NUVEEN TAX EXEMPT UNIT TRUST SERIES 735
487, 1994-06-21
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<PAGE>


                                                      File No. 33-53981
                                                      40 Act File No. 811-2271


                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                AMENDMENT NO. 1
                                       TO
                                    FORM S-6

For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N-8B-2

A.  Exact name of Trust:     NUVEEN TAX-EXEMPT UNIT TRUST, SERIES 735

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
  X       on 6/21/94 at 1:30 p.m. pursuant to Rule 487.
______



<PAGE>
   
                                 JUNE 21, 1994
                             SUBJECT TO COMPLETION
 
NUVEEN  Tax-Exempt Unit Trusts
             PROSPECTUS
            Series 735
             June 21, 1994
    
INTEREST  INCOME TO THE  TRUSTS AND TO  UNITHOLDERS, IN THE  OPINION OF COUNSEL,
UNDER EXISTING LAW IS EXEMPT FROM FEDERAL INCOME TAX. CAPITAL GAINS, IF ANY, ARE
SUBJECT TO TAX. IN ADDITION, INTEREST INCOME OF STATE TRUSTS IS, IN THE  OPINION
OF  COUNSEL,  EXEMPT,  TO THE  EXTENT  INDICATED,  FROM STATE  AND  LOCAL TAXES.
INTEREST INCOME OF ANY TRUST  OTHER THAN A STATE TRUST  MAY BE SUBJECT TO  STATE
AND LOCAL TAXES.
 
CURRENTLY  OFFERED AT PUBLIC OFFERING PRICE PLUS INTEREST ACCRUED TO THE DATE OF
SETTLEMENT. MINIMUM PURCHASE--EITHER $5,000 OR 50 UNITS, WHICHEVER IS LESS.
 
   
THE NUVEEN  TAX-EXEMPT  UNIT  TRUST,  SERIES 735  consists  of  four  underlying
separate  unit investment trusts  designated as National  Traditional Trust 531,
Intermediate Insured Trust  75, California  Insured Trust  227 and  Pennsylvania
Insured Trust 182. Each Trust initially consists of delivery statements relating
to  contracts to purchase  Bonds and, thereafter, will  consist of a diversified
portfolio of obligations issued by or on behalf of states and territories of the
United States and authorities and political subdivisions thereof (see  SCHEDULES
OF INVESTMENTS), the interest on which is, in the opinion of bond counsel to the
issuers,  exempt from  Federal income tax  under existing law.  In addition, the
interest on Bonds in each State Trust is, in the opinion of bond counsel to  the
issuers  of the obligations, exempt from such  State's income taxes, if any. All
obligations in each Traditional Trust are rated in the category "A" or better by
Standard & Poor's Corporation or Moody's Investors Service, Inc. on the Date  of
Deposit.  All  obligations in  each  Insured Trust  are  covered by  policies of
insurance obtained  from  the  Municipal Bond  Investors  Assurance  Corporation
guaranteeing  payment of principal  and interest when due.  All such policies of
insurance remain effective  so long  as the  obligations are  outstanding. As  a
result of such insurance, the Bonds in each portfolio of the Insured Trusts have
received  a rating of "Aaa" by Moody's  Investors Service, Inc. and the Bonds in
the Insured Trusts and the  Units of each such Trust  have received a rating  of
"AAA"  by Standard & Poor's Corporation. INSURANCE  RELATES ONLY TO THE BONDS IN
THE INSURED TRUSTS AND NOT TO THE UNITS OFFERED HEREBY OR TO THEIR MARKET VALUE.
(See Section 5.)
    
 
THE OBJECTIVES of the Trusts are  tax-exempt income and conservation of  capital
through  a diversified  investment in tax-exempt  Bonds. (SEE SECTIONS  2, 3 AND
11.) The payment of interest and  the preservation of principal are, of  course,
dependent upon the continuing ability of the issuers of Bonds and of any insurer
thereof  to meet  their obligations thereunder.  There is no  guarantee that the
Trusts' objectives will be achieved.
 
DISTRIBUTIONS of  interest received  by each  Trust will  be made  semi-annually
unless  the Unitholder elects to receive them monthly or quarterly. (SEE SECTION
13.) Distribution of funds in the Principal Account, if any, will ordinarily  be
made semi-annually.
 
   
FOR  ESTIMATED LONG TERM RETURNS AND ESTIMATED CURRENT RETURNS to Unitholders in
each Trust on the  business day prior to  the Date of Deposit.  (SEE PAGE 3  AND
SECTION  9.) For Estimated  Cash Flow Tables for  Intermediate Insured Trust 75,
see page 14.
    
 
THE PUBLIC OFFERING  PRICE per Unit  of each Trust  during the initial  offering
period  is equal to a pro rata share of the OFFERING prices of the Bonds in such
Trust's portfolio plus  a sales charge  of up  to 4.90% of  the Public  Offering
Price  (equivalent to 5.152%  of the net  amount invested); the  sales charge is
somewhat lower on Trusts  with lesser average maturities.  (SEE SECTION 6.)  The
Secondary  Market Public Offering Price per Unit for each Trust will be equal to
a pro rata share of the  sum of BID prices of the  Bonds in such Trust plus  the
sales  charges determined based on the number of years remaining to the maturity
of each  Bond. Accrued  interest from  the  preceding Record  Date to,  but  not
including,  the settlement date (normally five  business days after purchase) is
added to the Public Offering Price. The  sales charge is reduced on a  graduated
scale  for sales involving at least $50,000 or  500 Units and will be applied on
whichever basis is more favorable to the purchaser. (SEE SECTION 6.)
 
A UNITHOLDER MAY REDEEM UNITS at the office of the Trustee, United States  Trust
Company of New York, at prices based upon the BID prices of the Bonds. The price
received  upon  redemption  may  be  more  or  less  than  the  amount  paid  by
Unitholders, depending upon the  value of the  Bonds on the  date of tender  for
redemption.  (SEE  SECTION 19.)  The Sponsor,  although not  required to  do so,
intends to make a secondary market for  the Units of the Trusts at prices  based
upon  the BID  prices of the  Bonds in  the respective Trusts.  (SEE SECTION 7.)
RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE.
 
UNITS OF THE TRUST ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK AND ARE NOT FEDERALLY INSURED OR OTHERWISE PROTECTED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RE-
SERVE  BOARD  OR ANY  OTHER AGENCY  AND INVOLVE  INVESTMENT RISK,  INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
 
THESE SECURITIES HAVE  NOT BEEN APPROVED  OR DISAPPROVED BY  THE SECURITIES  AND
EXCHANGE  COMMISSION OR ANY  STATE SECURITIES COMMISSION  NOR HAS THE SECURITIES
AND EXCHANGE  COMMISSION OR  ANY  STATE SECURITIES  COMMISSION PASSED  UPON  THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
 
  NUVEEN  Tax-Exempt Unit Trusts
 
<TABLE>
<CAPTION>
      Index                                             Section         Page
<C>   <S>                                              <C>        <C>
      SPECIFIC TRUST MATTERS
      National Traditional Trust 531                          3         8-12
      Intermediate Insured Trust 75                           3        13-19
      California Insured Trust 227                            3        20-32
      Pennsylvania Insured Trust 182                          3        33-41
      GENERAL MATTERS
      Accrued Interest                                        8         A-16
      Accumulation Plan                                      14         A-24
      Bonds, How Selected                                     3            7
      Bonds, Initial Determination of Offering Price         10         A-18
      Bonds, Limited Right of Substitution                    4          A-7
      Bond Ratings                                            3         8-41
      Bonds, Removal from Trust                              21         A-32
      Call Provisions of Portfolio Bonds                   3, 4     8-41,A-6
      Capital Gains Taxability                               11         A-18
      Dealer Discount                                        17         A-28
      Description of Units of Trust                           1            5
      Distributions to Unitholders                           13         A-22
      Distribution Payment Dates                          3, 13   8-41, A-22
      Distribution of Units to the Public                    17         A-28
      Essential Information Regarding the Trusts             --            4
      Estimated Long Term Return and Estimated Current
      Return                                                  9      3, A-17
      Evaluation                                             16         A-28
      Expenses to Fund                                       12         A-21
      Insurance on Bonds in the Insured Trusts                5          A-9
      Insurance on Certain Bonds in the Traditional
      Trusts                                                  5         A-12
      Interest Income to Trust                                3         8-41
      Investments, Schedules of                               3         8-41
      Legality of Units                                      24         A-36
      Limitations on Liabilities of Sponsor and Trustee       22        A-33
      Market for Units                                        7         A-15
      Minimum Transaction                                    17         A-28
      Objectives of the Trusts                                2            6
      Optional Distribution Plan                             13         A-22
      Other Information                                      24         A-35
      Ownership and Transfer of Units                        18         A-29
      Public Offering Price of Units                          6         A-12
      Quantity Purchases                                      6         A-12
      Record Dates                                           13         A-22
      Ratings, Description of                                24         A-37
      Redemption of Units by Trustee                         19         A-30
      Reports to Unitholders                                 15         A-27
      Repurchase of Units by Sponsor                         20         A-32
      Sales Charge                                            6         A-12
      Sponsor, Information About                             23         A-34
      State Tax Status                                        3         8-41
      Successor Trustees and Sponsors                        22         A-34
      Tax Status of Unitholders                              11         A-18
      Trustee, Information About                             22         A-33
      Trust Indenture, Amendment and Termination             24         A-35
      Unit Value                                             16         A-28
</TABLE>
 
                  2
<PAGE>
                          ESTIMATED LONG TERM RETURNS
                                      AND
                    ESTIMATED CURRENT RETURNS FOR THE TRUSTS
 
Following  are the  Estimated Long Term  and Estimated Current  Returns for each
Trust on the  business day  prior to  the Date  of Deposit,  under the  monthly,
quarterly and semi-annual plans of distribution (SEE SECTION 3):
 
                          Estimated Long Term Returns
 
<TABLE>
<CAPTION>
                                                          PLAN OF DISTRIBUTION
                                                ----------------------------------------
                    TRUST                       MONTHLY      QUARTERLY      SEMI-ANNUAL
  <S>                                           <C>          <C>            <C>
  --------------------------------------------------------------------------------------
  National Traditional Trust 531...........      5.79%         5.82%           5.84%
  Intermediate Insured Trust 75............      4.98%         5.01%           5.03%
  California Insured Trust 227.............      5.64%         5.67%           5.70%
  Pennsylvania Insured Trust 182...........      5.61%         5.64%           5.66%
</TABLE>
 
                           Estimated Current Returns
 
<TABLE>
<CAPTION>
                                                          PLAN OF DISTRIBUTION
                                                ----------------------------------------
                    TRUST                       MONTHLY      QUARTERLY      SEMI-ANNUAL
  <S>                                           <C>          <C>            <C>
  --------------------------------------------------------------------------------------
  National Traditional Trust 531...........      5.72%         5.75%           5.77%
  Intermediate Insured Trust 75............      4.79%         4.82%           4.84%
  California Insured Trust 227.............      5.53%         5.56%           5.58%
  Pennsylvania Insured Trust 182...........      5.57%         5.60%           5.62%
</TABLE>
 
    The  Estimated Long Term Return for each Trust is a measure of the return to
the investor earned  over the estimated  life of the  Trust. The Estimated  Long
Term  Return represents an  average of the  yields to maturity  (or call) of the
Bonds in  the Trust's  portfolio  calculated in  accordance with  accepted  bond
practice and adjusted to reflect expenses and sales charges. Under accepted bond
practice,  tax-exempt bonds  are customarily  offered to  investors on  a "yield
price" basis, which involves computation of  yield to maturity or to an  earlier
call date (whichever produces the lower yield), and which takes into account not
only the interest payable on the bonds but also the amortization or accretion to
a  specified date of any premium over  or discount from the par (maturity) value
in the bond's  purchase price. In  calculating Estimated Long  Term Return,  the
average  yield for  the Trust's  portfolio is  derived by  weighting each Bond's
yield by the market value of the Bond and by the amount of time remaining to the
date to which the Bond is priced. Once the average portfolio yield is  computed,
this  figure is then reduced to reflect estimated expenses and the effect of the
maximum sales  charge paid  by investors.  The Estimated  Long Term  Return  and
Estimated  Current Return calculations do not take  into account the effect of a
first distribution which may be less than a regular distribution or may be  paid
at  some point after 30 days (or a  second distribution which may be less than a
normal distribution for Unitholders who choose quarterly or semi-annual plans of
distribution), and it also does not  take into account the difference in  timing
of  payments  to  Unitholders  who  choose  quarterly  or  semi-annual  plans of
distribution, each of which will reduce the return.
 
    Estimated Current Return  is computed  by dividing the  Net Annual  Interest
Income per Unit by the Public Offering Price. In contrast to Estimated Long Term
Return, Estimated Current Return does not reflect the amortization of premium or
accretion of discount, if any, on the Bonds in the Trust's portfolio. Net Annual
Interest Income per Unit is calculated by dividing the annual interest income to
the Trust, less estimated expenses, by the number of Units outstanding.
 
    Net  Annual Interest  Income per Unit,  used to  calculate Estimated Current
Return, will vary  with changes  in fees  and expenses  of the  Trustee and  the
Evaluator  and with the redemption, maturity, exchange or sale of Bonds. A Trust
may experience expenses and  portfolio changes different  from those assumed  in
the  calculation of Estimated Long  Term Return. There thus  can be no assurance
that the Estimated  Current Returns or  the Estimated Long  Term Returns  quoted
herein will be realized in the future. Both the Estimated Current Return and the
Estimated  Long Term Return quoted  herein are based on  the market value of the
underlying Bonds on the  business day prior to  the Date of Deposit;  subsequent
calculations  of these performance measures will reflect the then current market
value of the underlying Bonds and may be higher or lower. For more  information,
see Section 9. The Sponsor will provide estimated cash flow information relating
to  a Trust without  charge to each  potential investor in  a Trust who receives
this prospectus and makes  an oral or  written request to  the Sponsor for  such
information.
 
                                       3
<PAGE>
   
                 ESSENTIAL INFORMATION REGARDING THE TRUSTS ON
                                 JUNE 20, 1994+
    
           Sponsor and Evaluator...... John Nuveen & Co. Incorporated
           Trustee........... United States Trust Company of New York
                  -------------------------------------------
 
The  income, expense and distribution data  set forth below have been calculated
for  Unitholders   receiving   MONTHLY   distributions.   Unitholders   choosing
distributions  quarterly or  semi-annually will receive  slightly higher returns
because of the lower Trustee's fees and expenses under such plans. (SEE  SECTION
3 FOR DATA RELATING TO THESE PLANS.)
 
<TABLE>
<CAPTION>
                                                         National          Intermediate         California         Pennsylvania
                                                        Traditional           Insured             Insured             Insured
                                                         Trust 531           Trust 75            Trust 227           Trust 182
<S>                                                   <C>                 <C>                 <C>                 <C>
                                                      ---------------     ---------------     ---------------     ---------------
Principal Amount of Bonds in Trust..................  $   10,000,000      $   10,000,000      $    3,500,000      $    3,500,000
Number of Units.....................................         100,000             100,000              35,000              35,000
Fractional Undivided Interest in Trust Per Unit.....       1/100,000           1/100,000            1/35,000            1/35,000
Public Offering Price--Less than 500 Units
    Aggregate Offering Price of Bonds in Trust......  $    9,623,397      $    9,765,159      $    3,235,845      $    3,340,354
    Divided by Number of Units......................  $        96.23      $        97.65      $        92.45      $        95.44
    Plus Sales Charge*..............................  $         4.96      $         3.96      $         4.76      $         4.92
    Public Offering Price Per Unit(1)...............  $       101.19      $       101.61      $        97.21      $       100.36
Redemption Price Per Unit (exclusive of accrued
  interest).........................................  $        95.74      $        97.28      $        91.95      $        94.94
Sponsor's Initial Repurchase Price Per Unit
  (exclusive of accrued interest)...................  $        96.23      $        97.65      $        92.45      $        95.44
Excess of Public Offering Price Per Unit over
  Redemption Price Per Unit.........................  $         5.45      $         4.33      $         5.26      $         5.42
Excess of Public Offering Price Per Unit over
  Sponsor's Repurchase Price Per Unit...............  $         4.96      $         3.96      $         4.76      $         4.92
Calculation of Estimated Net Annual Interest Income
  Per Unit
    Annual Interest Income(2).......................  $       5.9900      $       5.0694      $       5.6000      $       5.8071
    Less Estimated Annual Expense...................  $        .2054      $        .2013      $        .2250      $        .2207
                                                      ---------------     ---------------     ---------------     ---------------
    Estimated Net Annual Interest Income(3).........  $       5.7846      $       4.8681      $       5.3750      $       5.5864
Daily Rate of Accrual Per Unit......................  $       .01606      $       .01352      $       .01493      $       .01551
Estimated Current Return(4).........................           5.72%               4.79%               5.53%               5.57%
Estimated Long Term Return(4).......................           5.79%               4.98%               5.64%               5.61%
 
<FN>
- ----------
Evaluations  for purpose of sale,  purchase or redemption of  Units are made as of  4 p.m. Eastern time  on the business day next
following receipt of an order by the Sponsor or Trustee. (See Section 6.)
 + The business day prior to the Date of Deposit.
 * National and State, 5.152%;  Long Intermediate, 4.439%; Intermediate, 4.058%;  Short Intermediate, 3.093%; Short Term,  2.564%
   (4.9%, 4.25%, 3.9%, 3.0% and 2.5% of the Public Offering Prices, respectively.)
(1)  Units are offered at the Public  Offering Price plus accrued interest from the  preceding Record Date to, but not including,
    the date of settlement (normally five business days after purchase).  The Date of Deposit of the Fund has been designated  as
    the  First Record  Date for all  plans of distribution  of the Trusts  and, accordingly, for  Units purchased on  the Date of
    Deposit, the following  amounts of accrued  interest to  the Settlement Date  will be  added to the  Public Offering  Prices:
    National  Traditional Trust--$.11, Intermediate Insured Trust--$.09,  California Insured Trust--$.10 and Pennsylvania Insured
    Trust--$.11. (See Section 8.)
(2) Assumes delivery of  all Bonds. (See Section  4.) Interest income does  not include accretion of  original issue discount  on
    "zero coupon" Bonds, Stripped Obligations or other original issue discount Bonds. (See "General Trust Information" in Section
    3.)
(3)  The amount and timing of interest distributions from each Trust under the various plans of distribution are shown in Section
    3.
(4) Estimated Long Term Return  for each Trust represents  the average of the yields  to maturity (or call)  of the Bonds in  the
    Trust's  portfolio calculated in accordance with accepted bond practices  and adjusted to reflect expenses and sales charges.
    Estimated Current Return is computed by dividing the Net Annual Interest Income per Unit by the Public Offering Price, and in
    contrast to Estimated Long Term  Return does not reflect the  amortization of premium or accretion  of discount, if any.  For
    more information see page 3 and Section 9.
</TABLE>
 
                                       4
<PAGE>
                   ESSENTIAL INFORMATION REGARDING THE TRUSTS
                                  (CONTINUED)
 
<TABLE>
<S>                                              <C>
Record Dates......................................................................See Section 13
Distribution Dates................................................................See Section 13
Minimum Principal Distribution....................................................$0.10 Per Unit
Date Trusts Established............................................................June 21, 1994
Settlement Date....................................................................June 28, 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:
</TABLE>
 
<TABLE>
<CAPTION>
                                                           PLAN OF DISTRIBUTION
                                                ------------------------------------------
                    TRUST                        MONTHLY       QUARTERLY      SEMI-ANNUAL
  -----------------------------------------     ----------     ----------     ------------
  <S>                                           <C>            <C>            <C>
  National Traditional Trust 531...........     $  1.6089      $  1.2889      $   1.0989
  Intermediate Insured Trust 75............        1.5679         1.2479          1.0579
  California Insured Trust 227.............        1.6190         1.2990          1.1090
  Pennsylvania Insured Trust 182...........        1.5767         1.2567          1.0667
  ------------
  *  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 735
    
 
   
1.  WHAT IS THE NUVEEN TAX-EXEMPT UNIT TRUST, SERIES 735?
    
 
   
Series 735 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 four underlying
separate  unit  investment  trusts,  combined  under  one  trust  indenture  and
agreement, designated National Traditional Trust 531, Intermediate Insured Trust
75, California Insured Trust 227 and Pennsylvania Insured Trust 182. The various
trusts  are collectively referred to herein as the "Trusts"; the trusts in which
few or  none  of  the  Bonds  are insured  are  sometimes  referred  to  as  the
"Traditional  Trusts",  the trusts  in which  all  of the  Bonds are  insured as
described herein are  sometimes referred  to as  the "Insured  Trusts", and  the
state  trusts (both  Traditional and Insured)  are sometimes referred  to as the
"State Trusts." This Series was created under the laws of the State of New  York
pursuant   to  a  Trust  Indenture  and  Agreement  dated  June  21,  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 $27,000,000 (the  "Bonds"),
which initially constitute the underlying securities of the
    
 
                                       5
<PAGE>
   
Trusts.  Bonds  may  include  fixed rate  obligations  with  regularly scheduled
interest payments, zero coupon bonds  and stripped obligations, which  represent
evidences of ownership interests with respect to either a principal payment or a
payment  of interest  on a  tax-exempt obligation  ("Stripped Obligations"). See
"SUMMARY OF PORTFOLIOS" and "GENERAL TRUST INFORMATION" for a discussion of zero
coupon bonds  and Stripped  Obligations. The  following principal  amounts  were
deposited  in  each  Trust:  $10,000,000  in  the  National  Traditional  Trust,
$10,000,000 in  the Intermediate  Insured Trust,  $3,500,000 in  the  California
Insured  Trust and  $3,500,000 in  the Pennsylvania  Insured Trust.  Some of the
delivery statements may relate to contracts for the purchase of "when issued" or
other Bonds with delivery dates after the date of settlement for a purchase made
on the Date of Deposit. See the "Schedules of Investments" and Section 4. For  a
discussion  of  the Sponsor's  obligations  in the  event  of a  failure  of any
contract for  the  purchase  of any  of  the  Bonds and  its  limited  right  to
substitute other bonds to replace any failed contract, see Section 4.
    
 
    Payment  of interest on the Bonds in each Insured Trust, and of principal at
maturity, is guaranteed under policies of  insurance obtained by the Sponsor  or
by  the issuers of the Bonds. (See Section  5.) AS A GENERAL MATTER, NEITHER THE
ISSUER NOR THE SPONSOR HAS OBTAINED INSURANCE  WITH RESPECT TO THE BONDS IN  ANY
TRADITIONAL TRUST.
 
   
    The  Trustee has delivered to the Sponsor registered Units for 100,000 Units
of the National  Traditional Trust,  100,000 Units of  the Intermediate  Insured
Trust,  35,000 Units  of the  California Insured Trust  and 35,000  Units of the
Pennsylvania Insured Trust,  which together  represent ownership  of the  entire
Series,  and which are offered for sale by this Prospectus. Each Unit of a Trust
represents a fractional undivided  interest in the principal  and net income  of
such  Trust in the  ratio of 10 Units  for each $1,000  principal value of Bonds
initially deposited in such Trust. Only Units of the National Traditional  Trust
and  Intermediate Insured Trust are offered  for sale to Virginia and Washington
residents by this Prospectus.
    
 
2.  WHAT ARE THE OBJECTIVES OF THE TRUSTS?
 
The objectives of the Trusts are income  exempt from Federal income tax and,  in
the  case of State Trusts, where applicable, state income and intangibles taxes,
and conservation of capital, through an  investment in obligations issued by  or
on  behalf of states  and territories of  the United States  and authorities and
political subdivisions thereof,  the interest  on which  is, in  the opinion  of
recognized  bond counsel  to the  issuing governmental  authorities, exempt from
Federal income tax under existing law. Bonds in any State Trust have been issued
primarily by  or on  behalf of  the  State for  which such  Trust is  named  and
counties,  municipalities, authorities  and political  subdivisions thereof, the
interest on which Bonds is, in the opinion of bond counsel, exempt from  Federal
and  certain state income tax and intangibles  taxes, if any, for purchasers who
qualify as residents of that  State. Insurance guaranteeing the timely  payment,
when  due, of all principal and interest on  the Bonds in each Insured Trust has
been obtained by the Sponsor or by the issuers of such Bonds from Municipal Bond
Investors  Assurance  Corporation,  and  as  a  result  of  such  insurance  the
obligations  in the Insured Trusts are rated "Aaa" by Moody's Investors Service,
Inc. and "AAA" by Standard & Poor's Corporation. (SEE SECTION 5)All  obligations
in each Traditional Trust are rated in the category "A" or better (SP-1 or MIG 2
or  better  in the  case  of short  term obligations  included  in a  Short Term
Traditional Trust)  by  Standard  &  Poor's  Corporation  or  Moody's  Investors
Service,  Inc.  (including  provisional or  conditional  ratings).  In addition,
certain Bonds  in  certain  Traditional  Trusts  may  be  covered  by  insurance
guaranteeing the timely payment,
 
                                       6
<PAGE>
when  due, of  all principal  and interest. (SEE  SECTION 3.)  The portfolios of
National and State  Trusts consist  of long-term  (approximately 15  to 40  year
maturities)   obligations;  those   of  Long  Intermediate   Trusts  consist  of
intermediate to long term (approximately 11 to 19 year maturities)  obligations;
those of Intermediate Trusts consist of intermediate term (approximately 5 to 15
year  maturities)  obligations; those  of Short  Intermediate Trusts  consist of
short to intermediate term (approximately  3 to 7 year maturities)  obligations;
and  those of Short Term Trusts consist of short term (approximately 1 to 5 year
maturities) obligations.  There is,  of course,  no guarantee  that the  Trusts'
objectives  will  be achieved.  For  a comparison  of  net after-tax  return for
various tax  brackets  see  the "Taxable  Equivalent  Estimated  Current  Return
Tables" included in this Prospectus.
 
    Each  Trust consists  of fixed-rate  municipal debt  obligations. Because of
this an investment in a Trust should be made with an understanding of the  risks
which an investment in such debt obligations may entail, including the risk that
the  value of the debt obligations and  therefore of the Units will decline with
increases in  interest  rates. In  general,  the  longer the  period  until  the
maturity  of a  Bond, the more  sensitive its  value will be  to fluctuations in
interest rates. During the past decade, there have been substantial fluctuations
in interest  rates, and,  accordingly, in  the value  of debt  obligations.  The
Sponsor cannot predict whether such fluctuations will recur.
 
3.  SUMMARY OF PORTFOLIOS
 
In  selecting  Bonds for  the respective  Trusts,  the following  factors, among
others, were considered:  (i) the Standard  & Poor's Corporation  rating of  the
Bonds  or the Moody's Investors Service, Inc. rating of the Bonds (see Section 2
for a description  of minimum rating  standards), (ii) the  prices of the  Bonds
relative   to  other  bonds  of  comparable  quality  and  maturity,  (iii)  the
diversification of Bonds as to purpose of issue and location of issuer, (iv) the
maturity dates of the Bonds, and (v) in the case of the Insured Trusts only, the
availability of Municipal Bond Investors Assurance Corporation insurance on such
Bonds.
 
    In order for Bonds in the Insured  Trusts to be eligible for Municipal  Bond
Investors Assurance Corporation insurance, they must have credit characteristics
which,  in the opinion of the insurer,  would qualify them as "investment grade"
obligations. Insurance is not  a substitute for the  basic credit of an  issuer,
but  supplements the existing credit  and provides additional security therefor.
(SEE SECTION 5.)
 
    Certain bonds may carry a "mandatory put" (also referred to as a  "mandatory
tender"  or "mandatory repurchase") feature pursuant to which the holder of such
bonds will receive payment of the full principal amount thereof on a stated date
prior to the maturity date unless  such holder affirmatively acts to retain  the
bond.  Under the Indenture,  the Trustee does  not have the  authority to act to
retain Bonds with  such features; accordingly,  it will receive  payment of  the
full  principal amount of any such Bonds on the stated put date and such date is
therefore treated as the maturity date of such Bonds in selecting Bonds for  the
respective  Trusts and for  purposes of calculating the  average maturity of the
Bonds in any Trust.
 
                                       7
<PAGE>
   
NATIONAL TRADITIONAL TRUST 531
    
   
    The  Portfolio of  National Traditional Trust  531 consists of  14 long term
(approximately 15 to 40 year maturities) obligations issued by entities  located
in  11  states.  Three  Bonds  in  the  Trust  are  general  obligations  of the
governmental entities issuing them and are backed by the taxing powers  thereof.
Eleven  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; College and University Revenue,  1;
Electrical  System  Revenue, 2;  Health  Care Facility  Revenue,  4; Combination
Utility Revenue, 1; Water and/or Sewer Revenue, 2. Thirteen issues in the  Trust
were  rated by Standard & Poor's  Corporation as follows: 4--AAA, 1--AA+, 3--AA,
1--A+, 2--A, 2--A-.  Fourteen issues  were rated by  Moody's Investors  Service,
Inc.  as  follows:  4--Aaa,  5--Aa, 1--A1,  4--A.  Twenty-three  percent  of the
principal amount of Bonds in the Trust consists of issues of entities located in
the State of  Illinois; such concentration  may involve more  risk than if  such
Bonds were issued by issuers located in several states.
    
 
   
    At  the Date of Deposit,  the average maturity of  the Bonds in the National
Traditional Trust is 27.2 years. The average maturity of the Bonds in a Trust is
calculated based upon the stated maturities of the Bonds in such Trust (or, with
respect to Bonds for  which funds or  securities have been  placed in escrow  to
redeem such Bonds on a stated call date, based upon such call date). The average
maturity  of the Bonds in a Trust may  increase or decrease from time to time as
Bonds mature or are called or sold.
    
 
   
    Approximately 17.5% of the  aggregate principal amount of  the Bonds in  the
Trust (accounting for approximately 16.2% of the aggregate offering price of the
Bonds)    are   original    issue   discount    bonds.   See    "GENERAL   TRUST
INFORMATION--ORIGINAL ISSUE  DISCOUNT  BONDS  AND STRIPPED  OBLIGATIONS"  for  a
discussion  of the  characteristics of  such bonds  and of  the risks associated
therewith.
    
 
    Approximately 25% of  the aggregate  principal amount  of the  Bonds in  the
Trust  are  obligations of  issuers whose  revenues  are primarily  derived from
hospitals or other health  care services. The source  of payment for certain  of
these  Bonds, accounting for 8% of the Trust (included in the above percentage),
is insured by  a commercial insurer.  Consequently, the credit  ratings of  such
Bonds  essentially  reflect  the strength  of  the insurance  or  guarantee and,
depending upon the actual structure of the bond issue, are typically rated "Aaa"
or "Aa" by Moody's or "AAA" or "AA" by Standard & Poor's.
 
    For a discussion of  the risks associated with  investments in the bonds  of
various issuers, see "General Trust Information" in this section.
 
   
    The  Sponsor entered into contracts  to acquire the Bonds  on June 20, 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>
  $9,595,349       $28,048           $599,000      $9,574,334                 .49%
</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 Traditional
 
                                       8
<PAGE>
   
Trust,  less estimated expenses, is  estimated to accrue at  the rate of $.01621
per Unit per day  under the semi-annual plan  of distribution, $.01615 per  Unit
per  day under the quarterly  plan of distribution and  $.01606 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 Traditional Trust
under the various plans appear in  the following table based upon estimated  Net
Annual Interest Income at the Date of Deposit:
 
<TABLE>
<CAPTION>
                                                                                                          Normal
                                                                                                      Distributions
National Traditional Trust                        1994                             1995                  per Year
<S>                                     <C>            <C>            <C>            <C>            <C>
- ----------------------------------------------------------------------------------------------------  --------------
Record Date*..........................        8/1           11/1            2/1            5/1
Distribution Date.....................       8/15          11/15           2/15           5/15
- --------------------------------------------------------------------------------------------------------------------
Monthly Distribution Plan.............  $   .6424(1)                                                  $  5.7846
                                                          --------  $.4818 every month  --------
Quarterly Distribution Plan...........  $   .6424(1)   $  1.4535(2)   $  1.4535      $  1.4535        $  5.8166
Semi-Annual Distribution Plan.........  $   .6424(1)   $  1.4589(3)                  $  2.9178        $  5.8356
- --------------------------------------------------------------------------------------------------------------------
<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)  The second distribution  under the semi-annual distribution  plan represents a  3-month distribution; subsequent semi-annual
    distributions will be regular 6-month distributions.
</TABLE>
 
    The accrual amounts set forth above, and  in turn the amount of interest  to
be  distributed annually per Unit, will  generally change as Bonds are redeemed,
mature or are sold or as fees and expenses increase or decrease.
 
TAX STATUS--NATIONAL TRADITIONAL TRUST
 
    For a discussion of the tax status of income earned on National  Traditional
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
June 21, 1994
NATIONAL TRADITIONAL TRUST 531
(Series 735)
    
 
<TABLE>
<CAPTION>
                                                                                          Ratings(3)           Trustee's
                                                                      Optional       ---------------------   Determination
 Aggregate        Name of Issuer and Title of Issue Represented      Redemption       Standard                of Offering
  Principal        by Sponsor's Contracts to Purchase Bonds(1)      Provisions(2)     & Poor's    Moody's      Price(4)
<C>          <C> <S>                                              <C>                <C>         <C>        <C>
- ---------------------------------------------------------------------------------------------------------------------------
$   750,000      The Water Works and Sewer Board of the City of      2003 at 102         AA         Aa      $       735,585
                   Birmingham (Alabama), Water and Sewer Revenue
                   Refunding Bonds, Series 1993-A, 6.00% Due
                   1/1/20.
    750,000      State Public Works Board of the State of            2003 at 102         A          A1              657,975
                   California, Lease Revenue Bonds (The Regents
                   of the University of California), 1993 Series
                   B (Various University of California
                   Projects), 5.50% Due 6/1/19.
    250,000      City of West Covina (California), Certificates      2004 at 102         A           A              250,000
                   of Participation, Queen of the Valley
                   Hospital, 6.50% Due 8/15/24. (Original issue
                   discount bonds delivered on or about May 31,
                   1994 at a price of 94.333% of principal
                   amount.)
    750,000      City of Colorado Springs, Colorado, Utilities       2002 at 100         AA         Aa              747,510
                   System Refunding Revenue Bonds, Series 1992A,
                   6.125% Due 11/15/20.
    750,000      Downtown Development Authority of the City of       2002 at 102         AA         Aa              755,558
                   Atlanta (Georgia), Refunding Revenue Bonds
                   (Underground Atlanta Project), Series 1992,
                   6.25% Due 10/1/16. (General Obligation
                   Bonds.)
    750,000      Illinois Health Facilities Authority Revenue        2004 at 102        AAA         Aaa             726,908
                   Bonds, Series 1994A (The University of
                   Chicago Hospitals Project), 6.125% Due
                   8/15/26. (MBIA Insured.)
    750,000      Illinois Health Facilities Authority, Revenue       2003 at 102         A-          A              649,125
                   Refunding Bonds, Series 1993 (Illinois
                   Masonic Medical Center), 5.50% Due 10/1/19.
                   (Original issue discount bonds delivered on
                   or about November 18, 1993 at a price of
                   94.719% of principal amount.)
    750,000      Regional Transportation Authority, Cook,            2004 at 102        AAA         Aaa             744,938
                   DuPage, Kane, Lake, McHenry and Will Counties
                   (Illinois), General Obligation Bonds, Series
                   1994A, 6.25% Due 6/1/24. (AMBAC Insured.)
    750,000      Massachusetts Bay Transportation Authority,         2004 at 102         A+          A              719,550
                   General Transportation System Bonds, 1994
                   Series B Bonds, 5.90% Due 3/1/24. (General
                   Obligation Bonds.) (When issued.)
    750,000      The Pollution Control Financing Authority of        2004 at 102        AAA         Aaa             743,438
                   Salem County (New Jersey), Pollution Control
                   Revenue Refunding Bonds of 1994 Series B
                   (Public Service Electric and Gas Company
                   Project), 6.25% Due 6/1/31. (When issued.)
                   (MBIA Insured.)
    750,000      New York State Environmental Facilities             2004 at 102         A-         Aa              730,650
                   Corporation, State Water Pollution Control,
                   Revolving Fund Revenue Bonds, Series 1994A
                   (New York City Municipal Water Finance
                   Authority Project)(Second Resolution Bonds),
                   5.875% Due 6/15/14.
</TABLE>
 
                                       11
<PAGE>
   
NATIONAL TRADITIONAL TRUST 531 (Continued)
    
<TABLE>
<CAPTION>
                                                                                          Ratings(3)           Trustee's
                                                                      Optional       ---------------------   Determination
 Aggregate        Name of Issuer and Title of Issue Represented      Redemption       Standard                of Offering
  Principal        by Sponsor's Contracts to Purchase Bonds(1)      Provisions(2)     & Poor's    Moody's      Price(4)
- ---------------------------------------------------------------------------------------------------------------------------
<C>          <C> <S>                                              <C>                <C>         <C>        <C>
$                                                                                                           $
    750,000      Piedmont Municipal Power Agency (South              2003 at 102        AAA         Aaa             751,875
                   Carolina), Electric Revenue Bonds, 1992
                   Refunding Series, 6.30% Due 1/1/22. (MBIA
                   Insured.)
    750,000      Harris County, Texas, Toll Road Unlimited Tax       2004 at 102        AA+         Aa              750,000
                   and Subordinate Lien Revenue Bonds, Series
                   1994A, 6.125% Due 8/15/20. (General
                   Obligation Bonds.)
    750,000      Industrial Development Authority of Albemarle       2003 at 102         --          A              660,285
                   County, Virginia, Hospital Refunding Revenue
                   Bonds (Martha Jefferson Hospital), Series
                   1993, 5.50% Due 10/1/20. (Original issue
                   discount bonds delivered on or about July 1,
                   1993 at a price of 93.313% of principal
                   amount.)
- -----------                                                                                                 ---------------
$10,000,000                                                                                                 $     9,623,397
- -----------                                                                                                 ---------------
- -----------                                                                                                 ---------------
</TABLE>
 
See Notes to Schedules of Investments, page 42.
 
                                       12
<PAGE>
   
INTERMEDIATE INSURED TRUST 75
    
 
   
    The  Portfolio of Intermediate Insured Trust  75 consists of 11 intermediate
term (approximately  5 to  15 year  maturities) obligations  issued by  entities
located  in  9 states  and one  obligation issued  by an  entity located  in the
District of Columbia.  Six Bonds  in the Trust  are general  obligations of  the
governmental  entities issuing them and are backed by the taxing powers thereof.
Six 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:
College and University Revenue, 1; Transportation Facility Revenue, 1; Municipal
Lease  Revenue, 2; Water and/or Sewer Revenue, 2. All of the Bonds in the Trust,
as insured, are rated AAA  by Standard & Poor's  Corporation and Aaa by  Moody's
Investors  Service, Inc. Twenty percent of the  principal amount of Bonds in the
Trust consists of issues of entities located in the State of Massachusetts; 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
Intermediate Insured Trust is 10.0 years. The average maturity of the Bonds in a
Trust is calculated based upon the stated maturities of the Bonds in such  Trust
(or,  with respect to  Bonds for which  funds or securities  have been placed in
escrow to redeem such Bonds on a  stated call date, based upon such call  date).
The  average maturity of the Bonds in a Trust may increase or decrease from time
to time as Bonds mature or are called or sold.
    
 
   
    Approximately 1.0% of  the aggregate principal  amount of the  Bonds in  the
Trust  (accounting for approximately .6% of  the aggregate offering price of the
Bonds) are  original issue  discount obligations.  All of  these original  issue
discount bonds are "zero coupon" bonds. See "GENERAL TRUST INFORMATION--ORIGINAL
ISSUE  DISCOUNT  BONDS  AND  STRIPPED  OBLIGATIONS"  for  a  discussion  of  the
characteristics of such bonds and of the risks associated therewith.
    
 
    Approximately 20% of  the aggregate  principal amount  of the  Bonds in  the
Trust consists of municipal lease obligations.
 
    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  28,
1994  and June 20, 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>
  $9,738,734       $26,425           $506,935      $9,727,784                 .37%
</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.
 
                                       13
<PAGE>
   
    Unitholders  may elect  to have  interest distributions  made on  a monthly,
quarterly or semi-annual basis. The interest on the Bonds initially deposited in
the Intermediate Insured Trust, less estimated expenses, is estimated to  accrue
at  the  rate  of  $.01366  per  Unit per  day  under  the  semi-annual  plan of
distribution, $.01361 per Unit per day under the quarterly plan of  distribution
and  $.01352 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 Intermediate 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
Intermediate Insured Trust                        1994                             1995                  per Year
<S>                                     <C>            <C>            <C>            <C>            <C>
- ----------------------------------------------------------------------------------------------------  --------------
Record Date*..........................        8/1           11/1            2/1            5/1
Distribution Date.....................       8/15          11/15           2/15           5/15
- --------------------------------------------------------------------------------------------------------------------
Monthly Distribution Plan.............  $   .5408(1)                                                  $  4.8681
                                                          --------  $.4056 every month  --------
Quarterly Distribution Plan...........  $   .5408(1)   $  1.2249(2)   $  1.2249      $  1.2249        $  4.9001
Semi-Annual Distribution Plan.........  $   .5408(1)   $  1.2294(3)                  $  2.4588        $  4.9191
- --------------------------------------------------------------------------------------------------------------------
<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)  The second distribution  under the semi-annual distribution  plan represents a  3-month distribution; subsequent semi-annual
    distributions will be regular 6-month distributions.
</TABLE>
 
    The accrual amounts set forth above, and  in turn the amount of interest  to
be  distributed annually per Unit, will  generally change as Bonds are redeemed,
mature or are sold or as fees and expenses increase or decrease.
 
TAX STATUS--INTERMEDIATE INSURED TRUST
 
    For a discussion of the tax status of income earned on Intermediate  Insured
Trust Units, See Section 11.
 
   
ESTIMATED MONTHLY CASH FLOW TABLE FOR INTERMEDIATE INSURED TRUST 75
    
 
   
    Following  is an Estimated  Monthly Cash Flow  Table for the above-captioned
Trust. As discussed below, the Table assumes  that the Bonds will remain in  the
Trust  until the date to which each bond is priced under accepted bond practice.
The Table is based on data and assumptions as to maturity and redemption  dates,
bond  pricing dates and  call dates, if any,  as of the date  of deposit, and is
thus subject to  change. Accordingly,  Unitholders should not  assume that  they
will in fact receive cash in the amounts and on the dates specified in the Table
and the Table cannot be used to predict the exact amount of distributions by the
Trust.
    
 
    The   Table  shows  the  amount  of  each  month's  interest  and  principal
distributions on one Unit  of the Trust if  every bond in the  Trust were to  be
redeemed  on the  date to which  it is priced  (the " 'priced  to' date"). Under
accepted bond  pricing practice,  tax-exempt bonds  are customarily  offered  to
investors  on a "yield price" basis,  which involves computation of yield either
to maturity or to an  earlier call date, whichever  produces the lower yield.  A
bond  whose market value exceeds its par value (a "premium bond") will generally
be priced to its
 
                                       14
<PAGE>
call date, if any;  in other words, its  "priced to" date is  its call date.  In
contrast, the "priced to" date for discount bonds will generally be the maturity
date.  This Table,  upon application  of accepted  Bond practice,  illustrates a
pricing to maturity date despite  the existence of optional redemption  features
for  some of the Bonds. There  can be no assurance that  every Bond will in fact
remain in the Trust until maturity. Some Bonds may be sold by the Trustee before
maturity, either to pay Unitholders who have redeemed their Units or pursuant to
the Sponsor's continuing program  of credit surveillance.  Certain Bonds may  be
subject  to sinking fund redemptions or extraordinary redemptions, as more fully
described below  at "Composition  of Trusts--Sale,  maturity and  redemption  of
bonds", as well as optional redemptions set forth in the Schedule of Investments
on page 19.
 
    The  Trust's actual cash flow will depend  on (1) the actual call experience
of the Bonds in the Trust's portfolio, which in turn will depend on the  factors
described  above, (2)  the extent  to which Bonds  are sold  as a  result of the
Sponsor's continuing program of credit surveillence, and (3) the extent to which
Bonds are sold or the proceeds of Bond calls or sales are used to pay for  units
redeemed. For the reasons above, it is unlikely that interest and principal will
be distributed in the amounts and on the dates indicated in the Table.
 
            ESTIMATED PRINCIPAL AND INTEREST DISTRIBUTIONS PER UNIT
<TABLE>
<CAPTION>
  Month                     Monthly
  /Year                     Option
- ---------                 -----------
<S>        <C>            <C>
                           $
 Jul 94                       0.0000
 Aug 94                       0.5408
 Sep 94                       0.4056
 Oct 94                       0.4056
 Nov 94                       0.4056
 Dec 94                       0.4056
 Jan 95                       0.4056
 Feb 95                       0.4056
 Mar 95                       0.4056
 Apr 95                       0.4056
 May 95                       0.4056
 Jun 95                       0.4056
 Jul 95                       0.4056
 Aug 95                       0.4056
 Sep 95                       0.4056
 Oct 95                       0.4056
 Nov 95                       0.4056
 Dec 95                       0.4056
 Jan 96                       0.4056
 Feb 96                       0.4056
 Mar 96                       0.4056
 Apr 96                       0.4056
 May 96                       0.4056
 Jun 96                       0.4056
 Jul 96                       0.4056
 Aug 96                       0.4056
 Sep 96                       0.4056
 Oct 96                       0.4056
 Nov 96                       0.4056
 Dec 96                       0.4056
 Jan 97                       0.4056
 Feb 97                       0.4056
 Mar 97                       0.4056
 Apr 97                       0.4056
 May 97                       0.4056
 Jun 97                       0.4056
 
<CAPTION>
  Month                     Monthly
  /Year                     Option
- ---------                 -----------
<S>        <C>            <C>
                           $
 Jul 97                       0.4056
 Aug 97                       0.4056
 Sep 97                       0.4056
 Oct 97                       0.4056
 Nov 97                       0.4056
 Dec 97                       0.4056
 Jan 98                       0.4056
 Feb 98                       0.4056
 Mar 98                       0.4056
 Apr 98                       0.4056
 May 98                       0.4056
 Jun 98                       0.4056
 Jul 98                       0.4056
 Aug 98                       0.4056
 Sep 98                       0.4056
 Oct 98                       0.4056
 Nov 98                       0.4056
 Dec 98                       0.4056
 Jan 99                       0.4056
 Feb 99                       0.4056
 Mar 99                       0.4056
 Apr 99                       0.4056
 May 99                       0.4056
 Jun 99                       0.4056
 Jul 99                       0.4056
 Aug 99                       0.4056
 Sep 99                       0.4056
 Oct 99                       0.4056
 Nov 99                       0.4056
 Dec 99                       0.4056
 Jan 00                       0.4056
 Feb 00                       0.4056
 Mar 00                       0.4056
 Apr 00                       0.4056
 May 00                       0.4056
 Jun 00                       0.4056
</TABLE>
 
                                       15
<PAGE>
<TABLE>
<CAPTION>
  Month                     Monthly
  /Year                     Option
- ---------                 -----------
                           $
<S>        <C>            <C>
 Jul 00                       0.4056
 Aug 00                       0.4056
 Sep 00                       0.4056
 Oct 00                       0.4056
 Nov 00                       0.4056
 Dec 00                       0.4056
 Jan 01                       0.4056
 Feb 01                       0.4056
 Mar 01                       0.4056
 Apr 01                       0.4056
 May 01                       0.4056
 Jun 01                       0.4056
 Jul 01                       0.4056
 Aug 01                       0.4056
 Sep 01                       0.4056
 Oct 01                       0.4056
 Nov 01                       0.4056
 Dec 01                       0.4056
 Jan 02                       0.4056
 Feb 02                       0.4056
 Mar 02                       0.4056
 Apr 02                       0.4056
 May 02                       0.4056
 Jun 02                       0.4056
 Jul 02                       0.4056
 Aug 02                       0.4056
 Sep 02                       0.4056
 Oct 02                       0.4056
<CAPTION>
  Month                     Monthly
  /Year                     Option
- ---------                 -----------
<S>        <C>            <C>
                           $
 Nov 02                       0.4056
 Dec 02                       0.4056
 Jan 03                       0.4056
 Feb 03                       0.4056
 Mar 03                       0.4056
 Apr 03                       0.4056
 May 03                       0.4056
 Jun 03                       0.4056
 Jul 03                       1.4056
 Aug 03                       0.4058
 Sep 03                       0.4058
 Oct 03                       0.4058
 Nov 03                       0.4058
 Dec 03                       5.3058
 Jan 04                       0.3844
 Feb 04                      10.3844
 Mar 04                      10.3444
 Apr 04                       0.3019
 May 04                      10.3019
 Jun 04                      10.2636
 Jul 04                      30.2219
 Aug 04                      10.0986
 Sep 04                       0.0594
 Oct 04                       0.0594
 Nov 04                       0.0594
 Dec 04                      10.0594
 Jan 05                       4.1174
</TABLE>
 
                                       16
<PAGE>
NATIONALLY DIVERSIFIED TRUST TAXABLE ESTIMATED CURRENT RETURN TABLE
(INTERMEDIATE INSURED TRUST)
 
    The  following tables show the approximate taxable estimated current returns
for individuals  that are  equivalent to  tax-exempt estimated  current  returns
under  published  1994  marginal  Federal  tax  rates.  The  tables  incorporate
increased tax  rates for  higher-income tax  payers that  were included  in  the
Revenue Reconciliation Act of 1993. The tables illustrate what you would have to
earn on taxable investments to equal the tax-exempt estimated current return for
your  income tax bracket. A taxpayer's marginal tax rate is affected by both his
taxable income and his adjusted gross income. Locate your adjusted gross  income
and  your taxable  income (which  is your adjusted  gross income  reduced by any
deductions and  exemptions), then  locate your  tax bracket  based on  joint  or
single  tax  filing. Read  across to  the  equivalent taxable  estimated current
return you would need to match the tax-free income.
 
  MARGINAL FEDERAL TAX RATES FOR JOINT TAXPAYERS WITH FOUR PERSONAL EXEMPTIONS
- --------------------------------------------------------------------------------
 
<TABLE>
<CAPTION>
                  Federal
    Federal      Adjusted
    Taxable        Gross                                   Tax-Exempt Estimated Current Return
    Income        Income        Federal       --------------------------------------------------------------
   (1,000's)     (1,000's)     Tax Rate1      4.00%   4.25%   4.50%   4.75%   5.00%   5.25%   5.50%   5.75%
 ------------- -------------  -----------     ------  ------  ------  ------  ------  ------  ------  ------
 <S>           <C>            <C>             <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
 $     0- 38.0 $     0-111.8      15.0   %     4.71    5.00    5.29    5.59    5.88    6.18    6.47    6.76
    38.0- 91.9       0-111.8      28.0         5.56    5.90    6.25    6.60    6.94    7.29    7.64    7.99
                 111.8-167.7      29.0         5.63    5.99    6.34    6.69    7.04    7.39    7.75    8.10
    91.9-140.0       0-111.8      31.0         5.80    6.16    6.52    6.88    7.25    7.61    7.97    8.33
                 111.8-167.7      32.0         5.88    6.25    6.62    6.99    7.35    7.72    8.09    8.46
                 167.7-290.2      34.5         6.11    6.49    6.87    7.25    7.63    8.02    8.40    8.78
   140.0-250.0   111.8-167.7      37.0         6.35    6.75    7.14    7.54    7.94    8.33    8.73    9.13
                 167.7-290.2      40.0         6.67    7.08    7.50    7.92    8.33    8.75    9.17    9.58
                  Over 290.2      37.0   2     6.35    6.75    7.14    7.54    7.94    8.33    8.73    9.13
    Over 250.0   167.7-290.2      44.0         7.14    7.59    8.04    8.48    8.93    9.38    9.82   10.27
                  Over 290.2      41.0   3     6.78    7.20    7.63    8.05    8.47    8.90    9.32    9.75
</TABLE>
 
  MARGINAL FEDERAL TAX RATES FOR SINGLE TAXPAYERS WITH ONE PERSONAL EXEMPTION
- --------------------------------------------------------------------------------
 
<TABLE>
<CAPTION>
                  Federal
    Federal      Adjusted
    Taxable        Gross                                   Tax-Exempt Estimated Current Return
    Income        Income        Federal       --------------------------------------------------------------
   (1,000's)     (1,000's)     Tax Rate1      4.00%   4.25%   4.50%   4.75%   5.00%   5.25%   5.50%   5.75%
 ------------- -------------  -----------     ------  ------  ------  ------  ------  ------  ------  ------
 <S>           <C>            <C>             <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
 $     0- 22.8 $     0-111.8      15.0   %     4.71    5.00    5.29    5.59    5.88    6.18    6.47    6.76
    22.8- 55.1       0-111.8      28.0         5.56    5.90    6.25    6.60    6.94    7.29    7.64    7.99
    55.1-115.0       0-111.8      31.0         5.80    6.16    6.52    6.88    7.25    7.61    7.97    8.33
                 111.8-234.3      32.5         5.93    6.30    6.67    7.04    7.41    7.78    8.15    8.52
   115.0-250.0   111.8-234.3      38.0         6.45    6.85    7.26    7.66    8.06    8.47    8.87    9.27
                  Over 234.3      37.0   2     6.35    6.75    7.14    7.54    7.94    8.33    8.73    9.13
    Over 250.0    Over 234.3      41.0   3     6.78    7.20    7.63    8.05    8.47    8.90    9.32    9.75
<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>
 
                                       17
<PAGE>
    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.
 
                                       18
<PAGE>
   
Nuveen Tax-Exempt Unit Trust
Schedule of Investments at Date of Deposit
June 21, 1994
INTERMEDIATE INSURED TRUST 75
(Series 735)
    
 
<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>
- ---------------------------------------------------------------------------------------------------------------------------
$   100,000      North Slope Borough, Alaska, General Obligation  No Optional Call      AAA         Aaa     $        61,282
                   Bonds, Series 1992A, 0.00% Due 6/30/03.
                   (Original issue discount bonds delivered on
                   or about September 1, 1992 at a price of
                   52.714% of principal amount.)
  1,000,000      Tucson Unified School District No. 1 of Pima     No Optional Call      AAA         Aaa             965,400
                   County, Arizona, Refunding Bonds, Series
                   1993, 4.90% Due 7/1/04. (General Obligation
                   Bonds.)
  1,000,000      District of Columbia (Washington, D.C.),         No Optional Call      AAA         Aaa             977,220
                   General Obligation Refunding Bonds, Series
                   1993B, 5.20% Due 6/1/04.
    410,000      City of Chicago (Illinois), Wastewater           No Optional Call      AAA         Aaa             403,502
                   Transmission Revenue Bonds, Refunding Series
                   1993, 5.30% Due 1/1/05.
  1,000,000      Public Building Commission of Chicago            No Optional Call      AAA         Aaa             988,110
                   (Illinois), Building Revenue Bonds, Series A
                   of 1993 (Board of Education of the City of
                   Chicago), 5.25% Due 12/1/04. (General
                   Obligation Bonds.)
  1,000,000      Louisville and Jefferson County Metropolitan        2003 at 102        AAA         Aaa             958,100
                   Sewer District (Commonwealth of
                   Kentucky),Sewer and Drainage System Revenue
                   Bonds, Series 1993, 4.80% Due 5/15/04.
  1,000,000      Board of Supervisors of Louisiana State          No Optional Call      AAA         Aaa             992,310
                   University and Agricultural and Mechanical
                   College Auxiliary Revenue Bonds, Series 1994,
                   5.30% Due 7/1/04. (When issued.)
  1,000,000      Massachusetts Bay Transportation Authority,      No Optional Call      AAA         Aaa             996,170
                   General Transportation System Bonds, Series A
                   Refunding Bonds, 5.30% Due 3/1/04. (General
                   Obligation Bonds.) (When issued.)
  1,000,000      The Commonwealth of Massachusetts, General          2003 at 102        AAA         Aaa             965,150
                   Obligation Refunding Bonds, 1993 Series C,
                   4.90% Due 8/1/04.
    490,000      Charter County of Wayne, Michigan, Airport       No Optional Call      AAA         Aaa             495,385
                   Revenue Refunding Bonds (Detroit Metropolitan
                   Wayne County Airport), Series 1994A, 5.45%
                   Due 12/1/03.
  1,000,000      Metropolitan Transportation Authority (New       No Optional Call      AAA         Aaa             992,280
                   York), Transit Facilities 1987 Service
                   Contract Bonds, Series 7, 5.20% Due 7/1/04.
  1,000,000      Rhode Island Public Buildings Authority, State      2003 at 102        AAA         Aaa             970,250
                   Public Projects Revenue Bonds, 1993 Series A,
                   5.00% Due 2/1/04.
- -----------                                                                                                 ---------------
$10,000,000                                                                                                 $     9,765,159
- -----------                                                                                                 ---------------
- -----------                                                                                                 ---------------
</TABLE>
 
See Notes to Schedules of Investments, page 42.
 
                                       19
<PAGE>
   
CALIFORNIA INSURED TRUST 227
    
 
   
    The  Portfolio of  California Insured  Trust 227  consists of  6 obligations
issued by entities located in California and one obligation issued by an  entity
located  in the  Territory of Puerto  Rico. Two  Bonds in the  Trust are general
obligations of the  governmental entities  issuing them  and are  backed by  the
taxing  powers thereof. Five 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, 1; Health Care Facility Revenue, 1; Water and/or Sewer Revenue,
2. All of the Bonds in the Trust, as insured, are rated AAA by Standard & Poor's
Corporation and Aaa by Moody's Investors Service, Inc.
    
 
   
    At the Date of Deposit, the average maturity of the Bonds in the  California
Insured  Trust is 27.9  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 14.3% of the  aggregate principal amount of  the Bonds in  the
Trust (accounting for approximately 13.6% of the aggregate offering price of the
Bonds)    are   original    issue   discount    bonds.   See    "GENERAL   TRUST
INFORMATION--ORIGINAL ISSUE  DISCOUNT  BONDS  AND STRIPPED  OBLIGATIONS"  for  a
discussion  of the  characteristics of  such bonds  and of  the risks associated
therewith.
    
 
    Approximately 29% of  the aggregate  principal amount  of the  Bonds in  the
Trust  consists of obligations  of issuers whose  revenues are primarily derived
from the sale of water and/or sewerage services.
 
    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 June 17,
1994 and June 20, 1994. The  following summarizes certain information about  the
Bonds as of the business day prior to the Date of Deposit:
    
 
<TABLE>
<CAPTION>
                                                                  Difference between Trustee's
                                                               Determination of Offering Price and
   Cost to    Profit (or loss)   Annual Interest   Bid Price              the Bid Price
   Sponsor       to Sponsor      Income to Trust    of Bonds       (as % of principal amount)
  ----------  -----------------  ----------------  ----------  -----------------------------------
  <S>         <C>                <C>               <C>         <C>
  $3,228,046       $7,799            $196,000      $3,218,345                 .50%
</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 California Insured Trust, less estimated expenses, is estimated to accrue at
the rate of $.01507 per Unit per day under the semi-annual plan of distribution,
$.01501 per Unit per day under the
    
 
                                       20
<PAGE>
   
quarterly  plan of distribution and  $.01493 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 California 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
California Insured Trust                          1994                             1995                  per Year
<S>                                     <C>            <C>            <C>            <C>            <C>
- ----------------------------------------------------------------------------------------------------  --------------
Record Date*..........................        8/1           11/1            2/1            5/1
Distribution Date.....................       8/15          11/15           2/15           5/15
- --------------------------------------------------------------------------------------------------------------------
Monthly Distribution Plan.............  $   .5972(1)                                                  $  5.3750
                                                          --------  $.4479 every month  --------
Quarterly Distribution Plan...........  $   .5972(1)   $  1.3509(2)   $  1.3509      $  1.3509        $  5.4070
Semi-Annual Distribution Plan.........  $   .5972(1)   $  1.3563(3)                  $  2.7126        $  5.4260
- --------------------------------------------------------------------------------------------------------------------
<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) The second distribution  under the semi-annual  distribution plan represents a  3-month distribution; subsequent  semi-annual
    distributions will be regular 6-month distributions.
</TABLE>
 
    The  accrual amounts set forth above, and  in turn the amount of interest to
be distributed annually per Unit, will  generally change as Bonds are  redeemed,
mature or are sold or as fees and expenses increase or decrease.
 
TAX STATUS--CALIFORNIA INSURED TRUST
 
    For  a discussion of the  Federal tax status of  income earned on California
Insured Trust Units, see Section 11.
 
    In the opinion of Orrick, Herrington & Sutcliffe, special California counsel
to the Series, under existing California income and property tax law  applicable
to individuals who are California residents:
 
        The  California  Insured  Trust  is  not  an  association  taxable  as a
    corporation and the income of the  California Insured Trust will be  treated
    as the income of the Unitholders under the income tax laws of California.
 
        Interest  on the underlying securities (which may include bonds or other
    obligations issued by the  governments of Puerto  Rico, the Virgin  Islands,
    Guam  or  the  Northern Mariana  Islands)  which  is exempt  from  tax under
    California personal income tax  and property tax laws  when received by  the
    California  Insured  Trust  will,  under such  laws,  retain  its  status as
    tax-exempt interest when  distributed to Unitholders.  However, interest  on
    the  underlying securities attributed to a Unitholder which is a corporation
    subject to the California franchise tax laws may be includable in its  gross
    income for purposes of determining its California franchise tax.
 
        Under  California  income tax  law,  each Unitholder  in  the California
    Insured Trust will have  a taxable event when  the California Insured  Trust
    disposes  of a security (whether by sale, exchange, redemption or payment at
    maturity) or when  the Unitholder  redeems or  sells Units.  Because of  the
    requirement that tax cost basis be
 
                                       21
<PAGE>
    reduced  to reflect amortization of bond premium, under some circumstances a
    Unitholder may realize taxable gain when  Units are sold or redeemed for  an
    amount  equal to, or less  than, their original cost.  The total tax cost of
    each Unit to a Unitholder is allocated among each of the bond issues held in
    the California  Insured Trust  (in  accordance with  the proportion  of  the
    California Insured Trust comprised by each bond issue) in order to determine
    his  per  unit tax  cost for  each bond  issue; and  the tax  cost reduction
    requirements relating to amortization of bond premium will apply  separately
    to  the per unit cost of each bond issue. Unitholders' bases in their Units,
    and the bases for their fractional interest in each California Insured Trust
    asset, may have to be adjusted for their pro rata share of accrued  interest
    received,  if any, on securities delivered after the Unitholders' respective
    settlement dates.
 
        Under the California  personal property tax  laws, bonds (including  the
    bonds  in  the  California  Insured  Trust  as  well  as  "regular-way"  and
    "when-issued" contracts for the purchase  of bonds) or any interest  therein
    is exempt from such tax.
 
        Any  proceeds paid under  the insurance policy issued  to the Trustee of
    the fund with respect to the bonds  in the California Insured Trust as  well
    as "regular-way" and "when-issued" contracts for the purchase of bonds which
    represent  maturing interest  on defaulted  obligations held  by the Trustee
    will be  exempt from  California personal  income tax  if, and  to the  same
    extent  as, such interest would have been so exempt if paid by the issuer of
    the defaulted obligations.
 
        Under Section 17280(b)(2) of the  California Revenue and Taxation  Code,
    interest on indebtedness incurred or continued to purchase or carry Units of
    the  California  Insured Trust  is not  deductible for  the purposes  of the
    California personal  income  tax. While  there  presently is  no  California
    authority  interpreting  this  provision,  Section  17280(b)(2)  directs the
    California Franchise  Tax Board  to  prescribe regulations  determining  the
    proper  allocation and apportionment of interest costs for this purpose. The
    Franchise Tax Board has not yet proposed or prescribed such regulations.  In
    interpreting  the generally similar Federal  provision, the Internal Revenue
    Service has taken the position that  such indebtedness need not be  directly
    traceable to the purchase or carrying of Units (although the Service has not
    contended that a deduction for interest on indebtedness incurred to purchase
    or  improve  a  personal residence  or  to  purchase goods  or  services for
    personal consumption  will be  disallowed). In  the absence  of  conflicting
    regulations  or  other California  authority,  the California  Franchise Tax
    Board generally  has  interpreted  California statutory  tax  provisions  in
    accord  with  Internal Revenue  Service  interpretations of  similar Federal
    provisions.
 
ECONOMIC FACTORS--CALIFORNIA
 
    As described  above, except  to the  extent the  Fund invests  in  temporary
investments,  the Fund will invest substantially all of its assets in California
Municipal Obligations. The Fund is therefore susceptible to political,  economic
or  regulatory factors  affecting issuers  of California  Municipal Obligations.
These include the possible adverse effects of certain California  constitutional
amendments,  legislative measures, voter initiatives  and other matters that are
described below. The following information provides only a brief summary of  the
complex  factors affecting the  financial situation in  California (the "State")
and is derived from  sources that are generally  available to investors and  are
believed  to  be accurate.  No  independent verification  has  been made  of the
accuracy or completeness  of any of  the following information.  It is based  in
part on information obtained from various State and
 
                                       22
<PAGE>
local  agencies in  California or contained  in Official  Statements for various
California Municipal Obligations.
 
    There can  be  no  assurance  that future  statewide  or  regional  economic
difficulties,  and the resulting impact on  State or local governmental finances
generally, will not adversely  affect the market  value of California  Municipal
Obligations  held in  the portfolio  of the  Fund or  the ability  of particular
obligors to  make timely  payments of  debt service  on (or  relating to)  those
obligations.
 
ECONOMIC OVERVIEW
 
    California's  economy is  the largest  among the  50 states  and one  of the
largest in the  world. The State's  population of almost  32 million  represents
12.3%  of the total United States population and grew by 27% in the 1980s. Total
personal income in the State, at an estimated $662 billion in 1992, accounts for
13% of all personal income in the nation. Total employment is almost 14 million,
the majority of which is in the service, trade and manufacturing sectors.
 
    Reports issued by the State Department of Finance and other sources indicate
that the State's economy is suffering its worst recession since the 1930s,  with
prospects  for recovery  slower than for  the nation  as a whole.  The State has
experienced the worst job losses in any postwar recession and employment  levels
are  not expected to stabilize until late 1994 or 1995. Pre-recession job levels
may not be reached until near the end of the decade. The largest job losses have
been in Southern California, led by  declines in the aerospace and  construction
industries. Weakness statewide occurred in manufacturing, construction, services
and  trade and will be hurt  in the next few years  by continued cuts in federal
defense spending and base closures. Unemployment averaged over 9% in 1993 and is
expected to remain high in  1994. The State's economy  is only expected to  pull
out  of  the recession  slowly, following  the the  national recovery  which has
begun. Delay in recovery will exacerbate shortfalls in State revenues.
 
CONSTITUTIONAL LIMITATIONS ON TAXES AND APPROPRIATIONS
 
    LIMITATION  ON  TAXES.  Certain  California  municipal  obligations  may  be
obligations  of issuers which rely in whole  or in part, directly or indirectly,
on AD  VALOREM property  taxes as  a source  of revenue.  The taxing  powers  of
California  local governments and districts are  limited by Article XIIIA of the
California Constitution, enacted  by the voters  in 1978 and  commonly known  as
"Proposition  13." Briefly, Article  XIIIA limits to  1% of full  cash value the
rate of AD VALOREM property taxes  on real property and generally restricts  the
reassessment  of property to 2% per year, except upon new construction or change
of ownership (subject to a number of exemptions). Taxing entities may,  however,
raise  AD VALOREM taxes above the 1% limit to pay debt service on voter-approved
bonded indebtedness.
 
    Under Article XIIIA, the basic 1% AD VALOREM tax levy is applied against the
assessed value of property as of the owner's date of acquisition (or as of March
1, 1975, if acquired earlier), subject  to certain adjustments. This system  has
resulted  in widely  varying amounts  of tax  on similarly  situated properties.
Several lawsuits have  been filed challenging  the acquisition-based  assessment
system of Proposition 13 and on June 18, 1992 the U.S. Supreme Court announced a
decision upholding Proposition 13.
 
    Article  XIIIA prohibits local governments  from raising revenues through AD
VALOREM property  taxes above  the 1%  limit;  it also  requires voters  of  any
governmental  unit to give two-thirds approval  to levy any "special tax." Court
decisions, however, allowed  non-voter approved  levy of  "general taxes"  which
were not dedicated to a specific use. In response to
 
                                       23
<PAGE>
these  decisions, the voters of the State  in 1986 adopted an initiative statute
which imposed significant new limits on  the ability of local entities to  raise
or  levy  general  taxes, except  by  receiving majority  local  voter approval.
Significant elements of this initiative, "Proposition 62," have been  overturned
in  recent court  cases. An  initiative proposed  to re-enact  the provisions of
Proposition 62  as a  constitutional amendment  was defeated  by the  voters  in
November 1990, but such a proposal may be renewed in the future.
 
    APPROPRIATIONS  LIMITS. California and its  local governments are subject to
an annual  "appropriations limit"  imposed by  Article XIIIB  of the  California
Constitution,  enacted  by  the  voters in  1979  and  significantly  amended by
Propositions 98 and 111 in 1988 and 1990, respectively. Article XIIIB  prohibits
the  State or any covered local government from spending "appropriations subject
to limitation" in  excess of the  appropriations limit imposed.  "Appropriations
subject  to limitation" are  authorizations to spend  "proceeds of taxes," which
consists of  tax  revenues and  certain  other funds,  including  proceeds  from
regulatory  licenses,  user  charges or  other  fees,  to the  extent  that such
proceeds exceed the cost of providing  the product or service, but "proceeds  of
taxes" excludes most State subventions to local governments. No limit is imposed
on appropriations of funds which are not "proceeds of taxes," such as reasonable
user charges or fees, and certain other non-tax funds, including bond proceeds.
 
    Among  the  expenditures not  included in  the Article  XIIIB appropriations
limit are (1)  the debt  service cost  of bonds  issued or  authorized prior  to
January  1, 1979, or  subsequently authorized by  the voters, (2) appropriations
arising from certain  emergencies declared by  the Governor, (3)  appropriations
for  certain  capital  outlay  projects,  (4)  appropriations  by  the  State of
post-1989  increases  in  gasoline  taxes  and  vehicle  weight  fees,  and  (5)
appropriations made in certain cases of emergency.
 
    The  appropriations  limit for  each year  is  adjusted annually  to reflect
changes in  cost  of  living  and  population,  and  any  transfers  of  service
responsibilities  between government units. The definitions for such adjustments
were liberalized in 1990 to follow more closely growth in California's economy.
 
    "Excess" revenues are measured over a two-year cycle. Local governments must
return any excess to taxpayers by rate  reduction. The State must refund 50%  of
any excess, with the other 50% paid to schools and community colleges. With more
liberal  annual adjustment factors since 1988, and depressed revenues since 1990
because of the  recession, few  governments are currently  operating near  their
spending  limits, but this condition may change over time. Local governments may
by voter approval exceed their spending limits for up to four years.
 
    Because of the complex nature of Articles XIIIA and XIIIB of the  California
Constitution,  the ambiguities and possible  inconsistencies in their terms, and
the impossibility of predicting future  appropriations or changes in  population
and  cost of living, and  the probability of continuing  legal challenges, it is
not currently possible to determine fully the impact of Article XIIIA or Article
XIIIB on California  Municipal Obligations or  on the ability  of California  or
local  governments to pay debt service on such California Municipal Obligations.
It is not presently  possible to predict the  outcome of any pending  litigation
with  respect  to  the ultimate  scope,  impact or  constitutionality  of either
Article XIIIA or Article  XIIIB, or the impact  of any such determinations  upon
State  agencies or local governments, or upon  their ability to pay debt service
on their obligations. Future initiatives or  legislative changes in laws or  the
California  Constitution  may also  affect  the ability  of  the State  or local
issuers to repay their obligations.
 
                                       24
<PAGE>
    OBLIGATIONS OF THE STATE OF CALIFORNIA. As of April 1, 1994, California  had
approximately  $18.1 billion of  general obligation bonds  outstanding, and $5.6
billion remained authorized  but unissued. In  addition, at June  30, 1993,  the
State  had lease-purchase obligations, payable from the State's General Fund, of
approximately $4.0 billion. Four general obligation bond propositions, totalling
$5.9 billion, will  be on the  June 1994  ballot. In fiscal  year 1992-93,  debt
service  on general obligation  bonds and lease-purchase  debt was approximately
4.1% of General Fund revenues. The State has paid the principal of and  interest
on  its general obligation bonds, lease-purchase debt and short-term obligations
when due.
 
    RECENT FINANCIAL RESULTS. The principal sources of General Fund revenues  in
1992-93  were the  California personal income  tax (44% of  total revenues), the
sales tax (38%), bank and corporation taxes (12%), and the gross premium tax  on
insurance  (3%). California maintains a  Special Fund for Economic Uncertainties
(the "Economic Uncertainties Fund"),  derived from General  Fund revenues, as  a
reserve to meet cash needs of the General Fund.
 
    GENERAL.  Throughout  the 1980's,  State spending  increased rapidly  as the
State population and economy also grew rapidly, including increased spending for
many assistance  programs  to  local  governments,  which  were  constrained  by
Proposition  13 and other laws. The largest State program is assistance to local
public school districts.  In 1988,  an initiative (Proposition  98) was  enacted
which  (subject to suspension  by a two-thirds  vote of the  Legislature and the
Governor) guarantees local  school districts and  community college districts  a
minimum share of State General Fund revenues (currently about 34%).
 
    Since  the  start  of  1990-91  Fiscal Year,  the  State  has  faced adverse
economic, fiscal,  and  budget  conditions.  The  economic  recession  seriously
affected  State tax revenues.  It also caused  increased expenditures for health
and welfare programs.  The State is  also facing a  structural imbalance in  its
budget  with  the largest  programs supported  by  the General  Fund (education,
health, welfare and corrections) growing at  rates higher than the growth  rates
for  the principal revenue sources  of the General Fund.  As a result, the State
entered a period of budget  imbalance, with expenditures exceeding revenues  for
four of the five fiscal years ending in 1991-92.
 
    As  the State fell  into a deep recession  in the summer  of 1990, the State
budget fell sharply  out of  balance in the  1990-91 and  1991-92 fiscal  years,
despite   significant  expenditure  cuts  and   tax  increases.  The  State  had
accumulated a $2.8 billion  budget deficit by June  30, 1992. This deficit  also
severely  reduced the State's cash resources, so that it had to rely on external
borrowing in the short-term markets to meet its cash needs.
 
    1992-93 FISCAL YEAR.  With  the failure to enact a  budget by July 1,  1992,
the State had no legal authority to pay many of its vendors until the budget was
passed;   nevertheless,  certain  obligations  (such  as  debt  service,  school
apportionments, welfare payments, and employee salaries) were payable because of
continuing or  special  appropriations,  or court  orders.  However,  the  State
Controller did not have enough cash to pay as they came due all of these ongoing
obligations, as well as valid obligations incurred in the prior fiscal year.
 
    Because  of the delay in enacting the  budget, the State could not carry out
its normal cash flow borrowing and, starting on July 1, 1992, the Controller was
required to issue  "registered warrants" in  lieu of normal  warrants backed  by
cash   to  pay  many   State  obligations.  Available  cash   was  used  to  pay
constitutionally mandated and priority obligations. Between July 1 and September
3, 1992, the  Controller issued an  aggregate of approximately  $3.8 billion  of
registered  warrants, all  of which were  called for redemption  by September 4,
 
                                       25
<PAGE>
1992 following enactment of the 1992-93 Budget Act and issuance by the State  of
$3.3 billion of Interim Notes.
 
    The 1992-93 Budget Act, when finally adopted, was projected to eliminate the
State's accumulated deficit, with additional expenditure cuts and a $1.3 billion
transfer of State education funding costs to local governments by shifting local
property  taxes to school districts. However,  as the recession continued longer
and deeper than expected,  revenues once again were  far below projections,  and
only  reached a level just equal to  the amount of expenditures. Thus, the State
continued to carry its $2.8 billion budget deficit at June 30, 1993.
 
    The 1993-94  Budget  Act was  similar  to the  prior  year, in  reliance  on
expenditure  cuts  and an  additional $2.6  billion transfer  of costs  to local
government, particularly counties. A major feature of the budget was a  two-year
plan  to eliminate the accumulated deficit  by borrowing into the 1994-95 fiscal
year. With  the recession  still continuing  longer than  expected, the  1994-95
Governor's Budget now projects that in the 1993-94 Fiscal Year, the General Fund
will  have $900 million  less revenue and $800  million higher expenditures than
budgeted. As  a result  revenues will  only exceed  expenditures by  about  $400
million.  If this projection is  met, it will be  the first operating surplus in
four years;  however, some  budget analysts  outside the  Department of  Finance
project revenues in the balance of 1993-94 will not even meet the revised, lower
projection.  In addition,  the General  Fund may  have some  unplanned costs for
relief related to the January 17, 1994 Northridge earthquake.
 
    The State has implemented  its short-term borrowing as  part of the  deficit
elimination  plan,  and has  also borrowed  additional sums  to cover  cash flow
shortfalls in the spring  of 1994, for  a total of $3.2  billion, coming due  in
July  and  December,  1994. Repayment  of  these short-term  notes  will require
additional borrowing, as  the State's  cash position continues  to be  adversely
affected.
 
    The  Governor's 1994-95 Budget proposal recognizes  the need to bridge a gap
of around $5 billion by June 30, 1995. Over $3.1 billion of this amount is being
requested from the federal government  as increased aid, particularly for  costs
associated  with  incarcerating,  educating  and  providing  health  and welfare
services to undocumented immigrants. However, President Clinton has not included
these costs in his proposed  Fiscal 1995 Budget. The rest  of the budget gap  is
proposed  to be closed with  expenditure cuts and projected  $600 million of new
revenue assuming the State wins a tax case presently pending in the U.S. Supreme
Court. Thus the State  will once again face  significant uncertainties and  very
difficult  choices in the 1994-95 budget, as tax increases are unlikely and many
cuts and budget adjustments have been made in the past three years.
 
    The State's  severe  financial difficulties  for  the current  and  upcoming
budget   years  will  result  in  continued   pressure  upon  almost  all  local
governments, particularly school  districts and counties  which depend on  State
aid.  Despite efforts in recent years  to increase taxes and reduce governmental
expenditures, there can be no assurance that the State will not face budget gaps
in the future.
 
    BOND RATING.    State general obligation bonds  are currently rated "Aa"  by
Moody's  and "A+" by S&P.  Both of these ratings  were reduced from "AAA" levels
which the  State held  until late  1991. There  can be  no assurance  that  such
ratings  will  be  maintained  in  the  future.  It  should  be  noted  that the
creditworthiness of  obligations  issued  by local  California  issuers  may  be
unrelated  to  the  creditworthiness  of  obligations  issued  by  the  State of
California, and that there  is no obligation  on the part of  the State to  make
payment on such local obligations in the event of default.
 
                                       26
<PAGE>
    LEGAL  PROCEEDINGS.   The  State is  involved  in certain  legal proceedings
(described in the State's recent financial statements) that, if decided  against
the  State, may require the State to make significant future expenditures or may
substantially impair revenues. The U.S. Supreme Court has granted review of  two
cases   challenging  California's  "unitary"   method  of  taxing  multinational
corporations. Although this taxing method has  since been changed, if the  State
loses these cases, it could be liable for tax refunds and lost receipts of taxes
assessed totalling $3.5 billion to $4 billion.
 
OBLIGATIONS OF OTHER ISSUERS
 
    OTHER  ISSUERS OF  CALIFORNIA MUNICIPAL OBLIGATIONS.  There are  a number of
state agencies, instrumentalities and political  subdivisions of the State  that
issue  Municipal Obligations, some  of which may  be conduit revenue obligations
payable from  payments from  private borrowers.  These entities  are subject  to
various  economic  risks  and  uncertainties,  and  the  credit  quality  of the
securities issued by them may vary  considerably from the credit quality of  the
obligations backed by the full faith and credit of the State.
 
    STATE  ASSISTANCE.  Property  tax  revenues  received  by  local governments
declined more than 50%  following passage of  Proposition 13. Subsequently,  the
California Legislature enacted measures to provide for the redistribution of the
State's  General Fund  surplus to  local agencies,  the reallocation  of certain
State revenues  to local  agencies and  the assumption  of certain  governmental
functions  by the  State to  assist municipal  issuers to  raise revenues. Total
local assistance (including public schools)  accounted for approximately 75%  of
General  Fund expenditures, including  the effect of  implementing reductions in
certain aid programs. To reduce State General Fund support for school districts,
the 1992-93 and 1993-94  Budget Acts caused local  governments to transfer  $3.9
billion  of property tax revenues to  school districts, representing loss of all
of the post-Proposition 13 "bailout" aid.  The largest share of these  transfers
came  from  counties,  and  the  balance  from  cities,  special  districts  and
redevelopment agencies.  In order  to make  up this  shortfall, the  Legislature
proposed  and voters approved dedicating  0.5% of the sales  tax to counties and
cities for public safety purposes. In addition, the Legislature has changed laws
to relieve local governments of certain mandates, allowing them to reduce costs.
 
    To the  extent  the  State  should  be  constrained  by  its  Article  XIIIB
appropriations  limit, or its obligation to  conform to Proposition 98, or other
fiscal considerations,  the absolute  level, or  the rate  of growth,  of  State
assistance to local governments may be reduced. Any such reductions in State aid
could  compound the serious fiscal constraints already experienced by many local
governments, particularly counties. The Richmond Unified School District (Contra
Costa County) entered  bankruptcy proceedings  in May 1991  but the  proceedings
have been dismissed.
 
    ASSESSMENT  BONDS.  California  Municipal Obligations  which  are assessment
bonds may be adversely affected by a general decline in real estate values or  a
slowdown in real estate sales activity. In many cases, such bonds are secured by
land  which  is  undeveloped at  the  time  of issuance  but  anticipated  to be
developed within a few years after issuance.  In the event of such reduction  or
slowdown,  such development may not occur  or may be delayed, thereby increasing
the risk of a  default on the  bonds. Because the  special assessments or  taxes
securing  these  bonds are  not  the personal  liability  of the  owners  of the
property assessed, the lien on the property is the only security for the  bonds.
Moreover,  in  most cases  the issuer  of these  bonds is  not required  to make
payments on the bonds in the event of delinquency in the payment of  assessments
or  taxes, except from  amounts, if any,  in a reserve  fund established for the
bonds.
 
                                       27
<PAGE>
    CALIFORNIA LONG-TERM LEASE OBLIGATIONS.  Certain California long-term  lease
obligations, though typically payable from the general fund of the municipality,
are subject to "abatement" in the event the facility being leased is unavailable
for  beneficial use  and occupancy  by the municipality  during the  term of the
lease. Abatement is not a default, and there may be no remedies available to the
holders of  the  certificates  evidencing  the lease  obligation  in  the  event
abatement  occurs. The  most common cases  of abatement are  failure to complete
construction of the  facility before the  end of the  period during which  lease
payments  have been  capitalized and uninsured  casualty losses  to the facility
(E.G., due to earthquake). In the event abatement occurs with respect to a lease
obligation, lease  payments  may  be interrupted  (if  all  available  insurance
proceeds  and reserves are exhausted) and the  certificates may not be paid when
due.
 
    Several years  ago the  Richmond Unified  School District  (the  "District")
entered  into a  lease transaction in  which certain existing  properties of the
District were sold and leased back in  order to obtain funds to cover  operating
deficits.  Following a fiscal crisis in which the District's finances were taken
over by  a State  receiver  (including a  brief  period under  bankruptcy  court
protection),  the  District  failed  to  make  rental  payments  on  this lease,
resulting in  a lawsuit  by the  Trustee for  the Certificate  of  Participation
holders,  in  which the  State was  a named  defendant (on  the grounds  that it
controlled the District's  finances). One of  the defenses raised  in answer  to
this  lawsuit was the  invalidity of the  District's lease. The  trial court has
upheld the validity of the lease and the case has been settled. Any judgment  in
a  future case against the position asserted by the Trustee in the Richmond case
may have adverse  implications for  lease transactions  of a  similar nature  by
other California entities.
 
    OTHER  CONSIDERATIONS.  The repayment  of industrial  development securities
secured by real property may be affected by California laws limiting foreclosure
rights of creditors. Securities backed by health care and hospital revenues  may
be  affected by  changes in State  regulations governing  cost reimbursements to
health care providers under Medi-Cal  (the State's Medicaid program),  including
risks  related  to  the  policy  of  awarding  exclusive  contracts  to  certain
hospitals.
 
    Limitations on  AD  VALOREM  property taxes  may  particularly  affect  "tax
allocation"  bonds issued by  California redevelopment agencies.  Such bonds are
secured solely by the increase in assessed valuation of a redevelopment  project
area  after  the start  of redevelopment  activity. In  the event  that assessed
values in the redevelopment  project decline (E.G., because  of a major  natural
disaster  such as an earthquake), the  tax increment revenue may be insufficient
to make principal  and interest payments  on these bonds.  Both Moody's and  S&P
suspended  ratings on  California tax  allocation bonds  after the  enactment of
Articles XIIIA and XIIIB, and only resumed such ratings on a selective basis.
 
    Proposition 87, approved  by California  voters in 1988,  requires that  all
revenues  produced by a tax rate increase go directly to the taxing entity which
increased such tax rate to repay that entity's general obligation  indebtedness.
As  a result, redevelopment  agencies (which, typically, are  the issuers of tax
allocation securities) no longer receive an increase in tax increment when taxes
on property in  the project area  are increased to  repay voter-approved  bonded
indebtedness.
 
    The  effect of these  various constitutional and  statutory changes upon the
ability of California municipal securities issuers to pay interest and principal
on their obligations remains unclear. Furthermore, other measures affecting  the
taxing  or spending authority of California or its political subdivisions may be
approved or enacted  in the future.  Legislation has been  or may be  introduced
which would modify existing taxes or other revenue-raising
 
                                       28
<PAGE>
measures  or which either would further  limit or, alternatively, would increase
the abilities of  state and local  governments to impose  new taxes or  increase
existing  taxes. It is not presently possible to predict the extent to which any
such legislation will be enacted. Nor is it presently possible to determine  the
impact  of any such legislation on California Municipal Obligations in which the
Fund may invest, future  allocations of state revenues  to local governments  or
the abilities of state or local governments to pay the interest on, or repay the
principal of, such California Municipal Obligations.
 
    Substantially  all of California is within an active geologic region subject
to major seismic activity. Any California Municipal Obligation in the California
Insured Trust  could be  affected  by an  interruption  of revenues  because  of
damaged  facilities, or, consequently, income tax deductions for casualty losses
or property tax assessment  reductions. Compensatory financial assistance  could
be  constrained by the  inability of (i)  an issuer to  have obtained earthquake
insurance coverage  at reasonable  rates;  (ii) an  insurer  to perform  on  its
contracts  of insurance in the event of  widespread losses; or (iii) the Federal
or State  government to  appropriate sufficient  funds within  their  respective
budget limitations.
 
    On  January 17, 1994, a major earthquake  with an estimated magnitude of 6.8
on the Richter scale struck the  Los Angeles area, causing significant  property
damage  to public and private facilities, presently estimated at $15-20 billion.
While over $9.5 billion of  federal aid, and a  projected $1.9 billion of  State
aid,  plus insurance proceeds, will  reimburse much of that  loss, there will be
some ultimate loss of wealth and income  in the region, in addition to costs  of
the  disruption  caused  by  the  event.  Short-term  economic  projections  are
generally neutral, as the  infusion of aid will  restore billions of dollars  to
the  local economy within a few  months; already the local construction industry
has picked up. Although the earthquake  will hinder recovery from the  recession
in  Southern California, already hard-hit, its  long-term impact is not expected
to be material in the context of  the overall wealth of the region. Almost  five
years  after the event, there are few  remaining effects of the 1989 Loma Prieta
earthquake in northern  California (which,  however, caused  less severe  damage
than Northridge).
 
                                       29
<PAGE>
CALIFORNIA TAXABLE ESTIMATED CURRENT RETURN TABLE
 
    The  following tables show the approximate taxable estimated current returns
for individuals  that are  equivalent to  tax-exempt estimated  current  returns
under  combined Federal and  state taxes, using  published 1994 marginal Federal
tax rates and marginal state tax  rates currently available and scheduled to  be
in  effect.  The  tables  incorporate  increased  tax  rates  for  higher-income
taxpayers that were  included in  the Revenue  Reconciliation Act  of 1993.  For
cases  in which more than one state  bracket falls within a Federal bracket, the
highest state bracket is combined with  the Federal bracket. The combined  state
and  Federal tax  brackets shown  reflect the fact  that state  tax payments are
currently deductible for Federal  tax purposes. The  tables illustrate what  you
would  have to  earn on  taxable investments  to equal  the tax-exempt estimated
current return for your  income tax bracket. A  taxpayer's marginal tax rate  is
affected  by both his taxable income and  his adjusted gross income. Locate your
adjusted gross and  your taxable  income (which  is your  adjusted gross  income
reduced by any deductions and exemptions), then locate your tax bracket based on
joint  or single  tax filing.  Read across  to the  equivalent taxable estimated
current return you would need to match the tax-free income.
 
 COMBINED MARGINAL TAX RATES FOR JOINT TAXPAYERS WITH FOUR PERSONAL EXEMPTIONS
- --------------------------------------------------------------------------------
 
<TABLE>
<CAPTION>
                  Federal
    Federal      Adjusted      Combined
    Taxable        Gross      State* and                   Tax-Exempt Estimated Current Return
    Income        Income        Federal       --------------------------------------------------------------
   (1,000's)     (1,000's)     Tax Rate1      4.75%   5.00%   5.25%   5.50%   5.75%   6.00%   6.25%   6.50%
 ------------- -------------  -----------     ------  ------  ------  ------  ------  ------  ------  ------
 <S>           <C>            <C>             <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
 $     0- 38.0 $     0-111.8      20.0   %     5.94    6.25    6.56    6.88    7.19    7.50    7.81    8.13
    38.0- 91.9       0-111.8      34.5         7.25    7.63    8.02    8.40    8.78    9.16    9.54    9.92
                 111.8-167.7      35.5         7.36    7.75    8.14    8.53    8.91    9.30    9.69   10.08
    91.9-140.0       0-111.8      37.5         7.60    8.00    8.40    8.80    9.20    9.60   10.00   10.40
                 111.8-167.7      38.5         7.72    8.13    8.54    8.94    9.35    9.76   10.16   10.57
                 167.7-212.4      40.5         7.98    8.40    8.82    9.24    9.66   10.08   10.50   10.92
   140.0-212.4   111.8-167.7      43.0         8.33    8.77    9.21    9.65   10.09   10.53   10.96   11.40
                 167.7-212.4      45.5         8.72    9.17    9.63   10.09   10.55   11.01   11.47   11.93
                 212.4-237.4      46.5         8.88    9.35    9.81   10.28   10.75   11.21   11.68   12.15
                 237.4-290.2      46.0         8.80    9.26    9.72   10.19   10.65   11.11   11.57   12.04
                  Over 290.2      43.5   2     8.41    8.85    9.29    9.73   10.18   10.62   11.06   11.50
   212.4-250.0   167.7-212.4      46.0         8.80    9.26    9.72   10.19   10.65   11.11   11.57   12.04
                 212.4-237.4      47.0         8.96    9.43    9.91   10.38   10.85   11.32   11.79   12.26
                 237.4-290.2      46.5         8.88    9.35    9.81   10.28   10.75   11.21   11.68   12.15
                  Over 290.2      44.0   2     8.48    8.93    9.38    9.82   10.27   10.71   11.16   11.61
   250.0-424.8   237.4-290.2      50.0         9.50   10.00   10.50   11.00   11.50   12.00   12.50   13.00
                  Over 290.2      47.0   3     8.96    9.43    9.91   10.38   10.85   11.32   11.79   12.26
    Over 424.8    Over 290.2      47.5   3     9.05    9.52   10.00   10.48   10.95   11.43   11.90   12.38
</TABLE>
 
                                       30
<PAGE>
  COMBINED MARGINAL TAX RATES FOR SINGLE TAXPAYERS WITH ONE PERSONAL EXEMPTION
- --------------------------------------------------------------------------------
 
<TABLE>
<CAPTION>
                  Federal
    Federal      Adjusted      Combined
    Taxable        Gross      State* and                   Tax-Exempt Estimated Current Return
    Income        Income        Federal       --------------------------------------------------------------
   (1,000's)     (1,000's)     Tax Rate1      4.75%   5.00%   5.25%   5.50%   5.75%   6.00%   6.25%   6.50%
 ------------- -------------  -----------     ------  ------  ------  ------  ------  ------  ------  ------
 <S>           <C>            <C>             <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
 $     0- 22.8 $     0-106.2      20.0   %     5.94    6.25    6.56    6.88    7.19    7.50    7.81    8.13
    22.8- 55.1       0-106.2      34.5         7.25    7.63    8.02    8.40    8.78    9.16    9.54    9.92
    55.1-106.2       0-106.2      37.5         7.60    8.00    8.40    8.80    9.20    9.60   10.00   10.40
                 106.2-111.8      38.0         7.66    8.06    8.47    8.87    9.27    9.68   10.08   10.48
                 111.8-131.2      39.5         7.85    8.26    8.68    9.09    9.50    9.92   10.33   10.74
                 131.2-234.3      39.0         7.79    8.20    8.61    9.02    9.43    9.84   10.25   10.66
   106.2-115.0       0-106.2      38.0         7.66    8.06    8.47    8.87    9.27    9.68   10.08   10.48
                 106.2-111.8      38.5         7.72    8.13    8.54    8.94    9.35    9.76   10.16   10.57
                 111.8-131.2      40.0         7.92    8.33    8.75    9.17    9.58   10.00   10.42   10.83
                 131.2-234.3      39.5         7.85    8.26    8.68    9.09    9.50    9.92   10.33   10.74
   115.0-212.4   111.8-131.2      44.5         8.56    9.01    9.46    9.91   10.36   10.81   11.26   11.71
                 131.2-234.3      44.5         8.56    9.01    9.46    9.91   10.36   10.81   11.26   11.71
                  Over 234.3      44.0   2     8.48    8.93    9.38    9.82   10.27   10.71   11.16   11.61
   212.4-250.0   131.2-234.3      45.0         8.64    9.09    9.55   10.00   10.45   10.91   11.36   11.82
                  Over 234.3      44.5   2     8.56    9.01    9.46    9.91   10.36   10.81   11.26   11.71
    Over 250.0    Over 234.3      47.5   3     9.05    9.52   10.00   10.48   10.95   11.43   11.90   12.38
</TABLE>
 
- ------------------
 
     * The  State tax  rates assumed  take into  account the  adjustment of  tax
brackets based on changes in the Consumer Price Index for 1993.
 
<TABLE>
<S>         <C>
<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. The table also reflects California income tax
laws that increase state income tax rates for high income  taxpayers, limit itemized deductions and phase out the benefit of  the
personal exemption credit and the dependent exemption credit in a manner similar to Federal tax law.
      2  Federal tax rate reverts to 36.0% and the state tax rate reverts to the applicable stated maximum rate after the 80% cap
on the limitation on itemized deductions, under federal or state law, as appropriate 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.
 
                                       31
<PAGE>
   
Nuveen Tax-Exempt Unit Trust
Schedule of Investments at Date of Deposit
June 21, 1994
CALIFORNIA INSURED TRUST 227
(Series 735)
    
 
<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>
- ---------------------------------------------------------------------------------------------------------------------------
$   500,000      California Statewide Communities Development        2003 at 102        AAA         Aaa     $       453,025
                   Authority, Certificates of Participation,
                   Sutter Health Obligated Group, 5.50% Due
                   8/15/23.
    500,000      Encinitas Public Financing Authority                2003 at 102        AAA         Aaa             436,155
                   (California), 1993 Water Revenue Bonds,
                   Series A (San Dieguito Water District), 5.25%
                   Due 10/1/23.
    500,000      City of Industry, California, General             2003 at 101 3/4      AAA         Aaa             472,470
                   Obligation Refunding Bonds, Issue of 1993,
                   5.70% Due 7/1/17.
    500,000      City of Los Angeles, California, Wastewater         2004 at 102        AAA         Aaa             477,500
                   System Revenue Bonds, Series 1994-A, 5.875%
                   Due 6/1/24. (When issued.)
    500,000      Redevelopment Agency of the City of Riverside       2002 at 102        AAA         Aaa             461,430
                   (California), Tax Allocation Refunding Bonds,
                   Casa Blanca Redevelopment Project, 1993
                   Series A, 5.625% Due 8/1/23.
    500,000      Sacramento, California, Municipal Utility           2003 at 102        AAA         Aaa             438,635
                   District, Electric Revenue Refunding Bonds,
                   1993 Series D, 5.25% Due 11/15/20. (Original
                   issue discount bonds delivered on or about
                   May 6, 1993 at a price of 93.784% of
                   principal amount.)
    500,000      Commonwealth of Puerto Rico, Public Improvement   2002 at 101 1/2      AAA         Aaa             496,630
                   Bonds of 1993 (General Obligation Bonds.),
                   6.00% Due 7/1/22.
- -----------                                                                                                 ---------------
$ 3,500,000                                                                                                 $     3,235,845
- -----------                                                                                                 ---------------
- -----------                                                                                                 ---------------
</TABLE>
 
See Notes to Schedules of Investments, page 42.
 
                                       32
<PAGE>
   
PENNSYLVANIA INSURED TRUST 182
    
 
   
    The  Portfolio of Pennsylvania  Insured Trust 182  consists of 7 obligations
issued by  entities located  in Pennsylvania  and one  obligation issued  by  an
entity  located in  the Territory  of Puerto  Rico. Two  Bonds in  the Trust are
general obligations of the governmental entities issuing them and are backed  by
the  taxing powers thereof. Six  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; College  and
University  Revenue,  3;  Electrical  System Revenue,  1;  Health  Care Facility
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.
    
 
   
    At  the  Date  of  Deposit,  the  average  maturity  of  the  Bonds  in  the
Pennsylvania Insured Trust is 28.2 years. The average maturity of the Bonds in a
Trust  is calculated based upon the stated maturities of the Bonds in such Trust
(or, with respect to  Bonds for which  funds or securities  have been placed  in
escrow  to redeem such Bonds on a stated  call date, based upon such call date).
The average maturity of the Bonds in a Trust may increase or decrease from  time
to time as Bonds mature or are called or sold.
    
 
   
    Approximately  3.6% of  the aggregate principal  amount of the  Bonds in the
Trust (accounting for approximately 3.3% of the aggregate offering price of  the
Bonds)    are   original    issue   discount    bonds.   See    "GENERAL   TRUST
INFORMATION--ORIGINAL ISSUE  DISCOUNT  BONDS  AND STRIPPED  OBLIGATIONS"  for  a
discussion  of the  characteristics of  such bonds  and of  the risks associated
therewith.
    
 
    Approximately 29% of  the aggregate  principal amount  of the  Bonds in  the
Trust  consists of obligations  of issuers whose  revenues are primarily derived
from  payments  to  colleges  and  universities,  including  tuition,  dormitory
revenues, grants and endorsements.
 
    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 on June 20,  1994.
The  following summarizes certain information about the Bonds as of the business
day prior to the Date of Deposit:
    
 
<TABLE>
<CAPTION>
                                                                  Difference between Trustee's
                                                               Determination of Offering Price and
   Cost to    Profit (or loss)   Annual Interest   Bid Price              the Bid Price
   Sponsor       to Sponsor      Income to Trust    of Bonds       (as % of principal amount)
  ----------  -----------------  ----------------  ----------  -----------------------------------
  <S>         <C>                <C>               <C>         <C>
  $3,324,074       $16,280           $203,250      $3,322,854                 .50%
</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 Pennsylvania Insured Trust, less estimated expenses, is estimated to  accrue
at  the  rate  of  $.01565  per  Unit per  day  under  the  semi-annual  plan of
distribution, $.01560 per Unit per day under the quarterly plan of  distribution
and  $.01551 per  Unit per  day under  the monthly  plan of  distribution. It is
anticipated that  the amount  of interest  to be  distributed per  Unit in  each
    
 
                                       33
<PAGE>
year  under each plan  of distribution will initially  be substantially equal to
the Estimated Net Annual Interest Income per Unit for that plan.
 
    Details of interest distributions per Unit of the Pennsylvania 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
Pennsylvania Insured Trust                        1994                             1995                  per Year
<S>                                     <C>            <C>            <C>            <C>            <C>
- ----------------------------------------------------------------------------------------------------  --------------
Record Date*..........................        8/1           11/1            2/1            5/1
Distribution Date.....................       8/15          11/15           2/15           5/15
- --------------------------------------------------------------------------------------------------------------------
Monthly Distribution Plan.............  $   .6204(1)                                                  $  5.5864
                                                          --------  $.4653 every month  --------
Quarterly Distribution Plan...........  $   .6204(1)   $  1.4040(2)   $  1.4040      $  1.4040        $  5.6184
Semi-Annual Distribution Plan.........  $   .6204(1)   $  1.4085(3)                  $  2.8170        $  5.6374
- --------------------------------------------------------------------------------------------------------------------
<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)  The second distribution  under the semi-annual distribution  plan represents a  3-month distribution; subsequent semi-annual
    distributions will be regular 6-month distributions.
</TABLE>
 
    The accrual amounts set forth above, and  in turn the amount of interest  to
be  distributed annually per Unit, will  generally change as Bonds are redeemed,
mature or are sold or as fees and expenses increase or decrease.
 
TAX STATUS--PENNSYLVANIA INSURED TRUST
 
    For a discussion of the Federal tax status of income earned on  Pennsylvania
Insured Trust Units, see Section 11.
 
    In  the opinion of  Dechert Price & Rhoads,  special Pennsylvania counsel to
the Series, under existing law:
 
        Units evidencing  fractional  undivided interests  in  the  Pennsylvania
    Insured  Trust  are  not  subject  to any  of  the  personal  property taxes
    presently in effect in Pennsylvania to the extent of that proportion of  the
    Trust  represented by Bonds issued by  the Commonwealth of Pennsylvania, its
    agencies and  instrumentalities,  or by  any  county, city,  borough,  town,
    township,  school  district,  municipality  and  local  housing  or  parking
    authority in the Commonwealth of Pennsylvania or issued by Puerto Rico,  the
    Virgin Islands, Guam or the Northern Mariana Islands ("Pennsylvania Bonds").
    The  taxes referred to  above include the County  Personal Property Tax, the
    additional personal property  taxes imposed on  Pittsburgh residents by  the
    School  District of Pittsburgh  and by the  City of Pittsburgh.  The City of
    Pittsburgh, the School  District of Pittsburgh  and Allegheny County  cannot
    impose  personal property taxes as of  January 1, 1995. Pennsylvania Insured
    Trust Units may  be taxable  under the Pennsylvania  inheritance and  estate
    taxes.
 
        The  proportion  of interest  income  representing interest  income from
    Pennsylvania Bonds distributed  to Unitholders of  the Pennsylvania  Insured
    Trust is not taxable under the Pennsylvania Personal Income Tax or under the
    Corporate  Net Income Tax imposed  on corporations by Article  IV of the Tax
    Reform Code. Nor will such interest be taxable under the Philadelphia School
    District Investment Income Tax imposed on Philadelphia resident individuals.
 
                                       34
<PAGE>
        The disposition by the Pennsylvania Insured Trust of a Pennsylvania Bond
    (whether by  sale, exchange,  redemption or  payment at  maturity) will  not
    constitute  a taxable event to a  Unitholder under the Pennsylvania Personal
    Income Tax if the  Pennsylvania Bond was issued  prior to February 1,  1994.
    Further, although there is no published authority on the subject, counsel is
    of  the opinion that (i) a Unitholder of the Pennsylvania Insured Trust will
    not have a taxable event under the Pennsylvania state and local income taxes
    referred to in the preceding paragraph (other than the Corporate Net  Income
    Tax)  upon  the  redemption or  sale  of his  Unit  to the  extent  that the
    Pennsylvania Insured Trust  is then comprised  of Pennsylvania Bonds  issued
    prior  to February  1, 1994  and (ii)  the dispositions  by the Pennsylvania
    Insured Trust of a Pennsylvania Bond (whether by sale, exchange,  redemption
    or  payment at maturity) will not constitute a taxable event to a Unitholder
    under the  Corporate Net  Income  Tax or  the Philadelphia  School  District
    Investment  Income Tax if the Pennsylvania Bond was issued prior to February
    1, 1994.  (The  School  District tax  has  no  application to  gain  on  the
    disposition of property held by the taxpayer for more than six months.)
 
        Gains  on the  sale, exchange, redemption,  or payment at  maturity of a
    Pennsylvania Bond issued on or after February 1, 1994, will be taxable under
    all of these taxes, as will gains on the redemption or sale of a unit to the
    extent that the Trust is comprised of Pennsylvania Bonds issued on or  after
    February 1, 1994.
 
ECONOMIC FACTORS--PENNSYLVANIA
 
    RISK   FACTORS--Prospective   investors   should   consider   the  financial
difficulties and pressures which the Commonwealth of Pennsylvania and certain of
its municipal subdivisions have undergone. Both the Commonwealth and the City of
Philadelphia have historically experienced significant revenue shortfalls. There
can be no assurance that the  Commonwealth will not experience further  declines
in  economic conditions or that portions  of the municipal obligations purchased
by the Fund  will not  be affected  by such  declines. Without  intending to  be
complete,  the following briefly  summarizes some of  these difficulties and the
current financial situation, as  well as some of  the complex factors  affecting
the financial situation in the Commonwealth. It is derived from sources that are
generally  available to investors  and is based in  part on information obtained
from various agencies in the Commonwealth. No independent verification has  been
made of the following information.
 
    STATE  ECONOMY--Pennsylvania  has been  historically  identified as  a heavy
industry state although that reputation  has changed recently as the  industrial
composition  of the Commonwealth  diversified when the  coal, steel and railroad
industries began to decline. The major new sources of growth in the Commonwealth
are in  the  service  sector,  including trade,  medical  and  health  services,
education and financial institutions. The Commonwealth's agricultural industries
are  also an important component of  its economic structure, accounting for more
than $3.6 billion in crop and livestock products annually while agribusiness and
food related industries support $38 billion in economic activity annually.
 
    Non-agricultural employment within the  Commonwealth has increased  steadily
from  1984 to its 1992 level of 81.3  percent of total employment. The growth in
employment experienced  in  the Commonwealth  is  comparable to  the  nationwide
growth   in  employment  which  has  occurred   during  this  period.  In  1993,
manufacturing  employment  represented  18.4  percent  of  all  non-agricultural
employment  in the  Commonwealth while  the services  sector accounted  for 29.9
percent and the trade sector accounted for 22.4 percent.
 
    The Commonwealth recently experienced a  slowdown in its economy.  Moreover,
economic  strengths and weaknesses vary in  different parts of the Commonwealth.
In general,
 
                                       35
<PAGE>
   
heavy industry and  manufacturing have been  facing increasing competition  from
foreign  producers. During  1993, the  annual average  unemployment rate  in the
Commonwealth was 7.0 percent compared to 6.8 percent for the United States.  For
May  1994 the unadjusted  unemployment rate was 6.4  percent in the Commonwealth
and 5.9 percent in the United States, while the seasonally adjusted unemployment
rate for the  Commonwealth was 6.2  percent and  for the United  States was  6.0
percent.
    
    STATE  BUDGET--The  Commonwealth operates  under an  annual budget  which is
formulated and submitted for legislative approval by the Governor each February.
The Pennsylvania  Constitution  requires  that the  Governor's  budget  proposal
consist  of three parts: (i) a  balanced operating budget setting forth proposed
expenditures and estimated revenues from all sources and, if estimated  revenues
and available surplus are less than proposed expenditures, recommending specific
additional  sources of revenue sufficient to  pay the deficiency; (ii) a capital
budget setting forth proposed expenditures to  be financed from the proceeds  of
obligations  of the  Commonwealth or its  agencies or from  operating funds; and
(iii) a financial plan for not less than the succeeding five fiscal years, which
includes for each year projected  operating expenditures and estimated  revenues
and  projected expenditures for capital projects.  The General Assembly may add,
change or delete  any items  in the  budget prepared  by the  Governor, but  the
Governor  retains veto  power over the  individual appropriations  passed by the
legislature. The Commonwealth's fiscal  year begins on July  1 and ends on  June
30.
 
    All  funds  received by  the Commonwealth  are  subject to  appropriation in
specific amounts by the  General Assembly or by  executive authorization by  the
Governor.  Total appropriations enacted  by the General  Assembly may not exceed
the ensuing  year's  estimated revenues,  plus  (less) the  unappropriated  fund
balance  (deficit) of the preceding year, except for constitutionally authorized
debt service payments. Appropriations from the principal operating funds of  the
Commonwealth  (the General  Fund, the Motor  License Fund and  the State Lottery
Fund)  are  generally  made  for  one  fiscal  year  and  are  returned  to  the
unappropriated  surplus of the fund if not spent or encumbered by the end of the
fiscal year. The Constitution specifies that a surplus of operating funds at the
end of a fiscal year must be appropriated for the ensuing year.
 
    Pennsylvania  uses  the  "fund"  method  of  accounting  for  receipts   and
disbursements. For purposes of government accounting, a "fund" is an independent
fiscal  and accounting entity  with a self-balancing  set of accounts, recording
cash and/or other resources together with all related liabilities and  equities.
In  the  Commonwealth,  over  120 funds  have  been  established  by legislative
enactment or  in certain  cases  by administrative  action  for the  purpose  of
recording  the receipts and disbursement of moneys received by the Commonwealth.
Annual budgets are adopted each fiscal year for the principal operating funds of
the Commonwealth  and  several other  special  revenue funds.  Expenditures  and
encumbrances  against these  funds may  only be  made pursuant  to appropriation
measures enacted  by the  General Assembly  and approved  by the  Governor.  The
General  Fund,  the  Commonwealth's  largest fund,  receives  all  tax revenues,
non-tax revenues and federal grants and  entitlements that are not specified  by
law  to be deposited elsewhere. The majority of the Commonwealth's operating and
administrative expenses are payable from the  General Fund. Debt service on  all
bond  indebtedness of the Commonwealth, except  that issued for highway purposes
or for the benefit of other special  revenue funds, is payable from the  General
Fund.
 
    Financial  information for the principal operating funds of the Commonwealth
are maintained on a budgetary basis of accounting, which is used for the purpose
of ensuring compliance with the enacted operating budget. The Commonwealth  also
prepares annual financial
 
                                       36
<PAGE>
statements in accordance with generally accepted accounting principles ("GAAP").
Budgetary  basis  financial  reports  are  based on  a  modified  cash  basis of
accounting as opposed to  a modified accrual basis  of accounting prescribed  by
GAAP.   Financial  information  is  adjusted   at  fiscal  year-end  to  reflect
appropriate accruals for financial reporting in conformity with GAAP.
 
    RECENT FINANCIAL  RESULTS--From fiscal  1984,  when the  Commonwealth  first
prepared  its financial  statements on  a GAAP  basis, through  fiscal 1989, the
Commonwealth reported a  positive unreserved-undesignated fund  balance for  its
governmental  fund types at each fiscal year end. Slowing economic growth during
1990, leading to a national economic recession beginning in fiscal 1991, reduced
revenue  growth  and   increased  expenditures  and   contributed  to   negative
unreserved-undesignated  fund balances  at the end  of the 1990  and 1991 fiscal
years. At the end  of fiscal 1990 and  fiscal 1991, the  unreserved-undesignated
fund  balance was  a negative  $205.8 million  and a  negative $1,189.2 million,
respectively, a drop of  $579.6 million and  $983.4 million, respectively,  from
the year-earlier amounts. The decline in the fiscal 1990 unreserved-undesignated
fund  balance  for government  fund types  was  largely the  result of  a $718.2
million operating  deficit in  the  General Fund  which  caused the  total  fund
balance  of the General  Fund to fall to  a negative $119.8  million at June 30,
1990. The decline in  the fiscal 1991  unreserved-undesignated fund balance  was
principally  the  result of  operating deficits  of  $1,076.6 million  and $66.2
million, respectively, in the General Fund and the State Lottery Fund.
 
    Rising  demands  on  state  programs  caused  by  the  economic   recession,
particularly  for  medical  assistance  and cash  assistance  programs,  and the
increased costs  of special  education programs  and correction  facilities  and
programs,  contributed  to  increased  expenditures in  fiscal  1991,  while tax
revenues for  the  1991 fiscal  year  were  severely affected  by  the  economic
recession.  Total corporation tax receipts and sales and use tax receipts during
fiscal 1991  were,  respectively, 7.3  percent  and 0.9  percent  below  amounts
collected during fiscal 1990. Personal income tax receipts also were affected by
the  recession but  not to  the extent  of the  other major  General Fund taxes,
increasing only 2.0 percent over fiscal 1990 collections.
 
    The Commonwealth experienced a $454 million  general fund deficit as of  the
end  of  its 1991  fiscal year.  The  deficit reflected  below-estimate economic
activity  and  growth  rates  of  economic  indicators  and  total  tax  revenue
shortfalls  of $817  million (4.1  percent) below  those assumed  in the enacted
budget. Economic conditions  also affected  expenditure trends  during the  1991
fiscal  year, with  expenditures for  medical assistance  costs and  other human
service programs  running  $512 million  above  estimates assumed  in  the  1991
budget.  In January  1991, the  Commonwealth initiated  a number  of cost-saving
measures, including the firing of  2,000 state employees, deferral of  paychecks
and  reduction of funds  to state universities,  which resulted in approximately
$871 million cost savings.
 
    Actions taken during fiscal 1992 to bring the General Fund budget back  into
balance,  including tax increases and expenditure  restraints resulted in a $1.1
billion reduction  for the  unreserved-undesignated  fund deficit  for  combined
governmental  fund types and a return to  a positive fund balance. Total general
fund revenues for fiscal 1992 were $14,516.8 million, which is approximately  22
percent  higher than fiscal 1991 revenues of $11,877.3 million due in large part
to tax  increases.  The  increased  revenues  funded  substantial  increases  in
education,  social services  and corrections  programs. As  a result  of the tax
increases and  certain appropriation  lapses,  fiscal 1992  ended with  an  $8.8
million  surplus after  having started the  year with  an unappropriated balance
deficit of $454 million.
 
                                       37
<PAGE>
    Financial performance continued to improve during fiscal 1993 resulting in a
positive unreserved-undesignated balance for combined governmental fund types at
June 30, 1993, as a  result of a $420.4 million  increase in the balance.  These
gains were produced by continued efforts to control expenditures growth.
 
    FISCAL 1993 BUDGET--On June 30, 1992, the Pennsylvania legislature presented
the  Governor with  a $14.126  billion general fund  budget for  the 1993 fiscal
year, which  began on  July 1,  1992. Before  signing the  budget, the  Governor
deleted  approximately $73 million in certain  state expenditures such as aid to
county courts and district justices. As a result, the budget for the 1993 fiscal
year was approximately $14.046 billion, which is approximately $105 million more
than the fiscal 1992 budget. On February 9, 1993, the Governor announced that he
anticipated that the 1993 budget  would be in balance at  the end of the  fiscal
year.
 
    FISCAL  1994 BUDGET--On  May 28, 1993,  the Governor signed  a $14.9 billion
general fund budget, an increase of  approximately five percent from the  fiscal
1993  budget.  A substantial  amount  of the  increase  is targeted  for medical
assistance programs and prisons.
 
    FISCAL 1995  BUDGET--On February  8,  1994, the  Governor proposed  a  $15.9
billion  general fund budget, an  increase of over four  percent from the Fiscal
1994 budget. A substantial amount of the increase is targeted for human services
and prisons.
 
    DEBT LIMITS AND OUTSTANDING DEBT--The Pennsylvania Constitution permits  the
issuance  of the following types  of debt: (i) debt  to suppress insurrection or
rehabilitate areas affected  by disaster; (ii)  electorate approved debt;  (iii)
debt for capital projects subject to an aggregate outstanding debt limit of 1.75
times  the annual average tax  revenues of the preceding  five fiscal years; and
(iv) tax anticipation notes payable in the fiscal year of issuance.
 
    Under the Pennsylvania Fiscal Code, the Auditor General is required annually
to certify  to  the  Governor  and  the  General  Assembly  certain  information
regarding  the Commonwealth's indebtedness. According to the most recent Auditor
General certificate, the average annual tax  revenues deposited in all funds  in
the  five fiscal years ended June 30, 1993 was $14.5 billion, and therefore, the
net debt limitation for the 1994  fiscal year is $27.1 billion. Outstanding  net
debt  totaled $4.0 billion  at June 30,  1993, a decrease  of $42.2 million from
June 30, 1992. At February 28, 1994, the amount of debt authorized by law to  be
issued, but not yet incurred was $15.0 billion.
 
    DEBT  RATINGS--All outstanding general obligation  bonds of the Commonwealth
are rated AA- by S&P and A1 by Moody's.
 
    CITY OF  PHILADELPHIA--The  City of  Philadelphia  experienced a  series  of
general  fund deficits for fiscal years  1988 through 1992 which have culminated
in the City's present serious financial difficulties. In its 1992  Comprehensive
Annual Financial Report, Philadelphia reported a cumulative general fund deficit
of $71.4 million for fiscal year 1992.
 
    In  June  1991, the  Pennsylvania  legislature established  the Pennsylvania
Intergovernmental Cooperation  Authority  ("PICA"), a  five-member  board  which
oversees  the  fiscal  affairs  of the  City  of  Philadelphia.  The Legislation
empowers PICA  to issue  notes and  bonds on  behalf of  Philadelphia, and  also
authorizes  Philadelphia to levy  a one-percent sales tax  the proceeds of which
would be used  to pay off  the bonds.  In return for  PICA's fiscal  assistance,
Philadelphia is required, among other things, to establish a five-year financial
plans   that  include  balanced  annual   budgets.  Under  the  legislation,  if
Philadelphia does  not comply  with such  requirements, PICA  may withhold  bond
revenues and certain state funding.
 
                                       38
<PAGE>
    In  May 1992,  the city counsel  of Philadelphia approved  the Mayor's first
five-year plan and  adopted a fiscal  1993 budget.  On June 5,  1992, PICA  sold
approximately  $480 million in bonds at yields ranging from 5.25 percent to 6.88
percent. The proceeds  of the bonds  were used to  cover shortfalls  accumulated
over  fiscal years 1988  through 1991, projected deficits  for fiscal years 1992
and 1993, construction  projects and other  capital expenditures. In  accordance
with  the enabling legislation, PICA was guaranteed a percentage of the wage tax
revenue expected to be collected from Philadelphia residents to permit repayment
of the bonds.
 
    In January 1993, Philadelphia anticipated  a cumulative general fund  budget
deficit  of $57 million for the 1993 fiscal year. In response to the anticipated
deficit, the Mayor unveiled a financial plan eliminating the budget deficit  for
the  1993 budget year through  significant service cuts that  included a plan to
privatize certain city  provided services. Due  to an upsurge  in tax  receipts,
cost-cutting  and additional  PICA borrowings,  Philadelphia completed  the 1993
fiscal year with a balanced general fund budget.
 
    In January 1994, the Mayor proposed a $2.3 billion city general fund  budget
that  included no  tax increases,  no significant service  cuts and  a series of
modest health  and welfare  program  increases. At  that  time, the  Mayor  also
unveiled  a $2.2 billion program  (the "Philadelphia Economic Stimulus Program")
designed to stimulate Philadelphia's economy and  stop the loss of 1,000 jobs  a
month.  However, the success  of the Philadelphia  Economic Stimulus Program has
been predicated upon several contingencies including, among others, $250 million
in revenues from riverboat gambling over the next three years, which first  must
be  approved by the state legislature,  and $100 million in federal "empowerment
zone" subsidies, which Philadelphia may or may not receive. As of January  1994,
the  1994 general  fund budget  was running  at a  deficit of  approximately $10
million. The Mayor has predicted that the  general fund will be balanced by  the
end of the 1994 fiscal year.
 
    The  Standard & Poor's Corporation rating on Philadelphia general obligation
bonds is "BB." The Moody's Investors Service rating is currently "Ba."
 
    LITIGATION--The Commonwealth is  a party  to numerous lawsuits  in which  an
adverse  final decision could materially  affect the Commonwealth's governmental
operations and consequently its ability to pay debt service on its  obligations.
The  Commonwealth also faces tort claims made  possible by the limited waiver of
sovereign immunity effected by Act 152, approved September 28, 1978.
 
PENNSYLVANIA TAXABLE ESTIMATED CURRENT RETURN TABLE
 
    The following tables show the approximate taxable estimated current  returns
for  individuals  that are  equivalent to  tax-exempt estimated  current returns
under combined Federal and  state taxes, using  published 1994 marginal  Federal
tax  rates and marginal state tax rates  currently available and scheduled to be
in  effect.  The  tables  incorporate  increased  tax  rates  for  higher-income
taxpayers  that were  included in  the Revenue  Reconciliation Act  of 1993. For
cases in which more than one state  bracket falls within a Federal bracket,  the
highest  state bracket is combined with  the Federal bracket. The combined state
and Federal tax  brackets shown  reflect the fact  that state  tax payments  are
currently  deductible for Federal  tax purposes. The  tables illustrate what you
would have to  earn on  taxable investments  to equal  the tax-exempt  estimated
current  return for your income  tax bracket. A taxpayer's  marginal tax rate is
affected by both his taxable income  and his adjusted gross income. Locate  your
adjusted  gross and  your taxable  income (which  is your  adjusted gross income
reduced by any deductions and exemptions), then locate your tax bracket based on
 
                                       39
<PAGE>
joint or single  tax filing.  Read across  to the  equivalent taxable  estimated
current return you would need to match the tax-free income.
 
 COMBINED MARGINAL TAX RATES FOR JOINT TAXPAYERS WITH FOUR PERSONAL EXEMPTIONS
- --------------------------------------------------------------------------------
 
<TABLE>
<CAPTION>
                  Federal
    Federal      Adjusted      Combined
    Taxable        Gross      State* and                   Tax-Exempt Estimated Current Return
    Income        Income        Federal       --------------------------------------------------------------
   (1,000's)     (1,000's)     Tax Rate1      4.75%   5.00%   5.25%   5.50%   5.75%   6.00%   6.25%   6.50%
 ------------- -------------  -----------     ------  ------  ------  ------  ------  ------  ------  ------
 <S>           <C>            <C>             <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
 $     0- 38.0 $     0-111.8      17.5   %     5.76    6.06    6.36    6.67    6.97    7.27    7.58    7.88
    38.0- 91.9       0-111.8      30.0         6.79    7.14    7.50    7.86    8.21    8.57    8.93    9.29
                 111.8-167.7      31.0         6.88    7.25    7.61    7.97    8.33    8.70    9.06    9.42
    91.9-140.0       0-111.8      33.0         7.09    7.46    7.84    8.21    8.58    8.96    9.33    9.70
                 111.8-167.7      34.0         7.20    7.58    7.95    8.33    8.71    9.09    9.47    9.85
                 167.7-290.2      36.0         7.42    7.81    8.20    8.59    8.98    9.38    9.77   10.16
   140.0-250.0   111.8-167.7      39.0         7.79    8.20    8.61    9.02    9.43    9.84   10.25   10.66
                 167.7-290.2      41.5         8.12    8.55    8.97    9.40    9.83   10.26   10.68   11.11
                  Over 290.2      39.0   2     7.79    8.20    8.61    9.02    9.43    9.84   10.25   10.66
    Over 250.0   167.7-290.2      45.5         8.72    9.17    9.63   10.09   10.55   11.01   11.47   11.93
                  Over 290.2      42.5   3     8.26    8.70    9.13    9.57   10.00   10.43   10.87   11.30
</TABLE>
 
  COMBINED MARGINAL TAX RATES FOR SINGLE TAXPAYERS WITH ONE PERSONAL EXEMPTION
- --------------------------------------------------------------------------------
 
<TABLE>
<CAPTION>
                  Federal
    Federal      Adjusted      Combined
    Taxable        Gross      State* and                   Tax-Exempt Estimated Current Return
    Income        Income        Federal       --------------------------------------------------------------
   (1,000's)     (1,000's)     Tax Rate1      4.75%   5.00%   5.25%   5.50%   5.75%   6.00%   6.25%   6.50%
 ------------- -------------  -----------     ------  ------  ------  ------  ------  ------  ------  ------
 <S>           <C>            <C>             <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
 $     0- 22.8 $     0-111.8      17.5         5.76    6.06    6.36    6.67    6.97    7.27    7.58    7.88
    22.8- 55.1       0-111.8      30.0         6.79    7.14    7.50    7.86    8.21    8.57    8.93    9.29
    55.1-115.0       0-111.8      33.0         7.09    7.46    7.84    8.21    8.58    8.96    9.33    9.70
                 111.8-234.3      34.5         7.25    7.63    8.02    8.40    8.78    9.16    9.54    9.92
   115.0-250.0   111.8-234.3      39.5         7.85    8.26    8.68    9.09    9.50    9.92   10.33   10.74
                  Over 234.3      39.0   2     7.79    8.20    8.61    9.02    9.43    9.84   10.25   10.66
    Over 250.0    Over 234.3      42.5   3     8.26    8.70    9.13    9.57   10.00   10.43   10.87   11.30
<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.
 
                                       40
<PAGE>
   
Nuveen Tax-Exempt Unit Trust
Schedule of Investments at Date of Deposit
June 21, 1994
PENNSYLVANIA INSURED TRUST 182
(Series 735)
    
 
<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>
- ---------------------------------------------------------------------------------------------------------------------------
$   500,000      Pennsylvania Intergovernmental Cooperation          2003 at 100        AAA         Aaa     $       464,685
                   Authority, Special Tax Revenue Bonds (City of
                   Philadelphia Funding Program), Series of
                   1993, 5.625% Due 6/15/23.
    125,000      The Pennsylvania State University Bonds,            2003 at 100        AAA         Aaa             109,431
                   Refunding Series 1993A, 5.10% Due 3/1/18.
                   (Original issue discount bonds delivered on
                   or about March 11, 1993 at a price of 93.00%
                   of principal amount.)
    500,000      Lehigh County Industrial Development Authority,     2004 at 102        AAA         Aaa             457,690
                   Pollution Control Revenue Refunding Bonds,
                   1994 Series A (Pennsylvania Power & Light
                   Company Project), 5.50% Due 2/15/27.
    500,000      Montgomery County Higher Education and Health       2004 at 102        AAA         Aaa             427,215
                   Authority (Pennsylvania), Hospital Revenue
                   Bonds, Series A of 1994 (Abington Memorial
                   Hospital), 5.125% Due 6/1/24.
    375,000      Montgomery County Higher Education and Health       2002 at 102        AAA         Aaa             387,953
                   Authority, Montgomery County, Pennsylvania,
                   Saint Joseph's University Revenue Bonds,
                   Series of 1992, 6.50% Due 12/15/22.
    500,000      City of Pittsburgh (Commonwealth of                 2002 at 102        AAA         Aaa             498,410
                   Pennsylvania), General Obligation Bonds,
                   Series of 1992D, 6.125% Due 9/1/17.
    500,000      University of Pittsburgh-Of the Commonwealth        2002 at 102        AAA         Aaa             498,340
                   System of Higher Education, University
                   Capital Project Bonds (Pennsylvania), 1992
                   Series A, 6.125% Due 6/1/21.
    500,000      Commonwealth of Puerto Rico, Public Improvement   2002 at 101 1/2      AAA         Aaa             496,630
                   Bonds of 1993 (General Obligation Bonds.),
                   6.00% Due 7/1/22.
- -----------                                                                                                 ---------------
$ 3,500,000                                                                                                 $     3,340,354
- -----------                                                                                                 ---------------
- -----------                                                                                                 ---------------
</TABLE>
 
See Notes to Schedules of Investments, page 42.
 
                                       41
<PAGE>
NOTES TO SCHEDULES OF INVESTMENTS
 
    (1) Contracts,  which  are  "when-issued"  or  "regular  way"  contracts  or
        contracts having delivery dates beyond the normal settlement date,  have
        been  deposited with the Trustee on the Date of Deposit. The performance
        of such contracts is secured by an irrevocable letter of credit,  issued
        by  a major commercial bank, which  has been deposited with the Trustee.
        At the Date  of Deposit, Bonds  may have been  delivered to the  Sponsor
        pursuant  to certain of these contracts; the Sponsor has assigned to the
        Trustee all of its right, title and interest in and to such Bonds.
 
    (2) The Bonds are first subject to optional redemption in the years, and  at
        the  prices, shown.  Unless otherwise  indicated, the  Bonds, except for
        Bonds issued at a substantial original issue discount, are redeemable at
        declining prices (but not below par value) in subsequent years. Original
        issue  discount  bonds,  including  zero  coupon  bonds,  are  generally
        redeemable  at  prices  based on  the  issue  price plus  the  amount of
        original issue discount accreted to redemption plus, if applicable, some
        premium, the amount of which will decline in subsequent years. The Bonds
        may also be subject to sinking fund redemption without premium prior  to
        the dates shown.
 
        Certain  Bonds may be subject to redemption without premium prior to the
        date shown  pursuant  to  special  or  mandatory  call  provisions;  for
        example,  if bond proceeds are not able  to be used as contemplated, the
        project is condemned or sold, or the project is destroyed and  insurance
        proceeds  are used to  redeem the bonds.  Single family mortgage revenue
        bonds and housing authority bonds are  most likely to be called  subject
        to  such provisions, but other bonds may have similar call features. See
        Section 4 and "General Trust Information" in this Section.
 
        The Trustee's determination of the offering prices of Bonds in the  Fund
        may  be  greater or  less than  the  amounts that  may be  received upon
        redemption or  maturity  of  such Bonds.  Subject  to  rules  concerning
        amortization  of bond  premium and of  original issue  discount, gain or
        loss realized  by  the Trustee  on  disposition  of any  Bonds  will  be
        recognized  as taxable capital gain or loss by Unitholders. (See Section
        4.)
 
    (3) See "Description  of  Ratings" herein.  All  the Bonds  in  the  Insured
        Trusts,  as insured by the  Insurer, are rated AAA  by Standard & Poor's
        Corporation and Aaa by Moody's Investors Service, Inc. (See Section 5.)
 
    (4) As determined by Kenny S&P Evaluation Services on behalf of the  Trustee
        as  of the close of  business on the business  day preceding the Date of
        Deposit. The prices as determined by Kenny S&P Evaluation Services  have
        been rounded to the nearest dollar.
 
                                       42
<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 735:
    
 
   
       We have audited  the accompanying  statements of  condition and  the
     related  schedules of investments at date  of deposit (included in the
     prospectus  herein)  of  Nuveen  Tax-Exempt  Unit  Trust,  Series  735
     (comprising National Traditional Trust 531, Intermediate Insured Trust
     75,  California Insured Trust 227 and Pennsylvania Insured Trust 182),
     as of June 21, 1994. These financial statements are the responsibility
     of the Sponsor. Our responsibility is  to express an opinion on  these
     financial statements based on our audits.
    
 
       We  conducted  our  audits  in  accordance  with  generally accepted
     auditing standards. Those standards require  that we plan and  perform
     the  audit to obtain reasonable  assurance about whether the financial
     statements are  free  of  material  misstatement.  An  audit  includes
     examining,  on  a  test  basis, evidence  supporting  the  amounts and
     disclosures in  the  financial  statements.  Our  procedures  included
     confirmation  of the irrevocable letter  of credit arrangement for the
     purchase of securities,  described in  Note (1) to  the statements  of
     condition,  by correspondence with the Trustee. An audit also includes
     assessing the  accounting principles  used and  significant  estimates
     made  by  the Sponsor,  as well  as  evaluating the  overall financial
     statement  presentation.  We  believe   that  our  audits  provide   a
     reasonable basis for our opinion.
 
   
       In  our  opinion,  the  statements  of  condition  and  the  related
     schedules of investments at date of deposit referred to above  present
     fairly,  in all material  respects, the financial  position of each of
     the trusts constituting the Nuveen  Tax-Exempt Unit Trust, Series  735
     as  of June 21, 1994, in conformity with generally accepted accounting
     principles.
    
 
                                                      ARTHUR ANDERSEN & CO.
 
   
     Chicago, Illinois,
     June 21, 1994.
    
 
                                       43
<PAGE>
                            Statements of Condition
   
                    NUVEEN TAX-EXEMPT UNIT TRUST, SERIES 735
    
   
   (National Traditional Trust 531, Intermediate Insured Trust 75, California
             Insured Trust 227 and Pennsylvania Insured Trust 182)
    
   
                              As of June 21, 1994
    
 
<TABLE>
<CAPTION>
                                             National          Intermediate         California         Pennsylvania
                                            Traditional           Insured             Insured             Insured
    TRUST PROPERTY                           Trust 531           Trust 75            Trust 227           Trust 182
<S>                                       <C>                 <C>                 <C>                 <C>
                                          ---------------     ---------------     ---------------     ---------------
Sponsor's contracts to purchase Tax-
 Exempt Bonds, backed by an irrevocable
 letter of credit(1)(2).................  $     9,623,397     $     9,765,159     $     3,235,845     $     3,340,354
Accrued interest to June 21, 1994 on
  underlying Bonds(1)...................          110,351             119,049              58,278              39,097
                                          ---------------     ---------------     ---------------     ---------------
            Total.......................  $     9,733,748     $     9,884,208     $     3,294,123     $     3,379,451
                                          ---------------     ---------------     ---------------     ---------------
                                          ---------------     ---------------     ---------------     ---------------
   LIABILITY AND INTEREST OF UNITHOLDERS
Liability:
    Accrued interest to June 21, 1994 on
      underlying Bonds(3)...............  $       110,351     $       119,049     $        58,278     $        39,097
                                          ---------------     ---------------     ---------------     ---------------
Interest of Unitholders:
    Units of fractional undivided
      interest outstanding (National
      Traditional Trust 531-- 100,000;
      Intermediate Insured Trust
      75--100,000; California Insured
      Trust 227--35,000; Pennsylvania
      Insured Trust 182--35,000)
      Cost to investors(4)..............  $    10,119,194     $    10,161,429     $     3,402,556     $     3,512,449
        Less: Gross underwriting
          commission(5).................         (495,797)           (396,270)           (166,711)           (172,095)
                                          ---------------     ---------------     ---------------     ---------------
    Net amount applicable to
      investors.........................  $     9,623,397     $     9,765,159     $     3,235,845     $     3,340,354
                                          ---------------     ---------------     ---------------     ---------------
            Total.......................  $     9,733,748     $     9,884,208     $     3,294,123     $     3,379,451
                                          ---------------     ---------------     ---------------     ---------------
                                          ---------------     ---------------     ---------------     ---------------
<FN>
(1) Represented by contracts  to purchase Tax-Exempt  Bonds which include "when  issued" or "regular  way" or "delayed  delivery"
    contracts  for which an irrevocable letter of  credit issued by a major commercial  bank has been deposited with the Trustee.
    The amount of such letter of credit  and any cash deposited exceeds the amount  necessary for the purchase of the Bonds  plus
    accrued  interest to the Date of  Deposit. At the Date of  Deposit, Bonds may have been  delivered to the Sponsor pursuant to
    certain of these contracts; the  Sponsor has assigned to  the Trustee all of  its rights, title and  interest in and to  such
    Bonds.
(2)  Aggregate value (at offering prices) as of the Date of  Deposit of the Bonds listed under "Schedules of Investments" herein,
    and their aggregate cost to the Trusts are the same. Such offering prices were determined by Kenny S&P Evaluation Services as
    of the close of business on the business day prior to the Date of Deposit. (See Section 10.) Insurance coverage providing for
    the timely payment, when due, of all principal  of and interest on the Bonds in  the Insured Trusts has been obtained by  the
    Sponsor  or by the issuers of such Bonds. Such insurance does not guarantee the market value of the Bonds or the value of the
    Units. Both the bid and the offering prices of the underlying  Bonds and of the Units may include value attributable to  such
    policies of insurance.
(3) Representing, as set forth in Section 8, advancement by the Trustee of an amount equal to the accrued Bond interest as of the
    Date of Deposit from the later of the last payment date on the Bonds or the date of issuance thereof.
(4) Aggregate Public Offering Price (exclusive of accrued interest) computed as set forth under Section 6.
(5) The gross underwriting commission has been calculated on the assumption that the Units offered by this prospectus are sold in
    single transactions involving less than $50,000 or 500 Units. At this level, the sales charge is 4.90% of the Public Offering
    Price  in the case of National and State Trusts, 4.25% thereof in  the case of Long Intermediate Trusts, 3.90% in the case of
    Intermediate Trusts, 3.00% in the  case of Short Intermediate Trusts  and 2.50% in the case  of Short Term Trusts. In  single
    transactions involving 500 Units or more, the sales charge is reduced. (See Section 6.)
</TABLE>
 
                                       44
<PAGE>
GENERAL TRUST INFORMATION
 
    An  investment in Units of any Trust should be made with an understanding of
the risks that  such an investment  may entail.  As set forth  in the  portfolio
summaries above, the Trusts may contain or be concentrated in one or more of the
types  of  bonds  discussed  below.  The  following  paragraphs  discuss certain
circumstances which may adversely affect the ability of issuers of Bonds held in
the portfolio of a Trust  to make payment of  principal and interest thereon  or
which  may adversely affect the  ratings of such Bonds;  with respect to Insured
Trusts, however, because  of the  insurance obtained by  the Sponsor  or by  the
issuers  of  the Bonds,  such  changes should  not  adversely affect  an Insured
Trust's receipt of principal and interest, the Standard & Poor's AAA or  Moody's
Aaa  ratings of  the Bonds  in the  Insured Trust  portfolio, or  the Standard &
Poor's AAA rating of the Units of each such Insured Trust.
 
    HEALTH FACILITY  OBLIGATIONS.    Some  of  the  Bonds  in  a  Trust  may  be
obligations  of issuers  whose revenues  are derived  from services  provided by
hospitals or other health care  facilities, including nursing homes. Ratings  of
bonds  issued  for health  care facilities  are  sometimes based  on feasibility
studies that contain projections of  occupancy levels, revenues and expenses.  A
facility's  gross  receipts and  net income  available for  debt service  may be
affected by future events and  conditions including, among other things,  demand
for  services, the ability of the facility  to provide the services required, an
increasing shortage of qualified nurses or a dramatic rise in nursing  salaries,
physicians'  confidence  in  the  facility,  management  capabilities,  economic
developments in  the service  area, competition  from other  similar  providers,
efforts  by  insurers  and  governmental agencies  to  limit  rates, legislation
establishing state rate-setting agencies,  expenses, government regulation,  the
cost  and possible unavailability of  malpractice insurance, and the termination
or restriction of governmental  financial assistance, including that  associated
with  Medicare, Medicaid and other similar  third party payor programs. Medicare
reimbursements are currently calculated on a prospective basis and are not based
on a provider's actual costs. Such method of reimbursement may adversely  affect
reimbursements to hospitals and other facilities for services provided under the
Medicare  program and thereby may have an  adverse effect on the ability of such
institutions to satisfy  debt service requirements.  In the event  of a  default
upon  a bond  secured by hospital  facilities, the limited  alternative uses for
such facilities may result  in the recovery upon  such collateral not  providing
sufficient funds to fully repay the bonds.
 
    Certain  hospital  bonds  provide for  redemption  at par  upon  the damage,
destruction or  condemnation of  the  hospital facilities  or in  other  special
circumstances.
 
    HOUSING  OBLIGATIONS.  Some  of the Bonds  in a Trust  may be obligations of
issuers whose  revenues are  primarily derived  from mortgage  loans to  housing
projects  for  low  to  moderate  income  families.  Such  issues  are generally
characterized by mandatory redemption at par  or, in the case of original  issue
discount  bonds, accreted  value in  the event of  economic defaults  and in the
event of a failure of the operator of a project to comply with certain covenants
as to the operation of the project. The failure of such operator to comply  with
certain  covenants related  to the tax-exempt  status of interest  on the Bonds,
such as provisions requiring that a  specified percentage of units be rented  or
available for rental to low or moderate income families, potentially could cause
interest on such Bonds to be subject to Federal income taxation from the date of
issuance of the Bonds. The ability of such issuers to make debt service payments
will   be  affected  by  events  and  conditions  affecting  financed  projects,
including, among other  things, the  achievement and  maintenance of  sufficient
occupancy  levels and adequate  rental income, employment  and income conditions
prevailing in local labor markets, increases  in taxes, utility costs and  other
operating  expenses, the managerial ability of project managers, changes in laws
and
 
                                      A-1
<PAGE>
governmental  regulations,  the  appropriation  of  subsidies,  and  social  and
economic  trends affecting  the localities  in which  the projects  are located.
Occupancy of such housing projects may be adversely affected by high rent levels
and income limitations imposed under Federal and state programs.
 
    SINGLE FAMILY MORTGAGE REVENUE BONDS.  Some  of the Bonds in a Trust may  be
single  family  mortgage revenue  bonds,  which are  issued  for the  purpose of
acquiring from originating financial institutions notes secured by mortgages  on
residences located within the issuer's boundaries and owned by persons of low or
moderate  income. Mortgage loans  are generally partially  or completely prepaid
prior to  their final  maturities as  a result  of events  such as  sale of  the
mortgaged  premises, default, condemnation or casualty loss. Because these bonds
are subject to extraordinary mandatory redemption in whole or in part from  such
prepayments of mortgage loans, a substantial portion of such bonds will probably
be  redeemed prior to their scheduled maturities or even prior to their ordinary
call dates. Extraordinary mandatory redemption without premium could also result
from the  failure of  the originating  financial institutions  to make  mortgage
loans in sufficient amounts within a specified time period. The redemption price
of  such issues  may be  more or  less than  the offering  price of  such bonds.
Additionally, unusually high rates of  default on the underlying mortgage  loans
may  reduce revenues available  for the payment  of principal of  or interest on
such mortgage revenue bonds. Single  family mortgage revenue bonds issued  after
December 31, 1980 were issued under Section 103A of the Internal Revenue Code of
1954,  as amended, or  Section 143 of  the Internal Revenue  Code of 1986, which
Sections contain certain  requirements relating to  the use of  the proceeds  of
such  bonds in  order for the  interest on  such bonds to  retain its tax-exempt
status. In each  case, the issuer  of the  bonds has covenanted  to comply  with
applicable  requirements and bond  counsel to such issuer  has issued an opinion
that the interest on the bonds is exempt from Federal income tax under  existing
laws   and  regulations.  There  can  be   no  assurance  that  such  continuing
requirements will  be satisfied;  the failure  to meet  such requirements  could
cause  interest on the Bonds to be  subject to Federal income taxation, possibly
from the date of issuance of the Bonds.
 
    FEDERALLY ENHANCED  OBLIGATIONS.   Some of  the mortgages  which secure  the
various  health care or housing projects which underlie the previously discussed
Health Facility, Housing,  and Single Family  Mortgage Revenue Obligations  (the
"Obligations")  in a Trust may be  insured by the Federal Housing Administration
("FHA"). Under FHA  regulations, the  maximum insurable  mortgage amount  cannot
exceed  90%  of the  FHA's  estimated value  of  the project.  The  FHA mortgage
insurance does not constitute a guarantee of timely payment of the principal  of
and  interest on the Obligations. Payment  of mortgage insurance benefits may be
(1) less than the principal amount of Obligations outstanding or (2) delayed  if
disputes  arise as to  the amount of the  payment or if  certain notices are not
given to the FHA within  the prescribed time periods.  In addition, some of  the
previously  discussed Obligations may be secured by mortgage-backed certificates
guaranteed by the  Government National Mortgage  Association ("GNMA"), a  wholly
owned  corporate  instrumentality  of  the  United  States,  and/or  the Federal
National  Mortgage  Association  ("Fannie   Mae")  a  federally  chartered   and
stockholder-owed  corporation. GNMA and  Fannie Mae guarantee  timely payment of
principal and  interest  on the  mortgage-backed  certificates, even  where  the
underlying   mortgage  payments   are  not  made.   While  such  mortgage-backed
certificates are often pledged  to secure payment of  principal and interest  on
the  Obligations, timely payment of interest and principal on the Obligations is
not insured or guaranteed by  the United States, GNMA,  Fannie Mae or any  other
governmental  agency or  instrumentality. The  GNMA mortgage-backed certificates
constitute a general obligation  of the United States  backed by its full  faith
and  credit. The obligations of Fannie  Mae, including its obligations under the
Fannie Mae mortgage-backed securities, are obligations
 
                                      A-2
<PAGE>
solely of Fannie Mae and are not backed  by, or entitled to, the full faith  and
credit of the United States.
 
    INDUSTRIAL  REVENUE OBLIGATIONS.   Certain  of the Bonds  in a  Trust may be
industrial revenue bonds  ("IRBs"), including pollution  control revenue  bonds,
which  are  tax-exempt  securities  issued  by  states,  municipalities,  public
authorities or similar entities to  finance the cost of acquiring,  constructing
or improving various industrial projects. These projects are usually operated by
corporate entities. Issuers are obligated only to pay amounts due on the IRBs to
the  extent that funds are available from the unexpended proceeds of the IRBs or
receipts or revenues of the issuer  under an arrangement between the issuer  and
the  corporate operator of  a project. The arrangement  may be in  the form of a
lease, installment sale agreement, conditional sale agreement or loan agreement,
but in each case  the payments to  the issuer are designed  to be sufficient  to
meet  the payments  of amounts  due on  the IRBs.  Regardless of  the structure,
payment of IRBs is solely dependent  upon the creditworthiness of the  corporate
operator  of  the project  and,  if applicable,  corporate  guarantor. Corporate
operators or  guarantors may  be affected  by  many factors  which may  have  an
adverse  impact on  the credit  quality of  the particular  company or industry.
These include cyclicality of revenues and earnings, regulatory and environmental
restrictions, litigation  resulting  from  accidents  or  environmentally-caused
illnesses,  extensive competition  and financial deterioration  resulting from a
corporate restructuring pursuant to a leveraged buy-out, takeover or  otherwise.
Such  a restructuring may  result in the  operator of a  project becoming highly
leveraged which may have an impact on such operator's creditworthiness which  in
turn  would have  an adverse impact  on the  rating and/or market  value of such
Bonds. Further, the  possibility of  such a  restructuring may  have an  adverse
impact  on the market for and consequently  the value of such Bonds, even though
no actual takeover or other action is ever contemplated or effected. The IRBs in
a Trust may be subject to  special or extraordinary redemption provisions  which
may  provide for redemption  at par or,  in the case  of original issue discount
bonds, accreted value. The  Sponsor cannot predict the  causes or likelihood  of
the redemption of IRBs in a Trust prior to the stated maturity of such Bonds.
 
    ELECTRIC  UTILITY  OBLIGATIONS.    Some  of the  Bonds  in  a  Trust  may be
obligations of issuers  whose revenues are  primarily derived from  the sale  of
electric  energy. The problems  faced by such issuers  include the difficulty in
obtaining approval for timely  and adequate rate  increases from the  applicable
public  utility  commissions,  the difficulty  of  financing  large construction
programs, increased competition,  reductions in estimates  of future demand  for
electricity  in certain areas of the  country, the limitations on operations and
increased costs  and delays  attributable to  environmental considerations,  the
difficulty  of the capital  market in absorbing utility  debt, the difficulty in
obtaining fuel at reasonable prices and  the effect of energy conservation.  All
of  such issuers  have been  experiencing certain  of these  problems in varying
degrees. In addition, Federal, state and municipal governmental authorities  may
from  time to time review existing, and impose additional, regulations governing
the licensing, construction  and operation  of nuclear power  plants, which  may
adversely  affect the ability of the issuers of  certain of the Bonds in a Trust
to make payments of principal and/or interest on such Bonds.
 
    TRANSPORTATION FACILITY REVENUE BONDS.  Some of the Bonds in a Trust may  be
obligations  of issuers which  are payable from and  secured by revenues derived
from the ownership and operation of airports, public transit systems and  ports.
The  major portion of  an airport's gross operating  income is generally derived
from fees received  from airlines pursuant  to use agreements  which consist  of
annual  payments for airport  use, occupancy of  certain terminal space, service
fees and  leases. Airport  operating income  may therefore  be affected  by  the
ability  of the airlines to meet their obligations under the use agreements. The
air transport industry  is experiencing significant  variations in earnings  and
 
                                      A-3
<PAGE>
traffic,  due  to  increased  competition,  excess  capacity,  increased  costs,
deregulation, traffic constraints  and other factors,  and several airlines  are
experiencing  severe financial difficulties. In  particular, facilities with use
agreements involving airlines experiencing financial difficulty may experience a
reduction in revenue  due to the  possible inability of  these airlines to  meet
their  use  agreement obligations  because  of such  financial  difficulties and
possible bankruptcy.  The  Sponsor cannot  predict  what effect  these  industry
conditions  may have on airport revenues which  are dependent for payment on the
financial condition of the  airlines and their usage  of the particular  airport
facility.  Bonds that are secured primarily by the revenue collected by a public
transit system  typically are  additionally secured  by a  pledge of  sales  tax
receipts  collected  at  the state  or  local  level, or  of  other governmental
financial assistance. Transit system net revenues will be affected by variations
in  utilization,  which  in  turn  may  be  affected  by  the  degree  of  local
governmental  subsidization, demographic and  population shifts, and competition
from other  forms of  transportation; and  by increased  costs, including  costs
resulting  from previous deferrals of maintenance. Port authorities derive their
revenues primarily from fees imposed on ships using the facilities. The rate  of
utilization  of such facilities may fluctuate depending on the local economy and
on competition from  competing forms  of transportation  such as  air, rail  and
trucks.
 
    WATER  AND/OR SEWERAGE  OBLIGATIONS.  Some  of the  Bonds in a  Trust may be
obligations of issuers whose revenues are derived from the sale of water  and/or
sewerage services. Such Bonds are generally payable from user fees. The problems
of  such  issuers  include  the  ability  to  obtain  timely  and  adequate rate
increases, population decline resulting in  decreased user fees, the  difficulty
of  financing  large construction  programs, the  limitations on  operations and
increased costs  and delays  attributable to  environmental considerations,  the
increasing  difficulty of obtaining or discovering  new supplies of fresh water,
the effect  of  conservation  programs  and the  impact  of  "no-growth"  zoning
ordinances. All of such issuers have been experiencing certain of these problems
in varying degrees.
 
    UNIVERSITY  AND COLLEGE REVENUE OBLIGATIONS.   Some of the  Bonds in a Trust
may be  obligations of  issuers which  are, or  which govern  the operation  of,
colleges  and universities and  whose revenues are  derived mainly from tuition,
dormitory revenues,  grants and  endowments. General  problems of  such  issuers
include  the prospect of a declining  percentage of the population consisting of
"college" age  individuals,  possible  inability  to  raise  tuitions  and  fees
sufficiently  to cover increased  operating costs, the  uncertainty of continued
receipt of  Federal grants  and  state funding,  and government  legislation  or
regulations  which may adversely  affect the revenues or  costs of such issuers.
All of such issuers have been experiencing certain of these problems in  varying
degrees.
 
    BRIDGE AUTHORITY AND TOLLROAD OBLIGATIONS.  Some of the Bonds in a Trust may
be  obligations  of issuers  which derive  their payments  from bridge,  road or
tunnel toll revenues. The revenues of such an issuer could be adversely affected
by competition from toll-free vehicular bridges and roads and alternative  modes
of transportation. Such revenues could also be adversely affected by a reduction
in  the availability of fuel to motorists  or significant increases in the costs
thereof. Specifically, governmental regulations restricting the use of  vehicles
in  the New  York City  metropolitan area may  adversely affect  revenues of the
Triborough Bridge and Tunnel Authority.
 
    DEDICATED-TAX SUPPORTED  BONDS.    Some of  the  Bonds  in a  Trust  may  be
obligations of issuers which are payable from and secured by tax revenues from a
designated  source, which revenues are pledged  to secure the bonds. The various
types of  Bonds described  below differ  in structure  and with  respect to  the
rights of the bondholders to the underlying property. Each type of dedicated-tax
supported  Bond has distinct risks, only some  of which are set forth below. One
type of dedicated-tax supported Bond is secured by the incremental tax  received
on   either  real   property  or   on  sales   within  a   specifically  defined
 
                                      A-4
<PAGE>
geographical area; such tax generally will  not provide bondholders with a  lien
on  the underlying property or revenues. Another type of dedicated-tax supported
Bond is  secured by  a special  tax levied  on real  property within  a  defined
geographical  area in such a manner that the  tax is levied on those who benefit
from the  project; such  bonds typically  provide for  a statutory  lien on  the
underlying  property for unpaid  taxes. A third  type of dedicated-tax supported
Bond may be secured by a tax levied upon the manufacture, sale or consumption of
commodities or upon the license to pursue certain occupations or upon  corporate
privileges  within a taxing jurisdiction. As to any of these types of Bonds, the
ability of  the  designated  revenues  to satisfy  the  interest  and  principal
payments  on such  bonds may be  affected by  changes in the  local economy, the
financial success of the  enterprise responsible for the  payment of the  taxes,
the  value of  any property on  which taxes may  be assessed and  the ability to
collect such  taxes in  a timely  fashion. Each  of these  factors will  have  a
different affect on each distinct type of dedicated-tax supported bonds.
 
    MUNICIPAL LEASE BONDS.  Some of the Bonds in a Trust may be obligations that
are  secured  by lease  payments  of a  governmental  entity. Such  payments are
normally subject to  annual budget  appropriations of  the leasing  governmental
entity.  A governmental  entity that enters  into such a  lease agreement cannot
obligate future  governments to  appropriate  for and  make lease  payments  but
covenants  to take such action as is necessary to include any lease payments due
in its budgets and to make the appropriations therefor. A governmental  entity's
failure to appropriate for and to make payments under its lease obligation could
result  in insufficient funds  available for payment  of the obligations secured
thereby.
 
    ORIGINAL ISSUE  DISCOUNT BONDS  AND STRIPPED  OBLIGATIONS.   Certain of  the
Bonds  in a Trust may be original  issue discount bonds. These Bonds were issued
with nominal  interest rates  less than  the rates  then offered  by  comparable
securities  and as a consequence  were originally sold at  a discount from their
face, or par, values. This original  issue discount, the difference between  the
initial  purchase price and face value, is deemed under current law to accrue on
a daily basis and the accrued  portion is treated as tax-exempt interest  income
for  federal income tax purposes. On sale  or redemption, gain, if any, realized
in excess of the earned  portion of original issue  discount will be taxable  as
capital  gain. See "What is the Tax Status of Unitholders". The current value of
an original issue discount bond reflects the present value of its face amount at
maturity. In a stable interest rate environment, the market value of an original
issue discount bond would  tend to increase  more slowly in  early years and  in
greater increments as the bond approached maturity.
 
    Certain  of the original issue discount bonds  in a Trust may be zero coupon
bonds. Zero coupon bonds do not provide for the payment of any current interest;
the buyer receives only the right to receive a final payment of the face  amount
of  the bond at its maturity. The effect of  owning a zero coupon bond is that a
fixed yield is earned not only on  the original investment but also, in  effect,
on  all  discount  earned  during  the life  of  the  obligation.  This implicit
reinvestment of earnings at the same rate eliminates the risk of being unable to
reinvest the income on such obligation at a rate as high as the implicit  yield,
but  at the same time also eliminates the holder's ability to reinvest at higher
rates in  the  future.  For  this  reason, zero  coupon  bonds  are  subject  to
substantially  greater  price  fluctuations during  periods  of  changing market
interest rates  than are  securities  of comparable  quality that  pay  interest
currently.
 
    Original  issue discount bonds, including zero  coupon bonds, may be subject
to redemption at prices  based on the  issue price plus  the amount of  original
issue   discount  accreted  to  redemption   (the  "accreted  value")  plus,  if
applicable, some premium.  Pursuant to  such call provisions  an original  issue
discount  bond may be called prior to its maturity date at a price less than its
face value. See the  "Schedules of Investments" for  more information about  the
call provisions of portfolio Bonds.
 
                                      A-5
<PAGE>
    Certain of the Bonds in a Trust may be Stripped Obligations, which represent
evidences  of ownership  with respect  to either  the principal  amount of  or a
payment of interest on a tax-exempt  obligation. An obligation is "stripped"  by
depositing  it with  a custodian, which  then effects a  separation in ownership
between the bond and any interest payment which has not yet become payable,  and
issues evidences of ownership with respect to such constituent parts. A Stripped
Obligation  therefore has economic characteristics similar to zero coupon bonds,
as described above.
 
    Each Stripped Obligation has  been purchased at a  discount from the  amount
payable  at maturity. With respect to each Unitholder, the Internal Revenue Code
treats as "original issue discount" that portion of the discount which  produces
a yield to maturity (as of the date of purchase of the Unitholder's Units) equal
to  the lower of the coupon rate of interest on the underlying obligation or the
yield to maturity on the basis of  the purchase price of the Unitholder's  Units
which  is allocable to  each Stripped Obligation.  Original issue discount which
accrues with respect to a Stripped Obligation will be exempt from Federal income
taxation to the  same extent  as interest  on the  underlying obligations.  (See
Section 11, " What Is The Tax Status of Unitholders".)
 
    Unitholders  should consult their own tax advisers with respect to the state
and local tax consequences of owning  original issue discount bonds or  Stripped
Obligations.  Under applicable  provisions governing determination  of state and
local taxes, interest on original  issue discount bonds or Stripped  Obligations
may  be deemed to  be received in  the year of  accrual even though  there is no
corresponding cash payment.
 
4.  COMPOSITION OF TRUSTS
 
Each Trust initially consists  of delivery statements  relating to contracts  to
purchase Bonds (or of such Bonds) as are listed under "Schedules of Investments"
and,  thereafter, of  such Bonds as  may continue to  be held from  time to time
(including certain securities deposited in  the Trust in substitution for  Bonds
not delivered to the Trust or in exchange or substitution for Bonds upon certain
refundings),  together  with  accrued  and  undistributed  interest  thereon and
undistributed cash realized from the disposition of Bonds.
 
    "WHEN-ISSUED"  AND  "DELAYED  DELIVERY"  TRANSACTIONS.    The  contracts  to
purchase  Bonds delivered to  the Trustee represent an  obligation by issuers or
dealers to deliver  Bonds to the  Sponsor for deposit  in the Trusts.  Normally,
"regular  way"  contracts are  settled and  the Bonds  delivered to  the Trustee
within a relatively  short period  of time.  However, certain  of the  contracts
relate  to Bonds which have not been issued  as of the Date of Deposit and which
are commonly referred to  as "when issued"  or "when, as  and if issued"  Bonds.
Although  the Sponsor does not believe it is  likely, one or more of the issuers
of such Bonds might decide not to proceed with such offerings. If such Bonds, or
replacement bonds  described below,  are not  acquired by  a Trust  or if  their
delivery  is  delayed, the  Estimated Current  Returns  and Estimated  Long Term
Returns shown herein may be reduced.  Certain of the contracts for the  purchase
of  Bonds provide for delivery dates after  the date of settlement for purchases
made on  the  Date of  Deposit.  Interest on  such  "when issued"  and  "delayed
delivery"  Bonds accrues to the benefit of Unitholders commencing with the first
settlement date for the Units. However,  in the opinion of counsel,  Unitholders
who  purchase their Units prior to the date such Bonds are actually delivered to
the Trustee must reduce the  tax basis of their  Units for interest accruing  on
such  Bonds during the interval between their purchase of Units and the delivery
of the Bonds because such amounts constitute a return of principal. As a  result
of  such adjustment, the  Estimated Current Returns set  forth herein (which are
based on the Public Offering Price as of  the business day prior to the Date  of
Deposit)  may be  slightly lower than  Unitholders will receive  after the first
year, assuming the Portfolio does not change
 
                                      A-6
<PAGE>
and estimated annual expense does not vary from that set forth under  "Essential
Information  Regarding the  Trusts." Those  Bonds in  each Trust  purchased with
delivery dates after the date  of settlement for purchases  made on the Date  of
Deposit are so noted in the Schedules of Investments.
 
    LIMITED  REPLACEMENT OF CERTAIN BONDS.   Neither the Sponsor nor the Trustee
shall be liable in any  way for any default, failure  or defect in any Bond.  In
the  event of a failure to deliver any  Bond that has been purchased for a Trust
under a contract, including those  Bonds purchased on a  when, as and if  issued
basis  ("Failed Bonds"), the Sponsor is authorized under the Indenture to direct
the Trustee to acquire  other specified Bonds ("Replacement  Bonds") to make  up
the original corpus of the Trust. The Replacement Bonds must be purchased within
20  days after  delivery of notice  of the failed  contract and the  cost to the
Trust (exclusive  of  accrued interest)  may  not  exceed the  amount  of  funds
reserved  for the purchase of  the Failed Bonds. The  Replacement Bonds (i) must
satisfy the criteria previously described  for Bonds originally included in  the
Trust  and, with respect  to Bonds purchased  for a State  Trust, shall have the
benefit of an exemption from state taxation of interest to an extent equal to or
greater than that of  the Bonds they  replace, (ii) must  have a fixed  maturity
date  after the date of purchase of not  less than approximately 15 years in the
case of National or State Trusts, approximately  11 years in the case of a  Long
Intermediate  Trust, approximately 5 years in  the case of Intermediate or State
Intermediate Trusts, approximately 3 years in  the case of a Short  Intermediate
Trust  and approximately 1 year in the case of a Short Term Trust, but not later
than the maturity date of the Failed Bonds, (iii) must be acquired at a cost  to
the  Trust equal to the  cost of the same principal  amount of Bonds provided in
the failed contract and  have a current  return and yield  to maturity not  less
than the current return and yield to maturity of the Failed Bonds and (iv) shall
not  be "when,  as and if  issued" Bonds.  Whenever a Replacement  Bond has been
acquired for a  Trust, the Trustee  shall, within five  days after the  delivery
thereof,  mail or deliver a notice 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 a Trust could not be  replaced,
the  Net Annual Interest Income per Unit for such Trust would be reduced and the
Estimated Current Return thereon might be lowered.
 
    SALE, MATURITY AND REDEMPTION OF BONDS.  Certain of the Bonds may from  time
to  time  under certain  circumstances be  sold  or redeemed  or will  mature in
accordance with their terms. The proceeds from  such events will be used to  pay
for   Units  redeemed  or   distributed  to  Unitholders   and  not  reinvested;
accordingly, no assurance can be given that  a Trust will retain for any  length
of time its present size and composition.
 
    All  of the Bonds in  each Trust are subject to  being called or redeemed in
whole or  in part  prior to  their stated  maturities pursuant  to the  optional
redemption  provisions described in  the "Schedules of  Investments" and in most
cases pursuant to sinking fund, special or extraordinary redemption  provisions.
A  bond  subject to  optional  call is  one which  is  subject to  redemption or
refunding   prior   to   maturity   at    the   option   of   the   issuer.    A
 
                                      A-7
<PAGE>
refunding  is a method by which a bond issue is redeemed, at or before maturity,
by the proceeds of a new bond  issue. A bond subject to sinking fund  redemption
is  one  which  is  subject to  partial  call  from  time to  time  from  a fund
accumulated for  the scheduled  retirement of  a portion  of an  issue prior  to
maturity.  Special  or  extraordinary  redemption  provisions  may  provide  for
redemption of  all or  a portion  of an  issue upon  the occurrence  of  certain
circumstances  related to  defaults or  unanticipated changes  in circumstances.
Events that may  permit or require  the special or  extraordinary redemption  of
bonds include, among others: substantial damage to or destruction of the project
for  which the proceeds  of the bonds were  used; exercise by  a local, state or
federal governmental  unit  of  its power  of  eminent  domain to  take  all  or
substantially  all of the project for which the proceeds of the bonds were used;
a final determination that the interest on the bonds is taxable; changes in  the
economic    availability    of    raw   materials,    operating    supplies   or
facilities or technological or other changes  which render the operation of  the
project  for which the proceeds of the  bonds were used uneconomical; changes in
law or an administrative or judicial decree which render the performance of  the
agreement  under which the proceeds of the  bonds were made available to finance
the project  impossible or  which create  unreasonable burdens  or which  impose
excessive  liabilities, such  as taxes,  not imposed on  the date  the bonds are
issued on the issuer of the bonds or  the user of the proceeds of the bonds;  an
administrative  or judicial decree which requires the cessation of a substantial
part of the operations of the project  financed with the proceeds of the  bonds;
an  overestimate of the costs of the project to be financed with the proceeds of
the bonds resulting in excess proceeds which may be applied to redeem bonds;  or
an  underestimate of a  source of funds  securing the bonds  resulting in excess
funds which may be applied to redeem bonds. The Sponsor is unable to predict all
of the circumstances which may result in  such redemption of an issue of  Bonds.
See  the discussion of the various types  of bond issues, above, for information
on the  call  provisions of  such  bonds, particularly  single  family  mortgage
revenue bonds.
 
    The exercise of redemption or call provisions will (except to the extent the
proceeds of the called Bonds are used to pay for Unit redemptions) result in the
distribution  of  principal and  may  result in  a  reduction in  the  amount of
subsequent interest  distributions; it  may also  affect the  current return  on
Units  of the Trust involved. Redemption pursuant to optional call provisions is
more likely to  occur, and  redemption pursuant to  sinking fund  or special  or
extraordinary  redemption provisions may occur, when  the Bonds have an offering
side evaluation  which represents  a premium  over par.  Redemption pursuant  to
optional  call provisions  may be,  and redemption  pursuant to  sinking fund or
special or extraordinary redemption provisions is likely to be, at a price equal
to the par value of the bonds without any premium (in the case of original issue
discount bonds, such redemption is generally to be made at the issue price  plus
the  amount of original issue discount accreted  to the date of redemption; such
price is referred to  herein as "accreted value").  Because Bonds may have  been
valued  at prices above or below par value or the then current accreted value at
the time Units  were purchased, Unitholders  may realize gain  or loss upon  the
redemption  of portfolio Bonds.  (See Sections 11  and 13 and  the "Schedules of
Investments.")
 
    CERTAIN TAX  MATTERS;  LITIGATION.   Certain  of  the Bonds  in  each  Trust
portfolio  may be subject to  continuing requirements such as  the actual use of
bond proceeds, manner of operation of the project financed from bond proceeds or
rebate of excess  earnings on  bond proceeds that  may affect  the exemption  of
interest  on such Bonds  from Federal income  taxation. Although at  the time of
issuance of each  of the  Bonds in  each Trust an  opinion of  bond counsel  was
rendered as to the exemption of interest on such obligations from Federal income
taxation,  and the issuers covenanted to  comply with all requirements necessary
to retain the tax-exempt status of the Bonds, there can be no assurance that the
 
                                      A-8
<PAGE>
respective issuers  or  other obligors  on  such obligations  will  fulfill  the
various  continuing  requirements  established  upon issuance  of  the  Bonds. A
failure to comply with such requirements may cause a determination that interest
on such  obligations  is  subject  to  Federal  income  taxation,  perhaps  even
retroactively  from the  date of  issuance of  such Bonds,  thereby reducing the
value of the Bonds and subjecting Unitholders to unanticipated tax liabilities.
 
    To the best knowledge of the Sponsor,  there is no litigation pending as  of
the  Date of Deposit in respect of  any Bonds which might reasonably be expected
to have a  material adverse effect  on any of  the Trusts. It  is possible  that
after  the Date of Deposit, litigation may be initiated with respect to Bonds in
any Trust. Any  such litigation may  affect the  validity of such  Bonds or  the
tax-exempt  nature of the interest thereon,  but while the outcome of litigation
of such nature can never be entirely predicted, the opinions of bond counsel  to
the  issuer of  each Bond  on the date  of issuance  state that  such Bonds were
validly issued and that the interest thereon is, to the extent indicated, exempt
from Federal income tax.
 
5.  WHY AND HOW ARE THE BONDS INSURED?
 
INSURANCE ON BONDS IN INSURED TRUSTS
 
Insurance guaranteeing  the  timely payment,  when  due, of  all  principal  and
interest  on the Bonds in each Insured Trust has been obtained by the Sponsor or
by the  issuers or  underwriters  of Bonds  from  the Municipal  Bond  Investors
Assurance  Corporation (the "Insurer"). Some of  the Bonds in each Insured Trust
may be covered by a policy or  policies of insurance obtained by the issuers  or
underwriters  of  the  Bonds  from  Municipal  Bond  Insurance  Association (the
"Association") or Bond Investors Guaranty Insurance Company ("BIG"). The Insurer
has issued a policy or policies of  insurance covering each of the Bonds in  the
Insured Trusts, each policy to remain in force until the payment in full of such
Bonds  and whether or not the Bonds continue  to be held by an Insured Trust. By
the terms  of each  policy the  Insurer will  unconditionally guarantee  to  the
holders  or owners of the Bonds the payment, when due, required of the issuer of
the Bonds of an amount  equal to the principal of  and interest on the Bonds  as
such  payments shall become due but not be paid (except that in the event of any
acceleration of the  due date of  principal by reason  of mandatory or  optional
redemption,  default or otherwise, the payments  guaranteed will be made in such
amounts and  at  such times  as  would  have been  due  had there  not  been  an
acceleration).  The  Insurer will  be responsible  for  such payments,  less any
amounts received by the holders or owners of the Bonds from any trustee for  the
bond  issuers or from  any other sources  other than the  Insurer. The Insurer's
policies relating to  small industrial development  bonds and pollution  control
revenue  bonds also guarantee the full and complete payments required to be made
by or on behalf  of an issuer  of Bonds pursuant  to the terms  of the Bonds  if
there  occurs an event which results in the loss of the tax-exempt status of the
interest on such Bonds,  including principal, interest  or premium payments,  if
any,  as and when thereby required. The Insurer has indicated that its insurance
policies do not insure the payment of  principal or interest on bonds which  are
not required to be paid by the issuer thereof because the bonds were not validly
issued;  as  indicated  under  "What  is the  Tax  Status  of  Unitholders?" the
respective issuing authorities have received  opinions of bond counsel  relating
to  the valid issuance of each of the Bonds in the Insured Trusts. The Insurer's
policy also does not insure against  non-payment of principal of or interest  on
the Bonds resulting from the insolvency, negligence or any other act or omission
of the trustee or other paying agent for the Bonds. The policy is not covered by
the  Property/ Casualty Insurance  Security Fund specified in  Article 76 of the
New York  Insurance Law.  The  policies are  non-cancellable and  the  insurance
premiums have been fully paid on or
 
                                      A-9
<PAGE>
prior  to the Date  of Deposit, either by  the Sponsor or, if  a policy has been
obtained by a Bond issuer, by such issuer.
 
    Upon notification from  the trustee  for any bond  issuer or  any holder  or
owner of the Bonds or coupons that such trustee or paying agent has insufficient
funds  to pay any  principal or interest in  full when due,  the Insurer will be
obligated to deposit funds  promptly with State Street  Bank and Trust  Company,
N.A.,  New York, New York, as fiscal  agent for the Insurer, sufficient to fully
cover the deficit. If notice of nonpayment is received on or after the due date,
the Insurer will provide for payment  within one business day following  receipt
of  the notice. Upon payment  by the Insurer of  any Bonds, coupons, or interest
payments, the Insurer shall succeed  to the rights of  the owner of such  Bonds,
coupons or interest payments with respect thereto.
 
    The  Insurer is the principal operating subsidiary of MBIA, Inc., a New York
Stock Exchange listed company. MBIA, Inc. is  not obligated to pay the debts  of
or  claims against the  Insurer. The Insurer is  a limited liability corporation
rather than a  several liability association.  The Insurer is  domiciled in  the
State  of New York and licensed to do business in all 50 states, the District of
Columbia and the Commonwealth of Puerto Rico.
 
    As of December  31, 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. As  of March  31, 1994,  the Insurer  had admitted  assets of  $3.2
billion  (unaudited), total liabilities  of $2.2 billion  (unaudited), and total
capital and surplus of  $998 million (unaudited)  determined in accordance  with
statutory  accounting practices prescribed or  permitted by insurance regulatory
authorities. Copies of the Insurer's  year end financial statements prepared  in
accordance  with statutory accounting practices  are available from the Insurer.
The address of the Insurer is 113 King Street, Armonk, New York 10504.
 
    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  York
State  Insurance Department which, if revised, could either increase or decrease
the amounts.
 
                                      A-10
<PAGE>
                      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 value of the Units of the Insured Trusts. The
insurance does not, however, guarantee the market  value of the Bonds or of  the
Units.
 
                                      A-11
<PAGE>
INSURANCE ON CERTAIN BONDS IN TRADITIONAL TRUSTS
 
    Insurance  guaranteeing the timely  payment, when due,  of all principal and
interest on certain Bonds in a Traditional  Trust may have been obtained by  the
Sponsor,  issuer or underwriter  of the particular Bonds  involved or by another
party. Such insurance, which  provides coverage substantially  the same as  that
obtained  with  respect  to  Bonds  in Insured  Trusts  as  described  above, is
effective so long as the insured Bond is outstanding and the insurer remains  in
business.  Insurance relates only  to the particular  Bond and not  to the Units
offered hereby or to their market value. Insured Bonds have received a rating of
"Aaa" by  Moody's Investors  Service, Inc.  and/or "AAA"  by Standard  &  Poor's
Corporation in recognition of such insurance.
 
    If  a Bond in  a Traditional Trust  is insured, the  Schedule of Investments
will identify the insurer. Such insurance will be provided by Financial Guaranty
Insurance  Company  ("FGIC"),  AMBAC   Indemnity  Corporation  ("AMBAC"),   Bond
Investors  Guaranty  Insurance  Company, now  known  as MBIA  Corp.  of Illinois
("BIG"),  Capital  Guaranty  Insurance  Company  ("CGIC"),  Financial   Security
Assurance,   Inc.   ("FSA"),   Municipal   Bond   Insurance   Association   (the
"Association"), Municipal  Bond  Investors  Assurance  Corporation  ("MBIA")  or
Connie  Lee Insurance Company  ("ConnieLee"). The Sponsor  to date has purchased
and presently  intends to  purchase insurance  for Bonds  in Traditional  Trusts
exclusively  from MBIA (see the preceding  disclosure regarding MBIA). There can
be no assurance  that any insurer  listed therein  will be able  to satisfy  its
commitments  in the  event claims  are made in  the future.  However, Standard &
Poor's Corporation has rated  the claims-paying ability  of each insurer  "AAA,"
and  Moody's Investors Service has rated all bonds insured by each such insurer,
except ConnieLee, "Aaa." Moody's Investor's  Service gives no ratings for  bonds
insured by ConnieLee.
 
    Because  any such insurance will  be effective so long  as the insured Bonds
are outstanding, such insurance  will be taken into  account in determining  the
market  value  of  such Bonds  and  therefore  some value  attributable  to such
insurance will be included in the value of the Units of the Trust that  includes
such  Bonds. The insurance does not, however,  guarantee the market value of the
Bonds or of the Units.
 
6.  HOW IS THE PUBLIC OFFERING PRICE DETERMINED?
 
The Public Offering Price of the Units  of each Trust is equal to the  Trustee's
determination  of the aggregate  OFFERING prices of  the Bonds deposited therein
(minus any  advancement  to the  principal  account of  the  Trust made  by  the
Trustee)  plus a sales charge of 5.152%  of the aggregate offering prices in the
case of National and  State Trusts, 4.439% of  the aggregate offering prices  in
the case of Long Intermediate Trusts, 4.058% of the aggregate offering prices in
the  case of Intermediate Trusts, 3.093% of the aggregate offering prices in the
case of Short Intermediate Trusts and 2.564% of the aggregate offering prices in
the case of Short  Term Trusts, in  each case adding to  the total thereof  cash
held  by the Trust,  if any, and dividing  the sum so obtained  by the number of
Units outstanding in the Trust.  This computation produces a gross  underwriting
profit  equal to 4.90% of the Public Offering  Price in the case of National and
State  Trusts,  4.25%  of  the  Public  Offering  Price  in  the  case  of  Long
Intermediate  Trusts,  3.90%  of  the  Public  Offering  Price  in  the  case of
Intermediate Trusts, 3.00%  of the Public  Offering Price in  the case of  Short
Intermediate  Trusts and 2.50% of the Public Offering Price in the case of Short
Term Trusts.
 
    The sales charge applicable to quantity purchases is reduced on a  graduated
scale  for sales to any purchaser  of at least $50,000 or  500 Units and will be
applied on whichever basis is more  favorable to the purchaser. For purposes  of
calculating  the applicable  sales charge,  purchasers who  have indicated their
intent to purchase a specified amount of Units of any Trust described herein  in
the  primary offering period or  units of any other  series of Nuveen Tax-Exempt
Unit Trusts in the primary offering period by executing and delivering a  letter
of intent to the Sponsor, which letter of intent must be in a form acceptable to
the
 
                                      A-12
<PAGE>
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
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  are
less  than the amount specified, the Unitholder involved must pay the Sponsor an
amount equal to the difference between the amounts paid for these purchases  and
the  amounts which  would have  been paid  if the  higher sales  charge had been
applied. If such Unitholder  does not pay the  additional amount within 20  days
after   written  request   by  the   Sponsor  or   the  Unitholder's  securities
representative, the Sponsor will instruct  the Trustee to redeem an  appropriate
number  of the escrowed  units to meet  the required payment.  By establishing a
letter of intent, a Unitholder irrevocably  appoints the Sponsor as attorney  to
give instructions to redeem any or all of such Unitholder's escrowed units, with
full  power  of substitution  in the  premises. A  Unitholder or  his securities
representative must notify the Sponsor whenever such Unitholder makes a purchase
of Units that he wishes to be counted towards the intended amount. Sales charges
during the primary offering period are as follows:
 
<TABLE>
<CAPTION>
                                                          National and State     Long Intermediate Trusts
                                                                Trusts                                       Intermediate Trusts
                                                       ------------------------  ------------------------  ------------------------
<S>                                                    <C>          <C>          <C>          <C>          <C>          <C>
                                                         Percent      Percent      Percent      Percent      Percent      Percent
                                                           of         of Net         of         of Net         of         of Net
                                                        Offering      Amount      Offering      Amount      Offering      Amount
                  Number of Units*                        Price      Invested       Price      Invested       Price      Invested
- -----------------------------------------------------  -----------  -----------  -----------  -----------  -----------  -----------
Less than 500........................................        4.90%       5.152%        4.25%       4.439%        3.90%       4.058%
500 but less than 1,000..............................        4.75        4.987         4.15        4.330         3.70        3.842
1,000 but less than 2,500............................        4.50        4.712         3.85        4.004         3.50        3.627
2,500 but less than 5,000............................        4.25        4.439         3.60        3.734         3.25        3.359
5,000 but less than 10,000...........................        3.50        3.627         3.35        3.466         3.00        3.093
10,000 but less than 25,000..........................        3.00        3.093         3.00        3.093         2.75        2.828
25,000 but less than 50,000..........................        2.50        2.564         2.50        2.564         2.50        2.564
50,000 or more.......................................        2.00        2.041         2.00        2.041         2.00        2.041
</TABLE>
 
<TABLE>
<CAPTION>
                                                          Short Intermediate
                                                                Trusts              Short Term Trusts
                                                       ------------------------  ------------------------
<S>                                                    <C>          <C>          <C>          <C>          <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  each
Trust is determined by adding to the Trustee's determination of the BID price of
each  Bond in the Trust  a sales charge determined  in accordance with the table
set forth below based upon the number of years remaining to the maturity of each
such Bond, adjusting  the total to  reflect the amount  of any cash  held in  or
advanced to the principal account of the Trust
 
                                      A-13
<PAGE>
and dividing the result by the number of Units then outstanding. For purposes of
this  calculation, Bonds will be deemed to mature on their stated maturity dates
unless: (a) the  Bonds have been  called for redemption  or funds or  securities
have been placed in escrow to redeem them on an earlier call date, in which case
such  call date shall  be deemed to be  the date upon which  they mature; or (b)
such Bonds are subject to  a "mandatory put," in  which case such mandatory  put
date shall be deemed to be the date upon which they mature.
 
    Pursuant to the terms of the Indenture, the Trustee may terminate a Trust if
the  net asset value of such Trust, as shown by any evaluation, is less than 20%
of the  original principal  amount of  the  Trust. In  the course  of  regularly
appraising  the  value of  Bonds  in each  Trust,  the Sponsor  will  attempt to
estimate the date on which a Trust's  value will fall below the 20% level  based
on anticipated bond events over a five year period, including maturities, escrow
calls  and  current  calls or  refundings,  assuming certain  market  rates. The
Sponsor intends from time to time to recommend that certain Trusts whose  values
have  fallen or are anticipated to fall  below the 20% level be terminated based
on certain criteria  which could adversely  affect the Trust's  diversification.
Once  the Sponsor has determined that a Trust's  value has or may fall below the
20% level within a five-year period, for purposes of computing the sales  charge
using the table set forth below, the maturity of each bond in such Trust will be
deemed  to be the earlier of the estimated termination date of the Trust, or the
actual date used  when pricing  the bond under  Municipal Securities  Rulemaking
Board rules and interpretations issued thereunder.
 
    The effect of this method of sales charge calculation will be that different
sales  charge rates will  be applied to  the various Bonds  in a Trust portfolio
based upon  the maturities  of  such Bonds,  in  accordance with  the  following
schedule.  As  shown, the  sales charge  on  Bonds in  each maturity  range (and
therefore the aggregate sales charge on the purchase) is reduced with respect to
purchases of at least $50,000 or 500 Units:
<TABLE>
<CAPTION>
                                                                  Amount of Purchase*
                             ---------------------------------------------------------------------------------------------
<S>                          <C>          <C>          <C>          <C>          <C>          <C>            <C>
                                            $50,000     $100,000     $250,000     $500,000     $1,000,000     $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.
 
                                      A-14
<PAGE>
    At all  times while  Units are  being  offered for  sale, the  Sponsor  will
appraise  or cause to  be appraised daily  the value of  the underlying Bonds in
each Trust as of 4:00 p.m. eastern time on each day on which the New York  Stock
Exchange  (the "Exchange") is normally open  and will adjust the Public Offering
Price of the Units commensurate with such appraisal. Such Public Offering  Price
will be effective for all orders received by a dealer or the Sponsor at or prior
to  4:00 p.m. eastern time on each such day. Orders received after that time, or
on a day when the Exchange is closed for a scheduled holiday or weekend, will be
held until the next determination of price.
 
    As more fully set  forth in Section 8,  accrued interest from the  preceding
Record  Date to, but not including, the settlement date of the transaction (five
business days after  purchase) will  be added to  the Public  Offering Price  to
determine the purchase price of Units.
 
    The  above graduated  sales charges  will apply  on all  purchases of Nuveen
investment company  securities on  any one  day  by the  same purchaser  in  the
amounts stated, and for this purpose purchases of this Series will be aggregated
with  concurrent purchases  of any  other Series  or of  shares of  any open-end
management investment company of which the Sponsor is principal underwriter  and
with respect to the purchase of which a sales charge is imposed.
 
    Purchases  by or for the account of an  individual and his or her spouse and
children under 21 years  of age will be  aggregated to determine the  applicable
sales  charge. The graduated sales  charges are also applicable  to a trustee or
other fiduciary  purchasing  securities for  a  single trust  estate  or  single
fiduciary account.
 
    Units  may be purchased at the Public  Offering Price without a sales charge
by officers or directors and by bona fide, full-time employees of Nuveen, Nuveen
Advisory Corp., Nuveen Institutional Advisory Corp. and The John Nuveen Company,
including in each case these individuals and their immediate family members  (as
defined above).
 
    The  initial or primary Public Offering Price  of the Units in each Trust is
based upon a pro rata share of the OFFERING prices per Unit of the Bonds in such
Trust plus the  applicable sales  charge. The secondary  market Public  Offering
Price of each Trust is based upon a pro rata share of the BID prices per Unit of
the Bonds in such Trust plus the applicable sales charge. The OFFERING prices of
Bonds in a Trust may be expected to average approximately 1% to 2% more than the
BID  prices of such Bonds  in the case of  National, Long Intermediate and State
Trusts, 3/4%  to 1  1/2% in  the  case of  Intermediate and  Short  Intermediate
Trusts,  and  1/2% to  3/4% in  the case  of Short  Term Trusts.  The difference
between the bid side evaluation and the offering side evaluation of the Bonds in
each Trust on  the business day  prior to the  Date of Deposit  is shown in  the
discussion of each Trust portfolio.
 
    Whether  or not Units are being offered for sale, the Sponsor will determine
the aggregate value of each Trust as of 4:00 p.m. eastern time: (i) on each June
30 or December 31 (or, if such date is not a business day, the last business day
prior thereto), (ii) on any day on  which a Unit is tendered for redemption  (or
the  next succeeding business day  if the date of  tender is a non-business day)
and (iii) at such other times as may be necessary. For this purpose, a "business
day" shall be any day on which the Exchange is normally open. (See Section 16.)
 
7.  MARKET FOR UNITS
 
During the  initial public  offering period,  the Sponsor  intends to  offer  to
purchase  Units of each  Trust at a price  equivalent to the  pro rata share per
Unit of the OFFERING prices of the Bonds in such Trust (plus accrued  interest).
Afterward,  although  it is  not  obligated to  do  so, the  Sponsor  intends to
maintain a secondary  market for  Units of  each Trust  at its  own expense  and
continuously  to offer  to purchase  Units of each  Trust at  prices, subject to
 
                                      A-15
<PAGE>
change at  any time,  which  are based  upon  the BID  prices  of Bonds  in  the
respective portfolios of the Trusts. If the supply of Units of any of the Trusts
of  this Series exceeds demand,  or for some other  business reason, the Sponsor
may discontinue purchases of Units of such Trust at such prices. UNITHOLDERS WHO
WISH TO DISPOSE OF THEIR UNITS SHOULD INQUIRE OF THE TRUSTEE OR THEIR BROKER  AS
TO  THE  CURRENT  REDEMPTION PRICE  (SEE  SECTION  19). In  connection  with its
secondary marketmaking activities, the Sponsor may from time to time enter  into
secondary  market  joint  account  agreements with  other  brokers  and dealers.
Pursuant to such an agreement the Sponsor will purchase Units from the broker or
dealer at the bid price and will place the Units into a joint account managed by
the Sponsor; sales from  the account will  be made in  accordance with the  then
current  prospectus and the Sponsor and the  broker or dealer will share profits
and losses in  the joint account  in accordance  with the terms  of their  joint
account agreement.
 
    Certificates,  if any, for Units are  delivered to the purchaser as promptly
after the date of settlement (five business days after purchase) as the  Trustee
can  complete the mechanics of registration. Normally, Certificates, if any, are
mailed by  the  Trustee within  48  hours after  registration  instructions  are
received.  Purchasers of Units to whom Certificates are issued will be unable to
exercise any right of redemption until they have received their Certificates  as
tender of the Certificate, properly endorsed for transfer. (See Section 19.)
 
    Each  Unit of  each respective  Trust initially  offered by  this Prospectus
represents that fractional  undivided interest  in such  Trust as  is set  forth
under "Essential Information Regarding the Trusts." To the extent that any Units
of  any Trust are  redeemed by the  Trustee, the aggregate  value of the Trust's
assets will decrease  by the amount  paid to the  redeeming Unitholder, but  the
fractional  undivided  interest  of  each unredeemed  Unit  in  such  Trust will
increase proportionately.  The Sponsor  will initially,  and from  time to  time
thereafter, hold Units in connection with their offering.
 
8.  WHAT IS ACCRUED INTEREST?
 
Accrued  interest is the accumulation of unpaid interest on a bond from the last
day on which  interest thereon  was paid.  Interest on  Bonds in  each Trust  is
accounted  for daily on an accrual basis. For this reason, the purchase price of
Units of a Trust will  include not only the Public  Offering Price but also  the
proportionate  share of  accrued interest  to the  date of  settlement. Interest
accrues to the  benefit of Unitholders  commencing with the  settlement date  of
their purchase transaction.
 
    Accrued interest does not include accrual of original issue discount on zero
coupon  bonds, Stripped Obligations or other original issue discount bonds. (See
"Summary of Portfolios--General Trust Information"  and "What Is The Tax  Status
of Unitholders.")
 
    In  an effort to reduce the amount  of accrued interest that investors would
have to pay in addition to the Public Offering Price, the Trustee has agreed  to
advance  to each Trust the amount of accrued interest due on the Bonds as of the
Date of Deposit (which has been designated  the first Record Date for all  plans
of  distribution). This  accrued interest  will be  paid to  the Sponsor  as the
holder of record of  all Units on  the Date of  Deposit. Consequently, when  the
Sponsor  sells Units of a  Trust, the amount of accrued  interest to be added to
the Public Offering Price to determine the  purchase price of the Units of  such
Trust  purchased by an investor will include only accrued interest from the Date
of Deposit  to, but  not including,  the date  of settlement  of the  investor's
purchase  (five business days  after purchase), less  any distributions from the
related Interest Account.  The Trustee  will recover  its advancements  (without
interest  or  other cost  to the  Trusts)  from interest  received on  the Bonds
deposited in each Trust.
 
    The Trustee has no  cash for distribution to  Unitholders until it  receives
interest  payments on the Bonds in the  Trusts. Since municipal bond interest is
accrued daily but
 
                                      A-16
<PAGE>
paid only semi-annually, during the initial  months of the Trusts, the  Interest
Accounts,  consisting of accrued but uncollected interest and collected interest
(cash), will  be predominantly  the  uncollected accrued  interest that  is  not
available for distribution. However, due to advances by the Trustee, the Trustee
will provide a first distribution between approximately 30 and 60 days after the
Date  of Deposit. Assuming each Trust  retains its original size and composition
and expenses and fees remain the same, annual interest collected and distributed
will approximate  the  estimated  Net  Annual  Interest  Income  stated  herein.
However,  the amount of  accrued interest at  any point in  time will be greater
than the amount that the Trustee will have actually received and distributed  to
the Unitholders. Therefore, there will always remain an item of accrued interest
that is included in the Purchase Price and the redemption price of the Units.
 
    Interest  is accounted  for daily and  a proportionate share  of accrued and
undistributed interest computed from the preceding  Record Date is added to  the
daily  valuation of each Unit  of each Trust. (See Sections  3 and 13.) As Bonds
mature, or are redeemed or sold,  the accrued interest applicable to such  bonds
is  collected and subsequently distributed  to Unitholders. Unitholders who sell
or redeem all or a portion of their Units will be paid their proportionate share
of the remaining accrued interest to, but not including, the fifth business  day
following the date of sale or tender.
 
9.  WHAT ARE ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN?
 
The  Estimated Long Term Return for each Trust is a measure of the return to the
investor earned over the  estimated life of the  Trust. The Estimated Long  Term
Return represents an average of the yields to maturity (or call) of the Bonds in
the  Trust's portfolio calculated in accordance  with accepted bond practice and
adjusted to reflect expenses  and sales charges.  Under accepted bond  practice,
tax-exempt  bonds are customarily offered to investors on a "yield price" basis,
which involves  computation of  yield to  maturity or  to an  earlier call  date
(whichever  produces the lower yield), and which takes into account not only the
interest payable  on the  bonds but  also  the amortization  or accretion  to  a
specified  date of any premium over or discount from the par (maturity) value in
the bond's  purchase  price. In  calculating  Estimated Long  Term  Return,  the
average  yield for  the Trust's  portfolio is  derived by  weighting each Bond's
yield by the market value of the Bond and by the amount of time remaining to the
date to which the Bond is priced. Once the average portfolio yield is  computed,
this  figure is then reduced to reflect estimated expenses and the effect of the
maximum  sales  charge  paid  by  investors.  The  Estimated  Long  Term  Return
calculation  does not take into account the effect of a first distribution which
may be less than a  regular distribution or may be  paid at some point after  30
days  (or a second distribution which may be less than a normal distribution for
Unitholders who choose quarterly or  semi-annual plans of distribution), and  it
also  does  not  take into  account  the  difference in  timing  of  payments to
Unitholders who choose quarterly or  semi-annual plans of distribution, each  of
which will reduce the return.
 
    Estimated  Current Return  is computed by  dividing the  Net Annual Interest
Income per Unit by the Public Offering Price. In contrast to Estimated Long Term
Return, Estimated Current Return does not reflect the amortization of premium or
accretion of discount, if 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
 
                                      A-17
<PAGE>
Return. There thus  can be no  assurance that the  Estimated Current Returns  or
Estimated  Long Term Returns quoted herein will be realized in the future. Since
both the Estimated  Current Return  and the  Estimated Long  Term Return  quoted
herein are based on the market value of the underlying Bonds on the business day
prior  to  the Date  of Deposit,  subsequent  calculations of  these performance
measures will reflect the then current market value of the underlying Bonds  and
may be higher or lower.
 
    A  portion of the  monies received by a  Trust may be  treated, in the first
year only, as a return of principal due to the inclusion in the Trust  portfolio
of  "when-issued"  or  other  Bonds  having delivery  dates  after  the  date of
settlement for purchases  made on  the Date of  Deposit. A  consequence of  this
treatment  is that in the computation of  Estimated Current Return for the first
year, such monies are excluded from Net Annual Interest Income and treated as an
adjustment to the Public Offering  Price. (See "Essential Information  Regarding
the Trusts" and Sections 4 and 11.)
 
    For a statement of the Net Annual Interest Income per Unit under the monthly
plan  of  distribution,  and Estimated  Long  Term Yield  and  Estimated Current
Returns based on the Public Offering Prices of the Trusts in this Series, all as
of the day prior  to the Date of  Deposit, see "Essential Information  Regarding
the Trusts."
 
10.  HOW WAS THE PRICE OF THE BONDS DETERMINED AT THE DATE OF DEPOSIT?
 
The prices at which the Bonds deposited in the Trusts would have been offered to
the  public on the business day prior to  the Date of Deposit were determined by
the Trustee on the basis  of an evaluation of such  Bonds prepared by Kenny  S&P
Evaluation  Services, a  firm regularly engaged  in the  business of evaluating,
quoting or appraising comparable bonds. With respect to Bonds in Insured  Trusts
and insured Bonds in Traditional Trusts, Kenny S&P Evaluation Services evaluated
the Bonds as so insured. (See Section 5).
 
    The  amount by which  the Trustee's determination of  the OFFERING PRICES of
the Bonds deposited  in the Trusts  was greater or  less than the  cost of  such
Bonds  to  the  Sponsor was  PROFIT  OR LOSS  to  the Sponsor  exclusive  of any
underwriting profit.  (See Section  3.)  The Sponsor  also may  realize  FURTHER
PROFIT  OR  SUSTAIN FURTHER  LOSS  as a  result  of fluctuations  in  the Public
Offering Price of the Units. Cash, if  any, made available to the Sponsor  prior
to  the settlement date for a purchase of  Units, or prior to the acquisition of
all Portfolio securities by a Trust, may  be available for use in the  Sponsor's
business, and may be of benefit to the Sponsor.
 
11.  WHAT IS THE TAX STATUS OF UNITHOLDERS?
 
At  the  respective times  of issuance  of  the Bonds  opinions relating  to the
validity thereof and to  the exemption of interest  thereon from Federal  income
tax  were rendered  by bond  counsel to  the respective  issuing authorities. In
addition, with respect to  State Trusts, where applicable,  bond counsel to  the
issuing  authorities rendered opinions  as to the exemption  of interest on such
Bonds, when held by residents  of the state in which  the issuers of such  Bonds
are  located, from state income taxes and certain state or local intangibles and
local income taxes.  For a  discussion of  the tax  status of  State Trusts  see
"Summary  of  Portfolios--  Tax Status"  for  the respective  State  Trust. (See
Sections 2 and 3.)  Neither the Sponsor  nor its counsel  have made any  special
review  for the Trusts of the proceedings  relating to the issuance of the Bonds
or of the basis for the opinions rendered in connection therewith.
 
    Taxpayers  must  disclose  on  their  Federal  tax  returns  the  amount  of
tax-exempt  interest  earned  during  the  year.  Federally  tax-exempt  income,
including income on  Units of the  Trusts, will be  taken into consideration  in
computing the portion, if any, of social security benefits received that will be
included in a taxpayer's gross income subject to the Federal income tax.
 
                                      A-18
<PAGE>
    Gain  realized on the sale or redemption of the Bonds by the Trustee or of a
Unit by  a Unitholder  is includable  in  gross income  for Federal  income  tax
purposes,  and may be includable  in gross income for  state tax purposes. (Such
gain does not  include any amounts  received in respect  of accrued interest  or
accrued  original  issue  discount,  if  any.) It  should  be  noted  that under
provisions of the Revenue Reconciliation Act  of 1993 (the "Tax Act")  described
below  that subject accretion of market discount on tax-exempt bonds to taxation
as ordinary income,  gain realized on  the sale  or redemption of  Bonds by  the
Trustee or of Units by a Unitholder that would have been treated as capital gain
under  prior law is treated as ordinary  income to the extent it is attributable
to accretion of market  discount. Market discount can  arise based on the  price
the  Trust pays  for the Bonds  or the  price a Unitholder  pays for  his or her
Units.
 
    In the opinion of Chapman and Cutler, Counsel to the Sponsor, under existing
law:
 
    (1) the Trusts  are not  associations taxable  as corporations  for  Federal
        income  tax purposes. Tax-exempt interest received by each of the Trusts
        on  Bonds  deposited  therein  will  retain  its  status  as  tax-exempt
        interest,  for Federal income tax purposes,  when received by the Trusts
        and when distributed  to the  Unitholders, except  that the  alternative
        minimum  tax and environmental  tax (the "Superfund  Tax") applicable to
        corporate Unitholders  may, in  certain  circumstances, include  in  the
        amount  on which  such taxes  are calculated  a portion  of the interest
        income received by  the Trust.  See "Certain Tax  Matters Applicable  to
        Corporate Unitholders", below;
 
    (2) each  Unitholder of a Trust is considered to  be the owner of a pro rata
        portion of such Trust under Subpart E, subchapter J of Chapter 1 of  the
        Internal Revenue Code of 1986 (the "Code") and will have a taxable event
        when  the Trust  disposes of  a Bond or  when the  Unitholder redeems or
        sells Units. Unitholders must  reduce the tax basis  of their Units  for
        their  share of accrued interest received by the Trust, if any, on Bonds
        delivered after  the  date the  Unitholders  pay for  their  Units  and,
        consequently,  such Unitholders may have an  increase in taxable gain or
        reduction in capital loss  upon the disposition of  such Units. Gain  or
        loss  upon the sale or redemption of  Units is measured by comparing the
        proceeds of  such sale  or redemption  with the  adjusted basis  of  the
        Units.  If the  Trustee disposes of  Bonds (whether by  sale, payment at
        maturity, redemption or otherwise),  gain or loss  is recognized to  the
        Unitholder. The amount of any such gain or loss is measured by comparing
        the  Unitholder's  pro  rata  share  of  the  total  proceeds  from such
        disposition with  the  Unitholder's  basis for  his  or  her  fractional
        interest  in the  asset disposed  of. In  the case  of a  Unitholder who
        purchases Units, such basis (before adjustment for earned original issue
        discount  and  amortized  bond  premium,   if  any)  is  determined   by
        apportioning  the  cost of  the  Units among  each  of the  Trust assets
        ratably according to value as of  the date of acquisition of the  Units.
        The   tax  cost  reduction   requirements  of  said   Code  relating  to
        amortization of bond  premium may, under  some circumstances, result  in
        the  Unitholder realizing a taxable gain when  his or her Units are sold
        or redeemed for an amount equal to their original cost; and
 
    (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.
 
                                      A-19
<PAGE>
In the opinion of Carter, Ledyard & Milburn, counsel to the Trustee, and, in the
absence  of a New York Trust from the Series, special counsel for the Series for
New York tax matters, under existing law:
 
        Under the income tax laws of the State and City of New York, each  Trust
    is  not an association taxable as a corporation and the income of each Trust
    will be treated as the income of the Unitholders.
 
    For a summary  of each opinion  of special counsel  to the respective  State
Trusts for state tax matters, see Section 3.
 
    ALL STATEMENTS IN THE PROSPECTUS CONCERNING EXEMPTION FROM FEDERAL, STATE OR
OTHER TAXES ARE THE OPINION OF COUNSEL AND ARE TO BE SO CONSTRUED.
 
    The  redemption of Units in a Trust by  a Unitholder would result in each of
the remaining Unitholders of said Trust owning a greater proportionate  interest
in  the remaining assets of  said Trust. Although present  law does not directly
address this matter, it  would appear reasonable  that a remaining  Unitholder's
tax  basis in his  Units would include  his proportionate share  of any proceeds
received by the Trust on the sale of bonds which were not distributed to him but
were instead used by  the Trust to redeem  Units and that his  tax basis in  the
remaining  assets of the Trust  would accordingly be increased  by such share of
proceeds, based on the relative fair market value of the remaining assets of the
Trust as of the date of such redemption.
 
    Sections 1288 and 1272 of the Code provide a complex set of rules  governing
the  accrual of original issue discount. These rules provide that original issue
discount accrues either  on the basis  of a constant  compound interest rate  or
ratably over the term of the Bond, depending on the date the Bond was issued. In
addition,  special  rules apply  if the  purchase  price of  a Bond  exceeds the
original issue price plus the amount of original issue discount which would have
previously accrued based upon its issue price (its "adjusted issue price").  The
application  of these rules will also vary depending on the value of the Bond on
the date a Unitholder acquires his Units, and the price the Unitholder pays  for
his  Units. The  accrual of  tax-exempt original  issue discount  on zero coupon
bonds and other original issue discount bonds will result in an increase in  the
Unitholder's  basis in  such obligations and,  accordingly, in his  basis in his
Units.
 
    The Tax Act subjects  tax-exempt bonds to the  market discount rules of  the
Code  effective for  bonds purchased  after April  30, 1993.  In general, market
discount is the amount (if any) by which the stated redemption price at maturity
exceeds an investor's purchase price (except to the extent that such difference,
if any, is attributable to original  issue discount not yet accrued). Under  the
Tax Act, accretion of market discount is taxable as ORDINARY INCOME; under prior
law,  the  accretion had  been  treated as  capital  gain. Market  discount that
accretes while the Trust holds a Bond would be recognized as ordinary income  by
the  Unitholders when principal payments are received  on the Bond, upon sale or
at redemption (including early  redemption), or upon the  sale or redemption  of
his  or her  Units, unless  a Unitholder  elects to  include market  discount in
taxable income  as  it  accrues.  The market  discount  rules  are  complex  and
Unitholders  should consult their  tax advisors regarding  these rules and their
application.
 
    The Internal Revenue Code provides that interest on indebtedness incurred or
continued to purchase  or carry  obligations, the  interest on  which is  wholly
exempt  from Federal income taxes, is not deductible. Because each Unitholder is
treated for Federal income tax purposes as the owner of a pro rata share of  the
Bonds owned by the applicable Trust, interest on borrowed funds used to purchase
or  carry Units  of such  Trust will  not be  deductible for  Federal income tax
purposes. Under rules used by the Internal Revenue Service for determining  when
borrowed  funds are  considered used for  the purpose of  purchasing or carrying
particular  assets,  the   purchase  of   Units  may  be   considered  to   have
 
                                      A-20
<PAGE>
been  made with borrowed funds  even though the borrowed  funds are not directly
traceable to the purchase of Units (however, these rules generally do not  apply
to  interest paid  on indebtedness  incurred to  purchase or  improve a personal
residence). Similar  rules  are generally  applicable  for state  tax  purposes.
Special  rules apply in the case  of certain financial institutions that acquire
Units. Investors with questions regarding these issues should consult with their
tax advisers.
 
    In general,  each  issue  of bonds  in  the  Trusts is  subject  to  certain
post-issuance  requirements which must be  met in order for  the interest on the
Bonds to be and remain exempt from Federal income taxation. Bond counsel to each
issuer generally has opined that, assuming continuing compliance by such issuers
with certain covenants, interest on such  Bonds will continue to be exempt  from
Federal income taxation (other than with respect to the application to corporate
Unitholders  of the alternative  minimum tax or the  Superfund Tax, as discussed
below).
 
    For purposes of computing  the alternative minimum  tax for individuals  and
corporations, interest on certain specified tax-exempt private activity bonds is
included as a preference item. The Trusts do not include any such bonds.
 
    For  taxpayers  other than  corporations,  net capital  gains  are presently
subject to a maximum tax  rate of 28 percent. However,  it should be noted  that
legislative proposals are introduced from time to time that affect tax rates and
could affect relative differences at which ordinary income and capital gains are
taxed.
 
    CERTAIN  TAX MATTERS  APPLICABLE TO  CORPORATE UNITHOLDERS.  In the  case of
certain corporations, the alternative minimum  tax and the Superfund Tax  depend
upon the corporation's alternative minimum taxable income ("AMTI"), which is the
corporation's  taxable income  with certain  adjustments. One  of the adjustment
items used in computing AMTI and the Superfund Tax of a corporation (other  than
an S corporation, Regulated Investment Company, Real Estate Investment Trust, or
REMIC)  is an amount equal to 75%  of the excess of such corporation's "adjusted
current earnings" over an amount equal to its AMTI (before such adjustment  item
and  the  alternative tax  net  operation loss  deduction).  Although tax-exempt
interest received by each of the Trusts  on Bonds deposited therein will not  be
included  in the gross  income of corporations for  Federal income tax purposes,
"adjusted current earnings" includes all tax-exempt interest, including interest
on all Bonds in the Trust and tax-exempt original issue discount.
 
    Corporate Unitholders  are urged  to  consult their  own tax  advisers  with
respect  to the particular tax consequences  to them resulting under the Federal
tax law, including the corporate alternative minimum tax, the Superfund Tax  and
the branch profits tax imposed by Section 884 of the Code.
 
    EXCEPT  AS NOTED ABOVE AND IN SECTION  3, THE EXEMPTION OF INTEREST ON STATE
AND LOCAL  OBLIGATIONS FOR  FEDERAL  INCOME TAX  PURPOSES DOES  NOT  NECESSARILY
RESULT IN EXEMPTION UNDER THE INCOME OR OTHER TAX LAWS OF ANY STATE OR CITY. THE
LAWS  OF  THE  SEVERAL  STATES  VARY  WITH  RESPECT  TO  THE  TAXATION  OF  SUCH
OBLIGATIONS.
 
12.  WHAT ARE NORMAL TRUST OPERATING EXPENSES?
 
No annual advisory fee is charged the  Trusts by the Sponsor. The Sponsor  does,
however,  receive a fee  of $0.17 per  annum per $1,000  principal amount of the
underlying Bonds  in each  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  each Trust  as set  forth in  "Essential  Information
Regarding  the Trusts." Each  annual fee is  per $1,000 principal  amount of the
underlying Bonds in a Trust for that
 
                                      A-21
<PAGE>
portion of the  Trust that  represents a  particular plan  of distribution.  The
Trustee's  fee  may  be periodically  adjusted  in response  to  fluctuations in
short-term interest rates (reflecting the cost to the Trustee of advancing funds
to a  Trust to  meet scheduled  distributions) and  may be  further adjusted  in
accordance  with  the  cumulative  percentage  increase  of  the  United  States
Department of Labor's  Consumer Price  Index entitled "All  Services Less  Rent"
since the establishment of the Trusts. The Trustee has the use of funds, if any,
being  held in  the Interest  and Principal  Accounts of  each Trust  for future
distributions,  payment  of  expenses   and  redemptions.  These  Accounts   are
non-interest  bearing to Unitholders. Pursuant to normal banking procedures, the
Trustee benefits  from the  use of  funds held  therein. Part  of the  Trustee's
compensation for its services to the Fund is expected to result from such use of
these funds.
 
    Premiums  for the policies  of insurance obtained  by the Sponsor  or by the
Bond issuers with respect to the Bonds in the Insured Trusts and with respect to
insured Bonds in Traditional Trusts have been paid in full prior to the  deposit
of the Bonds in the Trusts, and the value of such insurance has been included in
the evaluation of the Bonds in each Trust and accordingly in the Public Offering
Price  of Units of each Trust. There  are no annual continuing premiums for such
insurance.
 
    The Sponsor has borne all costs of creating and establishing the Trusts. The
following are  expenses of  the Trusts  and, when  paid by  or are  owed to  the
Trustee,  are secured by  a lien on the  assets of the Trust  or Trusts to which
such expenses are allocable: (1) the expenses and costs of any action undertaken
by the  Trustee to  protect  the Trusts  and the  rights  and interests  of  the
Unitholders;  (2) all taxes and other governmental charges upon the Bonds or any
part of the Trusts (no such taxes or charges are being levied or made or, to the
knowledge of the Sponsor, contemplated); (3)  amounts payable to the Trustee  as
fees  for  ordinary  recurring  services  and  for  extraordinary  non-recurring
services rendered  pursuant to  the Indenture,  all disbursements  and  expenses
including  counsel fees  (including fees of  bond counsel which  the Trustee may
retain) sustained or incurred  by the Trustee in  connection therewith; and  (4)
any  losses or liabilities accruing to the Trustee without negligence, bad faith
or willful misconduct on  its part. The  Trustee is empowered  to sell Bonds  in
order  to  pay  these  amounts  if funds  are  not  otherwise  available  in the
applicable Interest and Principal Accounts.
 
    The Indenture requires each Trust  to be audited on  an annual basis at  the
expense  of the Trust by independent public accountants selected by the Sponsor.
The Trustee  shall not  be  required, however,  to cause  such  an audit  to  be
performed  if its cost to a Trust shall exceed $.05 per Unit on an annual basis.
Unitholders of a  Trust covered by  an audit may  obtain a copy  of the  audited
financial statements upon request.
 
13.  WHEN ARE DISTRIBUTIONS MADE TO UNITHOLDERS?
 
Interest received by the Trustee on the Bonds in each Trust, including that part
of  the proceeds of  any disposition of Bonds  which represents accrued interest
and including  any insurance  proceeds representing  interest due  on  defaulted
Bonds,  shall be credited to the "Interest  Account" of such Trust and all other
moneys received by the Trustee shall  be credited to the "Principal Account"  of
such Trust.
 
    The  pro rata share of  cash in the Principal Account  in each Trust will be
computed as of each semi-annual Record Date and distributions to the Unitholders
as of such Record Date will be made on or shortly after the fifteenth day of the
month. Proceeds received from the disposition, including sale, call or maturity,
of any of the Bonds and all amounts  paid with respect to zero coupon bonds  and
Stripped  Obligations will be held  in the Principal Account  and either used to
pay for Units  redeemed or distributed  on the Distribution  Date following  the
next semi-annual Record Date. The Trustee is not required to make a distribution
from
 
                                      A-22
<PAGE>
the  Principal Account of any Trust unless the amount available for distribution
in such account equals at least ten cents per Unit.
 
    The pro rata share of the Interest Account in each Trust will be computed by
the Trustee each month as of each Record Date and distributions will be made  on
or  shortly after the fifteenth day of the month to Unitholders of such Trust as
of the Record Date who are entitled to distributions at that time under the plan
of distribution chosen. Persons who purchase  Units between a Record Date and  a
Distribution Date will receive their first distribution on the Distribution Date
following the next Record Date under the applicable plan of distribution.
 
    Purchasers  of  Units  who desire  to  receive interest  distributions  on a
monthly or quarterly basis may elect to do so at the time of purchase during the
initial public offering  period. Those indicating  no choice will  be deemed  to
have  chosen the  semi-annual distribution  plan. All  Unitholders, however, who
purchase Units during the  initial public offering period  and who hold them  of
record on the first Record Date will receive the first distribution of interest.
Thereafter, Record Dates for monthly distributions will be the first day of each
month;  Record  Dates  for quarterly  distributions  will  be the  first  day of
February,  May,  August   and  November;  and   Record  Dates  for   semi-annual
distributions will be the first day of May and November.
 
    Details  of distributions  per Unit  of each  Trust under  the various plans
based upon estimated Net Annual Interest Income at the Date of Deposit are shown
in the tables appearing  in Section 3. The  amount of the regular  distributions
will  remain the same so long as each  Trust portfolio remains the same and fees
and expenses remain the same, and will generally change when Bonds are redeemed,
mature or are sold or when fees and expenses increase or decrease.
 
    The plan of  distribution selected  by a  Unitholder will  remain in  effect
until  changed.  Unitholders  purchasing  Units  in  the  secondary  market will
initially receive distributions  in accordance  with the election  of the  prior
owner.  Unitholders desiring to change  their plan of distribution  may do so by
sending  a   written   notice  requesting   the   change,  together   with   any
Certificate(s),  to  the  Trustee. The  notice  and any  Certificate(s)  must be
received by  the  Trustee not  later  than the  semi-annual  Record Date  to  be
effective   as  of   the  semi-annual  distribution   following  the  subsequent
semi-annual Record  Date. Unitholders  are requested  to make  any such  changes
within  45 days prior to the applicable Record Date. Certificates should only be
sent by registered or certified mail to minimize the possibility of their  being
lost or stolen. (See Section 18.) If no notice is received in proper form by the
Trustee,  the Unitholder  will be  deemed to have  elected to  continue the same
plan.
 
    As of the first day of each month the Trustee will deduct from the  Interest
Account  of a Trust or, to the extent funds are not sufficient therein, from the
Principal Account of  a Trust, amounts  needed for payment  of expenses of  such
Trust.  The Trustee also may withdraw from said accounts such amount, if any, as
it deems necessary to establish a  reserve for any governmental charges  payable
out  of such Trust. Amounts  so withdrawn shall not be  considered a part of the
Trust's assets until such time  as the Trustee shall return  all or any part  of
such amounts to the appropriate account.
 
    For  the purpose  of minimizing fluctuations  in the  distributions from the
Interest Account of a Trust, the  Trustee is authorized to advance such  amounts
as may be necessary to provide for interest distributions of approximately equal
amounts.  The  Trustee  shall  be reimbursed,  without  interest,  for  any such
advances from funds  in the Interest  Account of such  Trust. The Trustee's  fee
takes  into account the  costs attributable to  the outlay of  capital needed to
make such advances.
 
                                      A-23
<PAGE>
    The Trustee  shall withdraw  from  the Interest  Account and  the  Principal
Account  of a  Trust such amounts  as may  be necessary to  cover redemptions of
Units of such Trust by the Trustee. (See Section 19.)
 
    Funds which are available for future distributions, redemptions and  payment
of  expenses are held in accounts  which are non-interest bearing to Unitholders
and are available for use by the Trustee pursuant to normal banking procedures.
 
14.  ACCUMULATION PLAN
 
The Sponsor, John Nuveen & Co.  Incorporated, is also the principal  underwriter
of  the  Nuveen Municipal  Bond Fund,  Inc. (the  "Bond Fund"),  Nuveen Tax-Free
Reserves, Inc. ("Tax-Free Reserves"), Nuveen California Tax-Free Fund, Inc. (the
"California Fund"),  Nuveen Tax-Free  Bond Fund,  Inc. ("Tax-Free  Bond  Fund"),
Nuveen  Insured Tax-Free  Bond Fund, Inc.  (the "Insured Bond  Fund") and Nuveen
Tax-Free Money  Market Fund,  Inc.  (the "Money  Market  Fund") and  the  Nuveen
Multistate  Tax-Free  Trust  (the  "Multistate  Trust").  Each  of  these  funds
(together, the  "Accumulation Funds")  is  an open-end,  diversified  management
investment   company  into  which  Unitholders  may  choose  to  reinvest  Trust
distributions automatically,  without any  sales  charge. (Reinvestment  in  the
California  Fund is available only to  Unitholders who are California residents.
Reinvestment in the State Portfolios of the Tax-Free Bond Fund, the Insured Bond
Fund, the  Money Market  Fund and  the  Multistate Trust  is available  only  to
Unitholders  who  are residents  of  the states  for  which such  portfolios are
named.) Unitholders may  reinvest both interest  and principal distributions  or
principal  distributions only. Each Accumulation  Fund has investment objectives
which differ in  certain respects from  those of  the Trusts and  may invest  in
securities which would not be eligible for deposit in the Trusts. The investment
adviser  to  each Accumulation  Fund is  Nuveen  Advisory Corp.,  a wholly-owned
subsidiary of  the  Sponsor. The  following  is  a general  description  of  the
investment  objectives  and  policies  of each  Accumulation  Fund.  For  a more
detailed description, Unitholders should read the prospectus of the Accumulation
Fund in which they are interested.
 
THE BOND FUND
 
    The Bond  Fund has  the  objective of  providing,  through investment  in  a
professionally  managed portfolio of long-term municipal  bonds, as high a level
of current interest income exempt from Federal income tax as is consistent  with
preservation  of capital. The Bond Fund  may include in its portfolio tax-exempt
bonds rated Baa or BBB or better by Moody's or Standard & Poor's, unrated  bonds
which,  in the  opinion of the  investment adviser,  have credit characteristics
equivalent  to  bonds  rated  Baa  or  BBB  or  better,  and  certain  temporary
investments,  including securities the interest income from which may be subject
to Federal income tax.
 
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
 
                                      A-24
<PAGE>
obligations that,  in  the  opinion  of  the  investment  adviser,  have  credit
characteristics equivalent to obligations rated as above, tax-exempt obligations
backed  by the U.S. Government, and temporary investments that may be subject to
Federal income tax.
 
THE CALIFORNIA FUND
 
    The California Fund has  the objective of  providing, through investment  in
professionally managed portfolios of California municipal obligations, as high a
level  of current interest income exempt from both Federal and California income
taxes as is consistent with the investment policies of each of the portfolios of
the California Fund  and with  preservation of  capital. Each  portfolio of  the
California  Fund may include  temporary investments that may  be subject to tax.
California Unitholders may reinvest in one of three portfolios of the California
Fund: The Nuveen California Tax-Free  Value Fund, the Nuveen California  Insured
Tax-Free Value Fund and the Nuveen California Tax-Free Money Market Fund.
 
    The  Nuveen California  Tax-Free Value  Fund invests  primarily in long-term
investment grade  California tax-exempt  bonds (I.E.,  bonds rated  in the  four
highest  categories by Moody's  or Standard &  Poor's or, if  unrated, that have
equivalent credit characteristics). The Nuveen California Insured Tax-Free Value
Fund invests  primarily in  the same  type of  investments as  the Special  Bond
Portfolio, each of which is covered by insurance guaranteeing the timely payment
of  principal  and  interest  or  is backed  by  a  deposit  of  U.S. Government
securities.
 
    The Nuveen  California  Tax-Free  Money Market  Fund  invests  primarily  in
high-quality  short term  California tax-exempt money  market instruments (I.E.,
obligations rated in the two highest categories by Moody's or Standard &  Poor's
or,  if unrated,  that have  equivalent credit  characteristics). This portfolio
will include  only  obligations  maturing  within one  year  from  the  date  of
acquisition, will maintain an average maturity of all investments of 120 days or
less, will value its portfolio at amortized cost and will seek to maintain a net
asset value of $1.00 per share. The Nuveen California Tax-Free Money Market Fund
provides for an expedited wire redemption privilege.
 
THE TAX-FREE BOND FUND
 
    The  Tax-Free Bond Fund consists of  the Nuveen Massachusetts Tax-Free Value
Fund, the Nuveen New  York Tax-Free Value Fund,  the Nuveen Ohio Tax-Free  Value
Fund,  and the Nuveen New  Jersey Tax-Free Value Fund,  which are each available
for reinvestment to Unitholders  who are residents of  the state for which  such
portfolio  is  named. The  Tax-Free Bond  Fund has  the objective  of providing,
through investment in a professionally managed portfolio of municipal bonds,  as
high  a level of current interest income exempt both from Federal income tax and
from the  income  tax  imposed  by  each  portfolio's  designated  state  as  is
consistent  with preservation of capital. The  Tax-Free Bond Fund may include in
each of its  portfolios tax-exempt  bonds rated Baa  or BBB  or better;  unrated
bonds   which,  in   the  opinion  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
 
                                      A-25
<PAGE>
designated  state portfolios,  from the income  tax imposed  by each portfolio's
designated state, as  is consistent  with preservation of  capital. The  Insured
Bond  Fund may include in each of its portfolios the same type of investments as
the Tax-Free Bond Fund, each of  which is covered by insurance guaranteeing  the
timely  payment of  principal and  interest or  is backed  by a  deposit of U.S.
Government securities.
 
THE MONEY MARKET FUND
 
    The Money Market Fund  consists of the  Nuveen Massachusetts Tax-Free  Money
Market  Fund and the Nuveen New York  Tax-Free Money Market Fund, which are each
available for reinvestment  to Unitholders who  are residents of  the state  for
which  such portfolio is named. The Money Market Fund includes in its portfolios
only obligations  maturing  within  one  year  from  the  date  of  acquisition,
maintains  an average  maturity of  120 days or  less, values  its portfolios at
amortized cost and seeks to maintain a  net asset value of $1.00 per share.  The
Money  Market  Fund  has  the  objective  of  providing,  through  investment in
professionally  managed  portfolios   of  high   quality  short-term   municipal
obligations, as high a level of current interest income exempt both from Federal
income  tax and from the income tax imposed by each portfolio's designated state
as is consistent with stability of  principal and the maintenance of  liquidity.
The  Money  Market  Fund  may  include  in  each  of  its  portfolios  municipal
obligations rated Aaa, Aa, MIG-1, MIG-2, VMIG-1,  VMIG-2, Prime 1 or Prime 2  by
Moody's  or  AAA, AA,  SP-1,  SP-2, A-1  or A-2  by  Standard &  Poor's; unrated
municipal obligations  that, in  the  opinion of  the investment  adviser,  have
credit  characteristics equivalent to obligations  rated as above; and temporary
investments that may be subject to Federal and state income tax.
 
THE MULTISTATE TRUST
 
    The Multistate Trust consists of the Nuveen Arizona Tax-Free Value Fund, the
Nuveen Florida Tax-Free Value Fund, the Nuveen Maryland Tax-Free Value Fund, the
Nuveen Michigan Tax-Free Value Fund, the Nuveen New Jersey Tax-Free Value  Fund,
the  Nuveen Pennsylvania  Tax-Free Value Fund  and the Nuveen  Virginia Tax Free
Value Fund, which  are each available  for reinvestment to  Unitholders who  are
residents  of the state for which such  portfolio is named. The Multistate Trust
has the objective of providing,  through investment in a professionally  managed
portfolio  of municipal bonds, as high a level of current interest income exempt
from both regular Federal  income tax and the  applicable state personal  income
tax  as is  consistent with  preservation of  capital. The  Multistate Trust may
include in  each of  its portfolios  tax-exempt bonds  rated "Baa"  or "BBB"  or
better,  unrated bonds  which, in  the opinion  of the  investment advisor, have
credit characteristics  equivalent to  bonds  rated "baa"  or "BBB"  or  better,
limited  to  no more  than 20%  of  the Multistate  Trust's assets,  and certain
temporary investments that may be subject to Federal and state income tax.
 
    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
 
                                      A-26
<PAGE>
reinvested  in the Accumulation Fund chosen and no part thereof will be retained
in a separate account. These purchases will be made without a sales charge.
 
    Shareholder Services, Inc. will mail to each participant in the Accumulation
Plan a quarterly  statement containing  a record of  all transactions  involving
purchases of Accumulation Fund shares (or fractions thereof) with Trust interest
distributions or as a result of reinvestment of Accumulation Fund dividends. Any
distribution  of principal used to purchase  shares of an Accumulation Fund will
be separately  confirmed by  Shareholder Services,  Inc. Unitholders  will  also
receive   distribution  statements  from  the   Trustee  detailing  the  amounts
transferred to their Accumulation Fund accounts.
 
    Participants may at any time, by so notifying the Trustee in writing,  elect
to  change  the  Accumulation  Fund into  which  their  distributions  are being
reinvested, to change from principal  only reinvestment to reinvestment of  both
principal and interest or vice versa, or to terminate their participation in the
Accumulation  Plan altogether and receive future distributions on their Units in
cash. There will be no  charge or other penalty for  such change of election  or
termination.
 
    The  character of  Trust distributions for  income tax  purposes will remain
unchanged even if they are reinvested in an Accumulation Fund.
 
15.  HOW DETAILED ARE REPORTS TO UNITHOLDERS?
 
The Trustee  shall  furnish Unitholders  of  a  Trust in  connection  with  each
distribution,  a statement of the amount of  interest and, if any, the amount of
other receipts (received  since the preceding  distribution) being  distributed,
expressed  in each case  as a dollar  amount representing the  pro rata share of
each Unit of a Trust outstanding and a year to date summary of all distributions
paid on said Units.  Within a reasonable  period of time after  the end of  each
calendar  year, the Trustee shall furnish to  each person who at any time during
the calendar  year was  a registered  Unitholder  of a  Trust a  statement  with
respect  to  such  Trust  (i)  as to  the  Interest  Account:  interest received
(including amounts  representing  interest  received  upon  any  disposition  of
Bonds),  and, except  for any  State Trust, the  percentage of  such interest by
states in which the issuers  of the Bonds are  located, deductions for fees  and
expenses of such Trust, redemption of Units and the balance remaining after such
distributions  and deductions,  expressed in  each case  both as  a total dollar
amount and as  a dollar  amount representing  the pro  rata share  of each  Unit
outstanding  on the  last business  day of  such calendar  year; (ii)  as to the
Principal Account: the dates  of disposition of any  Bonds and the net  proceeds
received  therefrom (excluding  any portion representing  accrued interest), the
amount paid for purchase of Replacement  Bonds, the amount paid upon  redemption
of  Units, deductions for payment  of applicable taxes and  fees and expenses of
the Trustee, and the balance  remaining after such distributions and  deductions
expressed  both as a total dollar amount and as a dollar amount representing the
pro rata  share of  each  Unit outstanding  on the  last  business day  of  such
calendar  year;  (iii)  a  list  of  the Bonds  held  and  the  number  of Units
outstanding on the last business day of such calendar year; (iv) the 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.
 
                                      A-27
<PAGE>
16.  UNIT VALUE AND EVALUATION
 
The value of each  Trust is determined by  the Sponsor on the  basis of (1)  the
cash  on hand in the Trust or moneys  in the process of being collected, (2) the
value of the Bonds  in the Trust based  on the BID prices  of the Bonds and  (3)
interest   accrued  thereon  not   subject  to  collection,   LESS  (1)  amounts
representing taxes or governmental charges payable out of the Trust and (2)  the
accrued  expenses of the Trust. The result of such computation is divided by the
number of Units of such  Trust outstanding as of  the date thereof to  determine
the  per Unit value ("Unit Value") of  such Trust. The Sponsor may determine the
value of the Bonds in each Trust (1)  on the basis of current BID prices of  the
Bonds  obtained from dealers or brokers who customarily deal in bonds comparable
to those held by the Trust, (2) if  bid prices are not available for any of  the
Bonds, on the basis of bid prices for comparable bonds, (3) by causing the value
of  the Bonds to be determined by  others engaged in the practice of evaluating,
quoting or appraising comparable bonds or  (4) by any combination of the  above.
Although  the Unit Value of each Trust is  based on the BID prices of the Bonds,
the Units are sold initially to the public at the Public Offering Price based on
the OFFERING prices of the Bonds.
 
    Because the insurance  obtained by the  Sponsor or by  the issuers of  Bonds
with  respect to  the Bonds in  the Insured  Trusts and with  respect to insured
Bonds in Traditional Trusts is effective so long as such Bonds are  outstanding,
such  insurance will be taken  into account in determining  the bid and offering
prices of such  Bonds and therefore  some value attributable  to such  insurance
will be included in the value of Units of Trusts that include such Bonds.
 
17.  HOW UNITS OF THE TRUSTS ARE DISTRIBUTED TO THE PUBLIC
 
John Nuveen & Co. Incorporated is the Sponsor and sole Underwriter of the Units.
It  is  the  intention  of  the  Sponsor  to  qualify  Units  of  National, Long
Intermediate, Intermediate, Short  Intermediate and Short  Term Trusts for  sale
under  the laws of  substantially all of  the states, and  Units of State Trusts
only in the state for which the Trust is named and selected other states.
 
    Promptly following the deposit of Bonds in exchange for Units of the Trusts,
it is the practice of the Sponsor to place all of the Units as collateral for  a
letter or letters of credit from one or more commercial banks under an agreement
to  release such Units from time to  time as needed for distribution. Under such
an arrangement  the Sponsor  pays  such banks  compensation  based on  the  then
current  interest  rate. This  is a  normal  warehousing arrangement  during the
period of distribution of the Units to public investors.
 
    The Sponsor plans to allow a  discount to brokers and dealers in  connection
with   the  primary  distribution   of  Units  and   also  in  secondary  market
transactions. The primary market discounts are as follows:
 
<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.
 
                                      A-28
<PAGE>
    The  Sponsor currently intends  to maintain a secondary  market for Units of
each Trust. See  Section 7.  The amount of  the dealer  concession on  secondary
market  purchases of Trust Units through the Sponsor will be computed based upon
the value  of the  Bonds in  the  Trust portfolio,  including the  sales  charge
computed as described in Section 6, and adjusted to reflect the cash position of
the  Trust principal  account, and will  vary with  the size of  the purchase as
shown in the following table:
 
<TABLE>
<CAPTION>
                                                               Amount of Purchase*
                            -----------------------------------------------------------------------------------------
<S>                         <C>        <C>        <C>        <C>        <C>        <C>         <C>         <C>
                                        $50,000   $100,000   $250,000   $500,000   $1,000,000  $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 Trusts available to  their
customers  on  an agency  basis. A  portion of  the sales  charge paid  by these
customers is retained by or  remitted to the banks in  the amounts shown in  the
above  table.  The Glass-Steagall  Act prohibits  banks from  underwriting Trust
Units; the Act  does, however,  permit certain agency  transactions and  banking
regulators  have not indicated that these particular agency transactions are not
permitted under the Act. In Texas and  in certain other states, any bank  making
Units available must be registered as a broker-dealer under state law.
 
    To  facilitate the handling of transactions, sales of Units shall be limited
to transactions involving a minimum of  either $5,000 or 50 Units, whichever  is
less.  The Sponsor reserves the right to reject,  in whole or in part, any order
for the purchase of Units.
 
18.  OWNERSHIP AND TRANSFER OF UNITS
 
The ownership of  Units is  evidenced by book  entry positions  recorded on  the
books  and records of the Trustee  unless the Unitholder expressly requests that
the purchased Units be evidenced in Certificate form. The Trustee is  authorized
to treat as the owner of Units that 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
 
                                      A-29
<PAGE>
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.
 
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
 
                                      A-30
<PAGE>
Telephone Redemption Authorization  Form and  furnish the Form  to the  Trustee.
Telephone  Redemption Authorization  Forms can  be obtained  from a Unitholder's
registered representative or by calling the Trustee. Once the completed Form  is
on  file, the Trustee will honor telephone redemption requests by any person. If
the telephone redemption request  is received prior to  4:00 p.m. eastern  time,
the Unitholder will be entitled to receive for each Unit tendered the Redemption
Price  as determined above.  A telephone redemption  request received after 4:00
p.m. eastern time will be treated as having been received the following business
day. The redemption proceeds will be mailed within seven calendar days following
the telephone redemption  request. Telephone  redemptions are  limited to  1,000
Units  or less. Only  Units held in the  name of individuals  may be redeemed by
telephone; accounts registered in  broker name, or  accounts of corporations  or
fiduciaries   (including  among  others,   trustees,  guardians,  executors  and
administrators) may not use the telephone redemption privilege.
 
    On the seventh calendar day following the date of tender, or if the  seventh
calendar day is not a business day, on the first business day prior thereto, the
Unitholder  will be entitled to receive in cash for each Unit tendered an amount
equal to the Unit Value of such Trust determined by the Trustee, as of 4:00 p.m.
eastern time on the date of  tender as defined hereafter, plus accrued  interest
to,  but  not  including,  the  fifth business  day  after  the  date  of tender
("Redemption Price"). The  price received upon  redemption may be  more or  less
than  the amount paid by  the Unitholder depending on the  value of the Bonds on
the date of  tender. Such  value will vary  with market  and credit  conditions,
including  changes in  interest rate levels.  Unitholders should  check with the
Trustee or  their broker  to  determine the  Redemption Price  before  tendering
Units.
 
    While the Trustee has the power to determine Redemption Price when Units are
tendered,  the authority has by  practice been delegated by  the Trustee to John
Nuveen & Co.  Incorporated, which  determines the  Redemption Price  on a  daily
basis.
 
    The  "date of  tender" is  deemed to be  the date  on which  the request for
redemption of Units is received  in proper form by  the Trustee, except that  as
regards a redemption request received after 4:00 p.m. eastern time or on any day
on  which the New York  Stock Exchange (the "Exchange")  is normally closed, the
date of tender  is the  next day  on which such  Exchange is  normally open  for
trading  and such request will be  deemed to have been made  on such day and the
redemption will be effected at the Redemption Price computed on that day.
 
    Accrued interest paid  on redemption  shall be withdrawn  from the  Interest
Account  of the  appropriate Trust or,  if the balance  therein is insufficient,
from the Principal Account of such  Trust. All other amounts paid on  redemption
shall  be withdrawn from the Principal Account. The Trustee is empowered to sell
underlying Bonds of  a Trust in  order to make  funds available for  redemption.
(See Section 21.) Units so redeemed shall be cancelled.
 
    To  the extent that Bonds  are sold from a Trust,  the size and diversity of
such Trust will  be reduced. Such  sales may be  required at a  time when  Bonds
would  not  otherwise  be sold  and  might  result in  lower  prices  than might
otherwise be realized.
 
    The Redemption Price is  determined on the  basis of the  BID prices of  the
Bonds  in each Trust, while  the initial Public Offering  Price of Units will be
determined on the  basis of the  OFFERING prices of  the Bonds as  of 4:00  p.m.
eastern  time on any day on which the  Exchange is normally open for trading and
such determination is made. As of any given time, the difference between the bid
and offering  prices of  such Bonds  may  be expected  to average  1% to  2%  of
principal  amount in the case of Bonds  in National, Long Intermediate and State
Trusts, 3/4%  to  1  1/2% in  the  case  of Bonds  in  Intermediate,  and  Short
Intermediate  Trusts and 1/2% to 3/4% in the case of Bonds in Short Term Trusts.
In the case of actively traded Bonds, the difference may be as little as 1/4  to
1/2  of 1%, and in  the case of inactively  traded Bonds such difference usually
will not  exceed  3%.  The  difference between  the  aggregate  offering  prices
 
                                      A-31
<PAGE>
of  the Bonds in each Trust and the aggregate bid prices thereof on the business
day prior to the Date  of Deposit is shown in  the discussion of specific  trust
matters.
 
    The  right  of redemption  may be  suspended and  payment postponed  for any
period during  which  the Securities  and  Exchange Commission  determines  that
trading  in the municipal bond market is restricted or an emergency exists, as a
result  of  which  disposal  or  evaluation  of  the  Bonds  is  not  reasonably
practicable, or for such other periods as the Securities and Exchange Commission
may by order permit.
 
    Under  regulations issued by the Internal  Revenue Service, the Trustee will
be required to withhold 31% of the principal amount of a Unit redemption if  the
Trustee  has not  been furnished  the redeeming  Unitholder's tax identification
number in the  manner required by  such regulations. Any  amount so withheld  is
transmitted  to  the  Internal  Revenue  Service and  may  be  recovered  by the
Unitholder only when filing  his or her tax  return. Under normal  circumstances
the  Trustee obtains the Unitholder's tax identification number from the selling
broker at the time the Certificate or Book Entry Return Confirmation is  issued,
and  this number is printed on the Certificate or Book Entry Return Confirmation
and on distribution statements. If a Unitholder's tax identification number does
not appear as  described above,  or if it  is incorrect,  the Unitholder  should
contact  the Trustee before redeeming Units to determine what action, if any, is
required to avoid this "back-up withholding."
 
20.  HOW UNITS MAY BE PURCHASED BY THE SPONSOR
 
The Trustee will notify the  Sponsor of any tender  of Units for redemption.  If
the  Sponsor's bid in  the secondary market  at that time  equals or exceeds the
Redemption Price it may purchase such Units by notifying the Trustee before  the
close  of business on the  second succeeding business day  and by making payment
therefor to  the  Unitholder not  later  than the  day  on which  payment  would
otherwise have been made by the Trustee. (See Section 19.) The Sponsor's current
practice  is to bid at the Redemption  Price in the secondary market. Units held
by the Sponsor may be tendered to the Trustee for redemption as any other Units.
 
    The Public Offering  Price upon  resale of any  Units thus  acquired by  the
Sponsor  will be  calculated in accordance  with the procedure  described in the
then currently effective prospectus relating to such Units. Any profit resulting
from the resale of  such Units will  belong to the  Sponsor which likewise  will
bear  any loss resulting from a lower  Public Offering Price or Redemption Price
subsequent to its acquisition of such Units.
 
21.  HOW BONDS MAY BE REMOVED FROM THE TRUSTS
 
Bonds will be removed from a Trust as they mature or are redeemed by the issuers
thereof. See  the "Schedules  of Investments"  and "General  Trust  Information"
under Section 3 for a discussion of call provisions of portfolio Bonds.
 
    The  Indenture also empowers  the Trustee to  sell Bonds for  the purpose of
redeeming Units tendered by any Unitholder, and for the payment of expenses  for
which  income may not be available. Under the Indenture the Sponsor is obligated
to provide the Trustee with a current list of Bonds in each Trust to be sold  in
such  circumstances. In deciding which Bonds  should be sold the Sponsor intends
to consider, among  other things, such  factors as: (1)  market conditions;  (2)
market  prices  of  the  Bonds;  (3)  the  effect  on  income  distributions  to
Unitholders of the sale of various Bonds; (4) the effect on principal amount  of
underlying  Bonds  per Unit  of the  sale  of various  Bonds; (5)  the financial
condition of the issuers; and (6) the effect of the sale of various Bonds on the
investment character of the Trust. Such sales, if required, could result in  the
sale  of Bonds by the Trustee at prices less than original cost to the Trust. To
the extent Bonds are sold, the size and diversity of such Trust will be reduced.
 
    In addition, the  Sponsor is empowered  to direct the  Trustee to  liquidate
Bonds upon the happening of certain other events, such as default in the payment
of principal and/or
 
                                      A-32
<PAGE>
interest,  an action  of the  issuer that will  adversely affect  its ability to
continue payment of the principal  of and interest on  its Bonds, or an  adverse
change  in market, revenue or credit  factors affecting the investment character
of the Bonds. If a default in the payment of the principal of and/or interest on
any of  the Bonds  occurs, and  if the  Sponsor fails  to instruct  the  Trustee
whether to sell or continue to hold such Bonds within 30 days after notification
by  the Trustee to the Sponsor of  such default, the Indenture provides that the
Trustee shall liquidate  said Bonds forthwith  and shall not  be liable for  any
loss so incurred.
 
    In  connection with its determination  as to the sale  or liquidation of any
Bonds, the Sponsor  will consider the  Bond's then current  rating, but  because
such  ratings are the opinions of the rating agencies as to the quality of Bonds
they undertake to rate and not  absolute standards of quality, the Sponsor  will
exercise its independent judgment as to Bond creditworthiness.
 
    The Sponsor may also direct the Trustee to liquidate Bonds in a Trust if the
Bonds  in  the  Trust  are  the  subject  of  an  advanced  refunding, generally
considered to be when  refunding bonds are issued  and the proceeds thereof  are
deposited  in irrevocable trust to retire the refunded Bonds on their redemption
date.
 
    Except as stated in Section 4 regarding the limited right of substitution of
Replacement Bonds for Failed Bonds, and except for refunding securities that may
be exchanged for Bonds under certain conditions specified in the Indenture,  the
Indenture  does  not permit  either the  Sponsor  or the  Trustee to  acquire or
deposit bonds either in addition  to, or in substitution  for, any of the  Bonds
initially deposited in a Trust.
 
22.  INFORMATION ABOUT THE TRUSTEE
 
The Trustee is United States Trust Company of New York, with its principal place
of  business at 114 West 47th Street, New York, New York 10036 and its corporate
trust office at  770 Broadway,  New York, New  York 10003.  United States  Trust
Company  of New York, established in  1853, has, since its organization, engaged
primarily in the  management of trust  and agency accounts  for individuals  and
corporations. The Trustee is a member of the New York Clearing House Association
and  is subject to supervision and examination by the Superintendent of Banks of
the State of New York, the  Federal Deposit Insurance Corporation and the  Board
of  Governors of the Federal Reserve System.  In connection with the storage and
handling of  certain Bonds  deposited in  the Trusts,  the Trustee  may use  the
services   of  The  Depository  Trust  Company.  These  services  would  include
safekeeping of the Bonds and  coupon-clipping, computer book-entry transfer  and
institutional  delivery  services. The  Depository  Trust Company  is  a limited
purpose trust company organized under the Banking Law of the State of New  York,
a  member of the Federal  Reserve System and a  clearing agency registered under
the Securities Exchange Act of 1934.
 
LIMITATIONS ON LIABILITIES OF SPONSOR AND TRUSTEE
 
    The Sponsor and the Trustee shall  be under no liability to Unitholders  for
taking  any action or for  refraining from any action  in good faith pursuant to
the Indenture, or for errors in judgment, but shall be liable only for their own
negligence, lack of good faith or  willful misconduct. The Trustee shall not  be
liable for depreciation or loss incurred by reason of the sale by the Trustee of
any  of the Bonds. In the  event of the failure of  the Sponsor to act under the
Indenture, the Trustee may act thereunder and shall not be liable for any action
taken by it in good faith under the Indenture.
 
    The Trustee shall not be liable for any taxes or other governmental  charges
imposed  upon or in respect of the Bonds or upon the interest thereon or upon it
as Trustee under  the Indenture or  upon or in  respect of any  Trust which  the
Trustee  may be required  to pay under any  present or future  law of the United
States of  America or  of any  other taxing  authority having  jurisdiction.  In
addition,  the  Indenture  contains  other  customary  provisions  limiting  the
liability of the Trustee.
 
                                      A-33
<PAGE>
SUCCESSOR TRUSTEES AND SPONSORS
 
    The Trustee or any successor trustee  may resign by executing an  instrument
of resignation in writing and filing same with the Sponsor and mailing a copy of
a  notice of resignation to all Unitholders  then of record. Upon receiving such
notice, the Sponsor is required to promptly appoint a successor trustee. If  the
Trustee becomes incapable of acting or is adjudged a bankrupt or insolvent, or a
receiver  or other public officer shall take  charge of its property or affairs,
the  Sponsor  may  remove  the  Trustee  and  appoint  a  successor  by  written
instrument.  The resignation or  removal of a  trustee and the  appointment of a
successor trustee shall become effective only when the successor trustee accepts
its appointment as such. Any successor trustee shall be a corporation authorized
to exercise  corporate  trust  powers, having  capital,  surplus  and  undivided
profits of not less than $5,000,000. Any corporation into which a trustee may be
merged  or with which it may be  consolidated, or any corporation resulting from
any merger or consolidation to  which a trustee shall be  a party, shall be  the
successor trustee.
 
    If  upon resignation of  a trustee no  successor has been  appointed and has
accepted the appointment within 30 days after notification, the retiring trustee
may apply  to  a  court of  competent  jurisdiction  for the  appointment  of  a
successor.
 
    If the Sponsor fails to undertake any of its duties under the Indenture, and
no  express  provision is  made for  action by  the Trustee  in such  event, the
Trustee may, in addition to its other  powers under the Indenture (1) appoint  a
successor sponsor or (2) terminate the Indenture and liquidate the Trusts.
 
23.  INFORMATION ABOUT THE SPONSOR
 
John Nuveen & Co. Incorporated, the Sponsor and Underwriter, was founded in 1898
and  is  the oldest  and  largest investment  banking  firm specializing  in the
underwriting and distribution of tax-exempt securities and maintains the largest
research department in the investment  banking community devoted exclusively  to
the  analysis of municipal securities. In  1961 the Sponsor began sponsoring the
Nuveen Tax-Exempt Unit Trust and, since this  time, it has issued more than  $30
billion  in tax-exempt unit trusts, including over $8 billion in insured trusts.
The Sponsor is  also principal underwriter  of the Nuveen  Municipal Bond  Fund,
Inc.,  the Nuveen Tax-Exempt Money Market  Fund, Inc., Nuveen Tax-Free Reserves,
Inc., Nuveen California Tax-Free  Fund, Inc., Nuveen  Tax-Free Bond Fund,  Inc.,
Nuveen  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
 
                                      A-34
<PAGE>
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 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   any  Trust   or   to   permit  the   deposit   or   acquisition
 
                                      A-35
<PAGE>
of  bonds  either  in addition  to,  or in  substitution  for any  of  the Bonds
initially deposited in  any Trust except  as stated in  Section 4 regarding  the
limited   right  of  substitution  of  Replacement  Bonds  and  except  for  the
substitution of refunding bonds under  certain circumstances. The Trustee  shall
advise the Unitholders of any amendment promptly after execution thereof.
 
TERMINATION OF INDENTURE
 
    Each  Trust may be liquidated at any time  by written consent of 100% of the
Unitholders or by  the Trustee when  the value of  such Trust, as  shown by  any
evaluation,  is less than 20% of the original principal amount of such Trust and
will be  liquidated  by  the Trustee  in  the  event that  Units  not  yet  sold
aggregating  more  than 60%  of the  Units originally  created are  tendered for
redemption by the Sponsor thereby reducing the  net worth of such Trust to  less
than  40%  of the  principal amount  of  the Bonds  originally deposited  in the
portfolio. (See "Essential Information Regarding the Trusts.") The sale of Bonds
from the Trusts upon  termination may result in  realization of a lesser  amount
than  might otherwise be realized  if such sale were  not required at such time.
For this  reason,  among  others,  the amount  realized  by  a  Unitholder  upon
termination   may  be  less  than  the  principal  amount  of  Bonds  originally
represented by the Units held by  such Unitholder. The Indenture will  terminate
upon the redemption, sale or other disposition of the last Bond held thereunder,
but  in no event shall it continue beyond the end of the calendar year preceding
the fiftieth anniversary of its execution for National and State Trusts,  beyond
the  end  of  the  calendar  year preceding  the  twentieth  anniversary  of its
execution for Long Intermediate,  and Intermediate Trusts or  beyond the end  of
the  calendar year  preceding the tenth  anniversary of its  execution for Short
Intermediate and Short Term Trusts.
 
    Written notice of  any termination  specifying the  time or  times at  which
Unitholders  may surrender their Certificates, if any, for cancellation shall be
given by  the  Trustee  to each  Unitholder  at  the address  appearing  on  the
registration  books of the Trust maintained  by the Trustee. Within a reasonable
time thereafter the Trustee shall liquidate any Bonds in the Trust then held and
shall deduct  from  the assets  of  the Trust  any  accrued costs,  expenses  or
indemnities  provided  by  the  Indenture which  are  allocable  to  such Trust,
including estimated compensation of the Trustee and costs of liquidation and any
amounts required as a reserve to provide for payment of any applicable taxes  or
other  governmental charges. The Trustee shall then distribute to Unitholders of
such Trust their pro  rata share of  the balance of  the Interest and  Principal
Accounts.  With such  distribution the  Unitholders shall  be furnished  a final
distribution  statement,  in   substantially  the  same   form  as  the   annual
distribution statement, of the amount distributable. At such time as the Trustee
in  its sole discretion shall determine that  any amounts held in reserve are no
longer necessary, it shall make distribution thereof to Unitholders in the  same
manner.
 
LEGAL OPINION
 
    The legality of the Units offered hereby has been passed upon by Chapman and
Cutler, 111 West Monroe Street, Chicago, Illinois 60603. Special counsel for the
Trusts for respective state tax matters are named in "Tax Status" for each Trust
under  Section 3. Carter, Ledyard  & Milburn, 2 Wall  Street, New York, New York
10005, has acted as counsel for the Trustee with respect to the Series, and,  in
the absence of a New York Trust from the Series, as special New York tax counsel
for the Series.
 
AUDITORS
 
    The  Statements of Condition and Schedules of Investments at Date of Deposit
included in  this  Prospectus  have  been audited  by  Arthur  Andersen  &  Co.,
independent public accountants, as indicated in their report in this Prospectus,
and  are included herein in reliance upon  the authority of said firm as experts
in giving said report.
 
                                      A-36
<PAGE>
                            DESCRIPTION OF RATINGS*
 
    STANDARD & POOR'S CORPORATION.  A  description of the applicable Standard  &
Poor's Corporation rating symbols and their meanings follows:
 
    A  Standard & Poor's rating is  a current assessment of the creditworthiness
of an obligor with  respect to a specific  debt obligation. This assessment  may
take into consideration obligors such as guarantors, insurers or lessees.
 
    The  rating is not  a recommendation to  purchase, sell or  hold a security,
inasmuch as  it  does not  comment  as to  market  price or  suitability  for  a
particular investor.
 
    The  ratings are  based on  current information  furnished by  the issuer or
obtained by Standard & Poor's from other sources it considers reliable. Standard
& Poor's does not  perform an audit  in connection with any  rating and may,  on
occasion,  rely on unaudited financial information.  The ratings may be changed,
suspended or withdrawn  as a result  of changes in,  or unavailability of,  such
information, or for other circumstances.
 
    The ratings are based, in varying degrees, on the following considerations:
 
     I.  Likelihood  of default--capacity and  willingness of the  obligor as to
         the timely payment of interest and repayment of principal in accordance
         with the terms of the obligation;
 
     II.  Nature of and provisions of the obligation;
 
    III.  Protection afforded by,  and relative position  of, the obligation  in
          the  event of  bankruptcy, reorganization or  other arrangements under
          the laws of bankruptcy and other laws affecting creditors' rights.
 
    AAA--This is the  highest rating  assigned by Standard  & Poor's  to a  debt
obligation. Capacity to pay interest and repay principal is extremely strong.
 
    AA--Bonds  rated AA have  a very strong  capacity to pay  interest and repay
principal, and differ from the highest rated issues only in small degree.
 
    A--Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
 
    BBB--Bonds rated BBB  are regarded  as having  an adequate  capacity to  pay
interest  and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse  economic  conditions  or changing  circumstances  are  more
likely  to lead to a  weakened capacity to pay  interest and repay principal for
bonds in this category than for bonds in the higher rated categories.
 
    Plus (+) or Minus (-): The ratings from "AA" to "BB" may be modified by  the
addition  of a  plus or minus  sign to  show relative standing  within the major
rating categories.
 
    Provisional  Ratings:  The   letter  "p"  indicates   that  the  rating   is
provisional.  A  provisional rating  assumes  the successful  completion  of the
project being financed by  the issuance of the  bonds being rated and  indicates
that  payment of debt service requirements is largely or entirely dependent upon
the successful and timely completion of the project. This rating, however, while
addressing credit  quality subsequent  to completion  of the  project, makes  no
comment  on the  likelihood of,  or the  risk of  default upon  failure of, such
completion. Accordingly,  the investor  should exercise  his own  judgment  with
respect to such likelihood and risk.
 
- ----------
*As published by the rating companies.
 
                                      A-37
<PAGE>
    Note  Ratings:  A  Standard  & Poor's  note  rating  reflects  the liquidity
concerns and market access risks unique to  notes. Notes due in 3 years or  less
will  likely receive  a note  rating. Notes  maturing beyond  3 years  will most
likely receive a long-term debt rating.
 
    Note rating symbols are as follows:
 
        SP-1  Very strong  or strong  capacity to  pay principal  and  interest.
              Those   issues   determined   to   possess   overwhelming   safety
              characteristics will be given a plus (+) designation.
 
        SP-2  Satisfactory capacity to pay principal and interest.
 
RATINGS OF INSURED TRUST UNITS.
 
    A Standard  &  Poor's  Corporation's  rating on  the  units  of  an  insured
investment  trust (hereinafter referred to collectively as "units" and "trusts")
is a current assessment of creditworthiness with respect to the investment  held
by  such trust. This assessment takes  into consideration the financial capacity
of the  issuers and  of any  guarantors, insurers,  lessees or  mortgagors  with
respect to such investments. The assessment, however, does not take into account
the  extent to which trust  expenses or portfolio asset  sales for less than the
trust purchase price will reduce payment  to the unitholder of the interest  and
principal  required to be paid on the  portfolio assets. In addition, the rating
is not a recommendation to purchase, sell or hold units, inasmuch as the  rating
does not comment as to market price of the units or suitability for a particular
investor.
 
    Units rated "AAA" are composed exclusively of assets that are rated "AAA" by
Standard  &  Poor's and/or  certain  short-term investments.  Standard  & Poor's
defines its  AAA  rating for  such  assets as  the  highest rating  assigned  by
Standard  & Poor's  to a  debt obligation.  Capacity to  pay interest  and repay
principal is very strong.  However, unit ratings may  be subject to revision  or
withdrawal  at any time by Standard & Poor's and each rating should be evaluated
independently of any other rating.
 
    MOODY'S INVESTORS  SERVICE, INC.    A brief  description of  the  applicable
Moody's Investors Service, Inc. rating symbols and their meanings follows:
 
    Aaa--Bonds which are rated Aaa are judged to be the best quality. They carry
the  smallest degree of investment  risk and are generally  referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally  stable
margin and principal is secure. While the various protective elements are likely
to  change, such changes  as can be  visualized are most  unlikely to impair the
fundamentally strong position of such issues. Their safety is so absolute  that,
with  the  occasional  exception  of oversupply  in  a  few  specific instances,
characteristically, their  market  value  is affected  solely  by  money  market
fluctuations.
 
    Aa--Bonds  which  are rated  Aa  are judged  to be  of  high quality  by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are  rated lower than the  best bonds because margins  of
protection  may  not  be  as  large as  in  Aaa  securities  or  fluctuations of
protective elements may be of greater  amplitude or there may be other  elements
present  which  make the  long-term  risks appear  somewhat  larger than  in Aaa
securities. Their  market value  is virtually  immune to  all but  money  market
influences,  with  the  occasional exception  of  oversupply in  a  few specific
instances.
 
    A--Bonds which are rated A possess many favorable investment attributes  and
are  to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered  adequate, but elements may be  present
which  suggest a susceptibility to impairment sometime in the future. The market
value of A-rated bonds may be 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
 
                                      A-38
<PAGE>
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
<PAGE>
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                                      A-40
<PAGE>
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                                      A-41
<PAGE>
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                                      A-42
<PAGE>
 
<TABLE>
<C>                <S>        <C>
           NUVEEN             Tax-Exempt Unit Trusts
 
                           PROSPECTUS
                           270,000 Units
                           National Traditional Trust
                           531
                           Intermediate Insured Trust
                           75
                           California Insured Trust 227
                           Pennsylvania Insured Trust
                           182
</TABLE>
 
<PAGE>
 
<TABLE>
<C>                 <S>        <C>
            NUVEEN             Tax-Exempt Unit Trusts
 
           Sponsor             John Nuveen & Co. Incorporated
                               333 West Wacker Drive
                               Chicago, IL 60606-1286
                               Telephone: 312.917.7700
 
                               Swiss Bank Tower
                               10 East 50th Street
                               New York, NY 10022
                               212.207.2000
 
           Trustee             United States Trust Company
                               of New York
                               770 Broadway
                               New York, NY 10003
                               800.257.8787
 
     Legal Counsel             Chapman and Cutler
        to Sponsor             111 West Monroe Street
                               Chicago, IL 60603
 
       Independent             Arthur Andersen & Co.
            Public             33 West Monroe Street
       Accountants             Chicago, IL 60603
    for the Trusts
</TABLE>
 
   Except as to statements made herein furnished by the Trustee, the Trustee has
   assumed  no responsibility for the accuracy, adequacy and completeness of the
   information contained in this Prospectus.
                   This Prospectus does not contain  all of the information  set
   forth in the registration statement and exhibits relating thereto, filed with
   the   Securities  and  Exchange  Commission,   Washington,  D.C.,  under  the
   Securities Act of 1933, and to which reference is made.
                   No person is authorized  to give any  information or to  make
   representations  not contained in  this Prospectus or  in supplementary sales
   literature prepared by the Sponsor, and any information or representation not
   contained therein must not be relied upon as having been authorized by either
   the Trusts, the Trustee or the  Sponsor. This Prospectus does not  constitute
   an  offer to sell,  or a solicitation of  an offer to  buy, securities in any
   State to any  person to  whom it is  not lawful  to make such  offer in  such
   state.  The  Trusts  are registered  as  a  Unit Investment  Trust  under the
   Investment Company Act  of 1940. Such  registration does not  imply that  the
   Trusts  or any of their Units  has been guaranteed, sponsored, recommended or
   approved by the United States or any State or agency or officer thereof.
 
   
   735
    
 
<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

    The Registrant, Nuveen Tax-Exempt Unit Trust, Series 735 hereby
identifies Series 401, 507, 512, 515, 517, 519 and 723 of the Nuveen 
Tax-Exempt Unit Trust for purposes of the representations required by 
Rule 487 and represents the following:

    (1) that the portfolio securities deposited in the series as to the
securities of which this Registration Statement is being filed do not differ
materially in type or quality from those deposited in such previous series;

    (2) that, except to the extent necessary to identify the specific
portfolio securities deposited in, and to provide essential financial
information for, the series with respect to the securities of which this
Registration Statement is being filed, this Registration Statement does not
contain disclosures that differ in any material respect from those contained
in the registration statements for such previous series as to which the
effective date was determined by the Commission or the staff; and

    (3) that it has complied with Rule 460 under the Securities Act of 1933.

    Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Nuveen Tax-Exempt Unit Trust, Series 735 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 6/21/94.

 
                                NUVEEN TAX-EXEMPT UNIT TRUST, SERIES 735
                                (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))
                                                      )
                                                      )6/21/94
___________________

*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>

735

                   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
6/21/94


                         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 to the Registration Statement.

                            CONSENT OF STATE COUNSEL

    The consents of special counsel to the Fund for state tax matters to the 
use of their names in the Prospectus included in the Registration Statement 
are contained in their opinions filed by this amendment as Exhibit 3.3 to the
Registration Statement.

                   CONSENT OF 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 (as Exibit 1.1 (a) to the Sponsor's Registration
         Statement on Form S-6 relating to Series 723 of the Fund (file No.
         33-52527) and incorporated herein by reference).

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.

3.3      Opinions of special state counsel to the Fund for state tax matters
         as to income tax status to residents of the respective states of the
         units of the respective trusts and consents to the use of their names
         in the Prospectus.

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(b)                                                                
                                                                              
                                                                              
                                                                              
                                                                              
                                 SCHEDULE A                                   
                                                                              
                                                                              
Series 735                                           June 21, 1994            
                                                                              
Item 1.  This Indenture relates to the Nuveen Tax-Exempt Unit Trust           
         Series 735.                                                          
                                                                              
Item 2.  The date of this Indenture is June 21, 1994.                         
                                                                              
Item 3.  Series 735 shall initially contain Trusts as follows:                
                                                                              
         (a)   National Traditional Trust 531                                 
         (b)   Intermediate Insured Trust 75                                  
         (c)   California Insured Trust 227                                   
         (d)   Pennsylvania Insured Trust 182                                 
                                                                              
                                                                              
Item 4.  Each Trust shall initially consist of the following number of Units: 
                                                                              
         (a)   National Traditional Trust              100,000 Units          
         (b)   Intermediate Insured Trust              100,000 Units          
         (c)   California Insured Trust                 35,000 Units          
         (d)   Pennsylvania Insured Trust               35,000 Units          
                                                                              
                                                                              
Item 5.  (a) The amount of the second distribution from the Interest          
             Account of the respective Trusts will be as follows:             
                                                                              
         ( 1)  National Traditional Trust              $ .6424 per Unit       
         ( 2)  Intermediate Insured Trust              $ .5408 per Unit       
         ( 3)  California Insured Trust                $ .5972 per Unit       
         ( 4)  Pennsylvania Insured Trust              $ .6204 per Unit       
                                                                              
         (b) The date of the second distribution from the Interest Account    
             of the respective Trusts will be as follows:                     
                                                                              
         ( 1)  National Traditional Trust              August 15, 1994        
         ( 2)  Intermediate Insured Trust              August 15, 1994        
         ( 3)  California Insured Trust                August 15, 1994        
         ( 4)  Pennsylvania Insured Trust              August 15, 1994        
                                                                              
         (c) The record date for the second distribution from the             
             Interest Account of the respective Trusts will be as             
             follows:                                                         
                                                                              
         ( 1)  National Traditional Trust              August 1, 1994         
         ( 2)  Intermediate Insured Trust              August 1, 1994         
         ( 3)  California Insured Trust                August 1, 1994         
         ( 4)  Pennsylvania Insured Trust              August 1, 1994         
                                                                              
                                                                              
         PAGE 2                                                               
                                                                              
                                                                              
Item 6.  Record dates for subsequent semi-annual distributions from the       
         Interest Account for each of the respective Trusts will be the 1st   
         day of May and November of each year.                                
                                                                              
                                                                              
Item 7.  (a) Record date for distibution from the Principal Account of each   
             of the respective Trusts will be the first day of May and        
             November of each year.                                           
                                                                              
         (b) The first record date for distributions from the Principal       
             Account of each of the respective Trusts will be                 
             November 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 for National and State Trusts, beyond the end of the       
         calendar year preceding the twentieth anniversary of its execution   
         for Long Intermediate and Intermediate Trusts and beyond the end of  
         the calendar year preceding the tenth anniversary of its execution   
         for Short Intermediate and Short Term Trusts.                        
                                                                              
                                                                              
Item 9.  Quarterly distributions from the Interest Account of the respective  
         Trusts 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 Traditional Trust              August 1, 1994         
         (b)   Intermediate Insured Trust              August 1, 1994         
         (c)   California Insured Trust                August 1, 1994         
         (d)   Pennsylvania Insured Trust              August 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 Traditional Trust              $1.6089                
         ( 2)  Intermediate Insured Trust              $1.5679                
         ( 3)  California Insured Trust                $1.619                 
         ( 4)  Pennsylvania Insured Trust              $1.5767                
                                                                              
         (b)  For services performed on or after the date indicated in        
              Item 5(c) of this Schedule A, the Trustee shall be paid at      
              the following annual rates per $1,000 of principal amount       
              of Bonds:                                                       
                                                                              
         ( 1)  National Traditional Trust                                     
                                                                              
               Monthly Plan of Distribution                  $1.6089          
               Quarterly Plan of Distribution                $1.2889          
               Semi-Annual Plan of Distribution              $1.0989          
                                                                              
         ( 2)  Intermediate Insured Trust                                     
                                                                              
               Monthly Plan of Distribution                  $1.5679          
               Quarterly Plan of Distribution                $1.2479          
               Semi-Annual Plan of Distribution              $1.0579          
                                                                              
         ( 3)  California Insured Trust                                       
                                                                              
               Monthly Plan of Distribution                  $1.619           
               Quarterly Plan of Distribution                $1.299           
               Semi-Annual Plan of Distribution              $1.109           
                                                                              
         ( 4)  Pennsylvania Insured Trust                                     
                                                                              
               Monthly Plan of Distribution                  $1.5767          
               Quarterly Plan of Distribution                $1.2567          
               Semi-Annual Plan of Distribution              $1.0667          
                                                                              
                                                                              
                                                                              
                            ADDITIONAL SCHEDULES                              
                                                                              
                                                                              
                         BONDS INITIALLY DEPOSITED                            
                                                                              
                  NUVEEN TAX-EXEMPT UNIT TRUST SERIES 735                     
                                                                              
                                                                              
                                                                              
                                                                              
Incorporated herein and made a part hereof as indicated below are the         
following annual rates per $1,000 of principal amount of Bonds:               
corresponding portions of the 'Schedules 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 Traditional Trust 531                          
         Schedule C:  Intermediate Insured Trust 75                           
         Schedule D:  California Insured Trust 227                            
         Schedule E:  Pennsylvania Insured Trust 182                          


<PAGE>

EXHIBIT 3.1

(ON CHAPMAN AND CUTLER LETTERHEAD)

6/21/94


John Nuveen & Co. Incorporated
333 W. Wacker Drive
Chicago, Illinois  60606

RE:  Nuveen Tax-Exempt Unit Trust, Series 735

Gentlemen:

    We have served as counsel for you, as depositor of Nuveen Tax-Exempt Unit
Trust, Series 735 (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 positions 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 Trusts and the Depositor in accordance with the 
terms thereof.

    We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 33-53981) 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)

6/21/94

John Nuveen & Co. Incorporated
333 W. Wacker Drive
Chicago, Illinois  60606

RE:  Nuveen Tax-Exempt Unit Trust, Series 735

Gentlemen:

    We have served as counsel for you, as Depositor of Nuveen Tax-Exempt Unit
Trust, Series 735 (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 a book entry position or certificate, if requested by the purchaser of 
Units, in the one or more Trusts of said Fund.

    We have also served as counsel for you in connection with all previous
Series of the Nuveen Tax-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 735.

    We have concluded that the Trust Indenture and Agreement for the Fund and
its counterpart in each of the prior issues of Nuveen Tax-Exempt Unit Trust 
are in all material respects substantially identical.

    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, each of the Trusts 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 Trusts 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. 33-53981) relating to the Units referred
to above and to the use of our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.

Respectfully submitted,


CHAPMAN AND CUTLER

<PAGE>


EXHIBIT 3.3

(ON ORRICK, HERRINGTON & SUTCLIFFE LETTERHEAD)




6/21/94


John Nuveen & Co. Incorporated
333 W. Wacker Drive
Chicago, Illinois 60606

United States Trust Company of New York
770 Broadway
New York, NY 10003

     Re: Nuveen Tax-Exempt Unit Trust, Series 735
            
            
         California Insured Trust 227  
            
                  

Dear Sirs:

        We have acted as special California counsel for John Nuveen & Co.
Incorporated, as Depositor of the above captioned trust(s) (each a "Trust"),
in connection with the issuance under the Trust Agreement dated 6/21/94,
among John Nuveen & Co. Incorporated, as Depositor, and United States Trust
Company of New York, as Trustee, of units of fractional undivided
interest in each Trust (the "Units") in exchange for certain bonds, as well as
"regular-way" and "when-issued" contracts for the purchase of bonds (such
bonds and contracts are hereinafter referred to collectively as the
Securities").

        In connection therewith, we have examined such corporate records,
certificates and other documents and such questions of law as we have deemed
necessary or appropriate for the purpose of this opinion, and, on the basis
of such examination, and upon existing provisions of the Revenue and Taxation
Code of the State of California, with respect to each Trust, we are of the
opinion that:

        1.  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
under the income tax laws of California.

        2.  Interest on the underlying Securities (which may include bonds
or other obligations issued by the governments of Puerto Rico, the Virgin
Islands, Guam, or the Northern Mariana Islands) which is exempt from tax
under California personal income tax and property tax laws when received by
the Trust will, under such laws, retain its status as tax-exempt interest when
distributed to unitholders.  However, interest on the underlying securities
attributed to a unitholder which is a corporation subject to the California
franchise tax laws may be includable in such corporation's gross income for
purposes of determining its California franchise tax.

        3.  Under California income tax law, each unitholder in the Trust will
have a taxable event when the Trust disposes of a security (whether by sale,
exchange, redemption, or payment at maturity) or when the unitholder redeems
or sells Units.  Because of the requirement that tax cost basis be reduced to
reflect amortization of bond premium, under some circumstances a
unitholder may realize taxable gain when units are sold or
redeemed for an amount equal to, or less than, their original cost.
The total tax cost of each Unit to a unitholder is allocated among each of
the bond issues held in the Trust (in accordance with the proportion of the
Trust comprised by each bond issue) in order to determine his per unit tax
cost for each bond issue; and the tax cost reduction requirements relating to
amortization of bond premium will apply separately to the per unit cost of
each bond issue.  Unitholders' bases in their Units, and the bases for
their fractional interest in each Trust asset, may have to be adjusted for
their pro rata share of accrued interest received, if any, on securities
delivered after the unitholders' respective settlement dates.

        4.  Under the California personal property tax laws, bonds (including
the Securities) or any interest therein is exempt from such tax.

        5.  Proceeds paid under an insurance policy, if any, issued to the
Trustee of the Trust with respect to the Securities which represent maturing
interest on defaulted obligations held by the Trustee will be exempt from
California personal income tax if, and to the same extent as, such interest
would have been so exempt if paid by the issuer of the defaulted obligations.

<PAGE> 

        6.  Under Section 17280(b)(2) of the California Revenue and
Taxation Code, interest on indebtedness incurred or continued to purchase
or carry Units of the Trust is not deductible for the purposes of the
California personal income tax.  While there presently is no California
authority interpreting this provision, Section 17280(b)(2) directs the
California Francise Tax Board to prescribe regulations determining the
proper allocation and apportionment of interest costs for this purpose.
The Franchise Tax Board has not yet proposed or prescribed such regulations.
In interpreting the generally similar Federal provision, the Internal
Revenue Service has taken the position that such indebtedness need not be
directly traceable to the purchase or carrying of Units (although the Service
has not contended that a deduction for interest on indebtedness incurred
to purchase or improve a personal residence or to purchase goods or services
for personal consumption will be disallowed).  In the absence of conflicting
regulations or other California authority, the California Franchise Tax
Board generally has interpreted California statutory tax provisions in accord
with Internal Revenue Service interpretations of similar Federal provisions.


       Opinions relating to the validity of securities and the exemption of
interest thereon from State of California income tax are rendered by bond
counsel to the issuing authority at the time securities are issued and we
have relied solely upon such opinions, or, as to securities not yet
delivered, forms of such opinions contained in official statements
relating to such securities.  Except in certain instances in which we acted
as bond counsel to issuers of securities, and as such made a review of pro-
ceedings relating to the issuance of certain securities at the time of their
issuance, we have not made any review of proceedings relating to the issuance
of securities or the bases of bond counsels' opinions.

        We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 33-53981) 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.

Very truly yours,



ORRICK, HERRINGTON & SUTCLIFFE
(BY KENNETH G. WHYBURN)



<PAGE>

EXHIBIT 3.3


(On Dechert Price & Rhoads Letterhead)

6/21/94


John Nuveen & Co. Incorporated
333 W. Wacker Drive
Chicago, Illinois  60606

RE:  Nuveen Tax-Exempt Unit Trust, Series 735
      
     Pennsylvania Insured Trust 182

Gentlemen:

    You have requested our opinion as to the Pennsylvania tax aspects of the
above-captioned Trust(s) (the "Pennsylvania Trust(s)") which is (are) a part
of the Nuveen Tax-Exempt Unit Trust Series 735 ("Fund").  The Fund is
organized under the Trust Indenture and Agreement, of even date, between John
Nuveen & Co. Incorporated, as Depositor, and United States Trust Company of
New York, as Trustee.  The Fund will contain several trusts, including the
Pennsylvania Trust(s), which will issue Units of fractional undivided
interests.  The Units will be purchased by various investors ("Unit Holder").
Each Unit of the Pennsylvania Trust(s) represents a fractional undivided
interest in the principal and net income of such Trust(s) in the ratio of ten
Units for each $1,000 of value of the obligations initially acquired by such
Trust(s).  Each Pennsylvania Trust will be administered as a distinct entity
with separate certificates, investments, expenses, books and records.
 
    The proceeds of the sale of the Units will be invested primarily in
interest-bearing obligations issued by or on behalf of the Commonwealth of
Pennsylvania, its agencies and instrumentalities, or political subdivisions
thereof, including any county, city, borough, town, township, school disrict,
municipality, and local housing or parking authority in the Commonwealth of
Pennsylvania or issued by Puerto Rico, the Virgin Islands, Guam or the
Northern Mariana Islands ("Bonds").  Distributions of the interest received by
the Trust will be made semi-annually unless the Unit Holder elects otherwise.
In the opinion of bond counsel to each issuer, the interest on all bonds in
the Trust is exempt fromn federal income tax under existing law.

    You have advised us that for federal income tax purposes each Pennsylvania
Trust will not be taxable as an association but will be governed by the
provisions of Subchapter J (relating to Trusts) of Chapter 1 of the Internal
Revenue Code of 1986.  Each Unit Holder will be considered the owner of a pro
rata portion of the Unit Holder's respective Pennsylvania Trust and will be
subject to tax on the income therefrom under the provisions of Subpart E of
Subchapter J of Chapter 1 of the Internal Revenue Code of 1986. A Pennsylvania
Trust itself will not be subject to federal income taxes. For federal income
tax purposes, each item of trust income will have the same character in the
hands of a Unit Holder as it would have in the hands of the Trustee.
Accordingly, to the extent that the income of a Pennsylvania Trust consists of
interest excludable from gross income under Section 103 of the Internal
Revenue Code of 1986, such income will be excludable from federal gross income
of the Unit Holder.

    Based upon the above facts, it is our opinion that for Pennsylvania state
and local tax purposes, a Pennsylvania Trust will be recognized as a trust not
taxable as a corporation.  It will, therefore, not be subject to the 
Pennsylvania Capital Stock/Franchise Tax or the Pennsylvania Corporate Net
Income Tax.  Since all of the income of a Trust is either itself income exempt
from Pennsylvania Personal Income Tax, as described below, or is required by 
the terms of the Trust to be distributed to the holders of Units, a Trust 
should not be subject to Pennsylvania Personal Income Tax.  The Philadelphia
School District Investment Income Tax described below, is not imposed on 
trusts.

    Various personal property taxes are in effect in Pennsylvania, however, 
each of them exempts, inter alia, Bonds, cash, checking and savings accounts 
in and certificates of deposit issued by commercial banks, savings 
institutions or trust companies and United States Treasury obligations.  In
general, these taxes apply to a specified list of items of intangible 
personal property including, inter alia, mortgages and other evidences of
indebtedness and shares of stock issued by business corporations not doing
business in Pennsylvania.  The taxes referred to above include the County 
Personal Property Tax imposed on residents of Pennsylvania by the Act of 
June 17, 1913, P.L. 507, as amended, the additional personal property taxes 
imposed on Pittsburgh residents by the School District of Pittsburgh under 
the Act of June 20, 1947, P.L. 733, as amended, and by the City of Pittsburgh 
by Ordinance No. 599 of December 28, 1967, under the Act of December 31, 1965,
P.L. 1257, and any additional personal property taxes that the School District
of Philadelphia may reimpose on Philadelphia residents under the authority 
contained in the Act of May 23, 1949, P.L. 1676, as amended.  Units evidencing 
fractional undivided interests in a Pennsylvania Trust will not be subject to 
any of these personal property taxes to the extent of that proportion of a 
Pennsylvania Trust represented by Bonds and other exempt assets. Only that 
proportion of the Units represented by taxable assets will be subject to the 
personal property taxes.  Pennsylvania Trust Units may be taxable under the 
Pennsylvania inheritance and estate taxes.
 
    The interest and gain from obligations issued by the Commonwealth of
Pennsylvania or by its political subdivisions or by any public authority of
either are exempt from tax under the Act of August 31, 1971, P.L. 395, 
Act No. 94.  However, that Act was repealed by the Act of December 3, 1993,
P.L. 473, Act No. 68 ("Act 68 of 1993") with respect to obligations issued
on or after February 1, 1994.  Pursuant to Act 68 of 1993, profits, gains or
income derived from the sale, exchange or other disposition of exempt 
government obligations issued after February 1, 1994 will be subject to
state or local taxation although interest and "income" derived from the
exempt obligations will continue to be exempt from all state and local 
taxation.  Therefore, the proportion of income representing interest from 
Bonds distributable to Unit Holders is not taxable under the Pennsylvania
Personal Income Tax imposed by Article III of the Pennsylvania "Tax Reform
Code of 1971", as amended by the Act of August 31, 1971, P.L. 362, Act No. 93,
or under the Corporate Net Income Tax imposed on corporations by Article IV of
the Tax Reform Code.  Similarly, such interest will not be taxable under the 
Philadelphia School District Investment Income Tax imposed on

<PAGE>

Philadelphia resident individuals under the authority of the Act of August 9,
1963, P.L. 640, as implemented by Section 19-1804 of the Philadelphia Code,
as amended, and resolutions of the Board of Education of the School District
of Philadelphia made pursuant to the ordinances, and such interest will not be
subject to any of the taxes on net income from business activities in 
Philadelphia under Philadelphia Code Sections 19-1500 and 19-2600, imposing
a Net Profits Tax and a Business Privilege Tax respectively.  The City and
School District of Pittsburgh do not impose any taxes on unearned income.
 
    Under the Pennsylvania Personal Income Tax Law, personal income tax is
imposed upon the following specified classes of income:  (1) compensation for
services, (2) net profits from the operation of a business, profession, or 
other activity, (3) net gains or income from the disposition of property, (4) 
net gains or income in the form of rents and royalties, (5) dividends, (6) 
interest from obligations not otherwise exempt, (7) gambling and lottery
winnings, (8) net gains or income from estates or trusts which fall under any 
of the preceding classifications.  Although there is no published authority
on the question, it is our opinion that any insurance proceeds paid in lieu of
interest on defaulted tax-exempt obligations will be exempt from Pennsylvania 
Personal Income Tax either as payment in lieu of tax-exempt interest or as 
payments of insurance proceeds which are not included in any of the classes 
of income specified as taxable under the Pennsylvania Personal Income Tax 
Law.  Since Pennsylvania Corporate Net Income Tax is imposed upon the 
corporation's net income for federal income tax purposes, because such
insurance proceeds will be excluded from the federal income tax base, such
proceeds will not be subject to the Pennsylvania Corporate Net Income Tax.
Finally, since proceeds from insurance policies are expressly excluded from
the Philadelphia School District Investment Income Tax, insurance proceeds
paid to replace defaulted payments under any Bonds held by the Pennsylvania
Trust(s) will not be subject to this tax.

    Under Act 68 of 1993, a Unit Holder's share of gain upon disposition of a 
Bond issued on or after February 1, 1994 by the Pennsylvania Trust, whether 
by sale, exchange, redemption or payment at maturity, will be taxable 
under the Pennsylvania Personal Income Tax.  Gains on the disposition of Bonds
issued before February 1, 1994 will continue to be exempt.  See 72 P.S. Section
7303(a)(3) and 61 Pa. Code Section. 121.9(b)(3).  While there is no published 
authority with respect to the treatment of such gains for purposes of the 
Philadelphia School District Investment Income Tax, it is our opinion that
gains upon dispositions of Bonds issued before February 1, 1994 are exempt from 
this tax under Act of August 31, 1971, P.L. 395, Act No. 94, and, if the 
question were litigated, the Pennsylvania courts should so hold.  Gains on the 
disposition of Bonds issued on or after February 1, 1994 will be taxable.  
In any event, the Philadelphia School District Investment Income Tax has no
application to any gain on the disposition of property held for more than
six months. 

    In C.C. Collings & Co., Inc. v. Commonwealth of Pennsylvania, 514 A.2d 1373
(1986), and two related cases, the Supreme Court of Pennsylvania held that 
gains or losses from the sale of obligations of the Commonwealth of 
Pennsylvania, its political subdivisions, instrumentalities and agencies are 
not subject to the Corporate Net Income Tax.  Profits, gains or income
derived from the sale, exchange or other disposition of those exempt 
obligations issued on or after February 1, 1994, however, will be subject
to tax pursuant to Act 68 of 1993.  

    There is no published authority under any of the Pennsylvania state and
local income taxes described above with respect to gain from the redemption
or sale of a Unit.  To the extent that such gain represents the
Unit Holder's share of any unrealized gain on the Bonds issued before 
February 1, 1994 and held by the Trust, it is our opinion that such gain is 
exempt from the above-described Pennsylvania state and local income taxes and, 
if the question were litigated, the Pennsylvania courts should so hold.  To the
extent that such gain is attributable to unrealized gain on Bonds issued on 
or after February 1, 1994, such gain will be taxable under such taxes.  In any
event, the Philadelphia School District Investment Income Tax has no 
application to any gain on the disposition of property held for more than six 
months.
 
    Interest on obligations of Puerto Rico, the Virgin Islands, Guam, or the
Northern Mariana Islands is, under federal law, exempt from taxation by states
and municipalities.  Federal law does not expressly exclude from taxation gain
realized upon the disposition of such obligations.  Therefore, a disposition
of such obligations by a Pennsylvania Trust could be a taxable event to a
Holder under each of the Pennsylvania state and local income taxes discussed
in the preceding paragraphs.  See Willcuts v. Bunn, 282 U.S. 216 (1931); U.S.
v. Stewart, 311 U.S. 60 (1940).  Similarly, to the extent that gain on the
redemption or sale of a Unit represents unrealized gain on such obligations
held by a Pennsylvania Trust, such gain could be taxable. 

    We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (No. 33-53981) relating to the Units referred to
above, and to the reference to our firm as special Pennsylvania tax counsel in
said Registration Statement and in the related Prospectus.

Very truly yours,


DECHERT PRICE & RHOADS

<PAGE>

EXHIBIT 4.1

(ON STANDARD & POOR'S CORPORATION LETTERHEAD)

6/21/94

John Nuveen & Company
333 West Wacker Drive
Chicago, Illinois  60606

Re:     NUVEEN TAX EXEMPT UNIT TRUST, SERIES 735

        This is in response to your requests regarding the above-captioned
fund which consists of separate underlying insured and traditional unit
investment trusts, SEC file # 33-53981.

        INSURED TRUSTS.

        With respect to the insured trusts 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 soley 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 attatched 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' to the units of each insured trust and a 'AAA' rating to
the securities contained in each 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 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 Standard and 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
time after the closing or should they not conform to certification received by
us, we reserve the right to nullify the ratings.


<PAGE>



        TRADITIONAL TRUSTS.

        With respect to the traditional unit investment trusts within the
above-captioned fund, we have reviewed the information presented to us and we
hereby confirm that the ratings indicated in the prospectus as being assigned
by Standard & Poor's Corporation to the securities contained in each
traditional trust of such fund are, according to our records, the ratings
currently assigned by Standard & Poor's Corporation to such securities.  You
understand that Standard & Poor's Corporation has not consented to, and will
not consent to, being named as "expert" under the federal securities laws,
including and without limitation, Section 7 of the Securities Act of 1933,
with respect to the ratings on any securities contained in any of the
traditional trusts.

        Please note that the 'AAA' rating assigned to the units of each
insured trust does not apply to the units of any of the traditional trusts.


                                          STANDARD & POOR'S CORPORATION

                                          
                                          Vincent S. Orgo



 
<PAGE>

EXHIBIT 4.2

(On Kenny Information Systems, Inc. Letterhead)

6/21/94

John Nuveen & Company
333 West Wacker Drive
Chicago, IL 60606

Re:  Nuveen Tax Exempt Unit Trust, Series 735

Gentlemen:

     We have examined the registration statement File No. 33-53981,
for the above captioned trust.  We hereby acknowledge that
Kenny S&P 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,


John R. Fitzgerald



<PAGE>


EXHIBIT 4.3

(ON CARTER LEDYARD & MILBURN LETTERHEAD)

6/21/94


Nuveen Tax-Exempt Unit Trust, Series 735
c/o John Nuveen & Co. Incorporated,
as Depositor of Nuveen Tax-Exempt Unit
Trust, Series 735
333 W. Wacker Drive
Chicago, Illinois  60606

RE:  Nuveen Tax-Exempt Unit Trust, Series 735

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 735 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 735
                               File No. 33-53981


    The Prospectus and the Indenture filed with Amendment No. 1 of the
Registration Statement on Form S-6 have been revised to reflect information
regarding the execution of the Indenture and the deposit of bonds on 6/21/94,
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 individual
trusts constituting the Fund.  All references to the Units, prices and related
statistical data will apply to each trust of the Fund and the Units thereof
individually.

    Except for such updating, an effort has been made to set forth below each 
of the changes and also to reflect the same by marking the Prospectus 
transmitted with the Amendment.  Also, differences between the Final 
Prospectus relating to the previous series of the Nuveen Tax-Exempt Unit 
Trust and the subject Prospectus have been indicated.

                                    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 each of the Trusts, 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 each of the Trusts.

     PAGE 8 et seq. The following information for each Trust appears on the
pages relating to such trust:

         The estimated daily accrual of interest under the plans of
         distribution for each of the Trusts

         Data regarding the composition of the portfolio of each
         Trust

         Disclosure regarding the states' economic and legislative
         matters relevant to investors of state trusts

         Concentrations of issues by purpose in each Trust

         The approximate percentage of the bonds in the
         portfolio of each Trust acquired in distributions where
         the Sponsor was either the sole underwriter or manager
         or member of the underwriting syndicate

         The percentage of "when issued" bonds in the portfolio
         of each Trust

         The schedule of investments for each Trust, including
         the notes thereto

         Descriptions of the opinions of the special tax
         counsel for state trusts

         The Record Dates and Distribution Dates for
         interest distributions for each Trust

         The distribution table for each Trust

         Taxable Equivalent Estimated Current Return Tables for residents
         of the respective jurisdictions

         The statements of condition for each Trust
         and the accountant's report with regard thereto.

         The amount of the Trustee's Fee

                             THE INDENTURE

The Schedules to the Indenture have been completed.


CHAPMAN AND CUTLER


Chicago, Illinois

6/21/94


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