trust; ____________, 198___
(7) [State] Intermediate Traditional ____________, 198___
Trust;
(8) Compound Interest Traditional ____________, 198___
Trust;
(9) National Insured Trust; ____________, 198___
(10) Long Intermediate Insured Trust; ____________, 198___
(11) Intermediate Insured Trust; ____________, 198___
(12) Short Intermediate Insured Trust; ____________, 198___
(13) Short Term Insured Trust; ____________, 198___
(14) [State] Insured Trust; ____________, 198___
(15) [State] Intermediate Insured Trust; ____________, 198___
(16) [State] Short Intermediate Insured ____________, 198___
Trust;
(c) The record date for the second distribution from the
Interest Account of the respective Trusts will be as
follows:
(1) National Traditional Trust; ____________ , 198___
(2) Long Intermediate Traditional ____________ , 198___
Trust;
(3) Intermediate Traditional Trust; ____________ , 198___
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<PAGE>
(4) Short Intermediate Traditional ____________ , 198___
Trust;
(5) Short Term Traditional Trust; ____________ , 198___
(6) [State] Traditional Trust; ____________ , 198___
(7) [State] Intermediate Traditional ____________ , 198___
Trust;
(8) Compound Interest Traditional ____________ , 198___
Trust;
(9) National Insured Trust; ____________ , 198___
(10) Long Intermediate Insured Trust; ____________ , 198___
(11) Intermediate Insured Trust; ____________ , 198___
(12) Short Intermediate Insured Trust; ____________ , 198___
(13) Short Term Insured Trust; ____________ , 198___
(14) [State] Insured Trust; ____________ , 198___
(15) [State] Intermediate Insured Trust; ____________ , 198___
(16) [State] Short Intermediate Insured ____________ , 198___
Trust;
Item 6. Record dates for subsequent semi-annual distributions from the
Interest Account of the respective Trusts (other than Compound
Interest Trusts) will be as follows:
Item 7. (a) Record date for distributions from the Principal
Account of the respective Trusts will be the first day of
May and November of each year.
(b) The first record date for distributions from the
Principal Account of the respective trusts will be
____________.
Item 8. The Trusts shall in no event continue beyond the end of the
calendar year preceding the fiftieth anniversary of the
execution of this Indenture for National and State Trusts,
beyond the end of the calendar year preceding the twentieth
anniversary of its execution for Long Intermediate,
Intermediate and Compound Interest Trusts and beyond the end of
the calendar year preceding the tenth anniversary of its
execution for Short Intermediate and Short Term Trusts.
Item 9. Quarterly distributions from the Interest Account of the
respective Trusts (other than a Compound Interest Trust) will
be computed as of the 1st day of February, May, August and
November.
Item 10. Certain deductions from the Interest Account by the Trustee
will commence as follows:
(1) National Traditional Trust; ____________, 198___
(2) Long Intermediate Traditional ____________, 198___
Trust;
(3) Intermediate Traditional Trust; ____________, 198___
(4) Short Intermediate Traditional ____________, 198___
Trust;
(5) Short Term Traditional Trust; ____________, 198___
(6) [State] Traditional Trust; ____________, 198___
(7) [State] Intermediate Traditional ____________, 198___
Trust;
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<PAGE>
(8) Compound Interest Traditional ____________, 198___
Trust;
(9) National Insured Trust; ____________, 198___
(10) Long Intermediate Insured Trust; ____________, 198___
(11) Intermediate Insured Trust; ____________, 198___
(12) Short Intermediate Insured Trust; ____________, 198___
(13) Short Term Insured Trust; ____________, 198___
(14) [State] Insured Trust; ____________, 198___
(15) [State] Intermediate Insured Trust; ____________, 198___
(16) [State] Short Intermediate Insured ____________, 198___
Trust;
Item 11. (a) For services performed prior to the date indicated in
Item 5(c) of this Schedule A, the Trustee shall be paid at
the following annual rates per $1,000 of principal amount of
Bonds:
(1) National Traditional Trust etc. $
(b) For services performed on and after the date indicated
in Item 5(c) of this Schedule A, the Trustee shall be paid
at the following annual rates per $1,000 of principal amount
of Bonds:
(1) National Traditional Trust
Monthly Plan of Distribution $
Quarterly Plan of Distribution $
Semi-Annual Plan of Distribution etc. $
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<PAGE>
SCHEDULES B, C, D, E, F, G, H, I, J, K, L, M, N, O, P AND Q
BONDS INITIALLY DEPOSITED
NUVEEN TAX-EXEMPT UNIT TRUST,
SERIES
Incorporated herein and made a part hereof as indicated below are the
corresponding portions of the "Schedule of Investments at Date of
Deposit" contained in the Prospectus dated the date of deposit and
relating to the above-named Series:
Schedule B: The National Traditional Trust
Schedule C: The Long Intermediate Traditional Trust
Schedule D: The Intermediate Traditional Trust
Schedule E: The Short Intermediate Traditional Trust
Schedule F: The Short Term Traditional Trust
Schedule G: The [State] Traditional Trust
Schedule H: The [State] Intermediate Traditional Trust
Schedule I: The Compound Interest Traditional Trust
Schedule J: The National Insured Trust
Schedule K: The Long Intermediate Insured Trust
Schedule L: The Intermediate Insured Trust
Schedule M: The Short Intermediate Insured Trust
Schedule N: The Short Term Insured Trust
Schedule O: The [State] Insured Trust
Schedule P: The [State] Intermediate Insured Trust
Schedule Q: The [State] Short Intermediate Insured Trust
