<PAGE>
File No. 33-52527
40 Act File No. 811-2271
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
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)
- -----
- ----- 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 as permitted by Rule 24f-2.
F. Proposed maximum offering price to the public of the securities being
registered: Not presently determinable.
G. Amount of filing fee: $500 in accordance with 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 registant 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>
APRIL 8, 1994
SUBJECT TO COMPLETION
NUVEEN Tax-Exempt Unit Trusts
PROSPECTUS
Series 723
April 8, 1994
INTEREST INCOME TO THE TRUST 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. INTEREST INCOME OF THE 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 723 consists of one underlying separate
unit investment trust designated as National Insured Trust 267. The 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 SCHEDULE OF INVESTMENTS),
the interest on which is, in the opinion of bond counsel to the issuers, exempt
from Federal income tax under existing law. All obligations in the National
Insured Trust 267 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
the portfolio of the National Insured Trust 267 have received a rating of "Aaa"
by Moody's Investors Service, Inc. and the Bonds in the National Insured Trust
267 and the Units of the Trust have received a rating of "AAA" by Standard &
Poor's Corporation. INSURANCE RELATES ONLY TO THE BONDS IN THE NATIONAL INSURED
TRUST 267 AND NOT TO THE UNITS OFFERED HEREBY OR TO THEIR MARKET VALUE. (See
Section 5.)
THE OBJECTIVES of the Trust 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
Trust's objectives will be achieved.
DISTRIBUTIONS of interest received by the 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
the Trust on the business day prior to the Date of Deposit. (SEE PAGE 3 AND
SECTION 9.)
THE PUBLIC OFFERING PRICE per Unit of the Trust during the initial offering
period is equal to a pro rata share of the OFFERING prices of the Bonds in the
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 if the Trust has a lesser average maturity. (SEE SECTION 6.) The
Secondary Market Public Offering Price per Unit for the Trust will be equal to a
pro rata share of the sum of BID prices of the Bonds in the 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 secondary market for the Units of the Trust at prices based
upon the BID prices of the Bonds in the Trust. (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
National Insured Trust 267 3 8-11
GENERAL MATTERS
Accrued Interest 8 A-15
Accumulation Plan 14 A-22
Bonds, How Selected 3 6
Bonds, Initial Determination of Offering Price 10 A-17
Bonds, Limited Right of Substitution 4 A-6
Bond Ratings 3 8-11
Bonds, Removal from Trust 21 A-31
Call Provisions of Portfolio Bonds 3, 4 8-11
Capital Gains Taxability 11 A-17
Dealer Discount 17 A-27
Description of Units of Trust 1 5
Distributions to Unitholders 13 A-21
Distribution Payment Dates 3, 13 8-11, A-21
Distribution of Units to the Public 17 A-27
Essential Information Regarding the Trust -- 5
Estimated Long Term Return and Estimated Current
Return 9 3, A-16
Evaluation 16 A-26
Expenses to Fund 12 A-20
Insurance on Bonds in the Insured Trust 5 A-9
Interest Income to Trust 3 8-11
Investments, Schedule of 3 8-11
Legality of Units 24 A-35
Limitations on Liabilities of Sponsor and Trustee 22 A-32
Market for Units 7 A-14
Minimum Transaction 17 A-28
Objectives of the Trust 2 6
Optional Distribution Plan 13 A-21
Other Information 24 A-34
Ownership and Transfer of Units 18 A-28
Public Offering Price of Units 6 A-12
Quantity Purchases 6 A-13
Record Dates 13 A-21
Ratings, Description of -- A-36
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 8-11
Successor Trustees and Sponsors 22 A-33
Tax Status of Unitholders 11 A-17
Trustee, Information About 22 A-32
Trust Indenture, Amendment and Termination 24 A-34
Unit Value 16 A-26
</TABLE>
2
<PAGE>
ESTIMATED LONG TERM RETURN
AND
ESTIMATED CURRENT RETURN FOR THE TRUST
Following are the Estimated Long Term and Estimated Current Returns for the
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
----------------------------------------
<S> <C> <C> <C>
TRUST MONTHLY QUARTERLY SEMI-ANNUAL
<CAPTION>
----------------------------------------------------------------------------
<S> <C> <C> <C>
National Insured Trust 267..... 5.92% 5.94% 5.96%
</TABLE>
Estimated Current Returns
<TABLE>
<CAPTION>
PLAN OF DISTRIBUTION
----------------------------------------
<S> <C> <C> <C>
TRUST MONTHLY QUARTERLY SEMI-ANNUAL
<CAPTION>
----------------------------------------------------------------------------
<S> <C> <C> <C>
National Insured Trust 267..... 5.89% 5.92% 5.94%
</TABLE>
The Estimated Long Term Return for the 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 delays in
payments to Unitholders for the first few months of Trust operations, and it
also does not take into account the difference in the 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 TRUST ON
APRIL 7, 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 current
returns because of the lower Trustee's fees and expenses under such plans. (SEE
SECTION 3 FOR DATA RELATING TO THESE PLANS.)
<TABLE>
<CAPTION>
National
Insured
Trust 267
---------------
Principal Amount of Bonds in Trust.................. $ 10,000,000
<S> <C>
Number of Units..................................... 100,000
Fractional Undivided Interest in Trust Per Unit..... 1/100,000
Public Offering Price--Less than 500 Units
Aggregate Offering Price of Bonds in Trust...... $ 9,675,605
Divided by Number of Units...................... $ 96.76
Plus Sales Charge*.............................. $ 4.98
Public Offering Price Per Unit(1)............... $ 101.74
Redemption Price Per Unit (exclusive of accrued
interest)......................................... $ 96.23
Sponsor's Initial Repurchase Price Per Unit
(exclusive of accrued interest)................... $ 96.76
Excess of Public Offering Price Per Unit over
Redemption Price Per Unit......................... $ 5.51
Excess of Public Offering Price Per Unit over
Sponsor's Repurchase Price Per Unit............... $ 4.98
Calculation of Estimated Net Annual Interest Income
Per Unit
Annual Interest Income(2)....................... $ 6.1975
Less Estimated Annual Expense................... $ .2077
---------------
Estimated Net Annual Interest Income(3)......... $ 5.9898
Daily Rate of Accrual Per Unit...................... $ .01664
Estimated Current Return(4)......................... 5.89%
Estimated Long Term Return(4)....................... 5.92%
<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 Trust and, accordingly, for Units purchased on the Date of
Deposit, the following amount of accrued interest to the Settlement Date will be added to the Public Offering Prices:
National Insured Trust--$.12. (See Section 7.)
(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 the Trust under the various plans of distribution are shown in Section
3.
(4) Estimated Long Term Return for the Trust represents the average of the yields to maturity (or call) of the Bonds in the
Trust's portfolio calculated in accordance with accepted bond practices and adjusted to reflect 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 TRUST
(CONTINUED)
<TABLE>
<S> <C> <C> <C>
Record Dates....................................................................See Section 13
Distribution Dates..............................................................See Section 13
Minimum Principal Distribution..................................................$0.10 Per Unit
Date Trust Established...........................................................April 8, 1994
Settlement Date.................................................................April 15, 1994
Mandatory Termination Date......................................................See Section 24
Minimum Value of Each Trust.....................................................See Section 24
Sponsor's Annual Evaluation Fee.....................$0.17 per $1,000 principal amount of Bonds
Trustee's Annual Fees:
<CAPTION>
PLAN OF DISTRIBUTION
----------------------------------------------------------------------
TRUST MONTHLY QUARTERLY SEMI-ANNUAL
- ---------------------- ----------- ---------------------- ----------------------
<S> <C> <C> <C>
National Insured Trust 267............... $1.6321 $ 1.3121 $ 1.1221
------------
* Each Trustee annual fee is per $1,000 principal amount of the underlying Bonds in a
Trust for that portion of the Trust that represents a particular plan of
distribution.
</TABLE>
---------------------------
THE NUVEEN TAX-EXEMPT UNIT TRUST
SERIES 723
1. WHAT IS THE NUVEEN TAX-EXEMPT UNIT TRUST, SERIES 723?
Series 723 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 one underlying
separate unit investment trust, under one trust indenture and agreement,
designated National Insured Trust 267. A Trust in which few or none of the Bonds
are insured is sometimes referred to as a "Traditional Trust", while a trust in
which all of the Bonds are insured as described herein is sometimes referred to
as an "Insured Trust." This Series was created under the laws of the State of
New York pursuant to a Trust Indenture and Agreement dated April 8, 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 $10,000,000 (the "Bonds"),
which initially constitute the underlying securities of the Trust. 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--General Trust Information" for a discussion of zero coupon bonds and
Stripped Obligations. The following principal amounts were deposited in the
Trust: $10,000,000 in the National Insured Trust. Some of
5
<PAGE>
the delivery statements may relate to contracts for the purchase of "when
issued" or other Bonds with delivery dates after the date of settlement for a
purchase made on the Date of Deposit. See the "Schedule of Investments" 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 the 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.)
The Trustee has delivered to the Sponsor registered Units for 100,000 Units
of the National Insured Trust, which represent ownership of the entire Series,
and which are offered for sale by this Prospectus. Each Unit of the Trust
represents a fractional undivided interest in the principal and net income of
the Trust in the ratio of 10 Units for each $1,000 principal value of Bonds
initially deposited in the Trust.
2. WHAT ARE THE OBJECTIVES OF THE TRUST?
The objectives of the Trust are income exempt from Federal income tax 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. Insurance guaranteeing the timely
payment, when due, of all principal and interest on the Bonds in the 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 Trust are rated "Aaa" by Moody's
Investors Service, Inc. and "AAA" by Standard & Poor's Corporation. (SEE SECTION
5) . 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. There is, of course, no
guarantee that the Trust's objectives will be achieved. For a comparison of net
after-tax return for various tax brackets see the "Taxable Equivalent Estimated
Current Return Table" included in this Prospectus.
The Trust consists of fixed-rate municipal debt obligations. Because of this
an investment in the 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 Trust, 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
6
<PAGE>
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) the availability of
Municipal Bond Investors Assurance Corporation insurance on such Bonds.
In order for Bonds in the Insured Trust 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
Trust and for purposes of calculating the average maturity of the Bonds in the
Trust.
7
<PAGE>
NATIONAL INSURED TRUST 267
The Portfolio of National Insured Trust 267 consists of 9 long term
(approximately 15 to 40 year maturities) obligations issued by entities located
in 7 states and one obligation issued by an entity located in the District of
Columbia. Two Bonds in the Trust are general obligations of the governmental
entities issuing them and are backed by the taxing powers thereof. Eight 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, 1; Electrical System Revenue, 3; Health Care
Facility Revenue, 3; Water and/or Sewer 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 percent of the principal amount of Bonds
in the Trust consists of issues of entities located in the State of Illinois and
20% of the principal amount of Bonds in the Trust consists of issues of entities
located in the State of Washington; 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 28.4 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 30% 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 25% 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 April 6,
1994 and April 7, 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>
$9,629,438 $46,167 $619,750 $9,623,105 .53%
</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 National Insured Trust, less estimated expenses, is estimated to accrue at
the rate of $.01678 per Unit per day under the semi-annual plan of distribution,
$.01673 per Unit per day under the
8
<PAGE>
quarterly plan of distribution and $.01664 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>
- ---------------------------------------------------------------------------------------------------- --------------
Record Date*.......................... 5/1 8/1 11/1 2/1
Distribution Date..................... 5/15 8/15 11/15 2/15
- --------------------------------------------------------------------------------------------------------------------
Monthly Distribution Plan............. $ .3826(1) $ 5.9898
-------- $.4991 every month --------
Quarterly Distribution Plan........... $ .3826(1) $ 1.5054(2) $ 1.5054 $ 1.5054 $ 6.0218
Semi-Annual Distribution Plan......... $ .3826(1) $ 3.0203(3) $ 6.0408
- --------------------------------------------------------------------------------------------------------------------
<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--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 TRADITIONAL 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.
9
<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 5.00% 5.25% 5.50% 5.75% 6.00% 6.25% 6.50% 6.75%
------------- ------------- ----------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 38.0 $ 0-111.8 15.0 % 5.88 6.18 6.47 6.76 7.06 7.35 7.65 7.94
38.0- 91.9 0-111.8 28.0 6.94 7.29 7.64 7.99 8.33 8.68 9.03 9.38
111.8-167.7 29.0 7.04 7.39 7.75 8.10 8.45 8.80 9.15 9.51
91.9-140.0 0-111.8 31.0 7.25 7.61 7.97 8.33 8.70 9.06 9.42 9.78
111.8-167.7 32.0 7.35 7.72 8.09 8.46 8.82 9.19 9.56 9.93
167.7-290.2 34.5 7.63 8.02 8.40 8.78 9.16 9.54 9.92 10.31
140.0-250.0 111.8-167.7 37.0 7.94 8.33 8.73 9.13 9.52 9.92 10.32 10.71
167.7-290.2 40.0 8.33 8.75 9.17 9.58 10.00 10.42 10.83 11.25
Over 290.2 37.0 2 7.94 8.33 8.73 9.13 9.52 9.92 10.32 10.71
Over 250.0 167.7-290.2 44.0 8.93 9.38 9.82 10.27 10.71 11.16 11.61 12.05
Over 290.2 41.0 3 8.47 8.90 9.32 9.75 10.17 10.59 11.02 11.44
</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 5.00% 5.25% 5.50% 5.75% 6.00% 6.25% 6.50% 6.75%
------------- ------------- ----------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 22.8 $ 0-111.8 15.0 % 5.88 6.18 6.47 6.76 7.06 7.35 7.65 7.94
22.8- 55.1 0-111.8 28.0 6.94 7.29 7.64 7.99 8.33 8.68 9.03 9.38
55.1-115.0 0-111.8 31.0 7.25 7.61 7.97 8.33 8.70 9.06 9.42 9.78
111.8-234.3 32.5 7.41 7.78 8.15 8.52 8.89 9.26 9.63 10.00
115.0-250.0 111.8-234.3 38.0 8.06 8.47 8.87 9.27 9.68 10.08 10.48 10.89
Over 234.3 37.0 2 7.94 8.33 8.73 9.13 9.52 9.92 10.32 10.71
Over 250.0 Over 234.3 41.0 3 8.47 8.90 9.32 9.75 10.17 10.59 11.02 11.44
<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.
10
<PAGE>
Nuveen Tax-Exempt Unit Trust
Schedule of Investments at Date of Deposit
April 8, 1994
NATIONAL INSURED TRUST 267
(Series 723)
<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>
- ---------------------------------------------------------------------------------------------------------------------------
$ 1,000,000 Department of Water and Power of the City of 2003 at 102 AAA Aaa $ 926,170
Los Angeles, California, Electric Plant
Refunding Revenue Bonds, Issue of 1993,
5.875% Due 9/1/30.
1,000,000 District of Columbia (Washington, D.C.), 2003 at 102 AAA Aaa 956,100
General Obligation Bonds, Series 1993 E,
6.00% Due 6/1/13.
500,000 Illinois Health Facilities Authority, Revenue 2003 at 102 AAA Aaa 433,225
Bonds, Series 1993 (Rush-Presbyterian-St.
Luke's Medical Center Obligated Group), 5.50%
Due 11/15/25.
1,500,000 Metropolitan Pier and Exposition Authority 2003 at 102 AAA Aaa 1,500,000
(Illinois), McCormick Place Expansion Project
Bonds, Series 1992A, 6.50% Due 6/15/27.
1,000,000 County of Boone, Kentucky, Collateralized 2002 at 102 AAA Aaa 1,007,520
Pollution Control Revenue Refunding Bonds,
1992 Series A (The Dayton Power and Light
Company Project), 6.50% Due 11/15/22.
1,000,000 Louisiana Public Facilities Authority, Revenue 2002 at 102 AAA Aaa 1,002,500
Bonds, Series 1992-B (Alton Ochsner Medical
Foundation Project), 6.50% Due 5/15/22.
1,000,000 Massachusetts Health and Educational Facilities 2004 at 102 AAA Aaa 863,580
Authority, Revenue Bonds, New England Medical
Center Hospitals Issue, Series G-1, 5.375%
Due 7/1/24.
1,000,000 Piedmont Municipal Power Agency (South 2003 at 102 AAA Aaa 983,260
Carolina), Electric Revenue Bonds, 1992
Refunding Series, 6.30% Due 1/1/14.
1,000,000 Northshore School District No. 417, King and 2002 at 100 AAA Aaa 1,024,650
Snohomish Counties, Washington, Unlimited Tax
General Obligation Bonds, 1992 Series A,
6.625% Due 12/1/11.
1,000,000 Municipality of Metropolitan Seattle (Seattle, 2003 at 102 AAA Aaa 978,600
Washington), Sewer Revenue Bonds, Series W,
6.30% Due 1/1/33.
- ----------- ---------------
$10,000,000 $ 9,675,605
- ----------- ---------------
- ----------- ---------------
</TABLE>
See Notes to Schedules of Investments, page 12.
11
<PAGE>
NOTES TO SCHEDULE 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
11.)
(3) See "Description of Ratings" herein. All the Bonds in the Insured Trust,
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.
12
<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 723:
We have audited the accompanying statement of condition and the
related schedule of investments at date of deposit (included in the
prospectus herein) of Nuveen Tax-Exempt Unit Trust, Series 723
(comprised of National Insured Trust 267), as of April 8, 1994. These
financial statements are the responsibility of the Sponsor. Our
responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statement. Our procedures included
confirmation of the irrevocable letter of credit arrangement for the
purchase of securities, described in Note (1) to the statement of
condition, by correspondence with the Trustee. An audit also includes
assessing the accounting principles used and significant estimates
made by the Sponsor, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statement of condition and the related schedule
of investments at date of deposit referred to above present fairly, in
all material respects, the financial position of the trust
constituting the Nuveen Tax-Exempt Unit Trust, Series 723 as of April
8, 1994, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN & CO.
Chicago, Illinois,
April 8, 1994.
13
<PAGE>
Statement of Condition
NUVEEN TAX-EXEMPT UNIT TRUST, SERIES 723
(National Insured Trust 267)
AS OF APRIL 8, 1994
<TABLE>
<CAPTION>
National
Insured
TRUST PROPERTY Trust 267
<S> <C>
--------------
Sponsor's contracts to purchase Tax-Exempt Bonds,
backed by an irrevocable letter of
credit(1)(2)..................................... $ 9,675,605
Accrued interest to April 8, 1994 on underlying
Bonds(1)........................................ 200,113
--------------
Total................................. $ 9,875,718
--------------
--------------
LIABILITY AND INTEREST OF UNITHOLDERS
Liability:
Accrued interest to April 8, 1994 on
underlying Bonds(3).......................... $ 200,113
--------------
Interest of Unitholders:
Units of fractional undivided interest
outstanding (National Insured Trust 267
--100,000)
Cost to investors(4)........................ $ 10,174,092
Less: Gross underwriting commission(5).... (498,487)
--------------
Net amount applicable to investors............ $ 9,675,605
--------------
Total................................. $ 9,875,718
--------------
--------------
(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 "Schedule of Investments" herein,
and their aggregate cost to the Trust are the same. Such
offering prices were determined by Standard & Poor's
Corporation 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 Trust
has been obtained by the Sponsor or by the issuers of such
Bonds. Such insurance does not guarantee the market value of
the Bonds or the value of the Units. Both the bid and the
offering prices of the underlying Bonds and of the Units may
include value attributable to such policies of insurance.
(3) 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>
14
<PAGE>
GENERAL TRUST INFORMATION
An investment in Units of the Trust should be made with an understanding of
the risks that such an investment may entail. As set forth in the portfolio
summary above, the Trust 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 the Trust to make payment of principal and interest thereon or
which may adversely affect the ratings of such Bonds; with respect to the
Insured Trust, however, because of the insurance obtained by the Sponsor or by
the issuers of the Bonds, such changes should not adversely affect the 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 the Insured Trust.
HEALTH FACILITY OBLIGATIONS. Some of the Bonds in the 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 the 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 the 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 the 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 the 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 the 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 the 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 the 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 the 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 the 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 the 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
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incremental tax received on either real property or on sales within a
specifically defined geographical area; such tax generally will not provide
bondholders with a lien on the underlying property or revenues. Another type of
dedicated-tax supported Bond is secured by a special tax levied on real property
within a defined geographical area in such a manner that the tax is levied on
those who benefit from the project; such bonds typically provide for a statutory
lien on the underlying property for unpaid taxes. A third type of dedicated-tax
supported Bond may be secured by a tax levied upon the manufacture, sale or
consumption of commodities or upon the license to pursue certain occupations or
upon corporate privileges within a taxing jurisdiction. As to any of these types
of Bonds, the ability of the designated revenues to satisfy the interest and
principal payments on such bonds may be affected by changes in the local
economy, the financial success of the enterprise responsible for the payment of
the taxes, the value of any property on which taxes may be assessed and the
ability to collect such taxes in a timely fashion. Each of these factors will
have a different affect on each distinct type of dedicated-tax supported bonds.
MUNICIPAL LEASE BONDS. Some of the Bonds in the 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 the 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 the 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
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price less than its face value. See the "Schedule of Investments" for more
information about the call provisions of portfolio Bonds.
Certain of the Bonds in the 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
The Trust initially consists of delivery statements relating to contracts to
purchase Bonds (or of such Bonds) as are listed under "Schedule 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 Trust. 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 the 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
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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 and estimated annual expense does not vary from that
set forth under "Essential Information Regarding the Trust." Those Bonds in the
Trust purchased with delivery dates after the date of settlement for purchases
made on the Date of Deposit are so noted in the Schedule of Investments.
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 the 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, (ii) must have a fixed maturity date after the date of purchase of not
less than approximately 15 years in the case of National 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 the Trust, the Trustee
shall, within five days after the delivery thereof, mail or deliver a notice of
such acquisition to all Unitholders of the Trust involved. Once the original
corpus of the Trust is acquired, the Trustee will have no power to vary the
investment of the Trust; 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 the Trust could not be replaced,
the Net Annual Interest Income per Unit for the 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 the Trust will retain for any length
of time its present size and composition.
All of the Bonds in the Trust are subject to being called or redeemed in
whole or in part prior to their stated maturities pursuant to the optional
redemption provisions described in the "Schedule of Investments" 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 "Schedule of
Investments.")
CERTAIN TAX MATTERS; LITIGATION. Certain of the Bonds in the 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 the 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 the Trust. It is possible that after the
Date of Deposit, litigation may be initiated with respect to Bonds in the 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 THE INSURED TRUST
Insurance guaranteeing the timely payment, when due, of all principal and
interest on the Bonds in the 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 the 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 Trust, 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 the 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 Trust. 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 prior to the Date of Deposit, either by the
Sponsor or, if a policy has been obtained by a Bond issuer, by such issuer.
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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 (audited), total liabilities of $2.1 billion (audited), and total
capital and surplus of $978 million (audited) 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 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
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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 the Bonds and therefore some value attributable to such
insurance will be included in the
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value of the Units of the Insured Trust. 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 the 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.
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 the 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 the
first purchase of Units following the execution of such letter of intent will be
at least 5% of the total amount of the intended aggregate purchases expressed in
such Unitholder's letter of intent. Further, through the establishment of the
letter of intent, such Unitholder agrees that Units representing 5% of the total
amount of the intended purchases will be held in escrow by United States Trust
Company of New York 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 redemptions, 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
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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> <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.
For "secondary market" sales the Public Offering Price per Unit of the 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 the Trust
if the net asset value of such Trust, as shown by any evaluation, is less than
20% of the original principal amount of the Trust. In the course of regularly
appraising the value of Bonds in the Trust, the Sponsor will attempt to estimate
the date on which the 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 the 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.
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<PAGE>
The effect of this method of sales charge calculation will be that different
sales charge rates will be applied to the various Bonds in the 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 $2,500,000
Under to to to to to to
Years to Maturity $50,000 $99,999 $249,999 $499,999 $999,999 $2,499,999 $4,999,999
- --------------------------- ----------- ----------- ----------- ----------- ----------- ------------- -------------
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>
$5,000,000
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 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 the
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
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<PAGE>
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 the Trust is
based upon a pro rata share of the OFFERING prices per Unit of the Bonds in the
Trust plus the applicable sales charge. The secondary market Public Offering
Price of the Trust is based upon a pro rata share of the BID prices per Unit of
the Bonds in the 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
the Trust on the business day prior to the Date of Deposit is shown in the
discussion of the Trust portfolio.
Whether or not Units are being offered for sale, the Sponsor will determine
the aggregate value of the 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.)
7. MARKET FOR UNITS
During the initial public offering period, the Sponsor intends to offer to
purchase Units of the Trust at a price equivalent to the pro rata share per Unit
of the OFFERING prices of the Bonds in the Trust (plus accrued interest).
Afterward, although it is not obligated to do so, the Sponsor intends to
maintain a secondary market for Units of the Trust at its own expense and
continuously to offer to purchase Units of the Trust at prices, subject to
change at any time, which are based upon the BID prices of Bonds in the
portfolio of the Trust. If the supply of Units of the Trust of this Series
exceeds demand, or for some other business reason, the Sponsor may discontinue
purchases of Units of the 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 the Trust initially offered by this Prospectus represents that
fractional undivided interest in the Trust as is set forth under "Essential
Information Regarding the
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<PAGE>
Trust." To the extent that any Units of the 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 the 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 the Trust is
accounted for daily on an accrual basis. For this reason, the purchase price of
Units of the 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 the 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 the Trust, the amount of accrued interest to be added to
the Public Offering Price to determine the purchase price of the Units of the
Trust purchased by an investor will include only accrued interest from the Date
of Deposit to, but 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 Trust) from interest received on the Bonds
deposited in the 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 the 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 the 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.
A-16
<PAGE>
9. WHAT ARE ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN?
The Estimated Long Term Return for the 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 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 the 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 Trust" 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 Trust in this Series, all as
of the day prior to the Date of Deposit, see "Essential Information Regarding
the Trust."
A-17
<PAGE>
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 the Insured
Trust, 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 Trust 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 the 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. Neither
the Sponsor nor its counsel have made any special review for the Trust 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 Trust, 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 Trust is not an association taxable as a corporation for Federal
income tax purposes. Tax-exempt interest received by the Trust on Bonds
deposited therein will retain its status as tax-exempt interest, for
Federal income tax purposes, when received by the Trust 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 the Trust is considered to be the owner of a pro rata
portion of the Trust under Subpart E, subchapter J of Chapter 1 of the
Internal Revenue Code
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<PAGE>
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
(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, the Trust
is not an association taxable as a corporation and the income of the Trust
will be treated as the income of the Unitholders.
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 the Trust by a Unitholder would result in each of
the remaining Unitholders of the Trust owning a greater proportionate interest
in the remaining assets of the 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
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<PAGE>
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 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 Trust, interest on borrowed funds used to purchase or carry
Units of the 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 Trust 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 Trust does 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
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<PAGE>
interest received by the Trust 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 Trust 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 the Trust for regularly evaluating the Bonds and for
maintaining surveillance over the portfolio. (See Section 16.)
The Trustee receives for ordinary recurring services an annual fee for each
plan of distribution for the Trust as set forth in "Essential Information
Regarding the Trust." Each annual fee is per $1,000 principal amount of the
underlying Bonds in the Trust for that portion of the Trust that represents a
particular plan of distribution. 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 the 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 Trust. The Trustee has the
use of funds, if any, being held in the Interest and Principal Accounts of the
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 Trust have been paid in
full prior to the deposit of the Bonds in the Trust, and the value of such
insurance has been included in the evaluation of the Bonds in the Trust and
accordingly in the Public Offering Price of Units of the Trust. There are no
annual continuing premiums for such insurance.
The Sponsor has borne all costs of creating and establishing the Trust. The
following are expenses of the Trust and, when paid by or are owed to the
Trustee, are secured by a lien on the assets of the Trust to which such expenses
are allocable: (1) the expenses and costs of any action undertaken by the
Trustee to protect the Trust and the rights and interests of the Unitholders;
(2) all taxes and other governmental charges upon the Bonds or any part of the
Trust (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
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<PAGE>
amounts if funds are not otherwise available in the applicable Interest and
Principal Accounts.
The Indenture requires the 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 the 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 the Trust, including that part
of the proceeds of any disposition of Bonds which represents accrued interest
and including any insurance proceeds representing interest due on defaulted
Bonds, shall be credited to the "Interest Account" of the Trust and all other
moneys received by the Trustee shall be credited to the "Principal Account" of
the Trust.
The pro rata share of cash in the Principal Account in the 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 the 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 the 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 the 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 the 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 the 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
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<PAGE>
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 the Trust or, to the extent funds are not sufficient therein, from
the Principal Account of the Trust, amounts needed for payment of expenses of
the Trust. The Trustee also may withdraw from said accounts such amount, if any,
as it deems necessary to establish a reserve for any governmental charges
payable out of the 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 the 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 the 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 the Trust such amounts as may be necessary to cover redemptions of
Units of the 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 Trust and may invest in
securities which would not be eligible for deposit in the Trust. 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.
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<PAGE>
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.
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.
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<PAGE>
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 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
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<PAGE>
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.
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 the 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 the 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 the Trust a
statement with respect to the Trust (i) as to the Interest Account: interest
received (including amounts representing interest received upon any disposition
of Bonds), and the percentage of such interest by states in which the issuers of
the Bonds are located, deductions for fees and expenses of the
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Trust, redemption of Units and the balance remaining after such distributions
and deductions, expressed in each case both as a total dollar amount and as a
dollar amount representing the pro rata share of each Unit outstanding on the
last business day of such calendar year; (ii) as to the Principal Account: the
dates of disposition of any Bonds and the net proceeds received therefrom
(excluding any portion representing accrued interest), the amount paid for
purchase of Replacement Bonds, the amount paid upon redemption of Units,
deductions for payment of applicable taxes and fees and expenses of the Trustee,
and the balance remaining after such distributions and deductions expressed both
as a total dollar amount and as a dollar amount representing the pro rata share
of each Unit outstanding on the last business day of such calendar year; (iii) a
list of the Bonds held and the number of Units outstanding on the last business
day of such calendar year; (iv) the Unit Value based upon the last computation
thereof made during such calendar year; and (v) amounts actually distributed
during such calendar year from the Interest Account and from the Principal
Account, separately stated, expressed both as total dollar amounts and as dollar
amounts representing the pro rata share of each Unit outstanding.
Each annual statement will reflect pertinent information in respect of all
plans of distribution so that Unitholders may be informed regarding the results
of other plans of distribution.
16. UNIT VALUE AND EVALUATION
The value of the 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
the Trust outstanding as of the date thereof to determine the per Unit value
("Unit Value") of the Trust. The Sponsor may determine the value of the Bonds in
the 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 the 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 Trust 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 the Trust.
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 Trust,
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
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<PAGE>
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:
<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
the 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 $2,500,000
Under to to to to to to $5,000,000
Years to Maturity $50,000 $99,999 $249,999 $499,999 $999,999 $2,499,999 $4,999,999 or more
- -------------------------- --------- --------- --------- --------- --------- ---------- ---------- ----------
Less than 1............... 0 0 0 0 0 0 0 0
1 but less than 2......... 1.00% .90% .85% .80% .70% .55% .467% .389%
2 but less than 3......... 1.30% 1.20% 1.10% 1.00% .90% .73% .634% .538%
3 but less than 4......... 1.60% 1.45% 1.35% 1.25% 1.10% .90% .781% .662%
4 but less than 5......... 2.00% 1.85% 1.75% 1.55% 1.40% 1.25% 1.082% .914%
5 but less than 7......... 2.30% 2.15% 1.95% 1.80% 1.65% 1.50% 1.320% 1.140%
7 but less than 10........ 2.60% 2.45% 2.25% 2.10% 1.95% 1.70% 1.496% 1.292%
10 but less than 13....... 3.00% 2.80% 2.60% 2.45% 2.30% 2.00% 1.747% 1.494%
13 but less than 16....... 3.25% 3.15% 3.00% 2.75% 2.50% 2.15% 1.878% 1.606%
16 or more................ 3.50% 3.50% 3.40% 3.35% 3.00% 2.50% 2.185% 1.873%
</TABLE>
*Breakpoint sales charges and related dealer concessions are computed both on a
dollar basis and on the basis of the number of Units purchased, using the
equivalent of 500 Units to $50,000, 2,500 Units to $250,000, etc., and will be
applied on that basis which is more favorable to the purchaser.
The Sponsor reserves the right to change the foregoing dealer concessions
from time to time.
Certain commercial banks are making Units of the Trust 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.
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<PAGE>
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 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 guarantor acceptable to
the Trustee. In certain instances the Trustee may require additional documents
such as, but not limited to, trust instruments, certificates of death,
appointments as executor or administrator or certificates of corporate
authority. Mutilated Certificates must be surrendered to the Trustee in order
for a replacement Certificate to be issued.
Although at the date hereof no charge is made and none is contemplated, a
Unitholder may be required to pay $2.00 to the Trustee for each Certificate
reissued or transfer of Units requested and to pay any governmental charge which
may be imposed in connection therewith.
REPLACEMENT OF LOST, STOLEN OR DESTROYED CERTIFICATES.
To obtain a new Certificate replacing one that has been lost, stolen, or
destroyed, the Unitholder must furnish the Trustee with sufficient
indemnification and pay such expenses as the Trustee may incur.
The indemnification protects the Trustee, Sponsor, and Trust from risk if
the original Certificate is presented for transfer or redemption by a person who
purchased it in good faith, for value and without notice of any fraud or
irregularity.
This indemnification must be in the form of an Open Penalty Bond of
Indemnification. The premium for such an indemnity bond may vary from time to
time, but currently amounts to 1% of the market value of the Units represented
by the Certificate. In the case however, of a Trust as to which notice of
termination has been given, the premium currently amounts to 0.5% of the market
value of the Units represented by such Certificate.
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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 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 the 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.
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Accrued interest paid on redemption shall be withdrawn from the Interest
Account of the Trust or, if the balance therein is insufficient, from the
Principal Account of the Trust. All other amounts paid on redemption shall be
withdrawn from the Principal Account. The Trustee is empowered to sell
underlying Bonds of the 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 the Trust, the size and diversity of
the 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 the 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 the 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 TRUST
Bonds will be removed from the Trust as they mature or are redeemed by the
issuers thereof. See the "Schedule 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 the 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 the 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 the 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 Trust, 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 the 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 Trust.
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 (Swiss Bank Tower, 10 East 50th Street). It
maintains 14 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 the 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 the
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
The Trust may be liquidated at any time by written consent of 100% of the
Unitholders or by the Trustee when the value of the Trust, as shown by any
evaluation, is less than 20% of the original principal amount of the Trust and
will be liquidated by the Trustee in the event that Units not yet sold
aggregating more than 60% of the Units originally created are tendered for
redemption by the Sponsor thereby reducing the net worth of the Trust to less
than 40% of the principal amount of the Bonds originally deposited in the
portfolio. (See "Essential Information Regarding the Trust.") The sale of Bonds
from the Trust 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 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
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furnished a final distribution statement, in substantially the same form as the
annual distribution statement, of the amount distributable. At such time as the
Trustee in its sole discretion shall determine that any amounts held in reserve
are no longer necessary, it shall make distribution thereof to Unitholders in
the same manner.
LEGAL OPINION
The legality of the Units offered hereby has been passed upon by Chapman and
Cutler, 111 West Monroe Street, Chicago, Illinois 60603. Carter, Ledyard &
Milburn, 2 Wall Street, New York, New York 10005, has acted as counsel for the
Trustee with respect to the Series, and, in the absence of a New York Trust from
the Series, as special New York tax counsel for the Series.
AUDITORS
The Statement of Condition and Schedule of Investments at Date of Deposit
included in 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.
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DESCRIPTION OF RATINGS*
STANDARD & POOR'S CORPORATION. A description of the applicable Standard &
Poor's Corporation rating symbols and their meanings follows:
A Standard & Poor's rating is a current assessment of the creditworthiness
of an obligor with respect to a specific debt obligation. This assessment may
take into consideration obligors such as guarantors, insurers or lessees.
The rating is not a recommendation to purchase, sell or hold a security,
inasmuch as it does not comment as to market price or suitability for a
particular investor.
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. Standard
& Poor's does not perform an audit in connection with any rating and may, on
occasion, rely on unaudited financial information. The ratings may be changed,
suspended or withdrawn as a result of changes in, or unavailability of, such
information, or for other circumstances.
The ratings are based, in varying degrees, on the following considerations:
I. Likelihood of default--capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance
with the terms of the obligation;
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or other arrangements under
the laws of bankruptcy and other laws affecting creditors' rights.
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.
AA--Bonds rated AA have a very strong capacity to pay interest and repay
principal, and differ from the highest rated issues only in small degree.
A--Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in the higher rated categories.
Plus (+) or Minus (-): The ratings from "AA" to "BB" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
Provisional Ratings: The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful completion of the
project being financed by the issuance of the bonds being rated and indicates
that payment of debt service requirements is largely or entirely dependent upon
the successful and timely completion of the project. This rating, however, while
addressing credit quality subsequent to completion of the project, makes no
comment on the likelihood of, or the risk of default upon failure of, such
completion. Accordingly, the investor should exercise his own judgment with
respect to such likelihood and risk.
- ----------
*As published by the rating companies.
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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-38
<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-39
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A-40
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A-41
<PAGE>
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A-42
<PAGE>
<TABLE>
<C> <S> <C>
NUVEEN Tax-Exempt Unit Trusts
PROSPECTUS
100,000 Units
National Insured Trust 267
</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 Trust
</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 Trust, the Trustee or the Sponsor. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, securities in any State
to any person to whom it is not lawful to make such offer in such state. The
Trust is registered as a Unit Investment Trust under the Investment Company
Act of 1940. Such registration does not imply that the Trust or any of its
Units has been guaranteed, sponsored, recommended or approved by the United
States or any State or agency or officer thereof.
723
<PAGE>
Statement of differences between electronic filing and printed document.
Pursuant to Rule 499(c) (7) under the Securities Act of 1933 and Rule
20-11 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>
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 amendment of Registration Statement comprises the following papers
and documents:
The facing sheet
The Prospectus
The signatures
Consents of Independent Public
Accountants and Counsel as indicated
Exhibits as listed on page S-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Nuveen Tax-Exempt Unit Trust, Series 723 has duly caused this
Amendment of Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized in the City of Chicago and State of
Illinois on 4/08/94.
NUVEEN TAX-EXEMPT UNIT TRUST, SERIES 723
(Registrant)
By JOHN NUVEEN & CO. INCORPORATED
(Depositor)
By: Larry Woods Martin
_________________________________
Vice President
Attest: Morrison C. Warren
__________________________________
Assistant Secretary
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
of Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated:
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 ) Larry Woods Martin
and Director ) Attorney-In-Fact**
)
Timothy T. Schwertfeger Executive Vice President )
and Director )
O. Walter Renfftlen Vice President and Controller )
(Principal Accounting Officer))
)
)4/08/94
___________________
*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 Schwertfeger with the Amendment to the
Registration Statement on Form S-6 of Nuveen Tax-Exempt Unit Trust,
Series 671 (File No. 33-49175).
<PAGE>
723
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report and to all references to our Firm included in or made a part of this
Registration Statement.
Arthur Andersen & Company
Chicago, Illinois
4/08/94
CONSENT OF CHAPMAN AND CUTLER
The consent of Chapman and Cutler to the use of its name in the Prospectus
included in the Registration Statement is contained in its opinions filed by
this amendment as Exhibits 3.1 and 3.2.
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 is filed by this
amendment as Exhibit 4.1 to the Registration Statement.
CONSENT OF KENNY S+P EVALUATION SERVICES
The consent of Kenny S+P Evaluation Services to the use of its name in the
Prospectus included in the Registration Statement is filed by this amendment
as Exhibit 4.2 to the Registration Statement.
CONSENT OF CARTER, LEDYARD & MILBURN
The consent of Carter, Ledyard & Milburn to the use of its name in the
Prospectus included in the Registration Statement is filed by this amendment
as Exhibit 4.3 to the Registration Statement.
<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 the Trust Indenture and Agreement.
2.1 Copy of Certificate of Ownership (Included in Exhibit 1.1(a) on
pages 2 to 8, inclusive, and incorporated herein by reference).
3.1 Opinion of counsel as to legality of securities being registered.
3.2 Opinion of counsel as to Federal income tax status of securities
being registered.
4.1 Consent of Standard + Poor's Corporation.
4.2 Consent of Kenny S+P Evaluation Services.
4.3 Consent of Carter, Ledyard & Milburn.
<PAGE>
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>
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<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.
-ii-
<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 registered on the registration books of the respective Trust
<PAGE>
the ownership of The Depository Trust Company of a number of Units con-
stituting 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 has caused such Units to be credited at The Depository
Trust Company to the account of the Depositor, and will, upon receipt of
confirmation of the effectiveness of the registration of the afore-
mentioned Units with the Securities and Exchange Commission, cause
such Units to be transferred on the registration books of the respective
Trusts to such other names, and in such denominations, as the Depositor
may direct, and will deliver certificates evidencing the same, upon
request, as hereinafter provided; 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.
-2-
<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
-3-
<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.
-4-
<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
-5-
<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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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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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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(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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(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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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 registration books of the Trust, for each
of the monthly, quarterly, and semi-annual plans of distribution, the
ownership by The Depository Trust Company of all Units of each Trust, and
will cause such Units to be credited at The Depository Trust Company to
the account of the Depositor. The Trustee shall not cause such Units to
be transferred on the registration books of the Trust to a holder other
than the Depositor, and the Depositor shall not sell, pledge, hypothecate
or otherwise transfer such Units, prior to the effectiveness of the
registration statement covering the Units filed with the Securities and
Exchange Commission under the Securities Act of 1933, except that the
Depositor may place the Units as security for any letter of credit
provided in connection with the deposit of contracts described in
Section 2.01.
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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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.
-38-
<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
/s/ Larry Woods Martin
By_____________________________
Authorized Officer
(SEAL)
Attest:
/s/ Morrison C. Warren
By_______________________________
Assistant Secretary
UNITED STATES TRUST COMPANY OF NEW
YORK, TRUSTEE
/s/ Timothy Kelley
By_________________________________
Assistant Vice President
(SEAL)
Attest:
/s/ Robert E. Lisk
By_______________________________
Assistant Secretary
-39-
<PAGE>
Exhibit 1.1(b)
SCHEDULE A
Series 723 April 8, 1994
Item 1. This Indenture relates to the Nuveen Tax-Exempt Unit Trust
Series 723.
Item 2. The date of this Indenture is April 8, 1994.
Item 3. Series 723 shall initially contain the following Trust:
(a) National Insured Trust 267
Item 4. The Trust shall initially consist of the following number of Units:
(a) National Insured Trust 100,000 Units
Item 5. (a) The amount of the second distribution from the Interest
Account of the Trust will be as follows:
( 1) National Insured Trust $ .3826 per Unit
(b) The date of the second distribution from the Interest Account
of the Trust will be as follows:
( 1) National Insured Trust May 15, 1994
(c) The record date for the second distribution from the
Interest Account of the Trust will be as follows:
( 1) National Insured Trust May 1, 1994
PAGE 2
Item 6. Record dates for subsequent semi-annual distributions from the
Interest Account of the Trust will be the 1st day of May and
November of each year.
Item 7. (a) Record dates for distibutions from the Principal Account of
of the Trust 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 Trust will be May 1, 1994.
Item 8. The Trust shall in no event continue beyond the end of the calendar
year preceding the fiftieth anniversary of the execution of this
Indenture.
Item 9. Quarterly distributions from the Interest Account of the 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:
(a) National Insured Trust May 1, 1994
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 Insured Trust $1.6321
(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 Insured Trust
Monthly Plan of Distribution $1.6321
Quarterly Plan of Distribution $1.3121
Semi-Annual Plan of Distribution $1.1221
ADDITIONAL SCHEDULES
BONDS INITIALLY DEPOSITED
NUVEEN TAX-EXEMPT UNIT TRUST SERIES 723
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: National Insured Trust 267
<PAGE>
EXHIBIT 3.1
(ON CHAPMAN AND CUTLER LETTERHEAD)
4/08/94
John Nuveen & Co. Incorporated
333 W. Wacker Drive
Chicago, Illinois 60606
RE: Nuveen Tax-Exempt Unit Trust, Series 723
Gentlemen:
We have served as counsel for you, as depositor of Nuveen Tax-Exempt Unit
Trust, Series 723 (hereinafter referred to as the "Fund"), in connection
with the issuance under the Trust Indenture and Agreement dated the date
hereof between John Nuveen & Co. Incorporated, as Depositor, and United
States Trust Company of New York, as Trustee, of Units of fractional
undivided interest in the one or more Trusts of said Fund (hereinafter
referred to as the "Units").
In connection therewith, we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to enable us
to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The execution and delivery of the Trust Indenture and Agreement and
the establishment of book entry positions and the execution and issuance
of certificates evidencing the Units in the Trusts of the Fund have been duly
authorized; and
2. The book entry positions and certificates evidencing the Units in
the Trusts of the Fund when duly executed and delivered or duly established
by the Depositor and the Trustee in accordance with the aforementioned Trust
Indenture and Agreement, will constitute valid and binding obligations of such
Trust and the Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 33-52527) relating to the Units referred
to above and to the use of our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
<PAGE>
EXHIBIT 3.2
(ON CHAPMAN AND CUTLER LETTERHEAD)
4/08/94
John Nuveen & Co. Incorporated
333 W. Wacker Drive
Chicago, Illinois 60606
RE: Nuveen Tax-Exempt Unit Trust, Series 723
Gentlemen:
We have served as counsel for you, as Depositor of Nuveen Tax-Exempt Unit
Trust, Series 723 (the "Fund") in connection with the issuance under the
Trust Indenture and Agreement, dated the date hereof between John Nuveen & Co.
Incorporated, as Depositor, and United States Trust Company of New York, as
Trustee, of Units of fractional undivided interest (the "Units"), as evidenced
by book entry position or certificate, if requested by the purchaser of Units,
in the one or more Trusts of said Fund.
We have also served as counsel for you in connection with all previous
Series of the Nuveen Tax-Exempt Unit Trust and as such have previously
examined such pertinent records and documents and matters of law as we have
deemed necessary, including (but not limited to) the Trust Indenture and
Agreements with respect to those series. We have also examined such
pertinent records and documents and matters of law as we have deemed
necessary including (but not limited to) the Trust Indenture and Agreement
relating to Nuveen Tax-Exempt Unit Trust, Series 723.
Based upon the foregoing, and upon such matters of law as we consider
to be applicable we are of the opinion that, under existing federal income
law:
(i) For Federal income tax purposes, the Trust will not be
taxable as an association but will be governed by the provisions of
Subchapter J (relating to Trusts) of Chapter 1, Internal Revenue Code of
1986 (the "Code").
(ii) Each Unitholder will be considered as owning a pro rata
share of each asset of the respective Trust of the Fund in the proportion
that the number of Units of such Trust held by him bears to the total number
of outstanding Units of such Trust. Under Subpart E, Subchapter J of Chapter
1 of the Code, income of each Trust will be treated as income of each
Unitholder thereof in the proportion described and an item of Fund income
will have the same character in the hands of a Unitholder as it would have in
the hands of the Trustee. Accordingly, to the extent that the income of a
Trust consists of interest and original issue discount excludable from gross
income under Section 103 of the Code, such income will be excludable from
federal gross income of the Unitholder, except in the case of a Unitholder
who is a substantial user (or a person related to such user) of a facility
financed through issuance of any industrial development bonds or certain
private activity bonds held by the Trust. In the case of such Unitholder who
is a substantial user (and no other) interest received and original issue
discount with respect to his Units attributable to such industrial
development bonds or such private activity bonds is includable in his gross
income. In the case of certain corporations, interest on the Bonds is included
in computing the alternative minimum tax pursuant to Sections 56(f) and 56(g)
of the Code, the enviromental tax (the "Superfund Tax") imposed by Sections
59A of the Code, and the branch profits tax imposed by Section 884 of the Code
with repect to U.S. branches of foreign corporations.
(iii) Gain or loss will be recognized to a Unitholder upon
redemption or sale of his Units. Such gain or loss is measured by comparing
the proceeds of such redemption or sale with the adjusted basis of such Units.
Before adjustment, such basis would normally be cost if the Unitholder had
acquired his Units by purchase, plus his aliquot share of advances by the
Trustee to the Trust to pay interest on Bonds delivered after the Unitholder's
settlement date to the extent that such interest accrued on the Bonds during
the period from the Unitholder's settlement date to the date such Bonds are
delivered to the Trust, but only to the extent that such advances are to be
repaid to the Trustee out of interest received by the Fund with respect to
such Bonds. In addition, such basis will be increased by both the
Unitholder's aliquot share of the accrued original issued discount with
respect to each Bond held by the Trust with respect to which there was an
original issue discount and reduced by the annual amortization of bond
premium, if any, on Bonds held by the Trust.
<PAGE>
(iv) If the Trustee disposes of a Trust asset (whether by sale, payment on
maturity, redemption or otherwise), gain or loss is recognized to the
Unitholder and the amount thereof is measured by comparing the
Unitholder's aliquot share of the total proceeds from the transaction
with his basis for his fractional interest in the asset disposed of. Such
basis is ascertained by apportioning the tax basis for his Units among each
of the Trust assets (as of the date on which his Units were acquired) ratably
according to their values as of the valuation date nearest the date on which
he purchased such Units. A Unitholder's basis in his Units and of his
fractional interest in each Trust asset must be reduced by the amount of his
aliquot share of interest received by the Fund, if any, on Bonds delivered
after the Unitholder's settlement date to the extent that such
interest accrued on the Bonds during the period from the Unitholder's
settlement date to the date such Bonds are delivered to the Trust, must be
reduced by the annual amortization of bond premium, if any, on Bonds held by
the Trust and must be increased by the Unitholder's share of accrued
original issue discount with respect to each Bond which, at the time
the Bond was issued, had original issue discount.
(v) In the case of any Bond held by the Trust where the "stated
redemption price at maturity" exceeds the "issue price," such excess shall
be original issue discount. With respect to each Unitholder, upon the
purchase of his Units subsequent to the original issuance of Bonds held by the
Trust Section 1272(a)(7) of the Code provides for a reduction in the accrued
"daily portion" of such original issue discount upon the purchase of a Bond
subsequent to the Bond's original issue, under certain circumstances. In the
case of any Bond held by the Trust the interest on which is excludable from
gross income under Section 103 of the Code, any original issue discount which
accrues with respect thereto will be treated as interest which is excludable
from gross income under Section 103 of the Code.
(vi) In the case of any Bond which matures within one year of the date
issued, the accrual of tax-exempt original issue discount will generally be
computed daily on a ratable basis unless the Unitholder elects to accrue such
discount under a constant yield method, compounded daily.
(vii) In the case of any Bond which does not mature within one year
after the date issued, tax-exempt original issue discount will accrue
daily, computed generally under a constant yield method, compounded
semiannually (with straight line interpolation between compounding dates).
(viii) In the case of any Trust for which Municipal Bond Investors
Assurance Corporation ("MBIA") insurance with respect to each of the Bonds
deposited therein has been obtained by the Depositor or the issuer or
underwriter of the Bonds, we have examined the form of MBIA's policy or several
policies of insurance (the "Policies") which have been delivered to the
Trustee. Assuming issuance of Policies in such form, in our opinion, any
amounts paid under said Policies representing maturing interest on defaulted
obligations held by the Trustee will be excludable from Federal gross income
if, and to the same extent as, such interest would have been so excludable if
paid by the respective issuer. Paragraph (ii) of this opinion is accordingly
applicable to Policy proceeds representing maturing interest.
<PAGE>
Because the Trusts do not include any "specified private activity bonds"
within the meaning of Section 57(a)(5) of the Code issued on or after August
8, 1986, none of the Trust Fund's interest income shall be treated as an item
of tax preference when computing the alternative minimum tax. In the case of
corporations, for taxable years beginning after December 31, 1986, the alter-
native minimum tax and the Superfund Tax depend upon the corporation's
alternative minimum taxable income ("AMTI"), which is the corporation's
taxable income with certain adjustments.
Pursuant to Section 56(f) of the Code, 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 50% of the excess of such
corporation's "adjusted net book income" over an amount equal to its AMTI
(before such adjustment item and the alternative tax net operating
loss deduction). For taxable years beginning after 1989, such adjustment item
will be 75% of the excess of such corporation's "adjusted current earnings"
over an amount equal to its AMTI (before such adjustment item and the
alternative tax net operating net operating loss deduction) pursuant to
Section 56(g) of the Code. Both "adjusted net book income" and "adjusted
current earnings" include all tax-exempt interest, including interest on all
Bonds in the Trust, and tax-exempt original issue discount.
Effective for tax returns filed after December 31, 1987, all taxpayers
are required to disclose to the Internal Revenue Service the amount of
tax-exempt interest earned during the year.
Section 265 of the Code generally provides for a reduction
in each taxable year of 100% of the otherwise deductible interest on
indebtedness incurred or continued by financial institutions, to which either
Section 585 or Section 593 of the Code applies, to purchase or carry
obligations acquired after August 7, 1986, the interest on which is exempt
from federal income taxes for such taxable year. Under rules prescribed by
Section 265, the amount of interest otherwise deductible by such financial
institutions in any taxable year which is deemed to be attributable to
tax-exempt obligations acquired after August 7, 1986 will be the amount
that bears the same ratio to the interest deduction otherwise allowable
(determined without regard to Section 265) to the taxpayer for the taxable
year as the taxpayer's average adjusted basis (within the meaning of Section
1016) of tax-exempt obligations acquired after August 7, 1986, bears to
such average adjusted basis for all assets of the taxpayer, unless such
financial institution can otherwise establish under regulations to be
prescribed by the Secretary of the Treasury, the amount of interest on
indebtedness incurred or continued to purchase or carry such obligations.
<PAGE>
We also call attention to the fact that, under Section 265 of the
Code, interest on indebtedness incurred or continued to purchase or carry
Units by taxpayers other than certain financial institutions, as referred to
above, is not deductible for Federal income tax purposes. Under rules used by
the Internal Revenue Service for determining when borrowed funds are con-
sidered used for the purpose of purchasing or carrying particular assets, the
purchase of Units may be considered to have been made with borrowed funds even
though the borrowed funds are not directly traceable to the purchase of Units.
However, these rules generally do not apply to interest paid on indebtedness
incurred for expenditures of a personal nature such as a mortgage incurred to
purchase or improve a personal residence.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") subjects tax-exempt
bonds to the market discount rules of the Code effective for bonds purchased
after April 30, 1993. In general, market discount is the amount (if any) by
which the stated redemption price at maturity exceeds an investor's purchase
price (except to the extent that such difference, if any, is attributable to
original issue discount not yet accrued). Market discount can arise based on
the price a Trust pays for Bonds or the price a Unitholder pays for his or her
Units. Under the Tax Act, accretion of market discount is taxable as ordinary
income; under prior law, the accretion had been treated as capital gain. Market
discount that accretes while a Trust holds a Bond would be recognized as
ordinary income by the Unitholders when principal payments are received on the
Bond, upon sale or at redemption (including early redemption), or upon the sale
or redemption of his or her Units, unless a Unitholder elects to include market
discount in taxable income as it accrues.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 33-52527) relating to the Units referred
to above and to the use of our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
<PAGE>
EXHIBIT 4.1
(ON STANDARD & POOR'S CORPORATION LETTERHEAD)
4/08/94
John Nuveen & Co. Incorporated
333 W. Wacker Drive
Chicago, IL 60606
RE: Nuveen Tax-Exempt Unit Trust, Series 723
Gentlemen:
This is in response to your requests regarding the above-
captioned fund which consists of separate underlying unit investment trusts
(the "trusts"), SEC file # 33-52527.
We have reviewed the information presented to us and have assigned a 'AAA'
rating to the units of each insured trust and a 'AAA' rating to the securities
contained in each insured trust. The ratings are direct reflections of the
portfolio of each insured trust, which will be composed solely of securities
covered by bond insurance policies that insure against default in the payment
of principal and interest on the securities contained in each insured trust
for as long as they remain outstanding. We understand that the bonds
described in the prospectus are the same as those in the attached list.
Since such policies have been issued by MBIA which has been assigned a 'AAA'
claims paying ability rating by S&P, S&P has assigned a 'AAA' rating to
the units of each insured trust and a 'AAA' rating to the securities contained
in each insured trust.
You have permission to use the name of Standard & Poor's Corporation and
the above-assigned rating in connection with your dissemination of
information relating to the insured trusts provided that it is understood that
the ratings are not "market" ratings nor recommendations to buy, hold or sell
the units of the insured trusts or the securities contained in the insured
trusts. Further, it should be understood the rating on the units of each
insured trust does not take into account the extent to which the trust's
expenses or portfolio asset sales for less than the trust's purchase price
will reduce payment to the unit holders of the interest and principal
required to be paid on the portfolio assets. S&P reserves the right to
advise its own clients, subscribers, and the public of the ratings. S&P
relies on the sponsor and its counsel, accountants, and other experts for the
accuracy and completeness of the information submitted in connection with the
ratings. S&P does not independently verify the truth or accuracy of any such
information.
This letter evidences our consent to the use of the name of Standard &
Poor's Corporation in connection with the rating assigned to the units of
each insured trust in the registration statement or prospectus relating to the
units and the trusts. However, this letter should not be construed as a
consent by us, within the meaning of Section 7 of the Securities Act of 1933,
to the use of the name of Standard & Poor's Corporation in connection with the
ratings assigned to the securities contained in the insured trusts. You are
hereby authorized to file a copy of this letter with the Securities and
Exchange Commission.
Please be certain to send us three copies of your final prospectus as
soon as it becomes available. Should we not receive them within a reasonable
amount of time after the closing or should they not conform to the
certification received by us, we reserve the right to nullify the ratings.
Very truly yours,
STANDARD & POOR'S CORPORATION
By Vincent S. Orgo
<PAGE>
EXHIBIT 4.2
(On Kenny S+P Evaluation Services Inc., Letterhead)
4/08/94
John Nuveen & Company
333 West Wacker Drive
Chicago, IL 60606
RE: Nuveen Tax Exempt Unit Trust, Series 723
Gentlemen:
We have examined the Registration Statement File No. 33-52527,
for the above captioned trust. We hereby acknowledge that Kenny S+P
Evaluation Services, a division of Kenny Information Systems, Inc. is
currently acting as the evaluator for the trust. We hereby consent to the
use in the Registration Statement of the reference to Kenny S+P Evaluation
Services, a division of Kenny Information Systems, Inc. as evaluator.
In addition, we hereby confirm that the ratings indicated in the
Registration Statement for the respective bonds comprising the trust
portfolio are the ratings currently indicated in our KENNYBASE database.
You are hereby authorized to file a copy of this letter with
the Securities and Exchange Commission.
Sincerely,
F.A. Shinal
Executive Vice President
<PAGE>
EXHIBIT 4.3
(ON CARTER LEDYARD & MILBURN LETTERHEAD)
4/08/94
Nuveen Tax-Exempt Unit Trust, Series 723
c/o John Nuveen & Co. Incorporated,
as Depositor of Nuveen Tax-Exempt Unit
Trust, Series 723
333 W. Wacker Drive
Chicago, Illinois 60606
RE: Nuveen Tax-Exempt Unit Trust, Series 723
Dear Sirs:
We hereby consent to the reference to our firm under the caption "What is
the Tax Status of Unitholders?" in the Registration Statement and
related Prospectus of Nuveen Tax-Exempt Unit Trust, Series 723 for the
registration of units of fractional undivided interest in the Fund in the
aggregate principal amount as set forth in the Closing Memorandum dated
today's date.
Very truly yours,
CARTER, LEDYARD & MILBURN
<PAGE>
MEMORANDUM
Nuveen Tax-Exempt Unit Trust, Series 723
File No. 33-52527
The Prospectus and the Indenture filed with Amendment No. 2 of the
Registration Statement on Form S-6 have been revised to reflect information
regarding the execution of the Indenture and the deposit of bonds on 4/08/94,
and to set forth certain statistical data based thereon. In addition, there
are a number of other changes from the Prospectus as originally filed to which
reference is made, including the increase in the size of the Fund, a
corresponding increase in the number of Units and a change in the trust
constituting the Fund. All references to the Units, prices and related
statistical data will apply to each trust of the Fund and the Units thereof.
Except for such updating, an effort has been made to set forth below each
of the changes and also to reflect the same by marking the Prospectus
transmitted with the Amendment. In addition, the subject and verb tense in
the descriptive sections of the Prospectus has been adjusted from plural to
singular terminology to reflect that only one Trust comprises the Fund.
FORM S-6
FACING SHEET. The file number is now shown.
THE PROSPECTUS
PAGE 3. The "Estimated Long-Term Return" and "Estimated Current
Return" to Unitholders under each Trust under each of the distribution
plans are stated.
PAGES 4 - 5. Essential information for the Trust, including
applicable footnotes, has been completed for this Series.
PAGES 5 - 6. The date of the Indenture has been inserted in Section 1
along with the size and number of Units of the Trust.
PAGE 8 et seq. The following information for the Trust appears on the
pages relating to such trust:
The estimated daily accrual of interest under the plans of
distribution for the Trust
Data regarding the composition of the portfolio of the Trust
Concentrations of issues by purpose in the Trust
The approximate percentage of the bonds in the
portfolio of the Trust acquired in distributions where
the Sponsor was either the sole underwriter or manager
or member of the underwriting syndicate
The percentage of "when issued" bonds in the portfolio
of the Trust
The schedule of investments for the Trust, including
the notes thereto
The Record Dates and Distribution Dates for
interest distributions for the Trust
The distribution table for the Trust
Taxable Equivalent Estimated Current Return Tables for residents
of the respective jurisdictions
The statement of condition for the Trust
and the accountant's report with regard thereto.
The description of the trustee's fee
The breakpoints for reduced sales charges
The procedures for Unitholders to aggregate sales in order to
reduce sales charges
THE INDENTURE
The Schedules to the Indenture have been completed.
CHAPMAN AND CUTLER
Chicago, Illinois
4/08/94
<PAGE>
STATEMENT OF UNITHOLDER ESTIMATED CASH FLOW
Series:0723 Day of Deposit:April 8, 1994
<TABLE>
National Insured Trust 267
<CAPTION> MONTHLY QUARTERLY SEMI-ANNUALLY
------------------------------------
<S> <C> <C> <C>
IRR: 5.870 5.854 5.822
CUR RET: 5.887 5.919 5.937
L/T RET: 5.915 5.944 5.963
</TABLE>
<TABLE>
ESTIMATED PRINCIPAL AND INTEREST
DISTRIBUTIONS PER UNIT
------------------------------------
<CAPTION> MON/YR MONTHLY QUARTERLY SEMI-ANNUALLY
- ----------------------------------------------
<S> <C> <C> <C>
APR 94 -101.860 -101.860 -101.860
MAY 94 0.3826 0.1275 0.0637
JUN 94 0.4991 0.0000 0.0000
JUL 94 0.4991 0.0000 0.0000
AUG 94 0.4991 1.5054 0.0000
SEP 94 0.4991 0.0000 0.0000
OCT 94 0.4991 0.0000 0.0000
NOV 94 0.4991 1.5054 3.0204
DEC 94 0.4991 0.0000 0.0000
JAN 95 0.4991 0.0000 0.0000
FEB 95 0.4991 1.5054 0.0000
MAR 95 0.4991 0.0000 0.0000
APR 95 0.4991 0.0000 0.0000
MAY 95 0.4991 1.5054 3.0204
JUN 95 0.4991 0.0000 0.0000
JUL 95 0.4991 0.0000 0.0000
AUG 95 0.4991 1.5054 0.0000
SEP 95 0.4991 0.0000 0.0000
OCT 95 0.4991 0.0000 0.0000
NOV 95 0.4991 1.5054 3.0204
DEC 95 0.4991 0.0000 0.0000
JAN 96 0.4991 0.0000 0.0000
FEB 96 0.4991 1.5054 0.0000
MAR 96 0.4991 0.0000 0.0000
APR 96 0.4991 0.0000 0.0000
MAY 96 0.4991 1.5054 3.0204
JUN 96 0.4991 0.0000 0.0000
JUL 96 0.4991 0.0000 0.0000
AUG 96 0.4991 1.5054 0.0000
SEP 96 0.4991 0.0000 0.0000
OCT 96 0.4991 0.0000 0.0000
NOV 96 0.4991 1.5054 3.0204
DEC 96 0.4991 0.0000 0.0000
JAN 97 0.4991 0.0000 0.0000
FEB 97 0.4991 1.5054 0.0000
MAR 97 0.4991 0.0000 0.0000
APR 97 0.4991 0.0000 0.0000
MAY 97 0.4991 1.5054 3.0204
JUN 97 0.4991 0.0000 0.0000
JUL 97 0.4991 0.0000 0.0000
AUG 97 0.4991 1.5054 0.0000
SEP 97 0.4991 0.0000 0.0000
OCT 97 0.4991 0.0000 0.0000
NOV 97 0.4991 1.5054 3.0204
DEC 97 0.4991 0.0000 0.0000
JAN 98 0.4991 0.0000 0.0000
FEB 98 0.4991 1.5054 0.0000
MAR 98 0.4991 0.0000 0.0000
APR 98 0.4991 0.0000 0.0000
MAY 98 0.4991 1.5054 3.0204
JUN 98 0.4991 0.0000 0.0000
JUL 98 0.4991 0.0000 0.0000
AUG 98 0.4991 1.5054 0.0000
SEP 98 0.4991 0.0000 0.0000
OCT 98 0.4991 0.0000 0.0000
NOV 98 0.4991 1.5054 3.0204
DEC 98 0.4991 0.0000 0.0000
JAN 99 0.4991 0.0000 0.0000
FEB 99 0.4991 1.5054 0.0000
MAR 99 0.4991 0.0000 0.0000
<PAGE>
APR 99 0.4991 0.0000 0.0000
MAY 99 0.4991 1.5054 3.0204
JUN 99 0.4991 0.0000 0.0000
JUL 99 0.4991 0.0000 0.0000
AUG 99 0.4991 1.5054 0.0000
SEP 99 0.4991 0.0000 0.0000
OCT 99 0.4991 0.0000 0.0000
NOV 99 0.4991 1.5054 3.0204
DEC 99 0.4991 0.0000 0.0000
JAN 00 0.4991 0.0000 0.0000
FEB 00 0.4991 1.5054 0.0000
MAR 00 0.4991 0.0000 0.0000
APR 00 0.4991 0.0000 0.0000
MAY 00 0.4991 1.5054 3.0204
JUN 00 0.4991 0.0000 0.0000
JUL 00 0.4991 0.0000 0.0000
AUG 00 0.4991 1.5054 0.0000
SEP 00 0.4991 0.0000 0.0000
OCT 00 0.4991 0.0000 0.0000
NOV 00 0.4991 1.5054 3.0204
DEC 00 0.4991 0.0000 0.0000
JAN 01 0.4991 0.0000 0.0000
FEB 01 0.4991 1.5054 0.0000
MAR 01 0.4991 0.0000 0.0000
APR 01 0.4991 0.0000 0.0000
MAY 01 0.4991 1.5054 3.0204
JUN 01 0.4991 0.0000 0.0000
JUL 01 0.4991 0.0000 0.0000
AUG 01 0.4991 1.5054 0.0000
SEP 01 0.4991 0.0000 0.0000
OCT 01 0.4991 0.0000 0.0000
NOV 01 0.4991 1.5054 3.0204
DEC 01 0.4991 0.0000 0.0000
JAN 02 0.4991 0.0000 0.0000
FEB 02 0.4991 1.5054 0.0000
MAR 02 0.4991 0.0000 0.0000
APR 02 0.4991 0.0000 0.0000
MAY 02 0.4991 1.5054 3.0204
JUN 02 0.4991 0.0000 0.0000
JUL 02 0.4991 0.0000 0.0000
AUG 02 0.4991 1.5054 0.0000
SEP 02 0.4991 0.0000 0.0000
OCT 02 0.4991 0.0000 0.0000
NOV 02 0.4991 1.5054 3.0204
DEC 02 10.4991 10.0000 10.0000
JAN 03 0.4456 0.0000 0.0000
FEB 03 0.4456 1.3979 0.0000
MAR 03 0.4456 0.0000 0.0000
APR 03 0.4456 0.0000 0.0000
MAY 03 0.4456 1.3442 2.7508
JUN 03 0.4456 0.0000 0.0000
JUL 03 0.4456 0.0000 0.0000
AUG 03 0.4456 1.3442 0.0000
SEP 03 0.4456 0.0000 0.0000
OCT 03 0.4456 0.0000 0.0000
NOV 03 0.4456 1.3442 2.6969
DEC 03 0.4456 0.0000 0.0000
JAN 04 0.4456 0.0000 0.0000
FEB 04 0.4456 1.3442 0.0000
MAR 04 0.4456 0.0000 0.0000
APR 04 0.4456 0.0000 0.0000
MAY 04 10.4456 11.3442 12.6969
JUN 04 0.3932 0.0000 0.0000
JUL 04 0.3932 0.0000 0.0000
AUG 04 0.3932 1.1861 0.0000
SEP 04 0.3932 0.0000 0.0000
OCT 04 0.3932 0.0000 0.0000
NOV 04 10.3932 11.1861 12.3798
DEC 04 0.3408 0.0000 0.0000
JAN 05 0.3408 0.0000 0.0000
FEB 05 0.3408 1.0280 0.0000
MAR 05 0.3408 0.0000 0.0000
APR 05 0.3408 0.0000 0.0000
MAY 05 0.3408 1.0280 2.0626
JUN 05 15.3408 15.0000 15.0000
JUL 05 0.2621 0.0000 0.0000
AUG 05 0.2621 0.8698 0.0000
SEP 05 0.2621 0.0000 0.0000
OCT 05 0.2621 0.0000 0.0000
NOV 05 0.2621 0.7908 1.6661
DEC 05 0.2621 0.0000 0.0000
JAN 06 0.2621 0.0000 0.0000
FEB 06 0.2621 0.7908 0.0000
MAR 06 0.2621 0.0000 0.0000
<PAGE>
APR 06 0.2621 0.0000 0.0000
MAY 06 0.2621 0.7908 1.5869
JUN 06 0.2621 0.0000 0.0000
JUL 06 0.2621 0.0000 0.0000
AUG 06 0.2621 0.7908 0.0000
SEP 06 0.2621 0.0000 0.0000
OCT 06 0.2621 0.0000 0.0000
NOV 06 0.2621 0.7908 1.5869
DEC 06 0.2621 0.0000 0.0000
JAN 07 0.2621 0.0000 0.0000
FEB 07 0.2621 0.7908 0.0000
MAR 07 0.2621 0.0000 0.0000
APR 07 0.2621 0.0000 0.0000
MAY 07 0.2621 0.7908 1.5869
JUN 07 0.2621 0.0000 0.0000
JUL 07 0.2621 0.0000 0.0000
AUG 07 0.2621 0.7908 0.0000
SEP 07 0.2621 0.0000 0.0000
OCT 07 0.2621 0.0000 0.0000
NOV 07 0.2621 0.7908 1.5869
DEC 07 0.2621 0.0000 0.0000
JAN 08 0.2621 0.0000 0.0000
FEB 08 0.2621 0.7908 0.0000
MAR 08 0.2621 0.0000 0.0000
APR 08 0.2621 0.0000 0.0000
MAY 08 0.2621 0.7908 1.5869
JUN 08 0.2621 0.0000 0.0000
JUL 08 0.2621 0.0000 0.0000
AUG 08 0.2621 0.7908 0.0000
SEP 08 0.2621 0.0000 0.0000
OCT 08 0.2621 0.0000 0.0000
NOV 08 0.2621 0.7908 1.5869
DEC 08 0.2621 0.0000 0.0000
JAN 09 0.2621 0.0000 0.0000
FEB 09 0.2621 0.7908 0.0000
MAR 09 0.2621 0.0000 0.0000
APR 09 0.2621 0.0000 0.0000
MAY 09 0.2621 0.7908 1.5869
JUN 09 0.2621 0.0000 0.0000
JUL 09 0.2621 0.0000 0.0000
AUG 09 0.2621 0.7908 0.0000
SEP 09 0.2621 0.0000 0.0000
OCT 09 0.2621 0.0000 0.0000
NOV 09 0.2621 0.7908 1.5869
DEC 09 0.2621 0.0000 0.0000
JAN 10 0.2621 0.0000 0.0000
FEB 10 0.2621 0.7908 0.0000
MAR 10 0.2621 0.0000 0.0000
APR 10 0.2621 0.0000 0.0000
MAY 10 0.2621 0.7908 1.5869
JUN 10 0.2621 0.0000 0.0000
JUL 10 0.2621 0.0000 0.0000
AUG 10 0.2621 0.7908 0.0000
SEP 10 0.2621 0.0000 0.0000
OCT 10 0.2621 0.0000 0.0000
NOV 10 0.2621 0.7908 1.5869
DEC 10 0.2621 0.0000 0.0000
JAN 11 0.2621 0.0000 0.0000
FEB 11 0.2621 0.7908 0.0000
MAR 11 0.2621 0.0000 0.0000
APR 11 0.2621 0.0000 0.0000
MAY 11 0.2621 0.7908 1.5869
JUN 11 0.2621 0.0000 0.0000
JUL 11 0.2621 0.0000 0.0000
AUG 11 0.2621 0.7908 0.0000
SEP 11 0.2621 0.0000 0.0000
OCT 11 0.2621 0.0000 0.0000
NOV 11 0.2621 0.7908 1.5869
DEC 11 0.2621 0.0000 0.0000
JAN 12 0.2621 0.0000 0.0000
FEB 12 0.2621 0.7908 0.0000
MAR 12 0.2621 0.0000 0.0000
APR 12 0.2621 0.0000 0.0000
MAY 12 0.2621 0.7908 1.5869
JUN 12 0.2621 0.0000 0.0000
JUL 12 0.2621 0.0000 0.0000
AUG 12 0.2621 0.7908 0.0000
SEP 12 0.2621 0.0000 0.0000
OCT 12 0.2621 0.0000 0.0000
NOV 12 0.2621 0.7908 1.5869
DEC 12 0.2621 0.0000 0.0000
JAN 13 0.2621 0.0000 0.0000
FEB 13 0.2621 0.7908 0.0000
MAR 13 0.2621 0.0000 0.0000
<PAGE>
APR 13 0.2621 0.0000 0.0000
MAY 13 0.2621 0.7908 1.5869
JUN 13 10.2621 10.0000 10.0000
JUL 13 0.2138 0.0000 0.0000
AUG 13 0.2138 0.6937 0.0000
SEP 13 0.2138 0.0000 0.0000
OCT 13 0.2138 0.0000 0.0000
NOV 13 0.2138 0.6452 1.3434
DEC 13 0.2138 0.0000 0.0000
JAN 14 10.2138 10.0000 10.0000
FEB 14 0.1631 0.5941 0.0000
MAR 14 0.1631 0.0000 0.0000
APR 14 0.1631 0.0000 0.0000
MAY 14 0.1631 0.4921 1.0899
JUN 14 0.1631 0.0000 0.0000
JUL 14 0.1631 0.0000 0.0000
AUG 14 0.1631 0.4921 0.0000
SEP 14 0.1631 0.0000 0.0000
OCT 14 0.1631 0.0000 0.0000
NOV 14 0.1631 0.4921 0.9875
DEC 14 0.1631 0.0000 0.0000
JAN 15 0.1631 0.0000 0.0000
FEB 15 0.1631 0.4921 0.0000
MAR 15 0.1631 0.0000 0.0000
APR 15 0.1631 0.0000 0.0000
MAY 15 0.1631 0.4921 0.9875
JUN 15 0.1631 0.0000 0.0000
JUL 15 0.1631 0.0000 0.0000
AUG 15 0.1631 0.4921 0.0000
SEP 15 0.1631 0.0000 0.0000
OCT 15 0.1631 0.0000 0.0000
NOV 15 0.1631 0.4921 0.9875
DEC 15 0.1631 0.0000 0.0000
JAN 16 0.1631 0.0000 0.0000
FEB 16 0.1631 0.4921 0.0000
MAR 16 0.1631 0.0000 0.0000
APR 16 0.1631 0.0000 0.0000
MAY 16 0.1631 0.4921 0.9875
JUN 16 0.1631 0.0000 0.0000
JUL 16 0.1631 0.0000 0.0000
AUG 16 0.1631 0.4921 0.0000
SEP 16 0.1631 0.0000 0.0000
OCT 16 0.1631 0.0000 0.0000
NOV 16 0.1631 0.4921 0.9875
DEC 16 0.1631 0.0000 0.0000
JAN 17 0.1631 0.0000 0.0000
FEB 17 0.1631 0.4921 0.0000
MAR 17 0.1631 0.0000 0.0000
APR 17 0.1631 0.0000 0.0000
MAY 17 0.1631 0.4921 0.9875
JUN 17 0.1631 0.0000 0.0000
JUL 17 0.1631 0.0000 0.0000
AUG 17 0.1631 0.4921 0.0000
SEP 17 0.1631 0.0000 0.0000
OCT 17 0.1631 0.0000 0.0000
NOV 17 0.1631 0.4921 0.9875
DEC 17 0.1631 0.0000 0.0000
JAN 18 0.1631 0.0000 0.0000
FEB 18 0.1631 0.4921 0.0000
MAR 18 0.1631 0.0000 0.0000
APR 18 0.1631 0.0000 0.0000
MAY 18 0.1631 0.4921 0.9875
JUN 18 0.1631 0.0000 0.0000
JUL 18 0.1631 0.0000 0.0000
AUG 18 0.1631 0.4921 0.0000
SEP 18 0.1631 0.0000 0.0000
OCT 18 0.1631 0.0000 0.0000
NOV 18 0.1631 0.4921 0.9875
DEC 18 0.1631 0.0000 0.0000
JAN 19 0.1631 0.0000 0.0000
FEB 19 0.1631 0.4921 0.0000
MAR 19 0.1631 0.0000 0.0000
APR 19 0.1631 0.0000 0.0000
MAY 19 0.1631 0.4921 0.9875
JUN 19 0.1631 0.0000 0.0000
JUL 19 0.1631 0.0000 0.0000
AUG 19 0.1631 0.4921 0.0000
SEP 19 0.1631 0.0000 0.0000
OCT 19 0.1631 0.0000 0.0000
NOV 19 0.1631 0.4921 0.9875
DEC 19 0.1631 0.0000 0.0000
JAN 20 0.1631 0.0000 0.0000
FEB 20 0.1631 0.4921 0.0000
MAR 20 0.1631 0.0000 0.0000
<PAGE>
APR 20 0.1631 0.0000 0.0000
MAY 20 0.1631 0.4921 0.9875
JUN 20 0.1631 0.0000 0.0000
JUL 20 0.1631 0.0000 0.0000
AUG 20 0.1631 0.4921 0.0000
SEP 20 0.1631 0.0000 0.0000
OCT 20 0.1631 0.0000 0.0000
NOV 20 0.1631 0.4921 0.9875
DEC 20 0.1631 0.0000 0.0000
JAN 21 0.1631 0.0000 0.0000
FEB 21 0.1631 0.4921 0.0000
MAR 21 0.1631 0.0000 0.0000
APR 21 0.1631 0.0000 0.0000
MAY 21 0.1631 0.4921 0.9875
JUN 21 0.1631 0.0000 0.0000
JUL 21 0.1631 0.0000 0.0000
AUG 21 0.1631 0.4921 0.0000
SEP 21 0.1631 0.0000 0.0000
OCT 21 0.1631 0.0000 0.0000
NOV 21 0.1631 0.4921 0.9875
DEC 21 0.1631 0.0000 0.0000
JAN 22 0.1631 0.0000 0.0000
FEB 22 0.1631 0.4921 0.0000
MAR 22 0.1631 0.0000 0.0000
APR 22 0.1631 0.0000 0.0000
MAY 22 0.1631 0.4921 0.9875
JUN 22 0.1631 0.0000 0.0000
JUL 22 0.1631 0.0000 0.0000
AUG 22 0.1631 0.4921 0.0000
SEP 22 0.1631 0.0000 0.0000
OCT 22 0.1631 0.0000 0.0000
NOV 22 0.1631 0.4921 0.9875
DEC 22 0.1631 0.0000 0.0000
JAN 23 0.1631 0.0000 0.0000
FEB 23 0.1631 0.4921 0.0000
MAR 23 0.1631 0.0000 0.0000
APR 23 0.1631 0.0000 0.0000
MAY 23 0.1631 0.4921 0.9875
JUN 23 0.1631 0.0000 0.0000
JUL 23 0.1631 0.0000 0.0000
AUG 23 0.1631 0.4921 0.0000
SEP 23 0.1631 0.0000 0.0000
OCT 23 0.1631 0.0000 0.0000
NOV 23 0.1631 0.4921 0.9875
DEC 23 0.1631 0.0000 0.0000
JAN 24 0.1631 0.0000 0.0000
FEB 24 0.1631 0.4921 0.0000
MAR 24 0.1631 0.0000 0.0000
APR 24 0.1631 0.0000 0.0000
MAY 24 0.1631 0.4921 0.9875
JUN 24 0.1631 0.0000 0.0000
JUL 24 10.1631 10.0000 10.0000
AUG 24 0.1200 0.4487 0.0000
SEP 24 0.1200 0.0000 0.0000
OCT 24 0.1200 0.0000 0.0000
NOV 24 0.1200 0.3621 0.8136
DEC 24 0.1200 0.0000 0.0000
JAN 25 0.1200 0.0000 0.0000
FEB 25 0.1200 0.3621 0.0000
MAR 25 0.1200 0.0000 0.0000
APR 25 0.1200 0.0000 0.0000
MAY 25 0.1200 0.3621 0.7266
JUN 25 0.1200 0.0000 0.0000
JUL 25 0.1200 0.0000 0.0000
AUG 25 0.1200 0.3621 0.0000
SEP 25 0.1200 0.0000 0.0000
OCT 25 0.1200 0.0000 0.0000
NOV 25 5.1200 5.3621 5.7266
DEC 25 0.0979 0.0000 0.0000
JAN 26 0.0979 0.0000 0.0000
FEB 26 0.0979 0.2955 0.0000
MAR 26 0.0979 0.0000 0.0000
APR 26 0.0979 0.0000 0.0000
MAY 26 0.0979 0.2955 0.5930
JUN 26 0.0979 0.0000 0.0000
JUL 26 0.0979 0.0000 0.0000
AUG 26 0.0979 0.2955 0.0000
SEP 26 0.0979 0.0000 0.0000
OCT 26 0.0979 0.0000 0.0000
NOV 26 0.0979 0.2955 0.5930
DEC 26 0.0979 0.0000 0.0000
JAN 27 0.0979 0.0000 0.0000
FEB 27 0.0979 0.2955 0.0000
MAR 27 0.0979 0.0000 0.0000
<PAGE>
APR 27 0.0979 0.0000 0.0000
MAY 27 0.0979 0.2955 0.5930
JUN 27 0.0979 0.0000 0.0000
JUL 27 0.0979 0.0000 0.0000
AUG 27 0.0979 0.2955 0.0000
SEP 27 0.0979 0.0000 0.0000
OCT 27 0.0979 0.0000 0.0000
NOV 27 0.0979 0.2955 0.5930
DEC 27 0.0979 0.0000 0.0000
JAN 28 0.0979 0.0000 0.0000
FEB 28 0.0979 0.2955 0.0000
MAR 28 0.0979 0.0000 0.0000
APR 28 0.0979 0.0000 0.0000
MAY 28 0.0979 0.2955 0.5930
JUN 28 0.0979 0.0000 0.0000
JUL 28 0.0979 0.0000 0.0000
AUG 28 0.0979 0.2955 0.0000
SEP 28 0.0979 0.0000 0.0000
OCT 28 0.0979 0.0000 0.0000
NOV 28 0.0979 0.2955 0.5930
DEC 28 0.0979 0.0000 0.0000
JAN 29 0.0979 0.0000 0.0000
FEB 29 0.0979 0.2955 0.0000
MAR 29 0.0979 0.0000 0.0000
APR 29 0.0979 0.0000 0.0000
MAY 29 0.0979 0.2955 0.5930
JUN 29 0.0979 0.0000 0.0000
JUL 29 0.0979 0.0000 0.0000
AUG 29 0.0979 0.2955 0.0000
SEP 29 0.0979 0.0000 0.0000
OCT 29 0.0979 0.0000 0.0000
NOV 29 0.0979 0.2955 0.5930
DEC 29 0.0979 0.0000 0.0000
JAN 30 0.0979 0.0000 0.0000
FEB 30 0.0979 0.2955 0.0000
MAR 30 0.0979 0.0000 0.0000
APR 30 0.0979 0.0000 0.0000
MAY 30 0.0979 0.2955 0.5930
JUN 30 0.0979 0.0000 0.0000
JUL 30 0.0979 0.0000 0.0000
AUG 30 0.0979 0.2955 0.0000
SEP 30 10.0979 10.0000 10.0000
OCT 30 0.0507 0.0000 0.0000
NOV 30 0.0507 0.2006 0.4977
DEC 30 0.0507 0.0000 0.0000
JAN 31 0.0507 0.0000 0.0000
FEB 31 0.0507 0.1531 0.0000
MAR 31 0.0507 0.0000 0.0000
APR 31 0.0507 0.0000 0.0000
MAY 31 0.0507 0.1531 0.3071
JUN 31 0.0507 0.0000 0.0000
JUL 31 0.0507 0.0000 0.0000
AUG 31 0.0507 0.1531 0.0000
SEP 31 0.0507 0.0000 0.0000
OCT 31 0.0507 0.0000 0.0000
NOV 31 0.0507 0.1531 0.3071
DEC 31 0.0507 0.0000 0.0000
JAN 32 0.0507 0.0000 0.0000
FEB 32 0.0507 0.1531 0.0000
MAR 32 0.0507 0.0000 0.0000
APR 32 0.0507 0.0000 0.0000
MAY 32 0.0507 0.1531 0.3071
JUN 32 0.0507 0.0000 0.0000
JUL 32 0.0507 0.0000 0.0000
AUG 32 0.0507 0.1531 0.0000
SEP 32 0.0507 0.0000 0.0000
OCT 32 0.0507 0.0000 0.0000
NOV 32 0.0507 0.1531 0.3071
DEC 32 0.0507 0.0000 0.0000
JAN 33 10.0507 10.1020 10.1023
</TABLE>
