<PAGE>
40 ACT FILE NO. 811-2271
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 805
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: Eric F. Fess
111 West Monroe Street
Chicago, Illinois 60603
It is proposed that this filing will become effective (check appropriate box)
_____
_____ immediately upon filing pursuant to paragraph (b)
_____
_____ on (date) pursuant to paragraph (b) of rule 485
_____
_____ 60 days after filing pursuant to paragraph (a)
_____
_____ on (date) pursuant to paragraph (a) of rule (485 or 486)
E. Title and amount of securities being registered: An indefinite number of
Units pursuant to Rule 24f-2 promulgated under the Investment Company Act of
1940, as amended.
F. Proposed maximum offering price to the public of the securities being
registered: Indefinite
G. Amount of filing fee: $500 (as required by Rule 24f-2)
H. Approximate date of proposed sale to the public:
As soon as practicable after the effective
date of the registration statement
- ----- Check box if it is proposed that this filing will become effective
- ----- on (Date) at (Time) pursuant to Rule 487.
______________________________________________________________________________
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a) may determine.
<PAGE>
MAY 3, 1995
SUBJECT TO COMPLETION
NUVEEN Tax-Exempt Unit Trusts
PROSPECTUS
Series 800
May 3, 1995
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 800 consists of two underlying separate
unit investment trusts designated as National Insured Trust 295 and California
Insured Trust 247. 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 MBIA Insurance 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. (SEE PAGE A-1.)
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.)
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 RESERVE 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 Insured Trust 295 3 8-11
California Insured Trust 247 3 12-25
GENERAL MATTERS
Accrued Interest 8 A-17
Accumulation Plan 14 A-25
Bonds, How Selected 3 7
Bonds, Initial Determination of Offering Price 10 A-19
Bonds, Limited Right of Substitution 4 A-7
Bond Ratings 3 8-25
Bonds, Removal from Trust 21 A-34
Call Provisions of Portfolio Bonds 3, 4 8-25,A-8
Capital Gains Taxability 11 A-20
Dealer Discount 17 A-29
Description of Units of Trust 1 5
Distributions to Unitholders 13 A-24
Distribution Payment Dates 3, 13 8-25, A-24
Distribution of Units to the Public 17 A-29
Essential Information Regarding the Trusts -- 4
Estimated Long Term Return and Estimated Current
Return 9 3, A-18
Evaluation 16 A-29
Expenses to Fund 12 A-23
Insurance on Bonds in the Insured Trusts 5 A-10
Insurance on Certain Bonds in the Traditional
Trusts 5 A-12
Interest Income to Trust 3 8-25
Investments, Schedules of 3 8-25
Legality of Units 24 A-38
Limitations on Liabilities of Sponsor and Trustee 22 A-35
Market for Units 7 A-17
Minimum Transaction 17 A-31
Objectives of the Trusts 2 6
Optional Distribution Plan 13 A-24
Other Information 24 A-37
Ownership and Transfer of Units 18 A-31
Public Offering Price of Units 6 A-13
Quantity Purchases 6 A-13
Record Dates 13 A-24
Ratings, Description of 24 A-39
Redemption of Units by Trustee 19 A-32,A-34
Reports to Unitholders 15 A-28
Repurchase of Units by Sponsor 20 A-33
Risk Factors 3 A-1
Sales Charge 6 A-13
Sponsor, Information About 23 A-36
State Tax Status 3 8-25
Successor Trustees and Sponsors 22 A-35
Tax Status of Unitholders 11 A-19
Trustee, Information About 22 A-35
Trust Indenture, Amendment and Termination 24 A-37
Unit Value 16 A-29
</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 Insured Trust 295............... 5.71% 5.74% 5.75%
California Insured Trust 247............. 5.67% 5.71% 5.73%
</TABLE>
ESTIMATED CURRENT RETURNS
<TABLE>
<CAPTION>
PLAN OF DISTRIBUTION
----------------------------------------
TRUST MONTHLY QUARTERLY SEMI-ANNUAL
<S> <C> <C> <C>
--------------------------------------------------------------------------------------
National Insured Trust 295............... 5.61% 5.64% 5.66%
California Insured Trust 247............. 5.55% 5.58% 5.60%
</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
MAY 2, 1995+
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 CALIFORNIA
INSURED INSURED
TRUST 295 TRUST 247
<S> <C> <C>
--------------- ---------------
Principal Amount of Bonds in Trust.................. $ 10,000,000 $ 5,000,000
Number of Units..................................... 100,000 50,000
Fractional Undivided Interest in Trust Per Unit..... 1/100,000 1/50,000
Public Offering Price--Less than 500 Units
Aggregate Offering Price of Bonds in Trust...... $ 9,434,260 $ 4,667,972
Divided by Number of Units...................... $ 94.34 $ 93.36
Plus Sales Charge*.............................. $ 4.86 $ 4.81
Public Offering Price Per Unit(1)............... $ 99.20 $ 98.17
Redemption Price Per Unit (exclusive of accrued
interest)......................................... $ 93.82 $ 92.87
Sponsor's Initial Repurchase Price Per Unit
(exclusive of accrued interest)................... $ 94.34 $ 93.36
Excess of Public Offering Price Per Unit over
Redemption Price Per Unit......................... $ 5.38 $ 5.30
Excess of Public Offering Price Per Unit over
Sponsor's Repurchase Price Per Unit............... $ 4.86 $ 4.81
Calculation of Estimated Net Annual Interest Income
Per Unit
Annual Interest Income(2)....................... $ 5.7650 $ 5.6650
Less Estimated Annual Expense................... $ .1999 $ .2160
--------------- ---------------
Estimated Net Annual Interest Income(3)......... $ 5.5651 $ 5.4490
Daily Rate of Accrual Per Unit...................... $ .01545 $ .01513
Estimated Current Return(4)......................... 5.61% 5.55%
Estimated Long Term Return(4)....................... 5.71% 5.67%
<FN>
- ----------
Evaluations for purpose of sale, purchase or redemption of Units are made as of 4 p.m. Eastern time on the business day next
following receipt of an order by the Sponsor or Trustee. (See Section 6.)
+ The business day prior to the Date of Deposit.
* National and State, 5.152%; Long Intermediate, 4.439%; Intermediate, 4.058%; Short Intermediate, 3.093%; Short Term, 2.564%
(4.9%, 4.25%, 3.9%, 3.0% and 2.5% of the Public Offering Prices, respectively.)
(1) Units are offered at the Public Offering Price plus accrued interest from the preceding Record Date to, but not including,
the date of settlement (normally five business days after purchase). The Date of Deposit of the Fund has been designated as
the First Record Date for all plans of distribution of the Trust and, accordingly, for Units purchased on the Date of
Deposit, the following amounts of accrued interest to the Settlement Date will be added to the Public Offering Prices:
National Insured Trust--$.11 and California Insured Trust--$.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....................................................May 3, 1995
Settlement Date...........................................................May 10, 1995
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 Insured Trust 295............... $1.5738 $1.2538 $1.0638
California Insured Trust 247............. 1.6541 1.3341 1.1441
------------
* 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>
CUSIP Numbers:
<TABLE>
<CAPTION>
TRUST MONTHLY QUARTERLY SEMI-ANNUAL
----------------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
National Insured Trust 295............... 6710A3 738 6710A3 746 6710A3 753
California Insured Trust 247............. 67064W 101 67064W 119 67064W 127
</TABLE>
------------------------
THE NUVEEN TAX-EXEMPT UNIT TRUST
SERIES 800
1. WHAT IS THE NUVEEN TAX-EXEMPT UNIT TRUST, SERIES 800?
Series 800 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 two underlying
separate unit investment trusts, combined under one trust indenture and
agreement, designated National Insured Trust 295 and California Insured Trust
247. 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." THERE ARE NO TRADITIONAL TRUSTS IN THIS SERIES. This Series was
created under the laws of the State of New York pursuant to a Trust Indenture
and Agreement dated May 3, 1995 (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
5
<PAGE>
interest, required for their purchase (or the obligations themselves) in the
principal amount of $15,000,000 (the "Bonds"), which initially constitute the
underlying securities of the Trusts. Bonds may include fixed rate obligations
with regularly scheduled interest payments, zero coupon bonds and stripped
obligations, which represent evidences of ownership interests with respect to
either a principal payment or a payment of interest on a tax-exempt obligation
("Stripped Obligations"). See "SUMMARY OF PORTFOLIOS" and "GENERAL TRUST
INFORMATION" for a discussion of zero coupon bonds and Stripped Obligations. The
following principal amounts were deposited in each Trust: $10,000,000 in the
National Insured Trust and $5,000,000 in the California 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 Insured Trust and 50,000 Units of the California Insured Trust,
which together represent ownership of the entire Series, and which are offered
for sale by this Prospectus. Each Unit of a Trust represents a fractional
undivided interest in the principal and net income of such Trust in the ratio of
10 Units for each $1,000 principal value of Bonds initially deposited in such
Trust. Only Units of the National Insured Trust are offered for sale to
Illinois, Indiana, 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 MBIA Insurance
Corporation, and as a result of such insurance the obligations in the Insured
Trusts are rated "Aaa" by Moody's Investors Service, Inc. and "AAA" by Standard
& Poor's Corporation. (SEE SECTION 5) All obligations in each Traditional Trust
are rated in the category "A" or better (SP-1 or MIG 2 or better in the case of
short term obligations included in a Short Term Traditional Trust) by Standard &
Poor's Corporation or Moody's Investors Service, Inc. (including provisional or
conditional ratings). In addition, certain Bonds in certain Traditional Trusts
may be covered by insurance guaranteeing the timely payment, when due, of all
principal and interest. (SEE SECTION 3.) The portfolios of National and State
Trusts consist of long-
6
<PAGE>
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 MBIA Insurance Corporation insurance on such Bonds.
In order for Bonds in the Insured Trusts to be eligible for MBIA Insurance
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 INSURED TRUST 295
The Portfolio of National Insured Trust 295 consists of 10 long term
(approximately 15 to 40 year maturities) obligations issued by entities located
in 7 states. Three Bonds in the Trust are general obligations of the
governmental entities issuing them and are backed by the taxing powers thereof.
Seven Bonds in the Trust are payable as to principal and interest from the
income of a specific project or authority and are not supported by the issuer's
power to levy taxes. The sources of payment for these Bonds are divided as
follows: Dedicated-Tax Supported Revenue, 1; Electrical System Revenue, 2;
Health Care Facility Revenue, 2; Transportation Facility Revenue, 1; Water
and/or Sewer Revenue, 1. All of the Bonds in the Trust, as insured, are rated
AAA by Standard & Poor's Corporation and Aaa by Moody's Investors Service, Inc.
Twenty percent of the principal amount of Bonds in the Trust consists of issues
of entities located in the State of Illinois; such concentration may involve
more risk than if such Bonds were issued by issuers located in several states.
At the Date of Deposit, the average maturity of the Bonds in the National
Insured Trust is 27.0 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 25.0% of the aggregate principal amount of the Bonds in the
Trust (accounting for approximately 23.9% 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 20% of the aggregate principal amount of the Bonds in the
Trust consists of obligations of issuers whose revenues are primarily derived
from the sale of electric energy.
Approximately 20% of the aggregate principal amount of the Bonds in the
Trust consists of obligations of issuers whose revenues are primarily derived
from services provided by hospitals or other health care facilities.
For a discussion of the risks associated with investments in the bonds of
various issuers, see "General Trust Information" in this section.
The Sponsor entered into contracts to acquire the Bonds on May 2, 1995. 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>
$9,391,329 $42,931 $576,500 $9,382,385 .52%
</TABLE>
Neither cost to Sponsor nor profit (or loss) to Sponsor reflects
underwriting profits or losses received or incurred by the Sponsor through its
participation in underwriting syndicates. An underwriter or underwriting
syndicate purchases bonds from the issuer on a negotiated or competitive bid
basis as principal with the motive of marketing such bonds to investors at a
profit. The Sponsor participated as either the sole underwriter or manager or as
a member of the syndicates which were the original underwriters of 10.0% of the
aggregate principal amount of the Bonds.
8
<PAGE>
Unitholders may elect to have interest distributions made on a monthly,
quarterly or semi-annual basis. The interest on the Bonds initially deposited in
the National Insured Trust, less estimated expenses, is estimated to accrue at
the rate of $.01560 per Unit per day under the semi-annual plan of distribution,
$.01554 per Unit per day under the quarterly plan of distribution and $.01545
per Unit per day under the monthly plan of distribution. It is anticipated that
the amount of interest to be distributed per Unit in each year under each plan
of distribution will initially be substantially equal to the Estimated Net
Annual Interest Income per Unit for that plan.
Details of interest distributions per Unit of the National Insured Trust
under the various plans appear in the following table based upon estimated Net
Annual Interest Income at the Date of Deposit:
<TABLE>
<CAPTION>
NORMAL
DISTRIBUTIONS
NATIONAL INSURED TRUST 1995 1996 PER YEAR
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------- --------------
Record Date*.......................... 6/1 8/1 11/1 2/1 5/1
Distribution Date..................... 6/15 8/15 11/15 2/15 5/15
- ---------------------------------------------------------------------------------------------------------------------------------
Monthly Distribution Plan............. $ .4326(1) $ 5.5651
-------- $.4635 every month --------
Quarterly Distribution Plan........... $ .4326(1) $ .9324(2) $ 1.3986 $ 1.3986 $ 1.3986 $ 5.5971
Semi-Annual Distribution Plan......... $ .4326(1) $ 2.3400(3) $ 2.8080 $ 5.6161
- ---------------------------------------------------------------------------------------------------------------------------------
<FN>
* Record Dates for semi-annual distributions are May 1 and November 1; for quarterly distributions, they are February 1, May 1,
August 1 and November 1. Record Dates for monthly distributions are the first day of each month.
(1) The first distribution will be paid to all Unitholders, regardless of the distribution plan selected. Such distribution may
be more or less than a regular monthly distribution.
(2) The second distribution under the quarterly distribution plan represents a 2-month distribution; subsequent quarterly
distributions will be regular 3-month distributions.
(3) The second distribution under the semi-annual distribution plan represents a 5-month distribution; subsequent semi-annual
distributions will be regular 6-month distributions.
</TABLE>
The accrual amounts set forth above, and in turn the amount of interest to
be distributed annually per Unit, will generally change as Bonds are redeemed,
mature or are sold or as fees and expenses increase or decrease.
TAX STATUS--NATIONAL INSURED TRUST
For a discussion of the tax status of income earned on National Insured
Trust Units, see Section 11.
NATIONALLY DIVERSIFIED TRUST TAXABLE ESTIMATED CURRENT RETURN TABLE
(NATIONAL 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 1995 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 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- 39.0 $ 0-114.7 15.0 % 5.59 5.88 6.18 6.47 6.76 7.06 7.35 7.65
39.0- 94.3 0-114.7 28.0 6.60 6.94 7.29 7.64 7.99 8.33 8.68 9.03
114.7-172.1 29.0 6.69 7.04 7.39 7.75 8.10 8.45 8.80 9.15
94.3-143.6 0-114.7 31.0 6.88 7.25 7.61 7.97 8.33 8.70 9.06 9.42
114.7-172.1 32.0 6.99 7.35 7.72 8.09 8.46 8.82 9.19 9.56
172.1-294.6 34.5 7.25 7.63 8.02 8.40 8.78 9.16 9.54 9.92
143.6-256.5 114.7-172.1 37.0 7.54 7.94 8.33 8.73 9.13 9.52 9.92 10.32
172.1-294.6 40.0 7.92 8.33 8.75 9.17 9.58 10.00 10.42 10.83
Over 294.6 37.0 2 7.54 7.94 8.33 8.73 9.13 9.52 9.92 10.32
Over 256.5 172.1-294.6 44.0 8.48 8.93 9.38 9.82 10.27 10.71 11.16 11.61
Over 294.6 41.0 3 8.05 8.47 8.90 9.32 9.75 10.17 10.59 11.02
</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 4.75% 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- 23.4 $ 0-114.7 15.0 % 5.59 5.88 6.18 6.47 6.76 7.06 7.35 7.65
23.4- 56.6 0-114.7 28.0 6.60 6.94 7.29 7.64 7.99 8.33 8.68 9.03
56.6-118.0 0-114.7 31.0 6.88 7.25 7.61 7.97 8.33 8.70 9.06 9.42
114.7-237.2 32.5 7.04 7.41 7.78 8.15 8.52 8.89 9.26 9.63
118.0-256.5 114.7-237.2 38.0 7.66 8.06 8.47 8.87 9.27 9.68 10.08 10.48
Over 237.2 37.0 2 7.54 7.94 8.33 8.73 9.13 9.52 9.92 10.32
Over 256.5 Over 237.2 41.0 3 8.05 8.47 8.90 9.32 9.75 10.17 10.59 11.02
<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
MAY 3, 1995
NATIONAL INSURED TRUST 295
(SERIES 800)
<TABLE>
<CAPTION>
Ratings(3) Trustee's
Optional --------------------- Determination
Aggregate Name of Issuer and Title of Issue Represented Redemption Standard of Offering
Principal by Sponsor's Contracts to Purchase Bonds(1) Provisions(2) & Poor's Moody's Price(4)
<C> <C> <S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
$ 1,000,000 California Statewide Communities Development 2004 at 100 AAA Aaa $ 808,160
Authority, Insured Revenue Certificates of
Participation (Childrens Hospital of Los
Angeles), Series 1993, 4.75% Due 6/1/21.
(Original issue discount bonds delivered on
or about December 23, 1993 at a price of
90.749% of principal amount.)
1,000,000 State of Florida, Full Faith and Credit, 2005 at 101 AAA Aaa 969,410
Department of Transportation, Right-of-Way
Acquisition and Bridge Construction Bonds,
Series 1995, 5.875% Due 7/1/24. (General
Obligation Bonds.)
500,000 City of Chicago (Illinois), Chicago-O'Hare 2004 at 102 AAA Aaa 427,995
International Airport, General Airport
Revenue Refunding Bonds, 1993 Series A, 5.00%
Due 1/1/16.
1,500,000 Metropolitan Pier and Exposition Authority 2004 at 102 AAA Aaa 1,448,175
(Illinois), McCormick Place Expansion Project
Refunding Bonds, Series 1994A, 6.00% Due
6/15/27. (Original issue discount bonds
delivered on or about June 23, 1994 at a
price of 93.881% of principal amount.)
1,000,000 City of Petersburg, Indiana, Pollution Control 2003 at 102 AAA Aaa 900,820
Refunding Revenue Bonds (Indianapolis Power &
Light Company Project), Series 1993C, 5.50%
Due 10/1/23.
1,000,000 Louisiana Public Facilities Authority, Revenue 2004 at 102 AAA Aaa 1,006,060
Bonds (General Health, Inc. Project), Series
1994, 6.375% Due 11/1/24.
1,000,000 Massachusetts Water Resources Authority, 2004 at 101 1/2 AAA Aaa 970,460
General Revenue Bonds, 1994 Series A, 5.90%
Due 8/1/16.
1,000,000 Southeastern Massachusetts University Building 2005 at 102 AAA Aaa 953,180
Authority, Refunding Revenue Bonds, 1995
Series A, 5.75% Due 5/1/16. (General
Obligation Bonds.)
1,000,000 King County, Washington, Department of 2004 at 102 AAA Aaa 1,000,000
Metropolitan Services, General Obligation
Sewer Revenue Bonds, 1994 Series A, 6.25% Due
1/1/34.
1,000,000 Washington Public Power Supply System, Nuclear 2003 at 102 AAA Aaa 950,000
Project No. 2 Refunding Revenue Bonds, Series
1993A, 5.75% Due 7/1/12.
- ----------- ---------------
$10,000,000 $ 9,434,260
- ----------- ---------------
- ----------- ---------------
</TABLE>
See Notes to Schedules of Investments, page 26.
11
<PAGE>
CALIFORNIA INSURED TRUST 247
The Portfolio of California Insured Trust 247 consists of 7 obligations
issued by entities located in California. Seven Bonds in the Trust are payable
as to principal and interest from the income of a specific project or authority
and are not supported by the issuer's power to levy taxes. The sources of
payment for these Bonds are divided as follows: College and University Revenue,
2; Electrical System Revenue, 2; 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 25.4 years. The average maturity of the Bonds in a Trust is
calculated based upon the stated maturities of the Bonds in such Trust (or, with
respect to Bonds for which funds or securities have been placed in escrow to
redeem such Bonds on a stated call date, based upon such call date). The average
maturity of the Bonds in a Trust may increase or decrease from time to time as
Bonds mature or are called or sold.
Approximately 30% of the aggregate principal amount of the Bonds in the
Trust consists of obligations of issuers whose revenues are primarily derived
from payments to colleges and universities, including tuition, dormitory
revenues, grants and endorsements.
Approximately 30% of the aggregate principal amount of the Bonds in the
Trust consists of obligations of issuers whose revenues are primarily derived
from the sale of electric energy.
Approximately 30% of the aggregate principal amount of the Bonds in the
Trust consists of obligations of issuers whose revenues are primarily derived
from the sale of 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 on May 2, 1995. 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>
$4,645,198 $22,774 $283,250 $4,643,597 .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 California Insured Trust, less estimated expenses, is estimated to accrue at
the rate of $.01527 per Unit per day under the semi-annual plan of distribution,
$.01522 per Unit per day under the quarterly plan of distribution and $.01513
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
12
<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 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 1995 1996 PER YEAR
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------- --------------
Record Date*.......................... 6/1 8/1 11/1 2/1 5/1
Distribution Date..................... 6/15 8/15 11/15 2/15 5/15
- ---------------------------------------------------------------------------------------------------------------------------------
Monthly Distribution Plan............. $ .4236(1) $ 5.4490
-------- $.4539 every month --------
Quarterly Distribution Plan........... $ .4236(1) $ .9132(2) $ 1.3698 $ 1.3698 $ 1.3698 $ 5.4810
Semi-Annual Distribution Plan......... $ .4236(1) $ 2.2905(3) $ 2.7486 $ 5.5000
- ---------------------------------------------------------------------------------------------------------------------------------
<FN>
* Record Dates for semi-annual distributions are May 1 and November 1; for quarterly distributions, they are February 1, May 1,
August 1 and November 1. Record Dates for monthly distributions are the first day of each month.
(1) The first distribution will be paid to all Unitholders, regardless of the distribution plan selected. Such distribution may
be more or less than a regular monthly distribution.
(2) The second distribution under the quarterly distribution plan represents a 2-month distribution; subsequent quarterly
distributions will be regular 3-month distributions.
(3) The second distribution under the semi-annual distribution plan represents a 5-month distribution; subsequent semi-annual
distributions will be regular 6-month distributions.
</TABLE>
The accrual amounts set forth above, and in turn the amount of interest to
be distributed annually per Unit, will generally change as Bonds are redeemed,
mature or are sold or as fees and expenses increase or decrease.
TAX STATUS--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 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
13
<PAGE>
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 local agencies in California
or contained in Official Statements for various California Municipal
Obligations.
14
<PAGE>
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. While
the State's substantial population growth during the 1980s stimulated local
economic growth and diversification and sustained a real estate boom between
1984 and 1990, it has increased strains on the State's limited water resources
and its infrastructure. Resultant traffic congestion, school overcrowding and
high housing costs have increased demands for government services and may impede
future economic growth. Population growth has slowed between 1991 and 1993 even
while substantial immigration has continued, due to a significant increase in
outmigration by California residents. Generally, the household incomes of new
residents have been substantially lower (and their education and social service
utilization higher) than those of departing households, which may have a major
long-term socioeconomic and fiscal impact. However, with the California economy
improving, the recent net outmigration within the Continental U.S. is expected
to decrease or be reversed.
From mid-1990 to late 1993, the State's economy suffered its worst recession
since the 1930s, with recovery starting later than for the nation as a whole.
The State has experienced the worst job losses of any post-war recession.
Prerecession job levels may not be realized 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. Additional military base
closures will have further adverse effects on the State's economy later in the
decade.
Since the start of 1994, the California economy has shown signs of steady
recovery and growth. The State Department of Finance reports net job growth,
particularly in construction and related manufacturing, wholesale and retail
trade, transportation, recreation and services. This growth has offset the
continuing but slowing job losses in the aerospace industry and restructuring of
the finance and utility sectors. Unemployment in the State was down
substantially in 1994 from its 10% peak in January, 1994, but still remains
higher than the national average rate. Retail sales were up strongly in 1994
from year-earlier figures. Delay or slowdown in recovery will adversely affect
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 the rate of inflation, not to exceed 2% per year, or
decline in value, or in the case of 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.
15
<PAGE>
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 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 qualified 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 now measured over a two-year cycle. With respect to
local governments, excess revenues must be returned by a revision of tax rates
or fee schedules within the two subsequent fiscal years. The appropriations
limit for a local government may be overridden by referendum under certain
conditions for up to four years at a time. With respect to the State, 50% of any
excess revenues is to be distributed to K-12 school districts and community
college districts (collectively, "K-14 districts") and the other 50% is to be
refunded to taxpayers. With more liberal annual adjustment factors since 1988,
and depressed revenues since 1990 because of the recession, few governments,
including the State,
16
<PAGE>
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.
OBLIGATIONS OF THE STATE OF CALIFORNIA. Under the California Constitution,
debt service on outstanding general obligation bonds is the second charge to the
General Fund after support of the public school system and public institutions
of higher education. Total outstanding general obligation bond and lease
purchase debt of the State increased from $9.4 billion at June 30, 1987 to $23.5
billion at June 30, 1994. In FY1993-94, debt service on general obligation bonds
and lease purchase debt was approximately 5.2% of General Fund revenues.
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 33%).
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. These structured concerns
will be exacerbated in coming years by the expected need to substantially
increase capital and operating funds for corrections as a result of a "Three
Strikes" law enacted in 1994. 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; revenues and expenditures were about equal in 1992-93.
By June 30, 1993, the State's General Fund had an accumulated deficit, on a
budget basis, of approximately $2.8 billion.
17
<PAGE>
RECENT BUDGETS. The state failed to enact its 1992-93 budget by July 1,
1992. Although the State had no legal authority to pay many of its vendors,
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.
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, 1992 following enactment of the
1992-93 Budget Act and issuance by the State of short-term 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 represented a third consecutive year of difficult
budget choices. As in the prior year, the budget contained no general state tax
increases, and relied principally on expenditure cuts, particularly for health
and welfare and higher education, a two-year suspension of the renters' tax
credit, some one-time and accounting adjustments, and -- the largest component
- -- an additional $2.6 billion transfer of property taxes from local government,
particularly counties, to school districts to reduce State education funding
requirements. A temporary state sales tax scheduled to expire on June 30, 1993
was extended for six months, and dedicated to support local government public
safety costs.
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 General Fund had $800
million less revenue and $800 million higher expenditures than budgeted. As a
result revenues only exceed expenditures by about $500 million. However, this
was the first operating surplus in four years and reduced the accumulated
deficit to $2.0 billion at June 30, 1994 (after taking account of certain other
accounting reserves).
CURRENT BUDGET. The 1994-95 Budget Act was passed on July 8, 1994, and
provides for an estimated $41.9 billion of General Fund revenues, and $40.9
billion of expenditures. The budget assumed receipt of about $750 million of new
federal assistance for the costs of incarceration, education, health and welfare
related to undocumented immigrants. Other major components of the budget include
further reductions in health and welfare costs and miscellaneous government
costs, some additional transfers of funds from local government, and a plan to
defer retirement of $1 billion of the accumulated budget deficit to the 1995-96
fiscal year. The federal government has apparently budgeted only $33 million of
the expected immigration aid. However, this shortfall is expected to be almost
fully offset by higher than projected revenues, and lower than projected
caseload growth, as the economy improves.
The State issued $7.0 billion of short-term debt in July, 1994 to meet its
cash flow needs and to finance the deferral of part of the accumulated budget
deficit to the 1995-96 fiscal
18
<PAGE>
year. In order to assure repayment of the $4 billion, 22-month part of this
borrowing, the State enacted legislation (the "Trigger Law") which can lead to
automatic, across-the-board cuts in General Fund expenditures in either the
1994-95 or 1995-96 fiscal years if cash flow projections made at certain times
during those years show deterioration from the projections made in July 1994
when the borrowings were made. On November 15, 1994, the State Controller as
part of the Trigger Law reported that the cash position of the General Fund on
June 30, 1995 would be about $580 million better than earlier projected, so no
automatic budget adjustments were required in 1994-95. The Controller's report
showed that loss of federal funds was offset by higher revenues, lower
expenditures, and certain other increases in cash resources.
PROPOSED 1995-96 BUDGET. On January 10, 1995, the Governor presented his
proposed FY 1995-96 Budget. This budget projects total General Fund revenues and
transfers of $42.5 billion, and expenditures of $41.7 billion, to complete the
elimination of the accumulated deficits from earlier years. However, this
proposal leaves no cushion, as the projected budget reserve at June 30, 1996
would be only about $92 million. While proposing increases in funding for
schools, universities and corrections, the Governor proposes further cuts in
welfare programs, and a continuation of the "realignment" of functions with
counties which would save the State about $240 million. The Governor also
expects about $800 million in new federal aid for the State's costs of
incarcerating and educating illegal immigrants. The Budget proposal also does
not account for possible additional costs if the State loses its appeals on
lawsuits which are currently pending concerning such matters as school funding
and pension payments, but these appeals could take several years to resolve.
Part of the Governor's proposal also is a 15% cut in personal income and
corporate taxes, to be phased in over three years, starting with calendar year
1996 (which would have only a small impact on 1995-96 income).
The State's difficult financial condition 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 ratings were reduced in July,
1994 to "A1" 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.
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. Trial courts have recently entered tentative
decisions or injunctions which would overturn several parts of the state's
recent budget compromises. The matters covered by these lawsuits include a
deferral of payments by the State to the Public Employees Retirement System,
reductions in welfare payments, and the use of certain cigarette tax funds for
health costs. All of these cases are subject to further proceedings and appeals,
and if the State eventually loses, the final remedies may not have to be
implemented in one year.
19
<PAGE>
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. Through
1990-91, local assistance (including public schools) accounted for approximately
75% of General Fund spending. 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 in 1993 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. At least one rural county (Butte) publicly
announced that it might enter bankruptcy proceedings in August 1990, although
such plans were put off after the Governor approved legislation to provide
additional funds for the county. Other counties have also indicated that their
budgetary condition is extremely grave. 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.
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
20
<PAGE>
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 ultimate
judgment in any 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 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
21
<PAGE>
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. Northern California in 1989 and Southern California
in 1994 experienced major earthquakes causing billions of dollars in damages.
The federal government provided more than $13 billion in aid for both
earthquakes, and neither event is expected to have any long-term negative
economic impact. 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).
On December 7, 1994, Orange County, California (the "County"), together with
its pooled investment fund (the "Pooled Fund") filed for protection under
Chapter 9 of the federal Bankruptcy Code, after reports that the Pooled Fund had
suffered significant market losses in its investments caused a liquidity crisis
for the Pooled Fund and the County. More than 180 other public entities, most
but not all located in the County, were also depositors in the Pooled Fund. As
of mid-January, 1995, the County estimated the Pooled Fund's loss at about $1.64
billion of its initial deposits of around $7.5 billion. The Pooled Fund has been
almost completely restructured to reduce its exposure to changes in interest
rates. Many of the entities which kept moneys in the Pooled Fund, including the
County, are facing cash flow difficulties because of the bankruptcy filing and
may be required to reduce programs or capital projects. The County and some of
these entities have, and others may in the future, default in payment of their
obligations. Moody's and Standard & Poor's have suspended, reduced to below
investment grade levels, or placed on "Credit Watch" various securities of the
County and the entities participating in the Pooled Fund.
The State of California has no obligation with respect to any obligations or
securities of the County or any of the other participating entities, although
under existing legal precedents, the State may be obligated to ensure that
school districts have sufficient funds to operate.
22
<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 1995 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 4.50% 4.75% 5.00% 5.25% 5.50% 5.75% 6.00% 6.25%
------------- ------------- ----------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 39.0 $ 0-114.7 20.0 % 5.63 5.94 6.25 6.56 6.88 7.19 7.50 7.81
39.0- 94.3 0-114.7 34.5 6.87 7.25 7.63 8.02 8.40 8.78 9.16 9.54
114.7-172.1 35.5 6.98 7.36 7.75 8.14 8.53 8.91 9.30 9.69
94.3-143.6 0-114.7 37.5 7.20 7.60 8.00 8.40 8.80 9.20 9.60 10.00
114.7-172.1 38.5 7.32 7.72 8.13 8.54 8.94 9.35 9.76 10.16
172.1-214.9 40.5 7.56 7.98 8.40 8.82 9.24 9.66 10.08 10.50
143.6-214.9 114.7-172.1 43.0 7.89 8.33 8.77 9.21 8.77 9.21 9.65 10.09
172.1-214.9 45.5 8.26 8.72 9.17 9.63 10.09 10.55 11.01 11.47
214.9-239.9 46.5 8.41 8.88 9.35 9.81 10.28 10.75 11.21 11.68
239.9-294.6 46.0 8.33 8.80 9.26 9.72 10.19 10.65 11.11 11.57
Over 294.6 43.5 2 7.96 8.41 8.85 9.29 9.73 10.18 10.62 11.06
214.9-256.5 172.1-214.9 46.0 8.33 8.80 9.26 9.72 10.19 10.65 11.11 11.57
214.9-239.9 47.0 8.49 8.96 9.43 9.91 10.38 10.85 11.32 11.79
239.9-294.6 46.5 8.41 8.88 9.35 9.81 10.28 10.75 11.21 11.68
Over 294.6 44.0 2 8.04 8.48 8.93 9.38 9.82 10.27 10.71 11.16
256.5-429.9 239.9-294.6 50.0 9.00 9.50 10.00 10.50 11.00 11.50 12.00 12.50
Over 294.6 47.0 3 8.49 8.96 9.43 9.91 10.38 10.85 11.32 11.79
Over 429.9 Over 294.6 47.5 3 8.57 9.05 9.52 10.00 10.48 10.95 11.43 11.90
</TABLE>
23
<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 4.50% 4.75% 5.00% 5.25% 5.50% 5.75% 6.00% 6.25%
------------- ------------- ----------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 23.4 $ 0-107.5 20.0 % 5.63 5.94 6.25 6.56 6.88 7.19 7.50 7.81
23.4- 56.6 0-107.5 34.5 6.87 7.25 7.63 8.02 8.40 8.78 9.16 9.54
56.6-107.5 0-107.5 37.5 7.20 7.60 8.00 8.40 8.80 9.20 9.60 10.00
107.5-114.7 38.0 7.26 7.66 8.06 8.47 8.87 9.27 9.68 10.08
114.7-132.5 39.5 7.44 7.85 8.26 8.68 9.09 9.50 9.92 10.33
132.5-237.2 39.0 7.38 7.79 8.20 8.61 9.02 9.43 9.84 10.25
107.5-118.0 0-107.5 38.0 7.26 7.66 8.06 8.47 8.87 9.27 9.68 10.08
107.5-114.7 38.5 7.32 7.72 8.13 8.54 8.94 9.35 9.76 10.16
114.7-132.5 40.0 7.50 7.92 8.33 8.75 9.17 9.58 10.00 10.42
132.5-237.2 39.5 7.44 7.85 8.26 8.68 9.09 9.50 9.92 10.33
118.0-214.9 114.7-132.5 44.5 8.11 8.56 9.01 9.46 9.91 10.36 10.81 11.26
132.5-237.2 44.5 8.11 8.56 9.01 9.46 9.91 10.36 10.81 11.26
Over 237.2 44.0 2 8.04 8.48 8.93 9.38 9.82 10.27 10.71 11.16
214.9-256.5 132.5-237.2 45.0 8.18 8.64 9.09 9.55 10.00 10.45 10.91 11.36
Over 237.2 44.5 2 8.11 8.56 9.01 9.46 9.91 10.36 10.81 11.26
Over 256.5 Over 237.2 47.5 3 8.57 9.05 9.52 10.00 10.48 10.95 11.43 11.90
<FN>
- ------------------
* The State tax rates assumed take into account the adjustment of tax brackets based on changes in the Consumer Price Index
for 1994.
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.
24
<PAGE>
NUVEEN TAX-EXEMPT UNIT TRUST
SCHEDULE OF INVESTMENTS AT DATE OF DEPOSIT
MAY 3, 1995
CALIFORNIA INSURED TRUST 247
(SERIES 800)
<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 $ 460,770
Authority, Insured Health Facilities Revenue
Certificates of Participation (UniHealth
America), 1993 Series A, 5.50% Due 10/1/14.
750,000 California Educational Facilities Authority, 2004 at 102 AAA Aaa 704,550
Revenue Bonds (Loyola Marymount University),
Series 1994, 5.75% Due 10/1/24.
750,000 The Regents of the University of California, 2003 at 102 AAA Aaa 689,828
University of California Housing System
Revenue Bonds, Series A, 5.50% Due 11/1/18.
750,000 Castaic Lake Water Agency (California), 2004 at 102 AAA Aaa 736,095
Refunding Revenue Certificates of
Participation (Water System Improvement
Projects), Series 1994A, 6.00% Due 8/1/18.
750,000 Department of Water and Power of The City of 2003 at 102 AAA Aaa 651,818
Los Angeles, California, Electric Plant
Refunding Revenue Bonds, Second Issue of
1993, 5.25% Due 11/15/26.
750,000 The City of Los Angeles, California, Wastewater 2003 at 102 AAA Aaa 702,548
System Revenue Bonds, Refunding Series
1993-A, 5.70% Due 6/1/20.
750,000 The City of San Diego, California, Industrial 2003 at 102 AAA Aaa 722,363
Development Revenue Refunding Bonds (San
Diego Gas & Electric Company), 1993 Series C,
5.90% Due 9/1/18.
- ----------- ---------------
$ 5,000,000 $ 4,667,972
- ----------- ---------------
- ----------- ---------------
</TABLE>
See Notes to Schedules of Investments, page 26.
25
<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, a division of J. J.
Kenny Co., Inc., 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, a division of J. J. Kenny Co., Inc.,
have been rounded to the nearest dollar.
26
<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 800:
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 800
(comprising National Insured Trust 295 and California Insured Trust
247), as of May 3, 1995. 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 800
as of May 3, 1995, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
May 3, 1995.
27
<PAGE>
Statements of Condition
NUVEEN TAX-EXEMPT UNIT TRUST, SERIES 800
(National Insured Trust 295 and California Insured Trust 247)
AS OF MAY 3, 1995
<TABLE>
<CAPTION>
NATIONAL CALIFORNIA
INSURED INSURED
TRUST PROPERTY TRUST 295 TRUST 247
<S> <C> <C>
--------------- ---------------
Sponsor's contracts to purchase
Tax-Exempt Bonds, backed by an
irrevocable letter of credit(1)(2)..... $ 9,434,260 $ 4,667,972
Accrued interest to May 3, 1995 on
underlying Bonds(1)................... 127,272 62,053
--------------- ---------------
Total....................... $ 9,561,532 $ 4,730,025
--------------- ---------------
--------------- ---------------
LIABILITY AND INTEREST OF UNITHOLDERS
LIABILITY:
Accrued interest to May 3, 1995 on
underlying Bonds(3)............... $ 127,272 $ 62,053
--------------- ---------------
INTEREST OF UNITHOLDERS:
Units of fractional undivided
interest outstanding (National
Insured Trust 295--100,000;
California Insured Trust 247--
50,000)
Cost to investors(4).............. $ 9,920,313 $ 4,908,466
Less: Gross underwriting
commission(5)................. (486,053) (240,494)
--------------- ---------------
Net amount applicable to
investors......................... $ 9,434,260 $ 4,667,972
--------------- ---------------
Total....................... $ 9,561,532 $ 4,730,025
--------------- ---------------
--------------- ---------------
<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>
28
<PAGE>
GENERAL TRUST INFORMATION
RISK FACTORS.
An investment in Units of any Trust should be made with an understanding of
the risks that such an investment may entail. These include the ability of the
issuer, or, if applicable, an insurer, to make payments of interest and
principal when due, the effects of changes in interest rates generally, early
call provisions and the potential for changes in the tax status of the Bonds. As
set forth in the portfolio summaries 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. For economic risks specific to the individual Trusts, see "Economic
Factors" for each 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
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<PAGE>
with certain covenants related to the tax-exempt status of interest on the
Bonds, such as provisions requiring that a specified percentage of units be
rented or available for rental to low or moderate income families, potentially
could cause interest on such Bonds to be subject to Federal income taxation from
the date of issuance of the Bonds. The ability of such issuers to make debt
service payments will be affected by events and conditions affecting financed
projects, including, among other things, the achievement and maintenance of
sufficient occupancy levels and adequate rental income, employment and income
conditions prevailing in local labor markets, increases in taxes, utility costs
and other operating expenses, the managerial ability of project managers,
changes in laws and governmental regulations, the appropriation of subsidies,
and social and economic trends affecting the localities in which the projects
are located. Occupancy of such housing projects may be adversely affected by
high rent levels and income limitations imposed under Federal and state
programs.
SINGLE FAMILY MORTGAGE REVENUE BONDS. Some of the Bonds in a Trust may be
single family mortgage revenue bonds, which are issued for the purpose of
acquiring from originating financial institutions notes secured by mortgages on
residences located within the issuer's boundaries and owned by persons of low or
moderate income. Mortgage loans are generally partially or completely prepaid
prior to their final maturities as a result of events such as sale of the
mortgaged premises, default, condemnation or casualty loss. Because these bonds
are subject to extraordinary mandatory redemption in whole or in part from such
prepayments of mortgage loans, a substantial portion of such bonds will probably
be redeemed prior to their scheduled maturities or even prior to their ordinary
call dates. Extraordinary mandatory redemption without premium could also result
from the failure of the originating financial institutions to make mortgage
loans in sufficient amounts within a specified time period. The redemption price
of such issues may be more or less than the offering price of such bonds.
Additionally, unusually high rates of default on the underlying mortgage loans
may reduce revenues available for the payment of principal of or interest on
such mortgage revenue bonds. Single family 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
A-2
<PAGE>
to the FHA within the prescribed time periods. In addition, some of the
previously discussed Obligations may be secured by mortgage-backed certificates
guaranteed by the Government National Mortgage Association ("GNMA"), a wholly
owned corporate instrumentality of the United States, and/or the Federal
National Mortgage Association ("Fannie Mae") a federally chartered and
stockholder-owed corporation. GNMA and Fannie Mae guarantee timely payment of
principal and interest on the mortgage-backed certificates, even where the
underlying mortgage payments are not made. While such mortgage-backed
certificates are often pledged to secure payment of principal and interest on
the Obligations, timely payment of interest and principal on the Obligations is
not insured or guaranteed by the United States, GNMA, Fannie Mae or any other
governmental agency or instrumentality. The GNMA mortgage-backed certificates
constitute a general obligation of the United States backed by its full faith
and credit. The obligations of Fannie Mae, including its obligations under the
Fannie Mae mortgage-backed securities, are obligations solely of Fannie Mae and
are not backed by, or entitled to, the full faith and credit of the United
States.
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
A-3
<PAGE>
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
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
A-4
<PAGE>
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 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
A-5
<PAGE>
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.
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
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<PAGE>
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 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
A-7
<PAGE>
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 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;
A-8
<PAGE>
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
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.
A-9
<PAGE>
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 MBIA Insurance 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 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
A-10
<PAGE>
in all 50 states, the District of Columbia, the Commonwealth of Puerto Rico, the
Commonwealth of the Northern Mariana Islands, the Virgin Islands of the United
States and the Territory of Guam. The Insurer has one European branch in the
Republic of France.
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 December 31, 1994, the Insurer had admitted assets of $3.4
billion (audited), total liabilities of $2.3 billion (audited), and total
capital and surplus of $1.1 billion (audited) determined in accordance with
statutory accounting practices prescribed or permitted by insurance regulatory
authorities. Copies of the Insurer's year end financial statements prepared in
accordance with statutory accounting practices are available from the Insurer.
The address of the Insurer is 113 King Street, Armonk, New York 10504.
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.
MUNICIPAL BOND INSURANCE ASSOCIATION
FIVE MEMBER COMPANIES ASSETS AND POLICYHOLDERS' SURPLUS (UNAUDITED)
AS OF SEPTEMBER 30, 1994.
(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...................... $ 10,030,200 $ 8,275,300 $ 1,754,900
Fireman's Fund Insurance Company......................... 6,815,775 4,904,534 1,911,241
The Travelers Indemnity Company.......................... 10,295,359 8,515,392 1,779,967
CIGNA Property and Casualty Company (formerly AEtna
Insurance Company)..................................... 5,112,251 4,842,235 270,016
The Continental Insurance Company........................ 2,794,536 2,449,805 344,731
--------------- --------------- --------------
Total............................................ $ 35,048,121 $ 28,987,266 $ 6,060,855
--------------- --------------- --------------
--------------- --------------- --------------
</TABLE>
A-11
<PAGE>
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.
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
A-12
<PAGE>
Company ("CGIC"), Financial Security Assurance, Inc. ("FSA"), Municipal Bond
Insurance Association (the "Association"), MBIA Insurance Corporation ("MBIA")
or Connie Lee Insurance Company ("ConnieLee"). The Sponsor to date has purchased
and presently intends to purchase insurance for Bonds in Traditional Trusts
exclusively from MBIA (see the preceding disclosure regarding MBIA). There can
be no assurance that any insurer listed therein will be able to satisfy its
commitments in the event claims are made in the future. However, Standard &
Poor's Corporation has rated the claims-paying ability of each insurer "AAA,"
and Moody's Investors Service has rated all bonds insured by each such insurer,
except ConnieLee, "Aaa." Moody's Investor's Service gives no ratings for bonds
insured by ConnieLee.
Because any such insurance will be effective so long as the insured Bonds
are outstanding, such insurance will be taken into account in determining the
market value of such Bonds and therefore some value attributable to such
insurance will be included in the value of the Units of the Trust that includes
such Bonds. The insurance does not, however, guarantee the market value of the
Bonds or of the Units.
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 or secondary offering period or units of any other series of Nuveen
Tax-Exempt Unit Trusts in the primary or secondary offering period by executing
and delivering a letter of intent to the Sponsor, which letter of intent must be
in a form acceptable to the Sponsor and shall have a maximum duration of
thirteen months, will be eligible to receive a reduced sales charge according to
the following tables based on the amount of intended aggregate purchases as
expressed in the letter of intent. Due to administrative limitations and in
order to permit adequate tracking, the only secondary market purchases that will
be permitted to be applied toward the intended specified amount and that will
receive the corresponding reduced sales charge are those Units that are acquired
through or from the Sponsor. By establishing a letter of intent, a Unitholder
agrees that the first purchase of Units following the execution of such letter
of intent will be at least 5% of the total amount of the intended aggregate
purchases expressed in such Unitholder's letter of intent. Further, through the
establishment of the letter of intent, such Unitholder agrees that units
representing 5% of the total amount of the intended purchases will be held in
escrow by United States Trust Company of New York pending completion of these
purchases. All distributions on units held in escrow will be
A-13
<PAGE>
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 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
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<PAGE>
mature. Any assumptions regarding maturity made for purposes of determining the
appropriate sales charge in no way predict or guarantee the actual remaining
life of a given Trust.
Pursuant to the terms of the Indenture, the Trustee may terminate a Trust if
the net asset value of such Trust, as shown by any evaluation, is less than 20%
of the original principal amount of the Trust. 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.
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
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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 applicable purchases of
Nuveen investment company securities on any one day by the same purchaser in the
amounts stated, and for this purpose purchases of this Series will be aggregated
with concurrent purchases of any other Series or of shares of any open-end
management investment company of which the Sponsor is principal underwriter and
with respect to the purchase of which a sales charge is imposed.
Purchases by or for the account of 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).
Units may be purchased in the primary or secondary market at the Public
Offering Price for non-breakpoint purchases minus the concession the Sponsor
typically allows to brokers and dealers for non-breakpoint purchases (see
Section 17) by (1) investors who purchase Units through registered investment
advisers, certified financial planners and registered broker-dealers who in each
case either charge periodic fees for financial planning, investment advisory or
asset management services, or provide such services in connection with the
establishment of an investment account for which a comprehensive "wrap fee"
charge is imposed, (2) bank trust departments investing funds over which they
exercise exclusive discretionary investment authority and that are held in a
fiduciary, agency, custodial or similar capacity, (3) any person who for at
least 90 days, has been an officer, director or bona fide employee of any firm
offering Units for sale to investors or their immediate family members (as
defined above) and (4) officers and directors of bank holding companies that
make Units available directly or through subsidiaries or bank affiliates.
Notwithstanding anything to the contrary in this Prospectus, such investors,
bank trust departments, firm employees and bank holding company officers and
directors who purchase Units through this program will not receive sales charge
reductions for quantity purchases.
The initial or primary Public Offering Price of the Units in each Trust is
based upon a pro rata share of the OFFERING prices per Unit of the Bonds in such
Trust plus the applicable sales charge. The secondary market Public Offering
Price of each Trust is based upon a pro rata share of the BID prices per Unit of
the Bonds in such Trust plus the applicable sales charge. The OFFERING prices of
Bonds in a Trust may be expected to average 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.
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<PAGE>
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
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.")
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<PAGE>
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 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
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<PAGE>
may be less than a normal distribution for Unitholders who choose quarterly or
semi-annual plans of distribution), and it also does not take into account the
difference in timing of payments to Unitholders who choose quarterly or
semi-annual plans of distribution, each of which will reduce the return.
Estimated Current Return is computed by dividing the Net Annual Interest
Income per Unit by the Public Offering Price. In contrast to Estimated Long Term
Return, Estimated Current Return does not reflect the amortization of premium or
accretion of discount, if any, on the Bonds in the Trust's portfolio. Net Annual
Interest Income per Unit is calculated by dividing the annual interest income to
the Trust, less estimated expenses, by the number of Units outstanding.
Net Annual Interest Income per Unit, used to calculate Estimated Current
Return, will vary with changes in fees and expenses of the Trustee and the
Evaluator and with the redemption, maturity, exchange or sale of Bonds. A Trust
may experience expenses and portfolio changes different from those assumed in
the calculation of Estimated Long Term Return. There thus can be no assurance
that the Estimated Current Returns or Estimated Long Term Returns quoted herein
will be realized in the future. A Unitholder's actual return may vary
significantly from the Estimated Long-Term Return, based on their holding
period, market interest rate changes, other factors affecting the prices of
individual bonds in the portfolio, and differences between the expected
remaining life of portfolio bonds and the actual length of time that they remain
in the Trust; such actual holding periods may be reduced by termination of the
Trust, as described in "AMENDMENT AND TERMINATION OF INDENTURE." 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 division of J. J. Kenny Co., Inc., 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, a division of J. J. Kenny Co., Inc., 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
A-19
<PAGE>
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.
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.) A portion of a Unitholder's gain, to
the extent of accreted market discount, may be treated as ordinary income rather
than capital gain if the Bonds were purchased by a Trust at a market discount or
if the Unitholder purchased his or her Units at a market discount on or after
April 30, 1993. 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
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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 provided that,
at the time such policies are purchased, the amounts paid for such
policies are reasonable, customary and consistent with the reasonable
expectation that the issuer of the bonds, rather than the insurer, will
pay debt service on the bonds. Paragraph (2) of this opinion is
accordingly applicable to policy proceeds representing maturing
interest.
In the opinion of Carter, Ledyard & Milburn, counsel to the Trustee, and, in the
absence of a New York Trust from the Series, special counsel for the Series for
New York tax matters, under existing law:
Under the income tax laws of the State and City of New York, each Trust
is not an association taxable as a corporation and the income of each Trust
will be treated as the income of the Unitholders.
For a summary of each opinion of special counsel to the respective State
Trusts for state tax matters, see Section 3.
ALL STATEMENTS IN THE PROSPECTUS CONCERNING EXEMPTION FROM FEDERAL, STATE OR
OTHER TAXES ARE THE OPINION OF COUNSEL AND ARE TO BE SO CONSTRUED.
The redemption of Units in a Trust by a Unitholder would result in each of
the remaining Unitholders of said Trust owning a greater proportionate interest
in the remaining assets of said Trust. Although present law does not directly
address this matter, it would appear reasonable that a remaining Unitholder's
tax basis in his Units would include his proportionate share of any proceeds
received by the Trust on the sale of bonds which were not distributed to him but
were instead used by the Trust to redeem Units and that his tax basis in the
remaining assets of the Trust would accordingly be increased by such share of
proceeds, based on the relative fair market value of the remaining assets of the
Trust as of the date of such redemption.
Sections 1288 and 1272 of the Code provide a complex set of rules governing
the accrual of original issue discount. These rules provide that original issue
discount accrues either on the basis of a constant compound interest rate or
ratably over the term of the Bond, depending on the date the Bond was issued. In
addition, special rules apply if the purchase price of a Bond exceeds the
original issue price plus the amount of original issue discount which would have
previously accrued based upon its issue price (its "adjusted issue price"). The
application of these rules will also vary depending on the value of the Bond on
the date a Unitholder acquires his Units, and the price the Unitholder pays for
his Units. The accrual of tax-exempt original issue discount on zero coupon
bonds and other original issue discount bonds will result in an increase in the
Unitholder's basis in such obligations and, accordingly, in his basis in his
Units.
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<PAGE>
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 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"
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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 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.
A-23
<PAGE>
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 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
A-24
<PAGE>
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.
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
A-25
<PAGE>
Standard & Poor's, unrated bonds which, in the opinion of the investment
adviser, have credit characteristics equivalent to bonds rated Baa or BBB or
better, and certain temporary investments, including securities the interest
income from which may be subject to Federal income tax.
TAX-FREE RESERVES
Tax-Free Reserves is a "money market" fund that includes in its portfolio
only obligations maturing within one year from the date of acquisition,
maintains an average maturity of all investments of 120 days or less, values its
portfolio at amortized cost and seeks to maintain a net asset value of $1.00 per
share. It provides checkwriting and expedited wire redemption privileges for its
shareholders. Tax-Free Reserves has the objective of providing, through
investment in a professionally managed portfolio of high quality short-term
municipal obligations, as high a level of current interest income exempt from
Federal income tax as is consistent with preservation of capital and the
maintenance of liquidity. Tax-Free Reserves may include in its portfolio
municipal obligations rated Aaa, Aa, MIG-1, VMIG-1 or Prime-1 by Moody's or AAA,
AA, SP-1 or A-1 by Standard & Poor's, unrated municipal obligations that, in the
opinion of the investment adviser, have credit characteristics equivalent to
obligations rated as above, tax-exempt obligations backed by the U.S.
Government, and temporary investments that may be subject to Federal income tax.
THE CALIFORNIA FUND
The California Fund has the objective of providing, through investment in
professionally managed portfolios of California municipal obligations, as high a
level of current interest income exempt from both Federal and California income
taxes as is consistent with the investment policies of each of the portfolios of
the California Fund and with preservation of capital. Each portfolio of the
California Fund may include temporary investments that may be subject to tax.
California Unitholders may reinvest in one of three portfolios of the California
Fund: The Nuveen California Tax-Free Value Fund, the Nuveen California Insured
Tax-Free Value Fund and the Nuveen California Tax-Free Money Market Fund.
The Nuveen California Tax-Free Value Fund invests primarily in long-term
investment grade California tax-exempt bonds (I.E., bonds rated in the four
highest categories by Moody's or Standard & Poor's or, if unrated, that have
equivalent credit characteristics). The Nuveen California Insured Tax-Free Value
Fund invests primarily in the same type of investments as the Special Bond
Portfolio, each of which is covered by insurance guaranteeing the timely payment
of principal and interest or is backed by a deposit of U.S. Government
securities.
The Nuveen California Tax-Free Money Market Fund invests primarily in
high-quality short term California tax-exempt money market instruments (I.E.,
obligations rated in the two highest categories by Moody's or Standard & Poor's
or, if unrated, that have equivalent credit characteristics). This portfolio
will include only obligations maturing within one year from the date of
acquisition, will maintain an average maturity of all investments of 120 days or
less, will value its portfolio at amortized cost and will seek to maintain a net
asset value of $1.00 per share. The Nuveen California Tax-Free Money Market Fund
provides for an expedited wire redemption privilege.
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
A-26
<PAGE>
portfolio of municipal bonds, as high a level of current interest income exempt
both from Federal income tax and from the income tax imposed by each portfolio's
designated state as is consistent with preservation of capital. The Tax-Free
Bond Fund may include in each of its portfolios tax-exempt bonds rated Baa or
BBB or better; unrated bonds which, in the opinion of the investment adviser,
have credit characteristics equivalent to bonds rated Baa or BBB or better; and
certain temporary investments, including securities the interest income from
which may be subject to Federal and state income tax.
THE INSURED BOND FUND
The Insured Bond Fund consists of the Nuveen Insured Municipal Bond Fund,
the Nuveen Massachusetts Insured Tax-Free Value Fund and the Nuveen New York
Insured Tax-Free Value Fund, which are each available for reinvestment to
Unitholders. (The Massachusetts and New York Portfolios are available only to
those Unitholders who are residents of the state for which the portfolio is
named.) The Insured Bond Fund has the objective of providing, through investment
in professionally managed portfolios of municipal bonds, as high a level of
current interest income exempt from both Federal income tax and, in the case of
designated state portfolios, from the income tax imposed by each portfolio's
designated state, as is consistent with preservation of capital. The Insured
Bond Fund may include in each of its portfolios the same type of investments as
the Tax-Free Bond Fund, each of which is covered by insurance guaranteeing the
timely payment of principal and interest or is backed by a deposit of U.S.
Government securities.
THE MONEY MARKET FUND
The Money Market Fund consists of the Nuveen Massachusetts Tax-Free Money
Market Fund and the Nuveen New York Tax-Free Money Market Fund, which are each
available for reinvestment to Unitholders who are residents of the state for
which such portfolio is named. The Money Market Fund includes in its portfolios
only obligations maturing within one year from the date of acquisition,
maintains an average maturity of 120 days or less, values its portfolios at
amortized cost and seeks to maintain a net asset value of $1.00 per share. The
Money Market Fund has the objective of providing, through investment in
professionally managed portfolios of high quality short-term municipal
obligations, as high a level of current interest income exempt both from Federal
income tax and from the income tax imposed by each portfolio's designated state
as is consistent with stability of principal and the maintenance of liquidity.
The Money Market Fund may include in each of its portfolios municipal
obligations rated Aaa, Aa, MIG-1, MIG-2, VMIG-1, VMIG-2, Prime 1 or Prime 2 by
Moody's or AAA, AA, SP-1, SP-2, A-1 or A-2 by Standard & Poor's; unrated
municipal obligations that, in the opinion of the investment adviser, have
credit characteristics equivalent to obligations rated as above; and temporary
investments that may be subject to Federal and state income tax.
THE MULTISTATE TRUST
The Multistate Trust consists of the Nuveen Arizona Tax-Free Value Fund, the
Nuveen Florida Tax-Free Value Fund, the Nuveen Maryland Tax-Free Value Fund, the
Nuveen Michigan Tax-Free Value Fund, the Nuveen New Jersey Tax-Free Value Fund,
the Nuveen Pennsylvania Tax-Free Value Fund and the Nuveen Virginia Tax Free
Value Fund, which are each 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
A-27
<PAGE>
bonds rated "baa" or "BBB" or better, limited to no more than 20% of the
Multistate Trust's assets, and certain temporary investments that may be subject
to Federal and state income tax.
Each person who purchases Units of a Trust may become a participant in the
Accumulation Plan and elect to have his or her distributions on Units of the
Trust invested directly in shares of one of the Accumulation Funds. Reinvesting
Unitholders may select any interest distribution plan. Thereafter, each
distribution of interest income or principal on the participant's Units
(principal only in the case of a Unitholder who has chosen to reinvest only
principal distributions) will, on the applicable distribution date, or the next
day on which the New York Stock Exchange is normally open ("business day") if
the distribution date is not a business day, automatically be received by
Shareholder Services, Inc., transfer agent for each of the Accumulation Funds,
on behalf of such participant and applied on that date to purchase shares (or
fractions thereof) of the Accumulation Fund chosen at net asset value as
computed as of 4:00 p.m. eastern time on each such date. All distributions will
be reinvested in the Accumulation Fund chosen and no part thereof will be
retained in a separate account. These purchases will be made without a sales
charge.
Shareholder Services, Inc. will mail to each participant in the Accumulation
Plan a quarterly statement containing a record of all transactions involving
purchases of Accumulation Fund shares (or fractions thereof) with Trust interest
distributions or as a result of reinvestment of Accumulation Fund dividends. Any
distribution of principal used to purchase shares of an Accumulation Fund will
be separately confirmed by Shareholder Services, Inc. Unitholders will also
receive distribution statements from the Trustee detailing the amounts
transferred to their Accumulation Fund accounts.
Participants may at any time, by so notifying the Trustee in writing, elect
to change the Accumulation Fund into which their distributions are being
reinvested, to change from principal only reinvestment to reinvestment of both
principal and interest or vice versa, or to terminate their participation in the
Accumulation Plan altogether and receive future distributions on their Units in
cash. There will be no charge or other penalty for such change of election or
termination.
The character of Trust distributions for income tax purposes will remain
unchanged even if they are reinvested in an Accumulation Fund.
15. HOW DETAILED ARE REPORTS TO UNITHOLDERS?
The Trustee shall furnish Unitholders of 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
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<PAGE>
both as a total dollar amount and as a dollar amount representing the pro rata
share of each Unit outstanding on the last business day of such calendar year;
(iii) a list of the Bonds held and the number of Units outstanding on the last
business day of such calendar year; (iv) the Unit Value based upon the last
computation thereof made during such calendar year; and (v) amounts actually
distributed during such calendar year from the Interest Account and from the
Principal Account, separately stated, expressed both as total dollar amounts and
as dollar amounts representing the pro rata share of each Unit outstanding.
Each annual statement will reflect pertinent information in respect of all
plans of distribution so that Unitholders may be informed regarding the results
of other plans of distribution.
16. UNIT VALUE AND EVALUATION
The value of 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:
A-29
<PAGE>
<TABLE>
<CAPTION>
DISCOUNT PER UNIT
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NATIONAL LONG INTER- SHORT INTER-
AND STATE MEDIATE INTERMEDIATE MEDIATE SHORT TERM
NUMBER OF UNITS* TRUSTS TRUSTS TRUSTS TRUSTS TRUSTS
- ------------------------------ ---------- ------------- ------------- ------------- -----------
Less than 500................. $3.20 $2.90 $2.70 $2.00 $1.50
500 but less than 1,000....... 3.20 2.90 2.70 2.00 1.50
1,000 but less than 2,500..... 3.20 2.70 2.50 1.80 1.30
2,500 but less than 5,000..... 3.20 2.45 2.25 1.55 1.05
5,000 but less than 10,000.... 2.50 2.45 2.25 1.55 1.05
10,000 but less than 25,000... 2.00 2.00 2.00 1.30 .80
25,000 but less than 50,000... 1.75 1.75 1.75 1.30 .60
50,000 or more................ 1.75 1.50 1.50 1.00 .60
</TABLE>
*Breakpoint sales charges and related dealer concessions are computed both on a
dollar basis and on the basis of the number of Units purchased, using the
equivalent of 500 Units to $50,000, 2,500 Units to $250,000 etc. and will be
applied on that basis which is more favorable to the purchaser.
The Sponsor currently intends to maintain a secondary market for Units of
each Trust. See Section 7. The amount of the dealer concession on secondary
market purchases of Trust Units through the Sponsor will be computed based upon
the value of the Bonds in the Trust portfolio, including the sales charge
computed as described in Section 6, and adjusted to reflect the cash position of
the Trust principal account, and will vary with the size of the purchase as
shown in the following table:
<TABLE>
<CAPTION>
AMOUNT OF PURCHASE*
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$50,000 $100,000 $250,000 $500,000 $1,000,000 $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.
Registered investment advisers, certified financial planners and registered
broker-dealers who in each case either charge periodic fees for financial
planning, investment advisory or asset management services, or provide such
services in connection with the establishment of an investment account for which
a comprehensive "wrap fee" charge is imposed, and bank trust departments
investing funds over which they exercise exclusive discretionary investment
authority and that are held in a fiduciary, agency, custodial or similar
capacity, are not entitled to receive any dealer concession for primary or
secondary market purchases in which an investor purchases any number of Units at
the Public Offering Price for non-breakpoint purchases minus the concession the
sponsor typically allows to brokers and dealers for non-breakpoint purchases
(see Section 6).
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
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<PAGE>
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 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.
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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 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.
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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 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
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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 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
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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.
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.
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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 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 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
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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 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, all 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.
To help advisers and investors better understand and more efficiently use an
investment in the Trust to reach their investment goals, the Trust's sponsor,
John Nuveen & Co. Incorporated, may advertise and create specific investment
programs and systems. For example, such activities may include presenting
information on how to use an investment in the Trust, alone or in combination
with an investment in other mutual funds or unit investment trusts sponsored by
Nuveen, to accumulate assets for future education needs or periodic payments
such as insurance premiums. The Trust's sponsor may produce software or
additional sales literature to promote the advantages of using the Trust to meet
these and other specific investor needs.
24. OTHER INFORMATION
AMENDMENT OF INDENTURE
The Indenture may be amended by the Trustee and the Sponsor without the
consent of any of the Unitholders (1) to cure any ambiguity or to correct or
supplement any provision thereof which may be defective or inconsistent, or (2)
to make such other provisions as shall not adversely affect the Unitholders,
provided, however, that the Indenture may not be amended to increase the number
of Units in any Trust or to permit the deposit or acquisition of bonds either in
addition to, or in substitution for any of the Bonds initially deposited in any
Trust except as stated in Section 4 regarding the limited right of substitution
of Replacement Bonds and except for the substitution of refunding bonds under
certain circumstances. The Trustee shall advise the Unitholders of any amendment
promptly after execution thereof.
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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 LLP,
independent public accountants, as indicated in their report in this Prospectus,
and are included herein in reliance upon the authority of said firm as experts
in giving said report.
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DESCRIPTION OF RATINGS*
STANDARD & POOR'S CORPORATION. A description of the applicable Standard &
Poor's Corporation rating symbols and their meanings follows:
A Standard & Poor's rating is a current assessment of the creditworthiness
of an obligor with respect to a specific debt obligation. This assessment may
take into consideration obligors such as guarantors, insurers or lessees.
The rating is not a recommendation to purchase, sell or hold a security,
inasmuch as it does not comment as to market price or suitability for a
particular investor.
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. Standard
& Poor's does not perform an audit in connection with any rating and may, on
occasion, rely on unaudited financial information. The ratings may be changed,
suspended or withdrawn as a result of changes in, or unavailability of, such
information, or for other circumstances.
The ratings are based, in varying degrees, on the following considerations:
I. Likelihood of default--capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance
with the terms of the obligation;
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or other arrangements under
the laws of bankruptcy and other laws affecting creditors' rights.
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.
AA--Bonds rated AA have a very strong capacity to pay interest and repay
principal, and differ from the highest rated issues only in small degree.
A--Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in the higher rated categories.
PLUS (+) OR MINUS (-): The ratings from "AA" to "BB" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
PROVISIONAL RATINGS: The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful completion of the
project being financed by the issuance of the bonds being rated and indicates
that payment of debt service requirements is largely or entirely dependent upon
the successful and timely completion of the project. This rating, however, while
addressing credit quality subsequent to completion of the project, makes no
comment on the likelihood of, or the risk of default upon failure of, such
completion. Accordingly, the investor should exercise his own judgment with
respect to such likelihood and risk.
- ----------
*As published by the rating companies.
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NOTE RATINGS: A Standard & Poor's note rating reflects the liquidity
concerns and market access risks unique to notes. Notes due in 3 years or less
will likely receive a note rating. Notes maturing beyond 3 years will most
likely receive a long-term debt rating.
Note rating symbols are as follows:
SP-1 Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety
characteristics will be given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
RATINGS OF INSURED TRUST UNITS.
A Standard & Poor's Corporation's rating on the units of an insured
investment trust (hereinafter referred to collectively as "units" and "trusts")
is a current assessment of creditworthiness with respect to the investment held
by such trust. This assessment takes into consideration the financial capacity
of the issuers and of any guarantors, insurers, lessees or mortgagors with
respect to such investments. The assessment, however, does not take into account
the extent to which trust expenses or portfolio asset sales for less than the
trust purchase price will reduce payment to the unitholder of the interest and
principal required to be paid on the portfolio assets. In addition, the rating
is not a recommendation to purchase, sell or hold units, inasmuch as the rating
does not comment as to market price of the units or suitability for a particular
investor.
Units rated "AAA" are composed exclusively of assets that are rated "AAA" by
Standard & Poor's and/or certain short-term investments. Standard & Poor's
defines its AAA rating for such assets as the highest rating assigned by
Standard & Poor's to a debt obligation. Capacity to pay interest and repay
principal is very strong. However, unit ratings may be subject to revision or
withdrawal at any time by Standard & Poor's and each rating should be evaluated
independently of any other rating.
MOODY'S INVESTORS SERVICE, INC. A brief description of the applicable
Moody's Investors Service, Inc. rating symbols and their meanings follows:
Aaa--Bonds which are rated Aaa are judged to be the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues. Their safety is so absolute that,
with the occasional exception of oversupply in a few specific instances,
characteristically, their market value is affected solely by money market
fluctuations.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities. Their market value is virtually immune to all but money market
influences, with the occasional exception of oversupply in a few specific
instances.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future. The market
value of A-rated bonds may be 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-40
<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-41
<PAGE>
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A-42
<PAGE>
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A-43
<PAGE>
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A-44
<PAGE>
<TABLE>
<C> <S> <C>
NUVEEN Tax-Exempt Unit Trusts
PROSPECTUS
150,000 Units
National Insured Trust 295
California Insured Trust 247
</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 LLP
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.
800
<PAGE>
*********************************************
* PRELIMINARY PROSPECTUS DATED 5/04/95 *
*********************************************
NUVEEN TAX-EXEMPT UNIT TRUST
- ------------------------------------------------------------------------------
100,000 UNITS SERIES 805
(A Unit Investment Trust)
- ------------------------------------------------------------------------------
The attached final Prospectus for a prior Series is hereby used as a
preliminary Prospectus for the above-stated Series. The narrative
information and structure of the attached final Prospectus will be
substantially the same as that of the final Prospectus for this Series.
Although the attached Prospectus includes trusts as indicated
therein, the specific trusts included in this Series when deposited may
differ from such trusts. Information with respect to the actual trusts to
be included, pricing, the number of Units, dates and summary information
regarding the characteristics of securities to be deposited in this Series
is not now available and will be different since each Series has a unique
Portfolio. Accordingly the information contained herein with regard to the
previous Series should be considered as being included for informational
purposes only. Ratings of the securities in this Series are expected to be
comparable to those of the securities deposited in the previous Series.
However, the Estimated Current Return for this Series will depend on the
interest rates and offering prices of the securities in this Series and may
vary materially from that of the previous Series.
**************************************************************************
* A registration statement relating to the units of this Series has been *
* filed with the Securities and Exchange Commission but has not yet *
* become effective. Information contained herein is subject to comple- *
* tion or amendment. Such Units may not be sold nor may offers to buy *
* be accepted prior to the time the registration statement becomes *
* effective. This Prospectus shall not constitute an offer to sell *
* or the solicitation of an offer to buy nor shall there be any sale *
* of the Units in any state in which such offer, solicitation or sale *
* would be unlawful prior to registration or qualification under the *
* securities laws of any such state. *
**************************************************************************
<PAGE>
Statement of differences between electronic filing and printed document.
Pursuant to Rule 499(c) (7) under the Securities Act of 1933 and Rule
0-11 under the Investment Company Act of 1940, Registrant hereby identifies
those differences in the foregoing document between the electronic format in
which it is filed and the printed form in which it will be circulated:
(1) The printed and distributed prospectus may be paged differently
because the printed document may contain a different amount of information on
each page from that contained in the electronic transmission.
(2) On the cover page, in the index and on the last page of the printed
document, solid vertical bars will appear.
(3) In the printed document, footnote symbols may include a "dagger" or
multiple "dagger". The "dagger" symbol is represented as # in the electronic
document.
(4) The printed and distributed prospectus will not contain the
preliminary prospectus legend included at the beginning of the first
prospectus page.
<PAGE>
NUVEEN TAX-EXEMPT UNIT TRUST, SERIES 805
Cross-Reference Sheet
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items Required by Instruction 1 as
to Prospectus on Form S-6)
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust ) Prospectus Cover Page
(b) Title of securities issued )
2. Name and address of Depositor )23 Information About the Sponsor
3. Name and address of Trustee )22 Information About the Trustee
4. Name and address of principal )23 Information About the Sponsor
Underwriter )
5. Organization of trust ) 1 What Is The Nuveen Tax-Exempt
) Unit Trust?
6. Execution and termination of ) 1 What Is The Nuveen Tax-Exempt
Trust Agreement ) Unit Trust?
)22 Information About the Trustee
)24 Other Information
7. Changes of Name *
8. Fiscal Year
9. Litigation
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
10. General Information regarding ) 3 Summary of Portfolios
trust's securities ) 5 Why and How are the Bonds
Insured?
13 When Are Distributions
Made to Unitholders?
)18 Ownership and Transfer of Units
)19 How Units May Be Redeemed
Without Charge
)21 How Bonds May Be Removed From
) The Trusts
)22 Information About the Trustee
)23 Information About the Sponsor
)24 Other Information
)11 What Is The Tax Status of
) Unitholders?
11. Type of securities comprising ) 1 What Is The Nuveen Tax-Exempt
units ) Unit Trust?
) 3 Summary of Portfolios
) 4 Composition of Trusts
) 2 What Are The Objectives Of
) The Trusts?
5 Why and How are the Bonds
Insured?
12. Certain information regarding ) *
periodic payment certificates )
13. (a)Load, fees, expenses, etc. )ii Essential Information Regarding
) the Trusts on Date of Deposit of
Bonds
) 6 How Is The Public Offering Price
) Determined?
) 7 Market For Units
) 8 What Is Accrued Interest?
) 9 What Is The Estimated Current
) Return?
)10 How Was The Price Of The Bonds
) Determined At Date of Deposit?
)12 What Are Normal Trust Operating
) Expenses?
) 3 Summary of Portfolios
)13 When Are Distributions Made
) to Certificateholders?
)15 How Detailed Are Reports To
Certificateholders?
<PAGE>
(b)Certain information regarding ) *
periodic payment certificates )
(c)Certain percentages ) 6 How Is the Public Offering Price
) Determined?
) 7 Market For Units
) 9 What Is The Estimated Current
) Return?
)10 How Was The Price of the Bonds
) Determined At Date of Deposit?
) 8 What is Accrued Interest?
(d)Certain other fees, etc. )10 How Was The Price Of The Bonds
payable by holders ) Determined At Date of Deposit?
)12 What Are Normal Trust Operating
) Expenses?
)18 Ownership and Transfer of Units
(e)Certain profits receivable ) 4 Composition of Trusts
by depositor, principal under- )
writer, trustee or affiliated )20 How Units May Be Purchased By
persons ) The Sponsor
(f)Ratio of annual charges
to income *
14. Issuance of trust's securities ) 3 Summary of Portfolios
)13 When Are Distributions Made
) To Unitholders?
)18 Ownership and Transfer of Units
)19 How Units May Be Redeemed
) Without Charge
15. Receipt and handling of payments ) *
from purchasers )
16. Acquisition and Disposition of ) 1 What Is The Nuveen Tax-Exempt
Underlying Securities ) Unit Trust?
) 3 Summary of Portfolios
) 4 Composition of Trusts
) 5 Why and How are the Bonds
Insured?
)19 How Units May Be Redeemed
Without Charge
)21 How Bonds May Be Removed From
) The Trusts
)24 Other Information
17. Withdrawal or redemption ) 7 Market For Units
)19 How Units May Be Redeemed
) Without Charge
)20 How Units May Be Purchased By
) The Sponsor
18. (a)Receipt and disposition of income ) 3 Summary of Portfolios
)13 When Are Distributions
Made To Unitholders?
)15 How Detailed Are Reports To
) Unitholders?
(b)Reinvestment of distributions )14 Accumulation Plan
(c)Reserves or special funds ) 3 Summary of Portfolios
)13 When Are Distributions
) Made To Certificateholders?
(d)Schedule of distributions ) *
19. Records, accounts and reports )13 When Are Distributions Made
) To Certificateholders?
)15 How Detailed Are Reports To
) Certificateholders?
20. Certain miscellaneous provisions of )22 Information About the Trustee
Trust Agreement )23 Information About the Sponsor
)24 Other Information
<PAGE>
21. Loans to security holders ) *
22. Limitations on liability ) 3 Summary of Portfolios
) 4 Composition of Trusts
)22 Information About The Trustee
23. Bond arrangements ) *
24. Other material provisions of Trust ) *
Agreement. )
III. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
25. Organization of Depositor )23 Information About the Sponsor
26. Fees received by Depositor ) *
27. Business of Depositor )23 Information About the Sponsor
28. Certain information as to officials ) *
and affiliated persons of Depositor )
29. Voting Securities of Depositor )23 Information About the Sponsor
30. Persons controlling Depositor )
)
31. Payments by Depositor for certain )
services rendered to trust )
) *
32. Payments by Depositor for certain )
other services rendered to trust )
)
33. Remuneration of employees of Depositor)
for certain services rendered to trust)
)
34. Remuneration of other persons for )
certain services rendered to trust )
<PAGE>
IV. DISTRIBUTION AND REDEMPTION OF SECURITIES
35. Distribution of trust's securities by )
states )
) *
36. Suspension of sales of trust's )
securities )
)
37. Revocation of authority to distribute )
38. (a)Method of distribution )
)
(b)Underwriting agreements )17 How Units of The Trusts Are
) Distributed To The Public
(c)Selling agreements )
39. (a)Organization of principal )
underwriter )
)23 Information About The Sponsor
(b)NASD membership of principal )
underwriter )
40. Certain fees received by principal ) *
underwriter
41. (a)Business of principal underwriter )
)
(b)Branch offices of principal under- ) *
writer )
)
(c)Salesmen of principal underwriter )
42. Ownership of trust's securities by ) *
certain persons )
)
43. Certain brokerage commissions received) *
by principal underwriter )
44. (a)Method of valuation )ii Essential Information Regarding
) The Trusts On Date Of Deposit Of
) Bonds
) 6 How Is The Public Offering Price
) Determined?
)10 How Was The Price Of The Bonds
) Determined At Date of Deposit?
)12 What Are Normal Trust Operating
) Expenses?
(b)Schedule as to offering price ) *
(c)Variation in offering price to ) 6 How Is the Public Offering Price
certain persons ) Determined?
) 8 What Is Accrued Interest?
)10 How Was The Price Of The Bonds
) Determined At Date of Deposit?
<PAGE>
45. Suspension of redemption rights ) *
46. (a)Redemption valuation )16 Unit Value and Evaluation
)19 How Units May Be Redeemed
) Without Charge
)20 How Units May Be Purchased By
) The Sponsor
(b)Schedule as to redemption price ) *
47. Maintenance of position in underlying ) 5 How Is the Public Offering Price
securities ) Determined?
)20 How Units May Be Purchased By
) The Sponsor
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation of Trustee)21 Information About The Trustee
49. Fees and expenses of Trustee )ii Essential Information Regarding
) The Trusts On Date of Deposit Of
) Bonds
)12 What Are Normal Trust Operating
) Expenses?
50. Trustee's lien )12 What Are Normal Trust Operating
) Expenses?
)13 When Are Distributions Made
) To Unitholders?
VI. INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
51. Insurance of holders of trust's ) *
securities )
VII. POLICY OF REGISTRANT
52. (a)Provisions of trust agreement with )12 What Are Normal Trust Operating
respect to selection or elimination) Expenses?
of underlying securities )19 How Units May Be Redeemed With-
) out Charge
)21 How Bonds May Be Removed From
) The Trusts
(b)Transactions involving elimination ) *
of underlying securities )
(c)Policy regarding substitution or ) 3 Summary of Portfolio
elimination of underlying ) 4 Composition of Trusts
securities )21 How Bonds May Be Removed From
) The Trusts
(d)Fundamental policy not otherwise ) *
covered )
53. Tax status of trust )11 What Is The Tax Status Of
) Unitholders?
VIII. FINANCIAL AND STATISTICAL INFORMATION
54. Trust's securities during last ten years) *
55.) ) *
56.)Certain information regarding )
57.)periodic payment certificates )
58.) )
__________
*Inapplicable, omitted, answer negative or not required.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
A. BONDING ARRANGEMENTS OF DEPOSITOR:
The Depositor has obtained the following Stockbrokers Blanket Bonds for
its officers, directors and employees:
INSURER/POLICY NO. AMOUNT
United Pacific Insurance Co. $10,000,000
Reliance Insurance Company
B 74 92 20
Aetna Casualty and Surety $10,000,000
08 F10618BCA
St. Paul Insurance Co. $ 6,000,000
400 HC 1051
B. This Registration Statement comprises the following papers and documents:
The facing sheet
The Prospectus
The signatures
Consents of Counsel
Exhibits
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Nuveen Tax-Exempt Unit Trust, Series 805, has duly caused
this Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized in the City of Chicago and State of Illinois
on 5/04/95.
NUVEEN TAX-EXEMPT UNIT TRUST, SERIES 805
(Registrant)
By JOHN NUVEEN & CO. INCORPORATED
(Depositor)
By: Larry Woods Martin
_______________________
Vice President
Attest: Morrison C. Warren
___________________
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons
in the capacities and on the date indicated:
SIGNATURE *TITLE DATE
Richard J. Franke Chairman, Board of Directors, )
Chief Executive Officer and )
Director )
)
Donald E. Sveen President, Chief Operating )
Officer and Director )
)
Anthony T. Dean Executive Vice President and )Larry Woods Martin
Director )Attorney-in-Fact**
)
Timothy T. Schwertfeger Executive Vice President and )
Director )
)
O. Walter Renfftlen Vice President and Controller )
(Principal Accounting Officer))
)
)5/04/95
- ------------------------------------------------------------------------------
*The titles of the persons named herein represent their capacity in and
relationship to John Nuveen & Co. Incorporated, the Depositor.
**The powers of attorney were filed on Form SE for Messrs. Franke, Sveen,
Renfftlen, Dean and Schwerfeger with the Amendment to the Registration
Statement on Form S-6 of Nuveen Tax-Exempt Unit Trust, Series 671
(File No. 33-49175).
<PAGE>
CONSENT OF CHAPMAN AND CUTLER
The consent of Chapman and Cutler to the use of its name in the Prospectus
included in the Registration Statement will be filed by Amendment.
CONSENT OF STATE COUNSEL
The consents of special counsel to the Fund for state tax matters to the
use of their names in the Prospectus included in the Registration Statement
will be filed by Amendment.
CONSENT OF STANDARD + POOR'S CORPORATION
The consent of Standard + Poor's Corporation to the use of its name
in the Prospectus included in the Registration Statement will be filed by
Amendment.
CONSENT OF KENNY S+P EVALUATION SERVICES
The consent of Kenny S+P Evaluation Services to the use of its name in the
Prospectus included in the Registration Statement will be filed by Amendment.
CONSENT OF CARTER, LEDYARD & MILBURN
The consent of Carter, Ledyard & Milburn to the use of its name in the
Prospectus included in the Registration Statement will be filed by Amendment.
CONSENT OF ARTHUR ANDERSEN LLP
The consent of Arthur Andersen LLP to the use of its report and to the
reference to such firm in the Prospectus included in the Registration
Statement will be filed by Amendment.
<PAGE>
LIST OF EXHIBITS:
1.1(a) Copy of Trust Indenture and Agreement between John Nuveen & Co.
Incorporated, Depositor, and United States Trust Company of
New York, Trustee. Filed as Exhibit 1.1(A) to the Sponsor's
Registration Statement filed with respect to Series 723
(File No. 33-52527) and is incorporated herein by reference.
1.1(b) Schedules to Trust Indenture and Agreement (to be supplied by
amendment).
1.2* Copy of Certificate of Incorporation, as amended, of John Nuveen
& Co. Incorporated, Depositor.
1.3** Copy of amendment of Certificate of Incorporation changing name
of Depositor to John Nuveen & Co. Incorporated.
2.1 Copy of Certificate of Ownership (included in Exhibit 1.1(A) and
Incorporated herein by reference).
3.1 Opinion of counsel as to legality of securities being registered
(to be supplied by amendment).
3.2 Opinion of counsel as to Federal income tax status of securities
being registered (to be supplied by amendment).
3.3 Consents of special state counsel to the Fund for state tax
matters to use of their names in the Prospectus (to be supplied
by amendment).
4.1 Consent of Standard + Poor's Corporation (to be supplied by
amendment).
4.2 Consent of Kenny S+P Evaluation Services (to be supplied by
amendment).
4.3 Consent of Carter, Ledyard & Milburn (to be supplied by
amendment).
6.1 List of Directors and Officers of Depositor and other related
information (incorporated by reference to Form S-6 [File
No. 33-58059] filed on March 13, 1995 on behalf of Nuveen
Tax-Exempt Unit Trust, Series 795).
- ------------------------------------------------------------------------------
*Incorporated by reference to Form N-8B-2 (File No. 811-1547) filed on
behalf of Nuveen Tax-Exempt Unit Trust, Series 16.
**Incorporated by reference to Form N-8B-2 (File No. 811-2198) filed on
behalf of Nuveen Tax-Exempt Unit Trust, Series 37.
